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                                                                    EXHIBIT 10.7


                          PROVINCE OF BRITISH COLUMBIA

                            TREE FARM LICENCE NO. 23


THIS LICENCE, dated March 1, 1995


BETWEEN:


                  THE MINISTER OF FORESTS, on behalf of
                  HER MAJESTY THE QUEEN IN RIGHT
                  OF THE PROVINCE OF BRITISH COLUMBIA,


                  (the "Minister")


AND:              POPE AND TALBOT LTD.
                  P.O. BOX 39
                  GRAND FORKS, BRITISH COLUMBIA
                  V0H 1H0


                  (the "Licensee")


WHEREAS


A.       Under Section 29 of the Forest Act, this Licence replaces Tree Farm
         Licence No. 23, dated January 1, 1980.


B.       The portion of the allowable annual cut attributable to Schedule B Land
         available to the Licensee under Tree Farm Licence No. 23, was reduced
         by 20 000 m3 under Instrument 129 and under the Forest Amendment Act,
         1988, was reduced by a further 43 000 m3 of which, in total, 50 000 m3
         was attributed to the residual Tree Farm Licence No. 23 at the time of
         the subdivision of Tree Farm Licence No. 23 to create Tree Farm Licence
         No. 55.


C.       As a result of the transfer of Tree Farm Licence No. 23 from Westshore
         Terminals Ltd. to Pope and Talbot Ltd., the portion of the allowable
         annual cut attributable to Schedule B Land, available to the Licensee,
         was reduced by 30 700 m3.

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THE PARTIES agree as follows:

1.00     GRANT OF RIGHTS AND TERM

         1.01     Subject to this Licence and the Forest Act, the Minister
                  grants the Licensee
                  (a)      the exclusive right during the term of this Licence
                           to harvest from
                           (i)      Schedule B Land, and
                           (ii)     Schedule A Land subject to a timber licence,
                           timber of the types specified in paragraph 1.02 from
                           the types of terrain specified in paragraph 1.03,
                  (b)      the right to manage
                           (i)      Schedule B Land, and
                           (ii)     Schedule A Land subject to a timber licence,
                           according to the management plan and development plan
                           in effect under this Licence, and
                  (c)      the right to enter and use
                           (i)      Schedule B Land, and
                           (ii)     Schedule A Land subject to a timber licence,
                           for the purpose of exercising a right or fulfilling
                           an obligation under this Licence.

         1.02     The following types of timber are specified for the purposes
                  of paragraph 1.01:
                  (a)      on Schedule A Land subject to a timber licence, all
                           merchantable timber; and
                  (b)      on Schedule B Land, all types of timber other than
                           deciduous types.

         1.03     The following types of terrain are specified for the purposes
                  of paragraph 1.01:
                  (a)      on Schedule A Land subject to a timber licence, all
                           terrain containing merchantable timber; and
                  (b)      on Schedule B Land, all types of terrain.

         1.04     The Licensee will not harvest timber from the Licence Area
                  except under and in accordance with a cutting permit, road
                  permit, free use permit issued to the Licensee, or special use
                  permit.

         1.05     Subject to paragraph 1.06, the Licensee will not occupy
                  Schedule B Land or Schedule A Land subject to a timber
                  licence, except under and in accordance with a cutting permit,
                  road permit, or special use permit authorizing such use or
                  occupation.

         1.06     Paragraph 1.05 does not apply to temporary occupation for the
                  purpose of

                  (a)      carrying out basic or incremental silviculture,


                  (b)      collecting inventory information,

                  (c)      doing engineering layouts and surveys,

                  (d)      carrying out protection activities, and

                  (e)      fulfilling other obligations of the Licensee under or
                           in association with this Licence.

         1.07     Each year during the term of this Licence, the Regional
                  Manager or District Manager may dispose of the following
                  volumes of timber of a type specified in paragraph 1.02 from a
                  type of terrain specified in paragraph 1.03, provided the
                  timber is within areas of Schedule B Land agreed to under
                  paragraph 1.10 or specified under paragraph 1.11:
                  (a)      subject to paragraph 1.15, 80 700 m3 of the allowable
                           annual cut, under non-replaceable timber sale
                           licences; and



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                  (b)      a volume of timber not exceeding one half of one
                           percent (0.5%) of the portion of the allowable annual
                           cut the Chief Forester determines is attributable to
                           Schedule B Land, under free use permits.

         1.08     In addition to any timber disposed of under paragraph 1.07,
                  each year during the term of this Licence, the Regional
                  Manager or District Manager may dispose of timber of a type
                  specified in paragraph 1.02 from a type of terrain specified
                  in paragraph 1.03, under timber sale licences issued pursuant
                  to a pulpwood agreement, provided

                  (a)      the timber is
                           (i)      of the type referred to in Section 34(1)(b)
                                    of the Forest Act,
                           (ii)     within a pulpwood area designated by the
                                    Minister, and
                           (iii)    within areas of Schedule B Land agreed to
                                    under paragraph 1.10 or specified under
                                    paragraph 1.11, and
                  (b)      the volume of timber disposed of does not exceed an
                           amount equal to the portion of the allowable annual
                           cut which the Chief Forester, having regard to the
                           factors and information considered in his or her most
                           recent determination of the allowable annual cut,
                           determines is attributable to timber of the type
                           referred to in clause (a)(i).

         1.09     Subject to paragraph 1.17, in addition to any timber disposed
                  of under paragraph 1.07 and 1.08, the Regional Manager or
                  District Manager may dispose of any timber in the Licence Area
                  that
                  (a)      is not of a type specified in paragraph 1.02, or
                  (b)      is not from a type of terrain specified in
                           paragraph 1.03,
          
                  provided the timber is within areas of Schedule B Land agreed
                  to under paragraph 1.10, or specified under paragraph 1.11.

         1.10     Subject to paragraph 1.11, the District Manager and the
                  Licensee will agree upon areas of Schedule B Land for the
                  purposes of paragraphs 1.07, 1.08, 1.09 and 1.16, having
                  regard to
                  (a)      the type and quality of timber on the area of
                           Schedule B Land under consideration compared to the
                           Schedule B Land as a whole,
                  (b)      the type of terrain on the area of Schedule B Land
                           under consideration compared to the Schedule B Land
                           as a whole,
                  (c)      in the case of paragraph 1.08, the type of timber
                           referred to in Section 34(1)(b) of the Forest Act,
                  (d)      in the case of paragraph 1.16, the nature of the
                           Licensee's failure to comply with the management
                           plan,
                  (e)      the management plan and development plan in effect
                           under this Licence,
                  (f)      any potential interference with the operations of the
                           Licensee under this Licence, and
                  (g)      use of the Licence Area for purposes other than
                           timber production, including use of the Licence Area
                           by
                           (i)      trappers, guide outfitters, range tenure
                                    holders, and other licensed resource users,
                                    and
                           (ii)     aboriginal people carrying out aboriginal
                                    activities.

         1.11     If under paragraph 1.10 the District Manager and the Licensee
                  are unable to agree upon areas of Schedule B Land for the
                  purposes of paragraph 1.07, 1.08, 1.09 or 1.16, the District
                  Manager or the Licensee may refer the matter to the Regional
                  Manager, in which case, the Regional Manager, subject to
                  paragraph 1.14, and having regard to

                  (a)      the factors referred to in paragraph 1.10, and

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                  (b)      the recommendations of the District Manager and the
                           Licensee,

                  will specify areas for these purposes.

         1.12     Subject to paragraphs 1.13 and 1.14, the Minister in a notice
                  given to the Licensee may delete an area from Schedule B Land
                  to enable the Regional Manager or District Manager to issue a
                  woodlot licence or community forest over the area, if the
                  Chief Forester determines that the portion of the allowable
                  annual cut attributable to the area does not exceed the volume
                  of timber referred to in subparagraph 1.07(a), having regard
                  to the factors and information considered by the Chief
                  Forester in his or her most recent determination of the
                  allowable annual cut.

         1.13     Before deleting an area under paragraph 1.12, the Minister
                  will consult the Licensee and consider any recommendations
                  made by the Licensee.

         1.14     The Regional Manager will only specify an area under paragraph
                  1.11, and the Minister will only delete an area under
                  paragraph 1.12, where the Regional Manager or the Minister, as
                  the case may be, is satisfied that specifying or deleting the
                  area will not
                  (a)      compromise the management plan and development plan
                           in effect under this Licence, or
                  (b)      unreasonably interfere with the Licensee's operations
                           under this Licence.

         1.15     Where the Minister deletes an area under paragraph 1.12,
                  (a)      the volume of timber referred to in subparagraph
                           1.07(a), and
                  (b)      the allowable annual cut,
                  is deemed to be reduced by an amount equal to the portion of
                  the allowable annual cut that the Chief Forester determines is
                  attributable to the deleted area, having regard to the factors
                  and information considered by the Chief Forester in his or her
                  most recent determination of the allowable annual cut.

         1.16     If
                  (a)      a management plan referred to in paragraph 2.01 or
                           approved under paragraph 2.27 provides that part of
                           the allowable annual cut is to be harvested from a
                           specified part of the Licence Area or from a
                           specified type of timber or terrain, and the Licensee
                           fails to comply with that provision, and
                  (b)      as a consequence, the Chief Forester, under Section
                           55.5 of the Forest Act, reduces the allowable annual
                           cut available to the Licensee,
                  then, in addition to any timber disposed of under paragraphs
                  1.07, 1.08 and 1.09, the Regional Manager or the District
                  Manager may dispose of a volume of timber, from areas of
                  Schedule B Land agreed to under paragraph 1.10 or specified
                  under paragraph 1.11, up to an amount equal to the amount by
                  which the Chief Forester reduces the allowable annual cut
                  under Section 55.5 of the Forest Act multiplied by the number
                  of years the reduction remains in effect.

         1.17     The Licensee may harvest timber in the Licence Area that
                  (a)      is not of a type specified in paragraph 1.02, or
                  (b)      is not from a type of terrain specified in 
                           paragraph 1.03, 

                  provided the Licensee is authorized to do so under a cutting
                  cutting permit issued under Part 5.00.


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         1.18     If an area of Schedule A Land is
                  (a)      subject to a timber licence that expires, or
                  (b)      deleted from a timber licence,
                  then the area is deemed to be deleted from Schedule A Land and
                  added to Schedule B Land.

         1.19     The term of this Licence is 25 years, beginning March 1, 1995.

2.00     MANAGEMENT PLANS

         2.01     A management plan
                  (a)      approved under the tree farm licence replaced by this
                           Licence, and
                  (b)      still in effect on the date immediately preceding the
                           date on which that tree farm licence expires,
                  is deemed for the remainder of the term of the management plan
                  to be the management plan in effect under this Licence.

         2.02     If there is no approved management plan in effect under the
                  tree farm licence replaced by this Licence on the date
                  immediately preceding the date on which that tree farm licence
                  expires, then solely for the purposes of
                  (a)      inviting comments under subparagraph 2.05(a) and
                           providing an assessment under subparagraph 2.08(a),
                           and
                  (b)      determining the deadlines for
                           (i)      inviting comments under subparagraph
                                    2.05(a),
                           (ii)     submitting a review strategy under
                                    subparagraph 2.05(b),
                           (iii)    providing an assessment under clause
                                    2.08(a)(i),
                           (iv)     submitting a summary under subparagraph
                                    2.08(b),
                           (v)      submitting a Statement of Management
                                    Objectives, Options and Procedures under
                                    paragraph 2.09,
                           (vi)     referring a draft management plan and
                                    inviting comments under paragraph 2.24, and
                           (vii)    submitting a proposed management plan under
                                    paragraph 2.26,

                  the parties will proceed as if the management plan which was
                  last in effect under that tree farm licence is the management
                  plan in effect under this Licence and, subject to paragraph
                  2.04, is due to expire 28 months after the date referred to in
                  paragraph 1.19.

         2.03     If the management plan deemed under paragraph 2.01 to be the
                  management plan in effect under this Licence is due to expire
                  less than 28 months after the date referred to in paragraph
                  1.19, then solely for the purpose of determining the deadlines
                  for
                  (a)      inviting comments under subparagraph 2.05(a),
                  (b)      submitting a review strategy under subparagraph
                           2.05(b), if applicable,
                  (c)      providing an assessment under clause 2.08(a)(i),
                  (d)      submitting a summary under subparagraph 2.08(b),
                  (e)      submitting a Statement of Management Objectives,
                           Options and Procedures under paragraph 2.09,
                  (f)      referring a draft management plan and inviting
                           comments under paragraph 2.24, and
                  (g)      submitting a proposed management plan under paragraph
                           2.26,
                  the parties will proceed as if, subject to paragraph 2.04, 
                  the management plan in effect under this Licence is due to 
                  expire 28 months after the date referred to in paragraph 1.19.

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         2.04     If
                  (a)      either
                           (i)      there is no approved management plan in
                                    effect under the tree farm licence replaced
                                    by this Licence on the date immediately
                                    preceding the date on which that tree farm
                                    licence expires, or
                           (ii)     the management plan deemed under paragraph
                                    2.01 to be the management plan in effect
                                    under this Licence is due to expire less
                                    than 28 months after the date referred to in
                                    paragraph 1.19, and
                  (b)      the Chief Forester is satisfied that a requirement or
                           obligation referred to in this Part has been met or
                           fulfilled under the tree farm licence replaced by
                           this Licence,
                  then the Chief Forester, in a notice given to the Licensee,
                  may
                  (c)      specify the requirement or obligation that has been
                           met or fulfilled and deem that requirement or
                           obligation to have been met or fulfilled under this
                           Licence, and
                  (d)      if a period of less than 28 months is sufficient for
                           the purpose of establishing a deadline referred to in
                           subparagraph 2.02(b) or paragraph 2.03, specify a
                           period less than 28 months which is sufficient for
                           this purpose.

         2.05     Not less than 28 months prior to the date on which the
                  management plan in effect under this Licence is due to expire,
                  (a)      the Licensee will
                           (i)      publish at least twice within a period of
                                    two consecutive weeks in a newspaper
                                    acceptable to the Regional Manager, an
                                    advertisement inviting comments regarding
                                    (A)      the management plan in effect under
                                             this Licence, and
                                    (B)      the Licensee's performance in
                                             respect of that management plan,
                                             and
                           (ii)     make a copy of the management plan in effect
                                    under this Licence available for review by
                                    interested persons
                                    (A)      during normal business hours, and
                                    (B)      at the Licensee's place of business
                                             in the vicinity of the Licence Area
                                             or, if the Licensee so chooses, at
                                             another location which is
                                             convenient to the public and
                                             acceptable to the Regional Manager,
                                    for a period of one month, or longer if the
                                    Licensee so chooses, beginning at least one
                                    week after the last publication of the
                                    advertisement referred to in clause (i), and
                  (b)      if there is no management plan in effect under this
                           Licence, or if the management plan in effect under
                           this Licence does not include a review strategy for
                           (i)      the Statement of Management Objectives,
                                    Options and Procedures referred to in
                                    paragraph 2.09,
                           (ii)     the draft management plan referred to in
                                    paragraph 2.24,
                           (iii)    the statement of objectives referred to in
                                    paragraph 3.01, or
                           (iv)     the statement of proposals referred 
                                    to in paragraph 3.02, 

                           the Licensee will submit to the Regional Manager a
                           review strategy complying with the requirements of
                           paragraph 6.01 for the Statement of Management
                           Objectives, Options and Procedures, the draft
                           management plan, the statement of objectives referred
                           to in paragraph 3.01, and the statement of proposals
                           referred to in paragraph 3.02, as applicable.


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         2.06     The Regional Manager, within two months after the date on
                  which the Regional Manager receives a review strategy
                  submitted under subparagraph 2.05(b) or 2.07(b), will in a
                  notice given to the Licensee approve the review strategy,
                  subject to such conditions as the Regional Manager considers
                  necessary or appropriate, if the Regional Manager is satisfied
                  that the review strategy meets the requirements of paragraph
                  6.01.

         2.07     Where the Regional Manager does not approve a review strategy
                  under paragraph 2.06,
                  (a)      the Regional Manager, within two months after the
                           date on which the Regional Manager receives the
                           review strategy, will specify in a notice given to
                           the Licensee why the Regional Manager has not
                           approved the review strategy, and
                  (b)      the Licensee, within one month after the date on
                           which the Licensee is given the notice referred to in
                           subparagraph (a), will submit a new or revised review
                           strategy to the Regional Manager.

         2.08     Not less than 26 months prior to the date on which the
                  management plan in effect under this Licence is due to expire,
                  (a) the Regional Manager will provide the Licensee with
                           (i)      an assessment of
                                    (A)      the management plan in effect under
                                             this Licence, and
                                    (B)      the Licensee's performance in
                                             respect of that management plan,
                                             and
                           (ii)     a list of
                                    (A)     guidelines,
                                    (B)      land and resource management plans,
                                             and
                                    (C)     local resource use plans,
                                    currently in effect, and
                  (b)      the Licensee will submit to the Regional Manager a
                           summary of the comments received by the Licensee in
                           complying with subparagraph 2.05(a).

         2.09     The Licensee, not less than 22 months prior to the date on
                  which the management plan in effect under this Licence is due
                  to expire, will submit to the Regional Manager
                  (a)      a Statement of Management Objectives, Options and
                           Procedures which has been referred to resource
                           agencies and made available for comment in accordance
                           with the review strategy approved
                           (i)      in the management plan in effect under this
                                    Licence, or
                           (ii)     under paragraph 2.06, 

                           as the case may be, and
                  (b)      a summary of
                           (i)      all comments received by the Licensee in
                                    complying with the review strategy referred
                                    to in subparagraph (a), and
                           (ii)     the modifications, if any, made to the
                                    Statement of Management Objectives, Options
                                    and Procedures, prior to its submission to
                                    the Regional Manager, in response to the
                                    comments referred to in clause (i).

         2.10     A Statement of Management Objectives, Options and Procedures
                  submitted under paragraph 2.09 or subparagraph 2.12(b) must
                  (a)      be prepared by a professional forester in accordance
                           with the applicable manual in effect four months
                           prior to the deadline for submitting the Statement of
                           Management Objectives, Options and Procedures under
                           paragraph 2.09 or subparagraph 2.12(b), as the case
                           may be,



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                  (b)      summarize the commitments which
                           (i)      were made by the Licensee
                                    (A)      in the application on which the
                                             award of the tree farm licence
                                             replaced by this Licence or any
                                             predecessor to that tree farm
                                             licence was based,
                                    (B)      in accepting the offer of the tree
                                             farm licence replaced by this
                                             Licence or any predecessor to that
                                             tree farm licence, or
                                    (C)      as a result of a request for the
                                             Minister's consent for the purposes
                                             of Section 50 of the Forest Act,
                                             and
                           (ii)     remain in effect at the time the Statement
                                    of Management Objectives, Options and
                                    Procedures is submitted,
                  (c)      identify the inadequacies, if any, in the information
                           to be included in the inventories referred to in
                           subparagraph 2.25(d),
                  (d)      propose management objectives for the Licence Area,
                           and identify management options, regarding
                           (i)      utilization of the timber resources,
                                    including harvesting methods and utilization
                                    standards suitable to the types of timber
                                    and terrain specified in paragraphs 1.02 and
                                    1.03,
                           (ii)     conservation of the non-timber values and
                                    resources, including visual quality,
                                    biodiversity, soils, water, recreation
                                    resources, cultural heritage resources,
                                    range land, and wildlife and fish habitats,
                           (iii)    integration of harvesting activities with
                                    use of the Licence Area for purposes other
                                    than timber production, including use of the
                                    Licence Area by
                                    (A)      trappers, guide outfitters, range
                                             tenure holders, and other licensed
                                             resource users, and
                                    (B)      aboriginal people carrying out
                                             aboriginal activities,
                           (iv)     forest fire prevention and suppression,
                                    prescribed fire, and fuel management,
                           (v)      forest health, including disease and pest
                                    management,
                           (vi)     road construction, maintenance and
                                    deactivation,
                           (vii)    basic silviculture and, if applicable,
                                    incremental silviculture, and 
                           (viii)   any issues identified
                                    (A)      by the Licensee,
                                    (B)      by the Regional Manager in the
                                             assessment referred to in clause
                                             2.08(a)(i), or
                                    (C)      in the comments referred 
                                             to in subparagraph 2.08(b), 
        
                           which are consistent with the guidelines, land and 
                           resource management plans, and local resource use 
                           plans referred to in clause 2.08(a)(ii), and the 
                           commitments referred to in subparagraph (b),
                  (e)      identify inadequacies referred to in subparagraph (c)
                           and issues referred to in clause (d)(viii) which will
                           require further study or analysis, and indicate what,
                           if any, studies or analyses the Licensee will carry
                           out,

                  (f)      identify issues referred to in clause (d)(viii) which
                           will be addressed in the management objectives and
                           strategies in the draft management plan referred to
                           in paragraph 2.24 and proposed management plan
                           referred to in paragraph 2.26, and

                  (g)      identify management options referred to in
                           subparagraph (d) which the Licensee proposes to
                           assess in the timber supply analysis.


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         2.11     The Regional Manager, within three months after the date on
                  which the Regional Manager receives a Statement of Management
                  Objectives, Options and Procedures submitted under paragraph
                  2.09, or two months after the date on which the Regional
                  Manager receives a Statement of Management Objectives, Options
                  and Procedures submitted under subparagraph 2.12(b), will in a
                  notice given to the Licensee accept the Statement of
                  Management Objectives, Options and Procedures, subject to such
                  conditions as the Regional Manager considers necessary or
                  appropriate, if
                  (a)      the Statement of Management Objectives, Options and
                           Procedures meets the requirements of paragraph 2.10,
                           and
                  (b)      the Regional Manager is satisfied that the Licensee
                           has
                           (i)      adequately addressed the inadequacies
                                    referred to in subparagraph 2.10 (c), the
                                    issues referred to in clause 2.10(d)(viii),
                                    and the comments referred to in clause
                                    2.09(b)(i), and
                           (ii)     selected appropriate management options for
                                    assessment in the timber supply analysis.

         2.12     Where the Regional Manager does not accept a Statement of
                  Management Objectives, Options and Procedures under paragraph
                  2.11,

                  (a)      the Regional Manager, within three months after the
                           date on which the Regional Manager receives a
                           Statement of Management Objectives, Options and
                           Procedures submitted under paragraph 2.09, or two
                           months after the date on which the Regional Manager
                           receives a Statement of Management Objectives,
                           Options and Procedures submitted under subparagraph
                           2.12(b), will specify in a notice given to the
                           Licensee why the Regional Manager has not accepted
                           the Statement of Management Objectives, Options and
                           Procedures, and

                  (b)      the Licensee, within one month after the date on
                           which the Licensee is given the notice referred to in
                           subparagraph (a), will submit a new or revised
                           Statement of Management Objectives, Options and
                           Procedures to the Regional Manager.

         2.13     Where the Regional Manager accepts a Statement of Management
                  Objectives, Options and Procedures under paragraph 2.11, the
                  Licensee, within three months after the date on which the
                  Statement of Management Objectives, Options and Procedures is
                  accepted, will submit a Timber Supply Analysis Information
                  Package to the Timber Supply Forester.

         2.14     A Timber Supply Analysis Information Package submitted under
                  paragraph 2.13 must
                  (a)      include the information required in the applicable
                           manual in effect six months prior to the deadline for
                           submitting the Timber Supply Analysis Information
                           Package,
                  (b)      identify assumptions the Licensee proposes to
                           incorporate into the timber supply analysis referred
                           to in subparagraph 2.17(a) which, subject to
                           paragraph 2.33, are consistent with
                           (i)      the management objectives proposed in the
                                    Statement of Management Objectives, Options
                                    and Procedures accepted under paragraph
                                    2.11, and
                           (ii)     the guidelines, land and resource management
                                    plans and local resource use plans referred
                                    to in clause 2.08(a)(ii),


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<PAGE>   10
                  (c)      without restricting the generality of subparagraph
                           (b), identify assumptions the Licensee proposes to
                           incorporate into the timber supply analysis referred
                           to in subparagraph 2.17(a) regarding
                           (i)      the inventory of timber and non-timber
                                    resources in the Licence Area,
                           (ii)     growth and yield,
                           (iii)    regeneration delays,
                           (iv)     silviculture treatments,
                           (v)      integrated resource management constraints,
                           (vi)     harvesting methods and utilization
                                    standards, and
                           (vii)    the operable land base,
                  (d)      describe the methodology, including the computer
                           model, if any, that the Licensee proposes to use in
                           the timber supply analysis, including a description
                           of the extent to which the assumptions referred to in
                           subparagraphs (b) and (c) are reflected in the
                           methodology,
                  (e)      include information which supports the assumptions
                           referred to in subparagraphs (b), (c) and (d),
                  (f)      describe how the Licensee proposes to address in the
                           timber supply analysis any inadequacies referred to
                           in subparagraph 2.10(c), and
                  (g)      include any other information readily available to
                           the Licensee, which
                           (i)      the Licensee, or
                           (ii)     the Timber Supply Forester, in a notice
                                    given to the Licensee within one month after
                                    the date on which the Licensee is given the
                                    notice accepting the Statement of Management
                                    Objectives, Options and Procedures under
                                    paragraph 2.11,
                           considers relevant to an assessment of the impact on
                           the timber supply of the management options referred
                           to subparagraph 2.10(g).

         2.15     The Timber Supply Forester, within three months after the date
                  on which the Timber Supply Forester receives the Timber Supply
                  Analysis Information Package submitted under paragraph 2.13,
                  or two months after the date on which the Timber Supply
                  Forester receives the information or proposals submitted under
                  subparagraph 2.16(b), will in a notice given to the Licensee
                  accept the assumptions and the methodology referred to in
                  paragraph 2.14 and, if applicable, subparagraph 2.16(b) for
                  use in the timber supply analysis, subject to such conditions
                  as the Timber Supply Forester considers necessary or
                  appropriate, if
                  (a)      the requirements of paragraph 2.14 and, if
                           applicable, subparagraph 2.16(b) have been met, and
                  (b)      the Timber Supply Forester is satisfied with the
                           information provided in support of the assumptions
                           and methodology.

         2.16     Where the Timber Supply Forester does not accept both the
                  assumptions and the methodology under paragraph 2.15,

                  (a)      the Timber Supply Forester, within three months after
                           the date on which the Timber Supply Forester receives
                           the Timber Supply Analysis Information Package
                           submitted under paragraph 2.13, or two months after
                           the date on which the Timber Supply Forester receives
                           the information or proposals submitted under
                           subparagraph 2.16(b), will specify in a notice given
                           to the Licensee why the Timber Supply Forester has
                           not accepted the assumptions, the methodology or
                           both, and

                  (b)      the Licensee, within one month after the date on
                           which the Licensee is given the notice referred to in
                           subparagraph (a), will

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<PAGE>   11
                           (i)      propose new or revised assumptions,
                           (ii)     propose a new or revised methodology, and
                           (iii)    submit further information in support of the
                                    assumptions, the methodology or both,
                           as required by the Timber Supply Forester.

         2.17     Where the Timber Supply Forester accepts the assumptions and
                  the methodology under paragraph 2.15, the Licensee, within
                  three months after the date on which the assumptions and the
                  methodology are accepted, will submit
                  (a)      a timber supply analysis to the Timber Supply
                           Forester, and
                  (b)      a 20-year plan to the District Manager.

         2.18     A timber supply analysis submitted under subparagraph 2.17(a)
                  or 2.22(b) must
                  (a)      assess the impact of the management options referred
                           to in subparagraph 2.10(g) on the timber supply, and
                  (b)      subject to paragraph 2.33,
                           (i)      be based on the assumptions, and
                           (ii)     use the methodology,
                           accepted by the Timber Supply Forester under
                           paragraph 2.15.

         2.19     A 20-year plan submitted under subparagraph 2.17(b) or 2.23(b)
                  must
                  (a)      identify
                           (i)      the net operable land base,
                           (ii)     harvested areas,
                           (iii)    existing and proposed road access within the
                                    net operable landbase, and
                           (iv)     areas subject to specific integrated
                                    resource management constraints,
                  (b)      categorize areas within the operable land base
                           referred to in clause (a)(i) by
                           (i)      the harvesting methods suitable to the
                                    terrain, and
                           (ii)     the type and, where the information is
                                    available to the Licensee, quality of
                                    timber, and
                  (c)      in support of the timber supply analysis, set out a
                           sequence of cut blocks in 5 year increments over a
                           period of 20 years, or longer if the Licensee so
                           chooses, which, subject to paragraph 2.33, is
                           (i)      based on a management option selected by the
                                    Licensee from the management options
                                    referred to in subparagraph 2.18(a), and
                           (ii)     consistent with
                                    (A)      the management objectives proposed
                                             in the Statement of Management
                                             Objectives, Options and Procedures
                                             accepted under paragraph 2.11, and
                                    (B)      the guidelines, land and resource
                                             management plans and local resource
                                             use plans referred to in clause
                                             2.08(a)(ii).

         2.20     The Timber Supply Forester, within three months after the date
                  on which the Timber Supply Forester receives a timber supply
                  analysis submitted under subparagraph 2.17(a), or two months
                  after the date the Timber Supply Forester receives a timber
                  supply analysis submitted under subparagraph 2.22(b), will

                  (a)      in a notice given to the Licensee accept the timber
                           supply analysis, subject to such conditions as the
                           Timber Supply Forester considers necessary or
                           appropriate, if the timber supply analysis meets the
                           requirements of paragraph 2.18, and

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<PAGE>   12
                  (b)      where the Timber Supply Forester accepts the timber
                           supply analysis under subparagraph (a), provide the
                           Licensee with an assessment of the strengths and
                           weakness of the timber supply analysis.

         2.21     The District Manager, within three months after the date on
                  which the District Manager receives a 20-year plan submitted
                  under subparagraph 2.17(b), or two months after the date on
                  which the District Manager receives a 20-year plan submitted
                  under 2.23(b), will
                  (a)      in a notice given to the Licensee accept the 20-year
                           plan, subject to such conditions as the District
                           Manager considers necessary or appropriate, if the
                           20-year plan meets the requirements of paragraph
                           2.19, and
                  (b)      where the District Manager accepts the 20-year plan
                           under subparagraph (a), provide the Licensee with an
                           assessment of the strengths and weakness of the
                           20-year plan.

         2.22     Where the Timber Supply Forester does not accept a timber
                  supply analysis under paragraph 2.20,
                  (a)      the Timber Supply Forester, within three months after
                           the date on which the Timber Supply Forester receives
                           a timber supply analysis submitted under subparagraph
                           2.17(a), or two months after the date on which the
                           Timber Supply Forester receives a timber supply
                           analysis submitted under subparagraph 2.22(b), will
                           specify in a notice given to the Licensee why the
                           Timber Supply Forester has not accepted the timber
                           supply analysis, and
                  (b)      the Licensee, within one month after the date on
                           which the Licensee is given the notice referred to in
                           subparagraph (a), will submit a new or revised timber
                           supply analysis to the Timber Supply Forester.

         2.23     Where the District Manager does not accept a 20-year plan
                  under paragraph 2.21,
                  (a)      the District Manager, within three months after the
                           date on which the District Manager receives a 20-year
                           plan submitted under subparagraph 2.17(b), or two
                           months after the date on which the District Manager
                           receives a 20-year plan submitted under 2.23(b), will
                           specify in a notice given to the Licensee why the
                           District Manager has not accepted the 20-year plan,
                           and
                  (b)      the Licensee, within one month after the date on
                           which the Licensee is given the notice referred to in
                           subparagraph (a), will submit a new or revised
                           20-year plan to the District Manager.

         2.24     Not less than six months prior to the date on which the
                  management plan in effect under this Licence is due to expire,
                  the Licensee will
                  (a)      refer a draft management plan to the Regional Manager
                           for comment, and
                  (b)      at the same time, refer the draft management plan
                           referred to in subparagraph (a) to resource agencies
                           and make it available for comment in accordance with
                           the review strategy approved
                           (i)      in the management plan in effect under this
                                    Licence, or
                           (ii)     under paragraph 2.06,

                           as the case may be.

         2.25     A draft management plan referred to in paragraph 2.24 or
                  subparagraph 2.37(a) and a proposed management plan submitted
                  by the Licensee under paragraph 2.26, subparagraph 2.30(b), or
                  subparagraph 2.37(b) must
                  (a)      be prepared by a professional forester in accordance
                           with the applicable manual in effect four months
                           prior to the deadline for submitting the draft
                           management plan under paragraph 2.24 or subparagraph
                           2.37(a), as the case may be,

                                                                         Page 12
<PAGE>   13
                  (b)      be signed and sealed by the professional forester who
                           prepared it, and signed by the Licensee or an
                           authorized signatory of the Licensee,
                  (c)      be consistent with this Licence and, subject to
                           paragraph 2.33, the Statement of Management
                           Objectives, Options and Procedures accepted under
                           paragraph 2.11,
                  (d)      include inventories, meeting the standards and
                           presented in the format set or approved in the
                           applicable manual in effect six months prior to the
                           deadline for submitting the Timber Supply Analysis
                           Information Package, of
                           (i)      the forest and recreation resources in the
                                    Licence Area, based on information collected
                                    for this purpose by the Licensee, including
                                    information relating to visual quality
                                    objectives, sensitive soils, recreation
                                    sites, and the type of timber and terrain,
                                    and
                           (ii)     the fisheries, wildlife, range and cultural
                                    heritage resources of the Licence Area,
                                    based on the best information readily
                                    available to the Licensee,
                  (e)      include proposals for updating the inventories
                           referred to in subparagraph (d) and, if applicable,
                           addressing inadequacies in the inventory information,
                  (f)      include proposals for
                           (i)      developing timber harvesting operations on
                                    the Licence Area,
                           (ii)     protecting the forest in the Licence Area
                                    from damage by fire, pests, wind and
                                    disease, and
                           (iii)    carrying out
                                    (A)      basic silviculture required under
                                             the Forest Act, and
                                    (B)      such incremental silviculture as
                                             the Licensee considers desirable,
                  (g)      specify measures to be taken, specifications to be
                           followed, and standards to be met by the Licensee in
                           the Licence Area to provide for
                           (i)      utilization of the timber resources,
                                    including harvesting methods and utilization
                                    standards suitable to the types of timber
                                    and terrain specified in paragraphs 1.02 and
                                    1.03,
                           (ii)     conservation of the non-timber values and
                                    resources, including visual quality,
                                    biodiversity, soils, water, recreation
                                    resources, cultural heritage resources,
                                    range land, and wildlife and fish habitats,
                           (iii)    integration of harvesting activities with
                                    use of the Licence Area for purposes other
                                    than timber production, including use of the
                                    Licence Area by
                                    (A)      trappers, guide outfitters, range
                                             tenure holders, and other licensed
                                             resource users, and
                                    (B)      aboriginal people carrying out
                                             aboriginal activities,
                           (iv)     forest fire prevention and suppression,
                                    prescribed fire, and fuel management,
                           (v)      forest health, including disease and pest
                                    management,
                           (vi)     road construction, maintenance and
                                    deactivation,
                           (vii)    basic silviculture and, if applicable,
                                    incremental silviculture, and
                           (viii)   anything else relating to the management,
                                    development and use of the Licence Area as
                                    the Chief Forester requires,
                           which, subject to paragraph 2.33, meet or, if the
                           Licensee so chooses, exceed the applicable measures,
                           standards or specifications contained or reflected in
                           the guidelines, land and resource management plans,
                           and local resource use plans referred to in clause
                           2.08(a)(ii),
                  (h)      specify measures to be taken by the Licensee to
                           identify and consult with trappers, guide outfitters,
                           range tenure holders, and other licensed resource
                           users operating in the Licence Area,

                                                                         Page 13
<PAGE>   14
                  (i)      specify measures to be taken by the Licensee to
                           identify and consult with aboriginal people who are
                           or who may be carrying out aboriginal activities in
                           the Licence Area,
                  (j)      include
                           (i)      the Statement of Management Objectives,
                                    Options and Procedures accepted under
                                    paragraph 2.11, including revisions, if any,
                                    required under paragraph 2.33,
                           (ii)     either
                                    (A)      the timber supply analysis accepted
                                             under paragraph 2.20, together with
                                             the assessment referred to in
                                             subparagraph 2.20(b), or
                                    (B)      where no timber supply analysis has
                                             been accepted, a draft timber
                                             supply analysis prefaced with a
                                             statement to the effect that the
                                             draft timber supply analysis has
                                             not been submitted under
                                             subparagraph 2.17(a) or accepted
                                             under paragraph 2.20, as
                                             applicable, and
                           (iii)    either
                                    (A)      the 20-year plan accepted under
                                             paragraph 2.21, together with the
                                             assessment referred to in
                                             subparagraph 2.21(b), or
                                    (B)      where no 20-year plan has been
                                             accepted, a draft 20-year plan
                                             prefaced with a statement to the
                                             effect that the draft 20-year plan
                                             has been not submitted under
                                             subparagraph 2.17(b) or accepted
                                             under paragraph 2.21, as
                                             applicable,
                  (k)      assess the impact the draft management plan or
                           proposed management plan, as the case may be, will
                           have on factors such as harvest levels, economic
                           opportunies, the number of persons employed by the
                           Licensee and contractors of the Licensee, and the
                           conservation of non-timber values,
                  (l)      highlight the key similarities and differences
                           between the draft management plan or the proposed
                           management plan, as the case may be, and the
                           management plan in effect or last in effect under
                           this Licence, and in a summary form compare 
                           (i)      the impact, if any, that implementation of
                                    the management plan in effect or last in
                                    effect under this Licence had, and
                           (ii)     the impact, if any, that the Licensee
                                    anticipates implementation of the draft
                                    management plan or the proposed management
                                    plan, as the case may be, will have
                           on factors such as those referred to in subparagraph
                           (k),
                  (m)      propose a review strategy, complying with the
                           requirements of paragraphs 6.01 and 6.03, for
                           (i)      the next Statement of Management Objectives,
                                    Options and Procedures to be submitted under
                                    paragraph 2.09,
                           (ii)     the next draft management plan to be
                                    submitted under paragraph 2.24,
                           (iii)    the next statement of objectives referred to
                                    in paragraph 3.01,
                           (iv)     the next statement of proposals referred to
                                    in paragraph 3.02, and
                           (v)      proposed development plans to be submitted
                                    under Part 4.00,
                  (n)      if applicable, provide that part of the allowable
                           annual cut will be harvested from a specified part of
                           the Licence Area, or from a specified type of timber
                           or terrain,
                  (o)      include such other information on the development,
                           management and use of the Licence Area as the Chief
                           Forester requires, and
                  (p)      if required in the manual referred to in subparagraph
                           (a), provide some or all of the information referred
                           to in this paragraph in the form of maps meeting the
                           requirements of the manual.

                                                                         Page 14
<PAGE>   15
         2.26     The Licensee, not less than three months prior to the date on
                  which the management plan in effect under this Licence is due
                  to expire, will submit to the Chief Forester
                  (a)      a proposed management plan which is based on the
                           draft management plan referred to in paragraph 2.24,
                           and
                  (b)      a summary of
                           (i)      all comments
                                    (A)      provided by the Regional Manager
                                             within two months of date on which
                                             the Regional Manager receives a
                                             draft management plan referred to
                                             the Regional Manager in accordance
                                             with the requirements of
                                             subparagraph 2.24(a), and
                                    (B)      received by the Licensee in
                                             complying with the requirements of
                                             subparagraph 2.24(b), and
                           (ii)     the differences, if any, between the draft
                                    management plan and the proposed management
                                    plan, including differences resulting from
                                    modifications made in response to the
                                    comments referred to in clause (i).

         2.27     Subject to paragraphs 2.28 and 2.29, the Chief Forester,
                  within three months after the date on which the Chief Forester
                  receives a proposed management plan submitted under paragraph
                  2.26, subparagraph 2.30(b) or subparagraph 2.37(b), will in a
                  notice given to the Licensee approve the proposed management
                  plan, subject to such conditions as the Chief Forester
                  considers necessary or appropriate, if
                  (a)      the Chief Forester is satisfied that the proposed
                           management plan
                           (i)      meets the requirements of paragraph 2.25 and
                                    subparagraph 2.26(a) or clause 2.37(b)(i),
                                    as the case may be, and
                           (ii)     adequately addresses the comment referred to
                                    in clause 2.26(b)(i) or subclause
                                    2.37(b)(ii)(A), as the case may be, and
                  (b)      the proposed management plan includes
                           (i)      inventories referred to subparagraph
                                    2.25(d),
                           (ii)     proposals referred to in subparagraph
                                    2.25(e) and (f),
                           (iii)    measures referred to in subparagraphs
                                    2.25(h) and (i), and
                           (iv)     a review strategy referred to in
                                    subparagraph 2.25(m),

                           which are satisfactory to the Chief Forester.

         2.28     The Chief Forester, in a notice given to the Licensee, may
                  decline to approve a proposed management plan under paragraph
                  2.27 until such time as
                  (a)      a timber supply analysis is accepted under paragraph
                           2.20, or
                  (b)      a 20-year plan is accepted under paragraph 2.21.

         2.29     Where a timber supply analysis accepted under paragraph 2.20
                  or a 20-year plan accepted under paragraph 2.21 was not
                  included in the draft management plan referred to in paragraph
                  2.24, before approving a proposed management plan under
                  paragraph 2.27, the Chief Forester, in a notice given to the
                  Licensee, may require the Licensee to refer the timber supply
                  analysis or the 20-year plan, as the case may be, and make it
                  available for comment in accordance with the review strategy
                  referred to in paragraph 2.24.

         2.30     Where the Chief Forester does not approve a proposed
                  management plan under paragraph 2.27,

                  (a)      subject to paragraphs 2.28 and 2.29, the Chief
                           Forester, within three months after the date on which
                           the Chief Forester receives the proposed management
                           plan, will specify in a notice given to the Licensee
                           why the Chief Forester has not approved the proposed
                           management plan, and


                                                                         Page 15
<PAGE>   16
                  (b)      the Licensee, within one month after the date on
                           which the Licensee is given the notice referred to in
                           subparagraph (a), will submit a new or revised
                           proposed management plan to the Chief Forester.

         2.31     Subject to paragraphs 2.28 and 2.29, if
                  (a)      the Chief Forester, within three months after the
                           date on which the Chief Forester receives a proposed
                           management plan submitted under paragraph 2.26, has
                           neither
                           (i)      approved the proposed management plan under
                                    paragraph 2.27, nor
                           (ii)     given the Licensee a notice referred to in
                                    subparagraph 2.30(a), and
                  (b)      there is a management plan in effect under this
                           Licence,

                  then the term of that management plan referred to in
                  subparagraph (b) is deemed to be extended until such time as
                  the Chief Forester approves the proposed management plan under
                  paragraph 2.27, or gives the Licensee a notice referred to in
                  subparagraph 2.30(a), as the case may be.

         2.32     If the Chief Forester is satisfied that the Licensee or a
                  ministry officer is trying in good faith to fulfill a
                  requirement or obligation under this Part, but for reasons
                  beyond the control of the Licensee or the ministry officer, as
                  the case may be, cannot

                  (a)      meet a deadline referred to in this Part, or

                  (b)      where there is a management plan in effect under this
                           Licence, fulfill the requirement or obligation before
                           the management plan is due to expire, 
                  then the Chief Forester, in a notice given to the Licensee,
                  will, as applicable,
                  (c)      extend the deadline by a period the Chief Forester
                           considers sufficient to allow the ministry officer or
                           the Licensee, as the case may be, to fulfill the
                           requirement or obligation, or
                  (d)      extend the term of the management plan by a period
                           the Chief Forester considers sufficient to allow the
                           ministry officer or the Licensee, as the case may be,
                           to fulfill the requirement or obligation in
                           accordance with applicable deadlines,
                  subject to such conditions as the Chief Forester considers
                  necessary or appropriate.

         2.33     If the Licensee
                  (a)      submits a Timber Supply Analysis Information Package
                           under paragraph 2.13, or the information or proposals
                           referred to in subparagraph 2.16(b) more than eight
                           months,
                  (b)      submits a timber supply analysis under subparagraph
                           2.17(a) or 2.22(b), or a 20-year plan under
                           subparagraph 2.17(b) or 2.23(b) more than 13 months,
                  (c)      submits a draft management plan under paragraph 2.24
                           more than 19 months, or
                  (d)      submits a proposed management plan under paragraph
                           2.26 or subparagraph 2.30(b) more than 22 months,
                  after the date on which the Statement of Management
                  Objectives, Options and Procedures is accepted under paragraph
                  2.11, the Chief Forester, in a notice given to the Licensee
                  within one month of the date on which the applicable item is
                  submitted, may require the Licensee to amend both the
                  Statement of Management Objectives, Options and Procedures,
                  and one or more the items referred to in subparagraph (a)
                  through (d) inclusive, to the extent required to ensure
                  consistency with 
                  (e)      guidelines,
                  (f)      land and resource management plans, and
                  (g)      local resource use plans, 
                  in effect on the date the Licensee is given the notice.


                                                                         Page 16
<PAGE>   17
         2.34     If the Chief Forester considers that
                  (a)      damage to timber in the Licence Area as a result of
                           fire, flood, wind, insects, disease, or other causes,
                  (b)      a determination by the Chief Forester that operations
                           conducted in accordance with the management plan are
                           causing or could cause serious damage to the natural
                           environment, including soils, fisheries, wildlife,
                           water, range, and recreation resources,
                  (c)      approval, amendment or replacement of a land and
                           resource management plan,
                  (d)      approval, amendment or replacement of a local
                           resource use plan,
                  (e)      a change in the allowable annual cut as a result of a
                           determination by the Chief Forester under the Forest
                           Act, or
                  (f)      other special circumstances,
                  have rendered the management plan in effect under the Licence
                  inadequate, the Chief Forester, in a notice given to the
                  Licensee, may require that the management plan be amended.

         2.35     A notice referred to in paragraph 2.34 must specify
                  (a)      why the Chief Forester considers the management plan
                           has been rendered inadequate,
                  (b)      the extent to which the management plan is
                           inadequate, and
                  (c)      the changes required by the Chief Forester.

         2.36     Where the Chief Forester gives the Licensee a notice referred
                  to in paragraph 2.34, the Licensee, within three months after
                  the date on which the notice is given, will submit for the
                  Chief Forester's approval a proposed amendment to the
                  management plan, which incorporates the changes referred to in
                  subparagraph 2.35(c), to have effect during the unexpired term
                  of the management plan.

         2.37     If the Licensee fails to comply with the requirements of
                  paragraph 2.36, the management plan in effect under this
                  Licence will expire three months after the date on which the
                  notice referred to in paragraph 2.34 is given to the Licensee,
                  in which case, 
                  (a)      within three months after the date on which the
                           management plan expires under this paragraph, the
                           Licensee will
                           (i)      refer a draft management plan to the
                                    Regional Manager and
                           (ii)     at the same time, refer the draft management
                                    plan referred to in clause (i) to resource
                                    agencies and make it available for comment
                                    in accordance with the review strategy
                                    referred to in subparagraph 2.24(b), and
                  (b)      within six months after the date on which the
                           management plan expires under this paragraph, the
                           Licensee will submit to the Chief Forester
                           (i)      a proposed management plan which is based on
                                    the draft management plan referred to in
                                    subparagraph (a), and
                           (ii)     a summary of
                                    (A)      all comments received by the
                                             Licensee in complying with the
                                             requirements of subparagraph (a),
                                             and
                                    (B)      the differences, if any, between
                                             the draft management plan and the
                                             proposed management plan, including
                                             differences resulting from
                                             modifications made in response to
                                             the comments referred to in
                                             subclause (A).

         2.38     The Licensee will implement the management plan in effect
                  under this Licence.

         2.39     A management plan is deemed to be part of this Licence.


                                                                         Page 17
<PAGE>   18
         2.40     Subject to paragraphs 2.31, 2.32, and 2.37, a management plan
                  expires five years after the date on which it takes effect.

3.00     OBJECTIVES AND STRATEGIES FOR EMPLOYMENT AND ECONOMIC OPPORTUNITIES

         3.01     When the Licensee submits a Statement of Management
                  Objectives, Options and Procedures under paragraph 2.09, the
                  Licensee will also submit to the Regional Manager
                  (a)      a statement of the Licensee's objectives regarding
                           (i)      employment of people living in or near the
                                    Licence Area, including aboriginal people,
                                    and
                           (ii)     economic opportunities available to people
                                    living in or near the Licence Area,
                                    including aboriginal people, in respect of
                                    the timber harvested under this Licence and
                                    the Licensee's operations under and in
                                    respect of this Licence,
                           which has been referred to resource agencies and made
                           available for comment in accordance with the review
                           strategy approved
                           (iii)    in the management plan in effect under this
                                    Licence, or
                           (iv)     under paragraph 2.06, as the case may be,
                                    and
                  (b)      a summary of
                           (i)      all comments received by the Licensee in
                                    complying with the review strategy referred
                                    to in subparagraph (a), and
                           (ii)     the modifications, if any, made to the
                                    statement of objectives, prior to its
                                    submission to the Regional Manager, in
                                    response to the comments referred to in
                                    clause (i).

         3.02     When the Licensee refers a draft management plan and makes it
                  available for comment under paragraph 2.24, the Licensee will
                  also refer and make available in accordance with
                  (a)      the review strategy approved in the management plan
                           in effect under this Licence, or
                  (b)      under paragraph 2.06,

                  as the case may be, a statement of the Licensee's proposals
                  for meeting the objectives set out in the statement of
                  objectives submitted under paragraph 3.01.

         3.03     When the Licensee submits a proposed management plan under
                  paragraph 2.26, the Licensee will also submit to the Chief
                  Forester 
                  (a)      a statement of proposals based on the statement of
                           proposals referred to in paragraph 3.02, and
                  (b)      a summary of
                           (i)      all comments received by the Licensee in
                                    complying with the requirements of paragraph
                                    3.02, and
                           (ii)     the differences, if any, between the
                                    statement of proposals submitted under this
                                    paragraph and the statement of proposals
                                    referred to in paragraph 3.02, including
                                    differences resulting from modifications
                                    made in response to the comments referred to
                                    in clause (i).


                                                                         Page 18
<PAGE>   19
4.00     DEVELOPMENT PLANS

         4.01     A five-year development plan approved under the tree farm
                  licence replaced by this Licence and still in effect on the
                  date immediately preceding the date on which that tree farm
                  licence expires is deemed for the remainder of the term of the
                  five-year development plan to be the development plan in
                  effect under this Licence.

         4.02     If there was no approved five-year development plan in effect
                  under the tree farm licence replaced by this Licence on the
                  date immediately preceding the date on which that tree farm
                  licence expires, then the Licensee, not later than six months
                  after the date referred to in paragraph 1.19, will submit for
                  the District Manager's approval a proposed development plan
                  for the Licence Area.

         4.03     The Licensee, not less than three months prior to the date on
                  which the development plan in effect under this Licence is due
                  to expire will submit for the District Manager's approval a
                  proposed development plan for the Licence Area.

         4.04     Where the Chief Forester gives the Licensee a notice referred
                  to in paragraph 2.34, the Chief Forester may at the same time
                  give the Licensee a notice requiring the Licensee to amend the
                  development plan in effect under this Licence to the extent
                  required to ensure consistency with the changes referred to in
                  subparagraph 2.35(c).

         4.05     Where the Chief Forester gives the Licensee a notice referred
                  to in paragraph 4.04, the Licensee, within three months after
                  the date on which the notice is given, will submit for the
                  District Manager's approval a proposed amendment to the
                  development plan to have effect during the unexpired term of
                  the development plan.

         4.06     If the Licensee fails to comply with the requirements of
                  paragraph 4.05, the development plan in effect under this
                  Licence will expire three months after the date on which the
                  notice referred to in paragraph 4.04 is given to the Licensee,
                  in which case the Licensee, within four months after the date
                  on which the development plan expires under this paragraph,
                  will submit a proposed development plan for the District
                  Manager's approval.

         4.07     A proposed development plan submitted under paragraph 4.02,
                  4.03, 4.06, or 4.11(b) must
                  (a)      be signed and sealed by a professional forester and
                           signed by the Licensee or the Licensee's authorized
                           signatory,
                  (b)      be prepared according to the applicable manual in
                           effect three months prior to the deadline for
                           submitting the proposed development plan under
                           paragraph 4.02, 4.03, or 4.06, as the case may be,
                  (c)      be consistent with this Licence and the management
                           plan in effect at the time the proposed development
                           plan is submitted,
                  (d)      set out the Licensee's development plans for a period
                           of five years, or longer if the Licensee so chooses,
                           beginning on the date the proposed development plan
                           takes effect,

                  (e)      set out a proposed harvesting sequence of cut blocks
                           which will enable the Licensee, each year during the
                           period referred to in subparagraph (d), to harvest
                           timber from the Licence Area in accordance with the
                           cut control provisions of the Forest Act,
                           categorizing these cut blocks as follows
                           (i)      cut blocks covered by existing cutting
                                    permits,
                           (ii)     cut blocks covered by outstanding cutting
                                    permit applications submitted to the
                                    District Manager,


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<PAGE>   20
                           (iii)    cut blocks for which the Licensee proposes
                                    to submit cutting permit applications during
                                    the term of the proposed development plan,
                                    and
                           (iv)     cut blocks which the Licensee proposes to
                                    harvest during the period referred to in
                                    subparagraph (d), but for which the Licensee
                                    does not propose to submit cutting permit
                                    applications during the term of the proposed
                                    development plan, unless for any reason cut
                                    blocks referred to in clause (iii) cannot be
                                    harvested,
                  (f)      include the following information regarding the cut
                           blocks referred to in subparagraph (e)
                           (i)      season of operation, logging system and
                                    reforestation method, and
                           (ii)     the status of adjacent harvested areas,
                  (g)      include one or more detailed maps of the following
                           information
                           (i)      based on the best information readily
                                    available to the Licensee,
                                    (A)      recreation areas, community
                                             watersheds, fish spawning, fish
                                             rearing and fish migration areas,
                                             critical wildlife habitats, and any
                                             other areas subject to specific
                                             integrated resource management
                                             constraints, and
                                    (B)      private properties, foreshore
                                             leases, and public utilities within
                                             the Licence Area,
                           (ii)     based on information gathered by the
                                    Licensee for the purposes of the proposed
                                    development plan,
                                    (A)      the forest cover,
                                    (B)      operability and contour lines,
                                    (C)      sensitive soils, unstable slopes,
                                             and areas subject to visual quality
                                             constraints,
                                    (D)      boundaries of
                                            (I)      cut blocks referred to in
                                                     subparagraph (e), and
                                            (II)     existing cutting permits,
                                    (E)      existing roads including, where
                                             applicable, linkage to the public
                                             road system, timber processing
                                             facilities and log dumps,
                                    (F)      proposed roads, including bridges
                                             and major culverts,
                                    (G)      roads under construction,
                                    (H)      roads which have been deactivated
                                             to a temporary or semi-permanent
                                             level,
                                    (I)      fire breaks and fuel management
                                             problem areas, and
                                    (J)      log handling and storage areas,
                                             including existing or proposed log
                                             dump sites,
                           (iii)    based on consultation carried out in
                                    accordance with the measures specified in
                                    the management plan,
                                    (A)      the location of areas where
                                             aboriginal people have indicated
                                             they are or may be carrying out
                                             aboriginal activities in the
                                             Licence Area, and
                                    (B)      the location of areas where
                                             trappers, guide outfitters, range
                                             tenure holders, and other licenced
                                             resource users are operating in the
                                             Licence Area, and
                           (iv)     any other information required under the
                                    manual referred to in subparagraph (b), and
                  (h)      include a Road Maintenance Plan complying with the
                           requirements of paragraph 11.04 and a Road
                           Deactivation Plan complying with the requirements of
                           paragraph 11.05.


                                                                         Page 20
<PAGE>   21
         4.08     In addition to the requirements under paragraph 4.07, a
                  proposed development plan submitted under paragraph 4.02,
                  4.03, or 4.06 must 
                  (a)      have been referred to resource agencies and made
                           available for comment in accordance with the review
                           strategy approved in the management plan in effect
                           under this Licence, and
                  (b)      be accompanied by a summary of
                           (i)      all comments received by the Licensee in
                                    complying with the review strategy referred
                                    to in subparagraph (a), and
                           (ii)     the modifications, if any, made to the
                                    proposed development plan, prior to its
                                    submission to the District Manager, in
                                    response to the comments referred to in
                                    clause (i).

         4.09     Subject to paragraph 4.10, the District Manager, within three
                  months after the date on which a proposed development plan is
                  submitted under paragraph 4.02, 4.03, or 4.06, or two months
                  after the date on which a proposed development plan is
                  submitted under subparagraph 4.11(b), will in a notice given
                  to the Licensee approve the proposed development plan, subject
                  to such conditions as the District Manager considers necessary
                  or appropriate, if 
                  (a)      the District Manager is satisfied that the proposed
                           development plan meets the requirements of paragraph
                           4.07,
                  (b)      the proposed harvesting sequence is satisfactory to
                           the District Manager,
                  (c)      the District Manager is prepared to accept cutting
                           permit applications for
                           (i)      the cut blocks referred to in clause
                                    4.07(e)(iii), and
                           (ii)     the cut blocks referred to in clause
                                    4.07(e)(iv), if for any reason cut blocks
                                    referred to in clause 4.07(e)(iii) cannot be
                                    harvested, and
                  (d)      the District Manager is satisfied that the
                           development plan adequately addressed the comments
                           referred to in clause 4.08(b)(i).

         4.10     The District Manager will not approve a proposed development
                  plan unless there is a management plan in effect under this
                  Licence.

         4.11     Where the District Manager does not approve a proposed
                  development plan under paragraph 4.09,
                  (a)      subject to paragraph 4.10, the District Manager,
                           within three months after the date on which a
                           proposed development plan is submitted under
                           paragraph 4.02, 4.03, or 4.06, or two months after
                           the date on which a proposed development plan is
                           submitted under subparagraph 4.11(b), will specify in
                           a notice given to the Licensee why the District
                           Manager has not approved the development plan, and
                  (b)      the Licensee, within one month after the date on
                           which the Licensee is given the notice referred to in
                           subparagraph (a), will submit a new or revised
                           proposed development plan to the District Manager.

         4.12     A development plan is deemed to be part of this Licence.

         4.13     Subject to paragraphs 4.01, 4.06, 4.14 and 4.15, a development
                  plan expires one year after the date on which it takes effect.

         4.14     If
                  (a)      the District Manager, within three months after the
                           date on which the District Manager receives a
                           proposed development plan submitted under paragraph
                           4.02 or 4.03, has neither
                           (i)      approved the proposed development plan under
                                    paragraph 4.09, nor

                                                                         Page 21
<PAGE>   22
                           (ii)     given the Licensee a notice referred to in
                                    subparagraph 4.11(a), and
                  (b)      there is a management plan and a development plan in
                           effect under this Licence,
                  then the term of the development plan referred to in
                  subparagraph (b) is deemed to be extended until such time as
                  the District Manager approves the proposed development plan
                  under paragraph 4.09, or gives the Licensee a notice referred
                  to in subparagraph 4.11(a), as the case may be.

         4.15     At the request of the Licensee, the District Manager may
                  extend the term of a development plan for a period not greater
                  than one year, provided there is a management plan in effect
                  under this Licence.

         4.16     Before extending the term of a development plan under
                  paragraph 4.15, the District Manager may require the Licensee
                  to amend the development plan to the extent required to ensure
                  compliance with the management plan in effect under this
                  Licence.

         4.17     If the development plan in effect under this Licence has been
                  rendered inadequate as a result of circumstances the Licensee
                  could not reasonably have foreseen at the time the proposed
                  development plan was submitted for the District Manager's
                  approval, the Licensee may submit for the District Manager's
                  approval a proposed amendment to the development plan.

         4.18     The District Manager at his or her sole discretion may approve
                  a proposed amendment submitted under paragraph 4.17, provided
                  there is a management plan in effect under this Licence.

         4.19     Before approving a proposed amendment submitted under
                  paragraph 4.17, the District Manager may require the Licensee
                  to refer the proposed amendment, and make it available for
                  comment in accordance with the review strategy referred to in
                  subparagraph 4.08(a).

5.00     CUTTING PERMITS

         5.01     All cutting permits in effect under the tree farm licence
                  replaced by this Licence continue in effect under this Licence
                  for the duration of their respective terms.

         5.02     Subject to paragraph 5.04, the Licensee may submit cutting
                  permit applications for
                  (a)      cut blocks referred to in clause 4.07(e)(iii), and
                  (b)      cut blocks referred to in clause 4.07(e)(iv), if for
                           any reason cut blocks referred to clause 4.07(e)(iii)
                           cannot be harvested, to enable the Licensee to
                           harvest timber from the Licence Area in accordance
                           with the cut control provisions of the Forest Act.

         5.03     Subject to paragraphs 5.05 and 5.06, upon receipt of cutting
                  permit applications referred to in paragraph 5.02, the
                  District Manager will issue cutting permits to the Licensee
                  for 
                  (a)      cut blocks referred to in clause 4.07(e)(iii), and
                  (b)      cut blocks referred to in clause 4.07(e)(iv), if for
                           any reason cut blocks referred to clause 4.07(e)(iii)
                           cannot be harvested,
                  if the District Manager is satisfied that the cutting permit
                  application meets the requirements of paragraph 5.04.


                                                                         Page 22
<PAGE>   23
         5.04     A cutting permit application referred to in paragraph 5.02
                  must
                  (a)      be signed and sealed by a professional forester and
                           signed by the Licensee or the Licensee's authorized
                           signatory,
                  (b)      contain such information as is required
                           (i)      by the District Manager in a notice given to
                                    the Licensee two months prior to the date on
                                    which the cutting permit application is
                                    submitted, or
                           (ii)     in the applicable manual in effect two
                                    months prior to the date on which the
                                    cutting permit application is submitted,
                  (c)      subject to paragraph 5.08, be accompanied by a
                           proposed logging plan, and
                  (d)      be consistent with the management plan and
                           development plan in effect under this Licence, and
                           the pre-harvest silviculture prescription, if any,
                           approved for the area on which the timber to be
                           harvested is located.

         5.05     The District Manager will not issue a cutting permit under
                  paragraph 5.03 unless
                  (a)      subject to an exemption referred to in subparagraph
                           5.18(b), the District Manager has approved a
                           pre-harvest silviculture prescription for the area on
                           which the timber to be harvested is located, and
                  (b)      there is a management plan and development plan in
                           effect under this Licence.

         5.06     The District Manager may delay issuing a cutting permit if he
                  or she is satisfied that
                  (a)      the Licensee will be able under existing cutting
                           permits and road permits to harvest that portion of
                           the allowable annual cut available to the Licensee,
                           and
                  (b)      the delay will not compromise the management plan and
                           development plan in effect under this Licence.

         5.07     Where the District Manager
                  (a)      is not satisfied that a cutting permit application
                           meets the requirement of paragraph 5.04,
                  (b)      is prohibited under paragraph 5.05 from issuing a
                           cutting permit, or
                  (c)      is delaying issuing the cutting permit under
                           paragraph 5.06, 
                  the District Manager will give the Licensee a notice to that
                  effect within two months after the date on which the cutting
                  permit application is submitted.

         5.08     The District Manager may
                  (a)      exempt the Licensee from the requirement under
                           paragraph 5.04(c) to submit a logging plan with a
                           cutting permit application, and
                  (b)      issue a cutting permit before approving a logging
                           plan,
                  however, where a cutting permit is issued prior to the
                  approval of the logging plan, the Licensee will not commence
                  operations under the cutting permit until a logging plan has
                  been submitted and approved.

         5.09     At the request or with the consent of the Licensee, the
                  District Manager may at any time
                  (a)      amend an existing cutting permit, or
                  (b)      issue a cutting permit, 
                  to authorize the Licensee to harvest wind thrown, dead,
                  damaged, infested or diseased timber within the Licence Area.


                                                                         Page 23
<PAGE>   24
         5.10     A cutting permit must
                  (a)      subject to this Licence and the Forest Act, authorize
                           timber to be harvested in accordance with the
                           provisions of the cutting permit from proximate cut
                           blocks located within the Licence Area,
                  (b)      be consistent with
                           (i)      this Licence,
                           (ii)     the Forest Act,
                           (iii)    subject to an exemption referred to in
                                    subparagraph 5.18(b), the pre-harvest
                                    silviculture prescription approved for the
                                    area on which the timber is to be harvested,
                                    and
                           (iv)     subject to paragraphs 5.09 and 5.14, the
                                    management plan and development plan in
                                    effect on the date the cutting permit is
                                    issued,
                  (c)      subject to paragraph 5.13, be for a term not
                           exceeding three years,
                  (d)      prescribe the locations of roads to be built or
                           deactivated on the area covered by the cutting
                           permit, and the specifications and standards to be
                           followed in building or deactivating these roads,
                  (e)      prescribe utilization standards and forestry
                           practices to be followed in timber harvesting
                           operations carried on under the cutting permit,
                  (f)      set out procedures for assessing the volumes of
                           timber wasted or damaged by the Licensee, and provide
                           for a charge based on applicable stumpage rates to be
                           paid by the Licensee,
                  (g)      specify a timber mark to be used in conjunction with
                           the timber harvesting operations carried on under the
                           cutting permit,
                  (h)      specify whether the cutting permit is scale based or
                           cruise based, and
                  (i)      subject to subparagraph (b), include such other
                           provisions as the District Manager considers
                           necessary or appropriate.

         5.11     Subject to paragraphs 5.12, 5.13 and 5.14, the District
                  Manager may amend a cutting permit only at the request or with
                  the consent of the Licensee.

         5.12     A cutting permit that does not comply with the requirements of
                  paragraph 5.10 is not void, however,
                  (a)      on the request of the Licensee, or
                  (b)      on one month notice to the Licensee,
                  the District Manager may amend the cutting permit to the
                  extent required to ensure compliance with the requirements of
                  paragraph 5.10.

         5.13     The District Manager may, in a notice given to the Licensee,
                  extend the term of a cutting permit.

         5.14     Where under paragraph 5.13 the District Manager extends the
                  term of a cutting permit, the District Manager may, in a
                  notice given to the Licensee, amend the cutting permit to the
                  extent required to ensure compliance with the management plan
                  and development plan in effect on the date the term of the
                  cutting permit is extended.

         5.15     Unless exempted in writing by the District Manager or a person
                  authorized by the District Manager, the Licensee will define
                  on the ground the boundaries of the areas authorized for
                  harvesting under a cutting permit.

         5.16     A cutting permit is deemed to be part of this Licence.



                                                                         Page 24
<PAGE>   25
         5.17     An logging plan approved in respect of a cutting permit is
                  deemed to be part of this Licence and the applicable cutting
                  permit.

         5.18     The Licensee will not harvest any timber under a cutting
                  permit, unless 
                  (a)      a pre-harvest silviculture prescription has been
                           approved, or
                  (b)      the Licensee has been exempted under the Forest Act
                           from the requirement to have a pre-harvest
                           silviculture prescription approved,
                  for the area on which the timber is located.

         5.19     A cutting permit or approved logging plan that is inconsistent
                  with the pre-harvest silviculture prescription approved for
                  the area covered by the cutting permit is not void, but to the
                  extent of the inconsistency the pre-harvest silviculture
                  prescription will prevail.

         5.20     Without restricting the generality of subparagraph 5.10(i),
                  the District Manager may include in a cutting permit a
                  provision requiring the Licensee to provide a specified level
                  of supervision in respect of employees and contractors
                  carrying out operations under the cutting permit on sites
                  identified by the District Manager as being environmentally
                  sensitive sites.

6.00     REVIEW STRATEGY & MINISTRY CONSULTATION

         6.01     A review strategy referred to in subparagraph 2.05(b), 2.07(b)
                  and subparagraph 2.25(m) must
                  (a)      provide adequate opportunities for comment to persons
                           interested in or affected by operations under this
                           Licence, including but not restricted to
                           (i)      resource agencies,
                           (ii)     trappers, guide outfitters, range tenure
                                    holders, and other licensed resource users,
                           (iii)    aboriginal people,
                           (iv)     local governments, and
                           (v)      members of the public, and
                  (b)      specify measures for inviting comment, including
                           (i)      referrals to resource agencies,
                           (ii)     advertising methods, times and locations,
                           (iii)    viewing methods, times and locations,
                           (iv)     if applicable, times and locations of open
                                    houses, and
                           (v)      methods for collecting written and oral
                                    comments from interested persons.

         6.02     An opportunity for comment provided to a person referred to in
                  subparagraph 6.01(a) will only be adequate for the purposes of
                  that subparagraph if, in the opinion of the Regional Manager
                  or the Chief Forester, as the case may be, the opportunity for
                  comment properly reflects the nature and extent of that
                  person's interest in the Licence Area and any right that
                  person may have to use the Licence Area.

         6.03     In addition to the requirements under paragraph 6.01, a review
                  strategy for development plans must specify measures which are
                  consistent with the usual procedures in the applicable forest
                  district.

                                                                         Page 25
<PAGE>   26
         6.04     When in accordance with an approved review strategy the
                  Licensee refers a document or plan to resource agencies, or
                  makes it available for comment, the Licensee will at the same
                  time send a copy of the document or plan to the Regional
                  Manager for his or her information.

         6.05     Before
                  (a)      approving a review strategy under paragraph 2.06,
                  (b)      accepting a Statement of Management Objectives,
                           Options and Procedures under paragraph 2.11,
                  (c)      approving a proposed management plan under paragraph
                           2.27,
                  (d)      approving a proposed development plan under paragraph
                           4.09, or
                  (e)      issuing a cutting permit under Part 5.00,

                  the Regional Manager, the Chief Forester, or the District
                  Manager, as the case may be, at his or her sole discretion and
                  notwithstanding the Licensee's obligations under the review
                  strategy, may consult persons who may be interested in or
                  affected by operations under this Licence, including but not
                  restricted to

                  (f)      resource agencies,
                  (g)      trappers, guide outfitters, range tenure holders, and
                           other licensed resource users,
                  (h)      aboriginal people,
                  (i)      local governments, and
                  (j)      members of the public,
                  and, subject to paragraph 6.06, may consider any comments
                  received as a result of consultation under this paragraph.

         6.06     If because of comments received as a result of consultation
                  under paragraph 6.05, the Regional Manager, the Chief
                  Forester, or the District Manager is considering
                  (a)      not accepting, approving, or issuing, or
                  (b)      imposing a condition upon acceptance, approval or
                           issuance of,

                  a document or plan referred to in paragraph 6.05, the Regional
                  Manager, the Chief Forester, or the District Manager, as the
                  case may be, will provide the Licensee with an opportunity to
                  respond to the comments before making a decision.

7.00     CONDITIONS IMPOSED UPON ACCEPTANCE OR APPROVAL

         7.01     Where under this Licence a ministry officer has a discretion
                  to make his or her acceptance or approval of a document or
                  plan subject to a condition, the ministry officer will
                  exercise that discretion in a reasonable manner, having regard
                  to the purposes and functions of the Ministry of Forests set
                  out in Section 4 of the Ministry of Forests Act as it read on
                  June 1, 1993.

         7.02     The Licensee, in a notice given to the appropriate ministry
                  officer within 15 days of the date on which the notice of
                  acceptance or approval is given to the Licensee, may reject
                  any condition to which the acceptance or approval is subject,
                  in which case the notice of approval or acceptance is deemed
                  to be a notice that the applicable document or plan is not
                  accepted or approved for the reasons set out in the
                  conditions.

8.00     ANNUAL REPORT

         8.01     On or before April 1 of each year during the term of this
                  Licence, the Licensee will submit to the Chief Forester, the
                  Regional Manager and the District Manager an annual report 


                                                                         Page 26
<PAGE>   27
                  (a)      prepared in accordance with the applicable manual in
                           effect on January 1 of the year in which the annual
                           report is submitted, and

                  (b)      containing the information required in the manual
                           referred to in subparagraph (a) regarding 
                           (i)      the Licensee's performance over the previous
                                    calendar year in relation to its management
                                    of the Licence Area and its obligations
                                    under this Licence,
                           (ii)     the Licensee's success in meeting its
                                    management objectives, including but not
                                    restricted to its management objectives with
                                    respect to employment and economic
                                    opportunities,
                           (iii)    the processing or other use or disposition
                                    of the timber harvested under this Licence,
                                    and
                           (iv)     the Licensee's goals and major initiatives
                                    for the next calendar year.

         8.02     The Licensee will make a copy of an annual report submitted
                  under paragraph 8.01 available for review by interested
                  persons during normal business hours at the Licensee's place
                  of business in the vicinity of the Licence Area or, if the
                  Licensee chooses, at another location which is convenient to
                  the public and acceptable to the Regional Manager.

9.00     CUT CONTROL

         9.01     The Licensee will comply with the cut control provisions of
                  the Forest Act.

         9.02     The five-year cut control period for this Licence means the
                  5-year period beginning on January 1, 1995, and each
                  succeeding 5-year period.

10.00    FINANCIAL AND DEPOSITS

         10.01    Where any money is payable by the Licensee under the Forest
                  Act in respect of this Licence, a road permit or a special use
                  permit, the money payable under the Forest Act is also deemed
                  to be money payable under this Licence.

         10.02    In addition to any money payable by the Licensee under
                  paragraph 10.01, the Licensee will pay to the Crown,
                  immediately upon receipt of a notice issued on behalf of the
                  Crown, 
                  (a)      in respect of timber harvested from Schedule B Land,
                           stumpage under Part 7 of the Forest Act,
                  (b)      in respect of timber harvested from Schedule A Land
                           subject to a timber licence, stumpage or royalty
                           under Part 7, as elected by the Licensee under
                           Section 23 of the Forest Act, and
                  (c)      any charges in respect of an assessment referred to
                           in subparagraph 5.10(f).

         10.03    During the term of this Licence, the Licensee will maintain on
                  deposit with the Crown an amount prescribed under the Forest
                  Act, in cash or in negotiable securities acceptable to the
                  Minister, as security for the Licensee's performance of its
                  obligations under
                  (a)      this Licence, a road permit or a special use permit,
                           or
                  (b)      the Forest Act in respect of this Licence a road
                           permit or a special use permit, and



                                                                         Page 27
<PAGE>   28
                  where the Regional Manager or District Manager gives the
                  Licensee a notice advising that an amount has been taken under
                  this Part from the deposit, the Licensee, within one month
                  after the date on which the notice is given, will pay to the
                  Crown, in cash or negotiable securities acceptable to the
                  Minister, an amount sufficient to replenish the deposit.

         10.04    If the Licensee fails
                  (a)      to pay money that the Licensee is required to pay to
                           the Crown under this Licence, a road permit or a
                           special use permit, or under the Forest Act in
                           respect of this Licence, a road permit or a special
                           use permit, or
                  (b)      to otherwise perform its obligations under this
                           Licence, a road permit or a special use permit, or
                           under the Forest Act in respect of this Licence, a
                           road permit or a special use permit,
                  then the Regional Manager or District Manager, after at least
                  one month notice to the Licensee, may take from the deposit
                  (c)      an amount equal to the money which the Licensee
                           failed to pay,
                  (d)      an amount sufficient to cover all costs reasonably
                           incurred by the Regional Manager or District Manager
                           in remedying the Licensee's failure to perform its
                           obligations, or
                  (e)      an amount equal to the Regional Manager's or District
                           Manager's estimate of the costs which the Regional
                           Manager or District Manager could reasonably expect
                           to incur in remedying the Licensee's failure to
                           perform its obligations,
                  and for that purpose a security included in the deposit may be
                  sold.

         10.05    A notice referred to in paragraph 10.04 must specify 
                  (a)      the obligation which the Licensee has failed to
                           perform, and
                  (b)      the amount of money the Regional Manager or District
                           Manager intends to take from the deposit.

         10.06    Subject to paragraphs 10.08, 10.09 and 10.10, where
                  (a)      the Regional Manager or District Manager under
                           paragraph 10.04 takes from the deposit an amount
                           equal to the Regional Manager's or District Manager's
                           estimate of the costs which the Regional Manager or
                           District Manger could reasonably expect to incur in
                           remedying the Licensee's failure to perform its
                           obligations, and
                  (b)      the costs reasonably incurred by the Regional Manager
                           or District Manager in remedying the Licensee's
                           failure to perform its obligations are less than the
                           amount taken from the deposit,
                  the Regional Manager or District Manager, as the case may be,
                  will as soon as practicable return to the Licensee an amount
                  equal to the difference between the amount taken from the
                  deposit and the costs incurred by the Regional Manager or
                  District Manager.

         10.07    Where
                  (a)      the Regional Manager or District Manager under
                           paragraph 10.04 takes from the deposit an amount
                           equal to the Regional Manager's or District Manager's
                           estimate of the costs which the Regional Manager or
                           District Manager could reasonably expect to incur in
                           remedying the Licensee's failure to perform its
                           obligations, and
                  (b)      the costs reasonably incurred by the Regional Manager
                           or District Manager in remedying the Licensee's
                           failure to perform its obligations are greater than
                           the amount taken from the deposit,



                                                                         Page 28
<PAGE>   29
                  the Regional Manager or District Manager may take from the
                  deposit an additional amount equal to the difference between
                  the costs incurred by the Regional Manager or District Manager
                  and the amount originally taken from the deposit, and for that
                  purpose a security included in the deposit may be sold.

         10.08    Where the Regional Manager or District Manager under paragraph
                  10.04 takes from the deposit an amount equal to the Regional
                  Manager's or District Manager's estimate of the costs which
                  the Regional Manager or District Manager could reasonably
                  expect to incur in remedying the Licensee's failure to perform
                  its obligations, the Regional Manager or District Manager, as
                  the case may be, is under no obligation to remedy the
                  Licensee's failure.

         10.09    Where
                  (a)      the Regional Manager or District Manager under
                           paragraph 10.04 takes from the deposit an amount
                           equal to the Regional Manager's or District Manager's
                           estimate of the costs which the Regional Manager or
                           District Manager could reasonably expect to incur in
                           remedying the Licensee's failure to perform its
                           obligations,
                  (b)      the Regional Manager or District Manager does not
                           remedy the Licensee's failure to perform its
                           obligations, and
                  (c)      the Regional Manager or District Manager gives a
                           notice to the Licensee indicating that the Regional
                           Manager or District Manager will not be remedying the
                           Licensee's failure to perform its obligations,
                  then, subject to paragraph 10.10, the Regional Manager or
                  District Manager may retain the amount taken from the deposit
                  under paragraph 10.04.

         10.10    If, after receiving a notice referred to in paragraph 10.09,
                  the Licensee 
                  (a)      remedies the failure to perform its obligations, and
                  (b)      gives a notice to that effect to the Regional Manager
                           or District Manager within three months of the date
                           on which the notice referred to in paragraph 10.09 is
                           given to the Licensee, or within such longer period
                           as the Regional Manager or District Manager may
                           approve,
                  then the Regional Manager or District Manager, as the case may
                  be, will return to the Licensee an amount equal to the
                  difference between the amount taken from the deposit and any
                  costs reasonably incurred by the Regional Manager or District
                  Manager in respect of the Licensee's failure to perform its
                  obligations.

         10.11    If the Regional Manager or District Manager considers that
                  (a)      any operation that is to be carried out under this
                           Licence, a road permit or a special use permit is
                           likely to cause damage to persons or property, and
                  (b)      the deposit is insufficient to indemnify the Crown
                           for any liability which the Crown might incur as a
                           consequence of the operation,
                  then the Regional Manager or District Manager may require the
                  Licensee to maintain with the Crown a special deposit, in cash
                  or in negotiable securities acceptable to the Minister, in the
                  amount determined by the Regional Manager or District Manager,
                  as the case may be.

         10.12    If the Licensee fails to
                  (a)      remedy any damage resulting from an operation
                           referred to in paragraph 10.11, or
                  (b)      compensate any person who suffers a loss as a result
                           of an operation referred to in paragraph 10.11,



                                                                         Page 29
<PAGE>   30
                  the Regional Manager or District Manager may, after at least
                  one month notice to the Licensee, take an amount from the
                  special deposit sufficient to indemnify the Crown for any
                  liability which is or may be incurred by the Crown as a
                  consequence of a failure referred to in subparagraph (a) or
                  (b).

         10.13    A notice referred to in paragraph 10.12 must specify
                  (a)      the nature of the Licensee's failure,
                  (b)      the nature of the damage or loss, and
                  (c)      the amount of money the Regional Manager or District
                           Manager intends to take from the special deposit.

         10.14    Subject to the Forest Act, the Regional Manager will refund to
                  the Licensee 
                  (a)      the deposit, less deductions made under paragraphs
                           10.04 and 10.07, when
                           (i)      this Licence terminates or expires and is
                                    not replaced under Section 29 of the Forest
                                    Act, and
                           (ii)     the Regional Manager is satisfied that the
                                    Licensee has fulfilled its obligations under
                                    this Licence, and
                  (b)      a special deposit, less deductions made under
                           paragraph 10.12, when the Regional Manager, acting
                           reasonably, is satisfied that the Crown is no longer
                           at risk of being held liable as a consequence of an
                           operation referred to in paragraph 10.11.

11.00    ROADS

         11.01    Subject to the provisions of a cutting permit or road permit,
                  the Licensee will ensure that the specifications, standards
                  and locations of all roads the Licensee builds on the Licence
                  Area are consistent with the management plan and development
                  plan in effect at the time the road is built.

         11.02    Upon the expiry of a road permit or a special use permit, all
                  improvements, including roads and bridges, constructed by the
                  Licensee under the authority of the road permit or the special
                  use permit will vest in the Crown, without right of
                  compensation to the Licensee, unless otherwise specified in
                  the road permit or special use permit.

         11.03    The Licensee will not remove any improvements referred to in
                  paragraph 11.02, unless authorized to do so by the Regional
                  Manager.

         11.04    The Road Maintenance Plan included in the Development Plan
                  must
                  (a)      identify those roads shown on the maps referred to in
                           subparagraph 4.07(g) which the Licensee will maintain
                           for harvesting, silviculture and forest protection
                           purposes, and
                  (b)      specify the maintenance operations which the Licensee
                           will carry out to
                           (i)      protect the structural integrity of the
                                    roads referred to in subparagraph (a) and
                                    the cleared area of the road right-of-way
                                    adjoining these roads,
                           (ii)     keep drainage systems, including culverts
                                    and ditches, functional,
                           (iii)    minimize surface erosion, and
                           (iv)     ensure these roads are safe for forest
                                    harvesting or other industrial purposes.


                                                                         Page 30
<PAGE>   31
         11.05    The Road Deactivation Plan included in the Development Plan
                  must
                  (a)      identify those roads shown on the maps referred to in
                           subparagraph 4.07(g) which the Licensee will
                           deactivate each year over the next three years,
                           specifying in each case whether the deactivation will
                           be temporary, semi-permanent or permanent,
                  (b)      specify the operations required to
                           (i)      stabilize the roads referred to in
                                    subparagraph (a) and the cleared area of the
                                    road right-of-way adjoining these roads, and
                           (ii)     restore or maintain the natural drainage at
                                    each road location,
                  (c)      identify those roads shown on the maps referred to in
                           subparagraph 4.07(g) which have been deactivated by
                           the Licensee to a temporary or semi-permanent level
                           in the past year, and any other roads that have been
                           permanently deactivated by the Licensee in the past
                           year, and
                  (d)      specify the type of vehicle which can access the
                           roads referred to in subparagraph (a) or (c).

         11.06    If the Licensor so desires, the Licensee will transfer such
                  rights of way and roads, located or to be located on the lands
                  set out in Schedule "E" of this Licence, which the Licensor at
                  his sole discretion identifies as the rights of way and roads
                  the Licensor wishes to acquire.

         11.07    The total consideration for the transfer referred to in
                  paragraph 11.06 shall be $10.00, and the Licensee hereby
                  acknowledges the sufficiency of this consideration.

         11.08    The Licensee will cooperate with the Licensor, and provide the
                  Licensor with any assistance the Licensor may reasonably
                  require, for the purpose of identifying the rights of way and
                  roads referred to in paragraph 11.06 that the Licensor wishes
                  to acquire, and, without restricting the generality of the
                  foregoing, the Licensee shall 
                  (a)      permit the Licensor to enter onto the lands set out
                           in Schedule "E" for the purpose of surveying rights
                           of way and roads, and
                  (b)      sign in a timely manner plans and documents as
                           required.

12.00    FIRE PROTECTION

         12.01    Before April 1 of each year during the term of this Licence,
                  the Licensee will submit for the District Manager's approval a
                  fire protection pre-organization plan consistent with this
                  Licence, and will include a duty roster in the fire protection
                  pre-organization plan.

         12.02    An approved fire protection pre-organization plan is deemed to
                  be part of this Licence.

         12.03    The Licensee's obligations under an approved fire protection
                  pre-organization plan are in addition to and do not replace
                  its commitments in the management plan or development plan or
                  its obligations under Section 121 of the Forest Act.


                                                                         Page 31
<PAGE>   32
13.00    FORESTRY

         13.01    The Licensee will
                  (a)      comply with the requirements of the Forest Act with
                           respect to basic silviculture, and
                  (b)      ensure basic silviculture and, if applicable,
                           incremental silviculture carried out by or for the
                           Licensee on the Licence Area is consistent with the
                           management plan in effect under this Licence.

         13.02    If under this Licence or the Forest Act the Licensee is to
                  develop or maintain a recreation site or trail, the Licensee
                  may enter onto Crown land for this purpose.

         13.03    If the Licensee posts a sign concerning silviculture or the
                  development and maintenance of recreation sites or trails, the
                  sign must acknowledge any contribution made by the Crown in
                  respect of the silviculture or the development or maintenance
                  of recreation sites or trails.

         13.04    The Licensee will annually review pest management strategies
                  with the District Manager and, if required by the District
                  Manager, the Licensee will submit a pest management plan,
                  including appropriate surveys, for the District Manager's
                  approval.

         13.05    The Licensee's obligations under an approved pest management
                  plan are in addition to and do not replace its commitments in
                  the management plan or development plan respecting pest
                  management.

         13.06    The Regional Manager or the District Manager may carry out
                  (a)      basic silviculture on Schedule B Land referred to in
                           paragraph 1.07, 1.08, 1.09 and 1.16, in accordance
                           with the Crown's basic silviculture obligations under
                           the Forest Act, and

                  (b)      incremental silviculture on Schedule B Land or
                           Schedule A Land subject to a timber licence, provided
                           that in so doing the Regional Manager or District
                           Manager, as the case may be, does not 
                           (i)      compromise the management plan or
                                    development plan in effect under this
                                    Licence, or
                           (ii)     unreasonably interfere with the Licensee's
                                    operations under this Licence.

         13.07    Where the Regional Manager or the District Manager carries out
                  basic silviculture referred to in subparagraph 13.06(a) or
                  incremental silviculture referred to in subparagraph 13.06(b),
                  the Regional Manager or the District Manager, as the case may
                  be, will ensure that the basic silviculture and, if applicable
                  the incremental silviculture is consistent with the intent of
                  the management plan in effect under this Licence.

         13.08    The Licensee will fulfill all outstanding silvicultural
                  obligations of Westshore as Licensee and permittee, in respect
                  of this Licence and License Area, as well as those obligations
                  arising under Part 10.1 of the Forest Act, including existing
                  pre-harvest silviculture prescriptions.



                                                                         Page 32
<PAGE>   33
         13.09    The plan for elimination of backlog "not satisfactorily
                  restocked" areas, entitled "Forest Renewal Initiative", dated
                  April 1990, prepared by T. M. Thomson and Associates Ltd. for
                  Westar Timber Ltd., the title page and table of contents which
                  are attached to this licence (for purposes of identification)
                  as Schedule "C", shall be deemed to be an integral part of
                  this Licence and the Licensee agrees to carry out obligations
                  therein which pertain to the Licence area by December 31,
                  1996, unless extended by the Chief Forester.

14.00    ACCESS AND ACCOMMODATION

         14.01    Any ministry officer may use roads owned or deemed to be owned
                  by the Licensee, for the purposes of fulfilling an obligation
                  or exercising a right under this Licence.

         14.02    The Licensee will allow any person who has been granted
                  harvesting rights to timber referred to in paragraph 1.07,
                  1.08, 1.09, or 1.16 to use any road providing access to timber
                  within the Licence Area, which is owned or deemed to be owned
                  by the Licensee.

         14.03    The Licensee will not require any payment from a person
                  referred to in paragraph 14.02 other than a reasonable payment
                  in respect of the actual maintenance costs of the road.

         14.04    Upon reasonable notice from the Regional Manager or District
                  Manager, the Licensee will provide a ministry officer with
                  reasonable office and living accommodation on premises owned
                  or operated by the Licensee in or near the Licence Area, to
                  enable the ministry officer to fulfill an obligation or
                  exercise a right under this Licence.

         14.05    The Licensee may charge the Regional Manager or District
                  Manager, as the case may be, for costs reasonably incurred in
                  providing the accommodation referred to in paragraph 14.04.

         14.06    The Licensee shall permit any third party, upon reasonable
                  payment to the Licensee, and on other reasonable terms, to use
                  the Licensee's log transportation infrastructure where such
                  use is reasonably necessary for purposes related to forest
                  harvesting.

15.00    CONTRACTORS

         15.01    Each year during the term of this Licence, the Licensee will
                  ensure that not less than 
                  (a)      50 percent of the volume of timber harvested by or
                           for the Licensee under this Licence during the year,
                           multiplied by
                  (b)      the result obtained by the division of
                           (i)      the portion of the allowable annual cut that
                                    the Chief Forester determines is
                                    attributable to Schedule B Land, by
                           (ii)     the allowable annual cut, 
                  is harvested by persons under contract with the Licensee.

         15.02    Compliance with the requirement of paragraph 15.01 will be
                  calculated in accordance with the method prescribed under the
                  Forest Act.

         15.03    If in a calendar year the volume of timber harvested by
                  persons under contract with the Licensee is less than a volume
                  required under paragraph 15.01, the Licensee will on demand
                  pay to the Crown, an amount of money equal to

                  (a)      the volume required under paragraph 15.01 minus the
                           volume harvested during the calendar year by persons
                           under contract, multiplied by


                                                                         Page 33
<PAGE>   34
                  (b)      the weighted average of the stumpage rates charged in
                           invoices issued to the Licensee during the calendar
                           year for timber harvested under this Licence from
                           Schedule B Land,
                  unless the Minister relieves the Licensee in whole or in part
                  from the requirements of this paragraph.

         15.04    The Licensee may contract to have more than the volume
                  required under paragraph 15.01 harvested by persons under
                  contract.

         15.05    The Minister may relieve the Licensee from the requirement
                  under paragraph 15.01 to the extent provided for under the
                  Forest Act.

16.00    TIMBER PROCESSING

         16.01    The Licensee will process all timber harvested under a cutting
                  permit or a road permit, or equivalent volumes, through a
                  timber processing facility located at Castlegar 
                  (a)      owned or operated by the Licensee or an affiliate of
                           the Licensee within the meaning of the Company Act,
                           and
                  (b)      equipped to carry out debarking and chipping, 
                  unless the Minister exempts the Licensee in whole or in part
                  from the requirements of this paragraph.

         16.02    Where the Licensee
                  (a)      intends to close a timber processing facility or
                           reduce its production, or
                  (b)      has reason to believe that an affiliate of the
                           Licensee within the meaning of the Company Act
                           intends to close a timber processing facility or
                           reduce its production,
                  for a period of longer than 90 days, the Licensee will give
                  the Minister at least three months notice prior to the closure
                  or reduction.

         16.03    Where
                  (a)      the Licensee, or
                  (b)      an affiliate of the Licensee within the meaning of
                           the Company Act,

                  closes a timber processing facility or reduces its production
                  for a period longer than 90 days, the Licensee will at the
                  request of the Minister provide information regarding the
                  volume of Crown timber processed through the timber processing
                  facility during the 24-month period immediately preceding the
                  closure or reduction in production level.

         16.04    The Licensee will continue to operate, and where applicable
                  construct or expand, a timber processing facility in
                  accordance with 
                  (a)      the proposal made in the application on which the
                           award of the tree farm licence replaced by this
                           Licence or any predecessor to that tree farm licence
                           was based, and
                  (b)      the revisions, if any, to that proposal which have
                           been approved by the Minister or an appropriate
                           ministry officer.

         16.05    The Licensee shall not sell or otherwise dispose of the
                  Castlegar sawmill unless the Castlegar sawmill is sold or
                  disposed of in conjunction with an assignment of this Licence.



                                                                         Page 34
<PAGE>   35
17.00    LIABILITY AND INDEMNITY

         17.01    Subject to paragraph 17.03, the Licensee will indemnify the
                  Crown against and save it harmless from all claims, demands,
                  suits, actions, causes of action, costs, expenses and losses
                  faced, incurred or suffered by the Crown as a result, directly
                  or indirectly, of any act or omission of 
                  (a)      the Licensee,
                  (b)      an employee of the Licensee,
                  (c)      an agent of the Licensee,
                  (d)      a contractor of the Licensee who engages in any
                           activity or carries out any operation, including but
                           not restricted to harvesting operations, under or
                           associated with this Licence, a road permit, a free
                           use permit issued to the Licensee, or a special use
                           permit, or
                  (e)      any other person who on behalf of the Licensee
                           engages in any activity or carries out any operation,
                           including but not restricted to harvesting
                           operations, under or associated with this Licence, a
                           road permit, a free use permit issued to the Licensee
                           or a special use permit.

         17.02    For greater certainty, the Licensee has no obligation to
                  indemnify the Crown under paragraph 17.01 in respect of any
                  act or omission of 
                  (a)      an employee, agent or contractor of the Crown, in the
                           course of carrying out his or her duties as employee,
                           agent or contractor of the Crown, or
                  (b)      a person other than the Licensee to whom the Crown
                           has granted the right to enter, use or occupy Crown
                           land, including a person who has been granted the
                           right to harvest timber referred to in paragraph
                           1.07, 1.08, 1.09 or 1.16, in the course of exercising
                           those rights.

         17.03    Paragraph 17.01 does not apply to an act or omission which is
                  a direct response to, and complies with, an order made by a
                  ministry officer or another officer of the Crown.

         17.04    Money taken under Part 10.00 from a deposit or special
                  deposit, and money paid by the Licensee under paragraph 15.03
                  or 17.01, is in addition to and not in substitution for any
                  other remedies available to the Crown in respect of a default
                  of the Licensee.

18.00    LIMITATION OF LIABILITY

         18.01    The Licensor is not liable to the Licensee for injuries,
                  losses, expenses, or costs incurred or suffered by the
                  Licensee as a result, directly or indirectly, of an act or
                  omission of a person who is not a party to this Licence,
                  including but not restricted to an act or omission of a person
                  disrupting, stopping or otherwise interfering with the
                  Licensee's operations under this Licence by road blocks or
                  other means.

19.00    INTERFERENCE WITH ABORIGINAL RIGHTS

         19.01    Notwithstanding any other provision of this Licence, if a
                  court of competent jurisdiction 
                  (a)      determines that the Licensee's operations under this
                           Licence, or the Licensee's use or occupation of
                           Schedule B Land or Schedule A Land subject to a
                           timber licence, is interfering or may interfere with
                           an aboriginal right,
                  (b)      grants an injunction further to a determination
                           referred to in subparagraph (a), or


                                                                         Page 35
<PAGE>   36
                  (c)      grants an injunction pending a determination of
                           whether the Licensee's operations under this Licence,
                           or the Licensee's use or occupation of Schedule B
                           Land or Schedule A Land subject to a timber licence,
                           is interfering or may interfere with an aboriginal
                           right,
                  then, having regard to any determination of the court and the
                  terms of any injunction granted by the court, the Regional
                  Manager or District Manager, in a notice given to the
                  Licensee, may, in whole or in part, vary, suspend, or refuse
                  to issue
                  (d)      a cutting permit,
                  (e)      a road permit,
                  (f)      a special use permit, or
                  (g)      a free use permit issued to the Licensee,

                  to the extent necessary to ensure there is no interference or
                  no further interference with the aboriginal right or the
                  alleged aboriginal right.

         19.02    Notwithstanding any other provision of this Licence, if a
                  court of competent jurisdiction 
                  (a)      determines that the Licensee's operations under this
                           Licence, or the Licensee's use or occupation of
                           Schedule B Land or Schedule A Land subject to a
                           timber licence, is interfering or may interfere with
                           an aboriginal right,
                  (b)      grants an injunction further to a determination
                           referred to in subparagraph (a), or
                  (c)      grants an injunction pending a determination of
                           whether the Licensee's operations under this Licence,
                           or the Licensee's use or occupation of Schedule B
                           Land or Schedule A Land subject to a timber licence,
                           is interfering or may interfere with an aboriginal
                           right,
                  then, having regard to any determination of the court and the
                  terms of any injunction granted by the court, the Chief
                  Forester, in a notice given to the Licensee, may require the
                  Licensee to amend one or both of the following
                  (d)      the management plan in effect under this Licence, and
                  (e)      the development plan in effect under this Licence,
                  to the extent necessary to ensure there is no interference or
                  no further interference with the aboriginal right or the
                  alleged aboriginal right.

         19.03    Where the Chief Forester gives the Licensee a notice referred
                  to in paragraph 19.02, the Licensee, in accordance with the
                  requirements of the notice and within the time specified in
                  the notice, will submit one or both of the following
                  (a)      for the Chief Forester's approval, a proposed
                           amendment to the management plan to have effect
                           during the unexpired term of the management plan, and
                  (b)      for the District Manager's approval, a proposed
                           amendment to the development plan to have effect
                           during the unexpired term of the development plan.

         19.04    Subject to the Forest Act and all other applicable legislation
                  and the other provisions of this Licence, the Chief Forester
                  or the District Manager, as the case may be, will approve a
                  proposed amendment referred to in paragraph 19.03 if he or she
                  is satisfied that the proposed amendment 
                  (a)      meets the requirements of the notice referred in
                           paragraph 19.02, and
                  (b)      is consistent with any determination of the court and
                           the terms of any injunction granted by the court
                           referred to in paragraph 19.02.

         19.05    If either
                  (a)      the Licensee fails to comply with the requirements of
                           paragraph 19.03, or
                  (b)      the Chief Forester or the District Manager does not
                           approve a proposed amendment under paragraph 19.04,


                                                                         Page 36
<PAGE>   37
                  the Chief Forester or the District Manager may amend the
                  management plan or the development plan, as the case may be,
                  to the extent necessary to ensure the plan 
                  (c)      meets the requirements of the notice referred to in
                           paragraph 19.02, and
                  (d)      is consistent with any determination of the court and
                           the terms of any injunction granted by the court
                           referred to in paragraph 19.02.

         19.06    Subject to the Forest Act and all other applicable legislation
                  and the other provisions of this Licence, where 
                  (a)      the Regional Manager or District Manager has varied a
                           cutting permit, road permit, special use permit, or
                           free use permit under paragraph 19.01,
                  (b)      a court of competent jurisdiction subsequently
                           overturns, sets aside or dissolves the determination
                           or injunction referred to in that paragraph, and
                  (c)      the Regional Manager or District Manager, as the case
                           may be, considers it practicable to do so,
                  the Regional Manager or District Manager, at the request of
                  the Licensee, will vary the permit to reflect as closely as
                  possible the terms and conditions of the permit prior to its
                  variation under paragraph 19.01.

         19.07    Subject to the Forest Act and all other applicable legislation
                  and the other provisions of this Licence, where 
                  (a)      the Regional Manager or District Manager has
                           suspended a cutting permit, road permit, special use
                           permit, or free use permit under paragraph 19.01,
                  (b)      a court of competent jurisdiction subsequently sets
                           aside or dissolves the determination or injunction
                           referred to in that paragraph, and
                  (c)      the Regional Manager or District Manager, as the case
                           may be, considers it practicable to do so,
                  the Regional Manager or District Manager, at the request of
                  the Licensee will reinstate the permit.

         19.08    Subject to the Forest Act and all other applicable legislation
                  and the other provisions of this Licence, where
                  (a)      the Regional Manager or District Manager has refused
                           to issue a cutting permit, road permit, special use
                           permit, or free use permit under paragraph 19.01,
                  (b)      a court of competent jurisdiction subsequently
                           overturns, sets aside or dissolves the determination
                           or injunction referred to in that paragraph, and
                  (c)      the Regional Manager or District Manager, as the case
                           may be, considers it practicable to do so,
                  the Regional Manager or District Manager, at the request of
                  the Licensee, will issue the permit.

         19.09    Subject to the Forest Act and all other applicable legislation
                  and the other provisions of this Licence, where
                  (a)      as a result of a determination or injunction referred
                           to in paragraph 19.02, an amendment to the management
                           plan or development plan in effect under this Licence
                           has been approved under paragraph 19.04 or made under
                           paragraph 19.05, and
                  (b)      a court of competent jurisdiction subsequently
                           overturns, sets aside or dissolves the determination
                           or injunction,
                  the Licensee may submit an amendment reversing, insofar as it
                  is possible, the effects of the amendment referred to in
                  subparagraph (a), and the Chief Forester or the District
                  Manager, as the case may be, will approve the amendment if he
                  or she considers its practicable to do so.



                                                                         Page 37
<PAGE>   38
20.00    TERMINATION AND SURRENDER

         20.01    If this Licence is terminated, expires and is not replaced
                  under Section 29 of the Forest Act, or if this Licence is
                  cancelled, 
                  (a)      cutting permits will terminate when the expiration,
                           termination or cancellation occurs, and
                  (b)      title to all
                           (i)      improvements, including roads and bridges,
                                    constructed on Schedule B Land by the
                                    Licensee under the authority of this
                                    Licence, and
                           (ii)     logs and special forest products which were
                                    harvested from Schedule B Land under the
                                    authority of this Licence and are still
                                    located on Schedule B Land,
                           will vest in the Crown, without right of compensation
                           to the Licensee, and
                  (c)      the Licensee may continue to enter, occupy and use
                           Schedule B Land for a period of one month after the
                           termination, expiry or cancellation of this Licence
                           for the purposes of removing the Licensee's property.

         20.02    The Licensee will not remove any improvements, logs or special
                  forest products referred to in subparagraph 20.01(b), unless
                  authorized to do so by the Regional Manager.

         20.03    Subject to paragraph 20.04, if the Licensee commits an act of
                  bankruptcy, makes a general assignment for the benefit of its
                  creditors or otherwise acknowledges its insolvency, the Chief
                  Forester may cancel this Licence in a notice given to the
                  Licensee.

         20.04    The Chief Forester will not cancel this Licence under
                  paragraph 20.03 unless and until the Chief Forester gives a
                  written notice to every holder of a registered security
                  interest that charges this Licence, allowing a period of not
                  less than 60 days prior to cancellation during which the
                  holder of the registered security interest may exercise the
                  rights and pursue the remedies available in respect of the
                  registered security interest.

21.00    NOTICE

         21.01    A notice given under this Licence must be in writing.

         21.02    Where a notice is to be given under this Licence, it may be
                  (a)      delivered by hand,
                  (b)      sent by prepaid registered mail, or
                  (c)      subject to paragraph 21.05, sent by facsimile
                           transmission, to the address or facsimile number, as
                           applicable, specified on the first page of this
                           Licence, or to such other address or facsimile number
                           as is specified in a notice given in accordance with
                           this Part.

         21.03    Where a notice is given under this Licence, it is deemed to
                  have been given 
                  (a)      if it is given in accordance with subparagraph
                           21.02(a), on the date it is delivered by hand,
                  (b)      if it is given in accordance with subparagraph
                           21.02(b), subject to paragraph 21.04, on the eighth
                           day after its deposit in a Canada Post Office at any
                           place in Canada, and
                  (c)      if it is given in accordance with subparagraph
                           21.02(c), subject to paragraph 21.05, on the date it
                           is sent by facsimile transmission.



                                                                         Page 38
<PAGE>   39
         21.04    Where, between the time a notice is mailed in accordance with
                  subparagraph 21.02(b) and the time it is actually received,
                  there occurs a postal strike, lockout or slowdown that might
                  reasonably affect delivery of the notice, the notice is not
                  deemed to be given until the party actually receives it.

         21.05    Where a notice is sent by facsimile transmission, the party
                  sending the notice must ensure that the transmission has been
                  successfully completed.

22.00    MISCELLANEOUS

         22.01    This Licence is subject to the laws of British Columbia,
                  including the Forest Act and all other applicable legislation.

         22.02    This Licence will enure to the benefit of, and be binding on,
                  the parties and their respective heirs, executors, successors
                  and permitted assigns.

         22.03    Where under this Licence the Minister or a ministry officer
                  has a discretion to require information, the Minister or
                  ministry officer will exercise this discretion in a reasonable
                  manner, having regard to the purposes and functions of the
                  Ministry of Forests set out in Section 4 of the Ministry of
                  Forests Act as it read on June 1, 1993.

         22.04    The Minister will ensure that the obligations under this
                  Licence of the ministry officers referred to in this Licence
                  are fulfilled within the limits of this Licence and applicable
                  legislation.

         22.05    The Licensee will use the services of one or more registered
                  professional foresters to manage the Licence Area in
                  accordance with the management plan and development plan in
                  effect under this Licence.

         22.06    At the request of the Regional Manager or District Manager,
                  the Licensee will survey and define on the ground any or all
                  boundaries of the Licence Area.

         22.07    Where
                  (a)      the boundaries of the Licence Area are based on
                           boundaries established under existing or expired
                           timber licences,
                  (b)      the legal description of the boundaries of the
                           Licence Area has been derived from original timber
                           licence survey plans or from reference maps prepared
                           from original timber licence survey plans, and
                  (c)      the legal description differs from the actual ground
                           location of timber licence corner posts,
                  the boundaries of the Licence Area are the boundaries as
                  originally established by the actual ground location of the
                  timber licence corner posts.

         22.08    Timber cut under this Licence or a road permit must be
                  (a)      marked according to the Forest Act, and
                  (b)      unless the timber is cut under a cruise based cutting
                           permit, scaled according to the Forest Act and any
                           procedures set or approved by the Ministry of
                           Forests.

         22.09    A right or duty of a ministry officer referred to in this
                  Licence may be exercised or fulfilled by another ministry
                  officer designated or authorized to do so by the Minister, the
                  Chief Forester, the Regional Manager, or the District Manager,
                  as appropriate.


                                                                         Page 39
<PAGE>   40
         22.10    Nothing in this Licence entitles the Licensee to have an area
                  of Schedule B Land, or Schedule A Land subject to a timber
                  licence, replaced with another area, or to have harvesting
                  rights awarded under another agreement under the Forest Act,
                  in the event timber is damaged or destroyed by pests, fire,
                  wind or other natural causes, or an area of land is deleted
                  from the Licence Area under the Forest Act or any other
                  statute.

         22.11    The Licensee waives any right the Licensee may have to
                  compensation from the Licensor, and releases the Licensor from
                  any claims the Licensee might have against the Licensor, as a
                  result of any deletion from the Licence Area, pursuant to
                  Section 53 of the Forest Act, of the areas which are indicated
                  on Schedule "D" attached to this Licence as the following:
                  Proposed Gold Range Wilderness Area, Proposed Monashee Park
                  Addition Study Area, Proposed Hutchinson Wilderness Area and
                  Addition, and Proposed Gladstone Wilderness Area. See map in
                  Schedule "D".

         22.12    Subject to the following, the Licensee shall continue the
                  employment of all of the following persons:
                  (a)      persons employed as of April 1, 1992, at, or on the
                           recall list for, the Castlegar sawmill,
                  (b)      persons employed as of April 1, 1992, within, or on
                           the recall list for, employment within Westar Timber
                           Ltd.'s (or an affiliate company's) log transportation
                           infrastructure associated with timber harvested from
                           this Licence,
                  (c)      persons employed as of April 1, 1992, at, or on the
                           recall list for, employment at Westar Timber Ltd.'s
                           (or an affiliated company's) woodlands divisions
                           associated with this Licence.
                  Termination of any of the above-noted employees must be for
                  one or more of the following reasons:
                  (a)      reduction of the allowable annual cut for this
                           Licence pursuant to the Forest Act,
                  (b)      other legitimate fiscal reasons, or
                  (c)      just cause.
                  In the event of termination of any employees, other than for
                  just cause, each terminated employee shall be treated as
                  though he or she has been continuously employed since he or
                  she last commenced employment with Westar Timber Ltd. (or any
                  of its affiliates).

         22.13    The Licensee will make available for purchase by traditional
                  local buyers, cedar volumes suitable for the manufacture of
                  shakes, harvested from the Licence Area.

23.00    INTERPRETATION

         23.01    In this Licence, unless the context otherwise requires,
                  (a)      "aboriginal activities" means cultural, spiritual,
                           religious, and sustenance activities associated with
                           traditional aboriginal life, including aboriginal
                           rights,
                  (b)      "aboriginal people" includes registered and
                           non-registered Indians, Inuits and Metis,
                  (c)      "allowable annual cut" means the allowable annual cut
                           determined for the Licence Area by the Chief Forester
                           under the Forest Act, as increased or decreased under
                           the Forest Act,
                  (d)      "close" or "closure" means cessation of production of
                           the principal forest products normally produced by a
                           timber processing facility,
                  (e)      "community forest" means a community forest as
                           defined by the Licensor,
                  (f)      "cultural heritage resource" means an object or site
                           that is of historic, cultural, or archaeological
                           significance,



                                                                         Page 40
<PAGE>   41
                  (g)      "cutting permit" means a cutting permit referred to
                           in paragraph 5.01, or issued under paragraph 5.03 or
                           5.09,
                  (h)      "deposit" means the deposit which the Licensee is
                           required to maintain under paragraph 10.03,
                  (i)      "development plan" means a plan which
                           (i)      details the proposed location and scheduling
                                    of development activities within the Licence
                                    Area, over a period of at least five years,
                                    including the location and scheduling of
                                    harvesting and road construction and
                                    deactivation activities,
                           (ii)     provides information to be considered in
                                    assessing the proposed location and
                                    scheduling of development activities, and
                           (iii)    subject to paragraph 4.15, is replaced every
                                    one or two years, depending on its term,
                  (j)      "Forest Act" means
                           (i)      the Forest Act, R.S.B.C. 1979, c. 140, as
                                    amended, or the successor to this act, or a
                                    part of this act if all or a part of it is
                                    repealed, and
                           (ii)     the regulations enacted under this act or
                                    its successor,
                  (k)      "free use permit" means a free use permit issued
                           under the Forest Act to the Licensee, or to a person
                           other than the Licensee,
                  (l)      "guideline" means a guideline, policy, procedure or
                           manual regarding forest practices applicable to all
                           or part of the Licence Area, which has been set or
                           approved by the Ministry ,
                  (m)      "harvest" includes entry onto land for the purpose of
                           cutting and removing timber, cutting the timber and
                           removing the timber from the land,
                  (n)      "land and resource management plan" means a plan,
                           approved by an appropriate official of the Government
                           of British Columbia, which provides direction for
                           land use, and establishes resource management
                           objectives and strategies, for all or part of the
                           Licence Area,
                  (o)      "Licence Area" means Schedule A Land and Schedule B
                           Land,
                  (p)      "local resource use plan" means a plan approved by
                           the District Manager which provides guidelines for
                           resource use and development in all or part of the
                           Licence Area,
                  (q)      "logging plan" means one or more detailed maps
                           setting out how the Licensee proposes to conduct
                           harvesting and related operations on one or more cut
                           blocks covered or to be covered by a cutting permit,
                  (r)      "Log transportation infrastructure" means all
                           facilities related to the scaling, dumping, booming,
                           towing and storage of logs, chips, wood products or
                           other related material or equipment,
                  (s)      "management plan" means a plan for managing,
                           protecting and conserving both the timber resources
                           and the non-timber values and resources of the
                           Licence Area, and integrating harvesting and related
                           activities with use of the Licence Area for purposes
                           other than timber production,
                  (t)      "manual" means a guideline, policy, procedure, or
                           manual set or approved by the Ministry for
                           preparation of
                           (i)      a Statement of Management Objectives,
                                    Options and Procedures,
                           (ii)     a Timber Supply Analysis Information
                                    Package,
                           (iii)    a timber supply analysis,
                           (iv)     a management plan,
                           (v)      a development plan,
                           (vi)     a cutting permit application,
                           (vii)    an annual report referred to in Part 8.00,
                                    or
                           (viii)   inventories referred to in Part 2.00,
                  (u)      "Ministry" means the Ministry of Forests,


                                                                         Page 41
<PAGE>   42
                  (v)      "ministry officer" means an employee of the Ministry,
                  (w)      "operable land base" mean those areas within the
                           Licence Area, which, based on the highest log prices
                           obtained over the previous decade for timber of the
                           type and quality principally found on the areas, are
                           economically feasible to develop and harvest with the
                           technology currently available to the Licensee,
                  (x)      "person" includes a corporation and a partnership,
                  (y)      "pest" means any animal, insect, fungus, bacteria,
                           virus, nematode, or other organism which is
                           detrimental to effective forest management,
                  (z)      "pre-harvest silviculture prescription" means a
                           prescription required prior to harvesting under
                           Section 129.3 of the Forest Act,
                  (aa)     "resource agencies" means any governmental agency,
                           ministry or department having jurisdiction over a
                           resource which may be affected by any activity or
                           operation, including but not restricted to harvesting
                           activities or operations, engaged in or carried out
                           under or associated with this Licence or a road
                           permit,
                  (bb)     "review strategy" means a plan for obtaining input
                           from resource agencies and interested persons
                           regarding management and development of the Licence
                           Area,
                  (cc)     "road" includes bridges and culverts,
                  (dd)     "Road Deactivation Plan" means a road deactivation
                           plan referred to in paragraph 11.05,
                  (ee)     "Road Maintenance Plan" means a road maintenance plan
                           referred to in paragraph 11.04,
                  (ff)     "road permit" means a road permit grantedto the
                           Licensee under the Forest Act which provides access
                           to timber harvested, or to be harvested, under this
                           Licence,
                  (gg)     "Schedule A Land" means the land described in the
                           Schedule "A" to this Licence,
                  (hh)     "Schedule B Land" means the Crown land described in
                           Schedule "B" to this Licence,
                  (ii)     "special deposit" means a special deposit which the
                           Licensee is required to maintain under paragraph
                           10.11,
                  (jj)     "special use permit" means a special use permit
                           issued under the Forest Act to authorize the Licensee
                           to use or occupy Crown land within the Licence Area,
                  (kk)     "timber supply analysis" means an analysis of the
                           short-term and long-term availability of timber for
                           harvesting in the Licence Area, including an analysis
                           of the short- and long-term effect of management
                           practices on the availability of timber,
                  (ll)     "Timber Supply Analysis Information Package" means
                           information relating to the preparation of a timber
                           supply analysis, including information regarding the
                           assumptions to be incorporated into a timber supply
                           analysis, and the methodology to be used in the
                           timber supply analysis,
                  (mm)     "Timber Supply Forester" means the ministry officer
                           designated by the Chief Forester to review the Timber
                           Supply Analysis Information Package and the timber
                           supply analysis,
                  (nn)     "20-year plan" means a plan prepared in support of a
                           timber supply analysis, which indicates the
                           availability of timber over a period of not less than
                           20 years.

      23.02       Unless otherwise provided in paragraph 23.01, if a word or
                  phrase used in this Licence is defined in the Forest Act, the
                  definition in the Forest Act applies to this Licence, and
                  where the word or phrase in the Forest Act is replaced by a
                  new word or phrase, this Licence is deemed to have been
                  amended accordingly.


                                                                         Page 42
<PAGE>   43
      23.03       Where a provision of the Forest Act referred to in this
                  Licence is renumbered, the reference in this Licence is to be
                  construed as a reference to the provision as renumbered.

      23.04       In this Licence, unless the context otherwise requires,
                  (a)      the singular includes the plural and the plural
                           includes the singular, and
                  (b)      the masculine, the feminine and the neuter are
                           interchangeable.

      23.05       This Licence is divided into parts, paragraphs, subparagraphs,
                  clauses and subclauses, illustrated as follows

                  1.00     part,
                           1.01     paragraph,
                                    (a)  subparagraph,
                                            (i)  clause,
                                                     (A) subclause,

                  and a reference to a subparagraph, clause or subclause be
                  construed as a reference to a subparagraph, clause or
                  subclause of the paragraph, subparagraph or clause, as the
                  case may be, in which the reference occurs.


                                                                         Page 43
<PAGE>   44
         IN WITNESS WHEREOF this Licence has been executed by the Minister and
the Licensee.

SIGNED on __________________ 19___ )  
by the Minister              )        
on behalf of Her Majesty     )        
the Queen in Right of                  )
the Province of              )        
British Columbia in the      )        
presence of:                           )
                                       )
__________________________________ )    ________________________________________
                                       )            The Honourable Andrew Petter

(Type in Name)____________________ )             Minister of Forests

                                      
THE COMMON SEAL of           )        
the Licensee was affixed     )        
on _________________________ 19___     )
in the presence of:          )        
                             )                           c/s
__________________________________ )  
                             )        
(Type in Name)____________________ )  
                                      

          (or)                        

                                      
SIGNED on __________________ 19___ )  
by the Licensee, in the      )        
presence of:                 )        
                             )        
__________________________________ )    ________________________________________
                             )                        (Licensee)
                                      
(Type in Name)____________________ )  
                                      

                                                                         Page 44
                                    
<PAGE>   45
                                  SCHEDULE "A"

                          ARROW LAKES TREE FARM LICENCE

                           TREE FARM LICENCE NUMBER 23



Forest lands and merchantable timber in other tenures owned or controlled by the
Licensee in Tree Farm Licence Number 23.


BLOCK 1

Now Tree Farm Licence Number 55 (Selkirk).

CROWN GRANTS

         Nil

TIMBER LICENCES

         Nil


BLOCK 2


<TABLE>
<CAPTION>
                                                 LAND TITLES
CROWN GRANTS               LAND DISTRICT         PARCEL IDENTIFIER       HECTARES
------------               -------------         -----------------       --------

<S>                        <C>                   <C>                     <C>   
The East half of           Kootenay              014-044-471             64.752
District Lot 770

The West half of           Kootenay              014-044-544             64.752
District Lot 770

District Lot 772           Kootenay              014-045-346             64.752

District Lot 5069          Kootenay              014-015-617             75.274

District Lot 7045          Kootenay              014-045-826             35.209

District Lot 7046          Kootenay              014-045-842             37.637

District Lot 7648          Kootenay              014-046-458
Except Parcel A
(See D. D. 13449I)

and

Parcel A (See D.D.         Kootenay              014-046-407             64.983
13449I)
District Lot 7648
</TABLE>

                                     Page 1
<PAGE>   46
<TABLE>
<S>                        <C>                   <C>                     <C>   
District Lot 7959          Kootenay              014-046-482             109.259
Except (1), Parcel
1 (Reference Plan
5828I) and Part
included in Plan 1321

District Lot 8653          Kootenay              014-045-907              43.708

District Lot 9126          Kootenay              014-045-869              16.188
                                                                         -------

                                                 TOTAL                   576.514
                                                                         =======
</TABLE>

BLOCK 2
TIMBER LICENCES

<TABLE>
<CAPTION>
                           REPLACES SPECIAL
TIMBER LICENCES            TIMBER LICENCES       LAND DISTRICT           HECTARES
---------------            ----------------      -------------           --------
<S>                        <C>                   <C>                     <C>   

     T0420                 TL 2671p              Kootenay                     64

     T0442                 TL 2737p              Kootenay                     70

     T0490                 TL 7318p              Kootenay                     71
                                                                            ----

                                                 TOTAL                       205
                                                                            ====
</TABLE>

BLOCK 3
CROWN GRANTED LANDS

<TABLE>
<CAPTION>
                                                 LAND TITLES
CROWN GRANTS               LAND DISTRICT         PARCEL IDENTIFIER       HECTARES
------------               -------------         -----------------       --------
<S>                        <C>                   <C>                     <C>   

Assigned Parcel            Kootenay              012-490-628                62.728
4, District Lot 373                                                 
Plan X13, Except                                                    
Parcel 1 (Reference                                                 
Plan 110363I)                                                       
                                                                    
Parcel A (sketch           Kootenay              014-045-443             2 257.416
Plan 596I)                                                          
District Lot 811                                                    
                                                                    
District Lot 860           Kootenay              014-045-508             1 082.977
                                                                    
District Lot 870           Kootenay              014-015-595               303.102
                                                                    
District Lot 2719          Kootenay              014-015-609                55.039
                                                                    
District Lot 7682,         Kootenay              014-025-001                32.376
except part included                                                
in Plan NEP 20435                                                   
                                                                    
Lot 17 of                  Kootenay              014-025-191                 7.082
District Lots                                                     
7893 and 7894,
Plan 1194
</TABLE>


                                     Page 2
<PAGE>   47
<TABLE>
<S>                        <C>                   <C>                     <C>   
Lot 18 of                  Kootenay              014-025-221               7.082
District Lots
7893 and 7894,
Plan 1194

Lot 20 of                  Kootenay              014-025-256               7.082
District Lots
7893 and 7894,
Plan 1194

Lot 21 of                  Kootenay              014-025-299               7.082
District Lots                                                           
7893 and 7894,                                                          
Plan 1194                                                               
                                                                        
Lot 22 of                  Kootenay              014-025-311               8.903
District Lots                                                           
7893 and 7894,                                                          
Plan 1194                                                               
                                                                        
Lot 23 of                  Kootenay              014-025-361               7.082
District Lots                                                           
7893 and 7894,                                                          
Plan 1194                                                               
                                                                        
Lot 24 of                  Kootenay              014-025-396               8.903
District Lots                                                           
7893 and 7894,                                                          
Plan 1194                                                               
                                                                        
Lot 25 of                  Kootenay              014-025-434               6.523
District Lots                                                           
7893 and 7894,                                                          
Plan 1194                                                               
                                                                        
Lot 26 of                  Kootenay              014-025-451               8.903
District Lots                                                           
7893 and 7894,                                                          
Plan 1194                                                               
                                                                        
Lot 27 of                  Kootenay              014-025-477               5.730
District Lots
7893 and 7894,
Plan 1194
</TABLE>


                                     Page 3
<PAGE>   48
<TABLE>
<S>                        <C>                   <C>                     <C>   

Lot 28 of                  Kootenay              014-025-515             8.903
District Lots
7893 and 7894,
Plan 1194

Lot 29 of                  Kootenay              014-025-558             5.431
District Lots
7893 and 7894,
Plan 1194

Lot 30 of                  Kootenay              014-025-639             8.648
District Lots
7893 and 7894,
Plan 1194

Lot 31 of                  Kootenay              014-025-663             5.673
District Lots
7893 and 7894,
Plan 1194

Lot 32 of                  Kootenay              014-025-680             8.142
District Lots
7893 and 7894,
Plan 1194

Lot 33 of                  Kootenay              014-025-701             5.766
District Lots
7893 and 7894,
Plan 1194

Lot 34 of                  Kootenay              014-025-728             7.891
District Lots
7893 and 7894,
Plan 1194

Lot 35 of                  Kootenay              014-025-752             5.378
District Lots
7893 and 7894,
Plan 1194

Lot 36 of                  Kootenay              014-025-779             7.891
District Lots
7893 and 7894,
Plan 1194

Lot 37 of                  Kootenay              014-025-787             5.961
District Lots
7893 and 7894,
Plan 1194
</TABLE>


                                     Page 4
<PAGE>   49
<TABLE>
<S>                        <C>                   <C>                     <C>   
Lot 40 of                  Kootenay              014-025-795             4.641
District Lots
7893 and 7894,
Plan 1194

Lot 42 of                  Kootenay              014-025-809             2.994
District Lots
7893 and 7894,
Plan 1194

Lot 43 of                  Kootenay              014-025-817             3.974
District Lots
7893 and 7894,
Plan 1194

Lot 44 of                  Kootenay              014-025-825             4.734
District Lots
7893 and 7894,
Plan 1194

Lot 49 of                  Kootenay              014-025-984             4.111
District Lots
7893 and 7894,
Plan 1194

Lot 50 of                  Kootenay              014-025-841             4.047
District Lots
7893 and 7894,
Plan 1194

Lot 77 of                  Kootenay              014-025-868             5.042
District Lots
7893 and 7894,
Plan 1194

Lot 83 of                  Kootenay              014-025-892             8.903
District Lots
7893 and 7894,
Plan 1194

Lot 85 of                  Kootenay              014-025-914             8.903
District Lots
7893 and 7894,
Plan 1194

Lot 86 of                  Kootenay              014-025-949             8.903
District Lots
7893 and 7894,
Plan 1194

Lot 20 of                  Kootenay              014-029-235             4.310
District Lot 8029,
Plan 822

Lot 21 of                  Kootenay              014-029-286             4.200
District Lot 8029,
Plan 822
</TABLE>

                                     Page 5
<PAGE>   50
<TABLE>
<S>                        <C>                   <C>                     <C>   

Lot 22 of                  Kootenay              014-029-316                4.200
District Lot 8029,
Plan 822

Lot 23 of                  Kootenay              014-029-332                4.431
District Lot 8029,                                                       --------
Plan 822

                                                 TOTAL                   4011.087
                                                                         ========
</TABLE>

<TABLE>
<CAPTION>
                           REPLACES
TIMBER LICENCES            TIMBER BERTH          LAND DISTRICT           HECTARES
---------------            ------------          -------------           --------
<S>                        <C>                   <C>                     <C>   

     T0160                     333               Kootenay                  63

     T0190                     392               Kootenay                 780

     T0220                     499               Kootenay                  27
                                                                         ----

                                                 TOTAL                    870
                                                                         ====
</TABLE>

<TABLE>
<CAPTION>
                           REPLACES SPECIAL
TIMBER LICENCES            TIMBER LICENCES       LAND DISTRICT           HECTARES
---------------            ----------------      -------------           --------
<S>                        <C>                   <C>                     <C>   

     T0109                     TL 595p           Kootenay                  49

     T0120                     TL 600p           Kootenay                  41

     T0145                     TL 604p           Kootenay                  18

     T0150                     TL 607p           Kootenay                  26

     T0159                     TL 879p           Kootenay                 122

     T0170                     TL 880p           Kootenay                 223

     T0215                     TL 881p           Kootenay                  55

     T0240                     TL 882p           Kootenay                 223

     T0300                     TL 883p           Kootenay                 185

     T0350                     TL 884p           Kootenay                  12

     T0370                     TL 885p           Kootenay                 221

     T0460                     TL 4842p          Kootenay                  27
</TABLE>


                                     Page 6
<PAGE>   51
<TABLE>
<S>                            <C>               <C>                       <C>   
     T0479                     TL 4843p          Kootenay                   40

     T0480                     TL 4845p          Kootenay                   62

     T0500                     TL 10014p         Kootenay                   10

     T0519                     TL 10015p         Kootenay                   46

     T0540                     TL 10016p         Kootenay                   37

     T0558                     TL 10017p         Kootenay                  113

     T0570                     TL 10019p         Kootenay                  152

     T0595                     TL 10029p         Kootenay                   87

     T0610                     TL 10030p         Kootenay                  102

     T0620                     TL 2982p          Kootenay                  147

     T0631                     TL 2983p          Kootenay                  259

     T0639                     TL 2984p          Kootenay                   84

     T0642                     TL 2985p          Kootenay                  125

     T0649                     TL 10031p         Kootenay                   67
                                                                         -----

                                                 TOTAL                   2 533
                                                                         =====
</TABLE>

BLOCK 4

<TABLE>
<CAPTION>
                                                 LAND TITLES
CROWN GRANTS               LAND DISTRICT         PARCEL IDENTIFIER       HECTARES
------------               -------------         -----------------       --------
<S>                        <C>                   <C>                     <C>   

Sublot 6, District         Kootenay              014-036-002             56.658
Lot 4599,
Plan X35

Lot 1 of Lot 6549,         Kootenay              014-018-217              6.070
Plan 1605

Lot 2 of Lot 6549,         Kootenay              014-018-241              6.475
Plan 1605

Lot 3 of Lot 6549,         Kootenay              014-018-268              6.576
Plan 1605

Lot 4 of Lot 6549,         Kootenay              014-018-284              6.649
Plan 1605

Lot 5 of Lot 6549,         Kootenay              014-018-306              6.240
Plan 1605
</TABLE>

                                     Page 7
<PAGE>   52
<TABLE>
<S>                        <C>                   <C>                     <C>   
Lot 7 of Lot 6549,         Kootenay              014-018-322              5.451
Plan 1605

Lot 8 of Lot 6549,         Kootenay              014-018-357              5.613
Plan 1605

Lot 9 of Lot 6549,         Kootenay              014-018-390              6.159
Plan 1605

Lot 10 of                  Kootenay              014-018-403              4.289
Lot 6549,
Plan 1605

Lot 11 of                  Kootenay              014-018-420              3.982
Lot 6549,
Plan 1605

Lot 12 of                  Kootenay              014-018-438              3.978
Lot 6549,
Plan 1605

Lot 6 of                   Kootenay              014-045-699              4.261
                                                                        -------
District Lot 6549,
Plan 853

                                                CROWN GRANT             122 401
                                                                        =======

SUMMARY

Total Crown Grants                                                    4 710 002

Total Timber Licences                                                 3 608 000
                                                                      ---------

                                                GRAND TOTAL           8 318 002
                                                                      =========
</TABLE>


                                     Page 8
<PAGE>   53
                                  SCHEDULE "B"
                          ARROW LAKES TREE FARM LICENCE
                           TREE FARM LICENCE NUMBER 23

1.       Schedule "B" Land

1.1      For the purposes of the definition of "Schedule 'B' Land" in Paragraph
         24.01 of this Licence, "Crown land described in Schedule 'B'" means all
         Crown land within the boundaries described in Paragraph 2, except for
         Alienated Crown Land.

2.       Boundaries

2.1      The boundaries referred to in Paragraph 1 are as follows:

         "Metes and bounds legal description"

3.       Interpretation

3.1      "Alienated Crown Land" means Crown land which is not available for
         inclusion in Schedule "B" Land and, without restricting the generality
         of the foregoing, includes Crown land which:

         (a)      is, as of the effective date of this Licence, within the area
                  of:

                  (i)      a park or ecological reserve;

                  (ii)     a lease, licence of exclusive occupation, or timber
                           licence held by a person other than the Licensee, or

                  (iii)    a highway (or road) right of way where the highway
                           (or road) is or is deemed, declared or determined to
                           be a public highway under the Highway Act (or a
                           Forest Service road under the Forest Act); or

         (b)      becomes vested in the Crown by escheat, reversion, transfer or
                  otherwise during the term of this Licence, except as provided
                  in this Licence.

3.2      Paragraph 24.02 of this Licence applies to this Schedule.

3.3      The map(s) accompanying this Schedule are for convenience only, and if
         there is any discrepancy between the map(s) and the description of
         boundaries in Paragraph 2, the description in Paragraph 2 will be
         deemed to be correct.

3.4      In this Schedule and on the accompanying map(s), identification of land
         which is within the boundaries described in Paragraph 2, but is not
         Schedule "B" Land does not mean all other land which is within these
         boundaries, but is not so identified is Schedule "B" Land.

         Note:    Crown land does not include land owned by an agent of the
                  Crown, nor land vested in the federal Crown.
<PAGE>   54
                                  SCHEDULE "B"
                          ARROW LAKES TREE FARM LICENCE
                           TREE FARM LICENCE NUMBER 23


All Crown lands not otherwise alienated within the area outlined in bold black
on the accompanying maps except Crown land reverted subsequent to 1971, which
was subject to an old temporary tenure (within the meaning of the Forest Act
assented to March 30, 1972) and held by a person other than the licensee.

BLOCK 1

Removed by Instrument Number 135, now forms Selkirk Tree Farm Licence Number 55
and Goldstream Tree Farm Licence Number 56.

BLOCK 2
AREA A

Commencing at the northwest corner of Lot 863, Kootenay Land District, also
being a point on the natural boundary of Upper Arrow Lake on the easterly shore
thereof; thence in a general northwesterly direction along the natural boundary
of said Upper Arrow Lake on the easterly shore thereof to the southeast corner
of Lot 8130; thence northerly and westerly along the easterly and northerly
boundaries of Lots 8130 and 8408 to the natural boundary of aforesaid Upper
Arrow Lake on the easterly shore thereof; thence in a general northerly
direction along the natural boundary of said Upper Arrow Lake on the easterly
shore thereof to the southwest corner of Lot 1139; thence easterly and northerly
along the southerly and easterly boundaries of said Lot 1139 to the southwest
corner of Lot 3945; thence easterly along the southerly boundary of said Lot
3945 to the northwest corner of Lot 1138; thence southerly and easterly along
the westerly and southerly boundaries of said Lot 1138 to the southeast corner
thereof; thence northerly and westerly along the easterly and northerly
boundaries of said Lots 1138 and 3945 to the northwest corner of said Lot 3945;
thence southerly along the westerly boundary of said Lot 3945 to the northeast
corner of aforesaid Lot 1139; thence westerly along the northerly boundary of
said Lot 1139 to the natural boundary of aforesaid Upper Arrow Lake on the
easterly shore thereof; thence in a general northwesterly direction along the
natural boundary of said Upper Arrow Lake on the easterly shore thereof to the
northwest corner 


                                     Page 1
<PAGE>   55
of Lot 5069; thence easterly along the northerly boundary of said Lot 5069 to
the westerly limit of the right of way of Highway No. 23; thence in a general
northerly direction along the westerly limit of the right of way of said Highway
No. 23 to a point 372 metres north and 1.251 kilometres west of the northeast
corner of said Lot 5069; thence west to the natural boundary of aforesaid Upper
Arrow Lake on the easterly shore thereof; thence in a general northerly
direction along the natural boundary of said Upper Arrow Lake on the easterly
shore thereof to the southwest corner of Lot 11005; thence easterly and
northerly along the southerly and easterly boundaries of Lots 11005, 2451 and
100 to the northeast corner of said Lot 100; thence westerly along the northerly
boundary of said Lot 100 to the natural boundary of aforesaid Upper Arrow Lake
on the easterly shore thereof; thence in a general northerly direction along the
natural boundary of said Upper Arrow Lake on the easterly shore thereof to a
point 107 metres south and 464 metres west of the southwest corner of Lot 12459;
thence south 3.181 kilometres; thence east 1.615 kilometres; thence north to the
southerly boundary of Lot 1146; thence easterly along the southerly boundary of
said Lot 1146 to the southeast corner thereof; thence northerly along the
easterly boundary of said Lot 1146 to the southerly boundary of Lot 7044; thence
easterly and northerly along the southerly and easterly boundaries of said Lot
7044 to the southerly boundary of Lot 7635; thence easterly along the southerly
boundary of said Lot 7635 to the westerly boundary of Lot 10633; thence
southerly, easterly, northerly, easterly and northerly along the westerly,
southerly, easterly, southerly and easterly boundaries of said Lot 10633 to the
southerly boundary of Lot 1143; thence easterly along the southerly boundary of
said Lot 1143 to the southeast corner thereof; thence northerly along the
easterly boundaries of Lots 1143 and 2112 to the northeast corner of said Lot
2112; thence due north to the southerly boundary of Lot 7818; thence easterly
along the southerly boundary of said Lot 7818 to the southeast corner thereof;
thence northerly along the easterly boundaries of Lots 7818, 8668, 7956 and 7957
to the northeast corner of said Lot 7957; thence northerly along the westerly
boundary of Lot 6012 to the northwest thereof; thence northerly in a straight
line to the southeast corner of Lot 8406; thence northerly along the easterly
boundary of said Lot 8406 to the southwest corner of Lot 7584; thence easterly
and northerly along the southerly and easterly boundaries of said Lot 7584 to
the northeast corner thereof; thence westerly along the northerly boundaries of
Lots 7584, 8308, 8309, 8683 and 8614 to the northwest corner of said Lot 8614;
thence southerly along the westerly boundary of said Lot 8614 to the northerly
boundary of Lot 2111; thence westerly along the northerly boundaries of Lots
2111 and 8407 to the northwest corner of 

                                     Page 2
<PAGE>   56
said Lot 8407; thence southerly along the westerly boundary of said Lot 8407 to
the natural boundary of Galena Bay on the westerly shore thereof; thence in a
general southwesterly direction along the natural boundary of said Galena Bay on
the westerly shore thereof to the natural boundary of aforesaid Upper Arrow Lake
on the easterly shore thereof; thence in a general northerly direction along the
natural boundary of said Upper Arrow Lake on the easterly shore thereof to the
natural boundary of the Northeast Arm of said Upper Arrow Lake on the southerly
shore thereof; thence in a general northeasterly direction along the natural
boundary of the Northeast Arm of said Upper Arrow Lake on the southeasterly
shore thereof to a point 998 metres south and 3.793 kilometres west of the
southwest corner of Lot 11331; thence east to the natural boundary of Beaton
Creek on the right bank thereof; thence in a general northerly direction along
the natural boundary of said Beaton Creek on the right bank thereof to the
southerly boundary of Lot 505; thence easterly and northerly along the southerly
and easterly boundaries of said Lot 505 to the southerly boundary of Lot 502;
thence easterly along the southerly boundary of said Lot 502 to the southwest
corner of Lot 7959; thence northerly along the westerly boundary of said Lot
7959 to the southwest corner of Lot 1 of said Lot 7959, Plan 1321, Nelson Land
Title Office; thence easterly along the southerly boundaries of Lots 1 and 2 of
said Lot 7959, Plan 1321 to the southeast corner of said Lot 2; thence northerly
along the easterly boundary of said Lot 2 to the northeast corner thereof;
thence due north to the southerly boundary of Assigned Parcel Number 1
(Reference Plan 5828-I); thence in a general easterly, northerly, westerly,
southwesterly and southerly direction along the southerly, easterly, northerly,
northwesterly and westerly boundaries of said Assigned Parcel Number 1
(Reference Number 5828-I) to the northerly limit of Camborne Road, Plan 1521;
thence in a general southwesterly direction along the northerly limit of said
Camborne Road, Plan 1521 to the westerly boundary of aforesaid Lot 7959; thence
northerly along the westerly boundary of said Lot 7959 to the natural boundary
of the Northeast Arm of aforesaid Upper Arrow Lake on the southerly shore
thereof; thence in a general southeasterly, northerly and westerly direction
along the natural boundary of the Northeast Arm of said Upper Arrow Lake on the
southerly, easterly, and northerly shores thereof to the southwest corner of Lot
503; thence northerly along the westerly boundary of said Lot 503 to the
northwest corner thereof; thence easterly along the northerly boundary of said
Lot 503 101 metres; thence north 1.127 kilometres; thence west 111 metres;
thence northwesterly in a straight line to the summit of Comaplix Mountain, also
being a point on the westerly boundary of the watershed of Incomappleux River;
thence in a general northerly 


                                     Page 3
<PAGE>   57
direction along westerly boundary of the watershed of said Incomappleux River to
the northerly boundary of the watershed of MacDougal Creek, also being a point
on the southerly boundary of Glacier National Park; thence in a general easterly
direction along the southerly boundary of said Glacier National Park to the
easterly boundary of the watershed of aforesaid Incomappleux River; thence in a
general southerly direction along the easterly boundary of the watershed of said
Incomappleux River to the northwesterly boundary of Lot 1973; thence
southwesterly along the northwesterly boundary of said Lot 1973 to the
northeasterly boundary of Lot 2150; thence northwesterly along the northeasterly
boundaries of Lots 2150, 2151 and 2147 to the most northerly corner of said Lot
2147; thence southwesterly along the northwesterly boundary of said Lot 2147 to
the most westerly corner thereof; thence southeasterly along the southwesterly
boundaries of Lots 2147, 2151 and 2150 to the most southerly corner of said Lot
2150; thence northeasterly along the southeasterly boundary of said Lot 2150 to
the southwesterly boundary of aforesaid Lot 1973; thence southeasterly along the
southwesterly boundary of said Lot 1973 to the easterly boundary of the
watershed of aforesaid Incomappleux River; thence in a general southerly
direction along the easterly boundary of the watershed of said Incomappleux
River to the northeasterly boundary of the watershed of Ferguson Creek; thence
in a general southeasterly direction along the northeasterly boundary of the
watershed of said Ferguson Creek to the northwesterly boundary of Lot 4705;
thence southwesterly, southeasterly and northeasterly along the northwesterly,
southwesterly and southeasterly boundaries of said Lot 4705 to the easterly
boundary of the watershed of said Ferguson Creek; thence in a general southerly
direction along the easterly boundary of the watershed of said Ferguson Creek to
the northerly boundary of the watershed of Lardeau Creek; thence in a general
northeasterly direction along the northerly boundary of the watershed of said
Lardeau Creek to the southwesterly boundary of Lot 4725; thence southeasterly
along the southwesterly boundary of said Lot 4725 to the northwesterly boundary
of Lot 4722; thence southwesterly, southeasterly, northeasterly and
northwesterly along the northwesterly, southwesterly, southeasterly and
northeasterly boundaries of said Lot 4722 to the northerly boundary of the
watershed of aforesaid Lardeau Creek; thence in a general northeasterly
direction along the northerly boundary of the watershed of said Lardeau Creek to
the southwesterly boundary of Lot 4568; thence southeasterly and northeasterly
along the southwesterly and southeasterly boundaries of said Lot 4568 to the
northerly boundary of the watershed of said Lardeau Creek; thence in a general
northeasterly and southerly direction along the northerly and easterly
boundaries of the watershed of said Lardeau Creek to 


                                     Page 4
<PAGE>   58
a point due east of the most southerly corner of Lot 8681; thence west to the
southeasterly boundary of Lot 5696; thence northeasterly, northwesterly and
southwesterly along the southeasterly, northeasterly and northwesterly
boundaries of said Lot 5696 to the southeasterly boundary of Lot 7433; thence
northeasterly, northwesterly and southwesterly along the southeasterly,
northeasterly and northwesterly boundaries of said Lot 7433 to the most westerly
corner thereof; thence southeasterly along the southwesterly boundaries of Lots
7433 and 5696 to a point due east of the most southerly corner of aforesaid Lot
8681; thence west to the most easterly northeast boundary of Lot 13044; thence
northwesterly and southwesterly along the northeasterly and northwesterly
boundaries of said Lot 13044 to the northeasterly boundary of Lot 13046; thence
northwesterly and southwesterly along the northeasterly and northwesterly
boundaries of said Lot 13046 to the northwesterly boundary of Lot 13048; thence
southwesterly along the northwesterly boundary said Lot 13048 to a point due
east of the most southerly corner of aforesaid Lot 8681; thence west to the most
southerly corner of said Lot 8681; thence northeasterly, southeasterly,
northeasterly and northwesterly along the southeasterly, southwesterly,
southeasterly and northeasterly boundaries of said Lot 8681 to the southerly
boundary of Lot 8680; thence easterly, northerly, westerly, southerly and
easterly along the southerly, easterly, northerly, westerly and southerly
boundaries of said Lot 8680 to the northwesterly boundary of said Lot 8681;
thence southwesterly and southeasterly along the northwesterly and southwesterly
boundaries of said Lot 8681 to the most southerly corner thereof; thence south
37 degrees west 1.851 kilometres; thence south 44 degrees west 2.300 kilometres,
more or less, to a point on the natural boundary of Trout Lake on the
northeasterly shore thereof; thence in a general northwesterly direction along
the natural boundary of said Trout Lake on the northeasterly shore thereof to
the southerly boundary of Lot 10645; thence easterly, northerly and westerly
along the southerly, easterly and northerly boundaries of said Lot 10645 to the
southeast corner of Lot 769; thence northerly along the easterly boundaries of
Lots 769 and 1147 to the northeast corner of said Lot 1147; thence westerly
along the northerly boundary of said Lot 1147 to the easterly boundary of Lot
771; thence northerly, westerly, southerly and easterly along the easterly,
northerly, westerly and southerly boundaries of said Lot 771 to the northwest
corner of Lot 11328; thence southerly and easterly along the westerly and
southerly boundaries of Lots 11328 and 190 to the natural boundary of aforesaid
Trout Lake on the southwesterly shore thereof; thence in a general southeasterly
direction along the natural boundary of said Trout Lake on the southwesterly
shore thereof to a point 242 metres north and 280 metres west of the northwest
corner of 


                                     Page 5
<PAGE>   59
Lot 15703; thence south 60 degrees west 13.325 kilometres, more or less, to the
easterly boundary of the watershed of Halfway River; thence in a general
southerly direction along the easterly boundary of the watershed of said Halfway
River to the northerly boundary of the watershed of Kuskanax Creek; thence in a
general southwesterly direction along the northerly boundary of the watershed of
said Kuskanax Creek to a point due east of the northeast corner of Lot 11743;
thence west to the northeast corner of said Lot 11743; thence westerly along the
northerly boundaries of Lots 11743 and 863 to the northwest corner of said Lot
863, being the point of commencement.

Excluding thereout all that foreshore and land covered by water within the above
described area.

AREA B

Commencing at the northwest corner of Lot 12769, Kootenay Land District; thence
north 402 metres; thence east 1.609 kilometres; thence north 402 metres; thence
east 1.609 kilometres; thence south 402 metres; thence east 1.609 kilometres;
thence south 805 metres; thence west 1.609 kilometres; thence south 402 metres;
thence west 1.609 kilometres; thence north 402 metres; thence west 1.609
kilometres, more or less, to the westerly boundary of aforesaid Lot 12769;
thence northerly along the westerly boundary of said Lot 12769 to the northwest
corner thereof, being the point of commencement.

Excluding thereout all that foreshore and land covered by water within the above
described area.

AREA C

Commencing at the southeast corner of Lot 12459, Kootenay Land District; thence
southerly along the westerly boundary of Lot 1146 68.470 metres; thence due west
to the natural boundary of Upper Arrow Lake on the easterly shore thereof;
thence in a general northeasterly direction along the natural boundary of said
Upper Arrow Lake on the easterly shore thereof to the westerly boundary of
aforesaid Lot 12459; thence southerly and easterly along the westerly and
southerly boundaries of said Lot 12459 to the southeast corner thereof, being
the point of commencement.


                                     Page 6
<PAGE>   60
Excluding thereout all that foreshore and land covered by water within the above
described area, and those areas of land described below, which are currently
active amendments and instruments within Tree Farm Licence 23, Block 2.

<TABLE>
<CAPTION>
DOCUMENT          DATE              PARTICULARS
--------          ----              -----------

<S>               <C>               <C>
Am #8             56-10-19          Removes Lots 8291, 8292 and 10373,
                                    Kootenay Land District.

Am #9             57-01-04          Removes Lots 15771 - 15778, Kootenay Land District 

Am #15            58-10-23          Removes Lookout site.

Am #33            61-05-03          Removal for proposed Park.
</TABLE>

<TABLE>
<CAPTION>
DOCUMENT          DATE              PARTICULARS
--------          ----              -----------

<S>               <C>               <C>

Am #34            61-05-02          Removal for proposed Park

Am #60            65-01-06          Removes Blocks 1 - 34, 36 - 41, 50 & 55
                                    Plan 6713, Nelson Land Title Office

Am #80            68-05-17          Removes 2 gravel pits

Am #90            69-11-06          Removes 14.4 acres (north of Lot 7952,
                                    Kootenay Land District)

Instr #114        78-10-05          Removes area near Galena Bay 

Instr #119        80-02-27          Removes Pipeline R/W and parking lot 

Instr #134        91-10-02          Removes Lot 16952, Kootenay Land District
</TABLE>

BLOCK 3

Commencing at the northeast corner of Lot 10391, Kootenay Land District, also
being a point on the natural boundary of Lower Arrow Lake on the westerly shore
thereof; thence westerly and southerly along the northerly and westerly
boundaries of said Lot 10391 to the northerly boundary of Lot 8180; thence
westerly along the northerly boundary of said Lot 8180 to the easterly boundary
of Lot 8409; thence northerly and westerly along the easterly and northerly
boundaries of Lots 8409 and 10026 to the northwest corner of said Lot 10026;
thence southerly along the westerly boundary of said Lot 10026 to the most
northerly northeast corner of Lot 10387; thence westerly along the northerly
boundary of said Lot


                                     Page 7
<PAGE>   61
10387 to the northwest corner thereof; thence southerly along the westerly
boundaries of Lots 10387 and 8101 to the northerly boundary of Lot 9148; thence
westerly along the northerly boundary of said Lot 9148 to the northwest corner
thereof; thence south 37 degrees west to a point lying due east of the southeast
corner of Lot 8546; thence west to the southeast corner of said Lot 8546; thence
westerly and northerly along the southerly and westerly boundaries of said Lot
8546 to the southeast corner of Lot 7893; thence westerly along the southerly
boundary of said Lot 7893 to the southwest corner thereof, also being the
southwest corner of Block 86 of Lot 7893, Plan 1194, Nelson Land Title Office;
thence northerly along the westerly boundaries of Blocks 86 and 85 to the
northwest corner of said Block 85; thence easterly along the northerly boundary
of said Block 85 to the northeast corner thereof; thence easterly in a straight
line to the northwest corner of Block 18; thence easterly along the northerly
boundary of said Block 18 to the southeast corner of Block 19; thence northerly
along the easterly boundary of said Block 19 to the southeast corner of Block
20; thence westerly along the southerly boundary of said Block 20 to the
southwest corner thereof; thence westerly in a straight line to the southeast
corner of Block 83; thence westerly along the southerly boundary of said Block
83 to the southwest corner thereof; thence northerly along the westerly
boundaries of Blocks 83, 22, 24, 26, 28, 30, 32 and 34 to the southwest corner
of Block 36; thence northerly and easterly along the westerly and northerly
boundaries of Blocks 36 and 43 to a point due south of the southwest corner of
Block 44; thence northerly in a straight line to the southwest corner of said
Block 44; thence northerly and easterly along the westerly and northerly
boundaries of said Block 44 to the northwest corner of Block 40; thence
easterly, southerly and easterly along the northerly, easterly and northerly
boundaries of said Block 40 to the most easterly northeast corner thereof;
thence southerly along the easterly boundary of said Block 40 to the southeast
corner thereof; thence due south to the northerly boundary of Block 42; thence
easterly along the northerly boundary of said Block 42 to the northeast corner
thereof; thence easterly in a straight line to the northwest corner of Block 37;
thence easterly along the northerly boundary of said Block 37 to the northeast
corner thereof, also being a point on the natural boundary of Barnes Creek on
the right bank thereof; thence in a general southerly direction along the
easterly boundaries of Blocks 37, 35, 33, 31, 29, 27 and 25 to the northerly
boundary of Block 23; thence easterly along the northerly boundary of said Block
23 to the northeast corner thereof, also being a point on the westerly boundary
of aforesaid Lot 8546; thence northerly and easterly along the westerly and
northerly boundaries of said Lot 8546 to the 

                                     Page 8
<PAGE>   62
southeast corner of Lot 8186; thence northerly along the easterly boundary of
said Lot 8186 to the southerly boundary of Lot 8548; thence easterly along the
southerly boundary of said Lot 8548 to the southeast corner thereof; thence
northerly and westerly along the easterly and northerly boundaries of Lots 8548
and 8170 to the northwest corner of said Lot 8170, also being a point on the
natural boundary of Whatshan Lake on the easterly shore thereof; thence in a
general southerly, westerly and northerly direction along the natural boundary
of said Whatshan Lake on the easterly, southerly and westerly shores thereof to
the southeast corner of Lot 8187; thence westerly and northerly along the
southerly and westerly boundaries of said Lot 8187 to the most southerly
southeast corner of Lot 8189; thence westerly along the southerly boundaries of
Lots 8189 and 8544 to the southwest corner of said Lot 8544; thence due west to
the westerly boundary of the watershed of aforesaid Barnes Creek; thence in a
general northerly direction along the westerly boundaries of the watersheds of
Barnes Creek, Whatshan Lake, Arrow Park Creek and Upper Arrow Lake to the
southerly boundary of Monashee Provincial Park, established by Order In Council
1201, approved and ordered August 2, 1990; thence in a general easterly and
northwesterly direction along the southerly, and northeasterly boundaries of
said Monashee Provincial Park to the westerly boundary of the watershed of
aforesaid Upper Arrow Lake; thence in a general northerly direction along the
westerly boundary of the watershed of said Upper Arrow Lake to a point due west
of the southwest corner of the southeast quarter of Section 5, Township 23,
Range 2, W6M; thence east to the southwest corner of the southeast quarter of
said Section 5; thence easterly along the southerly boundaries of Sections 5, 4
and 3 to the northwest corner of Section 34, Township 22, Range 2, W6M; thence
easterly along the northerly boundary of said Section 34 to the northwest corner
of Section 35; thence southerly and easterly along the westerly and southerly
boundaries of said Section 35 to the natural boundary of aforesaid Upper Arrow
Lake on the westerly shore thereof; thence in a general southerly direction
along the natural boundary of said Upper Arrow Lake on the westerly shore
thereof to the easterly boundary of Section 7, Township 22, Range 1, W6M; thence
southerly along the easterly boundaries of Sections 7 and 6 to the northwest
corner of the southwest quarter of Section 5; thence easterly and southerly
along the northerly and easterly boundaries of the southwest quarter of said
Section 5 to the northerly boundary of Section 32, Township 21, Range 1, W6M;
thence easterly along the northerly boundary of said Section 32 to the westerly
limit of the right of way of Highway No. 23; thence in a general southeasterly
direction along the westerly limit of the right of way of said Highway No. 23 to


                                     Page 9
<PAGE>   63
the easterly boundary of aforesaid Section 32; thence southerly along the
easterly boundary of said Section 32 to the northwest corner of the southwest
quarter of Section 33; thence easterly along the northerly boundary of the
southwest quarter of said Section 33 to the westerly limit of the right of way
aforesaid Highway No. 23; thence in a general southeasterly direction along the
westerly limit of the right of way of said Highway No. 23 to the easterly
boundary of the southwest quarter of said Section 33; thence southerly along the
easterly boundary of the southwest quarter of said Section 33 to the northwest
corner of the northeast quarter of Section 28; thence easterly and southerly
along the northerly and easterly boundaries of the northeast quarter of said
Section 28 to the northerly boundary of Legal Subdivision 12 of Section 27;
thence easterly along the northerly boundaries of Legal Subdivisions 12 and 11
to the natural boundary of aforesaid Upper Arrow Lake on the westerly shore
thereof; thence in a general southeasterly direction along the natural boundary
of said Upper Arrow Lake on the westerly shore thereof to the easterly boundary
of the west half of Section 23; thence southerly along the easterly boundary of
the west half of said Section 23 to the northerly boundary of Section 14; thence
easterly along the northerly boundary of said Section 14 to the northeast corner
thereof; thence southerly along the easterly boundaries of Sections 14 and 11 to
the northwest corner of Section 1; thence easterly and southerly along the
northerly and easterly boundaries of the northwest quarter and the southeast
quarter of said Section 1 to the northeast corner of Section 36, Township 20,
Range 1, W6M; thence southerly along the easterly boundary of said Section 36 to
the northwest corner of the fractional south half of Section 31, Township 20,
Range 29, W5M; thence easterly along the northerly boundary of the fractional
south half of said Section 31 to the northeast corner thereof; thence southerly
along the easterly boundaries of Sections 31 and 30 to the southwest corner of
fractional Section 29; thence easterly along the southerly boundary of said
fractional Section 29 to a point due north of the northwest corner of Lot 5092;
thence south to the northwest corner of said Lot 5092; thence southerly and
easterly along the westerly and southerly boundaries of said Lot 5092 to the
northwest corner of Lot 3257; thence southerly along the westerly boundary of
said Lot 3257 to the natural boundary of aforesaid Upper Arrow Lake on the
westerly shore thereof; thence in a general southerly direction along the
natural boundary of said Upper Arrow Lake on the westerly shore thereof to the
westerly boundary of Lot 1095; thence southerly and easterly along the westerly
and southerly boundaries of said Lot 1095 to the natural boundary of said Upper
Arrow Lake on the westerly shore thereof; thence in a general southeasterly
direction along the natural boundary of said 


                                    Page 10
<PAGE>   64
Upper Arrow Lake on the westerly shore thereof to the westerly boundary of Lot
3259; thence southerly and easterly along the westerly and southerly boundaries
of said Lot 3259 to the natural boundary of said Upper Arrow Lake on the
westerly shore thereof; thence in a general southeasterly direction along the
natural boundary of said Upper Arrow Lake on the westerly shore thereof to the
westerly boundary of Lot 1096; thence southerly and easterly along the westerly
and southerly boundaries of Lots 1096 and 445 to the natural boundary of
aforesaid Upper Arrow Lake on the westerly shore thereof; thence in a general
southerly direction along the natural boundary of said Upper Arrow Lake on the
westerly shore thereof to the northerly boundary of Lot 8312; thence westerly
along the northerly boundary of said Lot 8312 to the northwest corner thereof;
thence southerly along the westerly boundaries of Lots 8312 and 12898 to the
southwest corner of said Lot 12898, also being a point on the natural boundary
of aforesaid Upper Arrow Lake on the westerly shore thereof; thence in a general
southerly direction along the natural boundary of said Upper Arrow Lake on the
westerly shore thereof to the natural boundary of an unnamed creek on the right
bank thereof, said unnamed creek flowing southeasterly into said Upper Arrow
Lake at a point 117 metres south and 435 metres east of the most southerly
southwest corner of Lot 7902; thence in a general northwesterly direction along
the natural boundary of said unnamed creek on the right bank thereof to a point
5 metres north and 201 metres east of the most southerly southwest corner of
said Lot 7902; thence south 1.152 kilometres; thence due east to the natural
boundary of aforesaid Upper Arrow Lake on the westerly shore thereof; thence in
a general southerly direction along the natural boundary of said Upper Arrow
Lake on the westerly shore thereof to the northerly boundary of Lot 4576; thence
westerly along the northerly boundaries of Lots 4576 and 7897 to the northwest
corner of said Lot 7897; thence southerly and easterly along the westerly and
southerly boundaries of Lots 7897 and 7677 to the southwest corner of Lot 7676;
thence easterly along the southerly boundary of said Lot 7676 to the natural
boundary of aforesaid Upper Arrow Lake on the westerly shore thereof; thence in
a general southerly direction along the natural boundary of said Upper Arrow
Lake on the westerly shore thereof to the northerly boundary of Lot 10591;
thence westerly, southerly and easterly along the northerly, westerly and
southerly boundaries of said Lot 10591 to the natural boundary of aforesaid
Upper Arrow Lake on the westerly shore thereof; thence in a general southerly
direction along the natural boundary of said Upper Arrow Lake on the westerly
shore thereof to the westerly boundary of Lot 12325; thence southerly and
easterly along the westerly and southerly boundaries of said Lot 12325 to the
natural boundary of said Upper Arrow Lake on 


                                    Page 11
<PAGE>   65
the westerly shore thereof; thence in a general southerly direction along the
natural boundary of said Upper Arrow Lake on the westerly shore thereof to the
northerly boundary of Lot 8033; thence westerly and southerly along the
northerly and westerly boundaries of said Lot 8033 to the northerly boundary of
Lot 8034; thence westerly along the northerly boundary of said Lot 8034 to the
northeast corner of Lot 8510; thence westerly and southerly along the northerly
and westerly boundaries of Lots 8510, 12774, 8564, and 12775 to the northerly
boundary of Lot 8566; thence westerly along the northerly boundary of said Lot
8566 to the easterly boundary of Lot 12340; thence northerly and westerly along
the easterly and northerly boundaries of said Lot 12340 to the northeast corner
of Lot 8333; thence westerly and southerly along the northerly and westerly
boundaries of said Lot 8333 to the northerly boundary of Lot 373; thence
westerly and southerly along the northerly and westerly boundaries of Lots 373
and 8029 to the southwest corner of said Lot 8029; thence easterly along the
southerly boundary of said Lot 8029 to the northwest corner of Lot 8030; thence
southerly along the westerly boundaries of Lots 8030 and 12776 to the southwest
corner of said Lot 12776; thence easterly along the southerly boundaries of Lots
12776 and 7105 to the northwest corner of Lot 7104; thence southerly along the
westerly boundaries of Lots 7104 and 8512 to the southwest corner of said Lot
8512; thence easterly along the southerly boundary of said Lot 8512 to the
northwest corner of Lot 8027; thence southerly and easterly along the westerly
and southerly boundaries of said Lot 8027 to the westerly boundary of Lot 3619;
thence southerly along the westerly boundaries of Lots 3619, 3620 and 7690 to
the southwest corner of said Lot 7690; thence easterly along the southerly
boundary of said Lot 7690 to the northwest corner of Lot 7691; thence southerly
along the westerly boundaries of Lots 7691 and 12777 to the southwest corner of
said Lot 12777; thence easterly along the southerly boundaries of Lots 12777,
8159 and 7692 to the natural boundary of aforesaid Lower Arrow Lake on the
westerly shore thereof; thence in a general southerly and southwesterly
direction along the natural boundary of said Lower Arrow Lake on the westerly
and northerly shores thereof to the easterly boundary of Lot 7967; thence
northerly along the easterly boundary of said Lot 7967 to the northeast corner
thereof; thence westerly along the northerly boundaries of Lots 7967 and 8691 to
the easterly boundary of Lot 10593; thence northerly and westerly along the
easterly and northerly boundaries of said Lot 10593 to the easterly boundary of
Lot 12786; thence northerly along the easterly boundaries of Lots 12786, 12785
and 9892 to the northeast corner of said Lot 9892; thence westerly and southerly
along the northerly and westerly boundaries of said Lot 9892 to the northerly
boundary of Lot 9889; thence 


                                    Page 12
<PAGE>   66
westerly along the northerly boundaries of Lots 9889 and 11162 to the northwest
corner of said Lot 11162; thence southerly along the westerly boundaries of Lots
11162, 12784 and 9893 to the southwest corner of said Lot 9893; thence easterly
along the southerly boundary of said Lot 9893 to the northwest corner of Lot
9895; thence southerly and easterly along the westerly and southerly boundaries
of said Lot 9895 to the southeast corner thereof; thence northerly along the
easterly boundaries of Lots 9895 and 9894 to the southwest corner of aforesaid
Lot 12786; thence easterly along the southerly boundaries of said Lot 12786 and
aforesaid Lot 10593 to the westerly boundary of aforesaid Lot 8691; thence
southerly along the westerly boundaries of Lots 8691 and 12895 to the southwest
corner of said Lot 12895; thence south 805 metres; thence west 604 metres;
thence south to the natural boundary of aforesaid Lower Arrow Lake on the
westerly shore thereof; thence in a general southwesterly direction along the
natural boundary of said Lower Arrow Lake on the westerly shore thereof to the
northeast corner of aforesaid Lot 10391, being the point of commencement.

Excluding thereout all that foreshore and land covered by water within the above
described area, and those areas of land described below, which are currently
active amendments and instruments within Tree Farm Licence 23, Block 3.


<TABLE>
<CAPTION>
DOCUMENT                  DATE                 PARTICULARS
--------                  ----                 -----------
<S>                       <C>                  <C>                       

Am #4                     56-01-09             Removes R/W

Am #14                    58-05-20             Removes Hydro R/W

Am #19                    59-10-05             Removes Lookout site
</TABLE>

<TABLE>
<CAPTION>
DOCUMENT                  DATE                 PARTICULARS
--------                  ----                 -----------
<S>                       <C>                  <C>                       
Am #21                    60-01-12             Removes Lots 16071 - 16080, 16088 - 16095, 16101, 
                                                   16111 & 16112, Kootenay Land District

Am #22                    60-03-09             Removes lookout site

Am #25                    60-08-02             Removes T.V. transmission site

Am #27                    60-10-20             Removes Hydro R/W

Am #32                    62-04-19             Removes special use area

Am #37                    61-09-25             Removes T.V. transmission site
</TABLE>


                                    Page 13
<PAGE>   67
<TABLE>
<S>                       <C>                  <C>                       
Am #42                    62-10-30             Removes picnic site

Am #53                    64-07-21             Removes Ptn. of Lot 8543, Kootenay Land District

Am #72                    66-11-28             Removes hydro sites

Am #75                    67-06-22             Removes hydro R/W

Am #97                    70-08-24             Removes navigational aid sites

Am #98                    70-12-16             Removes hydro R/W

Am #102                   71-08-31             Removes snow course reserve

Am #103                   71-09-15             Removes hydro R/W

Am #106                   72-07-31             Removes highway rest area

Am #109                   72-12-05             Removes repeater site

Instr #123                85-10-15             Removes special use area
</TABLE>


BLOCK 4
AREA A

Commencing at the southeast corner of Sub Lot 17 of Lot 7159, Kootenay Land
District, also being a point on the natural boundary of Lower Arrow Lake on the
westerly shore thereof; thence in a general southerly direction along the
natural boundary of said Lower Arrow Lake on the westerly shore thereof to a
point due north of the most northerly corner of Lot A of Sub Lot 12 of Lot 7159,
Plan 6505, deposited in Nelson Land Title Office; thence south to the most
northerly corner of Lot A of said Plan 6505; thence southerly along the westerly
boundary of Lot A of said Plan 6505 to the southwest corner thereof; thence
easterly along the southerly boundary of Lot A of said Plan 6505 and the
easterly prolongation thereof to the natural boundary of aforesaid Lower Arrow
Lake on the westerly shore thereof; thence in a general southerly direction
along the natural boundary of said Lower Arrow Lake on the westerly shore
thereof to the northerly boundary of Lot 8069; thence westerly along the
northerly boundary of said Lot 8069 to the northwest corner thereof; thence
southerly along the westerly boundary of said Lot 8069 and the southerly
prolongation thereof to the northerly boundary of Sub Lot 37 of Lot 5817; thence
easterly along the northerly boundary of said Sub Lot 37 to the southwest corner
of Sub Lot 10; thence easterly along the southerly boundary of said Sub Lot 10
to the southeast corner thereof, also being a point on the natural boundary of
aforesaid Lower Arrow Lake on the westerly shore thereof; thence in a general
southerly 


                                    Page 14
<PAGE>   68
direction along the natural boundary of said Lower Arrow Lake on the westerly
shore thereof to the northerly boundary of Sub Lot 24 of aforesaid Lot 5817;
thence westerly along the northerly boundary of said Sub Lot 24 to the northwest
corner thereof; thence southwesterly in a straight line to a point, said point
being 1.050 kilometres north and 5.507 kilometres west of the northeast corner
of Lot 6613; thence west to the westerly boundary of the watershed of aforesaid
Lower Arrow Lake; thence in a general northerly direction along the westerly
boundary of the watershed of said Lower Arrow Lake to a point due west of the
southwest corner of Sub Lot 17 of aforesaid Lot 7159; thence east to the
southwest corner of said Sub Lot 17; thence easterly along the southerly
boundary of said Sub Lot 17 to the southeast corner thereof, being the point of
commencement.

Excluding thereout all that foreshore and land covered by water within the above
described area.


AREA B

Commencing at the northwest corner of Lot 7630, Kootenay Land District, also
being a point on the natural boundary of Lower Arrow Lake on the easterly shore
thereof; thence southerly, easterly, northerly and easterly along the westerly,
southerly, easterly and southerly boundaries of said Lot 7630 to the southwest
corner of Lot 7629; thence easterly along the southerly boundaries of Lots 7629
and 7628 to the most southerly southeast corner of said Lot 7628; thence
northerly and easterly along the easterly and southerly boundaries of said Lot
7628 to the southwest corner of Lot 8032; thence easterly along the southerly
boundaries of Lots 8032 and 7977 to the most southerly southeast corner of said
Lot 7977; thence northerly and easterly along the easterly and southerly
boundaries of said Lot 7977 to the westerly boundary of Lot 8026; thence
southerly and easterly along the westerly and southerly boundaries of Lots 8026,
8160 and 7696 to the northwest corner of Lot 8161; thence southerly along the
westerly boundary of said Lot 8161 to the northerly boundary of Lot 8700; thence
westerly, southerly and easterly along the northerly, westerly and southerly
boundaries of said Lot 8700 to the westerly boundary of Lot 8031; thence
southerly, easterly and northerly along the westerly, southerly and easterly
boundaries of said Lot 8031 to the most westerly southwest corner of Lot 8047;
thence easterly, southerly and easterly along the southerly, westerly and
southerly boundaries of said Lot 8047 to the southwest corner of Lot 8048;
thence easterly, northerly and westerly along the southerly, easterly and
northerly boundaries of said Lot 8048 to 


                                    Page 15
<PAGE>   69
the southeast corner of Lot 7980; thence northerly along the easterly boundary
of said Lot 7980 to the northeast corner thereof; thence due north to the
northerly boundary of the watershed of Snow Creek; thence in a general easterly
direction along the northerly boundary of the watershed of said Snow Creek to
the northwesterly boundary of Lot 2204; thence southwesterly along the
northwesterly boundary of said Lot 2204 to the northerly boundary of Lot 2205;
thence westerly along the northerly boundaries of Lots 2205 and 2207 to the
northwest corner of said Lot 2207; thence southerly along the westerly boundary
of said Lot 2207 to the northerly boundary of Lot 2206; thence westerly,
southerly, easterly and northerly along the northerly, westerly, southerly and
easterly boundaries of said Lot 2206 to the southerly boundary of aforesaid Lot
2205; thence easterly and northerly along the southerly and easterly boundaries
of said Lot 2205 to the southwesterly boundary of aforesaid Lot 2204; thence
southeasterly along the southwesterly boundary of said Lot 2204 to the westerly
boundary of Lot 2209; thence southerly and northeasterly along the westerly and
southeasterly boundaries of said Lot 2209 to the most southerly corner of
aforesaid Lot 2204; thence northeasterly along the southeasterly boundary of
said Lot 2204 to the southwesterly boundary of Lot 2208; thence southeasterly
and northeasterly along the southwesterly and southeasterly boundaries of said
Lot 2208 to the northerly boundary of the watershed of aforesaid Snow Creek;
thence in a general easterly direction along the northerly boundary of the
watershed of said Snow Creek to the westerly boundary of Valhalla Provincial
Park, established by Order In Council 1201, approved and ordered August 2, 1990;
thence in a general southerly direction along the westerly boundary of said
Valhalla Provincial Park to the southerly boundary of the watershed of Burton
Creek; thence in a general westerly direction along the southerly boundary of
the watershed of said Burton Creek to the easterly boundary of the watershed of
Lower Arrow Lake; thence in a general southerly direction along the easterly
boundary of the watershed of said Lower Arrow Lake to the northerly boundary of
the watershed of Deer Creek; thence in a general westerly and southerly
direction along the northerly and westerly boundaries of the watershed of said
Deer Creek to a point due west of the northwest corner of Sub Lot 31 of Lot
5817; thence east to the northwest corner of said Sub Lot 31; thence southerly
along the westerly boundaries of Sub Lots 31, 8, 7, 6 and 3 to the most
northerly northeast corner of Sub Lot 17; thence westerly along the northerly
boundary of said Sub Lot 17 to the easterly boundary of Sub Lot 21; thence
northerly and westerly along the easterly and northerly boundaries of said Sub
Lot 21 to the natural boundary of aforesaid Lower Arrow Lake on the easterly
shore thereof; thence in a general northerly 


                                    Page 16
<PAGE>   70
direction along the natural boundary of said Lower Arrow Lake on the easterly
shore thereof to the southerly boundary of Sub Lot 1 of aforesaid Lot 5817;
thence easterly, northerly and westerly along the southerly, easterly and
northerly boundaries of said Sub Lot 1 to the southeast corner of Lot 15 of Sub
Lots 1 and 19 of aforesaid Lot 5817, Plan 841, deposited in Nelson Land Title
Office; thence westerly, northerly and easterly along the southerly, westerly
and northerly boundaries of said Lot 15 to the northeast corner thereof; thence
northerly along the easterly boundaries of Lots 16 and 23 to the northeast
corner of said Lot 23; thence westerly along the southerly boundary of Lot 24 to
the southwest corner thereof; thence southerly, westerly and northerly along the
easterly, southerly and westerly boundaries of Lot 22 to the northwest corner
thereof; thence westerly along the southerly boundary of Lot 26 to the natural
boundary of aforesaid Lower Arrow Lake on the easterly shore thereof; thence in
a general northerly direction along the natural boundary of said Lower Arrow
Lake on the easterly shore thereof to the northerly boundary of said Lot 26;
thence easterly along the northerly boundaries of Lots 26, 25 and 24 to the
northeast corner of said Lot 24, also being a point on the easterly boundary of
aforesaid Sub Lot 19; thence northerly and westerly along the easterly and
northerly boundaries of Sub Lot 19 of said Lot 5817 to the natural boundary of
aforesaid Lower Arrow Lake on the easterly shore thereof; thence in a general
northerly direction along the natural boundary of said Lower Arrow Lake on the
easterly shore thereof to the southerly boundary of Block 5 of Sub Lot 27 of
aforesaid Lot 5817, Plan 5319; thence easterly along the southerly boundary of
said Block 5, Plan 5319 to the southeast corner thereof; thence northerly along
the easterly boundaries of Blocks 5, 4, 3 and 2 to the northeast corner of said
Block 2; thence westerly along the northerly boundary of said Block 2 to the
natural boundary of aforesaid Lower Arrow Lake on the easterly shore thereof;
thence in a general northerly direction along the natural boundary of said Lower
Arrow Lake on the easterly shore thereof to the southerly boundary of Lot 1 of
aforesaid Plan 5319; thence easterly, northerly and westerly along the
southerly, easterly and northerly boundaries of said Lot 1 to the natural
boundary of aforesaid Lower Arrow Lake on the easterly shore thereof; thence in
a general northerly direction along the natural boundary of said Lower Arrow
Lake on the easterly shore thereof to the southerly boundary of Sub Lot 30 of
aforesaid Lot 5817; thence easterly, northerly and westerly along the southerly,
easterly and northerly boundaries of said Sub Lot 30 to the natural boundary of
said Lower Arrow Lake on the easterly shore thereof; thence in a general
northerly direction along the natural boundary of said Lower Arrow Lake on the
easterly shore thereof to the 


                                    Page 17
<PAGE>   71
southerly boundary of Lot 8066; thence easterly, northerly, and westerly along
the southerly, easterly and northerly boundaries of said Lot 8066 to the natural
boundary of aforesaid Lower Arrow Lake on the easterly shore thereof; thence in
a general northerly direction along the natural boundary of said Lower Arrow
Lake on the easterly shore thereof to the southerly boundary of Lot 8065; thence
easterly, northerly and westerly along the southerly, easterly and northerly
boundaries of said Lot 8065 to the natural boundary of aforesaid Lower Arrow
Lake on the easterly shore thereof; thence in a general northerly direction
along the natural boundary of said Lower Arrow Lake on the easterly shore
thereof to a point 2.100 kilometres north and 405 metres west of the northeast
corner of aforesaid Lot 8065; thence east 300 metres; thence north 400 metres;
thence west 300 metres, more or less, to the natural boundary of aforesaid Lower
Arrow Lake on the easterly shore thereof; thence in a general northerly
direction along the natural boundary of said Lower Arrow Lake on the easterly
shore thereof to a point 380 metres west and 399 metres south of the southeast
corner of Lot 8063; thence east 105 metres; thence south 45 degrees east 275
metres; thence east 302 metres, more or less, to the easterly boundary of Lot
8062; thence northerly along the easterly boundary of said Lot 8062 543 metres;
thence north 33 degrees west 60 metres, more or less, to the northerly boundary
of said Lot 8062; thence westerly along the northerly boundary of said Lot 8062
to the southeast corner of aforesaid Lot 8063; thence northerly along the
easterly boundary of said Lot 8063 302 metres; thence west 95 metres, more or
less, to the natural boundary of aforesaid Lower Arrow Lake on the easterly
shore thereof; thence in a general northerly direction along the natural
boundary of said Lower Arrow Lake on the easterly shore thereof to the southerly
boundary of Lot 7771; thence easterly along the southerly boundary of said Lot
7771 to the southeast corner thereof; thence easterly and northerly along the
southerly and easterly boundaries of Lots 9144, 9146 and 6902 to the northeast
corner of said Lot 6902; thence westerly along the northerly boundary of said
Lot 6902 to the southeast corner of Lot 8097; thence northerly along the
easterly boundaries of said Lots 8097, 6900 and 8095 to the northeast corner of
said Lot 8095; thence westerly along the northerly boundary of said Lot 8095 to
the southwest corner of Lot 11910; thence northerly and easterly along the
westerly and northerly boundaries of said Lot 11910 to the northeast corner
thereof; thence northerly along the easterly boundaries of Lots 10588, 7670 and
7126 to the northeast corner of said Lot 7126; thence easterly and northerly
along the southerly and easterly boundaries of Lot 9159 to the northeast corner
thereof; thence northerly along the easterly boundary of Lot 10389 to the
northeast corner 


                                    Page 18
<PAGE>   72
thereof; thence easterly and northerly along the southerly and easterly
boundaries of Lot 9158 to the northeast corner thereof; thence northerly along
the easterly boundary of Lot 8164 to the northeast corner thereof; thence
easterly and northerly along the southerly and easterly boundaries of Lot 8165
to the southerly boundary of Lot 18 of Lots 8165 and 8799, Plan 1043, Nelson
Land Title Office; thence easterly and northerly along the southerly and
easterly boundaries of said Lot 18 to the southeast corner of Lot 17; thence
northerly and westerly along the easterly and northerly boundaries of said Lot
17 to the easterly boundary of aforesaid Lot 8165; thence northerly and westerly
along the easterly and northerly boundaries of said Lot 8165 to the southeast
corner of Lot 8163; thence northerly along the easterly boundary of said Lot
8163 to the southwest corner of Lot 10029; thence easterly and northerly along
the southerly and easterly boundaries of Lots 10029, 8808 and 8809 to the
natural boundary of aforesaid Lower Arrow Lake on the easterly shore thereof;
thence in a general northeasterly direction along the natural boundary of said
Lower Arrow Lake on the easterly shore thereof to the southerly boundary of Lot
7631; thence easterly along the southerly boundary of said Lot 7631 765 metres;
thence northeasterly in a straight line to the most northerly northeast corner
of said Lot 7631; thence westerly along the northerly boundary of said Lot 7631
to the natural boundary of aforesaid Lower Arrow Lake on the easterly shore
thereof; thence in a general northerly direction along the natural boundary of
said Lower Arrow Lake on the easterly shore thereof to the southerly boundary of
Lot 8688; thence easterly, northerly and westerly along the southerly, easterly
and northerly boundaries of said Lot 8688 to the natural boundary of aforesaid
Lower Arrow Lake on the easterly shore thereof; thence in a general northerly
direction along the natural boundary of said Lower Arrow Lake on the easterly
shore thereof to the northwest corner of said Lot 7630, being the point of
commencement.

Excluding thereout all that foreshore and land covered by water within the above
described area.

AREA C

Commencing at the northeast corner of Lot 9154, Kootenay Land District; thence
westerly and southerly along the northerly and westerly boundaries of Lots 9154
and 9068 to the natural boundary of Lower Arrow Lake on the easterly shore
thereof; thence in a general northerly direction along the natural boundary of
said Lower Arrow Lake on the easterly shore thereof to the easterly boundary of
Lot 9429; 


                                    Page 19
<PAGE>   73
thence northerly, westerly and southerly along the easterly, northerly and
westerly boundaries of said Lot 9429 to the natural boundary of said Lower Arrow
Lake on the easterly shore thereof; thence in a general northerly direction
along the natural boundary of said Lower Arrow Lake on the easterly shore
thereof to the easterly boundary of Lot 8070; thence northerly, westerly and
southerly along the easterly, northerly and westerly boundaries of said Lot 8070
to the natural boundary of said Lower Arrow Lake on the easterly shore thereof;
thence in a general northerly direction along the natural boundary of said Lower
Arrow Lake on the easterly shore thereof to the easterly boundary of Lot 400;
thence northerly and westerly along the easterly and northerly boundaries of
said Lot 400 to the southeasterly boundary of the watershed of Deer Creek;
thence in a general northeasterly direction along the southeasterly boundary of
the watershed of said Deer Creek to the northerly boundary of the watershed of
Cayuse Creek; thence in a general easterly and southerly direction along the
northerly and easterly boundaries of the watershed of said Cayuse Creek to the
northeasterly boundary of the watershed of Tulip Creek; thence in a general
southeasterly and southerly direction along the northeasterly and easterly
boundaries of the watershed of said Tulip Creek to a point due north of the
northeast corner of aforesaid Lot 9154; thence south to the northeast corner of
said Lot 9154, being the point of commencement.

Excluding thereout all that foreshore and land covered by water within the above
described area, and those areas of land described below, which are currently
active amendments and instruments within Tree Farm Licence 23, Block 4.

<TABLE>
<CAPTION>
DOCUMENT          DATE              PARTICULARS
--------          ----              -----------

<S>               <C>               <C>
Am #12            58-04-24          Removes lookout site

Am #20            59-12-23          Removes 3 cabin sites

Am #26            60-10-07          Removes transmission line R/W

Am #59            64-12-23          Removes Lot 2 of Sub Lot 12, Kootenay Land District,
                                    Plan 5818, Nelson Land Title Office

Am #97            70-08-24          Removes navigational aids
</TABLE>


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