8 % Convertible Senior Subordinated Notes due October 15, 2010

                            MERCER INTERNATIONAL INC.

                               PURCHASE AGREEMENT
                               ------------------

                                October 6, 2003

RBC  DAIN  RAUSCHER  INC.
c/o  RBC  Capital  Markets
200  Bay  Street
Royal  Bank  Plaza
Toronto,  Ontario  M5J  2W7

Ladies  and  Gentlemen:

     Mercer  International  Inc.,  a business trust organized and existing under
the  laws  of  Washington  (the  "COMPANY"),  proposes, subject to the terms and
conditions  stated  herein,  to  issue  and  sell to RBC Dain Rauscher Inc. (the
"INITIAL  PURCHASER") $82,500,000 in aggregate principal amount of the Company's
8  %  Convertible  Senior Subordinated Notes due October 15, 2010 (the "NOTES").
The  Notes  are  to  be  issued pursuant to an indenture (the "INDENTURE") to be
entered  into  as of the Closing Date (hereinafter defined), between the Company
and  Wells  Fargo Bank Minnesota, N.A., as trustee (the "TRUSTEE"), on the terms
set  forth  therein.  The Notes will be convertible into the Company's shares of
beneficial  interest  (the  "CONVERSION  SHARES") par value $1.00 per share (the
"SHARES  OF  BENEFICIAL  INTEREST").

     The holders of the Notes will be entitled to the benefits of a registration
rights  agreement  to  be dated as of the Closing Date (the "REGISTRATION RIGHTS
AGREEMENT")  between the Company and the Initial Purchaser pursuant to which the
Company  agrees  to  file  with  the  Securities  and  Exchange  Commission (the
"COMMISSION")  a  shelf  registration  statement  pursuant  to  Rule  415 of the
Securities  Act  (as defined below) relating to the resale of such Notes and the
Shares  of  Beneficial Interest issuable upon conversion of the Notes by holders
thereof.  This  Agreement,  the Notes, the Indenture and the Registration Rights
Agreement  are  hereinafter sometimes referred to collectively as the "OPERATIVE
DOCUMENTS."

     The   Company   has   prepared   a  preliminary  offering  memorandum  (the
"PRELIMINARY  OFFERING  MEMORANDUM")   and  a  final  offering  memorandum  (the
"OFFERING MEMORANDUM")  (each  as amended and supplemented from time to time and
including  all  Incorporated  Documents (as defined below)), with respect to the
offering and sale  of the Notes (the "OFFERING") in the United States and in the
provinces  of British  Columbia,  Alberta,  Ontario  and  Quebec  (the  "PRIVATE
PLACEMENT PROVINCES") and in other countries  selected by the Initial Purchaser.
The Offering  Memorandum  used  in  connection with the offering and sale of the
Notes  in  the  Private  Placement  Provinces  will  include  certain additional
Information relating to  the Offering in Canada and legends and other prescribed
Disclosure (the  "WRAP  INFORMATION")  in


<PAGE>

accordance  with  applicable Canadian  securities  legislation  in  the  Private
Placement  Provinces  and the rules, regulations, instruments  and  orders under
such legislation (the "CANADIAN SECURITIES LAWS")  and,  for  purposes  of  this
Agreement, references to the "Offering Memorandum" shall  be  deemed to include,
in the case of the Offering in Canada, the Wrap Information.

     The Notes and the Shares of Beneficial Interest issuable upon conversion of
the Notes have not been registered under the Securities Act of 1933,  as amended
(the "SECURITIES  ACT"), and the  Notes  are being sold to the Initial Purchaser
in   reliance  on  exemptions  from  or  in  transactions  not  subject  to  the
registration requirements  of  the  Securities  Act.  The  Initial Purchaser has
advised the Company that it will make offers (the "EXEMPT RESALES") of the Notes
on the terms  and  conditions  set  forth  herein and in the Offering Memorandum
solely to (i) persons the Initial Purchaser reasonably believes to be "qualified
institutional buyers," ("QIBS") as defined in Rule 144A under the Securities Act
("RULE  144A")  and  (ii)  certain non-U.S. persons outside the United States in
reliance upon Regulation S under the Securities Act ("REGULATION S") and, in the
case of Regulation S offers and sales in a Private Placement Province, through a
dealer  registered in such Private Placement Province or under an exemption from
the  registered  dealer  requirement  under  the Canadian Securities Laws and in
accordance  with  exemptions from the prospectus requirements under the Canadian
Securities  Laws  as  set  out  in  the  Wrap  Information  (each,  an "OFFSHORE
INVESTOR").  The  QIBs  and  the Offshore Investors are collectively referred to
herein  as  the  "ELIGIBLE  PURCHASERS."

     As  used  herein,  the  term  "INCORPORATED  DOCUMENTS"  includes  (i)  the
Company's annual  report on  Form  10-K  for  the  year ended December 31, 2002,
(ii) its definitive  proxy statements on Schedule 14A filed with  the Commission
on August 11, 2003  and  September 23, 2003, (iii) its quarterly reports on Form
10-Q for the  periods ended  March 31, 2003  and June 30, 2003, (iv) its current
reports on Form  8-K  filed  with the  Commission  on  May 5, 2003, May 9, 2003,
May 13, 2003, May  13,  2003,  June  18, 2003,  July  17,  2003, August 7, 2003,
August 11, 2003, August  14,  2003,  September 12,  2003 and September 16, 2003,
(v) its current report  on  Form  8-K/A  filed  with the Commission on August 7,
2003,  (vi)  any  future  filings  (but  excluding  information furnished to the
Commission pursuant to  Item  9  or Item 12 of Form 8-K) the Company makes  with
the Commission under  Section  13(a),  13(c),  14  or  15(d)  of  the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"),  during the  period  from
the date of the Preliminary Offering  Memorandum until all the Notes are sold by
the Initial Purchaser, and (vii)  any  amendments or supplements  to  any of the
foregoing.

     1.     Representations  and  Warranties  of  the  Company.  The  Company
            --------------------------------------------------
represents  and  warrants  to,  and  agrees  with,  the  Initial Purchaser that:

     (a)  The  Preliminary Offering Memorandum, as of its date, and the Offering
Memorandum  as  of  its  date  and  as  of  the  Closing Date, will not, and any
supplement or amendment will not, contain an untrue statement of a material fact
or  omit  to state a material fact required to be stated therein or necessary in
order  to  make  the statements therein, in the light of the circumstances under
which  they were made, not misleading. The representations and warranties in the
preceding sentence do not apply to statements or omissions made in reliance upon
and  in  conformity  with information furnished in writing to the Company by the
Initial


                                        2


<PAGE>

Purchaser and its affiliates  specifically for use therein, it being  understood
and  agreed that the only such information is that described as such in  Section
7(b)  hereof.

     (b) The Incorporated Documents, at the time they were or are filed with the
Commission,  conformed  and  will  conform  in  all  material  respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder, including the filing of all exhibits required to be filed therewith.

     (c)  The  Company  has  been  duly  organized  and is validly existing as a
Massachusetts  business  trust  in  good standing under the laws of the State of
Washington  with power and authority (corporate and other) to own its properties
and  conduct  its  business  as  described  in  the Offering Memorandum; and the
Company  is  duly  qualified to do business and is in good standing as a foreign
corporation  in  each  jurisdiction  in  which  the character or location of its
properties  (owned, leased or licensed) or the nature or conduct of its business
makes such qualification necessary, except for those failures to be so qualified
or  in  good  standing  which  will not in the aggregate have a material adverse
effect  on  the  condition  (financial  or  otherwise),  results  of operations,
business,  properties  or  the construction, development or planned operation of
the  Stendal  Mill  or  of  the Company and its subsidiaries taken as a whole (a
"MATERIAL  ADVERSE  EFFECT");  all  of  the  issued  and  outstanding  Shares of
Beneficial  Interest of the Company have been duly authorized and validly issued
and  are  fully  paid  and  nonassessable.

     (d)  Each subsidiary of the Company has been duly incorporated or organized
and  is  an  existing  corporation,  partnership  or limited partnership in good
standing  under  the  laws  of  the  jurisdiction  of  its  incorporation  or
organization,  with  power  and  authority  (corporate  and  other)  to  own its
properties and conduct its business as described in the Offering Memorandum; and
each  subsidiary  of  the  Company is duly qualified to do business as a foreign
corporation  in  good standing in all other jurisdictions in which its ownership
or lease of property or the conduct of its business requires such qualification,
except to the extent that the failure to be so qualified would not, individually
or  in  the  aggregate,  have  a  Material Adverse Effect; all of the issued and
outstanding  capital  stock  of  each  subsidiary  of  the Company has been duly
authorized  and  validly  issued  and  is  fully paid and nonassessable; and the
capital  stock  of  each  subsidiary  owned  by the Company, directly or through
subsidiaries,  is  owned  free  from liens, encumbrances and defects, other than
liens  and encumbrances granted pursuant to the terms of the "Bridge Loans", the
"Stendal  Loan Facility" and/or the "Rosenthal Loan Facility" (as such terms are
defined  in  the  Offering  Memorandum).

     (e) Except as described in the Offering Memorandum, since the date on which
information  is given in the Offering Memorandum, (i) there has been no material
adverse  change  or  any  development  involving  a prospective material adverse
change  in  the  business,  properties,  operations,  condition  (financial  or
otherwise)  or  results  of  operations,  assets, liabilities, properties or the
construction,  development  or  planned  operation  of  the  Stendal Mill of the
Company  and  its  subsidiaries  taken  as  a whole, whether or not arising from
transactions  in the ordinary course of business, and since the respective dates
as  of  which information is given in the Offering Memorandum ("Material Adverse
Change"),  (ii)  neither the Company nor any of its subsidiaries has incurred or
undertaken  any material liabilities or obligations, direct or contingent, other
than as incurred under the "Stendal Loan Facility", or entered into any material
transactions,  or  (iii) declared or paid any dividends or made any distribution
of  any  kind  with


                                        3


<PAGE>

respect to its capital stock and, except as described in the Offering Memorandum
there has not been any change in the capital stock, or any  material  change  in
the short-term  or  long-term  debt,  or  any  issuance  of  options,  warrants,
convertible securities or other rights to purchase the  capital  stock,  of  the
Company  or  any  of  its  subsidiaries,.

     (f)  This Agreement and the transactions contemplated herein have been duly
authorized  by  the  Company,  and  this  Agreement  has  been duly executed and
delivered  by  the  Company.

     (g)  The  Indenture has been duly authorized by the Company, and, when duly
executed  and  delivered  by  the  Company  and  duly  authorized,  executed and
delivered  by the Trustee, will constitute a legal, valid and binding obligation
of  the  Company,  enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance, moratorium,
reorganization  or similar laws relating to or affecting the rights of creditors
generally  and  subject  to  general  principles  of  equity.

     (h)  The authorized issued and outstanding Shares of Beneficial Interest of
the  Company  are as set forth in the Offering Memorandum in the column entitled
"June  30,  2003  -  Actual"  under  the  caption  "Capitalization"  (except for
subsequent  issuances  pursuant  to  this Agreement or pursuant to reservations,
agreements  or  option  plans  described  in  the  Offering  Memorandum  or  the
Incorporated  Documents)  and  have been duly and validly authorized and issued,
are fully paid and non-assessable and were not issued in violation of or subject
to  any  preemptive or similar rights that entitle or will entitle any person to
acquire  any Shares of Beneficial Interest from the Company upon issuance by the
Company  of  the  Conversion Shares upon conversion of the Notes; the Conversion
Shares  to  be issued upon conversion of the Notes have been duly authorized and
reserved  for issuance upon such conversion and when issued upon such conversion
by the Company in accordance with the terms of the Notes and the Indenture, will
be  validly  issued,  fully  paid  and non-assessable, and will not be issued in
violation of or subject to any preemptive or similar rights that entitle or will
entitle any person to acquire any Shares of Beneficial Interest from the Company
upon  such  issuance  of  the  Conversion  Shares  by  the  Company.

     (i)  The  Notes  have  been duly authorized by the Company for issuance and
sale  to  the  Initial Purchaser pursuant to this Agreement, and when issued and
authenticated  in  accordance  with  the  terms  of  the Indenture and delivered
against  payment  therefor  in  accordance  with  the  terms thereof and hereof,
assuming  the  due authorization, execution and delivery of the Indenture by the
Trustee,  will  be  a  legal,  valid  and  binding  obligation  of  the Company,
enforceable  against  the Company in accordance with their terms and entitled to
the  benefits  of  the  Indenture, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, moratorium, reorganization or similar laws relating to or
affecting the rights of creditors generally and subject to general principles of
equity. The Notes and the Indenture will conform in all material respects to the
descriptions  thereof  contained  in  the  Offering  Memorandum.

     (j)  The  Registration  Rights  Agreement  has  been duly authorized by the
Company, and, assuming due execution and delivery by the Initial Purchaser, when
executed  and  delivered  by  the  Company,  will  be a legal, valid and binding
obligation  of  the  Company, enforceable against the Company in accordance with
its  terms,  subject  to  applicable  bankruptcy,


                                        4

<PAGE>

insolvency, fraudulent conveyance, moratorium,  reorganization or  similar  laws
affecting the rights of creditors generally and subject to general principles of
equity.  The  Registration  Rights  Agreement   will  conform  in  all  material
respects to the description thereof contained  in  the  Offering  Memorandum.

     (k) The execution, delivery, and performance of the Operative Documents and
the  consummation  of  the transactions contemplated therein, including, without
limitation,  the  issuance  and  delivery  of  the  Conversion  Shares  upon due
conversion  of  the  Notes  in  accordance  with  the terms of the Notes and the
Indenture,  do  not  and  will  not  (i) as at the Closing Date and assuming the
application  of  funds  as  set  forth  in  the "Use of Proceeds" section of the
Offering  Memorandum conflict with or result in a breach of any of the terms and
provisions  of,  or constitute a default (or an event which with notice or lapse
of  time,  or both, would constitute a default) under, or result in the creation
or  imposition of any lien, charge or encumbrance upon any property or assets of
the  Company  or  any  of its subsidiaries pursuant to, any indenture, mortgage,
deed of trust, loan agreement or other agreement, instrument, franchise, license
or permit to which the Company or any of its subsidiaries is a party or by which
the  Company or any of its subsidiaries or their respective properties or assets
may  be  bound or (ii) violate or conflict with any provision of the Declaration
of  Trust  or  by-laws of the Company or any of the governing instruments of its
subsidiaries  or  (iii)  violate  or  conflict with any judgment, decree, order,
statute,  rule  or  regulation  of  any  court  or  any  public, governmental or
regulatory  agency  or  body  having jurisdiction over the Company or any of its
subsidiaries  or  any  of  their  respective  properties  or  assets.

     (l)  No  consent,  approval,  authorization,  order,  registration, filing,
qualification,  license  or  permit  of  or  with  any  court  or  any  public,
governmental  or  regulatory agency or body having jurisdiction over the Company
or  any  of  its subsidiaries or any of their respective properties or assets is
required  for the execution, delivery and performance of the Operative Documents
or the consummation of the transactions contemplated therein, including, without
limitation,  the issuance, sale and delivery of the Notes to be issued, sold and
delivered  by  the  Company  hereunder  and  the  issuance  and  delivery of the
Conversion  Shares upon due conversion of the Notes in accordance with the terms
of  the  Notes,  except  the  filing  of  (i)  the  Offering Memorandum and Wrap
Information  with the Ontario Securities Commission, (ii) reports of trades made
in  the  relevant  jurisdiction  and  any  required  fees,  with  the securities
commission  or  similar regulatory authority in the applicable Private Placement
Provinces  (the  "CANADIAN  COMMISSIONS"),  (iii)  a  certificate  prepared  in
accordance  with  Policy  Statement  41-601Q  of  the  Commission  des  valeurs
mobilieres  du  Quebec,  and (iv) if required, a private placement questionnaire
and  undertaking  by each Canadian purchaser of the Notes in the prescribed form
with  the  Toronto Stock Exchange (the "TSX"), and (v) such consents, approvals,
authorizations,  orders,  registrations,  filings,  qualifications, licenses and
permits  as  may  be required (A) under state securities or blue sky laws or the
laws  of  countries  outside the U.S. and Canada in connection with the purchase
and  distribution  of  the  Notes  by  the  Initial  Purchaser  in  the  manner
contemplated herein and in the Offering Memorandum or (B) in connection with the
Company's  obligations  under  the  Registration Rights Agreement, including the
qualification  of  the  Indenture  under  the  Trust  Indenture  Act.

     (m)  Except  as  disclosed  in  the Offering Memorandum or the Incorporated
Documents,  or  as would not have a Material Adverse Effect, each of the Company
and  its


                                        5


<PAGE>

significant subsidiaries (i) possesses the permits, licenses, consents and other
authorizations  all  grants,  subsidies,  guarantees,  consents,  approvals  and
other  authorizations  from  appropriate  German government agencies ("STATE AID
GRANTS")  (collectively,  the "GOVERNMENT LICENSES") issued by, and has made all
filings  with,  the  appropriate regulatory entities necessary to own, lease and
operate its properties and to conduct businesses now operated or, in the case of
the plant under construction in Stendal, Germany, proposed to be operated by it,
and  (ii)  all  such Government Licenses are valid and in full force and effect.
Except  as  will be described in the Offering Memorandum, or as would not have a
Material  Adverse  Effect:  (i)  each  of  the  Company  and  its  significant
subsidiaries  is  in  compliance  with  the  terms  and  conditions  of all such
Government  Licenses;  (ii)  neither the Company nor any subsidiary has received
any  notice  from any regulatory entity that allows, or after notice or lapse of
time or both, would allow revocation, modification, suspension or termination of
any  Government  License  including  any claim against the Company or any of the
subsidiaries  for  repayment  of  any benefit received under State Aid Grants or
would result in any other material impairment of the rights of the holder of any
such  Government  License;  and  (iii)  to  the knowledge of the Company and its
subsidiaries,  no  regulatory  entity  is  considering  limiting,  suspending or
revoking  any  Government  License  or  is investigating any of them, other than
ordinary  course  administrative  and  covenant  compliance  reviews.

     (n)  Except  as  disclosed  in  the Offering Memorandum or the Incorporated
Documents,  there is no legal or governmental proceeding to which the Company or
any  of  its subsidiaries is a party, or of which any property of the Company or
any of its subsidiaries is the subject which, singularly or in the aggregate, if
determined adversely to the Company or any of its subsidiaries, would reasonably
be  expected  to  have  a  Material  Adverse Effect, and to the knowledge of the
Company,  no  such  proceeding  is  threatened  or  contemplated by governmental
authorities  or  threatened  or  contemplated  by  others.

     (o)  Neither  the  Company nor any of its affiliates has taken prior to the
date  of this Agreement, directly or indirectly, any action designed to cause or
result  in,  or  which  constitutes  or  which  might  reasonably be expected to
constitute,  the  stabilization  or manipulation of the price of any security of
the  Company  or any of its subsidiaries to facilitate the sale or resale of the
Notes.

     (p)  Peterson  Sullivan P.L.L.C., who have audited the financial statements
and  supporting  schedules  as  set  forth  or  incorporated by reference in the
Offering  Memorandum,  are,  to  the  Company's  knowledge,  independent  public
accountants  as  required by the Securities Act and the rules and regulations of
the Commission promulgated thereunder (the "RULES AND REGULATIONS"), and are not
and  have not engaged in any non-audit activities that are prohibited by Section
201(a)  of  the  Sarbanes-Oxley  Act  of  2002.

     (q)  Deloitte  & Touche LLP, who have performed the procedures specified by
the American Institute of Certified Public Accountants as described in Statement
of  Accounting  Standard No. 100 with respect to the six month period ended June
30,  2003  as set forth or incorporated by reference in the Offering Memorandum,
are,  to  the Company's knowledge, independent public accountants as required by
the  Securities  Act  and  the  Rules  and Regulations, and are not and have not
engaged in any non-audit activities that are prohibited by Section 201(a) of the
Sarbanes-Oxley  Act  of  2002.


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<PAGE>

     (r)  The  financial statements, including the notes thereto, and supporting
schedules  as  set forth or incorporated by reference in the Offering Memorandum
present  fairly  in  all material respects the financial position and results of
operations  of the Company and its consolidated subsidiaries and as of the dates
indicated  and  for  the  periods  specified;  except as otherwise stated in the
Offering  Memorandum, such financial statements have been prepared in conformity
with  United  States  generally  accepted  accounting  principles  applied  on a
consistent  basis  throughout  the  periods  involved.

     (s) Except as disclosed in the Offering Memorandum, no holder of securities
of  the  Company has any rights to the registration of securities of the Company
as  a  result of the execution of the Operative Documents or the consummation of
the  transactions  contemplated therein (other than pursuant to the Registration
Rights  Agreement),  and  any  such  rights  so disclosed have either been fully
complied  with  by  the  Company  or  effectively waived by the holders thereof.

     (t) Except as disclosed in the Offering Memorandum, no relationship, direct
or  indirect,  exists between or among the Company or any of its subsidiaries on
the  one hand, and the trustees, directors, officers, stockholders, customers or
suppliers  of  the  Company  or  any of its subsidiaries on the other hand, that
would  be  required  by  the  Securities  Act  to  be  described in the Offering
Memorandum  if  the  Offering  Memorandum  were  a  prospectus  included  in  a
registration  statement  on  Form  S-1  filed  with  the  Commission.

     (u) The Company is not, and after giving effect to the offering and sale of
the  Notes will not be, an "investment company" under the Investment Company Act
of  1940,  as  amended.

     (v)  The  Company and its significant subsidiaries have good and marketable
title  in  fee  simple  to  all  real  property  owned  by  the  Company and its
significant  subsidiaries  and  have  good  and marketable title to all personal
property  owned  by them, in each case free and clear of all liens, encumbrances
and defects, except such as: (i) are described in the Offering Memorandum or the
Incorporated  Documents; or (ii) would not singularly or in the aggregate result
in  a  Material  Adverse  Effect; and any real property and buildings held under
lease  by  the  Company  or any of its significant subsidiaries are held by them
under  valid,  subsisting and enforceable leases with such exceptions as are not
material  to  the  Company  and  its  subsidiaries  taken as a whole, and do not
materially interfere with the ongoing use made of such property and buildings by
the  Company  and  its  significant  subsidiaries.

     (w)  Except  as  would  not have a Material Adverse Effect, the Company and
each  of  its significant subsidiaries have accurately prepared and timely filed
all  federal,  state,  provincial  and other tax returns that are required to be
filed  by  it  and  has  paid  or  made  provision for the payment of all taxes,
assessments,  governmental  or  other  similar  charges,  including  without
limitation,  all  sales and use taxes and all taxes that the Company and each of
its  subsidiaries  is  obligated  to  withhold  from amounts owing to employees,
creditors  and  third  parties,  with respect to the periods covered by such tax
returns (whether or not such amounts are shown as due on any tax return). Except
as  would  not  have  a  Material  Adverse Effect, no deficiency assessment with
respect  to  a  proposed adjustment of the Company's or any of its subsidiaries'
federal, state, provincial or other taxes is pending or, to the knowledge of the


                                        7


<PAGE>

Company,  threatened.  There  is  no  tax  lien, whether imposed by any federal,
state,  provincial  or  other  taxing authority, outstanding against the assets,
properties  or  business  of the Company or any of its significant subsidiaries.

     (x)  Each  of the Company and its subsidiaries (i) makes and keeps accurate
books  and  records and (ii) maintains internal accounting controls that provide
reasonable  assurance  that  (A)  transactions  are  executed in accordance with
management's authorization, (B) transactions are recorded as necessary to permit
preparation  of  its financial statements and to maintain accountability for its
assets,  (C)  access  to  its  assets  is  permitted  only  in  accordance  with
management's  authorization,  direction  or  policies  and  (D)  the  reported
accountability  for  its  assets  is compared with existing assets at reasonable
intervals.  Since  December  31,  2002,  neither  the  Company  nor  any  of its
subsidiaries  has  made  any  change  in  its  internal  controls  that would be
reportable  in  any  filing  under  the  Exchange  Act  pursuant  to Item 307 of
Regulation  S-K.  The  Company  maintains disclosure controls and procedures (as
defined  in  Rule  13a-14  under  the  Exchange  Act)  sufficient to ensure that
information required to be disclosed by the Company in the reports that it files
or  submits  under  the  Exchange  Act,  is  recorded, processed, summarized and
reported, within the time periods specified in the Commission's rules and forms.

     (y)  The  Company  has adopted a written code of ethics that applies to its
principal  executive  officer, principal financial officer, principal accounting
officer  or  controller  or  persons  performing  similar  functions.  Since the
adoption  of  its  code  of ethics, the Company has not made any amendment to or
granted  any  waiver  thereunder.

     (z)  The  Shares  of Beneficial Interest are registered pursuant to Section
12(g)  of  the  Exchange  Act  and are quoted on the Nasdaq National Market (the
"NASDAQ  NATIONAL  MARKET")  and posted and listed for trading on the TSX. On or
before  the Closing Time, the Conversion Shares will be authorized for quotation
on  the Nasdaq National Market and conditionally approved for listing on the TSX
subject  only  to  the filing of certain documents, and the Company has taken no
action  designed  to,  or  likely  to  have  the  effect  of,  terminating  the
registration  of  the  Shares  of  Beneficial Interest under the Exchange Act or
de-listing  the Shares of Beneficial Interest from the Nasdaq National Market or
the  TSX, nor has the Company received any notification that the Commission, the
Nasdaq National Market or the TSX is contemplating terminating such registration
or  listing.

     (aa)  The  Company  is  a  reporting  issuer,  or its equivalent, under the
securities  laws  of  British  Columbia,  Alberta, Ontario and Quebec, is not in
default  of any applicable Canadian Securities Laws, is not included in the list
of  defaulting  reporting  issuers  maintained  by  any of the relevant Canadian
Commissions,  and is, and will at the Closing Date be, a "qualifying issuer" for
the  purposes  of  Multilateral  Instrument  45-102  of  the Canadian Securities
Administrators  and  corresponding  provisions  of  Canadian  Securities  Laws
applicable  in  the  Province  of  Quebec.

     (bb)     Neither  the  Company  nor  any  of  its  subsidiaries  (i)  is in
violation  of  its  charter  or  by-laws,  (ii)  is in default (and no event has
occurred  which,  with  notice or lapse of time or both, would constitute such a
default)  under,  or result in the creation or imposition of any lien, charge or
encumbrance  upon  any  property  or  assets  of  the  Company  or  any  of  its
subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement
or  other


                                        8


<PAGE>

agreement  or  instrument  to  which it is a party or by which it is bound or to
which  any of its property or assets is subject, or (iii) except as disclosed in
the  Offering  Memorandum  or  Incorporated  Documents,  is  in violation in any
respect of any statute or any judgment, decree, order, rule or regulation of any
court  or governmental or regulatory agency or body having jurisdiction over the
Company  or any of its subsidiaries or any of their properties or assets, except
in the case of (i), (ii) and (iii) above any violation or default that would not
have  a  Material  Adverse  Effect.  Without  limitation  of  the foregoing, the
Company's  subsidiaries are in material compliance with all covenants applicable
to  them  in the Stendal Project Facility and the Rosenthal Facility (as defined
in  the  Offering  Memorandum).

     (cc)  Except  as described in the Offering Memorandum, no labor disturbance
with  the  employees of the Company or any of its subsidiaries exists or, to the
knowledge  of the Company, is imminent that would reasonably be expected to have
a  Material  Adverse  Effect.

     (dd)  The  Company  and  each of its significant subsidiaries carry, or are
covered  by,  insurance  in  such  amounts  and  covering  such  risks as in the
Company's  reasonable  determination  is  adequate  for  the  conduct  of  their
respective  businesses  and  the  value  of  their  respective  properties.

     (ee)  The  Company does not maintain, contribute to, or have any obligation
to contribute to, and has never maintained, contributed to or had any obligation
to  contribute  to,  any  "employee pension benefit plan" (as defined in Section
3(2)  of  the  Employee  Retirement  Income  Security  Act  of 1974, as amended,
including  the  regulations and published interpretations thereunder ("ERISA")),
which  is  subject  to  Title IV of ERISA or Section 412 of the Internal Revenue
Code  of  1986.

     (ff)  Except  as  disclosed  in the Offering Memorandum or the Incorporated
Documents  and  except as would not, singularly or in the aggregate, result in a
Material  Adverse  Effect,  (i)  there  has  been  no  storage,  generation,
transportation,  handling,  treatment,  disposal,  discharge, emission, or other
release  of  any kind of toxic or other wastes or other hazardous substances by,
due  to,  or  caused  by  the Company (or, to the Company's knowledge, any other
entity  for  whose  acts  or omissions the Company is or may be liable) upon any
other  property  now  or previously owned or leased by the Company or any of its
subsidiaries,  or  upon  any  other property, in violation of any statute or any
ordinance,  rule,  regulation, order, judgment, decree or permit or which would,
under  any  statute  or  any  ordinance,  rule  (including  rule of common law),
regulation,  order,  judgment, decree or permit, give rise to any liability, and
(ii)  there  has  been  no disposal, discharge, emission or other release of any
kind onto such property or into the environment surrounding such property of any
toxic  or  other  wastes or other hazardous substances with respect to which the
Company  or  any  of  its  subsidiaries  has  knowledge.

     (gg)     The  Company, its subsidiaries or any other person associated with
or  acting  on  behalf  of  the  Company  or its subsidiaries including, without
limitation,  any trustee, director, officer, agent or employee of the Company or
its subsidiaries, has not, directly or indirectly, while acting on behalf of the
Company  or  its  subsidiaries  (i)  used  any  corporate  funds  for  unlawful
contributions,  gifts,  entertainment  or  other  unlawful  expenses relating to
political  activity;  (ii)  made  any  unlawful  payment  to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns  from  corporate  funds;  (iii)


                                        9


<PAGE>

violated  or  is  in violation of any provision of the Foreign Corrupt Practices
Act  of  1977,  as  amended;  or  (iv)  made  any  other  unlawful  payment.

     (hh)  The  statistical  and market-related data included or incorporated by
reference  in  the Offering Memorandum are based on or derived from sources that
the  Company  reasonably  believes  to  be  reliable  and  accurate.

     (ii)  None  of  the  Company  or  any of its affiliates (as defined in Rule
501(b)  under  the  Securities Act) or any person acting on such person's behalf
(other  than  the  Initial  Purchaser  and  its  affiliates,  as  to  whom  no
representation  is  made) has sold, offered for sale, solicited offers to buy or
otherwise  negotiated in respect of any security (as such term is defined in the
Securities  Act)  that is or would be integrated with the sale of the Notes in a
manner  that  would  require  registration  under  the  Securities  Act.

     (jj)  When  the  Notes are issued and delivered pursuant to this Agreement,
the Notes will not be of the same class (within the meaning of Rule 144A) as any
securities  of  the  Company  which are listed on a national securities exchange
registered  under  Section  6  of  the Exchange Act or quoted in a United States
automated  inter-dealer  quotation  system.

     (kk)  The Company is subject to Section 13 or Section 15(d) of the Exchange
Act  and  is  in  compliance  with  the  provisions  of  such  Section.

     (ll) Assuming compliance by the Initial Purchaser with its representations,
warranties  and  covenants  set  forth  herein,  the  compliance  by the Initial
Purchaser  with  the offering and transfer procedures and restrictions described
in  the  Offering Memorandum, the accuracy of the representations and warranties
made by the purchasers to whom the Initial Purchaser resells Notes in accordance
with  the  Offering  Memorandum and the condition that any subsequent purchasers
receive  a  copy  of the Offering Memorandum prior to such sale, no registration
under  the  Securities  Act  of  the  Notes  and  no  filing  of a prospectus in
accordance  with the Canadian Securities Laws to qualify the distribution of the
Notes  is  required  for  the  sale  of  the  Notes  to the Initial Purchaser as
contemplated  hereby and in the Offering Memorandum or for the Exempt Resales or
to  qualify  the Indenture under the Trust Indenture Act of 1939, as amended. No
form  of general solicitation or general advertising (as those terms are defined
in Regulation D under the Securities Act) has been used by the Company or any of
its  affiliates  or  any  person  acting on such person's behalf (other than the
Initial  Purchaser  and its affiliates, as to whom no representation is made) in
connection  with  the  offer  and  sale  of  any  of  the  Notes.

     (mm) The Offering Memorandum and Wrap Information, as of its date, and each
amendment  or  supplement  thereto, as of its date, will contain the information
specified  in,  and  will  meet  the  requirements  of  the  applicable Canadian
Securities  Laws.

     (nn)  None  of the Company or any of its affiliates or any person acting on
such person's behalf (other than the Initial Purchaser and its affiliates, as to
whom  no  representation  is  made)  has  engaged or will engage in any directed
selling  efforts  within  the meaning of Regulation S with respect to the Notes.

     (oo) The Company and its affiliates and all persons acting on such person's
behalf  (other  than  the  Initial  Purchaser  and its affiliates, as to whom no
representation  is  made)


                                       10


<PAGE>

have  complied  with and will comply with the offering restrictions requirements
of  Regulation S in connection with the offering of the Notes outside the United
States.

     (pp) Each of the Notes and the Conversion Shares will bear the legends (and
such  other  legends  as may be required under the Indenture) provided for under
"Notice  to Investors" in the Offering Memorandum, and each of the Notes and the
Conversion  Shares offered and sold in the Private Placement Provinces will bear
the  legend  set  forth  under "Resale Restrictions" in the Wrap Information, in
each  case,  for  the  time  period  and  upon  the  other terms stated therein.

     (qq) None of the execution, delivery and performance of this Agreement, the
issuance  and  sale  of  the  Notes,  the  application  of the proceeds from the
issuance  and  sale  of  the  Notes  and  the  consummation  of the transactions
contemplated  hereby  and  thereby as set forth in the Offering Memorandum, will
violate  Regulations  T,  U  or  X  promulgated by the Board of Governors of the
Federal  Reserve  System  or  analogous  foreign  laws  and  regulations.

     (rr)  Except  as  disclosed  in  the  Offering  Memorandum,  there  are  no
contracts,  agreements or understandings between the Company and any person that
would  give  rise  to a valid claim against the Company or the Initial Purchaser
for  a  brokerage  commission,  finder's fee or other like payment in connection
with  the  sale  of  the  Notes.

     (ss) The Company held a special meeting of shareholders on October 3, 2003,
such meeting was duly noticed and at such meeting the Company obtained requisite
shareholder  approval  of the issuance of the Notes and the Conversion Shares as
set  forth in the Company's Definitive Proxy Statement dated September 23, 2003.

     (tt) As of the Closing Date, the purchase by any shareholder of the Company
who owns less than 15% of the outstanding Shares of Beneficial Interest of a pro
rata  share  of  the  Notes  being  sold  in  the Offering will not constitute a
"Triggering  Event"  under  the  Company's  Rights  Plan  as  amended.

     (uu) The Company and its affiliates and all persons acting on such person's
behalf  (other  than  the  Initial  Purchaser  and its affiliates, as to whom no
representation is made), have complied with and will comply to the best of their
knowledge  with  the  provisions  of  the paragraph "Plan of Distribution - Sale
Restrictions"  in  the  Offering  Memorandum

     2.     Purchase,  Sale  and  Delivery  of  the  Notes.
            ----------------------------------------------
     (a)  On  the  basis  of  the  representations,  warranties,  covenants  and
agreements  herein contained, but subject to the terms and conditions herein set
forth,  the  Company  agrees  to  sell  to the Initial Purchaser and the Initial
Purchaser  agrees  to  purchase  from the Company all of the Notes at a purchase
price of 95.912% of the principal amount thereof, plus accrued interest, if any.

     (b)  Payment  of the purchase price for, and delivery of the Notes shall be
made  at  the  office  of  Sangra Moller, 1000 Cathedral Place, 925 West Georgia
Street,  Vancouver  BC  V62 3L2, or at such other place as may be agreed upon by
you  and  the Company, at 7:00 A.M., Vancouver time, on October 10, 2003 (unless
postponed  in  accordance  with  the  provisions of


                                       11


<PAGE>

Section  9 hereof) or at such other time and date as shall be agreed upon by you
and  the Company (such time and date of payment and delivery being herein called
the  "CLOSING  DATE").

     The  Notes to be delivered to you shall be registered in the form of one or
more  permanent  global  notes in definitive form (the "GLOBAL NOTES") deposited
with  the  Trustee  as  custodian  for  The Depository Trust Company ("DTC") and
registered  in  the  name  of  Cede & Co., as nominee for DTC.  Interests in any
permanent  global Notes will be held only in book-entry form through DTC, except
in  the limited circumstances described in the Offering Memorandum.  The Company
will permit you to examine the Global Notes at least one full business day prior
to  the  Closing  Date.

     (c)  Payment  of  the  purchase  price  for  the Notes shall be made to the
Company  by  wire transfer of immediately available (same day) funds to the bank
account  designated  by  the Company on the Closing Date against delivery of the
Global  Notes  to  the  Initial  Purchaser  through  the  facilities  of  DTC.

     3.     Representations,  Warranties and Covenants of the Initial Purchaser.
            -------------------------------------------------------------------
The  Initial  Purchaser represents and warrants to, and agrees with, the Company
that:

     (a)  The  Initial  Purchaser  is  a  QIB.

     (b) The Initial Purchaser (A) is not acquiring the Notes with a view to any
distribution  thereof  that  would  violate the Securities Act or the securities
laws  of  any state of the United States, the Private Placement Provinces or any
other applicable jurisdiction and (B) will be reoffering and reselling the Notes
only  to those it reasonably believes to be QIBs in reliance on Rule 144A and in
certain  offshore  transactions in reliance upon Regulation S, including, in the
case  of offers and sales in the Private Placement Provinces, in accordance with
exemptions  from  the prospectus requirements under the Canadian Securities Laws
as  set  out  in  the  Wrap  Information.

     (c)  No form of general solicitation or general advertising (as those terms
are  defined  in Regulation D under the Securities Act) has been or will be used
by  the  Initial  Purchaser or any of its representatives in connection with the
offer  and  sale  of  any of the Notes, including, but not limited to, articles,
notices  or other communications published in any newspaper, magazine or similar
medium  or  broadcast  over television or radio, or any seminar or meeting whose
attendees  have been invited by any general solicitation or general advertising.

     (d)  The  Initial  Purchaser  agrees  that,  in  connection with the Exempt
Resales,  it  will  solicit offers to buy the Notes only from, and will offer to
sell  the  Notes  only  to,  Eligible  Purchasers. The Initial Purchaser further
acknowledges  and  agrees  that  such  Eligible Purchasers shall acknowledge and
agree  (or be deemed to acknowledge and agree) that (A) such Notes will not have
been  registered  under  the  Securities  Act, will not have been qualified by a
prospectus  filed  under applicable Canadian Securities Laws and may be offered,
resold,  pledged  or  otherwise transferred only (I) to a person whom the seller
reasonably  believes  is a QIB purchasing for its own account or for the account
of  a  QIB  in  a  transaction meeting the requirements of Rule 144A, (II) in an
offshore  transaction  complying  with  Rule  903  or 904 of Regulation S of the
Securities  Act,  subject  to  clause  (y) below, (III) pursuant to an exemption


                                       12


<PAGE>

from  registration under the Securities Act provided by Rule 144 (if available),
or  (IV)  pursuant  to  an effective registration statement under the Securities
Act,  (x)  in  each  of cases (I) through (IV) in accordance with any applicable
securities laws of any state of the United States or any jurisdiction outside of
the  U.S.  and  Canada, and (y) in the case of such a transaction in the Private
Placement  Provinces  or to or for the account or benefit of a Canadian resident
through the services of a dealer registered in the purchaser's province or under
an  exemption  from  the  registered  dealer  requirement  under  the  Canadian
Securities Laws and pursuant to an exemption from the prospectus requirements of
applicable Canadian Securities Laws, (B) such person shall not engage in hedging
transactions  with  regard  to  the  Notes and the Shares of Beneficial Interest
issuable  upon  conversion of the Notes unless in Compliance with the Securities
Act;  and  (C)  the  purchaser  will, and each subsequent holder is required to,
notify  any purchaser of the Notes of the resale restrictions referred to in (A)
and  (B)  above.

     (e)  The  Initial Purchaser and its affiliates or any person acting on such
person's  behalf  have  not  engaged and will not engage in any directed selling
efforts  within  the  meaning  of  Regulation  S  with  respect  to  the  Notes.

     (f)  The  Initial Purchaser agrees that it has not offered or sold and will
not  offer  or  sell the Notes in the United States or to, or for the benefit or
account  of,  a U.S. Person (other than a distributor), in each case, as defined
in Rule 902 under the Securities Act (i) as part of its distribution at any time
and  (ii)  otherwise  until  one year after the later of the commencement of the
offering  of  the  Notes  pursuant  hereto  and  the Closing Date, other than in
accordance  with  Regulation  S  or  another  exemption  from  the  registration
requirements  of  the  Securities Act. The Initial Purchaser agrees that, during
such  one-year  distribution  compliance  period,  it  will  not  cause  any
advertisement  with  respect  to  the  Notes  (including  any  "tombstone"
advertisement)  to  be published in any newspaper or periodical or posted in any
public  place and will not issue any circular relating to the Notes, except such
advertisements  as  are  permitted  by  and  include  the statements required by
Regulation  S.

     (g)  The  Initial  Purchaser  will  deliver at or prior to the sale to each
purchaser  of  the  Notes  from  such  Initial  Purchaser in connection with its
initial  distribution  of  the  Notes,  whether by mail, delivery, electronic or
other  means,  a copy of the Offering Memorandum, as amended and supplemented at
the  date  of  such  delivery.

     (h)  The  Initial  Purchaser  agrees that, at or prior to confirmation of a
sale of the Notes by it to any distributor, dealer or person receiving a selling
concession,  fee  or  other  remuneration  during  the  one-year  distribution
compliance  period  referred  to  in Rule 903(b)(3) under the Securities Act, it
will  send to such distributor, dealer or person receiving a selling concession,
fee  or  other  remuneration  a  confirmation  or  notice  to  substantially the
following  effect:

     "The  Notes  covered  hereby  have  not  been  registered  under  the  U.S.
     Securities  Act  of 1933, as amended (the "SECURITIES ACT"), and may not be
     offered  and  sold  within  the  United States or to, or for the account or
     benefit  of,  U.S.  persons (i) as part of your distribution at any time or
     (ii)  otherwise  until  one year after the later of the commencement of the
     Offering  and  the  Closing  Date, except in either case in accordance with
     Regulation  S  under  the  Securities  Act  (or  Rule  144A  or  to  an


                                       13


<PAGE>

     institutional  accredited investor in transactions that are exempt from the
     registration  requirements of the Securities Act), and during such one year
     period  you may not engage in hedging transactions with regard to the Notes
     and  the  Shares  of  Beneficial  Interest issueable upon conversion of the
     Notes  unless in compliance with the Securities Act, and in connection with
     any  subsequent  sale  by  you  of  the Notes covered hereby in reliance on
     Regulation S during the period referred to above to any distributor, dealer
     or  person  receiving  a selling concession, fee or other remuneration, you
     must  deliver  a  notice  to substantially the foregoing effect. Terms used
     above  have  the  meanings  assigned  to  them  in  Regulation  S."

     (i)  Offers  and sales of the Notes in the Private Placement Provinces will
be  made only by the Initial Purchaser or an affiliate, in either case, provided
that  it  is  registered  in an appropriate category or exempt from registration
under  the  Canadian  Securities  Laws  in  respect  of  such  offers and sales.

     (j)  The  Initial  Purchaser agrees to assist the Company in all reasonable
respects  to  secure  compliance  with  applicable  Canadian  Securities Laws in
connection  with the Offering in Canada, and shall timely provide the Company or
its agent with the information required to enable the Company to comply with its
obligations  under  subsection 4(i), including details of any Eligible Purchaser
resident  in  a  Private Placement Province and related information necessary to
complete  any  form  or  certificate  prescribed  by  a  Canadian  Commission in
connection  with  the Offering in Canada, including, but not limited to, Ontario
Securities  Commission  Form  45-501F1.

     (k)  The Initial Purchaser has taken no action, and will take no action, in
any jurisdiction (either on its own or as an agent of the Company) in connection
with  the  Offering  that  as  a  direct  result  of which any action, filing or
registration  would  be  required  in  any such jurisdiction (other than (x) the
filing  of  (i)  the  Offering  Memorandum and Wrap Information with the Ontario
Securities  Commission,  (ii)  reports  of  the  trades  in  the prescribed form
prepared  and  executed  in accordance with applicable Canadian Securities Laws,
(iii)  a certificate prepared in accordance with Policy Statement 41-601Q of the
Commission  des  valeurs  mobilieres  du Quebec, and (iv) if required, a private
placement  questionnaire and undertaking by each Canadian purchaser of the Notes
in  the  prescribed  form  with  the  TSX,  and  (y)  such  consents, approvals,
authorizations,  orders,  registrations,  filings,  qualifications, licenses and
permits  as  may  be  required  (i)  under  state securities or Blue Sky laws in
connection  with  the  purchase  and  distribution  of  the Notes by the Initial
Purchaser  or  (ii)  in  connection  with  the  Company's  obligations under the
Registration Rights Agreement), or that would independently result in the breach
of  the  applicable  securities laws, statutes, rules or regulations (whether by
the  Initial  Purchaser  or  the  Company) in any such jurisdiction. The Initial
Purchaser  will  comply with all applicable securities laws, statutes, rules and
regulations  in  connection  with  the Offering in each jurisdiction in which it
purchases,  offers,  sells  or  delivers  Notes  or  distributes or causes to be
distributed  the  Offering  Memorandum  in  connection  with the Exempt Resales.

     (l)  The  Initial  Purchaser will promptly notify the Company in writing of
the  completion  of  the  sale  of  the  Notes  by  it.


                                       14


<PAGE>

     (m) The Initial Purchaser and its affiliates and all persons acting on such
person's  behalf,  have  complied  with  and  will  comply  to the best of their
knowledge  with  the  provisions  of  the paragraph "Plan of Distribution - Sale
Restrictions"  in  the  Offering  Memorandum.

     4.     Covenants of the Company.  The Company covenants and agrees with the
            ------------------------
Initial  Purchaser  that:

     (a)  The  Company  shall, as soon as practicable and in any event not later
than  24  hours  after  the execution of this Agreement (or such other period as
agreed  to  by  the Initial Purchaser, acting reasonably), finalize the Offering
Memorandum  and  deliver  it  pursuant  to  Section  4(e)  below.

     (b)  The  Company shall notify you (and, if requested by you, shall confirm
such  notice  in  writing)  (i) of the filing of any information relating to the
offering  of the Notes with any securities exchange or any other regulatory body
in  the  United  States or Canada, and (ii) of the issuance by the Commission or
any  U.S.  state  securities commission or by any Canadian or foreign regulatory
authority  of  any  stop  order,  or  the  receipt  by  the Company of any other
notification,  suspending  the  qualification or exemption from qualification of
the  Notes  for  offering  and  sale  in  any jurisdiction, or the initiation or
threatening  of  any  proceeding for that purpose. If the Commission or any U.S.
state  securities  commission  or  any  Canadian or foreign regulatory authority
proposes  or  enters  a  stop  order or order of similar effect at any time with
respect  to  the  transactions contemplated by this Agreement, the Company shall
make every reasonable effort to prevent the issuance of any such stop order and,
if  issued,  to  obtain  the  lifting  of  such  order  as  soon  as  possible.

     (c)  The  Company shall not at any time make any amendment of or supplement
to  the  Offering  Memorandum (including the Incorporated Documents) without the
Initial  Purchaser's  consent,  which  shall  not  be  unreasonably  withheld or
delayed.

     (d)  If,  at any time prior to the completion of the sale of the Notes, any
event  occurs  or  condition exists as a result of which it is necessary, in the
opinion  of  counsel  for  the  Initial  Purchaser  or  for  the Company, acting
reasonably,  to  amend  or  supplement the Offering Memorandum in order that the
Offering  Memorandum will not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the  statements therein, in the light of the circumstances under which they were
made,  not  misleading,  or  if it is necessary, in the opinion of such counsel,
acting  reasonably,  at  any  such  time  to  amend  or  supplement the Offering
Memorandum in order to comply with the requirements of the Securities Act or the
Rules  and  Regulations  or  the  Canadian  Securities  Laws,  the Company shall
promptly  notify  you  (unless  counsel  for  the  Initial Purchaser already has
expressed  such  an  opinion)  and  prepare,  subject  to  subsection 4(c), such
amendment  or  supplement  (in form and substance satisfactory to you) as may be
necessary  to  correct  such statement or omission or to effect such compliance.

     (e) The Company shall promptly deliver to the Initial Purchaser such number
of copies of the Preliminary Offering Memorandum and Offering Memorandum and all
amendments of and supplements thereto, if any, and all Incorporated Documents or
any


                                       15


<PAGE>

amendment  thereof  or  supplement  thereto,  as you may reasonably request. The
Company  hereby  consents  to the use of such copies by the Initial Purchaser in
connection with the sale of the Notes. Prior to 2:00 P.M., Vancouver time on the
second  business  day  next  succeeding  the date of this Agreement, the Company
shall, without charge, furnish the Initial Purchaser with copies of the Offering
Memorandum in New York City and Toronto, respectively, in such quantities as you
may  reasonably request, and the Company shall deliver to the Initial Purchaser,
without  charge,  during  the  period prior to the completion of the sale of the
Notes,  such  number  of  copies  of the Offering Memorandum (as supplemented or
amended)  as  the  Initial  Purchaser  may  reasonably  request.

     (f)  The  Company shall not file any document under the Exchange Act before
the completion of the sale of the Notes by the Initial Purchaser if the document
would be deemed to be incorporated by reference into the Offering Memorandum, of
which the Initial Purchaser shall not previously have been advised and furnished
a  copy  or  to  which  the  Initial Purchaser shall have reasonably objected in
writing  or  that  is  not  in compliance with the Exchange Act or the rules and
regulations  of  the  Commission  promulgated  thereunder.

     (g)  The Company shall use its reasonable efforts, in cooperation with you,
to qualify the Notes under the securities or blue sky laws of such jurisdictions
within the United States as you may designate and to maintain such qualification
in  effect for so long as required for the sale of the Notes; provided, however,
that  in  no  event  shall  the  Company be obligated in connection therewith to
qualify  as  a foreign corporation or to execute a general consent to service of
process  or  to  subject  itself to taxation in respect of doing business in any
jurisdictions  in  which  it  is  not  otherwise  so  subject.

     (h)  The Company shall use all reasonable efforts to secure compliance with
the  Canadian  Securities  Laws  on  a  timely  basis  in  connection  with  the
distribution  of  the  Notes  to  Eligible  Purchasers  in the Private Placement
Provinces  on a prospectus-exempt basis, including without limitation, by filing
as  soon  as  practicable  after  the  Closing  Date and in any event within the
periods  stipulated  under  the  Canadian  Securities  Laws and at the Company's
expense  all  private placement forms, trade reports or other documents required
to  be  filed  in  connection  with  the Exempt Resales in the Private Placement
Provinces  and  paying  all  fees  required  in  connection  therewith.

     (i)  The Company shall use its reasonable efforts to maintain its status as
a  reporting  issuer,  or  its  equivalent, under the securities laws of British
Columbia,  Alberta, Ontario and Quebec, and to timely comply with its continuous
disclosure  and  other  obligations  under  the  Canadian  Securities  Laws.

     (j) During the period of 180 days from the date of the Offering Memorandum,
the Company shall not, directly or indirectly, without the prior written consent
of RBC Dain Rauscher Inc., issue, sell, offer or agree to sell, grant any option
for  the  sale  of,  pledge, make any short sale or maintain any short position,
establish  or  maintain  a "put equivalent position" (within the meaning of Rule
16a-1(h) under the Exchange Act), enter into any swap, derivative transaction or
other  arrangement  that  transfers  to another, in whole or in part, any of the
economic consequences of ownership of the Shares of Beneficial Interest (whether
any  such  transaction  is  to  be  settled  by delivery of Shares of Beneficial
Interest,  other  securities,  cash or other consideration) or otherwise dispose
of,  any  Shares  of  Beneficial  Interest  (or any securities convertible into,
exercisable for or exchangeable for Shares of Beneficial Interest, including the
Notes,  (the  "EXCHANGEABLE  SHARES"))  or  interest  therein of the Company, or
Shares  of  Beneficial  Interest or any securities convertible into, exercisable
for  or  exchangeable  for  Shares  of  Beneficial  Interest  of  any  of  its
subsidiaries,  and  the  Company  shall  obtain  the  undertaking of each of its
officers  and  trustees  as have been heretofore designated by you and listed on
Schedule  I  attached  hereto  not  to  engage  in  any  of  the  aforementioned
transactions  on  their  own  behalf, other than the Company's sale of the Notes
hereunder  and  (A) the Company's issuance of Shares of Beneficial Interest upon
(i)  the  conversion  or  exchange  of  outstanding  convertible or exchangeable
securities (including the Notes and the Conversion Shares), or (ii) the exercise
of  currently  outstanding  options;  (B)  the  grant  of  options under, or the
issuance of Shares of Beneficial Interest upon the exercise thereof pursuant to,
employee  stock  option plans in effect on the date hereof; or (C) the Company's
issuance  of  any  Shares  of  Beneficial  Interest  or other securities for the
purpose  of  acquiring  a business, any assets or any securities, so long as the
recipient  of  such  shares  or other securities agrees to be subject to similar
restrictions  for  the  remaining  balance  of  such  180-day  period.

     (k)  During the period of two years from the Closing Date the Company shall
furnish to you copies of any reports to holders of the Notes, and deliver to you
as  soon  as  they  are  available, copies of any periodic reports and financial
statements  furnished to or filed with the Commission or any national or foreign
securities exchange on which any class of securities of the Company is listed to
the  extent  such  documents  are  not  available  on  the  SEC's  website.

     (l)  For  so  long  as  any  of  the  Notes  or  the  Conversion Shares are
"restricted  securities" within the meaning of the Securities Act and during any
period  in  which  the  Company  is  not  subject  to Section 13 or 15(d) of the
Exchange Act, the Company shall furnish to any holder or beneficial owner of the
Notes  or  the  Conversion  Shares  in  connection with any sale thereof and any
prospective  purchaser  of  such  Notes or Conversion Shares from such holder or
beneficial  owner  (upon  the  request  of  such  holders,  beneficial owners or
prospective  purchasers)  the  information required by Rule 144A(d)(4) under the
Securities  Act.

     (m)  The Company shall not sell, offer for sale or solicit offers to buy or
otherwise  negotiate  in  respect  of any security (as defined in the Securities
Act)  that would be integrated with the sale of the Notes in a manner that would
require  the  registration  under  the Securities Act of the sale to the Initial
Purchaser  or  the  Eligible Purchasers of the Notes or to take any other action
that  would  result  in the sale of the Notes not being exempt from registration
under  the  Securities  Act.

     (n) The Company shall not take, directly or indirectly, any action designed
to, or that could reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company. Except as permitted by
the  Securities  Act  and approved by the Initial Purchaser (which approval will
not  be  unreasonably withheld or delayed), the Company shall not distribute any
offering  material  in  connection with the offering and sale of the Notes other
than  the  Offering  Memorandum.

     (o)  The  Company shall apply the net proceeds it receives from the sale of
the  Notes  as  set  forth  under  "Use of Proceeds" in the Offering Memorandum.


                                       17


<PAGE>

     (p) The Company shall use its reasonable efforts to effect the inclusion of
the  Notes  for trading in the PORTAL market and to obtain approval of the Notes
by  DTC  for  "book-entry"  transfer.

     (q) Until the earlier of (i) the second anniversary of the Closing Date and
(ii)  the  first date of effectiveness of the registration statement to be filed
pursuant  to  the  Registration Rights Agreement, the Company will not, and will
not  permit  any  of its "controlled" "affiliates" (as defined in Rule 405 under
the  Securities  Act)  to,  resell  any  of  the Notes or Conversion Shares that
constitute  "restricted  securities" under Rule 144 that have been reacquired by
any  of  them.

     (r)  None  of  the Company or any of its affiliates or any person acting on
such person's behalf (other than the Initial Purchaser and its affiliates, as to
whom  no  representation is made) will solicit any offer to buy or offer or sell
the  Notes  (i)  by  means  of  any  form  of  general  solicitation  or general
advertising  (as  those  terms  are defined in Regulation D under the Securities
Act),  including,  but not limited to, articles, notices or other communications
published  in  any  newspaper,  magazine,  or  similar  medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by  any  general  solicitation  or  general  advertising,  or (ii) in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act.

     (s)  The  Company  shall  at  all times reserve and keep available, free of
preemptive  or  similar rights, Shares of Beneficial Interest for the purpose of
enabling  the  Company to satisfy any obligations to issue the Conversion Shares
upon  conversion  of  the  Notes.

     (t)  The  Company shall refuse to register any transfer of the Notes or the
Conversion Shares not made (i) in accordance with the provisions of Regulation S
(Rule  901  through  905,  and Preliminary Notes), (ii) pursuant to registration
under  the  Securities  Act  or  (iii)  pursuant  to an available exemption from
registration.

     5.     Payment  of  Expenses.  Whether or not the transactions contemplated
            ---------------------
in  this  Agreement are consummated or this Agreement is terminated, the Company
hereby  agrees  to pay all costs and expenses incident to the performance of the
obligations  of  the  Company  hereunder,  and  under  the  Indenture  and  the
Registration  Rights  Agreement,  including  the  following:  (i)  the  fees,
disbursements  and  expenses  of  the  Company's  counsel  and  accountants  in
connection  with  the  qualification  of the Notes and the Conversion Shares for
distribution  in  the United States and, on a prospectus-exempt basis, in Canada
and  all  other  expenses in connection with the preparation and printing of the
Preliminary  Offering  Memorandum and the Offering Memorandum and amendments and
supplements  thereto  and  the  mailing  and  delivering  of  copies  thereof in
connection  with  sale  of the Notes; (ii) the cost of producing this Agreement,
the Blue Sky memoranda, any notice or similar filing reasonably requested by the
Initial  Purchaser  in  any  jurisdiction  outside  the U.S. and Canada, closing
documents  (including  any  compilations  thereof)  and  any  other documents in
connection  with  the  offering, purchase, sale and delivery of the Notes; (iii)
all  expenses  in connection with the qualification or registration of the Notes
for  offering  and  sale under state securities laws as provided in Section 4(g)
hereof,  including  the  reasonable  fees  and  disbursements of counsel for the
Initial  Purchaser  in connection with such qualification and in connection with
the  Blue  Sky survey; (iv) all fees and expenses in connection with listing and
qualifying  the  Notes  for  trading  in  the  PORTAL market; and (v) all


                                       18


<PAGE>

travel expenses of the Company's officers and employees and any other expense of
the  Company  incurred in connection with attending or hosting meetings, if any,
with  prospective purchasers of the Notes. The Company also will pay or cause to
be  paid:  (i)  the  reasonable  costs  and  expenses  of the Initial Purchaser,
including the fees and disbursements of their counsel, travel expenses and other
out-of-pocket  expenses;  (ii) the cost of preparing the Global Notes; (iii) the
cost and charges of the Trustee, including the reasonable fees and disbursements
of  counsel  to  the  Trustee;  and (iv) all other reasonable costs and expenses
incident to the performance of its obligations hereunder which are not otherwise
specifically  provided  for  in  this  Section  5.

     6.     Conditions  of  Initial Purchaser's Obligations.  The obligations of
            -----------------------------------------------
the Initial Purchaser to purchase and pay for the Notes as provided herein shall
be  subject to the accuracy of the representations and warranties of the Company
herein contained, as of the date hereof and as of the Closing Date or such other
date  as may be specified therein (for purposes of this Section 6 "Closing Date"
shall  refer  to  the  Closing  Date  for  the  Notes)  to  the absence from any
certificates,  opinions,  written  statements  or letters furnished to you or to
Initial Purchaser's Counsel (as defined below) pursuant to this Section 6 of any
misstatement  or  omission, to the performance by the Company of its obligations
hereunder,  and  to  each  of  the  following  additional  conditions:

     (a)  At  the  Closing  Date,  you shall have received the opinion of Heller
Ehrman  White  &  McAuliffe LLP, special U.S. counsel for the Company, dated the
Closing  Date,  addressed to the Initial Purchaser and substantially in the form
attached  hereto  as  Annex  I.  In giving such opinion, counsel may state that,
insofar  as  such  opinion  involves  factual  matters,  they  have  relied upon
certificates  of  officers  of the Company and certificates of public officials.

     (b)  At  the  Closing  Date, you shall have received the opinion of Sangra,
Moller,  Canadian  counsel for the Company, dated the Closing Date, addressed to
the Initial Purchaser and in substantially the form attached hereto as Annex II.
In giving such opinion, counsel may state that, insofar as such opinion involves
factual  matters,  they have relied upon certificates of officers of the Company
and  certificates  of  public  officials.

     (c)  At  the  Closing Date, you shall have received the opinion of Latham &
Watkins, special U.S. counsel for the Initial Purchaser, dated the Closing Date,
addressed  to  the  Initial  Purchaser  and  in  form  and  substance reasonably
satisfactory  to the Initial Purchaser, covering such matters as are customarily
covered  in  such  opinions.

     (d)  All  proceedings  taken  in  connection  with the sale of the Notes as
herein  contemplated  shall  be in form and substance reasonably satisfactory to
you and to the Initial Purchaser's Counsel, and the Company shall have furnished
to Initial Purchaser's Counsel such documents as they reasonably request for the
purpose  of  enabling  them to pass upon certain matters pursuant to subsections
(c)  above.

     (e) At the Closing Date, you shall have received a certificate of the Chief
Executive  Officer  and President and the Chief Financial Officer of the Company
in their capacities as officers of the Company, dated as of the Closing Date, to
the  effect that (i) the representations and warranties of the Company set forth
in  Section  1  hereof  are accurate as of the date hereof and as of the Closing
Date  (or  such  other  date  as  may  be  specified)  with  the  same


                                       19


<PAGE>

force  and  effect as though expressly made on such date, (ii) as of the Closing
Date,  the obligations of the Company to be performed or complied with hereunder
on  or  prior  thereto  have  been  duly  performed  or complied with, and (iii)
subsequent to the respective date of the most recent financial statements in the
Offering  Document,  the  Company  and  its  subsidiaries have not sustained any
material  loss  or  interference  with their respective businesses or properties
from  fire, flood, hurricane, accident or other calamity, whether or not covered
by insurance, or from any labor dispute or any legal or governmental proceeding,
and there has not been any change, or any development involving a change, in the
business, properties, operations, condition (financial or otherwise), or results
of  operations  of  the Company and its subsidiaries taken as a whole, except in
each case as described in or contemplated by the Offering Memorandum or as would
not  have  a  Material  Adverse  Effect.

     (f)  On  the date hereof and at the Closing Date, you shall have received a
comfort  letter  in  respect  of  the Offering Memorandum from Peterson Sullivan
P.L.L.C., former independent public accountants for the Company, dated as of the
date  hereof  or  the Closing Date, as the case may be, addressed to the Initial
Purchaser  and  in  form  and  substance  reasonably satisfactory to the Initial
Purchaser  containing statements and information of the type ordinarily included
in  accountants'  "comfort  letters"  to  initial purchasers with respect to the
financial statements and certain financial information contained in the Offering
Memorandum  and  Incorporated  Documents.

     (g)  On  the date hereof and at the Closing Date, you shall have received a
comfort letter in respect of the Offering Memorandum from Deloitte & Touche LLP,
independent  public accountants for the Company, dated as of the date hereof and
as  of  the Closing Date, as the case may be, addressed to the Initial Purchaser
and  in  form  and  substance  reasonably  satisfactory to the Initial Purchaser
containing  statements  and  information  of  the  type  ordinarily  included in
accountants'  "comfort  letters"  to  initial purchasers with respect to interim
unaudited  financial  statements  and certain financial information contained in
the  Offering  Memorandum  and  Incorporated  Documents.

     (h) Subsequent to the execution and delivery of this Agreement, there shall
not  have been any Material Adverse Change which, in the judgment of the Initial
Purchaser,  acting  reasonably, makes it impracticable or inadvisable to proceed
with  the  offering  or the delivery of the Notes on the terms and in the manner
contemplated  by  this Agreement and the Offering Memorandum, including, without
limitation  the  Exempt  Resales  (exclusive  of  any  amendment  or  supplement
thereto).

     (i)  You  shall  have  received  a  lock-up agreement from each trustee and
officer  of  the  Company  as  shall  have been heretofore designated by you and
listed  on Schedule II hereto substantially in the form attached hereto as Annex
III.

     (j)  The Company and the Trustee shall have entered into the Indenture, and
the  Initial  Purchaser  shall  have  received  an  executed  copy  thereof.

     (k)  The  Company  and  the  Initial  Purchaser shall have entered into the
Registration  Rights Agreement, and the Initial Purchaser shall have received an
executed  copy  thereof.


                                       20


<PAGE>

     (l)  At  the Closing Date, the Notes shall have been designated for trading
in  the  PORTAL  market.

     (m)  The  Company  shall  have  furnished the Initial Purchaser and Initial
Purchaser's Counsel with such other certificates, opinions or other documents as
they  may  have  reasonably  requested.

     The  Initial Purchaser may in its sole discretion waive compliance with any
conditions  to  its  obligations  hereunder.

     7.     Indemnification.
            ---------------

     (a)  The  Company  shall indemnify and hold harmless the Initial Purchaser,
its  directors, officers and employees and each person, if any, who controls the
Initial  Purchaser  within  the  meaning  of Section 15 of the Securities Act or
Section  20(a)  of  the  Exchange  Act  (including each affiliate of the Initial
Purchaser  who is deemed a third party beneficiary pursuant to Section 12 hereof
(an  "AFFILIATED  DEALER"),  its  directors,  officers  and  employees  and  any
controlling  person  of such affiliate) against any and all losses, liabilities,
claims,  damages  and expenses whatsoever as incurred (including but not limited
to  reasonable  attorneys'  fees and any and all expenses whatsoever incurred in
investigating,  preparing  or  defending  against  any  litigation, commenced or
threatened,  or any claim whatsoever, and any and all amounts paid in settlement
of  any claim or litigation), joint or several, to which they or any of them may
become  subject  under  the  Securities  Act,  the  Exchange  Act,  the Canadian
Securities  Laws  or  otherwise,  insofar  as  such losses, liabilities, claims,
damages  or  expenses  (or actions in respect thereof) arise out of or are based
upon  any  untrue  statement  or  alleged  untrue  statement  of a material fact
contained  in  the Offering Memorandum (including the Incorporated Documents) or
in  any  supplement  thereto  or amendment thereof, or arise out of or are based
upon  the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided,  however,  that the Company will not be liable in any such case to the
extent  but  only  to the extent that any such loss, liability, claim, damage or
expense  arises  out  of  or  is based upon any such untrue statement or alleged
untrue  statement  or omission or alleged omission made therein in reliance upon
and  in  conformity  with  written information transmitted to the Company by the
Initial  Purchaser  and its affiliates expressly for use therein. This indemnity
agreement  will  be  in addition to any liability that the Company may otherwise
have  including  under  this  Agreement.

     (b)  The  Initial  Purchaser shall indemnify and hold harmless the Company,
each  of  the  trustees  of the Company, each of the officers of the Company and
each  other  person,  if  any,  who  controls  the Company within the meaning of
Section  15  of the Securities Act or Section 20(a) of the Exchange Act, against
any  losses,  liabilities, claims, damages and reasonable expenses whatsoever as
incurred  (including but not limited to attorneys' fees and any and all expenses
whatsoever  incurred  in  investigating,  preparing  or  defending  against  any
litigation,  commenced  or  threatened, or any claim whatsoever, and any and all
amounts  paid  in  settlement  of any claim or litigation), joint or several, to
which  they  or  any  of  them  may become subject under the Securities Act, the
Exchange Act, the Canadian Securities Laws or otherwise, insofar as such losses,
liabilities,  claims,  damages or expenses (or actions in respect thereof) arise
out  of  or are based upon any untrue statement or alleged untrue statement of a
material  fact


                                       21


<PAGE>

contained  in  the Offering Memorandum (including the Incorporated Documents) or
in  any  amendment  thereof  or supplement thereto, or arise out of or are based
upon  the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in  each  case  to  the  extent,  but  only  to  the extent, that any such loss,
liability,  claim,  damage  or  expense  arises out of or is based upon any such
untrue  statement  or  alleged  untrue statement or omission or alleged omission
made  therein  in  reliance  upon  and  in  conformity  with written information
furnished  by  the  Initial Purchaser expressly for use therein; it being agreed
and  understood  that  for  all purposes of this Agreement, the only information
furnished  by the Initial Purchaser consists of the following information in the
Offering  Memorandum:  the  sections titled "Discounts and Expenses" (except for
the  last  sentence  thereof)  and  "Price  Stabilization  and  Short Positions"
(including  in  the  second  paragraph  thereof,  with respect to the absence of
representations  by  the  Initial  Purchaser)  under  the  caption  "Plan  of
Distribution"  in the Offering Memorandum. This indemnity will be in addition to
any liability that any Initial Purchaser may otherwise have including under this
Agreement.

     (c)  Promptly after receipt by an indemnified party under subsection (a) or
(b)  above  of  notice  of  any  claims  or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying  party  under  such  subsection,  notify  each  party  against whom
indemnification  is  to  be  sought  in writing of the claim or the commencement
thereof (but the failure so to notify an indemnifying party shall not relieve it
from  any  liability  which  it may have under this Section 7). In case any such
claim  or  action  is  brought against any indemnified party, and it notifies an
indemnifying  party  of the commencement thereof, the indemnifying party will be
entitled  to  participate  therein,  and  to  the extent it may elect by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice  from  such indemnified party, to assume the defense thereof with counsel
satisfactory  to  such  indemnified  party.  Notwithstanding  the foregoing, the
indemnified  party  or  parties  shall have the right to employ its or their own
counsel  in any such case, but the fees and expenses of such counsel shall be at
the  expense  of  such indemnified party or parties unless (i) the employment of
such  counsel  shall  have been authorized in writing by one of the indemnifying
parties  in  connection  with  the defense of such action, (ii) the indemnifying
parties  shall  not  have employed counsel to have charge of the defense of such
action  within  a  reasonable time after notice of commencement of the action or
(iii)  such  indemnified  party  or parties shall have reasonably concluded that
there  may  be  defenses  available  to  it  or  them that are different from or
additional  to  those  available  to  one or all of the indemnifying parties (in
which  case  the  indemnifying  parties  shall  not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which  events  the  fees  and  expenses  of  one  counsel  selected  by  all the
indemnified  parties  to  represent  them all shall be borne by the indemnifying
parties.  No  indemnifying party shall, without the prior written consent of the
indemnified  party,  effect  any  settlement or compromise of, or consent to the
entry  of  judgment with respect to, any pending or threatened action in respect
of  which  the  indemnified  party  is or reasonably could have been a party and
indemnity  or  contribution  may  be  or could have been sought hereunder by the
indemnified  party (an "ACTION"), unless such settlement, compromise or judgment
(x)  includes  an  unconditional  release  of  the  indemnified  party  from all
liability  on claims that are the subject matter of such action and (y) does not
include  a statement as to or an admission of fault, culpability or a failure to
act,  by  or  on  behalf  of  the indemnified party. No indemnified party shall,
without  the  prior  written  consent  of  the  indemnifying  party,  effect any
settlement  or


                                       22


<PAGE>

compromise  of, or consent to the entry of judgment with respect to, any Action,
unless  such settlement, compromise or consent includes an unconditional release
of  such  indemnified  party  from  all liability on claims that are the subject
matter  of  such  Action.

     8.     Contribution.  In order to provide for contribution in circumstances
            ------------
in  which the indemnification provided for in Section 7 hereof is for any reason
held  to  be  unavailable from any indemnifying party or is insufficient to hold
harmless  a  party indemnified thereunder, the Company and the Initial Purchaser
shall  contribute  to  the  aggregate  losses,  claims, damages, liabilities and
expenses of the nature contemplated by such indemnification provision (including
any investigation, legal and other expenses incurred in connection with, and any
amount  paid  in  settlement  of,  any  action, suit or proceeding or any claims
asserted,  but  after  deducting  in  the  case  of  losses,  claims,  damages,
liabilities  and  expenses  suffered by the Company any contribution received by
the  Company  from  persons,  other  than the Initial Purchaser, who may also be
liable  for  contribution,  including persons who control the Company within the
meaning  of  Section  15  of the Securities Act or Section 20(a) of the Exchange
Act, and officers and directors of the Company) as incurred to which the Company
and  one or both of the Initial Purchaser may be subject, in such proportions as
is  appropriate to reflect the relative benefits received by the Company and the
Initial  Purchaser  from the offering of the Notes or, if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only  the relative benefits referred to above but also the relative fault of the
Company and the Initial Purchaser in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as  any other relevant equitable considerations.  The relative benefits received
by  the  Company  and  the  Initial  Purchaser shall be deemed to be in the same
proportion  as  (x)  the  total proceeds from the Offering (net of discounts and
commissions  but  before deducting expenses) received by the Company and (y) the
discounts and commissions received by the Initial Purchaser.  The relative fault
of the Company and of the Initial Purchaser shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact  or  the  omission  or alleged omission to state a material fact relates to
information  supplied  by  the Company or the Initial Purchaser and the parties'
relative  intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.  The Company and the Initial Purchaser agree
that it would not be just and equitable if contribution pursuant to this Section
8  were  determined  by  pro rata allocation (even if the Initial Purchaser were
treated  as  one  entity  for such purpose) or by any other method of allocation
which  does  not take account of the equitable considerations referred to above.
Notwithstanding  the  provisions  of this Section 8, the Initial Purchaser shall
not  be  required  to contribute any amount in excess of the amount by which the
total  price  at which the Notes purchased by it and sold to Eligible Purchasers
were  offered  to  hereby  exceeds  the  amount  of any damages that the Initial
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue  statement  or  omission  or  alleged  omission.  No  person  guilty  of
fraudulent  misrepresentation  (within  the  meaning  of  Section  11(f)  of the
Securities  Act)  shall  be entitled to contribution from any person who was not
guilty  of  such  fraudulent misrepresentation.  For purposes of this Section 8,
each  person,  if  any, who controls the Initial Purchaser within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act shall have
the  same  rights  to contribution as the Initial Purchaser, and each person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act  or  Section  20(a) of the Exchange Act and each officer and director of the
Company  shall  have  the same rights to contribution as the Company.  Any party
entitled  to contribution will, promptly after receipt of


                                       23


<PAGE>

notice  of  commencement of any action, suit or proceeding against such party in
respect  of  which a claim for contribution may be made against another party or
parties,  notify each party or parties from whom contribution may be sought, but
the  omission  to so notify such party or parties shall not relieve the party or
parties  from whom contribution may be sought from any obligation it or they may
have  under  this  Section  8  or  otherwise.

     9.     Survival of Representations and  Agreements. All representations and
            -------------------------------------------  warranties,  covenants,
agreements  and  other statements of the Company or its officers and the Initial
Purchaser  set  forth  in  or  made  pursuant  to  this Agreement, including the
agreements contained in Section 5, the indemnity agreements contained in Section
7 and the contribution agreements contained in Section 8, shall remain operative
and  in  full  force  and  effect  regardless of any investigation made by or on
behalf  of  the  Initial Purchaser or any controlling person thereof or by or on
behalf  of  the  Company,  any  of  its officers and trustees or any controlling
person  thereof,  and shall survive delivery of and payment for the Notes to and
by  the  Initial  Purchaser.  The representations contained in Section 1 and the
agreements  contained  in  Sections  5,  7, 8 and 10(b) hereof shall survive the
termination  of  this  Agreement,  including  termination pursuant to Section 10
hereof.

     10.     Termination.
             -----------
     (a)  The  Initial Purchaser shall be entitled, at its option, to terminate,
without  liability  on  its part, its obligations under this Agreement by giving
written notice to that effect to the Company at or prior to the Closing Date if:
(i)  trading  in the Company's securities on the Nasdaq National Market has been
suspended  or made subject to material limitations; (ii) trading on the New York
Stock  Exchange  or  on  the Nasdaq National Market shall have been suspended or
been  made  subject  to  material  limitations, or minimum or maximum prices for
trading shall have been fixed, or maximum ranges for prices for securities shall
have  been  required,  on  the New York Stock Exchange or on the Nasdaq National
Market  or by order of the Commission or any other governmental authority having
jurisdiction;  (iii)  a  banking  moratorium  has  been  declared  by  a  state,
provincial  or  federal authority in the United States or if any new restriction
materially  adversely  affecting the distribution of the Notes shall have become
effective;  (iv) there has occurred any outbreak or escalation of hostilities or
acts  of  terrorism  involving  the  United  States  or  Canada,  or  there is a
declaration  of  a national emergency or war by the United States or Canada such
that  the  effect  of  any  such  event  in  your  reasonable  judgment makes it
impracticable  or inadvisable to proceed with the offering, sale and delivery of
the  Notes on the terms contemplated by the Offering Memorandum; (v) in relation
to  the  Company,  the  Notes or the Shares of Beneficial Interest, any inquiry,
investigation  or  other proceeding is commenced, threatened or announced or any
order  or  ruling is issued by any officer of such exchange or market, or by the
Commission, any of the Canadian Commissions or any other regulatory authority in
Canada  or  the  United States, or if any law or regulation under or pursuant to
any  statute of Canada or of any province thereof or of the United States or any
state  or  territory  thereof is promulgated or changed which, in the reasonable
opinion  of  the  Initial  Purchaser, operates to prevent or materially restrict
trading  in  or  the  distribution  of  the  Notes  or  shares  of the Shares of
Beneficial  Interest  in the United States; or (vi) there should develop, occur,
or  come  into effect any occurrence of national or international consequence or
any  action,  law  or  regulation,  inquiry,  or  other occurrence of any nature
whatsoever,  including,  without  limiting  the generality of the foregoing, any
military  conflict,  civil  insurrection, or any terrorist action, which,


                                       24


<PAGE>

in  the  reasonable  opinion  of the Initial Purchaser, seriously affects or may
seriously  affect  the  financial markets or the business of the Company and its
subsidiaries  taken  as  a  whole,  and/or  prevents or materially restricts the
trading  in or the distribution of the Notes in the United States or Canada.

     (b)  If  this  Agreement  is  terminated  pursuant to any of the provisions
hereof,  or  if  the  sale  of  the Notes provided for herein is not consummated
because  any  condition  to  the  obligations of the Initial Purchaser set forth
herein  is  not satisfied or because of any refusal, inability or failure on the
part of the Company to perform any agreement herein or comply with any provision
hereof,  the  Company  shall,  subject  to  demand by you, reimburse the Initial
Purchaser  for  all  out-of-pocket  expenses  (including the reasonable fees and
expenses  of  their  counsel),  incurred  by the Initial Purchaser in connection
herewith.

     11.     Notices.  All  communications hereunder, except as may be otherwise
             -------
specifically  provided  herein,  shall  be  in  writing,  and:

     (a)  if  sent to the Initial Purchaser, shall be mailed, delivered or faxed
and  confirmed  in  writing,  to:

          RBC  Capital  Markets
          Royal  Bank  Plaza,  4th  Floor,  South  Tower
          200  Bay  Street
          Toronto,  Ontario  M5J  2W7
          Ph:  (416)  842-7593
          Fax:  (416)  842-7650
          Attention:  Derek  Neldner,  Managing  Director

          with  copies  to:

          Lawson  Lundell
          1600  Cathedral  Place
          925  West  Georgia  Street
          Vancouver,  BC  V6C  3L2
          Attention:  Gordon  R.  Chambers

          Latham  &  Watkins  LLP
          633  West  Fifth  Street
          Los  Angeles,  CA  90071
          Attention:  Mark  Stegemoeller


                                       25


<PAGE>

     (b)  if  sent  to  the  Company,  shall  be  mailed, delivered or faxed and
confirmed  in  writing,  to:

          Mercer  International  Inc.
          14900  Interurban  Ave.  South
          Suite  271
          Seattle,  WA  98168
          Ph:  (206)  674-4639
          Fax:  (206)  674-4629
          Attention:  David  Gandossi

          with  copies  to:

          Sangra,  Moller
          1000  Cathedral  Place
          925  West  Georgia  Street
          Vancouver,  BC  V62  3L2
          Attention:  Harjit  Sangra

provided,  however, that any notice to the Initial Purchaser pursuant to Section
7  shall  be  delivered or sent by mail or facsimile transmission to the Initial
Purchaser  at  its  address  set forth in its acceptance facsimile to you, which
address will be supplied to any other party hereto by you upon request. Any such
statements,  requests,  notices  or  agreements shall take effect at the time of
receipt  thereof.

     12.     Successors  and  Assigns.  This Agreement shall inure solely to the
             ------------------------
benefit of, and shall be binding upon, the Initial Purchaser and the Company and
the  controlling  persons,  directors,  trustees, officers, employees and agents
referred  to  in  Sections 7 and 8, and their respective successors and assigns,
and  no  other  person shall have or be construed to have any legal or equitable
right,  remedy or claim under or in respect of or by virtue of this Agreement or
any  provision  herein  contained.  The  term "successors and assigns" shall not
include  a  purchaser,  in  its  capacity  as  such,  of  Notes from the Initial
Purchaser.  Any  Affiliated Dealer that is duly qualified and authorized to sell
the  Notes  in  the United States or Canada pursuant to the Offering Memorandum,
and  so  offers and sells the Notes shall be deemed a third party beneficiary of
the  representations  and  warranties of the Company contained in Section 1, the
covenants  of  the  Company  contained  in  Section  4,  the indemnification and
contribution  obligations  of  the Company contained in Sections 7 and 8 and the
officers'  certificates,  legal  opinions  and  other  documents  required to be
delivered  to  the  Initial  Purchaser pursuant to this Agreement, and each such
affiliate  shall  have the right to enforce such provisions of this Agreement to
the  same  extent  as  if  it  were  an  Initial  Purchaser.

     13.     Governing Law. This Agreement shall be governed by and construed in
             -------------
accordance  with  the  laws  of the State of New York, but without regard to any
applicable  principles  of  conflicts  of  law.


                                       26


<PAGE>

     14.     Counterparts.  This  Agreement  may  be  executed  in any number of
             -------------
counterparts,  each  of which when so executed shall be deemed to be an original
and  all  of  which  taken together shall constitute one and the same agreement.

     15.     Headings.   The   headings  in  this  Agreement  are  inserted  for
             --------
convenience  of  reference only, are not to be considered part of this Agreement
and  shall  in  no way modify or restrict any of the terms or provisions hereof.

     16.     Time  is  of  the  Essence.  Time  shall  be of the essence of this
             --------------------------
Agreement.  As  used herein, the term "business day" shall mean any day when the
Commission's  office  in  Washington,  D.C.  is  open  for  business.

     18.     Entire  Agreement.  This  Agreement is intended by the parties as a
             -----------------
final  expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the  subject  matter  contained  herein.  There  are  no restrictions, promises,
warranties  or  undertakings,  other  than those set forth or referred to herein
with  respect  to the registration rights granted by the Company with respect to
the  Notes  and  the  Conversion  Shares.

     19.     Severability.  If  any  one  or  more  of  the provisions contained
             ------------
herein, or the application thereof in any circumstance, is held invalid, illegal
or  unenforceability,  the  validity,  legality  and  enforceability of any such
provision  in  every  other  respect  and  of the remaining provisions contained
herein  shall  not  be  affected  or  impaired  thereby.

                            (signature page follows)


                                       27

<PAGE>

     If the foregoing correctly sets forth the understanding between you and the
Company,  please  so  indicate  in  the  space  provided below for that purpose,
whereupon  this  letter  shall  constitute  a  binding  agreement  among  us.

                                              Very  truly  yours,

                                              MERCER  INTERNATIONAL  INC.

                                              /s/  Jummy  Lee

                                              By:
                                                 ------------------------------
                                                 Name:
                                                 Title:



                                              By:
                                                 ------------------------------
                                                 Name:
                                                 Title:


                      (additional signature page follows)

<PAGE>

Accepted  as  of  the  date  first  above  written.

RBC  DAIN  RAUSCHER  INC.

/s/  Peter  de  Vos

By:
   --------------------------------------
   Name:  Peter  de  Vos
   Title:    Head  of  Corporate  Finance

                      signature page to purchase agreement


<PAGE>

                                   SCHEDULE I

Jimmy  S.H.  Lee
C.S.  Moon
William  McCartney
Graeme  Witts
Wolfram  Ridder
Guy  W.  Adams
David  M.  Gandossi
R.  Ian  Rigg
Kenneth  A.  Shields


<PAGE>

                                                                         ANNEX I

             Form of Opinion of Heller Ehrman White & McAuliffe LLP
             ------------------------------------------------------
     1.  The  Company  has  been  duly  formed  and  is  validly  existing  as a
Massachusetts  trust  under  the  laws  of  the  State  of  Washington.

     2.  The  Company  has  all  necessary  Massachusetts  trust  power  and
Massachusetts  trust  authority  to  conduct  its  business  as described in the
Offering  Memorandum,  to  offer,  issue  and  sell the Notes and the Conversion
Shares  and  to  perform  its  obligations  under  the  Operative  Documents.

     3.  The  Company  has  an  authorized capitalization as set forth under the
caption  "Capitalization"  in  the Offering Memorandum; and the issued Shares of
Beneficial  Interest  and the Conversion Shares conform in all material respects
to  the  descriptions  thereof  contained  in  the  Offering  Memorandum.

     4.  The Conversion Shares have been duly authorized by all necessary action
on  the  part  of  the  Company  and,  when issued by the Company to satisfy the
conversion rights of the Notes in accordance with the terms of the Notes and the
Indenture,  will  be  duly  issued,  fully  paid  and  non-assessable.

     5.  The Company has reserved for issuance the Conversion Shares in a number
of  authorized  but unissued Shares of Beneficial Interest sufficient to satisfy
the  conversion rights of the Notes, and no further approval or authority of the
shareholders  or  the  Board  of  Trustees  of  the  Company is required for the
issuance  of  such  Conversion  Shares.

     6. This Purchase Agreement has been duly authorized by all necessary action
on  the  part of the Company, and has been duly executed and delivered on behalf
of  the  Company.

     7.  The  Indenture  has been duly authorized by all necessary action on the
part  of  the Company, and has been duly executed and delivered on behalf of the
Company  and,  assuming  the  due  authorization,  execution and delivery of the
Indenture  by  the  Trustee, is the valid and binding obligation of the Company,
enforceable  against  the  Company  in accordance with its terms, subject to (i)
bankruptcy,  insolvency,  fraudulent  conveyance, moratorium, reorganization and
other  laws  of general applicability relating to or affecting creditors' rights
and  (ii)  general  principles  of equity (regardless of whether considered in a
proceeding  in  equity  or  at  law).

     8.  The Notes have been duly authorized by all necessary action on the part
of the Company and have been executed and delivered on behalf of the Company for
issuance  and  sale  to the Initial Purchaser pursuant to the Purchase Agreement
and, when issued and authenticated in accordance with the terms of the Indenture
and  delivered against payment therefor in accordance with the terms thereof and
of  the  Purchase  Agreement,  assuming  the  due  authorization,  execution and
delivery  of the Indenture by the Trustee, will constitute the valid and binding
obligations  of  the Company, enforceable against the Company in accordance with
their  terms  and  entitled  to  the  benefits  of the Indenture, subject to (i)
bankruptcy,  insolvency,  fraudulent  conveyance, moratorium, reorganization and
other  similar laws of general


                                    ANNEX I-1


<PAGE>

applicability  relating  to  or  affecting  creditors'  rights  and (ii) general
principles of equity (regardless of whether considered in a proceeding in equity
or  at  law).

     9.  The  Registration  Rights  Agreement  has  been  duly authorized by all
necessary  action  on  the  part  of the Company, and has been duly executed and
delivered  by  the  Company  and,  assuming the due authorization, execution and
delivery  of  the  Registration  Rights Agreement by the Initial Purchaser, when
executed  and  delivered  by  the Company, will constitute the valid and binding
obligation  of  the  Company, enforceable against the Company in accordance with
its  terms,  subject  to  (i)  bankruptcy,  insolvency,  fraudulent  conveyance,
moratorium, reorganization and other laws of general applicability related to or
affecting creditors' rights and (ii) general principles of equity (regardless of
whether  considered  in  a  proceeding  in  equity  or  at  law).

     10. The execution, delivery, and performance of the Operative Documents and
the  consummation of the transactions contemplated thereby by the Company do not
and  will  not  violate  any  provision of the Declaration of Trust or Trustee's
Regulations  of  the  Company  or,  to  the  best knowledge of such counsel, any
federal  or  New  York  statute,  rule or regulation known by such counsel to be
generally  applicable  to  similar  transactions.

     11. The issuance of the Notes, and issuance of the Conversion Shares by the
Company to satisfy the conversion rights of the Notes, will not require approval
of  the  shareholders  of  the  Company  under  Washington  law.

     12.  No  consent,  approval,  authorization,  order,  registration, filing,
qualification,  license  or  permit  of  or  with  any  court  or  any  public,
governmental,  or regulatory agency or body having jurisdiction over the Company
or  any  of  its properties or assets is required under any law or regulation of
the United States or of the State of New York, under the Massachusetts Trust Act
of  1959  or the Washington Business Corporation Act for the execution, delivery
and  performance  of  the  Operative  Documents  or  the  consummation  of  the
transactions  contemplated thereby, except for (1) such as may be required under
state  securities  or  Blue  Sky  laws  in  connection  with  the  purchase  and
distribution  of  the  Notes  by the Initial Purchaser (as to which such counsel
expresses  no  opinion), (2) such as may be required under the Securities Act or
the Exchange Act and the Trust Indenture Act of 1939, as amended and (3) such as
are  required  under  the  Registration  Rights Agreement in connection with the
Company's  obligations  thereunder.

     13. No registration under the Securities Act of the Notes or the Conversion
Shares,  and  no qualification of the Indenture under the Trust Indenture Act of
1939,  as amended is required for the offer and sale of the Notes by the Company
to  the  Initial Purchaser or the reoffer and resale of the Notes by the Initial
Purchaser  to the initial purchasers therefrom solely in the manner contemplated
by  the  Offering Memorandum, the Purchase Agreement and the Indenture, assuming
the  representations,  warranties  and  covenants of the Company and the Initial
Purchaser in Sections 1, 3 and 4 of the Purchase Agreement have been and will be
complied  with.

     14.  When the Notes are issued and delivered pursuant to this Agreement, no
Note  will  be  of  the  same  class  (within  the  meaning of Rule 144A) as any
securities  of  the  Company  that


                                    ANNEX I-2


are  listed  on a national securities exchange registered under Section 6 of the
Exchange  Act  or  that  are  quoted  in  a United States automated inter-dealer
quotation  system.

     15. The statements under the caption "Material United States Federal Income
Tax  Considerations" in the Offering Memorandum, while not purporting to address
all  possible  federal  tax consequences of investing in a Note, insofar as they
constitute  statements  of  United  States  federal  income  tax  law  or  legal
conclusions,  accurately  summarize  the  material  United  States  income  tax
consequences  to  holders  of  the  Notes.

     16.  The Company is not an "investment company," as such term is defined in
the  Investment  Company  Act.

     17.  The  purchase by an existing shareholder who owns less than 15% of the
outstanding  shares  of beneficial interest of the Company of a pro rata portion
of the Notes being sold in the offering does not constitute a "Triggering Event"
under the Company's Rights Plan as amended. The purchase by an Eligible Purchase
of  Notes  in  this  Offering  will  not constitute a Triggering Event under the
Company's Rights Plan as amended, so long as, upon consummation of the Offering,
no  purchaser  is  the  beneficial  owner of 15% or more in the aggregate of the
Company's outstanding shares of beneficial interest and the shares of beneficial
interest  into  which  the  Notes  are  convertible.


                                    ANNEX I-3

<PAGE>

                                                                        ANNEX II

                        Form of Opinion of Sangra, Moller
                        ---------------------------------

     1.  To such counsel's knowledge and other than as set forth in the Offering
Memorandum,  there are no legal or governmental proceedings pending to which the
Company  or  any  of  its  significant  subsidiaries  is a party or of which any
property  of  the  Company or any of its significant subsidiaries is the subject
that  is  likely  to,  individually or in the aggregate, have a Material Adverse
Effect;  and, to such counsel's knowledge, no such proceedings are threatened or
contemplated  by  governmental  authorities  or  threatened  by  others.

     2.  To such counsel's knowledge, the execution, delivery and performance of
the  Operative  Documents  and the consummation of the transactions contemplated
thereby  by  the  Company  do  not and will not (A) conflict with or result in a
breach  of  any  of  the terms and provisions of, or constitute a default (or an
event  which  with notice or lapse of time, or both, would constitute a default)
under,  or  result  in  the  creation  or  imposition  of  any  lien,  charge or
encumbrance  upon  any  property  or  assets  of  the  Company  or  any  of  its
subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement
or  any  other agreement, instrument, franchise, license or permit identified to
such  counsel  as material and listed as exhibits to the Company's Annual Report
on  Form  10-K  for the year ended December 31, 2002 and the Company's Quarterly
reports  on Form 10-Q for the periods ended March 31, 2003 and June 30, 2003, or
(B)  violate  or  conflict  with  any applicable laws of the Province of British
Columbia  or the federal laws of Canada applicable therein, or, to the knowledge
of such counsel, any judgment, decree, order, rule or regulation of any court or
any  public,  governmental or regulatory agency or body having jurisdiction over
the  Company  or  any of its significant subsidiaries or any of their respective
properties  or assets. For purposes of this opinion, counsel may assume that all
courts  of  competent  jurisdiction  would  enforce  agreements  and  orders not
expressly  governed  by  Canadian law as written but would apply the laws of the
Province  of  British  Columbia.

     3.  The  offering,  issue, sale and delivery of the Notes by the Company to
the  Initial  Purchaser  and  by the Initial Purchaser to its affiliates who are
permitted  under  applicable  securities laws to offer and sell the Notes in the
Private  Placement  Provinces (the "Affiliates") in compliance with the terms of
this  Agreement,  the  Offering  Memorandum  and the Wrap Information is exempt,
either  by  statute,  rule,  regulation,  interpretation note or order, from the
prospectus  requirements  of  the  applicable  Canadian  Securities Laws, and no
prospectus is required nor are other documents required to be filed, proceedings
taken  or  approvals,  permits, consents, orders or authorizations of regulatory
authorities obtained under the applicable Canadian Securities Laws to permit the
offering,  issue,  sale  and  delivery of the Notes by the Company in accordance
with  this  Purchase  Agreement.

     4.  The  offering,  issue,  sale  and  delivery of the Notes by the Initial
Purchaser  or  its  Affiliates  to  the  Eligible  Purchasers,  in each case, in
accordance  with  the  terms  and  conditions  set  forth in this Agreement, the
Offering  Memorandum  and  the Wrap Information and assuming the accuracy of the
representations  and  warranties  of  such  parties therein, are exempt from the
prospectus  requirements  of  the Canadian Securities Laws, and no documents are
required  to  be  filed,  proceedings  taken  or approvals, permits, consents or
authorizations  of regulatory


                                   ANNEX II-1

authorities obtained under the applicable Canadian Securities Laws in connection
therewith,  other  than  those which have been obtained and, with respect to the
distribution  of  the  Notes,  except  for the filing with the relevant Canadian
Commissions in each Private Placement Province in which an Eligible Purchaser is
resident, by or on behalf of the Company, within the prescribed time periods, of
(i)  a  copy  of  the  Offering Memorandum and Wrap Information with the Ontario
Securities  Commission,  (ii)  a  report  of  the  trade in the prescribed form,
prepared  and  executed  in accordance with applicable Canadian Securities Laws,
and  (iii) a certificate prepared in accordance with Policy Statement 41-601Q of
the  Commission  des  valuers mobilieres du Quebec, together with any prescribed
fees.

     5.  The  first  trade  of  the  Notes  sold by the Initial Purchaser or its
Affiliates  to  purchasers  resident  in  a  Private  Placement Province, except
Quebec,  other  than  a  trade  which  is  otherwise  exempt  under the Canadian
Securities  Laws,  will  be  a  distribution  subject  to  the  prospectus  and
registration  requirements  of  the  Canadian Securities Laws to the extent that
they  apply,  unless:

     (a)  the  Company is and has been a reporting issuer in a Private Placement
Province  specified  in  Multilateral  Instrument  45-102  for  the  four months
immediately  preceding  the  trade;

     (b)  at least four months have elapsed from the date of issue of the Notes;

     (c)  the  legend  requirements  of Multilateral Instrument 45-102 have been
satisfied;

     (d)  the  trade is not a "control distribution", as such term is defined in
Multilateral  Instrument  45-102;

     (e)  no  unusual effort is made to prepare the market or to create a demand
for  the  Notes  that  are  the  subject  of  the  trade;

     (f)  no  extraordinary  commission  or consideration is paid to a person or
company  in  respect  of  the  trade;  and

     (g)  if  the seller is an insider or officer of the Company, the seller has
no  reasonable  grounds  to believe that the Company is in default of securities
legislation.

     6.  The  first  trade  of  the  Notes  sold by the Initial Purchaser or its
Affiliates  to purchasers resident in the Province of Quebec, other than a trade
which  is  otherwise  exempt  under  the  Securities  Act  (Quebec),  will  be a
distribution  subject  to  the  prospectus  and registration requirements of the
Securities  Act  (Quebec)  to  the  extent  that  it  applies,  unless:

     (a)  the  Company  was  a  reporting  issuer in Quebec for a period of four
months  immediately  preceding  the  alienation;

     (b)  the  purchaser  and  subsequent  purchasers have in aggregate kept the
securities  for  at  least  four  months;

     (c)  no  extraordinary  commission  or consideration is paid concerning the
alienation;

     (d)  no  effort  is  made  to prepare the market or create a demand for the
Notes  that  are  the  subject  of  the  alienation;  and


                       ANNEX II-2

<PAGE>

     (e) where the seller is an insider of the Company, the seller has no reason
to  believe  that  the  Company  is  in  default  of any securities legislation.

     7.  The  Conversion Shares have been authorized for quotation on the Nasdaq
National  Market.

     8.  The issuance of Conversion Shares by the Company to Eligible Purchasers
resident  in a Private Placement Province will be exempt from the prospectus and
registration  requirements of the Canadian Securities Laws, and no documents are
required  to  be  filed,  proceedings  taken  or approvals, permits, consents or
authorizations  of regulatory authorities obtained under the Canadian Securities
Laws  in  connection  therewith,  provided  that:

     (a)  no  commission  or  other  remuneration  is paid or given to others in
respect  of the trade, except for administrative or professional services or for
services  performed  by  a  registered  dealer;  and

     (b) the Company files with the Canadian Commission in the Private Placement
Province  in  which  such Eligible Purchaser is resident the required notice and
pays  the applicable fee in accordance with applicable Canadian Securities Laws.

     9. The first trade in Conversion Shares by purchasers resident in a Private
Placement  Province, except Quebec, other than a trade which is otherwise exempt
under Canadian Securities Laws, will be a distribution subject to the prospectus
and  registration  requirements  of  the  Canadian  Securities  Laws,  unless:

     (a)     the  Company  is  and  has  been  a  reporting  issuer in a Private
Placement  Province  specified  in  Multilateral  Instrument 45-102 for the four
months  immediately  preceding  the  trade;

     (b)  at least four months have elapsed from the date of issue of the Notes;

     (c)  the  legend  requirements  of Multilateral Instrument 45-102 have been
satisfied;

     (d)  the  trade is not a "control distribution", as such term is defined in
Multilateral  Instrument  45-102;

     (e)  no  unusual effort is made to prepare the market or to create a demand
for  the  Conversion  Shares  that  are  the  subject  of  the  trade;

     (f)  no  extraordinary  commission  or consideration is paid to a person or
company  in  respect  of  the  trade;  and

     (g)  if  the seller is an insider or officer of the Company, the seller has
no  reasonable  grounds  to believe that the Company is in default of securities
legislation.

     10.  The  first trade in Conversion Shares by purchasers in the Province of
Quebec,  other  than  a  trade  which  is  otherwise exempt under Securities Act
(Quebec),  will  be  a  distribution  subject to the prospectus and registration
requirements  of  the  Securities  Act  (Quebec),  unless:

     (a) the issuer was a reporting issuer in Quebec for a period of four months
immediately  preceding  the  alienation;


                                 ANNEX II-3

<PAGE>

     (b)  the  purchaser  and  subsequent  purchasers have in aggregate kept the
securities  for  at  least  four  months;

     (c)  no  extraordinary  commission  or consideration is paid concerning the
alienation;

     (d)  no  effort  is  made  to prepare the market or create a demand for the
Conversion  Shares  that  are  the  subject  of  the  alienation;  and

     (e) where the seller is an insider of the Company, the seller has no reason
to  believe  that  the  Company  is  in  default  of any securities legislation.

     11.  The  statements  in  the Wrap Information under the caption "Rights of
Action",  insofar  as such statements purport to describe or summarize the legal
matters,  documents,  statutes,  regulations or proceedings referred to therein,
are  accurate  descriptions  or  summaries  in  all  material  respects.

     12. No registration, filing or recording of the Indenture under the federal
laws  of  Canada or the laws of the Province of British Columbia is necessary in
order  to preserve or protect the validity or enforceability of the Indenture or
the  Notes  issued  thereunder.

     13. Subject to the limitations and qualifications set out therein and based
on a certificate of an officer of the Company as to certain factual matters, the
statements  in  the Wrap Information under the heading "Certain Canadian Federal
Income  Tax  Considerations  for  Canadian  Residents"  fairly  describe  in all
material  respects  the principal Canadian federal income tax consequences under
the  Income  Tax Act (Canada) insofar as they purport to describe the provisions
of  law  referred  to  therein  generally applicable to the holders of Notes and
Conversion  Shares  referred  to  therein.

     14.  The  Shares of Beneficial Interest to be issued upon conversion of the
Notes  have  been conditionally approved for listing on the TSX, subject only to
the  filing  of  certain  documents.

     15.  The statements set forth in the Offering Memorandum under the captions
"Description  of  Notes"  and  "Description  of  Capital  Stock,"  insofar as it
purports  to  constitute  a  summary  of the Notes and the Conversion Shares and
under  the  captions  "Business  -  Rosenthal Conversion Project and Financing,"
"Business  -  Stendal  Pulp  Mill  Project  and  Financing - Project Financing,"
"Description  of  Certain  Indebtedness," and "Plan of Distribution," insofar as
they  purport  to  describe  the  provision of the laws and documents referenced
therein,  are  accurate  summaries  in  all  material  respects.

     In  addition, such opinion shall also contain a statement that such counsel
has  participated  in  conferences  with  officers  and  representatives  of the
Company,  representatives  of the independent public accountants for the Company
and  the  Initial Purchaser at which the contents of the Offering Memorandum and
related  matters were discussed and, as a result of such participation, no facts
have  come  to  the attention of such counsel that cause such counsel to believe
that  the  Offering Memorandum (including the Incorporated Documents), as of its
date  (or  any amendment thereof or supplement thereto made prior to the Closing
Date as of the date of such amendment or supplement) and as of the Closing Date,
contained or contains an untrue statement of a material fact or omitted or omits
to  state  any material fact required to be stated


                                   ANNEX II-4

<PAGE>

therein  or  necessary  in order to make the statements therein, in light of the
circumstances  under  which  they were made, not misleading (it being understood
that  such  counsel  need  express  no  belief  or  opinion  with respect to the
financial  statements and schedules and other financial data included therein or
omitted  therefrom).


                                   ANNEX II-5

<PAGE>

                                                                       ANNEX III

                            Form of Lock-Up Agreement
                            -------------------------

RBC  DAIN  RAUSCHER  INC.
Royal  Bank  Plaza
4th  Floor,  South  Tower
200  Bay  Street
Toronto,  Ontario  M5J  2W7


     Re:     Mercer  International  Inc.
             ---------------------------

Ladies  and  Gentlemen:

     In  consideration  of  the  agreement  of  RBC Dain Rauscher Inc. to act as
Initial  Purchaser  for  the  proposed  offering (the "OFFERING") of Convertible
Senior Subordinated Notes (the "NOTES") of Mercer International Inc., a business
trust  organized  under  the laws of the State of Washington (the "COMPANY"), as
contemplated  by  an offering memorandum, the undersigned hereby (i) agrees that
the undersigned will not, directly or indirectly, during a period of one hundred
eighty  (180)  days  from  the  date  of  the purchase agreement entered into in
connection  with  the Offering (the "LOCK-UP PERIOD"), without the prior written
consent  of RBC Dain Rauscher Inc. (such consent not to be unreasonably withheld
or  delayed), issue, sell, offer or agree to sell, grant any option for the sale
of,  pledge,  make  any  short sale or maintain any short position, establish or
maintain a "put equivalent position" (within the meaning of Rule 16-a-1(h) under
the  Securities  Exchange  Act  of  1934,  as  amended),  enter  into  any swap,
derivative  transaction or other arrangement that transfers to another, in whole
or  in  part, any of the economic consequences of ownership of (whether any such
transaction is to be settled by delivery of Shares of Beneficial Interest of the
Company  (the  "SHARES OF BENEFICIAL INTEREST"), other securities, cash or other
consideration),  or  otherwise dispose of, any Shares of Beneficial Interest (or
any  securities  convertible into, exercisable for or exchangeable for Shares of
Beneficial  Interest,  including  the  Notes,  (the  "EXCHANGEABLE  SHARES")) or
interest  therein  of  the  Company, or any Shares of Beneficial Interest or any
securities  convertible  into,  exercisable  for  or  exchangeable for Shares of
Beneficial Interest or interest therein of any of its subsidiaries, unless it is
a condition to any such transfer that the transferee certifies in writing to RBC
Dain  Rauscher Inc. that (x) such transferee is receiving and holding the Shares
of  Beneficial  Interest  or  other securities subject to the provisions of this
Agreement  and  that  there  shall  be  no  further  transfer  of such Shares of
Beneficial  Interest  or  other  securities  except  in  accordance  with  this
Agreement,  and (y) such transferee will comply with the terms of this Agreement
as  if  such  transferee  were  bound by this Agreement, and (ii) authorizes the
Company  during  the  Lock-Up  Period  to cause the transfer agent to decline to
transfer  and/or  to  note  stop transfer restrictions on the transfer books and
records of the Company with respect to any Shares of Beneficial Interest and any
securities  convertible  into,  exercisable  for  or  exchangeable for Shares of
Beneficial  Interest (including the Notes and the Exchangeable Shares) for which
the  undersigned  is  the  record  or  beneficial  holder.

     The undersigned agrees that any Shares of Beneficial Interest received upon
exercise  of  options  granted  to  the undersigned will also be subject to this
Agreement.  The


                                  ANNEX III-1


undersigned  further  agrees,  from the date hereof until the end of the Lock-up
Period,  that  the  undersigned will not exercise and will waive his, her or its
rights,  if  any,  to  require  the Company to register its Shares of Beneficial
Interest  and  to  receive  notice  thereof.

     The  undersigned  hereby  represents  and warrants that the undersigned has
full  power  and  authority  to  enter into the agreements set forth herein, and
that,  upon  request,  the  undersigned  will  execute  any additional documents
necessary  in  connection  with  implementing the agreements, authorizations and
other terms hereof. Any obligations of the undersigned shall be binding upon the
successors  and  assigns  of  the  undersigned.


                                                 Very  truly  yours,


Dated:                 ,  2003
      -----------------


                                  ANNEX III-2