<PAGE>


PAGES WHERE CONFIDENTIAL TREATMENT HAS BEEN REQUESTED PURSUANT TO RULE 406 OF
THE SECURITIES ACT OF 1933, AS AMENDED, ARE MARKED "CONFIDENTIAL TREATMENT
REQUESTED PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED, AND
THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE COMMISSION" AND THE
CONFIDENTIAL SECTION HAS BEEN MARKED WITH A STAR (*)





                              AMENDED AND RESTATED
                        CHIP AND PULPLOG SUPPLY AGREEMENT









                                     BETWEEN

                             3264891 CANADA LIMITED
                             3264912 CANADA LIMITED

                                       AND

                            TIMBERWEST FOREST LIMITED









                                  JUNE 23, 1997



<PAGE>


                              AMENDED AND RESTATED
                        CHIP AND PULPLOG SUPPLY AGREEMENT

                                TABLE OF CONTENTS

<Table>
<S>               <C>                                                                                            <C>
ARTICLE 1.        INTERPRETATION..................................................................................2
         1.1.     Definitions.....................................................................................2
         1.2.     Currency........................................................................................5
         1.3.     References......................................................................................6
         1.4.     Construction....................................................................................6
         1.5.     Governing Law...................................................................................6
         1.6.     Schedules.......................................................................................6

ARTICLE 2.        FIBRE COMMITMENT................................................................................6
         2.1.     Committed Volume................................................................................6
         2.2.     Exclusions......................................................................................6
         2.3.     Term............................................................................................7
         2.4.     Out of Province Opportunities...................................................................7

ARTICLE 3.        PRODUCTION NOTICES..............................................................................7
         3.1.     Anticipated Volume..............................................................................7
         3.2.     Notice of Further Volume........................................................................7

ARTICLE 4.        MINIMUM VOLUME REQUIREMENTS.....................................................................8
         4.1.     Minimum Annual Volume...........................................................................8
         4.2.     Annual Volume Shortfall.........................................................................8
         4.3.     Shortfall Notice................................................................................9
         4.4.     Immediate Remedy................................................................................9
         4.5.     Failure to Deliver Notice......................................................................10
         4.6.     Make-Up Notice.................................................................................11
         4.7.     No Shortfall...................................................................................11
         4.8.     Minimum Five-Year Volume.......................................................................11
         4.9.     Five-Year Shortfall............................................................................11
         4.10.    Final Five-Year Adjustment.....................................................................12
         4.11.    Shortfall Mitigation...........................................................................12

ARTICLE 5.        PRICE AND PAYMENT FOR CHIPS....................................................................13
         5.1.     Chip Price.....................................................................................13
         5.2.     Payment........................................................................................13
         5.3.     Production Costs...............................................................................13

ARTICLE 6.        CHIP MEASUREMENT, TESTING AND SPECIFICATIONS...................................................13
         6.1.     Optimization of Chip Quality...................................................................13
         6.2.     Measurement of Volume..........................................................................14
         6.3.     Interim Measurement............................................................................14
         6.4.     Measurement of Chip Volume.....................................................................14
         6.5.     Conversion Factors.............................................................................14

<PAGE>

<S>               <C>                                                                                            <C>
         6.6.     Application....................................................................................14
         6.7.     Variation of Chip Specifications...............................................................14
         6.8.     Inspection of Testing..........................................................................15
         6.9.     Rejection of Individual Loads..................................................................15
         6.10.    Costs of Disposal..............................................................................15
         6.11.    No Waiver......................................................................................15
         6.12.    Third Party Deliveries.........................................................................15

ARTICLE 7.        DELIVERY OF CHIPS..............................................................................16
         7.1.     Loading Facilities.............................................................................16
         7.2.     Elk Falls Chip Conveying System................................................................16
         7.3.     Current Manufacture............................................................................16
         7.4.     Rate of Delivery...............................................................................16
         7.5.     Transportation.................................................................................16
         7.6.     TimberWest Responsibilities....................................................................17
         7.7.     Species Segregation............................................................................18

ARTICLE 8.        PRICE AND PAYMENT FOR PULPLOGS.................................................................18
         8.1.     Pulplog Price..................................................................................18
         8.2.     Dispute of Purchase Price......................................................................18
         8.3.     Payment........................................................................................18
         8.4.     Vancouver Log Market...........................................................................19
         8.5.     Interfor Log Supply Agreement..................................................................19

ARTICLE 9.        PULPLOG SALE PROCEDURES........................................................................19
         9.1.     Notice of Availability.........................................................................19
         9.2.     Inspection and Acceptance......................................................................20
         9.3.     Agreement on Price.............................................................................20
         9.4.     Use of Telephone...............................................................................20
         9.5.     Delivery of Pulplogs...........................................................................20
         9.6.     Availability...................................................................................20
         9.7.     Costs up to Delivery...........................................................................20
         9.8.     Boomsticks.....................................................................................20
         9.9.     Boomgear Deposit...............................................................................20
         9.10.    Pulplog Specifications.........................................................................21
         9.11.    Scaling........................................................................................21
         9.12.    Checkscaling...................................................................................21
         9.13.    Condition of Parcels...........................................................................22
         9.14.    Log Sale Practices.............................................................................22

ARTICLE 10.       CUSTOM CHIPPING................................................................................22
         10.1.    Custom Chipping................................................................................22
         10.2.    Pulplogs.......................................................................................22
         10.3.    Other Arrangements.............................................................................22

ARTICLE 11.       TITLE AND RISK.................................................................................23
         11.1.    Title..........................................................................................23

<PAGE>

<S>               <C>                                                                                            <C>
ARTICLE 12.       COVENANTS......................................................................................23
         12.1.    Covenants of FCCL..............................................................................23
         12.2.    Covenants of TimberWest........................................................................24
         12.3.    Certificate of Officer.........................................................................24

ARTICLE 13.       DEFAULT........................................................................................25
         13.1.    Event of Default...............................................................................25
         13.2.    Remedies.......................................................................................25
         13.3.    Consequential Damages..........................................................................25

ARTICLE 14.       DISPOSITIONS BY TIMBERWEST.....................................................................26
         14.1.    Dispositions by TimberWest.....................................................................26
         14.2.    Material Part..................................................................................26
         14.3.    Excepted Timberlands...........................................................................27
         14.4.    Lender Status..................................................................................27
         14.5.    Breach.........................................................................................28
         14.6.    Release of TimberWest..........................................................................28

ARTICLE 15.       FORCE MAJEURE AND CURTAILMENT..................................................................28
         15.1.    Affecting FCCL.................................................................................28
         15.2.    Market Conditions..............................................................................29
         15.3.    Proportionate Curtailment......................................................................29
         15.4.    No Cumulative Obligation.......................................................................30
         15.5.    Alternative Disposition........................................................................30
         15.6.    Affecting TimberWest...........................................................................30
         15.7.    Credit to Volume Commitments (TimberWest Curtailment)..........................................31
         15.8.    Advance Warning................................................................................31
         15.9.    Reasonable Estimate............................................................................31
         15.10.   FCCL Estimate Notice...........................................................................32
         15.11.   TimberWest Estimate Notice.....................................................................32

ARTICLE 16.       ARBITRATION....................................................................................32
         16.1.    Arbitration....................................................................................32
         16.2.    Timely Decisions...............................................................................33

ARTICLE 17.       GENERAL........................................................................................33
         17.1.    Maintenance of Records.........................................................................33
         17.2.    Notices........................................................................................33
         17.3.    Time...........................................................................................34
         17.4.    Further Assurances.............................................................................34
         17.5.    Waivers........................................................................................34
         17.6.    Assignment by FCCL.............................................................................34
         17.7.    Confidentiality................................................................................35
         17.8.    Action by FCCL.................................................................................35
         17.9.    Nature of Obligations..........................................................................35
         17.10.   Restatement of Original Agreement..............................................................35
         17.11.   Enurement......................................................................................36
</Table>

<PAGE>

SCHEDULE A        PART I - CHIP SPECIFICATIONS
                  PART II - PULPLOGS

SCHEDULE B        TIMBERWEST FACILITIES

SCHEDULE C        TIMBER TENURES

SCHEDULE D        MINIMUM VOLUME CALCULATIONS


<PAGE>



                              AMENDED AND RESTATED
                        CHIP AND PULPLOG SUPPLY AGREEMENT



THIS AGREEMENT made as of the 23rd day of June, 1997,

BETWEEN:

                  3264891 CANADA LIMITED and 3264912 CANADA LIMITED, each a
                  Canadian corporation with an office at 9th Floor, 700 West
                  Georgia Street, Vancouver, British Columbia

                  (collectively "FCCL")

                                                              OF THE FIRST PART,

AND:

                  TIMBERWEST FOREST LIMITED, a British Columbia company with an
                  office at 7th Floor, 700 West Georgia Street, Vancouver,
                  British Columbia

                  ("TimberWest")

                                                             OF THE SECOND PART.

WHEREAS:

A.       By an agreement dated the 16th day of December, 1993 entitled "Chip and
         Pulplog Supply Agreement" among Fletcher Challenge Canada Limited, Elk
         Falls Forest Industries Limited and TimberWest as amended by an
         agreement dated January 19, 1996 among the same parties and TimberNorth
         Forest Limited (collectively the "Original Agreement") TimberWest
         agreed to sell and Fletcher Challenge Canada Limited and Elk Falls
         Forest Industries Limited agreed to purchase wood chips and pulplogs,
         produced, directly or indirectly, by TimberWest;

B.       On October 25, 1996, 3264891 Canada Limited acquired the Crofton pulp
         mill from Fletcher Challenge Canada Limited and 3264912 Canada Limited
         acquired the Elk Falls pulp mill from Elk Falls Forest Industries
         Limited;

C.       By an assignment made October 25, 1996 Fletcher Challenge Canada
         Limited and Elk Falls Forest Industries Limited assigned their right,
         title and interest in the Original Agreement to FCCL;

D.       TimberWest has on the date of this agreement transferred its Williams
         Lake facilities and related operations to a third party;

<PAGE>

                                       2

E.       The parties have agreed to amend the Original Agreement as at the date
         of this Agreement by restating that agreement as amended as set forth
         in this Agreement;

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
the mutual covenants hereafter set out, the parties agree as follows:


                                   ARTICLE 1.
                                 INTERPRETATION

1.1.     DEFINITIONS

         In this Agreement:

         (A)      "AFFILIATE" means with respect to any party, an affiliate of
                  the party within the meaning of the COMPANY ACT (British
                  Columbia), a joint venture in which that party holds at least
                  a one-half interest and a corporation where the shares thereof
                  carrying at least one-half of the votes for the election of
                  directors are held for the benefit of that party;

         (B)      "BDU" means bone dry unit which, in reference to Chips, means
                  a quantity of Chips that when oven-dried would weigh 2,400
                  pounds as determined using standard test sampling, drying and
                  weighing procedures adhered to in the North American pulp
                  industry;

         (C)      "BUSINESS DAY" means a day that is not a Saturday, Sunday or
                  statutory holiday in British Columbia;

         (D)      "CHIP SPECIFICATIONS" means the specifications for Chips set
                  out in Part II of Schedule A as varied from time to time
                  pursuant to Section 6.7;

         (E)      "CHIPS" means coniferous wood chips produced as a by-product
                  of wood manufacturing, including those produced from log yard
                  debris, but excluding pulpwood chips produced from whole-log
                  chipping;

         (F)      "COAST CHIP PRICE" means, for a Fiscal Quarter, a price equal
                  to the most common market price actually paid per Volumetric
                  Unit of Chips during that Fiscal Quarter, on an F.O.B. scow
                  (at seller's mill located in the southern coastal region of
                  British Columbia) basis or equivalent, by pulp mills located
                  in the southern coastal region of British Columbia for their
                  own consumption under arm's length long term contracts (being
                  contracts that have a term of not less than three consecutive
                  years and contracts having a term of not less than one year
                  which are renewable and which have been in force, in
                  substantially the same form, for not less than three
                  consecutive years) for volumes, specifications, quality and
                  species of Chips similar to those being sold under this
                  Agreement during the terms of such long term contracts
                  calculated on a net to seller basis, including the deduction
                  of any portion of such price attributable to the
                  transportation of such Chips to the Purchaser's mill, which
                  was, in the last Fiscal Quarter of 1993:

<PAGE>

                                       3

                  (i)  $58.00 per Volumetric Unit of hemlock Chips;

                  (ii) $55.00 per Volumetric Unit of sitka spruce Chips;

                  (iii) $53.00 per Volumetric Unit of Douglas fir Chips;

                  (iv) $30.00 per Volumetric Unit of red cedar Chips;

                  (v)  $35.00 per Volumetric Unit of yellow cedar Chips;

         (G)      "COASTAL AREA" means that part of British Columbia located
                  west of the Cascade Mountains;

         (H)     "CONTRACT YEAR" means a calendar year;

         (I)      "COWICHAN FACILITY" means the TimberWest Facility referred to
                  in Item 1 of Schedule B;

         (J)      "CROWN FOREST TENURES" means the forest tenures described in
                  Part I of Schedule C and any supplements to, or substitutes
                  for, such tenures and any other tenures or rights to harvest
                  Crown timber in British Columbia held, directly or indirectly,
                  by TimberWest or its Subsidiaries from time to time;

         (K)      "ELK FALLS CHIP CONVEYING SYSTEM" means the conveyor system
                  and all ancillary equipment together with all additions,
                  replacements or reconstructions thereof from time to time used
                  to transport Chips from the Elk Falls Facility to the Pulp
                  Mill adjacent thereto;

         (L)      "ELK FALLS FACILITY" means the TimberWest Facility referred to
                  in Item 2 of Schedule B;

         (M)      "FISCAL QUARTER" means any of the four calendar quarters;

         (N)      "FIVE YEAR PERIOD" means the period beginning on January 1,
                  1994 and ending on December 31, 1998 and each succeeding five
                  year period thereafter;

         (O)      "FULLY LOADED" means, with respect to a scow, that the scow
                  has been loaded:

                  (i)  by gravity to its capacity with Chips in a manner that
                       will minimize voids and air spaces and as well achieve
                       the maximum degree of density of Chips for such scow as
                       is usually achieved by proper loading of Chips;

                  (ii) following the limitations that a prudent person
                       exercising reasonable care would observe; and

                  trimmed in such a manner as will render it to remain in a
                  seaworthy condition throughout its voyage to its destination
                  in the judgment of the master of the vessel of the towing
                  agent;

<PAGE>

                                       4

         (P)      "m(3)" means a cubic metre of logs, British Columbia metric
                  scale as determined under the FOREST ACT (British Columbia)
                  and, with respect to Chips, also means the solid wood
                  equivalent;

         (Q)      "MINIMUM ANNUAL VOLUME" means, with respect to a Minimum
                  Volume Facility, the minimum annual volume applicable thereto
                  determined in accordance with Schedule D;

         (R)      "MINIMUM FIVE-YEAR VOLUME" means, with respect to a Minimum
                  Volume Facility, the minimum volume for a Five Year Period
                  applicable thereto determined in accordance with Schedule D;

         (S)      "MINIMUM VOLUME FACILITIES" means the Cowichan Facility and
                  the Elk Falls Facility and "MINIMUM VOLUME FACILITY" means
                  either of them;

         (T)      "ORIGINAL PULP MILLS" means the Crofton Pulp and Paper Mill
                  currently owned by Fletcher Challenge Canada Limited and
                  3264891 Canada Limited located at Crofton, British Columbia
                  and the Elk Falls Pulp and Paper Mill currently owned by Elk
                  Falls Forest Industries Limited and 3264912 Canada Limited
                  located at Duncan Bay, British Columbia and "ORIGINAL PULP
                  MILL" means either of them;

         (U)      "PARCEL" means a raft, boom, bag, barge, bundle, group of
                  bundles or other grouping of logs commonly offered for sale as
                  a unit;

         (V)      "POINT OF SALE" means a suitable water storage area for
                  Parcels of Pulplogs located at one of the following locations:

                  (i)  in Howe Sound in the vicinity of Gambier Island;

                  (ii) at a point on the Fraser River between the mouth of the
                       north arm and Barnston Island;

                  (iii)a pulp or pulp and paper mill which consumes Pulplogs
                       which is owned by FCCL or any of its Affiliates (other
                       than TimberWest and its Subsidiaries); or

                  (iv) such other location that the parties may agree upon;

         (W)      "PULPLOG" means a log which is described as a pulplog in Part
                  II of Schedule A;

         (X)      "PULPLOG SPECIFICATIONS" means the specifications for pulplogs
                  set out in Part II of Schedule A;

         (Y)      "PULP MILLS" means the Original Pulp Mills and any other pulp
                  and paper mills designated from time to time by FCCL by notice
                  to TimberWest that are owned by any or all of FCCL, an
                  Affiliate of FCCL and a purchaser of any material interest in
                  any of the foregoing pulp and paper mills that is an assignee
                  of an interest in this Agreement and "PULP MILL" means any one
                  of them;

<PAGE>

                                       5

         (Z)      "SUBSIDIARY" has the meaning set out in the COMPANY ACT
                  (British Columbia);

         (AA)     "TIMBERLANDS" means the lands described in Part II of Schedule
                  C and any other fee simple lands in British Columbia held,
                  directly or indirectly, by TimberWest or its Subsidiaries from
                  time to time for timber production or timber harvesting
                  purposes;

         (BB)     "TIMBER TENURES" means:

                  (i)  the Crown Forest Tenures, the Timberlands and all other
                       timber harvesting or equivalent rights in the Coastal
                       Area of British Columbia held, directly or indirectly,
                       by TimberWest or its Subsidiaries from time to time;

                  (ii) such other timber harvesting or equivalent rights as
                       the parties may agree;

         (CC)     "TIMBERWEST FACILITIES" means:

                  (i)  the sawmilling, planer and other wood processing or
                       converting facilities described in Schedule B and any
                       additions to, or substitutions for, such facilities;

                  (ii) all facilities in the Coastal Area of British Columbia
                       acquired subsequent to the date of this Agreement by
                       TimberWest or one of its Subsidiaries, or by a joint
                       venture (corporate or otherwise) in which TimberWest or
                       one of its Subsidiaries has a direct or indirect
                       interest which produces Chips; and

                  (iii)all other facilities, operations and interests in the
                       Coastal Area of British Columbia at or from which
                       TimberWest produces, receives or is entitled to receive
                       Chips;

                  (iv) such other facilities, operations and interests as the
                       parties may agree;

         (DD)     "VANCOUVER LOG MARKET PRICE" means, with respect to a Parcel
                  of Pulplogs, the fair market value of such Parcel of Pulplogs
                  determined with reference to:

                  (i)  the volume, type and quality of Pulplogs included in
                       such Parcel;

                  (ii) the competitive prices for equivalent volumes of
                       Pulplogs of the volume, type and quality included in
                       such Parcel prevailing in the Vancouver log market at
                       such time without regard to non-arm's length sales,
                       distress sales or sales for export from British
                       Columbia;

         (EE)     "VOLUMETRIC UNIT" means 200 cubic feet of Chips as compacted
                  in a scow when fully loaded or 2.039 m(3) of solid wood
                  equivalent of Chips.

1.2.     CURRENCY

         All dollar amounts referred to in this Agreement are Canadian dollars.

<PAGE>
                                       6


1.3.     REFERENCES

         References to the singular or masculine used in this Agreement will be
         deemed to include references to the plural, feminine or body corporate
         as the context may require.

1.4.     CONSTRUCTION

         The division of this Agreement into articles and the insertion of
         headings are for convenience of reference only and are not to affect
         the construction or interpretation of this Agreement.

1.5.     GOVERNING LAW

         This Agreement shall be governed by and construed in accordance with
         the laws of the Province of British Columbia and the federal laws of
         Canada applicable therein.

1.6.     SCHEDULES

         The following are the Schedules to this Agreement:

         Schedule A                 Chip and Pulplog Specifications
         Schedule B                 TimberWest Facilities
         Schedule C                 Timber Tenures
         Schedule D                 Minimum Volume Calculations


                                   ARTICLE 2.
                                FIBRE COMMITMENT

2.1.     COMMITTED VOLUME

         TimberWest will sell to FCCL and FCCL will purchase from TimberWest in
         each Contract Year during the term of this Agreement in accordance with
         and subject to the terms and conditions of this Agreement, all Chips
         produced from TimberWest Facilities and all Pulplogs harvested by or on
         behalf of TimberWest from the Timber Tenures or acquired by TimberWest
         as part of its log acquisition program in the Coastal Area, in each
         case free and clear of all liens, charges, encumbrances and third party
         rights.

2.2.     EXCLUSIONS

         Where a facility or operation becomes a TimberWest Facility or part of
         its related operations subsequent to the date of this Agreement and
         existing commitments to third parties regarding the sale of Chips or
         Pulplogs produced from that facility or operation are assumed, and are
         required to be assumed, by TimberWest as part of that acquisition, the
         commitment by TimberWest in Section 2.1 shall exclude the volume of
         Chips or Pulplogs produced from that facility or operation which are
         subject to any such commitment until the expiration of that commitment.
         TimberWest will use all reasonable efforts to minimize the term and
         extent of such commitments and:

<PAGE>
                                       7


         (ff)     will not agree to extend their term by way of amendment,
                  renewal or replacement or otherwise unless the other party to
                  such commitment has the unconditional right to such an
                  extension which does not require TimberWest to agree to such
                  an extension or any term or condition during such extension;
                  and

         (gg)     where TimberWest is entitled to terminate any such commitment
                  without incurring any additional liability to the other party
                  to such commitment, TimberWest will exercise such termination
                  right promptly after it becomes entitled to do so.

2.3.     TERM

         The term of this Agreement, which commenced on December 16, 1993 under
         the Original Agreement, shall continue in effect until terminated by
         FCCL by notice to TimberWest to that effect on a date specified in such
         notice that is not less than 24 months from the date of such notice or
         until terminated by a party pursuant to Section 13.2.

2.4.     OUT OF PROVINCE OPPORTUNITIES

         If TimberWest acquires any wood processing facilities or operations or
         timber harvesting or equivalent rights outside British Columbia, or an
         interest therein, TimberWest will offer FCCL the first opportunity to
         negotiate the terms and conditions upon which Chips and Pulplogs which
         are surplus to the maintenance of such operations or facilities would
         be made available for sale to FCCL under this Agreement.


                                   ARTICLE 3.
                               PRODUCTION NOTICES

3.1.     ANTICIPATED VOLUME

         Not later than 20 Business Days before the beginning of each Contract
         Year, TimberWest will provide to FCCL a schedule (a "Production
         Notice") of the anticipated production of Chips and Pulplogs for the
         Contract Year, including an estimate of species breakdown and monthly
         production, broken down, in the case of Chips, on a mill by mill basis
         for each TimberWest Facility.

3.2.     NOTICE OF FURTHER VOLUME

         If at any time after the Production Notice is given in respect of a
Contract Year:

         (a)      TimberWest anticipates that:

                  (i)      the volume of Chips or Pulplogs that will be produced
                           by TimberWest during the balance of the Contract Year
                           will vary by more than 15 percent from the volume
                           stated in the applicable Production Notice or most
                           recent notice under this Section for the balance of
                           such Contract Year; or

<PAGE>
                                       8


                  (ii)     the volume of Chips that will be produced from a
                           Minimum Volume Facility during the balance of the
                           Contract Year will vary by more than 15 percent from
                           the volume in respect of that Minimum Volume Facility
                           stated in the applicable Production Notice or most
                           recent notice under this Section for the balance of
                           such Contract Year; or

         (b)      the volume of Chips or Pulplogs actually delivered by
                  TimberWest to FCCL during such Contract Year varies by more
                  than 15 percent from the schedule of all deliveries, or the
                  schedule of deliveries anticipated in respect of Chips from a
                  particular Minimum Volume Facility, anticipated under the
                  applicable Production Notice or most recent notice under this
                  Section and, as a result, FCCL, acting reasonably, requests a
                  revised notice in respect of the balance of such Contract
                  Year;

         TimberWest will promptly deliver a notice (a "Revision Notice") to FCCL
         in the form of a revised quarterly schedule of Chip or Pulplog
         production, as the case may be, for the balance of such Contract Year.


                                   ARTICLE 4.
                           MINIMUM VOLUME REQUIREMENTS

4.1.     MINIMUM ANNUAL VOLUME

         The volume of Chips sold by TimberWest and purchased by FCCL under this
         Agreement during a Contract Year produced from each Minimum Volume
         Facility, subject to Section 4.11, will not be less than the Minimum
         Annual Volume applicable thereto.

4.2.     ANNUAL VOLUME SHORTFALL

         At the end of each Fiscal Quarter of a Contract Year in respect of
         which a Production Notice or a Revision Notice indicates that the
         volume of Chips produced from a Minimum Volume Facility that TimberWest
         will deliver to FCCL under this Agreement in such Contract Year will be
         less than the applicable Minimum Annual Volume (taking into account
         Section 4.11) for such Contract Year, or at the end of any other Fiscal
         Quarter in which:

         (a)      TimberWest fails to meet its production estimates for Chips in
                  respect of the applicable Minimum Volume Facility set out in
                  the most recent Production or Revision Notice; and

         (b)      on the basis of TimberWest meeting its estimates of production
                  for the remainder of the Contract Year as set out in such
                  Notice, TimberWest will deliver to FCCL less than the
                  applicable Minimum Annual Volume for such Contract Year,

         TimberWest will, within 20 Business Days after the end of such Fiscal
         Quarter deliver to FCCL either:

<PAGE>
                                       9


         (c)      a notice (a "Shortfall Notice") confirming that TimberWest
                  reasonably anticipates that TimberWest will deliver to FCCL
                  less than such Minimum Annual Volume for such Contract Year
                  and confirming the extent of the anticipated volume shortfall
                  (the "Volume Shortfall") for such Contract Year and including,
                  at TimberWest's option, a statement as to how TimberWest
                  proposes to make up such Volume Shortfall, including any
                  source from which, and price at which, Chips meeting the
                  conditions described in Subsection 4.4(b) are available for
                  outright purchase by FCCL; or

         (d)      a notice (a "Make-Up Notice") confirming that TimberWest
                  reasonably anticipates that a Volume Shortfall will not arise
                  in respect of such Contract Year,

         failing which, TimberWest will be deemed to have delivered a Shortfall
         Notice and the extent of the Volume Shortfall will be determined by
         applying the estimates described in Subsection 4.2(b).

4.3.     SHORTFALL NOTICE

         If TimberWest delivers, or is deemed to deliver, to FCCL a Shortfall
         Notice, FCCL may, at any time before the end of the first Fiscal
         Quarter after the Contract Year in which the Shortfall Notice is given,
         deliver a notice (a "Remedy Notice") to TimberWest confirming that FCCL
         requires a remedy to make up for the Volume Shortfall and including an
         invoice or other reasonable evidence of the cost to FCCL F.O.B. the
         Original Pulp Mills of a volume of Chips equal to the Volume Shortfall
         actually purchased by FCCL in an arm's length bona fide sale at any
         time during the 10 Business Days immediately preceding the date on
         which the Remedy Notice is delivered in excess of the cost of such
         volume calculated at the Chip Price and F.O.B. the Original Pulp Mills
         at such time (the "Excess Cost").

4.4.     IMMEDIATE REMEDY

         If the Remedy Notice is delivered to TimberWest within 10 Business Days
         after the day on which FCCL receives the Shortfall Notice, TimberWest
         will, within five Business Days after the date on which TimberWest
         receives the Remedy Notice, pay to FCCL:

         (a)      an amount equal to such Excess Cost; or

         (b)      if, within two Business Days after such Remedy Notice is
                  given, TimberWest delivers to FCCL reasonable evidence of a
                  lower cost source of Chips of similar volume, species and
                  quality and which:

                  (i)      are available to FCCL for outright purchase or
                           through arrangements facilitated by TimberWest,
                           including the production of Chips by TimberWest from
                           the Minimum Volume Facility which was the subject of
                           such shortfall; or

<PAGE>
                                       10


                  (ii)     were purchased at any time during the 10 Business
                           Days immediately preceding the date on which the
                           Remedy Notice is delivered on an arm's length bona
                           fide, spot market basis,

                  an amount equal to the Excess Cost calculated on the basis of
                  such lower cost,

         and when such payment is made, TimberWest will be credited, for the
         purposes of the applicable Minimum Annual Volume as having delivered to
         FCCL, during the Fiscal Quarter in respect of which the Volume
         Shortfall arose, a volume of Chips equal to the Volume Shortfall.

4.5.     FAILURE TO DELIVER NOTICE

         If TimberWest delivers, or is deemed to deliver, to FCCL a Shortfall
         Notice in respect of a Fiscal Quarter, and FCCL delivers a Remedy
         Notice containing the particulars specified in Section 4.3 to
         TimberWest after the time period described in Section 4.4, TimberWest
         will, within five Business Days after the date on which TimberWest
         receives the Remedy Notice, pay to FCCL an amount equal to the lower
         of:

         (a)      the Excess Cost calculated on the basis of the spot market
                  price of Chips at the time of delivery of the Shortfall Notice
                  which will not be greater than the price, if any, stated in
                  the Shortfall Notice as described in Subsection 4.2(c);

         (b)      the Excess Cost calculated on the basis of the cost of Chips
                  set out in the Remedy Notice; and

         (c)      if, within two Business Days after such Remedy Notice is
                  given, TimberWest delivers to FCCL reasonable evidence of a
                  lower cost source of Chips of similar volume, species and
                  quality and which:

                  (i)      are available to FCCL for outright purchase,
                           including the production of Chips by TimberWest from
                           the Minimum Volume Facility which was the subject of
                           such shortfall; or

                  (ii)     were purchased at any time during the 10 Business
                           Days immediately preceding the date on which the
                           Remedy Notice is delivered on an arm's length bona
                           fide, spot market basis;

                  an amount equal to the Excess Cost calculated on the basis of
                  such lower cost,

         and when such payment is made, TimberWest will be credited, for the
         purposes of the applicable Minimum Annual Volume as having delivered to
         FCCL, during the Fiscal Quarter in respect of which the Volume
         Shortfall arose, a volume of Chips equal to the Volume Shortfall.

<PAGE>
                                       11


4.6.     MAKE-UP NOTICE

         If TimberWest delivers to FCCL a Make-Up Notice, FCCL may confirm, by
         notice (a "Pricing Notice") delivered to TimberWest at any time before
         the end of the first Fiscal Quarter after the Contract Year in which
         the Make-Up Notice is delivered, that FCCL intends to establish, as of
         the date of the Pricing Notice, the prices that will be applicable in
         respect of any Volume Shortfall that may arise in respect of such
         Contract Year, and any Excess Cost payable by TimberWest in respect of
         such Contract Year will be determined by reference to prevailing prices
         of Chips on the date of delivery of the Pricing Notice.

4.7.     NO SHORTFALL

         If, at the end of a Contract Year, the Volume Shortfall in respect of
         which the Make-Up Notice was given does not arise, this Article will
         impose no additional obligation on TimberWest.

4.8.     MINIMUM FIVE-YEAR VOLUME

         The total volume of Chips sold by TimberWest and purchased by FCCL
         under this Agreement during a Five Year Period produced from each
         Minimum Volume Facility, subject to Section 4.11, will not be less than
         the Minimum Five Year Volume applicable thereto.

4.9.     FIVE-YEAR SHORTFALL

         If, at any time during a Five Year Period, a shortfall in a Minimum
         Five-Year Volume (a "Volume Shortfall") would arise in respect of a
         Minimum Volume Facility (taking into account Section 4.11), calculated
         on the assumptions that:

         (a)      during each remaining Contract Year of the Five -Year Period,
                  TimberWest would harvest the maximum volume available to it
                  under the Crown Timber Tenures associated with the Minimum
                  Volume Facility; and

         (b)      the proportion of the total harvest of the Crown Timber
                  Tenures associated with the Minimum Volume Facility comprised
                  of sawlogs and the chip recovery factor for the Minimum Volume
                  Facility would be the same as those for the current Contract
                  Year;

         FCCL may, at any time before the end of the first Fiscal Quarter after
         the fourth Contract Year of any Five Year Period, deliver a notice
         containing the particulars specified in Section 4.3 for a Remedy Notice
         (a "Five-Year Remedy Notice") to TimberWest in respect of all or any
         part of such Volume Shortfall and TimberWest will, within five Business
         Days after the date on which TimberWest receives the Five-Year Remedy
         Notice, pay to FCCL:

         (c)      an amount equal to the Excess Cost of the Volume Shortfall; or


<PAGE>
                                       12


         (d)      if, within two Business Days after such Five-Year Remedy
                  Notice is given, TimberWest delivers to FCCL reasonable
                  evidence of a lower cost source of Chips of similar volume,
                  species and quality and which:

                  (i)      are available to FCCL for outright purchase,
                           including the production of Chips by TimberWest from
                           the Minimum Volume Facility which was the subject of
                           such shortfall; or

                  (ii)     were purchased at any time during the 10 Business
                           Days immediately preceding the date on which the
                           Remedy Notice is delivered on an arm's length bona
                           fide, spot market basis;

                  an amount equal to the Excess Cost calculated on the basis of
                  such lower cost,

         and when such payment is made, TimberWest will be credited, for the
         purposes of the applicable Minimum Five Year Volume, as having
         delivered to FCCL, during the Five Year Period, the volume of Chips in
         respect of which the Five-Year Remedy Notice was given.

4.10.    FINAL FIVE-YEAR ADJUSTMENT

         If, at the end of a Five-year Period, after taking into account any
         volumes credited under Section 4.9:

         (a)      a Volume Shortfall exists, TimberWest will, before the end of
                  the first Fiscal Quarter after the Five-year Period, pay to
                  FCCL an amount equal to the Excess Cost of such Volume
                  Shortfall calculated in a manner consistent with Section 4.9;
                  or

         (b)      any amounts paid by TimberWest to FCCL under Section 4.9 were,
                  except for Section 4.9, in excess of what TimberWest would
                  have been required to pay to FCCL, FCCL will, before the end
                  of the first Fiscal Quarter after the Five Year Period, pay to
                  TimberWest an amount equal to such excess.

4.11.    SHORTFALL MITIGATION

         Volume Shortfalls for a Contract Year or Five Year Period with respect
         to a Minimum Volume Facility may be made up with Chips produced from
         the other Minimum Volume Facility. For the purposes of this Article,
         Chips made up under this Section will be credited towards the volume of
         Chips produced by the Minimum Volume Facility with the Shortfall and
         deducted from the volume of Chips produced by the other Minimum Volume
         Facility.



<PAGE>
                                       13



CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 406 OF THE SECURITIES ACT OF
1933, AS AMENDED, AND THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE
COMMISSION - CONFIDENTIAL SECTION HAS BEEN MARKED WITH A STAR (*)


                                   ARTICLE 5.
                           PRICE AND PAYMENT FOR CHIPS

5.1.     CHIP PRICE

         The purchase price payable by FCCL to TimberWest for Chips purchased by
         FCCL under this Agreement will be the Coast Chip Price for the Fiscal
         Quarter in which such Chips are delivered to FCCL in accordance with
         this Agreement, plus in the case of TMP - quality hemlock balsam Chips
         produced at the Elk Falls Facility from small hemlock and balsam
         sawlogs and consumed at the Elk Falls Pulp Mill, *.

5.2.     PAYMENT

         FCCL will pay to TimberWest, not later than the 11th Business Day
         following FCCL's monthly cut-off time (currently 8:00 a.m. on the
         Sunday immediately preceding the second-to-last Tuesday of each month)
         the applicable purchase price for all Chips delivered to and purchased
         by FCCL up to that cut-off time since the previous cut-off time.

5.3.     PRODUCTION COSTS

         TimberWest will be responsible for all costs associated with the
         production, movement and delivery up to the time of transfer of title
         described in Section 12.1 of all Chips sold pursuant to this Agreement
         including the acquisition, debarking and sawing of logs and chipping,
         screening and loading of Chips but excluding demurrage and other
         transportation charges relating to FCCL's obligations under Section
         11.1.


                                   ARTICLE 6.
                  CHIP MEASUREMENT, TESTING AND SPECIFICATIONS

6.1.     OPTIMIZATION OF CHIP QUALITY

         TimberWest will:

         (a)      use all reasonable efforts in the barking of logs and the
                  manufacture and screening of Chips to ensure that the Chip
                  Specifications are met;

         (b)      maintain all barking, chipping and screening facilities at the
                  TimberWest Facilities in good operating condition at all
                  times, including replacement and repair of equipment as
                  necessary, in order to produce Chips conforming to the Chip
                  Specifications; and


<PAGE>
                                       14


         (c)      maintain the chipper knives, faceplates, knife holders and
                  anvils in such a condition as to produce cleanly cut Chips.

6.2.     MEASUREMENT OF VOLUME

         The volume of Chips supplied by TimberWest under this Agreement will be
         measured by or on behalf of FCCL at its expense in BDU's or Volumetric
         Units consistent with normal industry practice or in such other volume
         measurement as may be adopted as a normal industry practice in the
         applicable region subsequent to the date of this Agreement.

6.3.     INTERIM MEASUREMENT

         Until a conveyor belt weightometer or other means of measuring Chips
         delivered by way of the Elk Falls Chip Conveying System has been
         installed, the volume of Chips delivered by way of the Elk Falls Chip
         Conveying System will be determined on a formula basis which estimates
         on a reasonable basis a volume of Chips contained within a volume of
         sawlogs consumed in the Elk Falls Facility taking into account solid
         wood equivalent volume for sawlogs, lumber output and sawdust, hog fuel
         and Chip production. Any dispute between the parties as to the use of a
         particular formula will be determined by arbitration.

6.4.     MEASUREMENT OF CHIP VOLUME

         FCCL will determine the oven dry weight by standard moisture test
         sampling and will notify TimberWest of all such measurements of Chips
         at the time that FCCL pays for such Chips.

6.5.     CONVERSION FACTORS

         Conversion from bone dry measure to Volumetric Units shall be
         determined using conversion factors of 1,850 bone dry pounds of
         hemlock/balsam Chips per Volumetric Unit and 2,000 bone dry pounds of
         Douglas fir Chips per Volumetric Unit. If either party believes that
         the applicable conversion factor differs from the conversion factor
         being utilized, it shall so advise the other party and the parties
         shall then use all reasonable efforts to agree on the appropriate
         conversion factor and failing agreement within 30 days of the request,
         will be determined by arbitration.

6.6.     APPLICATION

         The Chip Specifications and procedures for measuring and monitoring
         Chip Specifications set forth in this Article will apply to all Chips
         to which this Agreement applies. FCCL will conduct the necessary and
         appropriate classification tests according to procedures generally
         employed in the British Columbia pulp industry and in a manner
         consistent with present practices in order to determine whether such
         Chips conform to the Chip Specifications.

6.7.     VARIATION OF CHIP SPECIFICATIONS

<PAGE>
                                       15



         If FCCL wishes to vary any or all of the Chip Specifications from time
         to time after the date of this Agreement as required to meet its
         production requirements it will deliver to TimberWest notice of such
         required variation whereupon TimberWest will, at its expense if such
         revised specifications fall within normal industry standards in the
         area in which the applicable TimberWest Facility is located, or at the
         expense of FCCL if otherwise, modify the applicable TimberWest
         Facilities as soon as reasonably possible in order to produce Chips
         meeting the revised Chip Specifications within a reasonable time. Such
         variations may be made on a mill by mill basis if required by FCCL.


6.8.     INSPECTION OF TESTING

         TimberWest may, at any reasonable time, inspect and evaluate FCCL's
         testing procedures and practices. If TimberWest discovers any material
         error in FCCL's testing procedures and practices, FCCL will make such
         changes as are necessary in order that such procedures and practices
         conform to those generally employed in the British Columbia pulp
         industry.

6.9.     REJECTION OF INDIVIDUAL LOADS

         In recognition that an individual railcar, truck or scow load of Chips
         that fails to conform to the applicable Chip Specifications or species
         mix requirements may cause handling, production or quality problems in
         the manufacture of pulp or paper, if any individual railcar, truck or
         scow load of Chips that is sampled fails to conform in a material way
         to the Chip Specifications or species mix requirements and as a result
         is likely to cause unacceptable handling, production or quality
         problems in the manufacturing of pulp or paper, then FCCL may reject
         such railcar, truck or scow load and will immediately notify TimberWest
         of the rejection.

6.10.    COSTS OF DISPOSAL

         All original transportation, including barge hire costs where
         applicable, related to rejected Chips and all costs of disposal of
         rejected Chips, including transportation and, where applicable, barge
         hire costs to return the rejected Chips to TimberWest, will be for the
         account of TimberWest.

6.11.    NO WAIVER

         Failure to reject a railcar, truck or scow load that fails to meet the
         Chip Specifications will not constitute a waiver of FCCL's right to
         reject future railcar, truck or scow loads.

6.12.    THIRD PARTY DELIVERIES

         TimberWest acknowledges that FCCL may from time to time direct the
         delivery of Chips to third parties as part of FCCL's Chip sales and
         trading program and in each such case the procedures employed by such
         third party concerning measurement and testing of Chips will apply
         except that such third party procedures will be consistent with
         standard industry practices and will not be more onerous than similar
         procedures employed by FCCL.


<PAGE>
                                       16


                                   ARTICLE 7.
                                DELIVERY OF CHIPS

7.1.     LOADING FACILITIES

         TimberWest will, at all times, maintain or cause to be maintained in
         good condition and working order at each of the TimberWest Facilities
         (other than the Elk Falls Facility so long as Chips are delivered by
         way of the Elk Falls Chip Conveying System), loading facilities as
         follows:

         (a)      with respect to the Cowichan Facility, loading facilities
                  suitable for loading railcars or trucks of the capacity
                  delivered by FCCL;

         (b)      with respect to TimberWest Facilities, other than the Minimum
                  Volume Facilities, facilities suitable for loading railcars or
                  trucks or loading and mooring scows of the capacity utilized
                  by FCCL consistent with normal industry practice having regard
                  to the location of the TimberWest Facility.

7.2.     ELK FALLS CHIP CONVEYING SYSTEM

         The parties will, at all times, cause the Elk Falls Chip Conveying
         System to be maintained in good condition and working order, TimberWest
         being responsible for maintaining and repairing at its expense that
         part located within the Elk Falls Facility and FCCL being responsible
         for maintaining and repairing at its expense that part located within
         the Pulp Mill adjacent to the Elk Falls Facility.

7.3.     CURRENT MANUFACTURE

         TimberWest will use all commercially reasonable efforts to ensure that
         Chips to be sold hereunder are made available for loading as
         manufactured and will not include any Chips that have been stockpiled,
         except Chips that are piled as a result of normal loading practices or
         as provided in Subsection 15.5(c).

7.4.     RATE OF DELIVERY

         So far as is reasonably practicable, TimberWest will make Chips
         available for delivery to FCCL, and FCCL will accept and arrange for
         the removal of such Chips, on a regular and even basis throughout each
         Contract Year.

7.5.     TRANSPORTATION

         Except with respect to the operation of that part of the Elk Falls Chip
         Conveying System which is the responsibility of TimberWest under
         Section 7.2, FCCL will be responsible for transporting Chips from the
         TimberWest Facility at which the Chips were produced and will arrange
         to supply railcars and trucks, or where applicable, scows on an even
         and regular basis for such purpose. TimberWest will load Chips into
         railcars, trucks or, where applicable, scows in any proportions that
         FCCL requires from time to time as long as such loading does not
         require TimberWest to incur operating or capital costs


<PAGE>
                                       17

         associated with such loading that are materially greater than the costs
         that have previously been associated with such loading at the
         applicable TimberWest Facility.

7.6.     TIMBERWEST RESPONSIBILITIES

         TimberWest will:

         (a)      provide and maintain in good condition, and regulate in a
                  non-discriminatory manner, the orderly use of, access routes
                  on the TimberWest Facilities so as to allow empty trucks and
                  railcars to arrive, be loaded and depart expeditiously and in
                  safety;

         (b) where Chips are loaded on a scow at a TimberWest Facility:

                  (i)      be responsible for moving scows delivered by FCCL
                           between moorings and the Chip loading facility,
                           whether loaded or empty, until title to the Chips on
                           such scows passes to FCCL as contemplated by this
                           Agreement except that TimberWest will not be
                           responsible for any loaded scow:

                           A.       48 hours after FCCL's towing agent has been
                                    notified that such scow is fully loaded; or

                           B.       if the scow is not seaworthy and such
                                    unseaworthiness is not caused or contributed
                                    to by the negligence of TimberWest;

                  (ii)     if FCCL's towing agent provides TimberWest with an
                           empty barge or barges previously used for carrying
                           any material that may contaminate Chips, TimberWest
                           will clean such barges before loading the Chips and
                           may bill FCCL for its actual out-of-pocket costs of
                           cleaning, which will be payable by FCCL promptly upon
                           verification of the billing; and

                  (iii)    cause empty scows delivered by FCCL to be loaded
                           within 72 hours and will indemnify FCCL for demurrage
                           and any other costs or charges incurred by FCCL as a
                           result of any delay beyond such period;

         (c)      ensure that, in loading Chips for delivery to FCCL under this
                  Agreement, Chips produced from different species are not
                  mixed, unless FCCL notifies TimberWest otherwise pursuant to
                  Section 7.7, except that with respect to Chips produced from
                  the Elk Falls Facility or the Cowichan Facility (or other
                  TimberWest Facility located in the Coastal Area), hemlock and
                  balsam Chips may be mixed and Douglas fir and coastal pine
                  Chips may be mixed;

         (d)      cause each railcar or scow delivered by FCCL to be fully and
                  properly loaded, in accordance with all applicable loading
                  requirements and specifications, in such manner as will
                  minimize voids and spaces and achieve maximum degree of
                  compaction;

         (e)      promptly notify:


<PAGE>
                                       18


                  (i)      FCCL of the completion of loading of Chips into
                           railcars including such particulars of estimated
                           volumes and species as FCCL may reasonably require;
                           and

                  (ii)     FCCL's towing agent as soon as possible of completion
                           of loading of each scow and of the time that each
                           scow will be available for loading;

         (f)      indemnify FCCL against any claims, demands, action or causes
                  of action made against FCCL, including added transportation
                  costs, demurrage and freight charges, as a result of the
                  spillage or loss of Chips caused by improper loading of Chips
                  into railcars or scows.

7.7.     SPECIES SEGREGATION

         FCCL may vary from time to time the species mix permitted under Section
         7.6 by notice to TimberWest to that effect whereupon TimberWest will,
         unless the parties agree otherwise, make the modifications to the
         applicable TimberWest Facility as may be necessary to achieve such
         varied species mix as soon as reasonably possible after receipt of such
         notice. If the varied species mix falls within normal industry
         standards in the region in which the TimberWest Facility affected by
         such variation is located, the cost of any modifications which may be
         reasonably required to achieve such variation shall be borne by
         TimberWest but shall otherwise be borne by FCCL.


                                   ARTICLE 8.
                         PRICE AND PAYMENT FOR PULPLOGS

8.1.     PULPLOG PRICE

         The purchase price for Pulplogs purchased by FCCL under this Agreement
         will be the Vancouver Log Market Price of such Parcel at the time such
         Parcel is offered for sale hereunder calculated on a F.O.B. Point of
         Sale basis.

8.2.     DISPUTE OF PURCHASE PRICE

         If FCCL disputes the price stipulated by TimberWest for any Parcel of
         Pulplogs offered for sale under this Agreement, FCCL will notify
         TimberWest of the dispute before the end of the period described in
         Section 9.2, which dispute will be referred to arbitration under this
         Agreement for determination, and the period described in Section 9.5
         will be extended in order to permit completion of the arbitration
         process.

8.3.     PAYMENT

         FCCL will pay TimberWest, not later than the 11th Business Day
         following FCCL's monthly cut-off time, the purchase price for Pulplogs
         invoiced and accepted up to that cut-off time since the previous
         cut-off time.


<PAGE>
                                       19


8.4.     VANCOUVER LOG MARKET

         If a material change occurs in respect of the Vancouver Log Market to
         an extent that renders such market an unreliable indicator of the fair
         market value of logs traditionally purchased and sold thereon, the
         parties will use all reasonable efforts to agree upon a different
         pricing basis for coastal Pulplogs that more closely conforms with
         their mutual intentions in entering into this Agreement, and failing
         such agreement the matter will be determined by arbitration.

8.5.     INTERFOR LOG SUPPLY AGREEMENT

         If TimberWest fails to offer to sell to International Forest Products
         Ltd. ("Interfor") in any Contract Year the McDonald Base Volume in
         accordance with (and as defined in) the log supply agreement (the "Log
         Supply Agreement") among FCCL, Crown Forest Industries Limited and
         Interfor dated December 30, 1991 and such failure results in a waiver
         under the chip and pulplog supply agreement among the same parties
         dated December 30, 1991 that creates a credit against Interfor's
         obligations to sell Pulplogs to FCCL under that agreement in the
         following Contract Year as contemplated by Section 3.4 of the Log
         Supply Agreement (the volume of such credit referred to in this Section
         as the "Pulplog Credit") then TimberWest will:

         (a)      to the extent it is able to do so, provide sufficient Pulplogs
                  to FCCL to make up the Pulplog Credit on the same terms as
                  this Agreement from Pulplogs which originate from outside
                  British Columbia or Pulplogs which originate in British
                  Columbia but which FCCL has waived the purchase thereof; and

         (b)      to the extent that TimberWest does not make up the Pulplog
                  Credit under Subsection 8.5(a) in the Contract Year, pay FCCL
                  in respect of the difference in volume between the Pulplog
                  Credit and the volume made up under Subsection 8.5(a), the
                  amount, if any, by which the price payable for Hembal J Grade
                  sawlogs exceeds the price payable for Pulplogs under this
                  Agreement.


                                   ARTICLE 9.
                             PULPLOG SALE PROCEDURES

9.1.     NOTICE OF AVAILABILITY

         TimberWest will promptly advise FCCL of:

         (a)      the  availability  of  Pulplogs  for  delivery  and sale
                  under this  Agreement  including,  where applicable, the
                  Point of Sale;

         (b)      the volume, species and specifications of Pulplogs offered
                  for sale;

         (c)      the location of such Pulplogs or Parcels of Pulplogs; and

         (d)      the proposed selling price for such Pulplogs or Parcels of
                  Pulplogs.

<PAGE>
                                       20


9.2.     INSPECTION AND ACCEPTANCE

         FCCL will be entitled to inspect any Pulplogs made available for
         delivery and sale hereunder and if such Pulplogs meet the Pulplog
         Specifications and such sale otherwise would comply with the terms and
         conditions of this Agreement, FCCL will, not more than 15 Business Days
         after receipt of advice under Section 9.1, accept such Pulplogs.

9.3.     AGREEMENT ON PRICE

         The parties will, in respect of any Pulplogs purchased or sold
         hereunder, use reasonable efforts to reach agreement upon the purchase
         price for such Pulplogs before the end of the period described in
         Section 9.2, but if agreement is not reached Section 8.2 will apply.

9.4.     USE OF TELEPHONE

         Advice of availability of Pulplogs under this Agreement, and an
         acceptance or rejection thereof, may be communicated by telephone.

9.5.     DELIVERY OF PULPLOGS

         FCCL will take delivery of Pulplogs which it agrees to purchase under
         this Agreement at a Point of Sale within 15 Business Days after the
         date of receipt of advice under Section 9.1.

9.6.     AVAILABILITY

         To the extent that its logging operations permit, TimberWest will offer
         Pulplogs in the order of time of harvest in a regular and systematic
         manner during each Contract Year.

9.7.     COSTS UP TO DELIVERY

         TimberWest will be responsible for the payment of all stumpage, royalty
         and other charges against the title of Pulplogs sold by it, and all
         transportation and other costs incurred in order to deliver such
         Pulplogs to the Point of Sale.

9.8.     BOOMSTICKS

         Boomsticks will be provided by TimberWest for each Parcel of Pulplogs
         sold under this Agreement and FCCL will purchase such boomsticks at
         their fair market value concurrently with payment of the purchase price
         for such Parcel of Pulplogs. TimberWest will repurchase all such
         boomsticks from FCCL at the market price at the time if suitable for
         coastal towing or will otherwise be disposed of by TimberWest at the
         highest return and the proceeds paid or credited to FCCL.

9.9.     BOOMGEAR DEPOSIT

         FCCL will comply with boomgear deposit and return practices and
         procedures, in accordance with generally accepted industry practices,
         in effect at the time.


<PAGE>
                                       21


9.10.    PULPLOG SPECIFICATIONS

         All Pulplogs, and all Parcels of Pulplogs, to which this Agreement
         applies will conform to the Pulplog Specifications.

9.11.    SCALING

         Scaling will be done in accordance with the Ministry of Forests'
         applicable policies and industry standards and scaling expenses will be
         shared equally by the parties.

9.12.    CHECKSCALING

         If either party disputes the result of a scaling of a Parcel conducted
         under Section 9.11, it may cause a checkscaling to occur in accordance
         with the following provisions, the result of which will be binding on
         the parties and not subject to arbitration hereunder:

         (a)      such party (the "Disputing Party") will notify the other
                  party, before the Parcel is broken down or dewatered, of its
                  intention to cause a checkscaling, and will name one
                  independent, licensed scaler to perform the checkscaling;

         (b)      within 2 Business Days after the date of receipt of such
                  notice, the other party will, by notice to the Disputing
                  Party, name one independent, licensed scaler to also perform a
                  checkscaling, failing which the checkscaling will be performed
                  by the scaler named by the Disputing Party;

         (c)      each party will take all reasonable steps to ensure that the
                  checkscaling is carried out in a prompt and efficient manner;

         (d)      each party may inspect the Parcel before breakdown or
                  dewatering to determine if losses occurred during
                  transportation or handling as well as inspect checkscaling and
                  log handling practices;

         (e)      any logs not conforming to the Pulplog Specifications will be
                  deemed to have no value for the purposes of determining a
                  value with reference to a checkscale;

         (f)      if the value determined with reference to any checkscale does
                  not differ by more than 3% of the value determined with
                  reference to the original scale, excluding boomsticks and gear
                  in both cases, no adjustment will be made and all expenses
                  incurred relating to the checkscale, including towing,
                  handling and scaling, will be paid by the Disputing Party;

         (g)      if Subsection 9.12(f) is not applicable, the value determined
                  with reference to the original scale will be adjusted to equal
                  the average of the two checkscales or, if only one scaler was
                  named, to equal the single checkscale, and the checkscale
                  expenses described in Subsection 9.12(f) will be shared
                  equally by the parties.


<PAGE>
                                       22


9.13.    CONDITION OF PARCELS

         All Pulplogs delivered by TimberWest to FCCL hereunder will be properly
         and securely bundled. Intact Parcels will be fit for safe coastal
         towing except for those barged to and dumped at the Pulp Mill at
         Crofton, British Columbia.

9.14.    LOG SALE PRACTICES

         Except as expressly varied herein, the sale of Pulplogs under this
         Agreement will be in accordance with generally accepted log sales
         practices.


                                   ARTICLE 10.
                                 CUSTOM CHIPPING

10.1.    CUSTOM CHIPPING

         If TimberWest has excess whole-log chipping capacity available at any
         time and wishes to custom chip logs to utilize that excess capacity,
         TimberWest will, prior to offering or committing to custom chip any
         logs for any third party, offer that custom chipping capacity to FCCL
         at current industry rates. If FCCL does not accept such offer or
         accepts such offer only in respect of part of that chipping capacity,
         TimberWest may, with respect to the portion of that chipping capacity
         which FCCL does not elect to utilize, custom chip logs for third
         parties for a period of not more than six months from the date of
         TimberWest's offer, at which time FCCL's rights under this Section will
         again apply. Custom chipping commitments which were in effect at
         September 23, 1993 and were assumed by TimberWest as at the date of
         this Agreement will be excluded from the operation of this Section for
         their initial term but not for any extensions or renewals thereof.
         Where TimberWest is entitled to terminate any such commitment without
         incurring any additional liability to the other party to such
         commitment, TimberWest will exercise such termination right promptly
         after it becomes entitled to do so.

10.2.    PULPLOGS

         If FCCL intends to have Pulplogs it acquires from TimberWest under this
         Agreement custom chipped, FCCL will offer such custom chipping to
         TimberWest as long as TimberWest is able to perform such custom
         chipping at competitive rates, at a location that is suitable to FCCL
         and on other terms and conditions, including volume, regularity and
         term of availability that do not result in any net disadvantage to FCCL
         as determined by FCCL in its sole discretion.

10.3.    OTHER ARRANGEMENTS

         TimberWest will ensure that logs provided by FCCL to TimberWest for
         custom chipping will not be used for any other purpose except on terms
         and conditions approved by FCCL and that custom chipping of logs by
         TimberWest on behalf of third parties shall not in any way result in
         the reduction of the volume of Chips otherwise available to FCCL under
         this Agreement.


<PAGE>
                                       23



                                   ARTICLE 11.
                                 TITLE AND RISK

11.1.    TITLE

         Delivery of Chips and Pulplogs to FCCL under this Agreement shall be
         deemed to have been completed, and title to, all rights of property in,
         and all risks of loss or damage or destruction to Chips or Pulplogs
         shall pass to FCCL as follows:

         (a)      for Chips loaded into a railcar or truck, when the railcar or
                  truck leaves the applicable TimberWest Facility;

         (b)      for Chips delivered by way of the Elk Falls Chip Conveyor
                  System, when Chips on the Elk Falls Chip Conveyor System cross
                  over the boundary between the Elk Falls Facility and the
                  adjacent Pulp Mill;

         (c)      for Chips loaded into a scow, at such time as the master of
                  the tug of FCCL's towing agent has placed a line aboard a
                  fully loaded scow with the intention of removing such scow
                  from the scow moorings at a facility from which Chips are
                  delivered under this Agreement; and

         (d)      for Pulplogs, when the Pulplogs arrive at a Point of Sale and
                  such Pulplogs are invoiced and accepted in satisfactory
                  condition.


                                   ARTICLE 12.
                                    COVENANTS

12.1.    COVENANTS OF FCCL

         FCCL will:

         (a)      cause its directors, officers, employees, agents and
                  contractors, while on the premises of TimberWest, to comply
                  with all rules and regulations of TimberWest of general
                  application and, subject to Section 13.3, indemnify and hold
                  harmless TimberWest and its directors, officers, employees,
                  agents and contractors from and against any loss, damage,
                  liability, claim or action incurred or sustained, to the
                  extent attributable to a breach of such rules and regulations
                  or to any negligent or wilful act of FCCL or any of its
                  directors, officers, employees, agents or contractors;

         (b)      comply with all applicable laws, regulations, rules and
                  governmental restrictions and maintain in good standing all
                  licences, permits and approvals from any and all governments,
                  governmental commissions, boards or agencies applicable to the
                  performance of its obligations hereunder.

<PAGE>
                                       24



12.2.    COVENANTS OF TIMBERWEST

         TimberWest will:

         (a)      while any director, officer, employee, agent or contractor of
                  FCCL is on the premises of TimberWest, cause the employees,
                  agents and contractors of TimberWest and its subsidiaries to
                  comply with all rules and regulations of TimberWest applicable
                  to them and, subject to Section 13.3, indemnify and hold
                  harmless FCCL and its directors, officers, employees, agents
                  and contractors from and against any loss, damage, liability,
                  claim or action incurred or sustained to the extent
                  attributable to a breach of such rules and regulations or to
                  any negligent or wilful act of TimberWest or any of its
                  directors, officers, employees, agents or contractors;

         (b)      comply with all applicable laws, regulations, rules and
                  governmental restrictions and maintain in good standing all
                  licences, permits and approvals from any and all governments,
                  governmental commissions, boards or agencies applicable to the
                  performance of its obligations hereunder; and

         (c)      during the term of this Agreement, maintain comprehensive
                  general liability insurance to include its liabilities
                  hereunder for loss or damage to persons, property and Chips
                  for which it is responsible with limits of coverage to be not
                  less than $2,000,000 (reviewed every five years and adjusted
                  for inflation and all other reasonable factors) inclusive of
                  bodily injuries or property damage for each occurrence, and
                  will provide FCCL reasonable evidence of such insurance from
                  time to time upon FCCL's reasonable request;

         (d)      not during the term of this Agreement:

                  (i)  purchase Chips for any purpose; or

                  (ii) acquire Pulplogs except for resale to FCCL under this
                  Agreement.

12.3.    CERTIFICATE OF OFFICER

         FCCL may, after the end of a Contract Year, request a certificate of
         the Chief Financial Officer of TimberWest or, if the Chief Financial
         Officer is not available, a senior officer of TimberWest acceptable to
         FCCL, acting reasonably, verifying as to whether TimberWest has
         complied with its obligations under this Agreement including
         confirmation of the allowable annual cut in respect of the Crown Timber
         Tenures, the volume of logs harvested by and purchased and sold by
         TimberWest in the Contract Year, logs processed through the TimberWest
         Facilities during the Contract Year, the volume of Pulplogs produced
         from the Timber Tenures during the Contract Year, the volume of Chips
         produced by the TimberWest Facilities and delivered to FCCL during the
         Contract Year and particulars of any acquisitions of TimberWest
         Facilities. TimberWest will, not later than the 40th Business Day after
         the date of receipt of such request, provide such certificate in a form
         satisfactory to FCCL, acting reasonably.



<PAGE>
                                       25


                                   ARTICLE 13.
                                     DEFAULT

13.1.    EVENT OF DEFAULT

         An event of default ("Event of Default") will exist with respect to a
         party if such party has committed a material default in the performance
         of its obligations hereunder (for the purposes of this Section, the
         failure by a party to make two successive payments required under this
         Agreement, other than a failure arising from a bona fide dispute over
         the requirement to make such payment, will be deemed to be a material
         default), notice has been given to such party by the other party
         specifying the default and such default remains unremedied, and:

         (a)      in respect of a failure to make two successive payments
                  required under this Agreement, more than 5 Business Days have
                  elapsed since the date that the notice is delivered to such
                  party;

         (b)      in any other case, more than 15 Business Days have elapsed
                  since the expiration of such period following the giving of
                  such notice during which such party might by the exercise of
                  reasonable diligence have remedied the default;

         (c)      in the case of a default that could not, by the exercise of
                  reasonable diligence, be remedied within the period described
                  in Subsection 13.1(b), the earlier of:

                  (i)      the day on which the party fails or refuses to act
                           diligently to remedy the default; and

                  (ii)     the day on which it becomes evident to the other
                           party, acting reasonably, that such default will not
                           be remedied in a reasonably timely manner regardless
                           of the actions taken by such party.

13.2.    REMEDIES

         At any time while an Event of Default exists with respect to a party,
         the other party may exercise any right or remedy available to it, at
         law or in equity, and may without prejudice to any other right or
         remedy, terminate this Agreement by notice to the other party to that
         effect, effective on a date specified in such notice, which date shall
         be not earlier than the date on which such notice is given.

13.3.    CONSEQUENTIAL DAMAGES

         Any liability of either party to the other for breach of this Agreement
         or for negligence of its directors, officers, employees, agents and
         contractors will not extend to, or include liability for, loss of
         profits or contribution, loss of use of property or other consequential
         damages.



<PAGE>
                                       26


                                   ARTICLE 14.
                           DISPOSITIONS BY TIMBERWEST

14.1.    DISPOSITIONS BY TIMBERWEST

         TimberWest will not, without the prior written consent of FCCL:

         (a)      except as permitted by Section 14.3:

                  (i)      sell, transfer or otherwise dispose of a material
                           part of the TimberWest Facilities or Timber Tenures
                           except to a purchaser, transferee or assignee (an
                           "Assignee") that has agreed, as a condition of such
                           purchase, to be bound by the terms of this Agreement,
                           such agreement to be evidenced by the Assignee
                           entering into such formal agreements as FCCL may
                           reasonably require and which will give effect to an
                           assignment by TimberWest to the Assignee of an
                           interest in this Agreement to the extent required by
                           such assignment; or

                  (ii)     grant any harvest rights in respect of the Timber
                           Tenures or enter into any log or timber sale
                           arrangements which would result in a reduced volume
                           of logs being processed through TimberWest Facilities
                           unless the holder of such harvest rights or purchaser
                           of such logs or timber enters into an agreement in
                           such form as FCCL may reasonably require to ensure
                           that the Pulplogs included in such harvest or timber
                           sales and the Chips produced from processing such
                           harvest, timber or logs, or an equivalent volume,
                           will be available to FCCL on the terms and conditions
                           of this Agreement; or

         (b)      mortgage, charge, grant a security interest in or otherwise
                  encumber a material part of the TimberWest Facilities or
                  Timber Tenures except in compliance with Section 14.4;

         (c)      except as contemplated by Article 15, cease or curtail the
                  operation of any Minimum Volume Facility, unless the parties
                  enter into arrangements satisfactory to FCCL, acting
                  reasonably, to ensure the availability from alternate sources
                  of the Minimum Annual Volume of Chips in respect of that
                  Minimum Volume Facility;

         and TimberWest will not otherwise assign any part of its interest in
         this Agreement except by way of an assignment of amounts payable to
         TimberWest under this Agreement from time to time.

14.2.    MATERIAL PART

         For the purposes of this Article a "material part of the TimberWest
         Facilities or Timber Tenures" means any portion of the TimberWest
         Facilities or Timber Tenures the disposition of which would materially
         affect the ability of TimberWest to fulfil the terms of this Agreement
         or could reasonably be expected to result in a reduction in the volume
         of Chips or Pulplogs available to FCCL under this Agreement and, for
         the purposes of


<PAGE>
                                       27

         determining the application of Section 14.1 to a disposition of any
         part of the TimberWest Facilities or Timber Tenures:

         (a)      series of transactions that could reasonably be viewed as
                  related will be considered as a single disposition; and

         (b)      any exchange of assets in which any part of the TimberWest
                  Facilities or Timber Tenures are disposed of but are replaced
                  concurrently with other assets that become part of the
                  TimberWest Facilities or the Timber Tenures will not
                  constitute a disposition of a material part of the TimberWest
                  Facilities or Timber Tenures if, as a result of such exchange,
                  the ability of TimberWest to fulfil the terms of this
                  Agreement and the volume of Chips or Pulplogs available to
                  FCCL under this Agreement is not materially affected.

         TimberWest may, at its option, notify FCCL of any transaction
         TimberWest proposes to enter into that involves the acquisition or
         disposition of any tenure, right to harvest timber, or facility that is
         or could be used in connection with TimberWest's logging operations or
         wood processing business and any notice given by TimberWest to FCCL
         under this Section may include a request that FCCL advise TimberWest of
         FCCL's position regarding the application of this Article to the
         proposed transaction, including whether or not an asset is a material
         part of the TimberWest Facilities or Timber Tenures and whether or not
         any draft agreement proposed by TimberWest under Section 14.1 meets
         FCCL's reasonable requirements. FCCL agrees to respond promptly (and in
         any event not more than 15 Business Days after receipt of such notice)
         to any such request made by TimberWest and failure of FCCL to respond
         during such period will be deemed to be confirmation that FCCL does not
         consider this Article to apply to such transaction.

14.3.    EXCEPTED TIMBERLANDS

         Section 14.1 will not apply in respect of the sale of Timberlands that
         were originally purchased by TimberWest from Fletcher Challenge Canada
         Limited or Elk Falls Forest Industries Limited and which are not
         situated within a tree farm licence (the "non-TFL Timberlands") if the
         area of such non-TFL Timberlands, when added to the area of all other
         non-TFL Timberlands disposed of by TimberWest:

         (a)      during the immediately preceding 12 months does not exceed
                  1,455 hectares;

         (b)      at any time does not exceed 7,275 hectares.

14.4.    LENDER STATUS

         Any mortgage, charge, security interest or other encumbrances
         ("Encumbrances") granted over a material part of the TimberWest
         Facilities or Timber Tenures or this Agreement, or Encumbrances which
         in the aggregate constitute an Encumbrance over a material part of the
         TimberWest Facilities or Timber Tenures or this Agreement, will be
         subject to the condition that the holder of such Encumbrance or
         Encumbrances, enters into an agreement with FCCL in a form satisfactory
         to it acting reasonably, which:


<PAGE>
                                       28


         (a)      ensures that, to the extent permitted by law, any sale or
                  other disposition of any of the TimberWest Facilities or
                  Timber Tenures arising out of the enforcement of the
                  Encumbrance will be made only in accordance with this Article;

         (b)      provides that the holder of such Encumbrance and any receiver,
                  receiver-manager or person appointed under the Encumbrance
                  will not take any action to impair or restrict the rights of
                  FCCL under this Agreement;

         (c)      provides that FCCL will have notice of, and a reasonable
                  period to cure, defaults by TimberWest under the Encumbrance;
                  and

         (d)      if required by the holder of such Encumbrance as a condition
                  of entering into such agreement, provides that FCCL will
                  provide notice to, and give such holder a reasonable time to
                  cure, defaults by TimberWest under this Agreement.

14.5.    BREACH

         A breach by TimberWest of Section 14.1 could result in irreparable harm
         to FCCL for which FCCL could not adequately be compensated by monetary
         award and, accordingly, TimberWest agrees that in the event of any such
         breach, in addition to all other remedies available to FCCL at law or
         in equity, FCCL will be entitled as a matter of right to apply to a
         Court of competent jurisdiction for such relief by way of restraining
         order, injunction, decree or otherwise, as may be appropriate, to
         ensure compliance with Section 14.1.

14.6.    RELEASE OF TIMBERWEST

         Any assignment made under Section 14.1 will not release TimberWest from
         any of its obligations under this Agreement unless FCCL expressly
         consents in advance to an assignment to the Assignee by way of
         novation, which consent may be withheld unless FCCL is satisfied, in
         its absolute discretion, of the Assignee's ability to fulfil the terms
         of this Agreement on a long-term basis and, in such case, the release
         of TimberWest will extend only to that portion of this Agreement
         assigned to the Assignee by way of novation, except that if FCCL is not
         so satisfied at the time of such assignment, TimberWest may, at any
         time after the first anniversary of such assignment and not more
         frequently than on each anniversary date thereafter, request that FCCL
         provide such a release to TimberWest and FCCL will not refuse to
         provide such a release to TimberWest if it is satisfied, acting
         reasonably, of the Assignee's ability to fulfil the terms of this
         Agreement on a long-term basis.


                                   ARTICLE 15.
                          FORCE MAJEURE AND CURTAILMENT

15.1.    AFFECTING FCCL

         If, at any time while this Agreement is in force, the operation of the
         pulp production facilities or Chip unloading facilities at any Pulp
         Mill is shut down or curtailed, or FCCL is prevented from arranging
         delivery of Chips or Pulplogs, due to weather conditions, fire,


<PAGE>
                                       29


         strike or other labour disruptions, lockout, sabotage, shipwreck, riot,
         war, flood, extraordinary breakdown, explosion, laws or regulations,
         Court order, act of any government body or agency, act of God,
         blockade, civil commotion or disobedience (lawful or unlawful), as a
         result of excessive inventories or for any reason whether similar or
         dissimilar to the foregoing which FCCL considers sufficient to justify
         curtailing or shutting down such operations, then FCCL may, without
         liability, discontinue or curtail the purchase and acceptance of
         deliveries from TimberWest for the period of such shutdown or
         curtailment.

15.2.    MARKET CONDITIONS

         If, at any time while this Agreement is in force, market conditions in
         respect of the sale of pulp or paper are such that the operation of the
         pulp production facilities or Chip unloading facilities at any Pulp
         Mill is shut down or curtailed, FCCL, without liability, may
         discontinue or curtail the purchase and acceptance of deliveries from
         TimberWest for the period of such shutdown or curtailment.

15.3.    PROPORTIONATE CURTAILMENT

         If FCCL curtails its purchases pursuant to Section 15.1 or 15.2, it
         will do so on a proportionate basis, so that the volume of Chips and
         Pulplogs purchased by FCCL from TimberWest under this Agreement in any
         month during such curtailment will be not less than a volume equal to
         the result obtained when:

         (a)      the actual volume of Chips and Pulplogs (of the same species
                  mix and quality as are delivered by TimberWest pursuant to
                  this Agreement) that are delivered to the Pulp Mills in such
                  month is divided by;

         (b)      he total volume of such Chips and Pulplogs that FCCL, acting
                  reasonably and in good faith, estimates would have been
                  delivered to the Pulp Mills in such month if no curtailment
                  had occurred;

         multiplied by:

         (c)      the average monthly volume of such Chips and Pulplogs
                  purchased by FCCL from TimberWest under this Agreement during
                  each of the six months preceding the period of curtailment,
                  excluding any previous period of curtailment;

         and during such period of curtailment FCCL will assist and co-operate
         with TimberWest to minimize the detrimental effects of such curtailment
         on the TimberWest Facilities, including purchase for resale when
         feasible and permitted, except that FCCL will not be required to incur
         any cost in respect thereof. FCCL's determination of its proportionate
         reduction or curtailment of its purchases of Chips and Pulplogs during
         any period will be final and binding on TimberWest.


<PAGE>
                                       30



15.4.    NO CUMULATIVE OBLIGATION

         Where, as a result of a shutdown or curtailment pursuant to Section
         15.1 or 15.2, FCCL reduces or discontinues its purchases, FCCL will not
         be obliged, upon resuming its purchases, to purchase any additional
         volumes to make up for such discontinuance or curtailment of purchases.

15.5.    ALTERNATIVE DISPOSITION

         If, as provided in Section 15.1 or 15.2, FCCL discontinues or curtails
         the purchase of Chips or Pulplogs produced by TimberWest, TimberWest
         may dispose of such Chips or Pulplogs during or after such
         discontinuance or curtailment as it sees fit except that:

         (a)      TimberWest will, before entering into any agreement to dispose
                  of such Chips or Pulplogs, notify FCCL of its intention to do
                  so, and TimberWest will not dispose of such Chips or Pulplogs
                  if FCCL notifies TimberWest, within 5 Business Days after the
                  date of receipt of such notice, that FCCL will purchase such
                  Chips or Pulplogs upon production on condition, at FCCL's
                  option, that they are stored at a TimberWest Facility until
                  the end of the discontinuance or curtailment, except that if
                  Chip inventories at any TimberWest Facility at which such
                  Chips or Pulplogs are stored during such discontinuance or
                  curtailment impair TimberWest's operations, TimberWest may,
                  notwithstanding any commitment made by FCCL under this
                  Subsection, dispose of and deliver to a third party such
                  volume of Chips or Pulplogs as is necessary to relieve such
                  impairment (and promptly refund to FCCL any amounts paid by
                  FCCL for such Chips or Pulplogs), unless FCCL agrees to accept
                  delivery of such volume in a timely manner;

         (b)      subject to Section 15.10, TimberWest will not enter into any
                  agreement concerning the disposition of Chips or Pulplogs that
                  would conflict with FCCL's right to resume the purchase of
                  Chips or Pulplogs under this Agreement; and

         (c)      FCCL may, after the end of such discontinuance or curtailment,
                  purchase any Chips or Pulplogs that have not been disposed of
                  and which are stockpiled or stored, by delivering not less
                  than 10 Business Days' notice to TimberWest of the quantity of
                  such stockpiled Chips or stored Pulplogs that it wishes to
                  purchase under this Agreement stipulating a rate of delivery
                  of Chips or Pulplogs that will not interfere with the
                  efficiency of the TimberWest Facilities at which such Chips or
                  Pulplogs are located and confirming that FCCL will take the
                  risk of any impairment of the quality of the Chips or Pulplogs
                  resulting from the stipulated rate of delivery.

15.6.    AFFECTING TIMBERWEST

         If, at any time while this Agreement is in force, TimberWest shuts down
         or curtails the operation of any or all of the TimberWest Facilities
         due to weather conditions, fire, strike or other labour disruptions,
         lockout, sabotage, shipwreck, riot, war, flood, extraordinary
         breakdown, explosion, laws or regulations, Court order, act of any
         government body or


<PAGE>
                                       31


         agency, act of God, blockade, civil commotion or disobedience (lawful
         or unlawful) or as a result of FCCL reducing or discontinuing its
         purchases of Chips or Pulplogs under this Agreement, or for any reason
         whether similar or dissimilar to the foregoing and which TimberWest
         considers sufficient to justify curtailing or shutting down its
         operation, then TimberWest may, without liability, discontinue or
         curtail the production and delivery of Chips or Pulplogs to FCCL.

15.7.    CREDIT TO VOLUME COMMITMENTS (TIMBERWEST CURTAILMENT)

         For the purpose of calculating volumes of Chips sold by TimberWest to
         FCCL hereunder and, in particular, for the purpose of determining
         compliance with the volume commitments made herein, TimberWest will be
         deemed to have sold to FCCL hereunder:

         (a)      during any period of discontinuance or curtailment under
                  Sections 15.1, 15.2 or 15.6, a volume of Chips calculated on
                  the basis of the average monthly rate of actual delivery
                  during the six months immediately preceding the discontinuance
                  or curtailment, normalized by eliminating the effect of any
                  extraordinary non-recurring events; and

         (b)      such volumes of Chips that TimberWest offers to sell to FCCL
                  under Section 15.11 during the period from the end of the
                  curtailment or discontinuance until the end of the period
                  estimated by TimberWest in the applicable Estimate Notice;

         but under no circumstances will TimberWest be entitled to receive any
         volume credit if the discontinuance or curtailment arises from
         circumstances or events that result in a substantially similar
         adjustment of such volume commitments as a result of a change in
         harvest rights for that Contract Year. If the parties are unable to
         agree on any matter under this Section 15.7, the matter may be referred
         by either party for determination by arbitration under this Agreement.

15.8.    ADVANCE WARNING

         FCCL and TimberWest will give to each other as much advance notice as
         is reasonably possible of scheduled shutdowns or curtailments and
         prompt notice of unexpected shutdowns or curtailments affecting the
         delivery or acceptance of Chips or Pulplogs hereunder, stating the
         nature, date of commencement anticipated, duration and estimated effect
         of the event. The inadvertent failure to give notice under this Section
         will not preclude any Party from receiving any relief or credit
         provided for in this Article.

15.9.    REASONABLE ESTIMATE

         A party exercising a right of curtailment or discontinuance under this
         Article will, within 5 Business Days after the date of receipt of a
         request from the other party to do so, deliver to the other party a
         notice setting out a reasonable, good faith estimate of the length of
         the period of such curtailment or discontinuance (an "Estimate Notice")
         and a party that fails to deliver an Estimate Notice as required will
         be deemed to have delivered an Estimate Notice containing a reasonable
         estimate of 20 Business Days from the last day on which the Estimate
         Notice could have been given. A party receiving an Estimate Notice may,



<PAGE>
                                       32


         from time to time, reasonably request that the other party provide a
         revised Estimate Notice.

15.10.   FCCL ESTIMATE NOTICE

         If TimberWest enters into an agreement pursuant to Subsection 15.5(b)
         that has a term that is not longer than the period estimated in the
         Estimate Notice, or revised Estimate Notice, in effect at the date of
         such agreement delivered by FCCL, such term will be deemed not to
         conflict with FCCL's right to resume the purchase of Chips and Pulplogs
         under this Agreement regardless of whether the curtailment or
         discontinuance ends before the end of such period.

15.11.   TIMBERWEST ESTIMATE NOTICE

         If a curtailment of discontinuance invoked by TimberWest ends before
         the end of the period estimated by TimberWest in an Estimate Notice,
         FCCL may, but will not be required to, accept delivery of Chips and
         Pulplogs in excess of the volume of Chips and Pulplogs that was
         delivered during the curtailment or discontinuance until after the
         period estimated by TimberWest and TimberWest may dispose of any Chips
         or Pulplogs that FCCL does not purchase hereunder in any manner it sees
         fit.


                                   ARTICLE 16.
                                   ARBITRATION

16.1.    ARBITRATION

         Any dispute between the parties in respect of the determination of the
         Williams Lake Chip Price or Coast Chip Price, the determination or
         calculation of any price for Pulplogs purchased and sold hereunder, any
         credit to volume commitments contemplated by Section 15.7 or any other
         matter relating to the terms, conditions or other requirements of any
         purchases and sales hereunder will be submitted for determination by
         arbitration in accordance with the following:

         (a)      arbitrations will be carried out by a single arbitrator
                  agreed to by the parties but if no agreement is reached
                  within 2 Business Days after either party institutes such
                  process by notice to the other party:

                  (i)      each party will, within 2 Business Days, select one
                           arbitrator, and a third arbitrator will promptly be
                           agreed to by the selected arbitrators and failing
                           agreement, by a Justice of the Supreme Court of
                           British Columbia; or

                  (ii)     if either party fails to select an arbitrator, the
                           arbitrator selected by the other party will act as
                           the sole arbitrator;

         (b)      any dispute over the price for particular Pulplogs will be
                  determined by each party submitting the price that such party
                  has determined to be accurate and the arbitrators or
                  arbitrator will select one of such prices and no other;


<PAGE>
                                       33


         (c)      in resolving any dispute, other than a dispute over the price
                  of particular Pulplogs, the arbitrator or arbitrators shall
                  not be constrained in the manner contemplated by Subsection
                  16.1(b); and

         (d)      the decision of a majority of the arbitrators or the sole
                  arbitrator, as the case may be, including any decision as to
                  costs, will be final and binding on the parties, but will not
                  be a precedent in any subsequent arbitration under this
                  Agreement.

         Except as expressly provided herein, all arbitrations will be conducted
         according to the laws governing commercial arbitrations in British
         Columbia.

16.2.    TIMELY DECISIONS

         Any dispute referred to arbitration will be dealt with on an
         expeditious basis with both parties using all commercially reasonably
         efforts to obtain and implement a timely decision of the arbitrator who
         will have the authority to award treble costs of the arbitration
         proceedings against any party which does not, in the judgment of the
         arbitrator, act in accordance with this Section.


                                   ARTICLE 17.
                                     GENERAL

17.1.    MAINTENANCE OF RECORDS

         Each party will maintain detailed records of:

         (a)      all measurements and tests made by it by reference to which,
                  pursuant to this Agreement, the performance of an obligation
                  by either party is measured or the extent of an obligation
                  that either party is to perform is calculated; and

         (b)      all costs incurred by it for which it is, pursuant to this
                  Agreement, entitled to be reimbursed in whole or in party by
                  the other party;

         and will make such records available to the other party for inspection
         at all reasonable times.

17.2.    NOTICES

         Any notice, document or communication required or permitted to be given
         hereunder shall be in writing and delivered by hand or facsimile
         transmission to the party to which it is to be given as follows:

         TO FCCL:

         Fletcher Challenge Canada Limited
         9th Floor - 700 West Georgia Street
         Vancouver, British Columbia


<PAGE>
                                       34


         Attention:  Corporate Secretary

         Facsimile No.:  (604) 654-4254

         TO TIMBERWEST:

         TimberWest Forest Limited
         7th Floor - 700 West Georgia Street
         Vancouver, British Columbia

         Attention:  Corporate Secretary

         Facsimile No.:  (604) 654-4960

         or to such other address as either party may in writing advise by
         notice given in accordance with this Section. Any notice, document or
         communication will be deemed to have been given, if delivered, on the
         next Business Day after the day of delivery, and if sent by facsimile
         transmission, on the first Business Day after the day of transmittal.

17.3.    TIME

         Time shall be of the essence of this Agreement.

17.4.    FURTHER ASSURANCES

         Each of the parties shall execute and deliver all such further
         documents and do such further acts and things as may be reasonably
         required from time to time to give effect to this Agreement.

17.5.    WAIVERS

         Failure by either party at any time to require strict performance by
         the other of any term or provision hereof shall not be deemed to
         constitute a waiver of a breach of such or any other term or provision
         hereof nor shall it constitute a waiver of any succeeding breach of
         such or any other term or provision hereof.

17.6.    ASSIGNMENT BY FCCL

         FCCL may assign all or any portion of its interest in this Agreement,
         without the prior written consent of TimberWest, in the following
         circumstances:

         (a)      as a result of the granting by FCCL of a security interest
                  over all or substantially all of its assets; or

         (b)      to a purchaser of any material interest in a Pulp Mill if the
                  purchaser enters into an agreement with TimberWest confirming
                  that the purchaser is bound by this Agreement (with such
                  changes as may be required to contemplate the addition or
                  substitution of the purchaser as a party) to the extent of
                  such assignment and upon


<PAGE>
                                       35


                  any assignment under this Subsection will be released from
                  its obligations to the extent they relate to the subject
                  matter of the assignment.

         FCCL may not otherwise assign its interest in this Agreement without
         the prior consent of TimberWest.

17.7.    CONFIDENTIALITY

         Neither party will disclose any terms or conditions of this Agreement
         to any person who is not a director, officer employee or bona fide
         authorized representative of the party without the prior written
         consent of the other party except:

         (a)      if such party determines, acting reasonably, that disclosure
                  is required by law or during the course of its business; and

         (b)      if such disclosure is not required by law it is made under
                  terms that restrict further disclosure to the extent necessary
                  to protect the interests of the other party.

17.8.    ACTION BY FCCL

         Any action that is permitted or required to be taken by FCCL under this
         Agreement may be taken by Fletcher Challenge Canada Limited as agent
         for and on behalf of FCCL until such time as FCCL advises TimberWest
         otherwise and a document executed and delivered by, or notice given by,
         Fletcher Challenge Canada Limited pursuant to this Agreement shall
         constitute delivery or notice by FCCL.

17.9.    NATURE OF OBLIGATIONS

         The obligations and liabilities of 3264891 Canada Limited and 3264912
         Canada Limited under this Agreement shall be joint and several.

17.10.   RESTATEMENT OF ORIGINAL AGREEMENT

         This Agreement amends and restates the Original Agreement in its
         entirety as at the date of this Agreement but the provisions of the
         Original Agreement will continue in effect with respect to periods
         prior to the date of this Agreement.


<PAGE>
                                       36



17.11.   ENUREMENT

         This Agreement shall enure to the benefit of and be binding upon the
         parties hereto and their respective successors and permitted assigns.



IN WITNESS WHEREOF the parties have executed this Agreement the day and year
written on the first page hereof.



3264891 CANADA LIMITED



Per:     /s/ J. Whitwham                     c/s
         -----------------------------



Per:     /s/ J. Longley
         -----------------------------



3264912 CANADA LIMITED



Per:     /s/ J. Whitwham                       c/s
         -----------------------------



Per:     /s/ J. Longley
         -----------------------------



TIMBERWEST FOREST LIMITED



Per:     /s/ H. Karmally                     c/s
         -----------------------------



Per:     _____________________________



<PAGE>


                                   SCHEDULE A

                          PART I - CHIP SPECIFICATIONS

A.       SPECIFICATIONS (COWICHAN)

1.       Chips will be manufactured only from sound, bark-free wastewood such as
         logs, log-trim, sawmill wastewood or green veneer of the following
         species: Douglas fir, hemlock, balsam, spruce, pine, red cedar,
         cypress, or other species acceptable to FCCL.

2.       Chips will be clean, of approximately uniform length and thickness,
         clean-cut, and free from objectionable material of any kind that may
         adversely affect either the pulp quality or the pulping process and
         equipment, including, rocks, sand, silt, coal, coal dust, hog fuel, rot
         or bark in excess of the amount permitted, plastic or related
         materials, creosote or other treated wood, burned material, soot, char,
         dried veneer or glue, or tramp metal, any toxic or hazardous chemical
         including polychlorinated biphenyls (PCB's), pentachlorophenols (PCP's)
         or any material linked to the formation of any dioxin or furan
         compound, or any material that is likely to pose a health or safety
         risk.

3.       All Chips will be screened before delivery unless specifically agreed
         to in writing by the purchaser.

4.       All Chips delivered will conform to the following specifications:

         (a)      Chips will not contain more than 0.5% by green weight of bark
                  nor .5% by green weight of rot;

         (b)      the size of the Chips, as established by testing
                  representative samples in accordance with the Williams
                  classification method, or by such other method designed to
                  produce similar results, will conform to the following limits
                  of size:

<Table>
         <S>                                 <C>
         Over 1-1/2"                -        Not more than 1.5% by weight

         Retained on 1-1/8" screen
                  but not exceeding 1-1/2"   -       Not more than 6% by weight

         Retained on 7/8" screen    -       Not less than 20% by weight

         Retained on 5/8" screen    -       Not less than 30% by weight

         Retained on 3/8" screen    -       Not more than 30% by weight

         Retained on 3/16" screen   -       Not more than 10% by weight

         Passing the 3/16" screen   _       Not more than 1% by weight
</Table>

         (c)      determination of the percentage of bark, rot and Chip size in
                  any load of Chips will be made on the basis of the green
                  weight of a representative sample of the load.


<PAGE>
                                       2


5.       Chipper knives will be set to cut a Chip, from knife cut to knife cut,
         measured on the same plane end to end, seven-eights inch (7/8") in
         length.

B.       SPECIFICATIONS (ELK FALLS)

1.       Chips will be produced from sound, bark-free wastewood such as logs,
         log-trim, sawmill wastewood or green veneer.

2.       Chips will be clean, of approximately uniform length and thickness,
         clean-cut, and free from objectionable material of any kind that may
         adversely affect either the pulp quality or the pulping process and
         equipment, including, rocks, sand, silt, coal, coal dust, hog fuel, rot
         or bark in excess of the amount permitted, plastic or related
         materials, creosote or other treated wood, burned material, soot, char,
         dried veneer or glue, or tramp metal, any toxic or hazardous chemical
         including polychlorobiphenyls (PCB's), pentachlorophenols (PCP's) or
         any material linked to the formation of any dioxin or furan compound,
         or any material that is likely to pose a health or safety risk.

3.       All Chips will be screened before delivery unless specifically agreed
         to in writing by the Purchaser.

4.       Chips will be cut to a nominal length of 19 mm in order to meet the
         following standards:

         (a)      not more than 3% true oversize consisting of Chips exceeding
                  45 mm in length or an unfractured thickness of 10 mm in
                  thickness or both ("true overs");

         (b)      a minimum of 89% of Chips retained on a 7 mm round hole screen
                  (not including true overs);

         (c)      a maximum of 7% Chips, pin chips, fines and sawdust passing
                  through a 7 mm round hole screen and retained on a 3 mm round
                  hole screen;

         (d)      a maximum of 0.5% Chips, pin chips, fines and sawdust passing
                  through a 3 mm round hole screen;

         (e)      a maximum of 0.5% bark; and

         (f)      a maximum of 0.5% rot.

         Samples taken from any one truck load or railcar of Chips will meet the
         foregoing standards.

                               PART II - PULPLOGS

A.       DEFINITIONS

         A log:

         (a)      which is of the hemlock, balsam, fir, spruce, cypress, red
                  cedar species or other species acceptable to FCCL and has a
                  length not less than 3.8 metres and a top


<PAGE>
                                       38


                  radius not less than 8 centimetres (subject to changes to
                  Ministry of Forests utilization standards or the ability of
                  FCCL to specify a lower length or smaller top radius); and

         (b)      which has less than 75% lumber recovery and of which 50% or
                  more of the gross scale is firm wood;

         except:

         (c)      a log that meets the above specifications but which TimberWest
                  determines, acting reasonably and bona fide in a manner
                  consistent with the intent of this Agreement, and following
                  generally accepted industry practices for coastal British
                  Columbia forestry operations, is appropriate to be processed
                  as other than a Pulplog and is processed at either:

                  (i)      a TimberWest Facility; or

                  (ii)     some other facility from which the Chips produced are
                           sold or offered for sale to FCCL under this Agreement
                           or otherwise at a price which is no higher than the
                           Coast Chip Price.

         The parties agree that from time to time the above definition will be
         reviewed and revised to meet generally accepted industry practices for
         coastal British Columbia in place at that time.

B.       SPECIFICATIONS

1.       All Pulplogs to be bucked at both ends and delimbed.

2.       Parcels to be sorted by species:

(a)      hemlock/balsam which may contain up to 5% spruce;

(b)      spruce; or

(c)      Douglas fir; or

(d)      cypress; or

(e)      red cedar;

(f)      interior spruce, pine and subalpine fir;

(g)      other species acceptable to FCCL.

3. Pulplogs to be free of shape defects to allow for effective debarking.

4.       Hemlock/balsam Pulplogs will be sorted two ways by butt diameter as
         specified by FCCL in writing from time to time which specifications may
         vary by location.

<PAGE>



                                   SCHEDULE B

                              TIMBERWEST FACILITIES

I.       Cowichan facility located at Youbou, British Columbia, which currently
         comprises a large log sawmill, a small log sawmill and a planermill.

II.      Elk Falls facility located at Campbell River, British Columbia, which
         currently comprises a small log sawmill, an integrated whole log
         chipping facility and a planermill.


<PAGE>


                                   SCHEDULE C

                                 TIMBER TENURES

                          PART I - CROWN FOREST TENURES

I.       TREE FARM LICENCES

<Table>
<Caption>
PROPERTY NO.               DESCRIPTION

<S>                        <C>
TFL No. 46                 West Coast Tree Farm Licence
         TFL No. 47                 Duncan Bay Tree Farm Licence
</Table>

II.      FOREST LICENCES

<Table>
<Caption>
PROPERTY NO.               DESCRIPTION

<S>                        <C>
10-960                     Forest Licence A29159
         46-014                     Forest Licence A16870
         46-009                     Forest Licence A20913
</Table>


III.     TIMBER LICENCES

<Table>
<Caption>
         PROPERTY NO.               DESCRIPTION

         <S>                        <C>
         02-995                     Timber Licence T0012
         02-996                     Timber Licence T0018
         02-997                     Timber Licence T0020
         10-957                     Timber Licence T0769
         10-958                     Timber Licence T0883
         36-889                     Timber Licence T0153
         39-381                     Timber Licence T0414
         47-895                     Timber Licence T0911
         47-896                     Timber Licence T0910
         47-897                     Timber Licence T0226
         47-898                     Timber Licence T0257
         47-899                     Timber Licence T0249
         47-900                     Timber Licence T0238
         47-901                     Timber Licence T0213
         47-902                     Timber Licence T0205
         47-903                     Timber Licence T0204
         47-904                     Timber Licence T0196
         47-905                     Timber Licence T0171
         47-906                     Timber Licence T0158
         47-907                     Timber Licence T0155
         47-908                     Timber Licence T0142
         47-909                     Timber Licence T0137
         47-910                     Timber Licence T0129

<PAGE>

         <S>                        <C>
         47-911                     Timber Licence T0113
         47-912                     Timber Licence T0091
         47-913                     Timber Licence T0086
         47-914                     Timber Licence T0077
         47-915                     Timber Licence T0063
         47-916                     Timber Licence T0058
         47-917                     Timber Licence T0042
         47-918                     Timber Licence T0034
         47-919                     Timber Licence T0014
                                    Timber Licence T0153
         10-001                     Timber Licence T0080

         46-001                     Timber Licence T0024
         46-002                     Timber Licence T0039
         46-003                     Timber Licence T0184
         46-004                     Timber Licence T0194
         46-005                     Timber Licence T0206
         46-006                     Timber Licence T0207
         46-007                     Timber Licence T0228
         46-008                     Timber Licence T0245
         46-009                     Timber Licence T0250
         46-010                     Timber Licence T0253
         46-011                     Timber Licence T0264
         46-012                     Timber Licence T0273
         46-013                     Timber Licence T0279*1
         49-001                     Timber Licence T0008
         49-002                     Timber Licence T0017
         49-003                     Timber Licence T0029
         49-004                     Timber Licence T0038
         49-005                     Timber Licence T0049
         49-006                     Timber Licence T0083
         49-007                     Timber Licence T0085
         49-008                     Timber Licence T0118
         49-093                     Timber Licence T0532
</Table>


NOTES:

*1.      Subject of Cutting Rights Agreement with Husby Forest Products Ltd.

                              PART II - TIMBERLANDS

Fee simple timberlands located outside tree farm licences and within Managed
Forest Unit Nos. 65 and 68 as at the date of this Agreement which are
beneficially owned by TimberWest.



<PAGE>


                                   SCHEDULE D

                           MINIMUM VOLUME CALCULATIONS

                           PART I - COWICHAN FACILITY

I.       MINIMUM ANNUAL VOLUME ("MAV"):

         MAV = Cr * P * (1.0 - W) * (0.50 * AAC)

For 1994,

         MAV   = 0.356 * 0.587 * (1.0 - 0.046) * (0.50 * 558,860)
                           = 55,707 cubic meters

II.      MINIMUM FIVE YEAR VOLUME ("MFV") (EXAMPLE):

If Hv LESS THAN 0.9 * TAAC                  Then X = 0.9 * TAAC
         If Hv GREATER THAN TAAC                       Then X = TAAC
         Otherwise:                                  X = Hv

For example, if Hv = TAAC = 2,794,300

MFV      = Cr * P * (1.0 - W) * Hv
                = 0.356 * 0.587 * (1.0 - 0.046) * (2,794,300)
                = 557,070 cubic meters

NOTE:    If the Cowichan Facility is replaced as a Minimum Volume Facility
         with a facility adjacent to tidewater, 1.0 will be substituted for
         0.9 in this calculation effective upon such replacement.

III.     DESCRIPTION OF VARIABLES:

         AAC:     Annual allowable cut in effect for TFL 46 for the applicable
                  year. For 1994, AAC=558,860 cubic meters.

         TAAC:    Annual allowable cut for TFL 46 for the applicable Five Year
                  Period.

         W:       Historic levels of waste charged against the AAC and expressed
                  as a proportion of (harvest plus waste). For Five Year Period
                  commencing January 1, 1994, W=0.046.

         P:       Proportion of the total harvest of TFL 46 that is comprised of
                  fir, hemlock and balsam sawlogs. For Five Year Period
                  commencing January 1, 1994, P=0.587

         Cr:      Chip recovery factor for the Cowichan sawmill. For Five Year
                  Period commencing January 1, 1994, Cr=0.356 m(3) chips/m(3)
                  log.


<PAGE>


         Hv:      Actual harvest volume (including waste) from TFL 46 for the
                  applicable Five Year Period.

         Variables W, P and Cr to be adjusted for the Five Year Period
         commencing January 1, 1999 and each subsequent Five Year Period
         thereafter to reflect the immediately preceding Five Year Period.

                          PART II - ELK FALLS FACILITY

I.       MINIMUM ANNUAL VOLUME ("MAV"):

         MAV = 240 * 2 * Cr * Lc * 0.5

For 1994,

         MAV      =        240 * 2 * 0.46 * 1,100 * 0.5
                           =        121,440 cubic meters

II.      MINIMUM FIVE YEAR VOLUME ("MFV") (EXAMPLE ONLY):

MFV = lesser of MFV1 or MFV2, calculated as follows:

         MFV1  =  5 * (240 * 2 * Cr * Lc)
                           =        5 * (240 * 2 * 0.46 * 1,100)
                           =        1,214,400 cubic meters

or:

<Table>
         <S>      <C>
         MFV2 =   Cr * (P * (1.0 - W) * TAAC + R * P1 * TVAC)
                           =        0.46 * (0.305 * (1.0 - 0.042) * 4,094,660 + 0.073 *
                                    0.187 * (5 * 21,172,000)
                           =        1,215,096
</Table>

III.     DESCRIPTION OF VARIABLES:

         AAC:     Annual allowable cut for the applicable year for TFL 47 and
                  the Coastal Forest Licences. For 1994, AAC=818,932 cubic
                  meters.

         TAAC:    Annual allowable cut for TFL 47 and the Coastal Forest
                  Licences for the applicable Five Year Period.

         VAC:     Annual allowable cut for the Vancouver Forest Region for the
                  applicable year. Assumed to be 21,172,000 m(3) for 1994.

         TVAC:    Annual allowable cut for the Vancouver Forest Region for the
                  applicable Five Year Period.


<PAGE>

                                       3

         W:       Historic levels of waste charged against the AAC and expressed
                  as a proportion of (harvest plus waste). For Five Year Period
                  commencing January 1, 1994, W=0.042.

         P:       Proportion of the total harvest of TFL 47 and the Coastal
                  Forest Licences that is comprised of fir, hemlock and balsam J
                  grade logs. For Five Year Period commencing January 1, 1994,
                  P=0.305.

         P1:      Proportion of the Vancouver Log Market volume that is
                  comprised of fir, hemlock and balsam J grade logs. For Five
                  Year Period commencing January 1, 1994, P1=0.187.

         R:       Constant representing the purchased sawlogs for Elk Falls
                  sawmill. R=0.073.

         Cr:      Chip recovery factor for the Elk Falls sawmill. For Five Year
                  Period commencing January 1, 1994, Cr=0.46 m(3) chips/m(3)
                  log.

         Lc:      Average log consumption rate per 8 hour shift for the Elk
                  Falls sawmill. For Five Year Period commencing January 1,
                  1994, Lc=1,100 m(3).

         Timber Supply Areas referred to above are the Arrowsmith, Fraser,
         Kingcome, Midcoast, North Coast, Queen Charlotte, Soo, Strathcona and
         Sunshine Timber Supply Areas and Coastal Forest Licences are those
         forest licences in the Timber Supply Areas which are included in the
         Crown Timber Tenures. Variables W, P, P1, Cr and Lc to be adjusted for
         the Five Year Period commencing January 1, 1999 and each Five Year
         Period thereafter to reflect the immediately preceding Five Year
         Period.

                                    PART III

                       1993 AAC (SELECTED FOREST TENURES)

<Table>
<Caption>
         LICENCE           TIMBER SUPPLY AREA                          AAC (M(3))

         <S>               <C>                                         <C>
         TFL 47                                                        711,000
         TFL 46                                                        558,860
         FL A16870         Queen Charlotte                             24,292
         FL A20913         Strathcona                                  35,720
         FL A29159         Strathcona                                  47,920
</Table>


<PAGE>



                   CHIP AND PULPLOG SUPPLY AGREEMENT AMENDMENT







                                      AMONG

                FLETCHER CHALLENGE CANADA PULP OPERATIONS LIMITED

                                       AND

                                 TFL FOREST LTD.
                            TIMBERWEST FOREST COMPANY







                                 JANUARY 1, 1999



<PAGE>


                   CHIP AND PULPLOG SUPPLY AGREEMENT AMENDMENT


THIS AGREEMENT made as of the 1st day of January, 1999.

BETWEEN:

                  FLETCHER CHALLENGE CANADA PULP OPERATIONS LIMITED, a Canadian
                  corporation with an office at 19th Floor, 401 West Georgia
                  Street, Vancouver, British Columbia

                  ("FCCL")

AND:

                  TFL FOREST LTD., a British Columbia company and TIMBERWEST
                  FOREST COMPANY, a partnership of TIMBERWEST FOREST CORP., TFL
                  FOREST LTD. and PFP FOREST LTD., each with an office at 2300 -
                  1055 West Georgia Street, Vancouver, British Columbia

                  (collectively "TimberWest")

WHEREAS:

A.       By an agreement (the "Existing Agreement") entitled "Amended and
         Restated Chip and Pulplog Supply Agreement" dated the 23rd day of June,
         1997 between TimberWest Forest Limited (now TFL Forest Ltd.) and
         3264891 Canada Limited and 3264912 Canada Limited (both of which
         subsequently amalgamated with 3264939 Canada Limited to form 3418146
         Canada Limited which is now called Fletcher Challenge Canada Pulp
         Operations Limited), TimberWest Forest Limited agreed to sell, and
         3264891 Canada Limited and 3264912 Canada Limited agreed to purchase,
         wood chips and pulplogs produced, directly or indirectly, from the
         coastal facilities and related woodlands operations of TimberWest
         Forest Limited;

B.       Subsequent to January 1, 1998 certain of the obligations of TimberWest
         Forest Limited under the Existing Agreement were assumed by TimberWest
         Forest Company, a general partnership consisting of TimberWest Forest
         Corp. as managing partner and TFL Forest Ltd. (formerly named
         TimberWest Forest Limited) and PFP Forest Ltd. as the other partners;

C.       The parties have agreed to amend the Existing Agreement and reflect the
         reorganization referred to in Recital B as set out in this Agreement;

NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the premises
and the mutual covenants hereafter set out, the parties agree as follows:


<PAGE>

                                       2

                                   DEFINITIONS

In this Agreement:

         (hh)     terms which are defined in the Existing Agreement shall have
                  the respective meanings therein specified unless the context
                  of this Agreement otherwise requires or unless such terms are
                  otherwise defined herein;

         (ii)     "Chip and Pulplog Supply Agreement" means the Existing
                  Agreement as amended by this Agreement.


                       MODIFICATION TO ORIGINAL AGREEMENT

Effective January 1, 1998, the Existing Agreement is hereby amended as follows:

         (jj)     the Five Year Period beginning on January 1, 1994 shall be
                  shortened to a four year period ending on December 31, 1997
                  and thereafter a Five Year Period shall be the period
                  beginning on January 1, 1998 and ending on December 31, 2002
                  and each succeeding five year period thereafter;

         (kk)     by deleting Schedule C thereto and substituting therefor the
                  Schedule C attached to this Agreement; and

         (ll)     by deleting Schedule D thereto and substituting therefor the
                  Schedule D attached to this Agreement.


                      ADDITION OF TIMBERWEST FOREST COMPANY

The parties agree that:

         (mm)     TimberWest Forest Company will hereby become a party to the
                  Existing Agreement, as a joint and several obligant with TFL
                  Forest Ltd.;

         (nn)     the term "TimberWest" in the Chip and Pulplog Supply Agreement
                  will hereafter mean TFL Forest Ltd. and TimberWest Forest
                  Company, collectively; and

         (oo)     the obligations and liabilities of TFL Forest Ltd. and each of
                  the partners of TimberWest Forest Company under the Chip and
                  Pulplog Supply Agreement are joint and several.

TimberWest Forest Corp., TFL Forest Ltd. and PFP Forest Ltd. confirm that
         TimberWest Forest Corp. as managing partner of TimberWest Forest
         Company, has full power and authority to carry out the obligations, and
         exercise the rights, of TimberWest Forest Company under the Chip and
         Pulplog Supply Agreement and to execute and deliver agreements, notices
         or other documents on behalf of TimberWest Forest Company.


<PAGE>

                                       3

TimberWest's address for notices, documents or other communications under
         Section 11.2 of the Chip and Pulplog Supply Agreement is currently as
         follows:

         TimberWest Forest Corp.
         2300 - 1055 West Georgia Street
         Vancouver, British Columbia

         Attention:  Corporate Secretary
         Facsimile No.:  (604) 654-4960


                                     GENERAL

This Agreement forms part of and is to be read together with the Existing
Agreement.

Except as expressly set out in this Agreement, the Existing Agreement remains in
full force and effect, unamended.

IN WITNESS WHEREOF the parties have executed this Agreement.



FLETCHER CHALLENGE CANADA PULP OPERATIONS LIMITED

Per:  /s/ I. Goodreau
      ----------------------------------

Per:  /s/ W. Costuros
      ----------------------------------



TIMBERWEST FOREST CORP.

Per:  /s/ B. Park
      ----------------------------------

Per:  /s/ L. Promnitz
      ----------------------------------



TFL FOREST LTD.

Per:  /s/ B. Park
      ----------------------------------

Per:  /S/ L. Promnitz
      ----------------------------------



PFP FOREST LTD.

Per:  /s/ B. Park
      ----------------------------------

Per:  /s/ L. Promnitz
      ----------------------------------



<PAGE>


                                   SCHEDULE C

                                 TIMBER TENURES

                          PART I - CROWN FOREST TENURES

I.       TREE FARM LICENCES

<Table>
<Caption>
PROPERTY NO.               DESCRIPTION

<S>                        <C>
TFL No. 46                 West Coast Tree Farm Licence
         TFL No. 47                 Duncan Bay Tree Farm Licence
</Table>

II.      FOREST LICENCES

<Table>
<Caption>
PROPERTY NO.               DESCRIPTION

<S>                        <C>
10-960                     Forest Licence A29159
         46-009                     Forest Licence A20913
</Table>

III.     TIMBER LICENCES

<Table>
<Caption>
         PROPERTY NO.               DESCRIPTION

         <S>                        <C>
         02-995                     Timber Licence T0012
         02-996                     Timber Licence T0018
         02-997                     Timber Licence T0020
         10-957                     Timber Licence T0769
         10-958                     Timber Licence T0883
         36-889                     Timber Licence T0153
         39-381                     Timber Licence T0414
         47-895                     Timber Licence T0911
         47-896                     Timber Licence T0910
         47-897                     Timber Licence T0226
         47-898                     Timber Licence T0257
         47-899                     Timber Licence T0249
         47-900                     Timber Licence T0238
         47-901                     Timber Licence T0213
         47-902                     Timber Licence T0205
         47-903                     Timber Licence T0204
         47-904                     Timber Licence T0196
         47-905                     Timber Licence T0171
         47-906                     Timber Licence T0158
         47-907                     Timber Licence T0155
         47-908                     Timber Licence T0142
         47-909                     Timber Licence T0137
         47-910                     Timber Licence T0129
         47-911                     Timber Licence T0113

<PAGE>
                                       43

         <S>                        <C>
         47-912                     Timber Licence T0091
         47-913                     Timber Licence T0086
         47-914                     Timber Licence T0077
         47-915                     Timber Licence T0063
         47-916                     Timber Licence T0058
         47-917                     Timber Licence T0042
         47-918                     Timber Licence T0034
         47-919                     Timber Licence T0014
                                    Timber Licence T0153
         10-001                     Timber Licence T0080
         46-001                     Timber Licence T0024
         46-002                     Timber Licence T0039
         46-004                     Timber Licence T0194
         46-005                     Timber Licence T0206
         46-007                     Timber Licence T0228
         46-008                     Timber Licence T0245
         46-009                     Timber Licence T0250
         46-011                     Timber Licence T0264
         46-012                     Timber Licence T0273
         46-013                     Timber Licence T0279*1
         49-001                     Timber Licence T0008
         49-002                     Timber Licence T0017
         49-003                     Timber Licence T0029
         49-004                     Timber Licence T0038
         49-005                     Timber Licence T0049
         49-006                     Timber Licence T0083
         49-007                     Timber Licence T0085
         49-008                     Timber Licence T0118
         49-093                     Timber Licence T0532
</Table>

NOTES:

*1.      Subject of Cutting Rights Agreement with Husby Forest Products Ltd.



                              PART II - TIMBERLANDS

Fee simple timberlands located outside tree farm licences including those which,
as at the date of this Agreement, are owned beneficially by TimberWest Forest
Company or separately by one or more of TimberWest Forest Corp., TFL Forest Ltd.
or PFP Forest Ltd.


<PAGE>

                                   SCHEDULE D

                           MINIMUM VOLUME CALCULATIONS

                           PART I - COWICHAN FACILITY

I.       MINIMUM ANNUAL VOLUME ("MAV"):

         MAV = Cr * P * (1.0 - W) * 0.50 * (AAC + R)

For 1998,

         MAV   = 0.312 * 0.650 * (1.0 - 0.093) * 0.50 * (462,544 + 52,260)
                           = 47,346 cubic meters

II.      MINIMUM FIVE YEAR VOLUME ("MFV") (EXAMPLE):

<Table>
<S>                                 <C>
If Hv < 0.9 * TAAC                  Then X = 0.9 * TAAC
         If Hv > TAAC                       Then X = TAAC
         Otherwise:                                  X = Hv
</Table>

For example, if Hv = TAAC = 2,794,300

MFV = Cr * P * (1.0 - W) * (Hv + 5R)
           = 0.312 * 0.650 * (1.0 - 0.093) * (2,574,020)
           = 473,464 cubic meters

NOTE: If the Cowichan Facility is replaced as a Minimum Volume Facility with
      a facility adjacent to tidewater, 1.0 will be substituted for 0.9 in this
      calculation effective upon such replacement.

III.     DESCRIPTION OF VARIABLES:

         AAC:     Annual allowable cut in effect for TFL 46 for the applicable
                  year. For 1998, AAC=462,544 cubic meters.

         TAAC:    Annual allowable cut for TFL 46 for the applicable Five Year
                  Period.

         W:       Historic levels of waste charged against the AAC and expressed
                  as a proportion of (harvest plus waste). For Five Year Period
                  commencing January 1, 1998, W=0.093.

         P:       Proportion of the total harvest of TFL 46 that is comprised of
                  fir, hemlock and balsam sawlogs. For Five Year Period
                  commencing January 1, 1998, P=0.650

         Cr:      Chip recovery factor for the Cowichan sawmill. For Five Year
                  Period commencing January 1, 1998, Cr=0.312 m(3) chips/m(3)
                  log.


<PAGE>

                                       2

         Hv:      Actual harvest volume (including waste) from TFL 46 for the
                  applicable Five Year Period.

         R:       Constant representing non-TFL sawlogs after removal of private
                  land from TFL 46.

         Variables W, P and Cr to be adjusted for the Five Year Period
         commencing January 1, 2003 and each subsequent Five Year Period
         thereafter to reflect the immediately preceding Five Year Period.

                          PART II - ELK FALLS FACILITY

I.       MINIMUM ANNUAL VOLUME ("MAV"):

         MAV = 225 * 2 * Cr * Lc * 0.5

For 1998,

<Table>
         <S>               <C>
         MAV      =        225 * 2 * 0.315 * 1,050 * 0.5
                           =        74,419 cubic meters
</Table>

II.      MINIMUM FIVE YEAR VOLUME ("MFV") (EXAMPLE ONLY):

<Table>
<S>               <C>
MFV =             5 * (225 * 2 * Cr * Lc)
                  =        5 * (225 * 2 * 0.315 * 1,050)
                  =        744,190 cubic meters
</Table>

III.     DESCRIPTION OF VARIABLES:

         Cr:      Chip recovery factor for the Elk Falls sawmill. For Five Year
                  Period commencing January 1, 1998, Cr=0.315 m(3) chips/m(3)
                  log.

         Lc:      Average log consumption rate per 8 hour shift for the Elk
                  Falls sawmill. For Five Year Period commencing January 1,
                  1998, Lc=1,050 m(3).

         Variables CR and Lc are in effect for the Five Year Period commencing
         January 1, 1998 and are to be adjusted for the Five Year Period
         commencing January 1, 2003 and each Five Year Period thereafter to
         reflect the immediately preceding Five Year Period.

                                    PART III

                       1998 AAC (SELECTED FOREST TENURES)

<Table>
<Caption>
         LICENCE           TIMBER SUPPLY AREA                          AAC (M(3))

         <S>               <C>                                         <C>
         TFL 47                                                        599,888(1)
         TFL 46                                                        462,544(2)
         FL A20913         Strathcona                                  28,380
         FL A29159         Strathcona                                  42,904
</Table>



<PAGE>
                                       3


         NOTE:

         (1)  This AAC is calculated as if the sale of the Queen Charlotte
              Island portion of TFL 47 and FL 16870 occurred on or before
              January 1, 1998. No adjustment to be made to this volume when
              sale occurs.

         (2)  TFL 46 AAC reduction based on the removal of 7,500 hectares.