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| Documents Incorporated By Reference                                                                                                                                     | 1  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----|
| Glossary Of Terms                                                                                                                                                       | 1  |
| Forward Looking Statements                                                                                                                                              | 1  |
| Incorporation                                                                                                                                                           | 2  |
| Corporate Profile                                                                                                                                                       | 4  |
| Three Year History                                                                                                                                                      | 5  |
| Competitive Strengths                                                                                                                                                   | 10 |
| Business Strategy                                                                                                                                                       | 12 |
| Lines Of Business                                                                                                                                                       | 13 |
| Competition                                                                                                                                                             | 17 |
| Fibre Supply                                                                                                                                                            | 17 |
| Properties                                                                                                                                                              | 18 |
| Human Resources                                                                                                                                                         | 19 |
| Environment                                                                                                                                                             | 19 |
| Social Responsibility                                                                                                                                                   | 22 |
| Research And Development                                                                                                                                                | 23 |
| Capital Expenditures                                                                                                                                                    | 23 |
| Capital Structure                                                                                                                                                       | 24 |
| Foreign Operations                                                                                                                                                      | 24 |
| Risk Factors                                                                                                                                                            | 24 |
| Legal Proceedings                                                                                                                                                       | 24 |
| Dividends                                                                                                                                                               | 24 |
| Ratings                                                                                                                                                                 | 24 |
| Market For Securities                                                                                                                                                   | 27 |
| Material Contracts                                                                                                                                                      | 27 |
| Transfer Agent And Registrar                                                                                                                                            | 29 |
| Audit Committee Information                                                                                                                                             | 29 |
| Corporate Governance                                                                                                                                                    | 31 |
| Directors And Officers                                                                                                                                                  | 31 |
| Interests Of Experts                                                                                                                                                    | 33 |
| Additional Information                                                                                                                                                  | 33 |
| Glossary Of Terms                                                                                                                                                       | 35 |

----

|   | CATALYST PAPER CORPORATION |
|--------|----------------------------|

|   | ANNUAL INFORMATION FORM |
|--------|-------------------------|

|   | (with respect to the year ended December 31, 2010) |
|--------|----------------------------------------------------|

| ·   | are statements that address or discuss activities, events or developments that we expect or anticipate may occur in the future; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

| ·   | can be identified by the use of words such as “believe”, “expect”, “anticipate”, “intend”, “plan”, “likely”, “predicts”, “estimates”, “forecasts”, and similar words or phrases or the negative of such words or phrases; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | reflect our current beliefs, intentions or expectations based on certain assumptions and estimates, including those identified below, which could prove to be significantly incorrect: |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | our ability to develop, manufacture and sell new products and services that meet the needs of our customers and gain commercial acceptance; |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| o   | our ability to continue to sell our products and services in the expected quantities at the expected prices and expected times; |
|---------------|---------------------------------------------------------------------------------------------------------------------------------|

| o   | our ability to successfully obtain cost savings from our cost reduction initiatives; |
|---------------|--------------------------------------------------------------------------------------|

| o   | our ability to implement business strategies and pursue opportunities; |
|---------------|------------------------------------------------------------------------|

| o   | expected cost of goods sold; |
|---------------|------------------------------|

| o   | expected component supply costs and constraints; and |
|---------------|------------------------------------------------------|

| o   | expected foreign exchange and tax rates; |
|---------------|------------------------------------------|

| ·   | while considered reasonable by management, are inherently subject to known and unknown risks and uncertainties and other factors that could cause actual results or events to differ from historical or anticipated results or events.  These risk factors and others are discussed in this Annual Information Form and in Management’s Discussion and Analysis for the financial year ended December 31, 2010, which may be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.  Certain of these risks are: |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | the impact of general economic conditions in the countries in which we do business |
|---------------|------------------------------------------------------------------------------------|

| o   | conditions in the capital markets and our ability to obtain financing and refinance existing debt; |
|---------------|----------------------------------------------------------------------------------------------------|

| o   | market conditions and demand for our products (including declines in advertising and circulation); |
|---------------|----------------------------------------------------------------------------------------------------|

| o   | the implementation of trade restrictions in jurisdictions where our products are marketed; |
|---------------|--------------------------------------------------------------------------------------------|

| o   | fluctuations in foreign exchange or interest rates; |
|---------------|-----------------------------------------------------|

| o   | raw material prices (including wood fibre, chemicals and energy); |
|---------------|-------------------------------------------------------------------|

| o   | the effect of, or change in, environmental and other governmental regulations; |
|---------------|--------------------------------------------------------------------------------|

| o   | uncertainty relating to labour relations; |
|---------------|-------------------------------------------|

| o   | the availability of qualified personnel; |
|---------------|------------------------------------------|

| o   | legal proceedings; |
|---------------|--------------------|

| o   | the effects of competition from domestic and foreign producers; and |
|---------------|---------------------------------------------------------------------|

| o   | the risk of natural disaster and other factors many of which are beyond our control. |
|---------------|--------------------------------------------------------------------------------------|

| Subsidiaries                        | Jurisdiction     |
|-------------------------------------|------------------|
| Elk Falls Pulp and Paper Limited    | British Columbia |
| Catalyst Paper Finance Limited      | British Columbia |
| Catalyst Pulp Operations Limited    | British Columbia |
| Catalyst Pulp Sales Inc.            | British Columbia |
| Catalyst Pulp and Paper Sales Inc.  | British Columbia |
| Catalyst Paper Energy Holdings Ltd. | Canada           |
| Catalyst Paper (USA) Inc.           | California       |
| Catalyst Paper Holdings Inc.        | Delaware         |
| Catalyst Paper (Snowflake) Inc.     | Delaware         |
| Catalyst Paper Recycling Inc.       | Delaware         |
| Pacifica Papers Sales Inc.          | Delaware         |
| Pacifica Poplars Ltd.               | British Columbia |
| Pacifica Poplars Inc.               | Delaware         |
| Pacifica Papers U.S. Inc.           | Delaware         |
| The Apache Railway Company          | Arizona          |

----

| 2011 CAPACITY BY MILL LOCATION AND PRODUCT LINE1 |   |
|--------------------------------------------------|--------|
|                                             |   |   |   |   | Specialty printing papers1 |   |   | Newsprint1 |   |   | Market Pulp |   |   | Total |   |
| Mill location                                    |   | Number ofpaper machines |   |   | Uncoatedmechanical |   |   | CoatedMechanical |   |   | Directory |   |   | Newsprint |   |   | NBSK pulp |   |   |   |   |
| Crofton, B.C.2                                   |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | 145,000 |   |   |   | 291,000 |   |   |   | 310,000 | 3 |   |   | 746,000 |   |
| Port Alberni, B.C.                               |   |   | 2 |   |   |   | - |   |   |   | 223,000 |   |   |   | 115,000 |   |   |   | - |   |   |   | - |   |   |   | 338,000 |   |
| Powell River, B.C.                               |   |   | 3 |   |   |   | 449,000 |   |   |   | - |   |   |   | - |   |   |   | 30,000 |   |   |   | - |   |   |   | 479,000 |   |
| Snowflake, Arizona                               |   |   | 2 |   |   |   | 48,000 |   |   |   | - |   |   |   | - |   |   |   | 289,000 |   |   |   | - |   |   |   | 337,000 |   |
| Total capacity (tonnes)                          |   |   | 10 |   |   |   | 497,000 |   |   |   | 223,000 |   |   |   | 260,000 |   |   |   | 610,000 |   |   |   | 310,000 |   |   |   | 1,900,000 |   |
| % of total capacity                              |   |   |   |   |   |   | 26 | % |   |   | 12 | % |   |   | 14 | % |   |   | 32 | % |   |   | 16 | % |   |   | 100 | % |

| 1.     Capacities expressed in the above table can vary as we are able to switch production between products, particularly newsprint, directory and machine-finished uncoated grades. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | We have indefinitely curtailed the No. 1 paper machine at Crofton, removing the equivalent of 140,000 tonnes of newsprint production on an annualized basis.  The capacity and number of machines noted in the above table have not been adjusted to reflect this indefinite curtailment. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | Total pulp capacity at Crofton is 370,000 tonnes, of which 310,000 tonnes are designated as market pulp with the remainder 60,000 tonnes being consumed internally. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   2010 Production Curtailment  (000 tonnes) | SpecialtyPrinting Papers (1) |  Newsprint (2) |  Pulp (3) |  Total |
|-------------------------------------------------------|------------------------------|---------------------|----------------|-------------|
|   Q1                                             | 39                           | 129                 | 31             | 199         |
|   Q2                                             | 38                           | 128                 | 7              | 173         |
|   Q3                                             | 0                            | 35                  | 0              | 35          |
|   Q4                                             | 0                            | 35                  | 0              | 35          |
|   Total                                          | 77                           | 327                 | 38             | 442         |

| (1)   | Market-related curtailment relates to Elk Falls machines |
|-----------------|----------------------------------------------------------|

| (2)   | Market-related curtailment comprised of 187,000 tonnes of newsprint on Elk Falls machines and 140,000 tonnes on Crofton C1 machine which was curtailed throughout the year. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | Market-related curtailment relates to second pulp product line at Crofton which was curtailed until late April, 2010. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------|

| ● | Cost-Competitive Manufacturing.  Our financial results are driven by our manufacturing costs, particularly with respect to furnish costs, energy prices and usage and labour costs.  We are focused on reducing these costs and improving margins, while maintaining or improving the quality of our products.  There is a particular focus on finding ways to improve controllable operating costs and on developing more flexible and efficient work practices at the mills that will reduce manufacturing costs in the aggregate and create a shift in the proportion of fixed to variable costs.  We were able to implement workplace reductions at a number our mills in 2008 and 2009 and have made significant capital expenditures over the past six years to shift production towards higher-margin printing papers, reducing unit production costs, increasing machine productivity, improving product quality, and meeting or exceeding environmental regulations. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Strong Market Position.  We are the largest producer and marketer of printing papers (newsprint and specialty printing papers) in western North America with production capacity of approximately 1.9 million tonnes of paper and pulp.  We are the only producer of coated mechanical and supercalendered papers in western North America and the largest producer of glossy paper in the region. At Snowflake we produce 100% recycled paper that has Forest Stewardship Council (FSC) certification. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Diversified Product Mix and Product Development.  We are focused on optimizing our product mix by developing higher value grades and introducing new product lines, which allow us to exploit niche opportunities in the marketplace.  During 2009 we broadened the product mix at our Snowflake mill from recycled newsprint to include a small amount of recycled uncoated mechanical grades and continued to increase the production of recycled uncoated mechanical grades in 2010.  In 2010 we introduced PacificoteTM , a high brightness and high gloss paper with superior printability ideal for magazine, catalogue, insert and direct mail advertising applications, as the latest addition to our family of coated mechanical paper products.  We also launched ElectrabriteTM Book,  a range of caliper-controlled grades for book publishers,  Electrabrite 100% recycled hi-bright grade papers produced at Snowflake and E-Star Max, an 84-bright uncoated mechanical grade for commercial printing. These are our most recent additions to our expansive range of Electra-paper grades that include ElectraprimeTM (a soft-calendered, high-brightness paper designed to compete as an alternative to traditional supercalendered grades and used primarily for advertising inserts and flyers), ElectrastarTM (a super high-brightness grade designed for applications in which brightness is a desirable characteristic such as inserts and specialty newspapers), Electrabrite Lite (a lighter basis weight, high-brightness product that is used by newspapers and retailers) and Electracote Brite (a brighter, heavier-coated paper ideal for magazines, catalogue or retail insert applications as an attractive alternative to more expensive coated grades). We also introduced our Sage line of specialty printing papers in 2010 which allows us to offer the Pacificote and Electra grades as being manufactured carbon-neutral from certified wood fibre from sustainably managed forests with documented verification. These more specialized products generally provide higher margins and improved demand prospects than standard commodity grades.  We manage fluctuations in demand for our products through our ability to switch production between products and machines, particularly newsprint, directory, and machine-finished uncoated mechanical grades. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Diversification.  The acquisition of the Snowflake mill enhanced our geographic, fibre and currency diversification while increasing our market share.  The Snowflake mill is the only mechanical papers mill within a 1,600 kilometre (1,000 mile) radius.  This provides delivery and customer service advantages in key western American states with large and growing metropolitan populations such as Phoenix, Arizona, Los Angeles and San Diego, California and Denver, Colorado.  The mill’s primary raw material is old newspaper (“ONP”).  ONP is exposed to different market forces than the woodfibre used by our virgin fibre newsprint mills in Canada.  Current challenges in the U.S. housing market have reduced sawmilling activity, which in turn has reduced the availability of virgin fibre in Canada.  While ONP is also subject to market forces, these generally differ significantly from the primary drivers of virgin fibre cost and availability. The challenges for ONP include a limited supply due to decreasing consumption of newspapers in the U.S. as well as increased demand for recovered paper in Asia. The Snowflake mill also provides us with a natural hedge against fluctuations in the Canadian to U.S. dollar exchange rate.  As a U.S. based facility, the Snowflake mill’s margins have not been impacted in the way that Canadian mills have as a result of the strengthening of the Canadian dollar relative to the U.S. dollar. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Efficient Supply Chain Management Practices.  Distribution costs have a significant impact on net sales realizations. Our strong and flexible distribution network optimizes all transportation modes available to us, such as barge, truck, rail and break bulk and container shipping.  Controlling key elements of our supply chain has allowed us to control costs while achieving a high on time delivery performance and low damage levels especially to west coast print sites where our strategic importance to customers is highest.  Our Crofton mill site directly ships break bulk to offshore customers via regularly scheduled vessels.  We operate a central distribution centre in Surrey, B.C. which continuously receives volumes from our three British Columbia manufacturing sites and then ships via rail, truck and container to our customers.  This allows us to choose the most cost effective transportation mode in conjunction with customer requirements.  We also lease or otherwise have available 635 rail cars to ensure adequate supply and weight loads are maximized with the use of organization software.  We lease five paper barges which we use in conjunction with third party providers to transport our products to the Surrey distribution centre.  At Snowflake we balance inbound ONP paper with outbound finished product deliveries to minimize transportation costs. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | Financial Performance and Flexibility. Targeting adequate liquidity and the continued ability to finance growth and generate positive cash flow. See “Three Year History” – Note Exchange Transaction and Financing”. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Cost Competitive Manufacturing.  Our manufacturing costs are key to being competitive in a cyclical business like ours particularly with respect to furnish, energy and labour. We continually examine all areas of our business for cost reduction opportunities. See “Competitive Strengths – Cost Competitive Manufacturing and Efficient Supply Chain Management Practices”. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Product Mix and Positioning.  Developing higher-value grades and penetrating existing markets in order to diversify our product mix to maximize returns and manage fluctuation in demand.  See Competitive Strengths – Diversified Product Mix and Product Development. |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | Production and Capacity Utilization.  Focusing on improving machine productivity though initiatives such as the asset reliability program, operator technical training and reducing machine dry-end losses in order to increase production rates and reduce production downtime in order to reduce our cash costs on a per tonne basis. |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| • | Corporate Social Responsibility.  Corporate social responsibility is a core value.  Sustainability is based on achieving an appropriate balance between commerce, society and conservation.  In the context of persistent competitive and industry challenges, we are focused on strengthening relationships with employees and operating communities, improving workplace safety, and expanding supply-chain collaboration to further minimize environmental impacts. We have longstanding partnerships with external interest groups and experts, and observe international business principles such as those set out in the United Nations Global Compact.  We publicly report our sustainability results annually, following the guidelines set out in the Global Reporting Initiative.  See “Social Responsibility”. |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Paper |
|--------|-------|

| Crofton                                   | Product             |
|-------------------------------------------|---------------------|
| Paper Machine No. 1 (“PM1”)   | Specialty/Newsprint |
| Paper Machine No. 2 (“PM2”)   | Specialty           |
| Paper Machine No. 3 (“PM3”)   | Specialty/Newsprint |
|                                      |                |
| Port Alberni                              | Product             |
| Paper Machine No. 4 (“PM4”)   | Specialty           |
| Paper Machine No. 5 (“PM5”)   | Specialty           |
|                                      |                |
| Powell River                              | Product             |
| Paper Machine No. 9 (“PM9”)   | Specialty           |
| Paper Machine No. 10 (“PM10”) | Specialty           |
| Paper Machine No. 11 (“PM11”) | Specialty/Newsprint |
|                                      |                |
| Snowflake                                 | Product             |
| Paper Machine No. 1 (“PM1”)   | Specialty/Newsprint |
| Paper Machine No. 3 (“PM3”)   | Specialty/Newsprint |

----

|         |   |            |   |   | Net Production         |   |
|--------------|--------|-----------------|--------|--------|------------------------|--------|
|         |   | Annual Capacity |   |   | Year ended December 31 |   |
| Mill         |   |            |   |   | 2010                   |   |   | 2009 |   |
|         |   |            |   |   |                   |   |   |   |   |   |   |   |
| Crofton(1)   |   |            | 436    |   |                   |   | 289 |   |   |   | 358 |   |
| Elk Falls(2) |   |            | 0      |   |                   |   | 0 |   |   |   | 52 |   |
| Port Alberni |   |            | 338    |   |                   |   | 314 |   |   |   | 290 |   |
| Powell River |   |            | 479    |   |                   |   | 458 |   |   |   | 456 |   |
| Snowflake    |   |            | 337    |   |                   |   | 292 |   |   |   | 232 |   |
|         |   |            | 1,590  |   |                   |   | 1,353 |   |   |   | 1,388 |   |

| (1)   | We have indefinitely curtailed our No.1 paper machine at Crofton, displacing the equivalent of  140,000 tonnes of annual newsprint production from Crofton.  The capacity noted above has not been adjusted to reflect this indefinite curtailment. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Annual capacity for Elk Falls reflects the permanent closure of all three paper machines at Elk Falls in September, 2010. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------|

| Pulp |
|------|

|   | Recycled Content in Mechanical Paper |
|--------|--------------------------------------|

|   | Solid Waste |
|--------|-------------|

|   | Effluent |
|--------|----------|

|   | Air Emissions |
|--------|---------------|

|   | Contaminated Sites |
|--------|--------------------|

----

| $ Millions            | 2010   | 2009   | 2008   | 2007   | 2006   | Total  |
|-----------------------|--------|--------|--------|--------|--------|--------|
|                  |   |   |   |   |   |   |
| Paper (1)             | 11     | 11     | 39     | 75     | 83     | 217    |
| Pulp                  | 0      | 1      | 3      | 11     | 10     | 27     |
| Continuing Operations | 11     | 12     | 42     | 86     | 93     | 244    |

| (1) | The paper segment includes capital expenditures related to PREI.  We consolidate 100% of PREI. |
|-----|----------------------------------------------------------------------------------------------------------|

----

| December 31                                                                                                                                                                                                                                                                                                                 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  Moody’sOutlookCorporate Family ratingSenior secured debtSenior unsecured debtSpeculative Grade Liquidity Standard & Poor’sOutlookLong-term Corporate credit ratingSenior secured debtSenior unsecured debt DBRSOutlookLong Term Issuer RatingSenior secured debtSenior unsecured debt  | 2010 NegativeCaa1B3Caa2SGL-4  StableCCC+CCC+CCC-  NegativeCCCHBHCCC | 2009 NegativeB3-Caa3SGL-3  Credit Watch - NegativeCC-C  Under Review - NegativeBL-CCC | 2008 NegativeB1-B2SGL-3  NegativeB-B  Negative--BB |

----

| Month     | Price RangeLow-High ($) | Volume    |
|-----------|-------------------------|-----------|
| January   | 0.195-0.300             | 1,090,814 |
| February  | 0.205-0.265             | 991,427   |
| March     | 0.210-0.280             | 583,499   |
| April     | 0.250-0.440             | 1,637,333 |
| May       | 0.185-0.290             | 724,058   |
| June      | 0.150-0.200             | 458,877   |
| July      | 0.130-0.170             | 421,999   |
| August    | 0.090-0.145             | 1,047,048 |
| September | 0.090-0.115             | 1,116,155 |
| October   | 0.100-0.265             | 1,938,169 |
| November  | 0.160-0.260             | 979,026   |
| December  | 0.150-0.240             | 1,586,014 |

| 1. | Indenture, dated as of May 15, 2003, governing the Corporation’s 8 5/8% Senior Notes due 2011, among the Corporation, the subsidiary guarantors and Wells Fargo Bank Minnesota, National Association, as trustee (the “2003 Notes Indenture”). |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | First Supplemental Indenture amending the 2003 Notes Indenture, dated as of December 1, 2003, among the Corporation, the subsidiary guarantors named therein and Wells Fargo Bank Minnesota, National Association, as trustee. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | Indenture, dated as of March 23, 2004, governing Catalyst’s 7 3/8% Senior Notes due 2014, among Catalyst, the subsidiary guarantors and Wells Fargo Bank, National Association, as trustee (the “2004 Notes Indenture”). |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4. | Second Supplemental Indenture amending the 2003 Notes Indenture, dated as of July 14, 2006, among the Corporation, the subsidiary guarantors named therein and Wells Fargo Bank Minnesota, National Association, as trustee. |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5. | Standby Purchase Agreement dated February 10, 2008 between the Corporation, BMO Nesbitt Burns Inc. and Genuity Capital Markets. |
|----|---------------------------------------------------------------------------------------------------------------------------------|

| 6. | Oversubscription Agreement dated February 10, 2008 between the Corporation and Third Avenue International Value Fund. |
|----|-----------------------------------------------------------------------------------------------------------------------|

| 7. | Asset and Stock Purchase Agreement dated February 10, 2008 between the Corporation and Abitibi Consolidated Sales Corporation relating to the acquisition of the Snowflake mill. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8. | Dealer Manager Agreement dated February 29, 2008 between the Corporation,  BMO Nesbitt Burns Inc. and Genuity Capital Markets. |
|----|------------------------------------------------------------------------------------------------------------------------------------------|

| 9. | Subscription Receipt Agreement dated February 29, 2008 between the Corporation, BMO Nesbitt Burns Inc. on its own behalf and on behalf of Genuity Capital Markets, Third Avenue Trust on behalf of Third Avenue International Value Fund and CIBC Mellon Trust Company. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10. | Third Supplemental Indenture amending the 2003 Notes Indenture, dated as of April 10, 2008, among the Corporation, the subsidiary guarantors named therein and Wells Fargo Bank Minnesota, National Association, as trustee. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11. | Second Supplemental Indenture amending the 2004 Notes Indenture, dated as of April 10, 2008, among the Corporation, the subsidiary guarantors named therein and Wells Fargo Bank Minnesota, National Association, as trustee. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12. | Credit Agreement for the ABL Facility dated as of August 13, 2008 among the Corporation, Catalyst Paper, Catalyst Paper Holdings Inc. and Catalyst Paper (Snowflake) Inc. as Borrower, the subsidiary guarantors named therein, CIT Business Credit Canada Inc., J.P. Morgan Securities Inc., and the lender parties named therein (the “ABL Facility”). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13. | Support Agreement dated January 25, 2010 between the Corporation and certain holders of the Corporation’s 8.625% senior notes due June 15, 2011. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14. | Indenture dated as of March 10, 2010 governing the Corporation’s 11% senior secured notes due 2016 among the Corporation, the subsidiary guarantors named therein, Wilmington Trust FSB, as Trustee and Computershare Trust Company of Canada as collateral trustee. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 15. | Fourth Supplemental Indenture amending the 2003 Notes Indenture, dated as of March 10, 2010 among the Corporation, the subsidiary guarantors named therein and Wells Fargo Bank, National Association, as trustee. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 16. | Third Supplemental Indenture amending the 2004 Notes Indenture dated as of March 10, 2010 among the Corporation, the subsidiary guarantors named therein, and Wells Fargo Bank, National Association, as trustee. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 17. | First Amending Agreement amending the ABL Facility, dated as of March 10, 2010 among the Corporation, Catalyst Paper, Catalyst Paper Holdings Inc., and Catalyst Paper (Snowflake) Inc. as Borrower, the subsidiary guarantors named therein, CIT Business Credit Canada Inc., J.P. Morgan Securities Inc., and the lender parties named therein |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 18. | Second Amending Agreements amending the ABL Facility, dated as of May 11, 2010 among the Corporation, Catalyst Paper, Catalyst Paper Holdings Inc., and Catalyst Paper (Snowflake) Inc. as Borrower, the subsidiary guarantors named therein, CIT Business Credit Canada Inc., J.P. Morgan Securities Inc., and the lender parties named therein. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 19. | Indenture dated as of May 19, 2010 governing the Corporation’s Class B 11% senior secured notes due 2016 among the Corporation, the subsidiary guarantors named therein, Wilmington Trust FSB, as Trustee and Computershare Trust Company of Canada as collateral trustee. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 20. | Third Amending Agreement amending the ABL Facility, dated as of October 7, 2010 among the Corporation, Catalyst Paper, Catalyst Paper Holdings Inc., and Catalyst Paper (Snowflake) Inc. as Borrower, the subsidiary guarantors named therein, CIBC Asset-Based Lending Inc. (formerly CIT Business Credit Canada Inc.), J.P. Morgan Securities Inc., and the lender parties named therein. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Name                   | Relevant Education and Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| T.S. Chambers          | Mr. Chambers has been a chartered accountant since 1969.  He was an audit partner at PricewaterhouseCoopers LLP from 1976 to 2002 and was the managing partner of PricewaterhouseCoopers LLP’s and its predecessor’s Canadian audit practice from 1996 to 2001.  Mr. Chambers is a member of the Institute of Corporate Directors and was the chair of the British Columbia chapter of that organization from 2002 to 2004.  Mr. Chambers is the chair of three other audit committees.                                                                     |
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| D. P. Hayhurst         | Mr. Hayhurst has been a chartered accountant since 1973.  He was a tax partner at Pricewaterhouse from 1980 to 1991, the deputy national managing partner of  Pricewaterhouse from 1991 to 1996, the British Columbia managing partner of Pricewaterhouse from 1996 to 1998 and was Global Industry Leader with PricewaterhouseCoopers from 1998 to 2002.  Mr. Hayhurst is a certified director from the Institute of Corporate Directors and a Fellow of the Institute of Chartered Accountants of BC. Mr. Hayhurst is a chair/member of three other audit committees. |
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| J.G. Marshall          | Mr. Marshall is chairman of Smith Marshall, a strategic partnership which provides business consulting services to industry.  He has been  President and Chief Executive Officer of Aluma Enterprises Inc., a construction technology company, and Marshall Drummond McCall Inc., and in those capacities he actively supervised financial officers.  He is a member of one other audit committee.  He holds an MBA (Finance) from McGill University.                                                                                                         |
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| M. Dallas H. Ross | Mr. Ross is a general partner of Kinetic Capital Partners, a private investment partnership and was previously managing director, Investment Banking and Mergers & Acquisitions with ScotiaMcLeod Inc.  Mr. Ross is President & CFO of Westshore Holdings Ltd. and the CFO of Westshore Investments Ltd.  Mr. Ross holds a B. Comm. (Honors) from the University of British Columbia and qualified as a Chartered Accountant in 1984.  Mr. Ross is a chair of one other audit committee.                                                                             |

|   | (i) | to review all financial information and statutory disclosure documents prior to their approval by the Board and their distribution to shareholders and other interested persons; |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | to evaluate systems of internal control and procedures for financial reporting; |
|--------|------|---------------------------------------------------------------------------------|

|   | (iii) | to review and recommend for approval by the Board the terms of engagement and remuneration of the external auditor; |
|--------|-------|---------------------------------------------------------------------------------------------------------------------|

|   | (iv) | to monitor the performance of the external and internal auditors and assess the independence thereof; and |
|--------|------|-----------------------------------------------------------------------------------------------------------|

|   | (v) | to recommend to the Board the appointment of investment managers for the Corporation’s salaried pension plans and to monitor the performance of these managers. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                 |   | Period Ending December 31 |      |
|--------------------------------------|--------|---------------------------|-----------|
|                                 |   | 2010                      |      |   | 2009 |   |
|                                 |   |                      |      |   |   |   |   |   |
| (a)    Audit Fees     |   |  $                   | 715,000   |   |   | $ | 764,500 |   |
| (b)    Audit Related Fees  |   |                      | 293,780   |   |   |   | 195,406 |   |
| (c)    Tax Fees       |   |                      | 130,547   |   |   |   | 142,880 |   |
| (d)    All Other Fees |   |                      | —   |   |   |   | — |   |
| Total                                |   |  $                   | 1,139,327 |   |   | $ | 1,102,786 |   |

| Name and Municipality of Residence              | Principal Occupation                                                                                                                                                                         | Director Since   |
|-------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------|
|                                            |                                                                                                                                                                                         |             |
| Thomas S. ChambersVancouver, British Columbia   | President, Senior Partner Services Ltd.  Previously, Partner, PricewaterhouseCoopers                                                                                               | October 30, 2003 |
|                                            |                                                                                                                                                                                         |             |
| Kevin J. ClarkeVancouver, British Columbia      | President and Chief Executive Officer, Catalyst Paper Corporation. Previously Group President, World Color                                                                                   | June 21, 2010    |
|                                            |                                                                                                                                                                                         |             |
| William F. DicksonVancouver, British Columbia   | Corporate director.  Chairman of Fraserwood Industries Ltd.  Previously, a partner of and counsel to Lawson Lundell LLP, where he practised corporate and commercial law | June 9, 2008     |
|                                            |                                                                                                                                                                                         |             |
| Benjamin C. Duster, IVAtlanta, Georgia          | Senior Advisor, Watermark Advisors (financial advisory services).  Previously, Partner, Masson & Company LLC (financial restructuring firm)                                    | December 1, 2006 |
|                                            |                                                                                                                                                                                         |             |
| Douglas P. HayhurstVancouver, British Columbia  | Corporate director                                                                                                                                                                           | May 31, 2010     |
|                                            |                                                                                                                                                                                         |             |
| Denis JeanLac Megantic, Quebec                  | Corporate director and consultant                                                                                                                                                            | March 28, 2007   |
|                                            |                                                                                                                                                                                         |             |
| Jeffrey G. MarshallNiagara-on-the-Lake, Ontario | Chairman, Smith Marshall (business consulting services).  Previously, President and Chief Executive Officer, Aluma Enterprises Inc.                                                | December 1, 2006 |
|                                            |                                                                                                                                                                                         |             |
| Alan B. MillerNew York, New York                | Corporate director, senior counsel with Weil Gotshal & Manges LLP                                                                                                                        | May 31, 2010     |
|                                            |                                                                                                                                                                                         |             |
| Geoff PlantVancouver, British Columbia          | Partner with Heenan Blaikie LLP.                                                                                                                                                             | May 31, 2010     |
|                                            |                                                                                                                                                                                         |             |
| M. Dallas H. RossVancouver, British Columbia    | Partner with Kinetic Capital Partners, an equity investment firm                                                                                                                             | May 31, 2010     |

| Name and Municipality of Residence             | Principal Occupation                                                                                                                                                       |
|------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                           |                                                                                                                                                                       |
| David L. AdderleyVancouver, British Columbia   | Vice President and General Counsel.  Previously lawyer in private practice.                                                                                      |
|                                           |                                                                                                                                                                       |
| Brian BaardaSurrey, British Columbia           | Vice President, Finance and Chief Financial Officer.  Previously Vice President, Operations - Newsprint, ONP Procurement, Recycling.                             |
|                                           |                                                                                                                                                                       |
| Lyn BrownVancouver, British Columbia           | Vice President, Corporate Relations and Social Responsibility.  Previously, Director, Corporate Affairs and Social Responsibility.                               |
|                                           |                                                                                                                                                                       |
| Stephen BoniferroDelta, British Columbia       | Senior Vice President, Human Resources.  Previously, Vice President, Algoma Steel.                                                                               |
|                                           |                                                                                                                                                                       |
| Kevin J. ClarkeVancouver, British Columbia     | President and Chief Executive Officer. Previously Group President, World Color                                                                                             |
|                                           |                                                                                                                                                                       |
| L. Thomas CrowleyBainbridge Island, Washington | Senior Vice President, Sales and Marketing.  Previously Vice President and General Manager, Specialty Papers.                                                    |
|                                           |                                                                                                                                                                       |
| Brian JohnstonCampbell River, British Columbia | Vice President, Operations.  Previously Vice President, Operations - Speciality Paper and Pulp.                                                                  |
|                                           |                                                                                                                                                                       |
| Robert H. LindstromBurnaby, British Columbia   | Vice President, Supply Chain, Energy & Information Technology.  Previously, Vice President, Strategy, Vice President, Supply and Utilities, Pulp Operations. |
|                                           |                                                                                                                                                                       |
| Peter M. StaigerVancouver, British Columbia    | Vice President & Treasurer.  Previously, Corporate Controller & Treasurer.                                                                               |
|                                           |                                                                                                                                                                       |
| Robert L. StepusinVancouver, British Columbia  | Senior Vice President, Business Improvement. Previously, Executive Vice President, Finance and Administration, World  Color                                      |

| (a) | when our securities are in the course of a distribution pursuant to a short form prospectus or a preliminary short form prospectus which has been filed in respect of a distribution of our securities: |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (i) | one copy of our Annual Information Form, together with one copy of any document, or the pertinent pages of any document, incorporated by reference in the Annual Information Form; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | one copy of the 2010 Financial Statements together with the accompanying report of the auditor and one copy of any of our interim financial statements subsequent to the 2010 Financial Statements; |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | one copy of our Information Circular in respect of our most recent annual meeting of shareholders that involved the election of directors; and |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | one copy of any other documents that are incorporated by reference into the preliminary short form prospectus or the short form prospectus and are not required to be provided under (i) to (iii) above; or |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | at any other time, one copy of any other documents referred to in (a) (i), (ii) and (iii) above, provided we may require the payment of a reasonable charge if the request is made by a person who is not a holder of our securities. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Bleached pulp – pulp that has been purified or whitened by chemical treatment to alter colouring matter and has taken on a higher brightness characteristic. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Chemical pulp – obtained by cooking wood in solutions of various chemicals.  The principal chemical processes are sulphite and sulphate (kraft). |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | De-inked pulp – obtained by removing inks, clays and coatings, bindings and other additives from waste papers (primarily old newspapers and office waste) so that it can be reused as a source of papermaking furnish. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Kraft pulp – chemical pulp produced by an alkaline cooking process using sodium sulphate. |
|--------|------------------------------------------------------------------------------------------------------|

|   | Market pulp – pulp sold on the open market. |
|--------|---------------------------------------------------|

|   | Northern bleached softwood kraft (“NBSK”) pulp – kraft pulp produced from slow-growing coniferous trees indigenous to the forests of Canada, the northern United States and Scandinavian countries.  NBSK pulp is noted for its strength and length of fibre. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Thermomechanical pulp (“TMP”) – pulp produced from wood chips using heated mechanical processes to break the bonds between the wood fibres. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| I. | Purpose |
|----|---------|

|   | A. | The Corporation’s annual financial statements fairly present in all material respects the financial condition, results of operations and cash flows of the Corporation and to recommend to the Board whether the annual financial statements should be approved. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | B. | The financial information contained in the Corporation’s quarterly financial statements and report, Annual Report and other financial publications such as Management’s Discussion and Analysis, the Annual Information Form and information contained in any other material disclosure document is fairly presented in all material respects and to recommend to the Board whether these materials should be approved. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | C. | The Corporation has appropriate systems of internal control over the safeguarding of assets and financial reporting to ensure compliance with legal and regulatory requirements.  This would include appropriate disclosure controls and procedures that enable financial information to be recorded, processed, summarized and reported within the time periods required by law. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | D. | The external auditor is independent and qualified and the internal and external audit functions have been effectively carried out and any matter which the internal or the external auditors wish to bring to the attention of the Board has been addressed. The Committee will also recommend to the Board the re-appointment or appointment of auditors and their remuneration. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Committee will also report and make recommendations to the Board in respect of the administrative aspects of pension plan investment policy, the performance of the investment portfolios and compliance with government pension legislation. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| II. | Composition and Terms of Office |
|-----|---------------------------------|

|   | A. | Following each annual meeting of shareholders of the Corporation, the Board shall appoint not less than three directors to serve on the Committee, each of whom shall be an independent director.1 |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | B. | All members shall be financially literate, (as defined by applicable legislation). At least one member shall have accounting or related financial management expertise and, if required by applicable legislation, at least one member shall be a financial expert. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | C. | The Committee Chair shall be appointed by the Board. |
|--------|----|------------------------------------------------------|

|   | D. | The Committee Chair shall: |
|--------|----|----------------------------|

|   | (i) | provide leadership to the Committee by reinforcing and monitoring the achievement of the Committee’s objectives; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | coordinate the agenda, information packages and related events for Committee meetings with the Chief Financial Officer; and |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | chair Committee meetings. |
|--------|-------|---------------------------|

|   | E. | Any member may be removed or replaced at any time by the Board and shall cease to be a member upon ceasing to be a director of the Corporation. Each member shall hold office until the close of the next annual meeting of shareholders of the Corporation or until the member resigns or is replaced, whichever first occurs. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | F. | The Committee will meet at least four times per year. The meetings will be scheduled to permit timely review of the interim and annual financial statements. Additional meetings may be held as deemed necessary by the Chair of the Committee or as requested by any member or by the internal or external auditors. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | G. | A quorum for the transaction of business at all meetings of the Committee shall be a majority of the authorized number of members.  Questions arising at any meeting shall be determined by a majority of votes of the members present, and in case of an equality of votes the Chair shall have a second casting vote. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | H. | The Committee will meet regularly with management, the internal auditors and the external auditors in separate sessions. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------|

|   | I. | The minutes of all meetings of the Committee will be provided to the Board. |
|--------|----|-----------------------------------------------------------------------------|

|   | J. | Supporting schedules and information reviewed by the Committee will be available for examination by any director upon request to the Secretary of the Committee. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | K. | The Committee shall choose as its Secretary such person as it deems appropriate. |
|--------|----|----------------------------------------------------------------------------------|

|   | L. | The internal and external auditors shall be given notice of, and have the right to appear before and to be heard at, every meeting of the Committee, and shall appear before the Committee when requested to do so by the Committee. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| III. | Authority and Responsibilities |
|------|--------------------------------|

|   | A. | Audit Committee Terms of Reference |
|--------|----|------------------------------------|

|   | The Committee shall review and assess the adequacy of its terms of reference at least annually and submit its terms of reference to the Board for approval. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | B. | Financial Reporting Control Systems |
|--------|----|-------------------------------------|

|   | The Committee shall: |
|--------|----------------------|

|   | (i) | review reports from senior officers outlining any significant changes in financial risks facing the Corporation; |
|--------|-----|------------------------------------------------------------------------------------------------------------------|

|   | (ii) | review the management letter of the external auditors and the Corporation’s responses to suggestions made; |
|--------|------|------------------------------------------------------------------------------------------------------------------|

|   | (iii) | review any new appointments to senior positions with financial reporting responsibilities and pre-approve the hiring to a financial reporting oversight role of any person who had been employed by the Corporation’s external auditors within one year prior to the commencement of procedures for the current audit engagement; and |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | annually, as of the end of the Corporation’s fiscal year, in consultation with management, external auditors and internal auditors, evaluate the Corporation’s internal controls and procedures for financial reporting,  discuss significant financial risk exposures and the steps management has taken to monitor, control, and report such exposures and review significant findings prepared by the external auditors and the internal auditors together with management’s responses. |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | C. | Interim Financial Statements |
|--------|----|------------------------------|

|   | The Committee shall: |
|--------|----------------------|

|   | (i) | review interim financial statements with Corporation officers prior to their release and, if applicable, recommend their approval to the Board; this will include a detailed review of quarterly and year-to-date results and management’s discussion and analysis; and |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | review narrative comment and associated press releases accompanying interim financial statements. |
|--------|------|---------------------------------------------------------------------------------------------------|

|   | D. | Annual Financial Statements and Other Financial Information |
|--------|----|-------------------------------------------------------------|

|   | The Committee shall: |
|--------|----------------------|

|   | (i) | review any changes in accounting policies or financial reporting requirements that may affect the current year’s financial statements; |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | obtain summaries of significant issues regarding accounting principles, practices and significant management estimates and judgments, and other potentially difficult matters whose treatment in the annual financial statements merits advance consideration; |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | obtain draft annual financial statements in advance of the Committee meeting and assess, on a preliminary basis, the reasonableness of the financial statements in light of the analyses provided by Corporation officers; |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | review and discuss reports from external auditors on: |
|--------|------|-------------------------------------------------------|

|   |    (a) | all critical accounting policies and practices to be used; |
|--------|------------------|------------------------------------------------------------|

|   |    (b) | all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor; |
|--------|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |    (c) | other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences; and |
|--------|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |    (d) | the external auditors attestation of management’s internal control report if required by applicable law; |
|--------|------------------|----------------------------------------------------------------------------------------------------------------|

|   | (v) | review disclosures made to the Committee by the CEO and CFO during their certification process for any statutory documents about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have a significant role in the Corporation’s internal controls; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (vi) | review with management, including the CEO and CFO, management’s internal control report required to be included in any statutory document; |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (vii) | review and investigate complaints and confidential submissions to the Corporation or the Committee regarding internal controls or questionable accounting or auditing matters; |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (viii) | review a summary provided by the Corporation’s legal counsel of the status of any material pending or threatened litigation, claims and assessments; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ix) | review and discuss the annual financial statements and the auditors’ report thereon with the Corporation’s officers and the auditors; |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (x) | review the Annual Report and other annual public information documents including the Annual Information Form, Management’s Discussion and Analysis and any related press releases; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (xi) | provide to the Board a recommendation as to whether the annual financial statements should be approved; |
|--------|------|---------------------------------------------------------------------------------------------------------|

|   | (xii) | ensure that appropriate disclosure controls and procedures are in place and annually assess the adequacy of such procedures; |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------|

|   | (xiii) | review the Corporation’s various sources of risk and management’s plans to mitigate such risk including insurance, hedging, etc.; and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (xiv) | review the actuarial funding status of the pension plans managed by the Corporation. |
|--------|-------|--------------------------------------------------------------------------------------|

|   | E. | External Audit Terms of Reference, Reports, Planning and Appointment |
|--------|----|----------------------------------------------------------------------|

|   | The external auditor shall report directly to the Committee.  The Committee shall: |
|--------|----------------------------------------------------------------------------------------------|

|   | (i) | review the audit plan with the external auditors and oversee the work of the external auditors in preparing and issuing the auditors’ report and performing other audit, review or attest services for the Corporation; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | annually review and discuss with the external auditors all significant relationships they have with the Company that could impair the external auditors’ independence; |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | discuss with the external auditors, without management present, matters affecting the conduct of their audit and other corporate matters; |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | consider the external auditors’ judgments about the quality and appropriateness of the Corporation’s accounting principles; |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | (v) | recommend to the Board each year the retention or replacement of the external auditors; if there is a plan to change auditors, review all issues related to the change and the steps planned for an orderly transition; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (vi) | annually review and recommend for approval to the Board the terms of engagement and the remuneration of the external auditors; |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------|

|   | (vii) | pre-approve all non-audit services to be performed by the external auditors that are not prohibited by law (unless such approval is not required by applicable law), provided that the Chair of the Committee may pre-approve a specified type of non-audit services that have a value equal to up to CDN$100,000.  All non-audit services pre-approved by the Chair shall be presented to the Committee at its first scheduled meeting following such pre-approval; |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (viii) | ensure the rotation of the lead or coordinating audit partner having primary responsibility for the audit as required by law; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | (ix) | review and approve the Corporation’s hiring policies regarding employees and former employees of the Corporation’s present and former external auditors. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | F. | Internal Audit and Legal Compliance |
|--------|----|-------------------------------------|

|   | The Committee shall: |
|--------|----------------------|

|   | (i) | review quarterly the significant reports of the internal audit function together with management’s response to those reports; |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | annually review the mandate, planned activities, budget and resources of the internal audit function for the coming year; |
|--------|------|---------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | review legal matters with the Corporation’s legal counsel; |
|--------|-------|------------------------------------------------------------------|

|   | (iv) | establish procedures for (a) the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls and auditing matters; and (b) the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | G. | Material Disclosure Documents |
|--------|----|-------------------------------|

|   | The Committee shall review the contents of any financial information within any prospectus, information circular or other material disclosure documents prior to their release and recommend to the Board whether these materials should be approved. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | H. | Pension Plans |
|--------|----|---------------|

|   | The Committee shall: |
|--------|----------------------|

|   | (i) | establish, review and if appropriate recommend to the Board amendment of the funding and investment objectives for pension trust funds established in connection with pension plans for employees of the Corporation and its subsidiaries for the purpose of meeting the long term obligations arising from such pension plans and complying with the appropriate pension legislation; |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | review and evaluate recommendations from the Retirement Plan Committee on the appointment and termination of investment managers, external auditors, actuaries, trustees and/or custodians and approve the appointment or change in such service providers; |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | report to the Board on the investment of all pension trust funds of the Corporation and its subsidiaries at not fewer than two meetings each year; and |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iv) | approve material changes to the documentation for the Plans. |
|--------|------|--------------------------------------------------------------|

| IV. | Accountability |
|-----|----------------|

|   | A. | The Committee shall report to the Board at its next regular meeting all such action it has taken since the previous report. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------|

|   | B. | The Committee is empowered to investigate any activity of the Corporation and all employees are to co-operate as requested by the Committee. The Committee may retain and compensate independent counsel and other persons having special expertise to assist it in fulfilling its responsibilities and the Corporation shall provide sufficient funding for this purpose. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | C. | The Committee is authorized to communicate directly with the internal and external auditors and request the presence, at any meeting, of a representative from the external auditors, senior management, internal audit, legal counsel or anyone else who could contribute substantively to the subject of the meeting. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| V. | Committee Timetable |
|----|---------------------|

|   | The timetable outlined on the following pages outlines the Committee’s schedule of activities during the year. |
|--------|----------------------------------------------------------------------------------------------------------------------|

----

  

----

| Meeting Timing                                                                                                                                                                                                                                                                                            | February | April  | July   | October |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|--------|--------|---------|
| Agenda Item:                                                                                                                                                                                                                                                                                              |     |   |   |    |
|                                                                                                                                                                                                                                                                                                      |     |   |
| A. Financial Reporting Control Systems                                                                                                                                                                                                                                                                    |     |   |
| (i)       Review reports from senior officers outlining changes in financial risks.                                                                                                                                                                                              | X        | X      | X      | X       |
| (ii)      Review management letter of external auditor and Corporation’s responses to suggestions made.                                                                                                                                                                    |     | X      |   |    |
| (iii)     Review any new appointments to senior positions with financial reporting responsibilities.                                                                                                                                                                                  | X        | X      | X      | X       |
| (iv)     Obtain assurance from both internal and external auditors regarding the overall control environment and the adequacy of accounting system controls.                                                                                                                          | X        | X      | X      | X       |
| (v)      Review financial statement certification process and disclosure controls and procedures.                                                                                                                                                                                |     |   | X      |    |
| (vi)     Review procedures for receipt and treatment of complaints regarding accounting controls or auditing matters and confidential, anonymous submission            of concerns regarding accounting or auditing matters.        |     |   | X      |    |
| (vii)    Receive and review external auditors report on critical accounting policies.                                                                                                                                                                                                      |     |   | X      |    |
|                                                                                                                                                                                                                                                                                                      |
| B. Interim Financial Statements                                                                                                                                                                                                                                                                           |
| (i)       Review interim financial statements with Corporation prior to their release and recommend their approval to the Board.                                                                                                                                            | X        | X      | X      | X       |
| (ii)      Review management’s discussion and analysis and associated press releases, accompanying interim financial statements.                                                                                                                                            | X        | X      | X      | X       |
|                                                                                                                                                                                                                                                                                                      |
| C. Annual Financial Statements and Other Financial Information                                                                                                                                                                                                                                            |
| (i)      Review any changes in accounting policies or financial reporting requirements that may affect the current year’s financial statements.                                                                                                                            | X        | X      | X      | X       |
| (ii)     Obtain summaries of significant transactions, and other potentially difficult matters whose treatment in the annual financial statements merits advance          consideration.                                                      | X        | X      | X      | X       |
| (iii)    Obtain draft annual financial statements in advance of the committee meeting and assess, on a preliminary basis, the reasonableness of the financial           statements in light of the analyses provided by Corporation officers. | X        |   |   |    |
| (iv)    Review summary of the status of any material pending or threatened litigation, claims and assessments.                                                                                                                                                                             | X        | X      | X      | X       |
| (v)     Discuss the annual financial statements and the auditors’ report thereon in detail with Corporation officers and the auditors.                                                                                                                                          | X        |   |   |    |
| (vi)    Review critical accounting policies, alternative treatments of financial information and material communication between management and external auditors.                                                                                                                          | X        | X      | X      | X       |
| (vii)   Review the annual report and other annual public information documents, including management’s discussion and analysis and earnings press release.                                                                                                                                | X        |   |   |    |
| (viii)  Provide to the Board a recommendation as to whether the annual financial statements should be approved.                                                                                                                                                                                      | X        |   |   |    |
| (ix)     Review risk management plans such as insurance programs.                                                                                                                                                                                                                     |     |   |   | X       |
| (x)      Review hedging programs and policies                                                                                                                                                                                                                                    |     | X      |   |    |
| (xi)     Review actuarial funding status of Pension Plans.                                                                                                                                                                                                                            | X        |   |   |    |
| (xii)    Assess adequacy of disclosure controls and procedures.                                                                                                                                                                                                                            |     |   | X      |    |
|                                                                                                                                                                                                                                                                                                      |
| D. External Audit Terms of Reference, Reports, Planning and Appointment                                                                                                                                                                                                                                   |
| (i)      Review the audit plan with the external auditors                                                                                                                                                                                                                        |     |   |   | X       |
| (ii)     Discuss in private with the external auditors matters affecting the conduct of their audit and other corporate matters.                                                                                                                                                           | X        |   |   |    |
| (iii)    Recommend to the Board the retention or replacement of the external auditors. If there is a plan to change auditors, review all issues related to the change          and the steps planned for an orderly transition.                         | X        |   |   |    |
| (iv)    Assess independence of external auditors.  Ensure rotation of lead or coordinating audit partner having primary responsibility for the audit as required by          law.                                                             | X        |   |   |    |
| (v)     Review and approve engagement of external auditors for non-audit services.                                                                                                                                                                                                         | X        |   |   |    |
| (vi)    Review and recommend for approval to the Board the terms of engagement and the remuneration of the external auditor.                                                                                                                                                               |     | X      |   |    |
| (vii)   Review hiring policies regarding employees of external auditor.                                                                                                                                                                                                                         |     |   | X      |    |
|                                                                                                                                                                                                                                                                                                      |
| E. Internal Audit Reports and Planning                                                                                                                                                                                                                                                                    |
| (i)      Review the summary report of the internal audit function for the past year.                                                                                                                                                                                                  | X        |   |   |    |
| (ii)     Review planned activities and resources of the internal audit function for the coming year.                                                                                                                                                                                  |     | X      |   |    |
|                                                                                                                                                                                                                                                                                                      |
| F. Governance Matters                                                                                                                                                                                                                                                                                     |
| (i)      Review Audit Committee terms of reference.                                                                                                                                                                                                                              | X        |   |   |    |
| (ii)     Review key accounting and finance policies.                                                                                                                                                                                                                                  |     |   | X      |    |
|                                                                                                                                                                                                                                                                                                      |
| G. Material Disclosure Documents                                                                                                                                                                                                                                                                          |
| (i)      Review the contents of any material disclosure document prior to their release and recommend their approval to the Board.                                                                                                                                               | X        | X      | X      | X       |
|                                                                                                                                                                                                                                                                                                      |
| H. Pension Plans                                                                                                                                                                                                                                                                                          |
| (i)      Review pension committee terms of reference                                                                                                                                                                                                                             |     |   | X      |    |
| (ii).    Review pension plan Investment Guidelines and Objectives.                                                                                                                                                                                                                         |     |   | X      |    |
| (iii)    Review management reports on quarterly pension fund investment performance.                                                                                                                                                                                                       | X        | X      | X      | X       |
| (iv)    Report to board on pension fund investment performance.                                                                                                                                                                                                                            | X        |   | X      |    |

----