<PAGE>

                                                                     EXHIBIT 4.5

                                                                   FINAL VERSION



                        NORSKE SKOG CANADA LIMITED ET AL

                                       AND

                                  TD SECURITIES
                             MERRILL LYNCH & CO. AND
                             RBC DOMINION SECURITIES

                                  AS ARRANGERS

                                       AND

                          THE LENDERS FROM TIME TO TIME
                             PARTY TO THIS AGREEMENT

                                       AND

                            THE TORONTO-DOMINION BANK
                             AS ADMINISTRATION AGENT

                                       AND

                             MERRILL LYNCH & CO. AND
                             RBC DOMINION SECURITIES
                              AS SYNDICATION AGENTS

--------------------------------------------------------------------------------

                       CDN. $700,000,000 CREDIT FACILITIES
                                CREDIT AGREEMENT
                           DATED AS OF 14 AUGUST 2001

--------------------------------------------------------------------------------



                            BORDEN LADNER GERVAIS LLP
                                 LAWSON LUNDELL


<PAGE>


            THIS CREDIT AGREEMENT is made as of 14 August 2001


B E T W E E N:


             NORSKE SKOG CANADA LIMITED, NORSKE SKOG CANADA FINANCE
           LIMITED AND THE OTHER RESTRICTED PARTIES FROM TIME TO TIME

                                     - and -

                                  TD SECURITIES
                             MERRILL LYNCH & CO. AND
                             RBC DOMINION SECURITIES
                         (collectively, the "Arrangers")

                                     - and -

                        THE LENDERS LISTED ON SCHEDULE E
                                TO THIS AGREEMENT
                                 (the "Lenders")

                                     - and -

                            THE TORONTO-DOMINION BANK
                     in its capacity as Administration Agent
                                  (the "Agent")

                                     - and -

                             MERRILL LYNCH & CO. AND
                             RBC DOMINION SECURITIES
                     in their capacity as Syndication Agents
                           (the "Syndication Agents")

RECITALS:

A.    Norske Skog Canada Limited ("NSCL") has requested the Arrangers to arrange
senior secured credit facilities of up to a maximum aggregate amount of Cdn.
$700,000,000 to be used to (i) finance the general corporate purposes of the
Restricted Parties (ii) assist in financing the acquisition of Pacifica, (iii)
assist in refinancing the bank debt of Pacifica, (iv) assist in funding a
special distribution by NSCL of approximately $1,490,000,000 and (v) assist in
funding fees and expenses relating to the acquisition, refinancing and special
distribution.



<PAGE>


                                      - 2 -

B.          The Lenders have each agreed to provide their respective commitments
to NSCL, subject to the terms and conditions of this Agreement.

C.          The parties are entering into this Agreement to provide for the
terms of the credits.

            THEREFORE, for value received, and intending to be legally bound by
this Agreement, the parties agree as follows:

                                    ARTICLE I
                                 INTERPRETATION

1.1         DEFINED TERMS

            In this Agreement, unless something in the subject matter or context
is inconsistent therewith:

1.1.1       "ACCEPTING LENDER" has the meaning defined in Section 2.4.3.

1.1.2       "ACQUISITION" means the acquisition of all of the then issued and
            outstanding Capital Stock of Pacifica by NSCL in accordance with the
            Pacifica Arrangement.

1.1.3       "ADVANCE" means an availment of a Credit by the Borrower by way of
            Prime Rate Advance, Base Rate Advance, US Prime Rate Advance,
            acceptance of Bankers' Acceptances, L/C or LIBOR Advance, deemed
            Advances and conversions, renewals and rollovers of existing
            Advances, and any reference relating to the amount of Advances shall
            mean the sum of all outstanding Prime Rate Advances, Base Rate
            Advances, US Prime Rate Advances and LIBOR Advances, plus the face
            amount of all outstanding Bankers' Acceptances and L/Cs.

1.1.4       "AFFILIATED FUND" means (a) with respect to any Lender, any person
            that is engaged in making, purchasing, holding or otherwise
            investing in bank loans and similar extensions of credit in the
            ordinary course of its business and is administered or managed by a
            Lender or an affiliate of that Lender, and (b) with respect to any
            Lender that is a fund which invests in bank loans and similar
            extensions of credit, any other fund that invests in bank loans and
            similar extensions of credit and is managed by the same investment
            advisor as that Lender or by an affiliate of that investment
            advisor.

1.1.5       "AGENT" means TD in its role as administration agent for the
            Lenders, and any successor administration agent appointed in
            accordance with this Agreement.

<PAGE>

                                      - 3 -

1.1.6       "AGREEMENT", "HEREOF", "HEREIN", "HERETO", "HEREUNDER" or similar
            expressions mean this Agreement and any Schedules hereto, as
            amended, supplemented, restated and replaced from time to time.

1.1.7       "APPLICABLE FEE RATE" means, on any day, in respect of any Advance
            by way of Bankers' Acceptance or L/C, as the case may be, the
            applicable rate (expressed as a percentage per annum) set forth
            below, and "APPLICABLE MARGIN" means, on any day, with respect to
            any Prime Rate Advance, Base Rate Advance, US Prime Rate Advance or
            LIBOR Advance, the applicable margin (expressed as a percentage per
            annum) set forth below, in each case based upon the Reference Debt
            Ratings on that day.

            For the Operating Credit and Term Credit A:

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------
                         Level 1          Level 2         Level 3        Level 4          Level 5         Level 6
------------------------------------------------------------------------------------------------------------------------

<S>                      <C>              <C>             <C>            <C>              <C>             <C>
Moody's                  Baa1 or          Baa2            Baa3           Ba1              Ba2             < Ba2
                         above

S&P                      BBB+ or          BBB             BBB-           BB+              BB              < BB
                         above
------------------------------------------------------------------------------------------------------------------------
Margin for               0                0.125%           0.25%          1.25%            1.625%         2.25%
Prime Rate
Advances/ Base
Rate Advances
------------------------------------------------------------------------------------------------------------------------
Margin for               1.00%            1.125%          1.25%          2.25%            2.625%          3.25%
LIBO Rate
Advances
------------------------------------------------------------------------------------------------------------------------
Rate for                 1.00%            1.125%          1.25%          2.25%            2.625%          3.25%
Bankers'
Acceptance Fee/
L/C Fee
------------------------------------------------------------------------------------------------------------------------
</TABLE>

            For Term Credit B:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
                            Level 1          Level 2          Level 3           Level 4
-----------------------------------------------------------------------------------------------

<S>                         <C>              <C>              <C>               <C>
Moody's                     >Ba1             Ba1              Ba2               < Ba2

S&P                         >BB+             BB+              BB                < BB
-----------------------------------------------------------------------------------------------
Margin for US Prime         1.50%            1.75%            2.00%             2.25%
Rate Advances
-----------------------------------------------------------------------------------------------
</TABLE>


<PAGE>


                                                     - 4 -

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------
                            Level 1          Level 2          Level 3           Level 4
-----------------------------------------------------------------------------------------------
<S>                         <C>              <C>              <C>               <C>
Margin for                  2.50%            2.75%            3.00%             3.25%
LIBO Rate Advances
-----------------------------------------------------------------------------------------------
</TABLE>

            For the period from the date of the first Advance under this
            Agreement to and including 28 February 2002, the Applicable Fee Rate
            and Applicable Margin shall be based on Level 4 for the Operating
            Credit and Term Credit A and Level 2 for Term Credit B.

            For purposes hereof, (i) if the ratings established (or deemed to
            have been established, as provided in clause (ii) below) by Moody's
            and S&P fall within different Levels as set out above, the
            Applicable Fee Rate and Applicable Margin will be the higher of the
            alternative Applicable Fee Rates and Applicable Margins, (ii) if at
            any time there is only one of Moody's and S& P which has in effect a
            Reference Debt Rating (other than (a) because such ratings agency is
            no longer in the business of rating corporate debt obligations, (b)
            as a result of a change in the rating system of Moody's or S&P or
            (c) for any other reason reasonably determined by the Agent to be
            outside of the control of and unrelated to NSCL), then the
            Applicable Fee Rate and Applicable Margin shall be determined as if
            each rating agency had established a Reference Debt Rating in Level
            6 with respect to the Operating Credit and Term Credit A and Level 4
            with respect to Term Credit B and (iii) if any rating established
            (or deemed to have been established, as provided in clause (ii)
            above) by Moody's or S&P is changed (other than as a result of a
            change in the rating system of Moody's or S&P), the change shall be
            effective as of the date on which it is first publicly announced by
            the applicable rating agency. Each change in the Applicable Fee Rate
            and Applicable Margin shall apply during the period commencing on
            the effective date of such change and ending on the date immediately
            preceding the effective date of the next such change, on which date
            the Borrower shall pay any additional amount attributable to a
            higher Applicable Fee Rate with respect to a Bankers' Acceptance or
            an L/C outstanding on that date for the remaining term of the
            Bankers' Acceptance or L/C, or the Lenders shall remit to the Agent,
            who shall refund to the Borrower, any amount attributable to a lower
            Applicable Fee Rate. If at any time only one of Moody's and S&P has
            in effect a Reference Debt Rating (x) because the rating system of
            Moody's or S&P has changed, (y) because such rating agency has
            ceased to be in the business of rating corporate debt obligations,
            or (z) for any other reason reasonably determined by the Agent to be
            outside of the control of and unrelated to NSCL, NSCL and the
            Lenders (acting through the Agent) shall negotiate in good faith to
            amend the references to specific ratings in this definition to
            reflect such changed rating system or the non-availability of
            ratings from such rating agency and, pending the


<PAGE>

                                      - 5 -

            effectiveness of any such amendment, the Applicable Fee Rate and
            Applicable Margin shall be determined by reference to the Level most
            recently in effect.

1.1.8       "ARRANGERS" means, collectively, TD Securities, Merrill Lynch & Co.
            and RBC Dominion Securities.

1.1.9       "ASSIGNMENT AGREEMENT" means an agreement in the form of Schedule D
            to this Agreement.

1.1.10      "BA DISCOUNT PROCEEDS" means, in respect of any Bankers' Acceptance,
            an amount calculated on the applicable Drawdown Date which is
            (rounded to the nearest full cent, with one-half of one cent being
            rounded up) equal to the face amount of such Bankers' Acceptance
            multiplied by the price, where the price is calculated by dividing
            one by the sum of one plus the product of (i) the BA Discount Rate
            applicable thereto expressed as a decimal fraction multiplied by
            (ii) a fraction, the numerator of which is the term of such Bankers'
            Acceptance and the denominator of which is 365, which calculated
            price will be rounded to the nearest multiple of 0.001%.

1.1.11      "BA DISCOUNT RATE" means, (a) with respect to any Bankers'
            Acceptance accepted by a Lender named on Schedule I to the BANK ACT
            (Canada), the average rate that appears on the Reuters Screen CDOR
            Page at or about 10:00 a.m. (Toronto time) on the applicable
            Drawdown Date, for bankers' acceptances having an identical maturity
            date to the maturity date of such Bankers' Acceptance, and (b) with
            respect to any Bankers' Acceptance accepted by any other Lender, the
            rate determined established in accordance with (a) above plus 0.07%
            per annum.

1.1.12      "BA EQUIVALENT LOAN" has the meaning defined in Section 8.15.5.

1.1.13      "BANKERS' ACCEPTANCE" means a depository bill as defined in the
            DEPOSITORY BILLS AND NOTES ACT (Canada) in Canadian Dollars that is
            in the form of an order signed by the Borrower and accepted by a
            Lender pursuant to this Agreement or, for Lenders not participating
            in clearing services contemplated in that Act, a draft or bill of
            exchange in Canadian Dollars that is drawn by the Borrower and
            accepted by a Lender pursuant to this Agreement. Orders that become
            depository bills, drafts and bills of exchange are sometimes
            collectively referred to in this Agreement as "orders." Any
            depository bill may be made payable to "CDS & Co." and deposited
            with the The Canadian Depository for Securities Limited.

1.1.14      "BANKERS' ACCEPTANCE FEE" means the amount calculated by multiplying
            the face amount of each Bankers' Acceptance by the rate for the
            Bankers' Acceptance Fee specified in Sections 2.5 and 3.5, and then
            multiplying the result by a fraction, the


<PAGE>

                                      - 6 -

            numerator of which is the duration of its term on the basis of the
            actual number of days to elapse from and including the date of
            acceptance of a Bankers Acceptance by the Lender up to but excluding
            the maturity date of the Bankers' Acceptance and the denominator of
            which is 365.

1.1.15      "BASE RATE" means, on any day, the greater of:

            (a)   the annual rate of interest (expressed as a percentage per
                  annum on the basis of a 365 day year) announced by TD on that
                  day as its reference rate for commercial loans made in Canada
                  in US Dollars; and

            (b)   the Federal Funds Effective Rate plus 1% per annum.

1.1.16      "BASE RATE ADVANCE" means an Advance in US Dollars bearing interest
            based on the Base Rate and includes deemed Base Rate Advances
            provided for in this Agreement.

1.1.17      "BORROWER" means Norske Skog Canada Finance Limited, a corporation
            governed by the COMPANY ACT (British Columbia).

1.1.18      "BRANCH OF ACCOUNT" means the Agency Account, Toronto-Dominion
            International Centre, Toronto, Ontario or, for Term Credit B, the
            agency account designated by the US Agent in Houston, Texas.

1.1.19      "BRIDGE LOAN" means a senior interim loan in the amount of up to US
            $200,000,000 arranged for NSCL by Merrill Lynch Capital Canada Inc.,
            RBC and TD under a letter agreement dated 23 July 2001, which will
            be advanced if the NSCL Notes have not been issued at the date of
            completion of the Acquisition or to the extent that the gross
            proceeds of the NSCL Notes are less than US $200,000,000.

1.1.20      "BUSINESS DAY" means a day of the year, other than Saturday or
            Sunday, on which (a) the Agent is open for business at its executive
            offices in Toronto, Ontario, at its main branch in Vancouver,
            British Columbia and at its principal offices in New York, New York
            and Houston, Texas (or in other locations specified by any successor
            to TD as Agent) and (b) in respect of notices, determinations,
            payments or Advances relating to LIBOR Advances, the Agent is open
            for business at its principal offices in London, England.
            Notwithstanding the foregoing, if the Agent will be open in some
            locations referred to above and closed in others on a particular
            day, and the Agent in consultation with NSCL determines that the
            closing on that day will not adversely affect completion of relevant
            transactions in accordance with customary banking market and trading
            practices,

<PAGE>

                                      - 7 -

            the Agent may, on reasonable notice to NSCL and the Lenders, specify
            the particular day to be a Business Day.

1.1.21      "CANADIAN DOLLARS", "CDN. DOLLARS", "CDN. $" and "$" mean lawful
            money of Canada.

1.1.22      "CAPITAL STOCK" means, with respect to any person, any and all
            present and future shares, partnership or other interests,
            participations or other equivalent rights in the person's capital,
            however designated and whether voting or non-voting.

1.1.23      "COLLATERAL" means cash, a bank draft or a letter of credit issued
            by a Canadian chartered bank, all in a form satisfactory to the
            Lenders, acting reasonably.

1.1.24      "COMMITMENT" means in respect of each Lender from time to time, the
            commitment to make Advances to the Borrower in the Lender's
            Proportionate Share of the maximum amount of any Credit as set out
            on Schedule E and, where the context requires, the maximum amount of
            Advances which the Lender has made or committed to make.

1.1.25      "COMPLIANCE CERTIFICATE" means a certificate in the form of
            Schedule C.

1.1.26      "CONSOLIDATED NET TANGIBLE ASSETS" means the sum of the net book
            value of the assets of the Restricted Parties less, without
            duplication, the sum of (a) the net book value of the Restricted
            Parties' goodwill, trademarks, copyrights, patents, trade names,
            organization expense, treasury stock, deferred charges, unamortized
            debt discount expense and other similar intangible assets and (b)
            the net book value of the Restricted Parties' liabilities (including
            deferred taxes but excluding Funded Debt) and minority interests.

1.1.27      "CONSTATING DOCUMENTS" means, with respect to any Restricted Party,
            its articles or certificate of incorporation, amendment,
            amalgamation or continuance, memorandum of association, by-laws,
            partnership agreement, limited liability company agreement or other
            similar document, and all unanimous shareholder agreements, other
            shareholder agreements, voting trust agreements and similar
            arrangements applicable to the Restricted Party's Capital Stock, all
            as amended from time to time.

1.1.28      "CONTRACTS" means agreements, franchises, leases, easements,
            servitudes, privileges and other rights, other than Permits.

1.1.29      "CONTRIBUTING LENDER" shall have the meaning defined in Section
            12.3.2.

<PAGE>

                                      - 8 -

1.1.30      "CREDITS" means the Operating Credit, Term Credit A and Term Credit
            B, and "CREDIT" means any of them.

1.1.31      "CREDIT DOCUMENTS" means this Agreement, the Security and all other
            documents relating to the Credits, or any of them.

1.1.32      "DEBT" means, with respect to any person, without duplication and
            without regard to any interest component thereof (whether actual or
            imputed) that is not due and payable, the aggregate of the following
            amounts, each calculated in accordance with GAAP unless the context
            otherwise requires:

            (a)   all obligations (including, without limitation, by way of
                  overdraft and drafts or orders accepted representing
                  extensions of credit) that would be considered to be
                  indebtedness for borrowed money, and all obligations (whether
                  or not with respect to the borrowing of money) that are
                  evidenced by bonds, debentures, notes or other similar
                  instruments;

            (b)   the BA Discount Proceeds of all outstanding Bankers'
                  Acceptances, less the Bankers' Acceptance Fees in respect
                  thereof, and the equivalent amounts in respect of any similar
                  instruments not issued under this Agreement;

             (c)  all liabilities upon which interest charges are customarily
                  paid by that person;

             (d)  any Capital Stock of that person (or of any Subsidiary of that
                  person that is not held by that person or by a Subsidiary of
                  that person that is wholly owned, directly or indirectly)
                  which Capital Stock, by its terms (or by the terms of any
                  security into which it is convertible or for which it is
                  exchangeable at the option of the holder), or upon the
                  happening of any event, matures or is mandatorily redeemable,
                  pursuant to a sinking fund obligation or otherwise, or is
                  redeemable at the option of the holder thereof, in whole or in
                  part, for cash or securities constituting Debt;

            (e)   all capital lease obligations, synthetic lease obligations,
                  obligations under sale and leaseback transactions and purchase
                  money obligations;

            (f)   all obligations for the deferred purchase price of Property or
                  services acquired by such person or any predecessor and all
                  obligations of such person under any conditional sale or other
                  title retention agreement with respect to any Property;


<PAGE>

                                      - 9 -

            (g)   all obligations secured by any Encumbrance upon or in any
                  Property owned by such person whether or not such person has
                  assumed or become liable for the payment of such obligations;

            (h)   the Market Value of all Swaps in respect of which the Market
                  Value is negative from that person's perspective (that is, the
                  person is "out of the money") less, in the case of any such
                  Swaps entered into with a Lender, the Market Value of all
                  Swaps with the same Lender in respect of which the Market
                  Value is positive (up to the Market Value of the Swaps with a
                  negative Market Value);

            (i)   the amount of all contingent liabilities in respect of L/Cs
                  and other letters of credit and letters of guarantee;

            (j)   the amount of all contingent liabilities in respect of
                  performance bonds and surety bonds, and any other guarantee or
                  other contingent liability of any part or all of an obligation
                  of a person other than a Restricted Party, in each case only
                  to the extent that the guarantee or other contingent liability
                  is required by GAAP to be treated as a liability on a balance
                  sheet of the guarantor or person contingently liable; and

            (k)   the amount of the contingent liability under any guarantee
                  (other than by endorsement of negotiable instruments for
                  collection or deposit in the ordinary course of business) in
                  any manner of any part or all of an obligation of another
                  person of the type included in any of the other items in this
                  definition;

            provided that trade payables and accrued liabilities that are
            current liabilities incurred in the ordinary course of business do
            not constitute Debt.

1.1.33      "DECLINING LENDER" has the meaning defined in Section 2.4.1.

1.1.34      "DEFAULTING LENDER" has the meaning defined in Section 12.3.2.

1.1.35      "DESIGNATED ACCOUNT" means, in respect of any Advance, the account
            or accounts maintained by the Borrower at a branch of RBC in
            Vancouver, British Columbia that the Borrower designates in its
            notice requesting an Advance.

1.1.36      "DRAWDOWN DATE" means the date, which shall be a Business Day, of
            any Advance.


<PAGE>

                                     - 10 -

1.1.37      "EBITDA" means, for any relevant period, an amount equal to NSCL's
            net income or net loss for the period, calculated on a consolidated
            basis;

            (a)   plus, amounts deducted in calculating net income or net loss
                  in respect of depreciation and amortization;
            (b)   plus, Total Interest Expense;

            (c)   plus, upfront fees paid to the Agent, Arrangers or Lenders in
                  connection with this Agreement;

            (d)   plus, amounts deducted in calculating net income or net loss
                  in respect of income taxes (but not capital taxes except those
                  that are considered by GAAP to be income taxes), whether or
                  not deferred;

            (e)   minus, any non-cash items increasing consolidated net income
                  for such period;

            (f)   plus, any non-cash items decreasing consolidated net income
                  for such period;

            (g)   plus, unusual non-cash charges which require an accrual of, or
                  a reserve for, cash charges for any future period;

            (h)   minus, all cash payments during such period relating to
                  non-cash charges which were added back in determining EBITDA
                  in any prior period;

            and excluding:

            (i)   any gain or loss attributable to the sale, conversion,
                  abandonment or other disposition of Property, other than sales
                  of inventory in the ordinary course of business; and

            (j)   gains resulting from the write-up of Property and losses
                  resulting from the write-down of Property (other than
                  allowances for doubtful accounts receivable and any inventory
                  adjustments); and

            (k)   any gain or loss on the repurchase or redemption of any
                  securities (including in connection with the early retirement
                  or defeasance of any Debt); and

            (l)   any foreign exchange gain or loss (other than foreign exchange
                  gains or losses in respect of accounts receivable and accounts
                  payable and hedges or forward


<PAGE>

                                     - 11 -


                  exchange contracts in respect of revenues, in each case that
                  are realized in the ordinary course of business); and

            (m)   any income or loss attributable to discontinued operations;
                  and

            (n)   any other extraordinary items; and

            (o)   net income or net loss and other amounts specified in the
                  other items of this definition that are attributable to
                  persons other than Restricted Parties or to minority interests
                  in Restricted Parties;

            all of which shall be calculated in accordance with GAAP unless
            otherwise expressly described. If NSCL has established a new
            Restricted Party or has disposed of a Restricted Party or material
            Property out of the ordinary course of business during the relevant
            period, EBITDA shall be calculated in accordance with GAAP (or
            otherwise on a basis satisfactory to the Agent, acting reasonably),
            as if the new Restricted Party had been a Restricted Party during
            the entire period or the disposition had occurred at the beginning
            of the period.

1.1.38      "ENCUMBRANCE" means any mortgage, debenture, pledge, hypothec,
            deposit, lien, charge, assignment by way of security, consignment,
            capital lease, hypothecation, security interest or other security
            agreement, trust or arrangement having the effect of security for
            the payment of any debt, liability or obligation, or any other
            adverse claim affecting Property, and "ENCUMBRANCES",
            "ENCUMBRANCER", "ENCUMBER" and "ENCUMBERED" shall have corresponding
            meanings.

1.1.39      "ENVIRONMENTAL LAWS" means all applicable Requirements of Law,
            Permits and guidelines or requirements of any governmental body
            (whether or not having the force of law, and including consent
            decrees as to which any Restricted Party is a party or otherwise
            subject, and administrative orders which may affect a Restricted
            Party) relating to public health and safety, protection of the
            environment, the release of Hazardous Materials or occupational
            health and safety.

1.1.40      "EVENT OF DEFAULT" has the meaning defined in Section 11.1.

1.1.41      "EVENT OF FAILURE" has the meaning defined in Section 5.1.1.

1.1.42      "EXCHANGE RATE" means, on any day, for the purpose of calculations
            under this Agreement, the amount of Canadian Dollars into which US
            Dollars may be converted, or VICE VERSA, using the Agent's mid rate
            (i.e. the average of the Agent's spot buying and selling rates) for
            converting the first currency to the other currency at the relevant
            time on that day. If the Exchange Rate is being determined at any


<PAGE>

                                     - 12 -

            time in respect of a previous day, the noon spot rate of the Bank of
            Canada on that previous day shall be used instead of the Agent's mid
            rate.

1.1.43      "EXCLUDED TAXES" means any Taxes now or hereafter imposed, levied,
            collected, withheld or assessed on a Lender by Canada or any other
            jurisdiction in which that Lender is subject to Tax as a result of
            the Lender (i) carrying on a trade or business in such jurisdiction
            or being deemed to do so, or having a permanent establishment in
            such jurisdiction; (ii) being organized under the laws of such
            jurisdiction; (iii) being resident or deemed to be resident in such
            jurisdiction, (iv) not dealing at arm's length with the Restricted
            Parties or any other Lender or (v) being connected with the
            jurisdiction imposing such Taxes otherwise than by the mere
            advancement of credit hereunder, the receipt of payments under the
            Credit Documents or the enforcement of rights under the Credit
            Documents; but does not include any sales, goods or services Tax
            payable under the laws of any such jurisdiction with respect to any
            goods or services made available by a Lender to the Borrower under
            this Agreement or any withholding tax.

1.1.44      "EXISTING MAJOR SHAREHOLDER" means the largest shareholder of NSCL
            as disclosed on page 27 of NSCL's notice of extraordinary general
            meeting and management information circular dated 25 April 2001
            relating to the meeting to approve the Special Distribution.

1.1.45      "FEDERAL FUNDS EFFECTIVE RATE" means for any period, a fluctuating
            interest rate per annum equal, for each day during such period, to
            the weighted average of the rates on overnight federal funds
            transactions with members of the Federal Reserve System arranged by
            Federal Funds brokers as published for such day (or, if such day is
            not a Business Day, for the next preceding Business Day) by the
            Federal Reserve Bank of New York or, for any day on which that rate
            is not published for that day by the Federal Reserve Bank of New
            York, the average of the quotations for that day for such
            transactions received by the Agent from three Federal Funds brokers
            of recognized standing.

1.1.46      "FEE AGREEMENT" means the agency fee agreement between the Borrower
            and the Agent dated as of 14 August 2001, as amended, supplemented,
            restated and replaced from time to time.

1.1.47      "FUND" means any Person that is engaged in making, purchasing,
            holding or otherwise investing in bank loans and similar extensions
            of credit in the ordinary course of its business.


<PAGE>

                                     - 13 -

1.1.48      "FUNDED DEBT" means all Debt of NSCL on a consolidated basis other
            than Debt referred to in item (d) of the definition of Debt and Debt
            in respect of which no interest, fee or other compensation is
            charged and no Encumbrance is held.

1.1.49      "FUNDED DEBT RATIO" means at any time, the ratio calculated by
            dividing NSCL's (a) Funded Debt by (b) the aggregate of its Funded
            Debt plus its shareholders equity determined in accordance with GAAP
            on a consolidated basis.

1.1.50      "GAAP" means Canadian generally accepted accounting principles,
            including such principles recommended by the Canadian Institute of
            Chartered Accountants as contained in the "CICA Handbook" as
            amended, replaced or restated from time to time and, in the absence
            of a specific recommendation contained in the "CICA Handbook,"
            accounting principles generally accepted in practice in Canada.

1.1.51      "HAZARDOUS MATERIALS" means:

            (a)   any oil, flammable substances, explosives, radioactive
                  materials, hazardous wastes or substances, toxic wastes or
                  substances or any other wastes, contaminates, materials or
                  pollutants which:

                  (i)      pose a hazard to any real property, or to persons on
                           or about any real property; or

                  (ii)     cause any real property to be in violation of any
                           Requirement of Law;

            (b)   asbestos in any form which is or could become friable, urea
                  formaldehyde foam insulation, transformers or other equipment
                  which contain dielectric fluid containing levels of
                  polychlorinated biphenyls in excess of limits prescribed by
                  Requirements of Law, or radon gas;

            (c)   any chemical, material or substance defined as or included in
                  the definition of "dangerous goods", "deleterious substance",
                  "hazardous substances", "hazardous wastes", "hazardous
                  materials", "extremely hazardous wastes", "restricted
                  hazardous waste", "toxic substances", "waste" or words of
                  similar import under any Law, including the Canadian
                  Environmental Protection Act (Canada), Fisheries Act (Canada),
                  Transportation of Dangerous Goods Act (Canada), Canada Water
                  Act (Canada) and any applicable provincial legislation; and

            (d)   any other chemical, material or substance, exposure to which
                  is prohibited, limited or regulated by any governmental body
                  or which may or could pose


<PAGE>

                                     - 14 -

                  a hazard to the occupants of any real property or any other
                  person coming upon any real property or adjacent or
                  surrounding property;

            and references to a "release" of Hazardous Materials include
            spilling, leaking, pumping, pouring, emitting emptying, discharging,
            injecting, escaping, leaching, disposing, dumping or other form of
            release, or permitting any of the foregoing to occur.

1.1.52      "INTELLECTUAL PROPERTY" means patents, trademarks, service marks,
            trade names, copyrights, trade secrets, industrial designs and other
            similar rights.

1.1.53      "INTERBANK REFERENCE RATE" means, in respect of any currency, the
            interest rate expressed as a percentage per annum which is
            customarily used by the Agent when calculating interest due by it or
            owing to it arising from correction of errors in transactions in
            that currency between it and other chartered banks.

1.1.54      "INTERCREDITOR AGREEMENTS" means any intercreditor agreements that
            may be entered into from time to time to provide for the terms of
            subordination of any Debt in favour of the Obligations, or other
            relationship between the Lenders and the holders of other Debt,
            including, without limitation, any intercreditor agreements entered
            into with the holders of Pacifica Notes, Bridge Loan, NSCL Notes,
            Permitted Senior Indebtedness and Permitted Subordinated
            Indebtedness, each as amended, supplemented, restated and replaced
            from time to time.

1.1.55      "INTEREST COVERAGE RATIO" means, at any time, the ratio calculated
            by dividing (a) EBITDA for NSCL's four most recently completed
            fiscal quarters by (b) Total Interest Expense for that period. For
            the purpose of calculating the Interest Coverage Ratio, NSCL's
            EBITDA and Total Interest Expense shall be calculated on a PRO FORMA
            basis acceptable to the Lenders, acting reasonably for the period
            beginning 1 October 2000 and ending 30 September 2001. The PRO FORMA
            calculation shall take into account the Special Distribution, the
            Acquisition if it is completed by 31 August 2001, and all Debt
            incurred or assumed in connection therewith.

1.1.56      "INTEREST PAYMENT DATE" means (in connection with Prime Rate
            Advances, Base Rate Advances and US Prime Rate Advances) the first
            day of each calendar month or if that is not a Business Day, the
            Business Day next following.

1.1.57      "ISSUING BANK" means, with respect to Operating Credit 1, each
            Lender designated by the Agent after consultation with NSCL that
            issues L/Cs for and on behalf of the Lenders under a Credit and, for
            the time being, means RBC and, with


<PAGE>

                                     - 15 -

            respect to Operating Credit 2, means the Lender making Advances
            under Operating Credit 2, which is RBC unless changed in accordance
            with Section 2.1.1.

1.1.58      "L/C" means a standby letter of credit, letter of guarantee or
            commercial letter of credit in a form satisfactory to the Issuing
            Bank issued by the Issuing Bank at the request of the Borrower in
            favour of a third party to secure the payment or performance of an
            obligation of a Restricted Party to the third party.

1.1.59      "L/C FEE" means the amount calculated by multiplying the face amount
            of each L/C by the rate for the L/C Fee specified in Section 2.5,
            and then multiplying the result by a fraction, the numerator of
            which is the duration of its term on the basis of the actual number
            of days to elapse from and including the date of issuance of an L/C
            by the Issuing Bank up to but excluding the expiry date of the L/C
            and the denominator of which is 365.

1.1.60      "LENDERS" means each of the persons listed on Schedule E and other
            lenders that agree from time to time to become Lenders in accordance
            with Article XIII of this Agreement, including the Operating Credit
            Lenders, the Term Credit A Lenders and the Term Credit B Lenders,
            and "LENDER" means any one of the Lenders.

1.1.61      "LIBO RATE" means, for any LIBOR Period and LIBOR Advance, either:

            (a)   the rate of interest (expressed as an annual rate on the basis
                  of a 360 day year) determined by the Agent to be the
                  arithmetic mean (rounded up to the nearest 0.01%) of the
                  offered rates for deposits in US Dollars for a period equal to
                  the particular LIBOR Period, which rates appear on (A) the
                  Reuters screen LIBO page, or (B) if the Reuters screen LIBO
                  page is not readily available to the Agent, Page 3750 of the
                  Telerate screen, in either case as of 11:00 a.m. (London time)
                  on the second Business Day before the first day of that LIBOR
                  Period, or,

            (b)   if neither the Reuters screen LIBO page nor Page 3750 of
                  Telerate is readily available to the Agent for any reason, the
                  rate of interest determined by the Agent which is equal to the
                  simple average of the rates of interest (expressed as a rate
                  per annum on the basis of a year of 360 days and rounded up to
                  the nearest 0.01%) at which three of the five largest (as to
                  total assets) banks listed on Schedule I to the BANK ACT
                  (Canada) as selected by the Agent would be prepared to offer
                  leading banks in the London interbank market a deposit in US
                  Dollars for a period equal to the LIBOR Period in an amount
                  approximately equal to the relevant LIBOR Advance at or about
                  10:00 a.m. (Toronto time) on the second Business Day before
                  the first day of such Interest Period.

<PAGE>

                                     - 16 -

            The LIBO Rate calculated as above shall be adjusted from day to day
            for any Lender to whom the Eurocurrency Reserve Percentage applies
            in respect of its LIBOR Advances under this Agreement by dividing
            the LIBO Rate by a percentage equal to 100% minus the Eurocurrency
            Reserve Percentage on that day. The Eurocurrency Reserve Percentage
            is the percentage prescribed by the Board of Governors of the
            Federal Reserve System of the United States (or any successor to its
            functions) for determining the maximum reserve requirement
            (including but not limited to any emergency, supplemental or other
            marginal reserve requirement) for a member bank of the Federal
            Reserve System in New York, New York with deposits exceeding US $5
            billion in respect of Eurocurrency Liabilities (as defined in
            Regulation D of the Board of Governors of the Federal Reserve
            System) or in respect of any other category of liabilities which
            includes deposits by reference to which the interest rate on LIBOR
            Advances is determined or any category of extensions of credit or
            assets which includes loans by a non-United States office of any
            bank to United States residents.

1.1.62      "LIBOR ADVANCE" means an advance in US Dollars bearing interest
            based on the LIBO Rate.

1.1.63      "LIBOR PERIOD" means the period selected by the Borrower for a LIBOR
            Advance or the period applicable to the LIBOR Advance under the
            terms of this Agreement.

1.1.64      "MAJORITY LENDERS" means Lenders holding, in the aggregate, a
            minimum of 66 2/3% of the outstanding amount of the Commitments.

1.1.65      "MARKET VALUE" means the amount, if any, that a person would be
            required to pay to its counterparty in any Swap in order to
            terminate the Swap as a result of the person being "out of the
            money" on a mark to market valuation of the Swap and, without
            limiting the foregoing, for any Swap governed by an ISDA Master
            Agreement, means, on any day, the amount (whether positive or
            negative) expressed in Canadian Dollars that is determined by a
            Lender in good faith in accordance with its customary practices as
            of the close of business on that day as though that day was an
            "Early Termination Date" and the "Transaction" was a "Terminated
            Transaction" in accordance with the payment measure provided for in
            section 6(e)(i)(3) of the 1992 ISDA Master Agreement (Multicurrency
            - Cross Border). "Early Termination Date," "Transaction" and
            "Terminated Transaction" have the meanings defined in that ISDA
            Master Agreement.

1.1.66      "MATERIAL ADVERSE CHANGE" means any one or more transactions, events
            or conditions which, when taken together, have a material adverse
            effect on (a) the ability of the Restricted Parties as a whole to
            perform and discharge their


<PAGE>

                                     - 17 -

            obligations under this Agreement or any Material Contract which is
            listed in Part A of Schedule G or the Material Contracts taken as a
            whole, (b) the Agent's or the Lenders' ability to enforce their
            rights or remedies under any of the Credit Documents, or (c) the
            financial condition, business or prospects of NSCL and its
            Subsidiaries, taken as a whole. Notwithstanding the foregoing, if
            the context requires, "Material Adverse Change" shall be interpreted
            having reference only to such persons (other than all of the
            Restricted Parties) as the context requires.

1.1.67      "MATERIAL CONTRACT" means any Contract:

            (a)   which is listed on Schedule G;

            (b)   to which is attached obligations on the part of the Restricted
                  Parties or which has an economic value to the Restricted
                  Parties in excess of $25,000,000 per annum; or

            (c)   to which a Restricted Party is a party that, if terminated,
                  would materially impair the ability of the Restricted Parties
                  as a whole to carry on business in the ordinary course or
                  would cause a Material Adverse Change.

1.1.68      "MATERIAL PERMIT" means any Permit issued to a Restricted Party
            that, if terminated, would materially impair the ability of the
            Restricted Parties as a whole to carry on business in the ordinary
            course or would cause a Material Adverse Change.

1.1.69      "MOODY'S" means Moody's Investors Service, Inc.

1.1.70      "NON BA LENDER" has the meaning defined in Section 8.15.5.

1.1.71      "NEW LENDER" has the meaning defined in Section 2.4.4.

1.1.72      "NOTEHOLDERS" means the holders from time to time of the Pacifica
            Notes and the NSCL Notes.

1.1.73      "NSCL" means Norske Skog Canada Limited, a corporation governed by
            the COMPANY ACT (British Columbia), which is expected to be
            continued under the CANADA BUSINESS CORPORATIONS ACT if the
            Acquisition is completed, and also means the corporation resulting
            from the amalgamation under the CANADA BUSINESS CORPORATIONS ACT of
            NSCL and Pacifica which will occur if the Acquisition is completed.

<PAGE>

                                     - 18 -

1.1.74      "NSCL NOTES" means senior notes to be issued by NSCL after the date
            of this Agreement (the proceeds of which will only be released from
            escrow if the Acquisition is completed on or before 31 August 2001)
            to finance the Acquisition and/or refinance the Bridge Loan, or
            which are issued in exchange for the Bridge Loan, in each case as
            long as such notes are, in the reasonable opinion of the Agent, on
            terms that are no more onerous to NSCL than the Pacifica Indenture
            and shall mature no earlier than the Pacifica Notes. For greater
            certainty, NSCL Notes includes any replacement notes issued after
            registration under the SECURITIES ACT OF 1933 (United States) in
            accordance with the terms of the NSCL Notes.

1.1.75      "OBLIGATIONS" means all obligations of the Borrower to the Lenders
            under or in connection with this Agreement, including but not
            limited to all debts and liabilities, present or future, direct or
            indirect, absolute or contingent, matured or not, at any time owing
            by the Borrower to the Lenders in any currency or remaining unpaid
            by the Borrower to the Lenders in any currency under or in
            connection with this Agreement, whether arising from dealings
            between the Lenders and the Borrower or from any other dealings or
            proceedings by which the Lenders may be or become in any manner
            whatever creditors of the Borrower under or in connection with this
            Agreement, and wherever incurred, and whether incurred by the
            Borrower alone or with another or others under or in connection with
            this Agreement, and whether as principal or surety, and all
            interest, fees, legal and other costs, charges and expenses. In this
            definition, "the Lenders" shall be interpreted as "the Lenders, or
            any of them".

1.1.76      "OPERATING CREDIT" means, collectively, the revolving credit of up
            to $220,000,000 or the US Dollar equivalent thereof (designated as
            "OPERATING CREDIT 1") and the revolving credit of up to $30,000,000
            or the US Dollar equivalent thereof (designated as "OPERATING CREDIT
            2") which are established in favour of the Borrower by this
            Agreement to assist in financing the general corporate requirements
            of the Restricted Parties.

1.1.77      "OPERATING CREDIT LENDERS" means the Lenders who have provided
            Commitments relating to the Operating Credit as more particularly
            described in Schedule E.

1.1.78      "OTHER SECURED OBLIGATIONS" means the present and future debts,
            liabilities and obligations to any Lender under or in connection
            with (a) Swaps to exchange one of Canadian Dollars, US Dollars or
            Japanese yen to another of those currencies, provided that in the
            case of such Swaps that relate to Debt, such Swaps do not increase
            the principal amount of Debt outstanding other than as a result of
            fluctuations in foreign currency exchange rates or by reason of
            fees, indemnities or compensation payable thereunder, and (b) Swaps
            to provide for the exchange


<PAGE>

                                     - 19 -


            of floating interest rate obligations for fixed interest rate
            obligations in an aggregate amount (net of offsetting transactions)
            that does not exceed 75% of NSCL's consolidated floating rate Debt
            at the time any such Swap is entered into.

1.1.79      "PACIFICA" means Pacifica Papers Inc., a corporation governed by the
            CANADA BUSINESS CORPORATIONS ACT.

1.1.80      "PACIFICA ARRANGEMENT" means an arrangement agreement made on 25
            March 2001 between NSCL and Pacifica with respect to the Acquisition
            and the plan of arrangement described in that agreement.

1.1.81      "PACIFICA BANK DEBT" means indebtedness arising under the
            Multi-Option Credit Facility made among Pacifica, Pacifica Power Co.
            Ltd. and Pacifica Papers Limited Partnership, as borrower, Canadian
            Imperial Bank of Commerce, as arranger and administrative agent, The
            Bank of Nova Scotia, as documentation agent and Canadian Imperial
            Bank of Commerce and other lenders dated 12 March 1999, as amended
            by Amending Agreement dated 21 February 2000, Consent to
            Restrictions and Assumption Agreement dated 30 January 2001 and
            Consent to Sale and Amendment Agreement dated 31 January 2001.

1.1.82      "PACIFICA INDENTURE" means the trust indenture dated as of 12 March
            1999 between Pacifica, certain of its Subsidiaries as guarantors and
            Norwest Bank Minnesota, National Association, as Trustee, as amended
            and supplemented by agreements dated 12 March 1999, 30 December 1999
            and 31 January 2001 and otherwise as permitted by this Agreement.

1.1.83      "PACIFICA NOTES" means the 10% senior notes due 2009 issued by
            Pacifica under the Pacifica Indenture.

1.1.84      "PENDING EVENT OF DEFAULT" means an event which, with giving of
            notice, lapse of time, or both, or subject to any other condition
            subsequent to such event, would constitute an Event of Default.

1.1.85      "PENSION PLAN" means (a) a "registered pension plan" (as that term
            is defined in the INCOME TAX ACT (Canada)) which is subject to the
            funding requirements of applicable pension benefits legislation in
            any jurisdiction of Canada and is applicable to employees resident
            in Canada of any Restricted Party, or (b) any pension benefit plan,
            other post-retirement benefit plan or other similar arrangement
            applicable to employees of any Restricted Party.

1.1.86      "PERMITS" means governmental licenses, authorizations, consents,
            registrations, exemptions, permits and other approvals required by
            law.

<PAGE>

                                     - 20 -

1.1.87      "PERMITTED ENCUMBRANCES" means, with respect to any person, the
            following:

            (a)   Encumbrances for taxes, rates, assessments or other
                  governmental charges or levies not yet due, or for which
                  instalments have been paid based on reasonable estimates
                  pending final assessments, or if due, the validity of which is
                  being contested diligently and in good faith by appropriate
                  proceed ings by that person and the payment of which has been
                  secured by such arrangements (including Collateral) as the
                  Lenders may require;

            (b)   undetermined or inchoate Encumbrances, rights of distress and
                  charges incidental to current operations which have not at
                  such time been filed or exercised and of which none of the
                  Lenders has been given notice, or which relate to obligations
                  not due or payable or if due, the validity of which is being
                  contested diligently and in good faith by appropriate
                  proceedings by that person and the payment of which has been
                  secured by such arrangements (including Collateral) as the
                  Lenders may require;

            (c)   reservations, limitations, provisos and conditions expressed
                  in any original grants from the Crown or other grants of real
                  or immovable property, or interests therein, which do not
                  materially affect the use of the affected land for the purpose
                  for which it is used by that person;

            (d)   zoning, land use and building restrictions, by-laws,
                  regulations and ordinances of federal, provincial, municipal
                  and other governmental authorities, licenses, easements,
                  rights-of-way and rights in the nature of easements
                  (including, without limiting the generality of the foregoing,
                  licenses, easements, rights-of-way and rights in the nature of
                  easements for sidewalks, public ways, sewers, drains, gas,
                  steam and water mains or electric light and power, or
                  telephone and telegraph conduits, poles, wires and cables),
                  none of which will materially impair the use of the affected
                  land for the purpose for which it is used by that person;

            (e)   title defects, encroachments or irregularities which are of a
                  minor nature and which in the aggregate will not materially
                  impair the use of the affected property for the purpose for
                  which it is used by that person;

            (f)   the right reserved to or vested in any municipality or
                  governmental or other public authority by the terms of any
                  lease, license, franchise, grant or permit acquired by that
                  person or by any statutory provision to terminate any such
                  lease, license, franchise, grant or permit, or to require
                  annual or other payments as a condition to the continuance
                  thereof;


<PAGE>

                                     - 21 -

            (g)   the Encumbrance resulting from the deposit of cash or
                  securities in connection with contracts (other than for the
                  payment of Debt), tenders or expropriation proceedings, or to
                  secure workers' compensation, unemployment insurance, surety
                  or appeal bonds, costs of litigation when required by law,
                  liens and claims incidental to current construction,
                  mechanics', warehousemen's, carriers' and other similar liens,
                  and public, statutory and other like obligations incurred in
                  the ordinary course of business, up to a maximum at any time
                  of $10,000,000 for all Restricted Parties;

            (h)   security given to a public utility or any municipality or
                  governmental authority when required by such utility or
                  authority in connection with the operations of that person in
                  the ordinary course of its business, up to a maximum at any
                  time of $10,000,000 for all Restricted Parties;

            (i)   the Trustee Security, to the extent that it secures debentures
                  that have been issued under the trust deeds forming part of
                  the Trustee Security and pledged to secure the debts,
                  liabilities and obligations described in Section 6.2, and the
                  pledges of those debentures;

            (j)   the Security other than the Trustee Security;

            (k)   the Encumbrance created by a judgment of a court of competent
                  jurisdiction, as long as the judgment is being contested
                  diligently and in good faith by appropriate proceedings and
                  payment has been secured by such arrangements (including
                  Collateral) as the Lenders may require or the judgment is
                  being satisfied by that person and has not caused an Event of
                  Default;

            (l)   Encumbrances on Property and the proceeds thereof created or
                  assumed to finance the acquisition or improvement or secure
                  the unpaid purchase price thereof (including the principal
                  amount of any capital lease or Purchase Money Mortgage),
                  provided that the aggregate principal amount (or fair market
                  value of the Property Encumbered if no principal amount is
                  designated) in respect of all such Encumbrances entered into
                  by all Restricted Parties does not exceed 4% of Consolidated
                  Net Tangible Assets at any time;

            (m)   a pledge of preferred shares of Pope & Talbot Mackenzie Pulp
                  Operations Ltd.. by Norske Skog Pulp Operations Ltd. to secure
                  obligations of Norske Skog Pulp Operations Ltd. in the amount
                  of $16,200,000 to Pope & Talbot Mackenzie Pulp Operations Ltd.
                  for which recourse is limited to the pledged shares and which
                  is terminated on or before 31 October 2001;


<PAGE>

                                     - 22 -

            (n)   escrow arrangements and related Encumbrances in respect of the
                  proceeds of the NSCL Notes if they are issued before the date
                  of completion of the Acquisition to secure redemption of the
                  NSCL Notes if the Acquisition is not completed; and

            (o)   other Encumbrances expressly agreed to in writing by the
                  Majority Lenders.

1.1.88      "PERMITTED OBLIGATIONS" means the following:

            (a)   the Obligations;

            (b)   the Other Secured Obligations;

            (c)   debts, liabilities and obligations of any Restricted Party to
                  another Restricted Party;

            (d)   if the Acquisition is completed on or before 31 August 2001,
                  the Pacifica Notes, the Bridge Loan and the NSCL Notes;

            (e)   Permitted Senior Indebtedness;

            (f)   Permitted Subordinated Indebtedness;

            (g)   unsecured debts, liabilities and obligations of NSCL in
                  connection with an existing letter of credit issued for the
                  account of NSCL by Bank of Tokyo- Mitsubishi (Canada) to The
                  Bank of Tokyo-Mitsubishi Ltd., Kyobashi Branch, Tokyo, Japan
                  in the amount of 30,000,000 Japanese yen;

            (h)   other debts, liabilities and obligations secured by Permitted
                  Encumbrances;

            (i)   current accounts payable, accrued expenses and other similar
                  debts, liabilities and obligations incurred in the ordinary
                  course of business which are not for borrowed money;

            (j)   deferred taxes;

            (k)   obligations and liabilities incurred in the ordinary course of
                  business which do not constitute Debt;

            (l) actuarially determined obligations in respect of Pension Plans;


<PAGE>

                                     - 23 -

            (m)   obligations arising from guarantees by one Restricted Party of
                  debts, liabilities and obligations of another Restricted Party
                  that are themselves Permitted Obligations; and

            (n)   other debts, liabilities and obligations expressly permitted
                  under this Agreement or expressly consented to by the Majority
                  Lenders in writing.

1.1.89      "PERMITTED SENIOR INDEBTEDNESS" means Debt of NSCL for borrowed
            money that:

            (a)   except for Special Permitted Senior Indebtedness, has a stated
                  maturity later than 14 August 2007 and is unsecured;

            (b)   is on terms and conditions that, in the reasonable opinion of
                  the Majority Lenders, are no more restrictive to the
                  Restricted Parties than the terms of the Obligations
                  including, without limitation except for Special Permitted
                  Senior Indebtedness, the scheduled amortization of the Debt;

            (c)   is not incurred at a time that an Event of Default or Pending
                  Event of Default has occurred and is continuing or would, in
                  the opinion of the Majority Lenders, acting reasonably, based
                  on their review of PRO FORMA budgets and other information
                  that the Lenders may require from NSCL (all of which must be
                  in form and substance satisfactory to the Lenders), result
                  from the incurrence of the Debt; and

            (d)   if required by the Majority Lenders, is subject to the terms
                  of an Intercreditor Agreement entered into with the Agent in
                  form and substance satisfactory to the Majority Lenders,
                  acting reasonably.

1.1.90      "PERMITTED SUBORDINATED INDEBTEDNESS" means unsecured Debt of NSCL
            for borrowed money that:

            (a)   has a stated maturity later than 14 August 2007 and does not
                  require any principal payments before maturity, provided that
                  voluntary prepayments shall be permitted with the prior
                  written consent of the Majority Lenders;

            (b)   is on terms and conditions including, without limitation,
                  financial covenants that, in the reasonable opinion of the
                  Majority Lenders, are less restrictive to the Restricted
                  Parties than the terms of the Obligations;

            (c)   contains no financial covenants except those which apply only
                  at the time of incurrence of Debt;


<PAGE>

                                     - 24 -

            (d)   is not incurred at a time that an Event of Default or Pending
                  Event of Default has occurred and is continuing or would, in
                  the opinion of the Majority Lenders, acting reasonably, based
                  on their review of PRO FORMA budgets and other information
                  that the Lenders may require from NSCL (all of which must be
                  in form and substance satisfactory to the Lenders), result
                  from the incurrence of the Debt;

            (e)   provides for a standstill period in respect of enforcement by
                  holders of the Debt of not less than 180 days following
                  default, provides for acceleration with reference to other
                  Debt of NSCL and any Subsidiaries of NSCL that are guarantors
                  only upon acceleration of that Debt rather than default under
                  the terms of that Debt, and does not require repayments upon
                  any dispositions of Property of the Restricted Parties;

            (f)   if required by the Majority Lenders, is subject to the terms
                  of an Intercreditor Agreement entered into with the Agent in
                  form and substance satisfactory to the Majority Lenders,
                  acting reasonably.

1.1.91      "PERSON" or "PERSON" means any individual, corporation, company,
            partnership, unincorporated association, trust, joint venture,
            estate or other judicial entity or any governmental body.

1.1.92      "PLEDGED SHARES" means the Capital Stock of the Restricted Parties
            and other persons that is pledged as part of the Trustee Security
            from time to time.

1.1.93      "PRIME RATE" means, on any day, the greater of:

                  (a)      the annual rate of interest expressed as a percentage
                           per annum in effect on that day as TD's reference
                           rate for commercial loans made by it in Canada in
                           Canadian Dollars; and

                  (b)      the average rate for 30 day Canadian Dollar bankers'
                           acceptances that appears on the Reuters Screen CDOR
                           Page at 10:00 a.m. Toronto time on that day, plus 1%
                           per annum.

1.1.94      "PRIME RATE ADVANCE" means an Advance in Canadian Dollars bearing
            interest based on the Prime Rate and includes deemed Prime Rate
            Advances provided for in this Agreement.

1.1.95      "PROPERTY" means, with respect to any person, any or all of its
            undertaking, property and assets.


<PAGE>

                                     - 25 -

1.1.96      "PROPORTIONATE SHARE" means the percentage of the maximum amount of
            the Credits which a Lender has agreed to advance to the Borrower, as
            set out on Schedule E, which shall be amended by the Agent from time
            to time as other persons become Lenders or the Proportionate Shares
            of Lenders otherwise change.

1.1.97      "PURCHASE MONEY MORTGAGE" means any Encumbrance, including a capital
            lease, created, issued or assumed by any Restricted Party to secure
            indebtedness assumed by that person as part of, or issued or
            incurred to provide funds to pay, and not exceeding 100% of, the
            unpaid purchase price (including installation cost) or construction
            cost of any Property, if the Encumbrance is limited to the Property
            acquired and is created, issued or assumed substantially
            concurrently with the acquisition of the Property or in connection
            with the refinancing of an existing Purchase Money Mortgage, if the
            principal amount has not increased and the Encumbrance continues to
            be limited to that Property. Purchase Money Mortgage also includes
            any other fixed charge over specific limited Property securing term
            debt of a person existing at the time the person is acquired by a
            Restricted Party or assumed by a Restricted Party in connection with
            the acquisition of Property from the person, but not incurred in
            connection with or in anticipation of the acquisition of the person
            or Property.

1.1.98      "RBC" means Royal Bank of Canada, a bank to which the BANK ACT
            (Canada) applies.

1.1.99      "REFERENCE DEBT RATING" means the public rating of the indebtedness
            and liability of the Borrower to the Lenders under the Credits or if
            either Moody's or S&P has not established a rating for indebtedness
            and liability under the Credits, the corporate credit or issuer
            ratings of NSCL established by Moody's or S&P, as the case may be,
            shall apply.

1.1.100     "REGISTER" has the meaning defined in Section 13.2.3.

1.1.101     "REPLACEMENT CONTRACT" means any one or more Contracts (a) entered
            into by a Restricted Party to replace a Material Contract that has
            been terminated or in respect of which a declaration of
            non-performance has been issued or similar step has been taken, (b)
            which provide the Restricted Party with rights, benefits and value
            substantially similar to and on terms and conditions not materially
            less favourable than those contained in the Material Contract being
            replaced and (c) which are entered into concurrently with or before
            a termination, declaration or similar step arising from a breach by
            or other event relating to a Restricted Party or within 30 days of a
            termination, declaration or similar step arising from a breach by or
            other event relating to a Person other than a Restricted Party. A
            Replacement Contract shall be deemed to be a Material Contract and
            shall be deemed to be

<PAGE>

                                     - 26 -

            listed in Part A of Schedule G if the Material Contract that it
            replaces was listed in Part A, and the Material Contract that is
            replaced shall cease to be a Material Contract.

1.1.102     "REQUIREMENT OF LAW" means, as to any person, any law, treaty,
            regulation, ordinance, decree, judgment, order or similar
            requirement made or issued under sovereign or statutory authority
            and applicable to or binding upon that person, or to which that
            person or any of its Property is subject.

1.1.103     "RESTRICTED PARTIES" means NSCL, the Borrower, Norske Skog Canada
            Pulp Operations Limited, Elk Falls Pulp and Paper Limited, Norske
            Skog Canada Sales Inc., Norske Skog Canada Pulp Sales Inc., Norske
            Skog Pulp Sales (Japan) Ltd., Norske Skog Canada (Japan) Ltd., NSCL
            Holdings Inc. and Norske Skog Paper Company, and such other
            Subsidiaries of NSCL as may become Restricted Parties from time to
            time.

1.1.104     "S&P" means Standard & Poor's Corporation.

1.1.105     "SCHEDULE" means the designated schedule of this Agreement.

1.1.106     "SECTION" means the designated section of this Agreement.

1.1.107     "SECURED DEBT RATIO" means, at any time, the ratio of (a) the amount
            of Funded Debt that is secured by any Encumbrance to (b) the
            aggregate of all Funded Debt plus NSCL's shareholders' equity
            determined in accordance with GAAP on a consolidated basis.

1.1.108     "SECURITY" means the security held from time to time by or on behalf
            of the Lenders (including but not limited to the Trustee Security),
            securing or intended to secure repayment of the Obligations,
            including without limitation the security described in Section 6.1.

1.1.109     "SPECIAL DISTRIBUTION" means a distribution by NSCL to its
            shareholders of approximately $1,490,000,000 in accordance with the
            plan of arrangement under section 252 of the COMPANY ACT (British
            Columbia) which was approved by NSCL's shareholders on 31 May 2001
            and by the British Columbia Supreme Court on 1 June 2001.

1.1.110     "SPECIAL PERMITTED SENIOR INDEBTEDNESS" means Debt in an aggregate
            principal amount of up to $50,000,000 outstanding at any time that
            is Permitted Senior Indebtedness but may be secured by the Trustee
            Security and may be payable before 14 August 2007.

<PAGE>

                                     - 27 -

1.1.111     "SUBSIDIARY" means, with respect to a Restricted Party, a subsidiary
            as defined in the CANADA BUSINESS CORPORATIONS ACT as of the date of
            this Agreement, and any partnership or other organization in which
            the Restricted Party or any of its Subsidiaries has the right to
            make or control management decisions.

1.1.112     "SUCCESSOR AGENT" has the meaning defined in Section 12.11.

1.1.113     "SWAP" means any interest rate swap, basis swap, forward rate
            transaction, currency hedging or swap transaction, cap transaction,
            floor transaction, collar transaction, futures contract, or other
            similar transaction, or any option or derivative with respect to
            such a transaction or combination of any such transactions, whether
            relating to interest rates, foreign exchange, commodities or
            otherwise.

1.1.114     "SYNDICATION AGENTS" means Merrill Lynch & Co. and RBC Dominion
            Securities in their role as syndication agents for the Lenders.

1.1.115     "TAXES" means all taxes, levies, imposts, stamp taxes, duties,
            deductions, withholdings, rates, assessments, fees, dues and similar
            governmental impositions payable, levied, collected, withheld,
            imposed or assessed as of the date of this Agreement or at any time
            in the future, and "TAX" shall have a corresponding meaning.

1.1.116     "TERM CREDIT A means the credit of up to $150,000,000 or the US
            Dollar equivalent thereof in favour of the Borrower which is
            established by this Agreement for the purposes specified in Section
            3.3.

1.1.117     "TERM CREDIT A LENDERS" means the Lenders who have provided
            Commitments relating to Term Credit A as more particularly described
            in Schedule E.

1.1.118     "TERM CREDIT B" means the credit of up to US $200,000,000 in favour
            of the Borrower which is established by this Agreement to assist in
            funding the Special Distribution and related fees.

1.1.119     "TERM CREDIT B LENDERS" means the Lenders who have provided
            Commitments relating to Term Credit B as more particularly described
            in Schedule E.

1.1.120     "TD" means The Toronto-Dominion Bank, a bank to which the BANK ACT
            (Canada) applies.

1.1.121     "THRESHOLD AMOUNT" means, while the Pacifica Notes are outstanding,
            the aggregate of:


<PAGE>

                                     - 28 -

            (a)   the greater of (i) $430,000,000 and (ii) the sum of 75% of the
                  net book value of the accounts receivable of NSCL and its
                  "Restricted Subsidiaries" as defined under the Pacifica
                  Indenture plus 50% of the net book value of inventory of NSCL
                  and its Restricted Subsidiaries plus $290,000,000;

            (b)   $40,000,000; and

            (c)   the amount of Advances outstanding under the Operating Credit
                  that are trade letters of credit and standby letters of credit
                  incurred in the ordinary course of business and the amount of
                  Bankers' Acceptances outstanding under the Credits that are
                  incurred in the ordinary course of business, up to an
                  aggregate principal amount of $5,000,000 outstanding at any
                  one time;

            and, if the Pacifica Notes are no longer outstanding and the Bridge
            Loan and/or the NSCL Notes are outstanding, means such higher amount
            as the Agent determines is permitted based on the terms of the
            Bridge Loan and/or the NSCL Notes that correspond with clauses (i),
            (ix) and (xi) of the definition of "Permitted Indebtedness" in the
            Pacifica Indenture.

1.1.122     "TOTAL INTEREST EXPENSE" means, for any particular period, without
            duplication, the aggregate expense incurred by NSCL on a
            consolidated basis (omitting amounts that are not attributable to
            Restricted Parties) for interest and equivalent costs of borrowing
            (taking into account the effect of any relevant Swaps), including
            but not limited to (i) bankers' acceptance fees, (ii) discounts on
            bankers' acceptances, (iii) the interest portion of any capital
            lease, and (iv) all fees and other compensation paid to any person
            that has extended credit to the Restricted Parties other than any
            upfront, extension and similar non-recurring fees paid to the Agent
            or Lenders, in each case whether or not actually paid (unless paid
            by the issuance of securities constituting Debt), and calculated in
            accordance with GAAP.

1.1.123     "TRUSTEE" means The Canada Trust Company in its capacity as trustee
            under the Trustee Security from time to time, and any successor
            trustee.

1.1.124     "TRUSTEE SECURITY" means the trust deeds granted by the Restricted
            Parties to the Trustee and the pledges of Pledged Shares,
            assignments of Material Contracts and other collateral security for
            the trust deeds.

1.1.125     "US AGENT" means Toronto Dominion (Texas), Inc. or any successor
            appointed in accordance with this Agreement.

1.1.126     "US DOLLARS" and "US $" mean lawful money of the United States of
            America.

<PAGE>

                                     - 29 -

1.1.127     "US PRIME RATE" means, on any day, the greater of:

            (a)   the annual rate of interest (expressed as a percentage per
                  annum on the basis of a calendar year) announced by TD's New
                  York branch on that day as its reference rate for commercial
                  loans made in the United States of America in US Dollars; and

            (b) the Federal Funds Effective Rate plus 1% per annum.

1.1.128     "US PRIME RATE ADVANCE" means an Advance in US Dollars bearing
            interest based on the US Prime Rate and includes deemed US Prime
            Rate Advances provided for in this Agreement.

1.1.129     "WELFARE PLAN" means any medical, health, hospitalization, insurance
            or other employee benefit or welfare plan, agreement or arrangement
            applicable to employees of any Restricted Party.


                                   ARTICLE II
                                OPERATING CREDIT

2.1         AMOUNT AND AVAILMENT OPTIONS

2.1.1       Upon and subject to the terms and conditions of this Agreement, the
Operating Credit Lenders agree to provide a credit for the use of the
Borrower in the amount of up to Cdn. $250,000,000 or the US Dollar equivalent
thereof, which is referred to collectively as the Operating Credit and is
comprised of a tranche of up to Cdn.$220,000,000 referred to as Operating
Credit 1 and a tranche of up to Cdn. $30,000,000 referred to as Operating
Credit 2. Subject to Section 8.1, Advances under Operating Credit 1 will be
made by the Operating Credit Lenders and Advances under Operating Credit 2
will be made by RBC. The Borrower may from time to time with the agreement of
RBC, the Agent and the proposed replacement, designate another Operating
Credit Lender to replace RBC in making Advances under Operating Credit 2. In
that case, references in this Agreement to RBC in respect of Operating Credit
2 shall be interpreted as referring to the replacement.

2.1.2       At the option of the Borrower, Operating Credit 1 may be used by
requesting Prime Rate Advances to be made by the Operating Credit Lenders, by
requesting Base Rate Advances to be made by the Operating Credit Lenders, by
presenting orders to the Operating Credit Lenders for acceptance as Bankers'
Acceptances, by requesting that LIBOR Advances be made by the Operating
Credit Lenders, or by requesting that L/Cs be issued by the Issuing Bank on
behalf of all Operating Credit Lenders. The aggregate face amount of L/Cs

<PAGE>

                                     - 30 -

outstanding under Operating Credit 1 at any time shall not, however, exceed
$50,000,000 or the US Dollar equivalent thereof.

2.1.3       Operating Credit 2 may be used by the Borrower incurring overdrafts
in its accounts with RBC, which shall be deemed to be Prime Rate Advances in
the case of Canadian Dollar overdrafts and Base Rate Advances in the case of
US Dollar overdrafts, by presenting orders to RBC for acceptance as Bankers'
Acceptances, by requesting that LIBOR Advances be made by RBC or by
requesting that L/Cs be issued by RBC. The aggregate face amount of L/Cs
outstanding under Operating Credit 2 at any time shall not, however, exceed
$10,000,000 or the US Dollar equivalent thereof.

2.2         REVOLVING CREDIT

            The Operating Credit is a revolving credit and the principal amount
of any Advance under the Operating Credit that is repaid may be reborrowed, if
the Borrower is otherwise entitled to an Advance under the Operating Credit.

2.3         USE OF OPERATING CREDIT

            The Operating Credit shall be used to assist in financing the
general corporate requirements of the Restricted Parties, including to assist in
financing the Acquisition (including related expenses) and refinancing the
Pacifica Bank Debt.

2.4         TERM AND REPAYMENT

            The Operating Credit shall be repaid in full and cancelled on or
before 30 June 2004. If no Event of Default or Pending Event of Default has
occurred and is continuing, the Borrower may request that the maturity date of
the Operating Credit be extended by successive one year periods in accordance
with the following procedures:

2.4.1    The Borrower shall, if it wishes to extend the maturity date, make such
request to each Operating Credit Lender by written notice given to the Agent not
earlier than 1 April nor later than 30 April in each year. Each Operating Credit
Lender shall provide a written response to such request to the Agent within 30
days after receiving the request. If any Operating Credit Lender fails to
respond, it shall be deemed to have declined to grant any extension (and shall
have no liability for failing to respond). Promptly thereafter, the Agent will
notify the Borrower of the response of the Operating Credit Lenders, which
notice shall include the names of all Operating Credit Lenders who declined or
were deemed to have declined to grant such extension (the "DECLINING LENDERS").

2.4.2 If all of the Lenders agree to extend the maturity date, the Conversion
Date shall be extended by one year from the then applicable maturity date.


<PAGE>

                                     - 31 -

2.4.3   If the aggregate amount of the Commitments in respect of the Operating
Credit of all Lenders who agree to extend the maturity date (the "ACCEPTING
LENDERS") is less than or equal to two-thirds of the aggregate Commitments in
respect of the Operating Credit of all Lenders then in effect, the maturity date
shall not be extended.

2.4.4   If the aggregate amount of the Commitments of the Accepting Lenders
exceeds two-thirds of the aggregate Commitments of all Lenders in respect of the
Operating Credit then in effect, unless the Borrower elects not to extend the
maturity date by giving a further written notice to the Agent to that effect
before the then applicable maturity date, the maturity date shall be extended by
one year from the then applicable maturity date provided that the Borrower has,
before the then applicable maturity date, replaced or cancelled the Commitments
in respect of the Operating Credit of all Declining Lenders in the following
manner:

            (a)   the Operating Borrower may negotiate an agreement with:

                  (i)      one or more of the Accepting Lenders, or

                  (ii)     one or more other financial institutions ("NEW
                           LENDERS") which have been identified by the Borrower
                           (with the assistance of the Agent, if requested) and
                           which are acceptable to the Accepting Lenders, acting
                           reasonably,

                  to assume the Commitments of the Declining Lenders upon
                  payment to the Declining Lenders of all amounts owed to the
                  Declining Lenders under or in connection with the Operating
                  Credit, and in that event an assignment by the Declining
                  Lenders to the Accepting Lenders or the New Lenders will be
                  deemed to have occurred in accordance with the terms of the
                  form of Assignment Agreement; and

            (b)   to the extent the Commitments of the Declining Lenders have
                  not been fully assumed by the Accepting Lenders and the New
                  Lenders pursuant to paragraph (a) above, the Borrower shall
                  cancel the Commitments of the Declining Lenders and pay to the
                  Declining Lenders on the latest maturity date to which the
                  Declining Lenders have previously agreed, all amounts owed to
                  the Declining Lenders under or in connection with the
                  Operating Credit, without penalty but subject to payment of
                  any losses, costs and expenses payable to the Declining
                  Lenders pursuant to this Agreement.

2.5         INTEREST RATES AND FEES


<PAGE>

                                     - 32 -

            Interest rates on Prime Rate Advances, Base Rate Advances and LIBOR
Advances and the rates for calculation of Bankers' Acceptance Fees and L/C Fees
shall vary according to the Reference Debt Ratings. The rate for calculation of
Bankers' Acceptance Fees and L/C Fees shall be the Applicable Fee Rate per annum
from time to time in effect. Interest shall accrue and be payable on Prime Rate
Advances and Base Rate Advances at the Prime Rate and Base Rate, respectively,
per annum plus the Applicable Margin from time to time in effect. Interest shall
accrue and be payable on LIBOR Advances at the LIBO Rate per annum for the
applicable LIBOR Period plus the Applicable Margin from time to time in effect.
Any change in the Applicable Fee Rate or Applicable Margin shall take effect as
provided in the definitions of those terms.

            Interest and fees for Operating Credit 1 shall be promptly
distributed by the Agent to the Operating Credit Lenders based on their
respective Proportionate Shares as adjusted in accordance with Section 8.2.
Subject to Section 8.1, interest for Operating Credit 2 shall be paid to RBC for
its own account. In addition, a fronting fee calculated in the same manner as
the L/C Fee but at a rate of 0.125% per annum on the amount of each L/C issued
under Operating Credit 1 will be payable to the Issuing Bank for its own
account.

2.6         COMMITMENT FEE

            The Borrower shall pay commitment fees based on the daily undrawn
portion of Operating Credits 1 and 2, respectively, at the following rates,
which shall vary according to the percentage of the aggregate amount of the
Operating Credit which is drawn and the Applicable Fee Rate from time to time:

<TABLE>
<CAPTION>
                                                      Applicable Commitment Fee
            Percentage which is Drawn                 (% of Applicable Fee Rate)

            <S>                                       <C>
            LESS THAN OR EQUAL TO =33%                          35%
            GREATER THAN 33 LESS THAN OR EQUAL TO =67%          30%
            GREATER THAN 67%                                    25%
</TABLE>

            The commitment fee shall be calculated daily beginning on 14 August
2001 and shall be payable quarterly in arrears on the third Business Day after
the end of each calendar quarter, with the first payment to be made on 3 October
2001. Commitment fees for Operating Credit 1 shall be promptly distributed by
the Agent to the Operating Credit Lenders based on their respective
Proportionate Shares as adjusted in accordance with Section 8.2. Subject to
Section 8.1, commitment fees for Operating Credit 2 shall be paid to RBC for its
own account.

2.7         OTHER FEES


<PAGE>

                                     - 33 -

            The Borrower shall also pay agency and other fees in respect of all
Credits to the Agent in accordance with the Fee Agreement and to TD, RBC and
Merrill Lynch Capital Canada Inc. in accordance with the fee letter dated 15 May
2001 as amended by letter dated 25 July 2001 from those Lenders to NSCL.

2.8         EXISTING L/CS

            The letters of credit listed on Schedule L, which were issued by RBC
pursuant to its credit arrangements with NSCL before the date of this Agreement,
shall be deemed to have been issued as L/Cs and to be Advances under Operating
Credit 1 in the case of the first letter of credit listed on Schedule L and
Operating Credit 2 in the case of the other letters of credit. The Borrower
hereby assumes all debts, liabilities and obligations of NSCL under or in
connection with the letters of credit listed on Schedule L. The Borrower shall,
concurrently with the first Advance under this Agreement, pay the Agent for the
accounts of the Operating Credit Lenders and the Issuing Bank L/C Fees and
fronting fees that would have been paid to them had those L/Cs been issued on
the date of the first Advance for terms from that date to the respective expiry
dates of the L/Cs.


                                   ARTICLE III
                                  TERM CREDIT A

3.1         AMOUNT AND AVAILMENT OPTIONS

            Upon and subject to the terms and conditions of this Agreement, the
Term Credit A Lenders agree to provide a credit for the use of the Borrower in
the amount of up to Cdn. $150,000,000 or the US Dollar equivalent thereof. At
the option of the Borrower, Term Credit A may be used by requesting Prime Rate
Advances to be made by the Term Credit A Lenders, by requesting Base Rate
Advances to be made by the Term Credit A Lenders, by presenting orders to the
Term Credit A Lenders for acceptance as Bankers' Acceptances or by requesting
that LIBOR Advances be made by the Term Credit A Lenders.

            Term Credit A may be drawn only in a single Advance, other than
Advances that are rollovers or conversions. No Advance under Term Credit A,
other than a rollover or conversion, will be available after 31 August 2001. Any
amount under Term Credit A which is not drawn at the time of the initial Advance
under Term Credit A or which is not drawn on or before 31 August 2001 will be
permanently cancelled. If NSCL issues the NSCL Notes on or before the date of
the initial Advance with gross proceeds greater than US $200,000,000, the
maximum amount available under Term Credit A will be reduced by the Canadian
Dollar equivalent of the amount by which the gross proceeds of the NSCL Notes
exceed US $200,000,000.


<PAGE>

                                     - 34 -

3.2         NON-REVOLVING CREDIT

            Term Credit A is a non-revolving credit and the principal amount of
any Advance under Term Credit A that is repaid may not be reborrowed.

3.3         USE OF TERM CREDIT A

            Term Credit A shall be used to assist in funding the Special
Distribution and related expenses and shall be drawn only on the date the
Special Distribution is to be paid, which for greater certainty includes the
date on which NSCL determines to put its transfer agent in funds for the purpose
of paying the Special Distribution.

3.4         TERM AND REPAYMENT

            Term Credit A shall be repaid and permanently reduced by quarterly
instalments on the last Business Days of each of March, June, September and
December of each year, beginning in December 2001, in the following percentages
of the principal amount of the Advances under Term Credit A as of 1 September
2001:

<TABLE>
<CAPTION>
            Dates                                    Amount of Each Payment
            -----                                    ----------------------
            <S>                                      <C>
            December 2001 to June 2003               2.5%
            September 2003 to June 2004              5.0%
            September 2004 to June 2005              6.25%
            September 2005 to June 2006              9.375%
</TABLE>

            In addition to the scheduled repayments and reductions, the
aggregate amount available under Term Credit A and Term Credit B shall be repaid
and permanently reduced in accordance with Section 5.1. Term Credit A shall, in
any event, be repaid in full and cancelled on or before 30 June 2006.

3.5         INTEREST RATES AND FEES

            Interest and fees shall be payable on Advances under Term Credit A
at the same rates as specified in Section 2.5 in relation to Advances under the
Operating Credit.

            Interest and fees shall be distributed by the Agent to the Term
Credit A Lenders based on their respective Proportionate Shares.

3.6         COMMITMENT FEE


<PAGE>

                                     - 35 -

            The Borrower shall pay a commitment fee based on the daily undrawn
portion of Term Credit A at a rate equal to 0.7875% per annum. The commitment
fee shall be calculated daily from and including 14 August 2001 to but excluding
the date of the initial Advance or cancellation of Term Credit A, and shall be
payable on 31 August 2001 or the date of the initial Advance, whichever is
earlier. The commitment fee shall be promptly distributed by the Agent to the
Term Credit A Lenders based on their respective Proportionate Shares.


                                   ARTICLE IV
                                  TERM CREDIT B

4.1         AMOUNT AND AVAILMENT OPTIONS

            Upon and subject to the terms and conditions of this Agreement, the
Term Credit B Lenders agree to provide a credit for the use of the Borrower in
the amount of up to US $200,000,000. At the option of the Borrower, Term Credit
B may be used by requesting US Prime Rate Advances to be made by the Term Credit
B Lenders or by requesting that LIBOR Advances be made by the Term Credit B
Lenders.

            Term Credit B may be drawn only in a single Advance at the time of
the initial Advance under this Agreement, other than Advances that are rollovers
or conversions. Any amount under Term Credit B which is not drawn at the time of
the initial Advance under this Agreement will be permanently cancelled.

4.2         NON-REVOLVING CREDIT

            Term Credit B is a non-revolving credit and the principal amount of
any Advance under Term Credit B that is repaid may not be reborrowed.

4.3         USE OF TERM CREDIT B

            Term Credit B shall be used to assist in funding the Special
Distribution and related expenses.

4.4         TERM AND REPAYMENT

            Term Credit B shall be repaid and permanently reduced by instalments
that are each equal to 0.25% of the principal amount of the Advances under Term
Credit B as of 1 September 2001. Payments shall be made on the last Business
Days of each of March, June, September and December in each year, beginning on
28 September 2001. Term Credit B shall, in any event, be repaid in full and
cancelled on or before 14 August 2007. In addition


<PAGE>

                                     - 36 -

to the scheduled repayments and reductions, the aggregate amount available under
Term Credit A and Term Credit B shall be repaid and permanently reduced in
accordance with Section 5.1.

4.5         INTEREST RATES

            Interest rates on US Prime Rate Advances and LIBOR Advances shall
vary according to the Reference Debt Ratings. Interest shall accrue and be
payable on US Prime Rate Advances at the US Prime Rate per annum plus the
Applicable Margin from time to time in effect. Interest shall accrue and be
payable on LIBOR Advances at the LIBO Rate per annum for the applicable LIBOR
Period plus the Applicable Margin from time to time in effect. Any change in the
Applicable Margin shall take effect as provided in the definition of that term.

            Interest and fees for Term Credit B shall be promptly distributed by
the Agent to the Term Credit B Lenders based on their respective Proportionate
Shares.

4.6         ESCROW FOR ADVANCE

            The initial Advance under Term Credit B shall be made in US Dollars
upon satisfaction of all conditions precedents in Sections 7.1 and 7.3, but
shall not be released to the Borrower until the date for payment of the Special
Distribution upon the Agent being satisfied that the Special Distribution will
be paid on that date, including being satisfied that NSCL has established the
payment date for the Special Distribution and that NSCL has notified the Toronto
Stock Exchange of the payment date. Until then, the proceeds of the Advance
shall be deposited with and held by the Agent in escrow and, without limiting
the Lenders' other rights, may be set off against the Obligations relating to
the Advance (and returned to the respective Term Credit B Lenders) upon any
Event of Default occurring, or if the Special Distribution is not paid on the
date for payment established by NSCL's board of directors.


                                    ARTICLE V
                             PREPAYMENTS OF CREDITS

5.1         PREPAYMENTS OF CREDITS

5.1.1 It shall be an Event of Failure under this Agreement (and is acknowledged
by the Lenders to be an event of failure within the meaning of subparagraph
212(1)(b)(vii) of the INCOME TAX ACT (Canada)) if:


<PAGE>

                                     - 37 -

            (a)   a Restricted Party sells or otherwise disposes of any part of
                  its Property (including Capital Stock of any other person)
                  having a fair market value in excess of an aggregate for all
                  Restricted Parties during the term of this Agreement of 12.5%
                  of the Consolidated Net Tangible Assets valued immediately
                  before any disposition, other than dispositions to another
                  Restricted Party, sales of inventory in the ordinary course of
                  its business and the redemption of the shares of Pope & Talbot
                  Mackenzie Pulp Operations Ltd. referred to in Section
                  1.1.87(m), if the proceeds are used to repay the debt secured
                  by the pledge of those shares;

            (b)   any Property of a Restricted Party is expropriated, condemned,
                  destroyed, damaged or otherwise lost;

            (c)   the Acquisition is not completed on or before 31 August 2001;
                  or

            (d)   a Restricted Party incurs any Debt, other than the
                  Obligations, Debt contemplated in Section 1.1.87(l), the
                  Bridge Loan and the NSCL Notes, at a time when the Funded Debt
                  Ratio is greater than 50% after giving effect to any
                  additional Debt.

5.1.2    If an Event of Failure occurs, the Borrower shall offer to repay
         Advances under Term Credits A and B equal to:

            (a)   in the case of an Event of Failure under Section 5.1.1(a),
                  100% of the proceeds of all sales and other dispositions of
                  Property in excess of the threshold specified in Section
                  5.1.1(a) above, net of all direct out of pocket costs of
                  disposition and net of an allowance determined by NSCL's
                  auditors and approved by the Agent for future income tax
                  payable by the Restricted Parties as a result of any capital
                  gain or income from the disposition, except to the extent such
                  net proceeds are paid on account of the obligations secured by
                  a Permitted Encumbrance having priority over the Security or
                  are used to acquire revenue producing Property within the core
                  business of the Restricted Parties within 12 months after the
                  receipt thereof;

            (b)   in the case of an Event of Failure under Section 5.1.1(b),
                  100% of the proceeds of all insurance (other than liability or
                  business interruption insurance) and other compensation for
                  the expropriation, condemnation, destruction, damage or other
                  loss of any Property of a Restricted Party, except to the
                  extent such proceeds are paid on account of the obligations
                  secured by a Permitted Encumbrance having priority over the
                  Security, are used to repair or replace the Property
                  expropriated, condemned, destroyed, damaged or otherwise lost,
                  or are used to acquire revenue producing Property within the

<PAGE>

                                     - 38 -

                  core business of the Restricted Parties, in each case within
                  12 months (or such longer time as may be reasonably necessary
                  in the case of repair or replacement) after the receipt
                  thereof;

            (c)   in the case of an Event of Failure under Section 5.1.1(c),
                  $100,000,000 or the equivalent thereof in US Dollars
                  (representing a portion of the proceeds of the sale of the
                  Capital Stock of Norske Skog Canada Mackenzie Pulp Limited
                  which were received on 15 June 2001 and retained by NSCL in
                  anticipation of funding the Acquisition) if the Acquisition
                  has not been completed on or before 31 August 2001;

            (d)   in the case of an Event of Failure under Section 5.1.1(d),
                  100% of the proceeds (net of all direct out of pocket costs of
                  issuance) from any issuance of Debt other than the
                  Obligations, Debt contemplated in Section 1.1.87(l), the
                  Bridge Loan and the NSCL Notes.

The offer to repay Advances shall be made by the Borrower to the Agent
immediately upon expiry of the respective periods mentioned in items (a), (b)
and (c) above or immediately upon receipt of proceeds in the case of item (d)
above, and payment shall be made not later than the fourth Business Day after
acceptance of the offer. The offer shall be deemed to be accepted by the Term
Credit A Lenders unless the Term Credit A Lenders unanimously agree otherwise.
The offer shall be deemed to be accepted by the Term Credit B Lenders unless
Term Credit B Lenders holding, in the aggregate, a minimum of 66 2/3% of the
outstanding amount of the Commitments for Term Credit B agree otherwise (without
prejudice to any right of the Term Credit B Lenders to decline payment as
specified in Section 5.1.7). If the offer is declined by the Term Credit A
Lenders or Term Credit B Lenders (other than as specified in Section 5.1.7), the
proceeds that would otherwise be paid to the Lenders which decline payment may
be retained by the relevant Restricted Party or shall be used in accordance with
any condition agreed upon by the Lenders and the Borrower as a basis of the
Lenders' agreement to decline repayment of Advances. The Majority Lenders may
require that proceeds referred to in item (b) above be immediately used to repay
Term Credits A and B if:

            (e)   an Event of Default or Pending Event of Default has occurred
                  and is continuing; or

            (f)   the Majority Lenders determine, acting reasonably, that the
                  proceeds of such insurance together with other resources
                  available and likely to become available to the Restricted
                  Parties (the use of which would not contravene this Agreement)
                  are not sufficient to fully repair or replace the Property in
                  respect of which the insurance proceeds are payable within the
                  remaining term of the then-outstanding Credits or within 365
                  days, whichever is less.

<PAGE>

                                     - 39 -

5.1.3    The following amounts shall be used to repay the Operating Credit,
without prejudice to the Borrower's right to obtain further Advances under the
Operating Credit, unless otherwise specified in this Agreement:

            (a)   the proceeds referred to in Section 5.1.2(a), to the extent
                  that they are not immediately used to repay Term Credits A and
                  B, to repay obligations secured by a Permitted Encumbrance
                  having priority over the Security, or to acquire revenue
                  producing Property within the core business of the Restricted
                  Parties;

            (b)   the proceeds referred to in Section 5.1.2(b), to the extent
                  that they are not immediately used to repay Term Credits A and
                  B, to repay obligations secured by a Permitted Encumbrance
                  having priority over the Security, or to repair or replace the
                  Property expropriated, condemned, destroyed, damaged or
                  otherwise lost, and are not required to be paid to the Trustee
                  under Section 10.6;

            (c)   all proceeds of business interruption insurance held by a
                  Restricted Party.

If nothing is outstanding under the Operating Credit, any remaining amounts
shall be held by the Agent as part of the Security for the Obligations until
applied to payment of the Obligations or released to the affected Restricted
Party. The Agent shall place all such funds in an interest-bearing account with
the interest thereon to accrue to the benefit of the affected Restricted Party.

5.1.4    The proceeds of the NSCL Notes shall be used to repay the Bridge Loan
if it has been funded and otherwise shall be used to assist in financing the
Acquisition, refinancing the Pacifica Bank Debt and paying relating financing
and restructuring transaction costs. If the gross proceeds of the NSCL Notes are
greater than the outstanding unpaid principal of the Bridge Loan (including any
interest added to principal), Term Credit A shall be repaid and permanently
reduced by the Canadian Dollar equivalent of the amount by which the gross
proceeds of the NSCL Notes exceed the outstanding unpaid principal of the Bridge
Loan, and the repayment and reduction shall be applied against scheduled
repayments and reductions of Term Credit A in inverse order of due date.

5.1.5    In addition to other required repayments and reductions, and except for
proceeds that are used to repay the Bridge Loan, the aggregate amount available
under Term Credits A and B shall, if the Funded Debt Ratio is greater than 50%
after giving effect to any additional Debt, be repaid and permanently reduced by
100% of the proceeds (net of all direct out of pocket costs of issuance) from
any issuance of Capital Stock, any right to acquire Capital Stock or any
equity-equivalent security. Such payments shall be made on receipt of the
proceeds and shall be applied on a PRO RATA basis to Term Credit A and Term
Credit B and further on a PRO RATA basis against scheduled repayments and
reductions of the respective


<PAGE>

                                     - 40 -

Credits, or as otherwise agreed to by the Term Credit A Lenders and the Term
Credit B Lenders.

5.1.6    Notwithstanding the principal payments contemplated in Sections 4.4 and
5.1.5, the aggregate amount of all mandatory principal payments under Term
Credit B within the first five years following the date of the initial Advance
of Term Credit B (which will occur on 14 August 2001 subject to satisfaction of
all conditions precedent) shall not exceed 25% of the principal amount of Term
Credit B, except for payments required as a result of an Event of Default or
Event of Failure. If the preceding sentence would prevent a mandatory payment in
respect of Term Credit B, the Borrower may make a voluntary payment in respect
of Term Credit B, failing which the principal payment that would have been paid
in respect of Term Credit B if not prevented by the preceding sentence shall
instead be paid in respect of Term Credit A as long as it remains outstanding
and thereafter shall be applied to repay and permanently reduce the Operating
Credit.

5.1.7    So long as any Advances or undrawn Commitments are outstanding under
Term Credit A, each Term Credit B Lender shall have the right to refuse all or
any portion of any voluntary or mandatory prepayments applicable to its Advances
under Term Credit B. Any amount that is refused by a Term Credit B Lender shall
be used to repay and permanently reduce Term Credit A.

5.1.8    Voluntary prepayments on Term Credit A and/or Term Credit B, other than
those contemplated in Section 5.1.6, shall be applied to Term Credit A and Term
Credit B on a PRO RATA basis, based on the outstanding principal amount at the
time of payment. Voluntary prepayments shall be applied to reduce the scheduled
instalments of Term Credit A and Term Credit B, including the payment due on
maturity, in inverse order of due date. Mandatory prepayments and proceeds of
offers to repay Advances upon an Event of Failure shall be applied to Term
Credit A and Term Credit B PRO RATA and shall be applied to reduce the scheduled
instalments of Term Credit A and Term Credit B, including the payment due on
maturity, PRO RATA within each Credit, or as otherwise agreed by the respective
Lenders. If any scheduled instalment of Term Credit B is prevented by reason of
Section 5.1.6, the reduction that would otherwise have been made to that
instalment shall instead be made to the corresponding scheduled instalment of
Term Credit A.

5.1.9    The provisions of this Section concerning use of proceeds shall not
affect any provision of this Agreement that requires the consent of the Lenders
or any of them to any disposition, incurrence of Debt or other matter
contemplated above.


<PAGE>

                                     - 41 -


                                 ARTICLE VI
                     SECURITY AND EXCHANGE RATE FLUCTUATIONS

6.1         SECURITY

6.1.1    The Security includes the following, all in form and substance
satisfactory to the Lenders and subject only to Permitted Encumbrances:

            (a)   a $5,000,000,000 trust deed granted by each Restricted Party
                  in favour of the Trustee, secured by a fixed charge over all
                  freehold and leasehold real property and all equipment and a
                  security interest and floating charge over all other Property,
                  together with such other documents as the Lenders may require
                  from time to time to charge Property located outside of
                  British Columbia;

            (b)   debentures issued under each trust deed and pledged in favour
                  of the Agent for the benefit of the Lenders;

            (c)   pledges in favour of the Trustee of all Capital Stock of the
                  Restricted Parties other than NSCL that are owned by the
                  Restricted Parties (including NSCL) from time to time;

            (d)   pledges in favour of the Trustee of all Capital Stock of
                  persons other than Restricted Parties (excluding Pope & Talbot
                  Mackenzie Pulp Operations Ltd. but including Pope & Talbot,
                  Inc.) that are owned by the Restricted Parties from time to
                  time;

            (e)   specific assignments by way of security of such Material
                  Contracts as are designated by the Agent from time to time, by
                  the relevant Restricted Parties in favour of the Trustee;

            (f)   unconditional guarantees of the Obligations by each of the
                  Restricted Parties, excluding the Borrower, which shall be
                  unlimited except for limits imposed by applicable law.

            Notwithstanding the foregoing, but subject to compliance with
Sections 10.5.3(d) and 10.5.3(e), the Restricted Parties shall not be required
to deliver Security documents in a form customarily used in jurisdictions
outside Canada, California and Delaware or arrange registrations of the Security
outside Canada, California and Delaware as a condition precedent to the initial
Advance under this Agreement, but shall cause such documents to be delivered
immediately upon request by the Agent, together with all opinions and supporting
documents that the Agent reasonably requires.

            Notwithstanding Section 6.1.1(d), if NSCL notifies the Agent that it
wants to sell Capital Stock of Pope & Talbot, Inc., then provided an Event of
Default has not occurred and


<PAGE>

                                     - 42 -

is continuing the Agent shall promptly release such Capital Stock from the
Security if the sale price per share equals or exceeds US $10, but if the sale
price per share is less than US $10, then such release shall be in the
discretion of the Agent acting reasonably.

            Except for the companies listed in Schedule I (other than any
Restricted Parties), if at any time NSCL owns, establishes or acquires a
Subsidiary that is wholly owned by NSCL, directly or indirectly (including but
not limited to those that are acquired through the Acquisition), NSCL shall
immediately cause that Subsidiary to become a Restricted Party, adopt this
Agreement by delivering an agreement in the form of Schedule B so as to be bound
by all of the terms applicable to Restricted Parties as if it had executed this
Agreement as a Restricted Party, and deliver a guarantee and other security
documents similar to those delivered by other Restricted Parties, which shall
become part of the Security. NSCL shall also deliver or cause the delivery of a
pledge of all of the Capital Stock of the new Subsidiary as part of the Trustee
Security and cause the delivery of such legal opinions and other supporting
documents as the Agent may reasonably require. In connection with the
Acquisition, NSCL shall deliver a pledge of all Capital Stock of Pacifica
concurrently with the completion of the Acquisition and shall cause all other
requirements of this paragraph to be complied with in respect of Pacifica and
its wholly-owned Subsidiaries (including but not limited to Pacifica Papers
Sales Ltd., Pacifica Poplars Ltd., Pacifica Papers Kabushiki Kaisha, Pacifica
Papers U.S. Inc., Pacifica Poplars Inc. and Pacifica Papers Sales Inc.) and
Pacifica Papers Co. LP concurrently with the completion of the amalgamation of
NSCL with Pacifica.

            If at any time any Restricted Party owns or obtains an interest in a
person that is not a wholly owned Subsidiary, other than Powell River Energy
Inc., NSCL shall cause that interest to immediately be pledged as part of the
Trustee Security and cause the delivery of such legal opinions and other
supporting documents as the Agent may reasonably require.

            If at any time all of the Capital Stock of a Restricted Party other
than the Borrower or NSCL is sold in accordance with the terms of this
Agreement, other than to another Restricted Party, then if no Event of Default
or Pending Event of Default has occurred and is continuing, the Restricted Party
of which the Capital Stock has been sold and any wholly-owned Subsidiary thereof
that is a Restricted Party shall, on request by NSCL, cease to be a Restricted
Party and the Agent shall deliver or direct the Trustee to deliver such releases
of the Security, including guarantees, as may reasonably be required to release
the obligations of those Restricted Parties. The Agent shall also discharge any
Security (or direct the Trustee to do so) to the extent necessary to allow any
Restricted Party to complete any sale or other disposition of Property permitted
by this Agreement.

6.2         OBLIGATIONS SECURED BY THE TRUSTEE SECURITY

6.2.1 Debentures shall be issued by the Restricted Parties under their
respective trust deeds and pledged to the Agent to secure the Obligations up to
the Threshold Amount and


<PAGE>

                                     - 43 -

the Other Secured Obligations (including guarantees by Restricted Parties of
Other Secured Obligations incurred by other Restricted Parties) equally and
ratably with each other but in priority to any other debts, liabilities and
obligations secured by the Trustee Security. Out of an abundance of caution
(recognizing that the Restricted Parties are not permitted to incur secured
Funded Debt in excess of the Threshold Amount if the Acquisition is completed),
further debentures shall be issued by the Restricted Parties under their
respective trust deeds and pledged to the Agent to secure the Obligations in
excess of the Threshold Amount, equally and ratably with the debts, liabilities
and obligations of the Restricted Parties under or in connection with the
Pacifica Notes, the Bridge Loan and/or the NSCL Notes if the Pacifica Notes, the
Bridge Loan and/or the NSCL Notes are required to be secured under their terms.
If the Acquisition is not completed, the limitations relating to the Threshold
Amount shall not apply and no debentures shall be issued or pledged to secure
the Pacifica Notes, the Bridge Loan or the NSCL Notes.

            As between the Lenders, all Obligations shall rank equally and
ratably with each other notwithstanding that different Obligations may be
designated as having been incurred with reference to different provisions of the
Pacifica Indenture, the NSCL Notes and the Bridge Loan which might otherwise
imply that different Obligations have different rankings. Each Lender shall (and
hereby absolutely, unconditionally and irrevocably agrees to) do all such
things, including delivery of indemnity agreements and assignments to other
Lenders of Advances made by those Lenders as shall be required to ensure that
result. Any such action on the part of the Operating Credit Lenders shall be
binding on the Borrower. If any Lender fails to take the actions required under
this Section, the Agent may, without prejudice to the other rights of the
Lenders, make such adjustments to the payments to the defaulting Lender under
this Agreement as are necessary to compensate the other Lenders for the
defaulting Lender's failure.

            Further debentures may be issued by a Restricted Party under its
trust deed and pledged to another Restricted Party to secure debts, liabilities
and other obligations to the other Restricted Party as long as the debentures
are subordinate to all debentures pledged to secure the Obligations and the
Other Secured Obligations and are assigned to the Agent as additional security
for the Obligations up to the Threshold Amount.

            Subject to Section 10.1.2, further debentures may be issued by a
Restricted Party under its trust deed and pledged to secure Special Permitted
Senior Indebtedness. Any debentures issued and pledged for that purpose may rank
equally and ratably as to proceeds of enforcement of security with debentures
issued and pledged to secure the Obligations and the Other Secured Obligations,
but shall be designated as "Ratable Debentures" under the respective trust
deeds.

6.2.2    Out of an abundance of caution (recognizing that the Restricted Parties
are not permitted to incur secured Funded Debt in excess of the Threshold Amount
if the Acquisition

<PAGE>

                                     - 44 -

is completed), for the purposes of section 4.06 of the Pacifica Indenture (if
the Acquisition is completed), the Advances under Term Credit A and Term Credit
B are hereby classified by NSCL as being incurred under clause (i) of the
definition of "Permitted Indebtedness" in the Pacifica Indenture and the
Advances under the Operating Credit are hereby classified as being incurred
under clause (xi) of the definition of "Permitted Indebtedness" to the maximum
extent possible, thereafter under clause (i) of the definition of "Permitted
Indebtedness" to the maximum extent possible, and thereafter under clause (ix)
of the definition of "Permitted Indebtedness" to the maximum extent possible. If
the Bridge Loan and/or the NSCL Notes are issued, NSCL hereby makes the
corresponding classifications of Advances under the terms of the Bridge Loan
and/or the NSCL Notes, as the case may be. The classifications are irrevocable
without the consent of the Majority Lenders. To the extent that Advances under
the Operating Credit would exceed the Threshold Amount at the time they are
made, the Borrower shall only be entitled to obtain Advances if it is permitted
to do so under the Pacifica Indenture and the terms of the Bridge Loan and the
NSCL Notes.

            If any Advance is within the Threshold Amount at the time it is made
and thereby entitled to be secured in priority to the Pacifica Notes, the Bridge
Loan and the NSCL Notes, it shall remain entitled to that priority
notwithstanding any subsequent diminution of the Threshold Amount. If any
repayment is made under the Operating Credit, it shall be deemed to have first
been made in respect of any Advance that was not within the Threshold Amount at
the time it was made, and shall only be made in respect of any Advance that was
within the Threshold Amount at the time it was made if no other Advances are
then outstanding under the Operating Credit.

            For the purposes of section 4.06 of the Pacifica Indenture (if the
Acquisition is completed), the Other Secured Obligations are hereby classified
by NSCL as being incurred under clauses (v) and (vi) of the definition of
"Permitted Indebtedness" in the Pacifica Indenture. If the Bridge Loan and/or
the NSCL Notes are issued, NSCL hereby makes the corresponding classifications
of Advances under the terms of the Bridge Loan and/or the NSCL Notes, as the
case may be. The classifications are irrevocable without the consent of the
Majority Lenders.

6.2.3    As of the date of this Agreement, the Other Secured Obligations are
those listed in Schedule H. The Agent shall from time to time prepare and
provide the Lenders and NSCL with a revision of Schedule H to reflect changes in
the Other Secured Obligations, but the Agent's failure to do so shall not affect
the security for the Other Secured Obligations if it has been agreed in
accordance with this Section that they shall be secured by the Trustee Security.
Other Secured Obligations listed on Schedule H from time to time shall be
conclusively deemed to be secured by the Trustee Security (in the absence of
manifest error) and shall not cease to be secured without the prior written
consent of the respective Lenders to whom the Other Secured Obligations are
owed. If the Obligations have been indefeasibly paid in full, the Lenders will
release their interest in the Trustee Security upon receiving

<PAGE>

                                     - 45 -

Collateral to secure the Other Secured Obligations, in an amount satisfactory to
the Lenders to whom Other Secured Obligations are owed, acting reasonably.

            Notwithstanding the rights of Lenders to benefit from the Trustee
Security in respect of the Other Secured Obligations, all decisions concerning
the Trustee Security and the enforcement thereof shall be made by the Lenders or
the Majority Lenders in accordance with this Agreement. No Lender holding Other
Secured Obligations from time to time shall have any additional right to
influence the Trustee Security or the enforcement thereof as a result of holding
Other Secured Obligations as long as this Agreement remains in force and the
Agent shall vote any debentures issued under the Trustee Security and pledged to
secure the Other Secured Obligations in the same manner as the debentures
pledged to secure the Obligations. However, the Other Secured Obligations shall
continue to be secured by the Trustee Security notwithstanding the termination
of this Agreement by reason of payment of the Credits, or for any other reason.
After the termination of this Agreement, decisions concerning the Trustee
Security shall be made by the holders of Other Secured Obligations as they may
determine among themselves.

6.3         CONSENT TO ASSIGNMENT OF CONTRACTS

            Each Restricted Party that is a party to any Contract with, or that
has issued any instrument in favour of, any other Restricted Party or Restricted
Parties hereby acknowledges that the rights of the other Restricted Party or
Restricted Parties are charged by the Trustee Security, consents to the granting
of the Trustee Security and agrees that the Trustee shall be entitled to enforce
the Trustee Security in accordance with the terms thereof.

6.4         EXCHANGE RATE FLUCTUATIONS

            If fluctuations in rates of exchange in effect between US Dollars
and Cdn. Dollars cause the amount of Advances (expressed in Cdn. Dollars) under
the Operating Credit or Term Credit A to exceed the maximum amount of that
Credit permitted herein by three percent or more at any time, the Borrower shall
pay the Lenders immediately on demand such amount as is necessary to repay the
excess. If the Borrower is unable to immediately pay that amount because LIBOR
Periods have not ended or Bankers' Acceptances have not matured, the Borrower
shall, immediately on demand, post Collateral with the Agent in the amount of
the excess, which shall form part of the Security for the Obligations and be
held until the amount of the excess is paid in full or is less than three
percent. If, on the date of any Advance under the Operating Credit or Term
Credit A (whether by rollover, conversion or otherwise), the amount of Advances
(expressed in Cdn. Dollars) under that Credit exceeds the maximum amount of that
Credit permitted herein because of fluctuations in rates of exchange, the
Borrower shall immediately pay the Lenders the excess and shall not be entitled
to any Advance that would result in the amount of that Credit being exceeded.


<PAGE>

                                     - 46 -

                                   ARTICLE VII
                             DISBURSEMENT CONDITIONS

7.1         CONDITIONS PRECEDENT TO INITIAL ADVANCE

            The following conditions precedent must be satisfied at or before
the time of the first Advance under this Agreement, unless waived in accordance
with Section 12.7.2. Where delivery of documents is referred to, the documents
shall be delivered to the Agent, for and on behalf of the Lenders, and shall be
in full force and effect and in form and substance satisfactory to the Lenders.

7.1.1       SPECIAL DISTRIBUTION - The Agent shall have received:

            (a)   a certificate of NSCL with copies of all documents necessary
                  to fully and fairly disclose all material terms of the Special
                  Distribution;

            (b)   evidence that all Permits and other approvals required for
                  payment of the Special Distribution have been obtained and are
                  in full force and effect and that the Special Distribution is
                  permitted by applicable Requirements of Law.

7.1.2       OTHER DEBT AND ENCUMBRANCES - The Agent shall have received:

            (a)   evidence that all existing credit facilities and other Debt of
                  the Restricted Parties not forming part of Permitted
                  Obligations have been or will be paid and performed in full
                  and cancelled concurrently with the first Advance and that all
                  security held in connection therewith has been or will be
                  promptly released;

            (b)   releases, discharges and postponements (in registrable form
                  where appropriate) covering all Encumbrances affecting the
                  collateral Encumbered by the Security which are not Permitted
                  Encumbrances, and all statements and acknowledgments that are
                  reasonably required in respect of other security interests
                  affecting the Property of the Restricted Parties or other
                  parties delivering Security to confirm that the collateral
                  Encumbered by those Encumbrances does not include the
                  collateral Encumbered by the Security or is a Permitted
                  Encumbrance.

7.1.3       FINANCIAL INFORMATION - The Agent shall have received:

            (a)   a certificate of NSCL containing its audited consolidated
                  financial statements for its fiscal period ended 31 December
                  2000 and its unaudited consolidated

<PAGE>

                                     - 47 -

                  financial statements for its fiscal period ended 30 June 2001
                  (and the Lenders must be satisfied with the matters disclosed
                  by those statements);

            (b)   a Compliance Certificate from NSCL for the fiscal period ended
                  30 June 2001, with calculations based on both NCSL's actual
                  financial results and the PRO FORMA combined financial
                  statements of NCSL and Pacifica;

            (c)   PRO FORMA consolidated financial statements for NSCL as of 31
                  December 2000 (excluding PRO FORMA balance sheet) and 30 June
                  2001, giving effect to the Bridge Loan and/or NSCL Notes, the
                  Pacifica Notes, the Acquisition and the Advances contemplated
                  by this Agreement.

7.1.4       SECURITY AND OTHER DOCUMENTS - The Agent shall have received:

            (a)   duly executed copies of this Agreement and the Security, duly
                  registered as required;

            (b)   certificates representing the Pledged Shares, and executed
                  stock powers of attorney relating to those certificates;

            (c)   certificates of insurance or other evidence that the covenants
                  and conditions of the Credit Documents concerning insurance
                  coverage are being complied with;

            (d)   the Fee Agreement;

            (e)   agreements from other parties to Material Contracts that have
                  then been specifically assigned as part of the Trustee
                  Security, except to the extent that the Agent expressly
                  permits such agreements to be obtained after the date of the
                  initial Advance.

7.1.5       CORPORATE AND OTHER INFORMATION - The Agent shall have received:

            (a)   a certificate of each Restricted Party with copies of its
                  Constating Documents, a list of its officers and directors
                  with specimens of the signatures of those who are executing
                  Credit Documents on its behalf, and copies of the corporate
                  proceedings taken to authorize it to execute, deliver and
                  perform its obligations under the Credit Documents;

            (b)   evidence that the delivery of Credit Documents will not
                  contravene laws governing financial assistance or other
                  similar laws which affect the Credit Documents;

<PAGE>

                                     - 48 -

            (c)   evidence that the delivery of Credit Documents will not
                  contravene any material covenants or agreements to which any
                  Restricted Party is a party;

            (d)   consents that are required from the directors, shareholders or
                  partners of the Restricted Parties, either in connection with
                  the pledges of Pledged Shares or in connection with any
                  disposition of the Pledged Shares pursuant to the Trustee
                  Security.

7.1.6       OPINIONS - The Agent shall have received:

            (a)   the opinion of Borden Ladner Gervais LLP, counsel to the
                  Lenders, addressed to the Agent and the Lenders;

            (b)   the opinion of Lawson Lundell, Canadian counsel to the
                  Restricted Parties, addressed to the Agent, the Lenders and
                  Borden Ladner Gervais LLP;

            (c)   the opinion of Shearman & Sterling, US counsel to the
                  Restricted Parties, addressed to the Agent, the Lenders and
                  Borden Ladner Gervais LLP;

            (d)   the opinions of local counsel concerning the Security,
                  addressed to the Agent, the Lenders and Borden Ladner Gervais
                  LLP.

7.1.7       OTHER MATTERS - The following conditions must also be satisfied:

            (a)   the Lenders must have received a certificate of NSCL, and
                  otherwise be satisfied, that no Material Adverse Change has
                  occurred since 30 June 2001;

            (b)   the Agent shall have received satisfactory evidence that NSCL
                  has obtained a Reference Debt Rating from each of Moody's and
                  S&P that expressly contemplates the completion of the Special
                  Distribution and the Acquisition on a basis consistent with
                  this Agreement and have received satisfactory written or
                  verbal confirmation from each of them that they do not intend
                  to amend their Reference Debt Ratings;

            (c)   the Agent shall have received payment of all fees owing to the
                  Agent, the Lenders, or any of them and reimbursement of all
                  expenses incurred, including but not limited to legal fees, in
                  each case up to the time of the initial Advance;

            (d)   the Agent shall have received such other documents as the
                  Lenders may reasonably require.


<PAGE>

                                     - 49 -

7.1.8       DEADLINE FOR ADVANCE

            The initial Advance under the Credits must be made on or before 31
August 2001, failing which the Credits may be terminated at the option of any of
the Lenders unless, before that date, other persons identified by the Borrower
and satisfactory to the remaining Lenders have agreed to become Lenders in place
of those Lenders who are unwilling to continue beyond that date.

7.2         CONDITIONS PRECEDENT TO ACQUISITION

            The following conditions precedent must be satisfied at or before
the time of completion of the Acquisition, whether or not any Advance is made
for the purpose of funding the Acquisition, unless waived in accordance with
Section 12.7.2. Where delivery of documents is referred to, the documents shall
be delivered to the Agent, for and on behalf of the Lenders, and shall be in
full force and effect and in form and substance satisfactory to the Lenders.

7.2.1       ACQUISITION OF PACIFICA - The Agent shall have received:

            (a)   evidence that all Permits and other regulatory approvals
                  required in connection with the Acquisition have been obtained
                  and are in full force and effect, including but not limited to
                  evidence of compliance with the COMPETITION ACT (Canada) and
                  the INVESTMENT CANADA ACT;

            (b)   a certificate of NSCL with copies of all documents necessary
                  to fully and fairly disclose all material terms of the
                  Acquisition, including but not limited to the Pacifica
                  Arrangement, the terms of all of which must be satisfactory to
                  the Lenders;

            (c)   evidence that the Acquisition will be completed in accordance
                  with the terms of the Pacifica Arrangement and of any
                  applicable shareholders agreements, without waiver by NSCL of
                  any material condition therein;

            (d)   evidence that all Pacifica Bank Debt and other Debt of
                  Pacifica and its Subsidiaries not forming part of Permitted
                  Obligations has been or will be paid and performed in full and
                  cancelled concurrently with the Acquisition and that all
                  security held in connection therewith has been or will be
                  promptly released;

            (e)   a duly executed pledge of all Capital Stock of Pacifica,
                  certificates representing the Pledged Shares and executed
                  stock powers of attorney relating to those certificates;

<PAGE>

                                     - 50 -

            (f)   an updated version of Schedule F, to include all Subsidiaries
                  of Pacifica that will become Restricted Parties upon the
                  amalgamation of NSCL and Pacifica;

            (g)   a certificate of NSCL with copies of all documents necessary
                  to fully and fairly disclose all material terms of the
                  Pacifica Notes;

            (h)   evidence satisfactory to the Lenders that Pacifica is not
                  then, and will not reasonably be expected to be, required to
                  make an offer to purchase the Pacifica Notes as a consequence
                  of the Acquisition;

            (i)   evidence that gross proceeds of not less than US $200,000,000
                  have been received from the Bridge Loan and/or the NSCL Notes
                  and a certificate of NSCL with copies of all documents
                  necessary to fully and fairly disclose all material terms of
                  the Bridge Loan and/or the NSCL Notes, as applicable;

            (j)   evidence satisfactory to the Lenders that, as of the time of
                  completion of the Acquisition, neither the Bridge Loan nor the
                  NSCL Notes, as applicable, nor the Pacifica Notes are required
                  to be secured as a consequence of Advances under this
                  Agreement.

7.2.2       OTHER MATTERS - The following conditions must also be satisfied:

            (a)   the Lenders must be satisfied that no Material Adverse Change
                  has occurred with respect to either (i) NSCL and its
                  Subsidiaries taken as a whole, or (ii) Pacifica and its
                  Subsidiaries taken as a whole, in each case since 30 June
                  2001;

            (b)   the Agent shall have received payment of all fees owing to the
                  Agent, the Lenders, or any of them and reimbursement of all
                  expenses incurred, including but not limited to legal fees, in
                  each case up to the time of the Advance;

            (c)   the Agent shall have received such other documents as the
                  Lenders may reasonably require.

7.3         CONDITIONS PRECEDENT TO ALL ADVANCES

            The obligation of the Lenders to make any Advance is subject to the
conditions precedent that:

            (a)   no Event of Default or (except in the case of a conversion of
                  a LIBOR Advance into a Base Rate Advance or US Prime Rate
                  Advance, the

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                                     - 51 -

                  conversion of a Bankers' Acceptance to a Prime Rate Advance or
                  an Advance for the purpose of paying a demand under an L/C)
                  Pending Event of Default has occurred and is continuing on the
                  Drawdown Date, or would result from making the Advance, and
                  without limiting the foregoing, all representations and
                  warranties of the Restricted Parties contained in this
                  Agreement, other than those expressly stated to be made as of
                  a specific date, are true on and as of the date of the
                  Advance;

            (b)   the Advance is in compliance with the terms of the Pacifica
                  Notes, Bridge Loan and/or NSCL Notes as applicable, Permitted
                  Senior Indebtedness and Permitted Subordinated Indebtedness,
                  to the extent they are outstanding (including but not limited
                  to any limitation on additional indebtedness contained in the
                  documentation relating to the Pacifica Notes, Bridge Loan,
                  NSCL Notes, Permitted Senior Indebtedness or Permitted
                  Subordinated Indebtedness ) and will not contravene or cause a
                  default under any of the terms of the Pacifica Notes, Bridge
                  Loan, NSCL Notes, Permitted Senior Indebtedness and Permitted
                  Subordinated Indebtedness;

            (c)   the Agent has received timely notice as required under Section
                  8.6;

            (d)   all other terms and conditions of this Agreement upon which an
                  Advance may be obtained are fulfilled.


                                  ARTICLE VIII
                                    ADVANCES

8.1         LENDERS' OBLIGATIONS RELATING TO L/CS AND OPERATING CREDITS 1 AND 2

            Notwithstanding that L/Cs under Operating Credit 1 are issued by an
Issuing Bank, it is the intention of the parties that the credit risk and
exposure of any Lender be in accordance with its Proportionate Share of
Operating Credit 1 as adjusted in accordance with Section 8.2. Each Lender shall
(and hereby absolutely, unconditionally and irrevocably agrees to) indemnify the
Issuing Bank for that Lender's Proportionate Share under Operating Credit 1 of
any payment made by the Issuing Bank in respect of an L/C for which the Issuing
Bank is not immediately reimbursed by the Borrower, and shall do all such
things, including delivery of indemnity agreements and assignments to other
Lenders of Advances made by the Issuing Bank, as shall be required to ensure
that result. Any such action on the part of the Lenders shall be binding on the
Borrower. If the rating of the non-credit-enhanced senior debt of any Operating
Credit Lender by S&P or Moody's is at any time less than "A" or "A2"
respectively, that Lender shall, if requested by an Issuing Bank, provide
Collateral (in a form


<PAGE>

                                     - 52 -

satisfactory to the Issuing Bank acting reasonably) to secure that Lender's
obligations under this clause.

            In addition, notwithstanding that Advances under Operating Credit 2
are for the time being made by RBC and its participation in Advances under
Operating Credit 1 is reduced, and the participation of the other Operating
Credit Lenders is increased, in accordance with Section 8.2, it is the intention
of the parties that the ultimate credit risk and exposure of any Operating
Credit Lender in respect of the Operating Credit (including in respect of L/Cs
issued under either Operating Credit 1 or Operating Credit 2) be in accordance
with its Proportionate Share of the entire amount of the Operating Credit.
Accordingly, upon the Obligations becoming due and payable under Section 11.2,
each Operating Credit Lender shall (and hereby absolutely, unconditionally and
irrevocably agrees to) do all such things, including delivery of indemnity
agreements and assignments to other Operating Credit Lenders of Advances made by
RBC under Operating Credit 2 or assignments to RBC of Advances made by other
Operating Credit Lenders under Operating Credit 1 as shall be required to ensure
that result. Any such action on the part of the Operating Credit Lenders shall
be binding on the Borrower.

            If any Lender fails to take the actions required under this Section,
the Agent may, without prejudice to the other rights of the Lenders, make such
adjustments to the payments to the defaulting Lender under this Agreement as are
necessary to compensate the other Lenders for the defaulting Lender's failure.

8.2         ADJUSTMENT OF PROPORTIONATE SHARES FOR SPECIFIC CREDITS

            While RBC is the sole Lender making Advances under Operating Credit
2, its participation in Advances and payments (including commitment fees) under
Operating Credit 1 shall be reduced and shall be adjusted by the Agent from time
to time, having regard to the maximum principal amounts of Operating Credits 1
and 2 and the overall Commitment of RBC to Operating Credit, so that RBC's
separate Proportionate Shares of Operating Credits 1 and 2 reflect its overall
Proportionate Share of Operating Credit. The Agent shall amend Schedule E to
this Agreement from time to time to reflect such adjustments and notify NSCL and
all affected Lenders of the amendment.

8.3         EXCEPTIONS REGARDING PARTICULAR CREDITS

            Subject to the provisions of Section 8.1 regarding the assignment of
interests under Operating Credit 2 in the event of acceleration of payment of
the Obligations, the provisions of this Agreement do not apply to Operating
Credit 2 to the extent that the provisions contemplate the participation in
Advances and payments under Operating Credit 2 by any Lender other than RBC. All
Advances under Operating Credit 2 shall be made solely by RBC and records
concerning Advances shall be maintained solely by RBC, but RBC shall


<PAGE>

                                     - 53 -

provide information concerning such Advances to the Agent from time to time upon
request. All payments of principal, interest, fees and other amounts relating to
Operating Credit 2 shall be made solely to RBC. In addition, any notices by the
Borrower in connection with Operating Credit 2 shall be made to RBC, and notice
and minimum amount requirements for Advances shall not apply to Advances by way
of overdraft under Operating Credit 2.

            In connection with Advances by way of overdraft, RBC shall ascertain
the positions or net positions of the Borrower's Canadian Dollar and US Dollar
accounts daily and, if the positions or net positions are debits in favour of
RBC, the debits will (if the Borrower is entitled to an Advance) be deemed to be
a Prime Rate Advance (in the case of Canadian Dollars) or a Base Rate Advance
(in the case of US Dollars) under Operating Credit 2 in the respective amounts
of the debits. If the positions or net positions are credits in favour of the
Borrower, the credits will be deemed to be repayments of Prime Rate Advances (in
the case of Canadian Dollars) or Base Rate Advances (in the case of US Dollars)
under Operating Credit 2 in the respective amounts of the credits.

            Subject to further notice by the Agent, the functions of the Agent
that relate solely to Term Credit B are hereby delegated to the US Agent.
Without limiting the foregoing, Advances under Term Credit B shall be funded by
Term Credit B Lenders to the US Agent, payments of principal, interest, fees and
other amounts relating to Term Credit B shall be made to the US Agent, notices
by the Borrower in connection with Term Credit B shall be given to the US Agent
and matters relating to assignments by Term Credit B Lenders shall be
administered by the US Agent.

            Similarly, references in this Agreement to the Lenders generally
shall, in the context of a particular Credit, be interpreted as referring only
to the Lenders who have Commitments relating to that Credit. For example, no
Lender other than a Term Credit A Lender shall have any right to receive
payments in respect of Term Credit A or any obligation to make Advances under
Term Credit A.

8.4         EVIDENCE OF INDEBTEDNESS

            The Obligations resulting from Prime Rate Advances, Base Rate
Advances, US Prime Rate Advances and LIBOR Advances made by the Lenders shall be
evidenced by records maintained by the Agent, and by each Lender concerning
those Advances it has made. The Agent shall also maintain records of the
Obligations resulting from Advances by way of Bankers' Acceptances and L/Cs, and
each Lender shall also maintain records relating to Bankers' Acceptances that it
has accepted. The Issuing Bank shall also maintain records relating to L/Cs that
it has issued. The records maintained by the Agent, and by the Issuing Bank
relating to L/Cs, shall constitute, in the absence of manifest error, conclusive
evidence of the Obligations and all details relating thereto. The failure of the
Agent or any Lender to


<PAGE>

                                     - 54 -

correctly record any such amount or date shall not, however, adversely affect
the obligation of the Borrower to pay the Obligations in accordance with this
Agreement.

8.5         CONVERSIONS

            Subject to the other terms of this Agreement (including notice
requirements), the Borrower may from time to time convert all or any part of the
outstanding amount of any Advance into another form of Advance permitted by this
Agreement. A conversion does not, however, constitute a new advance of funds by
any Lender, but only an adjustment of the basis on which interest payable to the
Lenders will be calculated.

8.6         NOTICE OF ADVANCES AND PAYMENTS

            The Borrower shall give the Agent irrevocable written notice, in the
form attached as Schedule A to this Agreement, of any request for any Advance to
it under the Credits. The Borrower shall also give the Agent irrevocable written
notice in the same form of any payment by it (whether resulting from repayment,
prepayment, rollover or conversion) of any Advance under the Credits, other than
a scheduled repayment under Term Credit A or Term Credit B.

            Notice shall be given on or before the third Business Day (but not
earlier than the fifth Business Day) prior to the date of any Advance or
payment, except that notice shall be given in respect of an Advance by way of
L/C at such earlier time as the Issuing Bank may reasonably require so that it
has sufficient time to review the proposed form of L/C, and except that notice
in respect of a Prime Rate Advance, Base Rate Advance, US Prime Rate Advance or
payment thereof may be given on the Business Day before any such Advance or
payment. Any cancellation of part or all of any Credit shall only be effective
on three Business Days' notice as required by Section 8.7.

            Notices shall be given not later than 1:00 p.m. (Toronto time) on
the date for notice. Payments (other than those being made solely from the
proceeds of rollovers and conversions) must be made prior to 1:00 p.m. (Toronto
time) on the date for payment. If a notice or payment is not given or made by
those times, it shall be deemed to have been given or made on the next Business
Day, unless all Lenders affected by the late notice or payment agree, in their
sole discretion, to accept a notice or payment at a later time as being
effective on the date it is given or made.

8.7         PREPAYMENTS AND REDUCTIONS

            Subject to giving notice required by Section 8.6 and to the other
provisions of this Agreement, the Borrower may from time to time repay Advances
outstanding under any Credit without penalty, except that (i) LIBOR Advances may
not be paid prior to the end of


<PAGE>

                                     - 55 -

the applicable LIBOR Periods unless the Borrower indemnifies the Lenders for any
loss or expense that the Lenders incur as a result, including any breakage costs
and (ii) Bankers' Acceptances may not be paid prior to their respective maturity
dates.

            The Borrower may from time to time, by giving not less than three
Business Days' express written notice to the Agent and paying all accrued and
unpaid commitment fees to the effective date of cancellation, irrevocably notify
the Agent of the cancellation in whole or in part of the undrawn amount any
Credit by an amount which shall be a minimum of $1,000,000 and a whole multiple
of $100,000, or the equivalent thereof in US Dollars. The Borrower shall have no
right to any increase in the committed amount of that Credit thereafter.

8.8         PRIME RATE, BASE RATE, US PRIME RATE AND LIBOR ADVANCES

            Upon timely fulfilment of all applicable conditions as set forth in
this Agreement, the Agent, in accordance with the procedures set forth in
Section 8.11, will make the requested amount of a Prime Rate Advance, Base Rate
Advance, US Prime Rate Advance or LIBOR Advance available to the Borrower on the
Drawdown Date requested by the Borrower by transferring such amount to the
Designated Account. Each Prime Rate Advance shall be in an aggregate minimum
amount of $1,000,000 and in a whole multiple of $100,000. Each Base Rate Advance
or US Prime Rate Advance shall be in an aggregate minimum amount of US
$1,000,000 and in a whole multiple of US $100,000. Each LIBOR Advance shall be
in minimum amount of US $5,000,000 and a whole multiple of US $500,000, except
for LIBOR Advances under Operating Credit 2, each of which shall be in minimum
amount of US $1,000,000 and a whole multiple of US $100,000. The Borrower shall
pay interest to the Agent for the account of the Lenders at the Branch of
Account on any such Advances outstanding to it from time to time hereunder at
the applicable rate of interest specified in Sections 2.5, 3.5 and 4.5.

            Interest on Prime Rate Advances, Base Rate Advances and US Prime
Rate Advances shall be payable monthly on each Interest Payment Date. Interest
on LIBOR Advances shall be payable on the last day of the applicable LIBOR
Period and, if the LIBOR Period is longer than three months, every three months
after the date of the relevant LIBOR Advance. All interest shall accrue from day
to day and shall be payable in arrears for the actual number of days elapsed
from and including the date of Advance or the previous date on which interest
was payable, as the case may be, to but excluding the date on which interest is
payable, both before and after maturity, default and judgment, with interest on
overdue interest at the same rate payable on demand. Overdue interest with
respect to a LIBOR Advance shall, upon the expiry of the LIBOR Period applicable
to such LIBOR Advance, bear interest, payable on demand, calculated at the rates
applicable to Base Rate Advances.


<PAGE>

                                     - 56 -

            Interest calculated with reference to the Prime Rate and the US
Prime Rate shall be calculated monthly on the basis of a calendar year. Interest
calculated with reference to the Base Rate shall be calculated monthly on the
basis of a year of 365 days. Interest calculated with reference to the LIBO Rate
shall be calculated on the basis of a year of 360 days for a term equal to the
applicable LIBOR Period or, if a LIBOR Period is longer than three months, every
three months. Each rate of interest which is calculated with reference to a
period (the "DEEMED INTEREST PERIOD") that is less than the actual number of
days in the calendar year of calculation is, for the purposes of the INTEREST
ACT (Canada), equivalent to a rate based on a calendar year calculated by
multiplying such rate of interest by the actual number of days in the calendar
year of calculation and dividing by the number of days in the deemed interest
period.

8.9         LIBOR PERIODS

            The Borrower may select, by irrevocable notice to the Agent, LIBOR
Periods of one, two, three or six months to apply to any particular LIBOR
Advance, provided that the Agent, in circumstances of market disruption or
illiquidity, shall have the discretion to restrict the LIBOR Period. LIBOR
Periods of other lengths shall also be available at the discretion of the
Lenders from time to time. No LIBOR Period may end on a date which is not a
Business Day or on a date which is later than the date on which the principal
amount of any Credit is required to be reduced (in whole or in part) if that
would adversely affect the Borrower's ability to cause the reduction of the
Credit in question. The Borrower shall from time to time select and give notice
to the Agent of the LIBOR Period for a LIBOR Advance which shall commence upon
the making of the LIBOR Advance or at the expiry of any outstanding LIBOR Period
applicable to a LIBOR Advance that is being rolled over. If the Borrower fails
to select and give the Agent notice of a LIBOR Period for a LIBOR Advance in
accordance with Section 8.6, the Lenders shall be deemed to have made a Base
Rate Advance to the Borrower to replace the maturing LIBO Rate Advance. A
rollover of a LIBOR Advance does not constitute a new advance of funds by the
Lenders, but rather an adjustment of the basis on which interest is charged.

8.10        TERMINATION OF LIBOR ADVANCES

            If at any time a Lender determines in good faith and on reasonable
grounds (which determination shall be conclusive and binding on the Borrower)
that:

            (a)   adequate and reasonable means do not exist for ascertaining
                  the LIBO Rate applicable to a LIBOR Advance;

            (b)   the LIBO Rate does not adequately reflect the effective cost
                  to the Lender of making or maintaining a LIBOR Advance, except
                  as a result of the Lender

<PAGE>

                                     - 57 -

                  failing to obtain a deposit in the amount and for the term of
                  the LIBOR Advance; or

            (c)   it cannot readily obtain or retain funds in the London
                  interbank market in order to fund or maintain any LIBOR
                  Advance or cannot otherwise perform its obligations hereunder
                  with respect to any LIBOR Advance,

then upon written notice by the Agent to the Borrower,

            (d)   the right of the Borrower to request LIBOR Advances from that
                  Lender shall be and remain suspended until the Agent notifies
                  the Borrower that any condition causing such determination no
                  longer exists, and

            (e)   if the Lender is prevented from maintaining a LIBOR Advance,
                  the Borrower shall, at its option, either repay the LIBOR
                  Advances owing by it to that Lender or convert the LIBOR
                  Advances into other forms of Advance which are permitted by
                  this Agreement, but the Borrower shall be responsible for any
                  loss or expense that the Lender incurs as a result, including
                  breakage costs if the Lender is prevented from maintaining a
                  LIBOR Advance for reasons beyond its control.

8.11        CO-ORDINATION OF PRIME RATE, BASE RATE, US PRIME RATE AND LIBOR
            ADVANCES

            Each Lender shall advance its Proportionate Share of each Prime Rate
Advance, Base Rate Advance, US Prime Rate Advance and LIBOR Advance in
accordance with the following provisions:

            (a)   the Agent shall advise each Lender of its receipt of a notice
                  from the Borrower pursuant to Section 8.6 on the day such
                  notice is received and shall, as soon as possible, advise each
                  Lender of such Lender's Proportionate Share of any Advance
                  requested by the notice;

            (b)   each Lender shall deliver its Proportionate Share of the
                  Advance to the Agent not later than 11:00 a.m. (Toronto time)
                  on the Drawdown Date;

            (c)   if the Agent determines that all the conditions precedent to
                  an Advance specified in this Agreement have been met, it shall
                  advance to the Borrower the amount delivered by each Lender by
                  transferring it to the Designated Account prior to 2:00 p.m.
                  (Toronto time) on the Drawdown Date, but if the conditions
                  precedent to the Advance are not met by 2:00 p.m. (Toronto
                  time) on the Drawdown Date, the Agent shall return the funds
                  to the Lenders or

<PAGE>

                                     - 58 -

                  invest them in an overnight investment as orally instructed
                  by each Lender until such time as the Advance is made; and

            (d)   if the Agent determines that a Lender's Proportionate Share of
                  an Advance would not be a whole multiple of $100,000 or US
                  $100,000, as the case may be, the amount to be advanced by
                  that Lender may be increased or reduced by the Agent in its
                  sole discretion to the extent necessary to reflect the
                  requirements of this sub-paragraph.

8.12        EXECUTION OF BANKERS' ACCEPTANCES

            To facilitate the acceptance of Bankers' Acceptances hereunder, the
Borrower hereby appoints each Lender as its attorney to sign and endorse on its
behalf, as and when considered necessary by the Lender, an appropriate number of
orders in the form prescribed by that Lender.

            Each Lender may, at its option, execute any order in handwriting or
by the facsimile or mechanical signature of any of its authorized officers, and
the Lenders are hereby authorized to accept or pay, as the case may be, any
order of the Borrower which purports to bear such a signature notwithstanding
that any such individual has ceased to be an authorized officer of the Lender.
Any such order or Bankers' Acceptance shall be as valid as if he or she were an
authorized officer at the date of issue of the order or Bankers' Acceptance.

            Any order or Bankers' Acceptance signed by a Lender as attorney for
the Borrower, whether signed in handwriting or by the facsimile or mechanical
signature of an authorized officer of a Lender may be dealt with by the Agent or
any Lender to all intents and purposes and shall bind the Borrower as if duly
signed and issued by the Borrower.

            The receipt by the Agent of a request for an Advance by way of
Bankers' Acceptances shall be each Lender's sufficient authority to execute, and
each Lender shall, subject to the terms and conditions of this Agreement,
execute orders in accordance with such request and the advice of the Agent given
pursuant to Section 8.15, and the orders so executed shall thereupon be deemed
to have been presented for acceptance.

8.13        SALE OF BANKERS' ACCEPTANCES

            It shall be the responsibility of each Lender to arrange, in
accordance with normal market practice, for the sale on each Drawdown Date of
the Bankers' Acceptances issued by the Borrower and to be accepted by that
Lender, failing which the Lender shall purchase its Bankers' Acceptances.


<PAGE>

                                     - 59 -

            In accordance with the procedures set forth in Section 8.15, the
Agent will make the net proceeds of the requested Advance by way of Bankers'
Acceptances received by it from the Lenders available to the Borrower on the
Drawdown Date by transferring such amount to the Designated Account.

            Notwithstanding the foregoing, if in the determination of the
Majority Lenders acting reasonably a market for Bankers' Acceptances does not
exist at any time, or the Lenders cannot for other reasons, after reasonable
efforts, readily sell Bankers' Acceptances or perform their other obligations
under this Agreement with respect to Bankers' Acceptances, then upon written
notice by the Agent to the Borrower, the Borrower's right to request Advances by
way of Bankers' Acceptances shall be and remain suspended until the Agent
notifies the Borrower that any condition causing such determination no longer
exists.

8.14        SIZE AND MATURITY OF BANKERS' ACCEPTANCES AND ROLLOVERS

            Each Advance of Bankers' Acceptances shall be in a minimum amount of
$5,000,000 and each Bankers' Acceptance shall be in the amount of $100,000 or
whole multiples thereof. Each Bankers' Acceptance shall have a term of one, two,
three or six months after the date of acceptance of the order by a Lender,
provided that the Agent, in circumstances of market disruption or illiquidity,
shall have the discretion to restrict the term or maturity dates of Bankers'
Acceptances. No Bankers' Acceptance may mature on a date which is not a Business
Day or on a date which is later than the date on which the principal amount of
any Credit is required to be reduced (in whole or in part) if that would
adversely affect the Borrower's ability to cause the reduction of the Credit in
question. The face amount at maturity of a Bankers' Acceptance may be renewed as
a Bankers' Acceptance or converted into another form of Advance permitted by
this Agreement.

8.15        CO-ORDINATION OF BA ADVANCES

            Each Lender shall advance its Proportionate Share of each Advance by
way of Bankers' Acceptances in accordance with the provisions set forth below.

8.15.1    The Agent, promptly following receipt of a notice from the Borrower
pursuant to Section 8.6 requesting an Advance by way of Bankers' Acceptances,
shall advise each Lender of the aggregate face amount and term(s) of the
Bankers' Acceptances to be accepted by it, which term(s) shall be identical for
all Lenders. The aggregate face amount of Bankers' Acceptances to be accepted by
a Lender shall be determined by the Agent by reference to the respective
Commitments of the Lenders, except that, if the face amount of a Bankers'
Acceptance would not be Cdn. $100,000 or a whole multiple thereof, the face
amount shall be increased or reduced by the Agent in its sole discretion to the
nearest whole multiple of Cdn. $100,000.


<PAGE>

                                     - 60 -

8.15.2    Each Lender shall transfer to the Agent at the Branch of Account for
value on each Drawdown Date immediately available Cdn. Dollars in an aggregate
amount equal to the BA Discount Proceeds of all Bankers' Acceptances accepted
and sold or purchased by the Lender on such Drawdown Date net of the applicable
Bankers' Acceptance Fee and net of the amount required to pay any of its
previously accepted Bankers' Acceptances that are maturing on the Drawdown Date
or any of its other Advances that are being converted to Bankers' Acceptances on
the Drawdown Date.

8.15.3    If the Agent determines that all the conditions precedent to
an Advance specified in this Agreement have been met, it shall advance to the
Borrower the amount delivered by each Lender by transferring it to the
Designated Account prior to 2:00 p.m. (Toronto time) on the Drawdown Date, but
if the conditions precedent to the Advance are not met by 2:00 p.m. (Toronto
time) on the Drawdown Date, the Agent shall return the funds to the Lenders or
invest them in an overnight investment as orally instructed by each Lender until
such time as the Advance is made.

8.15.4    Notwithstanding any other provision hereof, for the purpose of
determining the amount to be transferred by a Lender to the Agent for the
account of the Borrower in respect of the sale of any Bankers' Acceptance issued
by the Borrower and accepted by such Lender, the proceeds of sale thereof shall
be deemed to be an amount equal to the BA Discount Proceeds calculated with
respect thereto. Accordingly, in respect of any particular Bankers' Acceptance
accepted by it, a Lender in addition to its entitlement to retain the applicable
Bankers' Acceptance Fee for its own account (i) shall be entitled to retain for
its own account the amount, if any, by which the actual proceeds of sale thereof
exceed the BA Discount Proceeds calculated with respect thereto, and (ii) shall
be required to pay out of its own funds the amount, if any, by which the actual
proceeds of sale thereof are less than the BA Discount Proceeds calculated with
respect thereto.

8.15.5    Whenever the Borrower requests an Advance that includes Bankers'
Acceptances, each Lender that is not permitted by applicable law or by customary
market practice to accept a Bankers' Acceptance or any other Lender that in any
instance chooses not to accept a Bankers' Acceptance (each, a "NON BA LENDER")
shall, in lieu of accepting its PRO RATA amount of such Bankers' Acceptances,
make available to the Borrower on the Drawdown Date a loan (a "BA EQUIVALENT
LOAN") in Canadian Dollars and in an amount equal to the BA Discount Proceeds of
the Bankers' Acceptances that the Non BA Lender would have been required to
accept on the Drawdown Date if it were able to accept Bankers' Acceptances. Each
Non BA Lender shall also be entitled to deduct from the BA Equivalent Loan an
amount equal to the Bankers Acceptance Fee that would have been applicable had
it been able to accept Bankers' Acceptances. The BA Equivalent Loan shall have a
term equal to the term of the Bankers' Acceptances that the Non BA Lender would
otherwise have accepted and the Borrower shall, at the end of that term, be
obligated to pay the Non BA Lender an amount equal to the aggregate face amount
of the Bankers' Acceptances that it would


<PAGE>

                                     - 61 -

otherwise have accepted. All provisions of this Agreement applicable to Bankers'
Acceptances and Lenders that accept Bankers' Acceptances shall apply MUTATIS
MUTANDIS to BA Equivalent Loans and Non BA Lenders and, without limiting the
foregoing, Advances shall include BA Equivalent Loans.

8.16        PAYMENT OF BANKERS' ACCEPTANCES

            The Borrower shall provide for the payment to the Agent at the
Branch of Account for the account of the applicable Lenders of the full face
amount of each Bankers' Acceptance accepted for its account on the earlier of
(i) the date of maturity of a Bankers' Acceptance and (ii) the date on which any
Obligations become due and payable pursuant to Section 11.2. The Lenders shall
be entitled to recover interest from the Borrower at a rate of interest per
annum equal to the rate applicable to Prime Rate Advances under the Credit under
which the Bankers' Acceptance was issued, compounded monthly, upon any amount
payment of which has not been provided for by the Borrower in accordance with
this Section. Interest shall be calculated from and including the date of
maturity of each Bankers' Acceptance up to but excluding the date such payment,
and all interest thereon, both before and after demand, default and judgment, is
provided for by the Borrower.

            If the Borrower provides cash in response to any Obligations
becoming due and payable under Section 11.2, it shall be entitled to receive
interest on the cash provided in accordance with Section 14.16 as long as the
cash is held as Collateral.

8.17        DEEMED ADVANCE - BANKERS' ACCEPTANCES

            Except for amounts which are paid from the proceeds of a rollover of
a Bankers' Acceptance or for which payment has otherwise been funded by the
Borrower, any amount which a Lender pays to any third party on or after the date
of maturity of a Bankers' Acceptance in satisfaction thereof or which is owing
to the Lender in respect of such a Bankers' Acceptance on or after the date of
maturity of such a Bankers' Acceptance, shall be deemed to be a Prime Rate
Advance to the Borrower under this Agreement. Each Lender shall forthwith give
notice of the making of such a Prime Rate Advance to the Borrower and the Agent
(which shall promptly give similar notice to the other Lenders). Interest shall
be payable on such Prime Rate Advances in accordance with the terms applicable
to Prime Rate Advances.

8.18        WAIVER

            The Borrower shall not claim from a Lender any days of grace for the
payment at maturity of any Bankers' Acceptances presented and accepted by the
Lender pursuant to this Agreement. The Borrower waives any defence to payment
which might otherwise exist if for any reason a Bankers' Acceptance shall be
held by a Lender in its own right at the maturity


<PAGE>

                                     - 62 -

thereof, and the doctrine of merger shall not apply to any Bankers' Acceptance
that is at any time held by a Lender in its own right.

8.19        DEGREE OF CARE

            Any executed orders to be used as Bankers' Acceptances shall be held
in safekeeping with the same degree of care as if they were the Lender's own
property, and shall be kept at the place at which such orders are ordinarily
held by such Lender.

8.20        INDEMNITY

            The Borrower shall indemnify and hold the Lenders, and each of them,
harmless from any loss, cost, damage or expense with respect to any Bankers'
Acceptance dealt with by the Lenders for the Borrower's account, but shall not
be obliged to indemnify a Lender for any loss, cost, damage or expense caused by
the gross negligence or wilful misconduct of that Lender.

8.21        OBLIGATIONS ABSOLUTE

            The obligations of the Borrower with respect to Bankers' Acceptances
under this Agreement shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including, without limitation, the following circumstances:

            (i)   any lack of validity or enforceability of any order accepted
                  by a Lender as a Bankers' Acceptance; or

            (ii)  the existence of any claim, set-off, defence or other right
                  which the Borrower may have at any time against the holder of
                  a Bankers' Acceptance, a Lender or any other person or entity,
                  whether in connection with this Agreement or otherwise.

8.22        SHORTFALL ON DRAWDOWNS, ROLLOVERS AND CONVERSIONS

            The Borrower agrees that:

            (a)   the difference between the amount of an Advance requested by
                  the Borrower by way of Bankers' Acceptances and the actual
                  proceeds of the Bankers' Acceptances;


<PAGE>

                                     - 63 -

            (b)   the difference between the actual proceeds of a Bankers'
                  Acceptance and the amount required to pay a maturing Bankers'
                  Acceptance, if a Bankers' Acceptance is being rolled over; and

            (c)   the difference between the actual proceeds of a Bankers'
                  Acceptance and the amount required to repay any Advance which
                  is being converted to a Bankers' Acceptance;

shall be funded and paid by the Borrower from its own resources, by 11:00 a.m.
on the day of the Advance or may be advanced as a Prime Rate Advance under a
Credit if the Borrower is otherwise entitled to an Advance under the Credit.

8.23        PROHIBITED USE OF L/CS AND BANKERS' ACCEPTANCES

            The Borrower shall not enter into any agreement or arrangement of
any kind with any person to whom Bankers' Acceptances have been delivered
whereby the Borrower undertakes to replace such Bankers' Acceptances on a
continuing basis with other Bankers' Acceptances, nor shall the Borrower
directly or indirectly take, use or provide Bankers' Acceptances or L/Cs as
security for loans or advances from any other person.

8.24        ISSUANCE AND MATURITY OF L/CS

            A request for an Advance by way of L/C shall be made by a Borrower
in accordance with Section 8.6, except that a copy of the request shall be sent
directly to the Issuing Bank. The Agent shall promptly notify the Lenders of the
receipt of a request relating to Operating Credit 1, but L/Cs under Operating
Credit 1 shall only be issued by the Issuing Bank as fronting bank for all
Operating Credit Lenders. A request shall include the details of the L/C to be
issued. The Issuing Bank shall promptly notify the Borrower of any comment
concerning the form of the L/C requested by the Borrower and shall, if the
Borrower is otherwise entitled to an Advance, issue the L/C to the Borrower at
the branch where its account is maintained on the Drawdown Date or as soon
thereafter as the Issuing Bank is satisfied with the form of L/C to be issued.

            Each L/C issued under this Agreement shall have a term which is not
more than one year after its issuance date or renewal date and does not extend
beyond the then-current maturity date of the Operating Credit. Collateral shall
be provided for the benefit of the Lenders promptly upon demand by the Agent. An
L/C may be renewed by the Borrower subject to complying with the terms of this
Agreement applicable to an Advance by way of L/C.

8.25        PAYMENT OF L/C FEES


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                                     - 64 -

            Payment of L/C Fees and the fronting fee applicable to L/Cs shall be
made to the Agent at the Branch of Account for the account of the Lenders (other
than the fronting fee under Operating Credit 1, which shall be solely for the
Issuing Bank's account), and shall be made at the time of issuance or renewal of
an L/C.

8.26        PAYMENT OF L/Cs

            The Borrower shall provide for the payment to the Issuing Bank at
the branch where the L/C was issued of the full face amount of each L/C (or the
amount actually paid in the case of a partial payment) on the earlier of (i) the
date on which the Issuing Bank makes a payment to the beneficiary of an L/C, and
(ii) the date on which any Obligations become due and payable pursuant to
Section 11.2. The Lenders shall be entitled to recover interest from the
Borrower at a rate of interest per annum equal to the rate applicable to Prime
Rate Advances (in the case of Canadian Dollar L/Cs) or Base Rate Advances (in
the case of US Dollar L/Cs), compounded monthly, upon any amount payment of
which has not been provided for by the Borrower in accordance with this Section.
Interest shall be calculated from and including the date on which the Issuing
Bank makes a payment to the beneficiary of an L/C, up to but excluding the date
such payment, and all interest thereon, both before and after demand, default
and judgment, is provided for by the Borrower.

            The obligation of the Borrower to reimburse the Lenders for a
payment to a beneficiary of an L/C shall be absolute and unconditional, without
prejudice to the Borrower's right to subsequently claim damages for matters
arising from a Lender's wilful misconduct or gross negligence, and shall not be
reduced by any demand or other request for payment of an L/C (a "DEMAND") paid
or acted upon in good faith and in conformity with laws, regulations or customs
applicable thereto being invalid, insufficient, fraudulent or forged, nor shall
the Borrower's obligation be subject to any defence or be affected by any right
of set-off, counter-claim or recoupment which the Borrower may now or hereafter
have against the beneficiary, the Lender or any other person for any reason
whatsoever, including the fact that the Issuing Bank paid a Demand or Demands
(if applicable) aggregating up to the amount of the L/C notwithstanding any
contrary instructions from the Borrower to the Issuing Bank or the occurrence of
any event including, but not limited to, the commencement of legal proceedings
to prohibit payment by the Issuing Bank of a Demand. Any action, inaction or
omission taken or suffered by the Issuing Bank under or in connection with an
L/C or any Demand, if in good faith and in conformity with laws, regulations or
customs applicable thereto shall be binding on the Borrower and shall not place
any Lender under any resulting liability to the Borrower. Without limiting the
generality of the foregoing, the Issuing Bank may receive, accept, or pay as
complying with the terms of the L/C, any Demand otherwise in order which may be
signed by, or issued to, any administrator, executor, trustee in bankruptcy,
receiver or other person or entity acting as the representative or in place of,
the beneficiary.


<PAGE>

                                     - 65 -

            If the Borrower provides cash in response to any Obligations
becoming due and payable under Section 11.2, it shall be entitled to receive
interest on the cash provided in accordance with Section 14.16 as long as the
cash is held as Collateral.

8.27        DEEMED ADVANCE - L/Cs

            Except for amounts which have been funded by the Borrower, any
amount which the Issuing Bank pays to any third party in respect of an L/C in
satisfaction or partial satisfaction hereof shall also be deemed to be a Prime
Rate Advance in the case of Canadian Dollar L/Cs or a Base Rate Advance in the
case of US Dollar L/Cs, in each case under the Credit under which the L/C was
issued. The Issuing Bank shall forthwith give notice of the making of such an
Advance to the Borrower and the Agent (which shall promptly give similar notice
to the other Lenders in the case of Operating Credit 1). Interest shall be
payable on such Advances in accordance with the terms applicable to such
Advances.

8.28        PROHIBITED RATES OF INTEREST

            It is the intention of the parties to comply with applicable usury
laws now or hereafter enacted. Accordingly, notwithstanding any other provisions
of this Agreement or any other Credit Document, in no event shall any Credit
Document require the payment or permit the collection of interest or other
amounts in an amount or at a rate in excess of the amount or rate that is
permitted by law or in an amount or at a rate that would result in the receipt
by the Lenders or the Agent of interest at a criminal rate, as the terms
"interest" and "criminal rate" are defined under the CRIMINAL CODE (Canada).
Where more than one such law is applicable to any Restricted Party, that
Restricted Party shall not be obliged to make payment in an amount or at a rate
higher than the lowest amount or rate permitted by such laws. If from any
circumstances whatever, fulfilment of any provision of any Credit Document shall
involve transcending the limit of validity prescribed by applicable law for the
collection or charging of interest, the obligation to be fulfilled shall be
reduced to the limit of such validity, and if from any such circumstances the
Agent or the Lenders shall ever receive anything of value as interest or deemed
interest under any Credit Document in an amount that would exceed the highest
lawful rate of interest permitted by applicable law, such amount that would be
excessive interest shall be applied to the reduction of the principal amount of
the relevant Credit, and not to the payment of interest, or if such excessive
interest exceeds the unpaid principal balance of the relevant Credit, the amount
exceeding the unpaid balance shall be refunded to the Borrower. In determining
whether or not the interest paid or payable under any specified contingency
exceeds the highest lawful rate, the Restricted Parties, the Agent and the
Lenders shall, to the maximum extent permitted by applicable law, (a)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, (b) exclude voluntary prepayments and the effects thereof, (c)
amortize, prorate, allocate and spread the total amount of interest throughout
the term of such indebtedness so that interest thereon does not exceed the
maximum amount permitted by applicable law,


<PAGE>

                                     - 66 -

and/or (d) allocate interest between portions of such indebtedness to the end
that no such portion shall bear interest at a rate greater than that permitted
by applicable law. For the purposes of the application of the CRIMINAL CODE
(Canada), the effective annual rate of interest shall be determined in
accordance with generally accepted actuarial practices and principles and in the
event of any dispute, a certificate of a Fellow of the Canadian Institute of
Actuaries appointed by the Agent shall be conclusive for the purpose of such
determination.


                                   ARTICLE IX
                         REPRESENTATIONS AND WARRANTIES

9.1         REPRESENTATIONS AND WARRANTIES

            Each Restricted Party represents and warrants to the Lenders as
specified below.

9.1.1       CORPORATE MATTERS

            (a)   It is a duly incorporated or amalgamated and validly existing
                  corporation or a duly organized and validly existing
                  partnership, as the case may be, and has the power and
                  authority to enter into and perform its obligations under any
                  Credit Documents to which it is or will be a party, to own its
                  Property and to carry on the business in which it is engaged.

            (b)   It is in compliance with the requirements for carrying on
                  business in all jurisdictions in which it carries on business,
                  and has all Permits required as of the date hereof, to enter
                  into and perform its obligations under any Credit Documents to
                  which it is or will be a party, to own its Property and to
                  carry on the business in which it is engaged, except to the
                  extent that the non-compliance or absence of Permits would not
                  have a material adverse effect on the ability of the
                  Restricted Parties, taken as a whole, to do so.

            (c)   The entering into and the performance by it of the Credit
                  Documents to which it is or will be a party (i) have been duly
                  authorized by all necessary corporate action on its part, (ii)
                  do not and will not violate its Constating Documents, any
                  Requirement of Law, any Permit or any Contract to which it is
                  a party, and (iii) will not result in the creation of any
                  Encumbrance on any of its Property or require it to create any
                  Encumbrance on any of its Property other than Permitted
                  Encumbrances and will not result in the forfeiture of any of
                  its Property.

<PAGE>

                                     - 67 -

            (d)   Its Constating Documents do not restrict the power of its
                  directors to borrow money, to give financial assistance by way
                  of loan, guarantee or otherwise, or to encumber any or all of
                  its present and future Property to secure the Obligations,
                  except for restrictions under any Constating Document which
                  have been complied with in connection with the Credit
                  Documents and the Permitted Obligations.

            (e)   It is not in violation of any term of its Constating Documents
                  and is not in violation of any Requirement of Law, Permit or
                  Contract, the violation of which would materially and
                  adversely affect its ability to own its Property and conduct
                  its business, nor will its execution, delivery and performance
                  of any Credit Documents to which it is a party result in any
                  such violation.

            (f)   It has good and marketable title to or the right to use or
                  good, valid and subsisting leases or licenses in respect of
                  all of the Property necessary for the operation of its
                  business, free and clear of any Encumbrances, other than
                  Permitted Encumbrances, and no person has any agreement or
                  right to acquire any of its Property out of the ordinary
                  course of business.

9.1.2       CREDIT DOCUMENTS

            (a)   The Credit Documents to which it is or will be a party have
                  been or will be duly executed and delivered by it and, when
                  executed and delivered, will constitute legal, valid and
                  binding obligations enforceable against it in accordance with
                  their respective terms, subject to the availability of
                  equitable remedies and the effect of bankruptcy, insolvency
                  and similar laws affecting the rights of creditors generally.

            (b)   As of the date of this Agreement, no Event of Default or
                  Pending Event of Default has occurred and is continuing.

            (c)   From and after the date on which the relevant Security is
                  delivered, the Lenders will have the benefit of legal, valid
                  and enforceable security upon all of its present and future
                  Property subject only to Permitted Encumbrances, the
                  availability of equitable remedies, and the effect of
                  bankruptcy, insolvency and similar laws affecting the rights
                  of creditors generally.

9.1.3       LITIGATION, FINANCIAL STATEMENTS ETC.

            (a)   As of the date of execution of this Agreement, there are no
                  litigation, arbitration or administrative proceedings or
                  industrial or labour disputes outstanding and, to its
                  knowledge after having made reasonable inquiry, there

<PAGE>

                                     - 68 -

                  are no proceedings or disputes pending or threatened, against
                  it which, in either case, could constitute a Material Adverse
                  Change, except as disclosed on Schedule J.

            (b)   All of the historical financial statements which have been
                  furnished to the Lenders, or any of them, in connection with
                  this Agreement are complete and, to its knowledge after
                  reasonable inquiry, fairly present the financial position of
                  NSCL on a consolidated basis as of the dates referred to
                  therein and have been prepared in accordance with GAAP except,
                  in the case of quarterly financial statements, notes to the
                  statements and normal year-end audit adjustments required by
                  GAAP are not included.

            (c)   All projections, including forecasts, budgets, PRO FORMAS and
                  business plans provided to the Agent were prepared in good
                  faith based on assumptions which were believed to be
                  reasonable and were believed at the time of preparation to be
                  reasonable estimates of the prospects of the businesses
                  referred to therein, and all material changes in the estimates
                  of the prospects of those businesses occurring between the
                  time of preparation and the date of this Agreement have been
                  disclosed to the Lenders in writing.

            (d)   As of the date of execution of this Agreement, it has no
                  liabilities (contingent or other) or other obligations of the
                  type required to be included in the consolidated financial
                  statements of the Restricted Parties in accordance with GAAP
                  which are not fully included on NSCL's audited financial
                  statements provided to the Lenders for its fiscal year ended
                  31 December 2000 or NSCL's unaudited financial statements for
                  the fiscal period ended 30 June 2001, other than liabilities
                  and obligations incurred thereafter in the ordinary course of
                  its business and the Obligations, none of which constitutes a
                  Material Adverse Change.

            (e)   It is not in default under any of the Permitted Encumbrances
                  to an extent that would materially and adversely affect the
                  financial position of NSCL on a consolidated basis, or the
                  Restricted Party's ability to carry on its business or perform
                  its obligations under the Credit Documents to which it is or
                  will be a party.

            (f)   There is no fact that it has not disclosed to the Agent in
                  writing that materially and adversely affects its ability to
                  perform its obligations under the Credit Documents to which it
                  is or will be a party.

9.1.4       OTHER DEBT


<PAGE>

                                     - 69 -

            (a)   This Agreement is in compliance with the terms of the Pacifica
                  Notes, Bridge Loan, NSCL Notes, Permitted Senior Indebtedness
                  and Permitted Subordinated Indebtedness to the extent they are
                  outstanding obligations of a Restricted Party (including but
                  not limited to any limitation on additional indebtedness
                  contained in the documentation relating to the Pacifica Notes,
                  Bridge Loan, NSCL Notes, Permitted Senior Indebtedness or
                  Permitted Subordinated Indebtedness) and will not contravene
                  or cause a default under any of the Pacifica Notes, Bridge
                  Loan, NSCL Notes, Permitted Senior Indebtedness and Permitted
                  Subordinated Indebtedness.

            (b)   All Obligations are "Permitted Indebtedness" under the terms
                  of the Pacifica Notes, Bridge Loan, NSCL Notes, Permitted
                  Senior Indebtedness and Permitted Subordinated Indebtedness to
                  the extent they are outstanding
                  obligations of a Restricted Party.

            (c)   All Obligations are "Senior Indebtedness" and "Designated
                  Senior Indebtedness" (or equivalent terms) under the terms of
                  any outstanding Permitted Subordinated Indebtedness and are
                  entitled to the benefit of all subordination provisions under
                  the terms of any outstanding Permitted Subordinated
                  Indebtedness.

            (d)   If the Acquisition is completed, the Credits will (when NSCL
                  is amalgamated with Pacifica) constitute "New Credit
                  Facilities" under the terms of the Pacifica Notes and the
                  Bridge Loan and/or the NSCL Notes as applicable, and the
                  Threshold Amount will be not less than $700,000,000 at the
                  time the Acquisition is completed.

9.1.5       PROPERTY AND CAPITAL STOCK

            (a)   Schedule F fully and fairly describes as of the date of this
                  Agreement, the ownership of all of its issued and outstanding
                  Capital Stock, the Capital Stock in Restricted Parties and
                  other persons that it owns, the nature of the business that it
                  carries on, the locations of its head office (and chief
                  executive office, if different) and its freehold (or fee as
                  the case may be) and leasehold real property, and the
                  jurisdictions in which its other Property (other than accounts
                  receivable) are located.

            (b)   The Pledged Shares are validly issued as fully paid and
                  non-assessable Capital Stock of the respective Restricted
                  Parties or other issuers.

            (c)   The consents of the shareholders or directors of the
                  respective Restricted Parties or other issuers and any other
                  consents that will be delivered at or

<PAGE>

                                     - 70 -

                  prior to the time that the Pledged Shares become part of the
                  Trustee Security are the only consents that are necessary or
                  desirable in connection with the pledges of the Pledged Shares
                  as part of the Trustee Security (including the enforcement of
                  the pledges), and will be kept in full force and effect as
                  long as they remain necessary or desirable.

            (d)   It owns or is licensed or otherwise has the right to use all
                  Intellectual Property that is necessary for the operation of
                  its business, to its knowledge without conflict with the
                  rights of any other person, except as specified on Schedule K.
                  All Intellectual Property that it owns is listed on Schedule
                  K, subject to modifications made by NSCL to the Agent in
                  writing from time to time.

9.1.6       ENVIRONMENTAL MATTERS

            (a)   To its knowledge having made all due inquiry, (i) there are no
                  active or abandoned underground storage tanks located on any
                  land which it occupies or controls, except those that comply
                  with applicable Requirements of Law, (ii) there are no
                  Hazardous Materials located on, above or below the surface of
                  any land which it occupies or controls or contained in the
                  soil or water constituting such land (except those that are in
                  compliance with applicable Requirements of Law), (iii) no
                  release of Hazardous Materials has occurred on or from such
                  land (except those minor items that are in accordance with
                  Permits or otherwise do not violate applicable Requirements of
                  Law) and (iv) no land that it occupies or controls has been
                  used as a landfill or waste disposal site, except in each case
                  as disclosed on Schedule J or as would not reasonably be
                  expected to cause a Material Adverse Change.

            (b)   Its business and Property have been and are being owned,
                  occupied and operated in substantial compliance with
                  applicable Requirements of Law intended to protect the
                  environment (including, without limitation, laws respecting
                  the disposal or emission of Hazardous Materials), to the best
                  of its knowledge after reasonable inquiry there are no
                  breaches thereof and no enforcement actions in respect thereof
                  are threatened or pending which, in any such case, would
                  reasonably be expected to cause a Material Adverse Change.

9.1.7       TAXES AND WITHHOLDINGS

            (a)   It has (i) duly filed on a timely basis all material tax
                  returns, elections and reports required to be filed by it and
                  has paid, collected and remitted all material Taxes due and
                  payable, collectible or remittable by it, and (ii) made
                  adequate provision for material Taxes payable by it for the
                  current period and any previous period for which tax returns
                  are not yet required to be filed and,


<PAGE>

                                     - 71 -

                  except as disclosed in writing to the Agent from time to time,
                  there are no actions, proceedings or claims pending or, to its
                  knowledge, threatened, against it in respect of material Taxes
                  (it being agreed that, for purposes of this paragraph, the
                  amount of a Tax is material if it equals or exceeds Cdn.
                  $1,000,000 or the equivalent thereof in another currency).

            (b)   It has (i) withheld from each payment made to any of its past
                  or present employees, officers or directors, and to any
                  non-resident of the country in which it is resident, the
                  amount of all material Taxes and other deductions required to
                  be withheld therefrom and has paid the same to the appropriate
                  tax authority within the time required under any applicable
                  legislation, and (ii) collected and remitted to the
                  appropriate tax authority when required by law to do so all
                  material amounts collectible and remittable in respect of
                  goods and services tax and similar provincial or state Taxes,
                  and has paid all such material amounts payable by it on
                  account of sales Taxes including goods and services and
                  value-added taxes (it being agreed that, for purposes of this
                  paragraph, the amount of a Tax is material if it equals or
                  exceeds Cdn. $1,000,000 or the equivalent thereof in another
                  currency).

9.1.8       PENSION PLANS

            (a)   During the twelve-consecutive-month period before the date of
                  the execution and delivery of this Agreement and before the
                  date of any Advance hereunder, (i) no steps have been taken to
                  terminate any Pension Plan (wholly or in part), which could
                  result in a Restricted Party being required by applicable
                  Requirements of Law to make an additional contribution to the
                  Pension Plan in excess of $1,000,000, (ii) no contribution
                  failure has occurred with respect to any Pension Plan
                  sufficient to give rise to a lien or charge under any
                  applicable pension benefits laws of any other jurisdiction
                  that, individually or in the aggregate could reasonably be
                  expected to cause a Material Adverse Change, (iii) no
                  condition exists and no event or transaction has occurred with
                  respect to any Pension Plan which might result in the
                  incurrence by any Restricted Party of any liability (other
                  than a liability to pay benefits in accordance with the
                  Pension Plan), fine or penalty in excess of $1,000,000, and
                  (iv) except as disclosed in the financial statements required
                  to be provided pursuant to this Agreement or as otherwise
                  disclosed in writing from time to time to the Agent, no
                  Restricted Party has any contingent liability with respect to
                  any post-retirement benefit under a Welfare Plan that,
                  individually or in the aggregate could reasonably be expected
                  to cause a Material Adverse Change.

            (b)   Each Pension Plan is in compliance in all material respects
                  with all applicable pension benefits and tax laws, (i) all
                  contributions (including employee


<PAGE>

                                     - 72 -

                  contributions made by authorized payroll deductions or other
                  withholdings) required to be made to the appropriate funding
                  agency in accordance with all applicable laws and the terms of
                  each Pension Plan have been made in accordance with all
                  applicable laws and the terms of each Pension Plan, (ii) all
                  liabilities under each Pension Plan which are required by
                  applicable Requirements of Law to be funded are fully funded,
                  on a going concern and solvency basis, in accordance with the
                  terms of the respective Pension Plans, the requirements of
                  applicable pension benefits laws and of applicable regulatory
                  authorities and the most recent actuarial report filed with
                  respect to the Pension Plan, and (iii) no event has occurred
                  and no conditions exist with respect to any Pension Plan that
                  has resulted or could reasonably be expected to result in any
                  Pension Plan having its registration revoked or refused for
                  the purposes of any applicable pension benefits or tax laws or
                  being placed under the administration of any relevant pension
                  benefits regulatory authority or being required to pay any
                  taxes or penalties under any applicable pension benefits or
                  tax laws, except for any exceptions to clauses (i) through
                  (iii) above that, individually or in the aggregate, could not
                  reasonably be expected to cause a Material Adverse Change.

9.1.9       ABORIGINAL CLAIMS

            (a)   Except for matters which would not, in the aggregate,
                  reasonably be expected to cause a Material Adverse Change, no
                  Aboriginal group has asserted, by virtue of its Aboriginal
                  status:

                  (i)      any claim against any Property of a Restricted Party;

                  (ii)     any right, title, benefit or interest in any real
                           property of a Restricted Party;

                  (iii)    any claim of jurisdiction over any real property of a
                           Restricted Party; or

                  (iv)     any right to be consulted with respect to any change
                           in the use, development or improvement in any real
                           property of a Restricted Party.

            (b)   Except for matters which would not, in the aggregate,
                  reasonably be expected to cause a Material Adverse Change, it
                  is not aware of and has not received, in relation to any of
                  its real property, any notice of:

                  (i)      the existence or potential existence of any
                           Aboriginal heritage sites;

<PAGE>

                                     - 73 -

                  (ii)     any actual or alleged interference with Aboriginal
                           rights; or

                  (iii)    any specific or comprehensive claims.

            (c)   Except for matters which would not, in the aggregate,
                  reasonably be expected to cause a Material Adverse Change, it
                  has disclosed to the Lenders all written correspondence,
                  notices or minutes of meetings received from or involving any
                  Aboriginal group relating to any claim, conflict or
                  controversy.

9.1.10      OTHER MATTERS

            (a)   Neither it nor any of its Subsidiaries is an "investment
                  company" within the meaning of the Investment Company Act of
                  1940, as amended, or a "holding company", or a "subsidiary
                  company" of a "holding company", or an "affiliate" of a
                  "holding company" or of a "subsidiary company" of a "holding
                  company," within the meaning of the Public Utility Holding
                  Company Act of 1935, as amended.

            (b)   None of the proceeds of any Advance shall be used to purchase
                  or carry, or to reduce or retire or refinance any credit
                  incurred to purchase or carry, any margin stock (within the
                  meaning of Regulations U and X of the Board of Governors of
                  the Federal Reserve System of the United States) or to extend
                  credit to others for the purpose of purchasing or carrying any
                  margin stock.

9.2         SURVIVAL OF REPRESENTATIONS AND WARRANTIES

            Unless expressly stated to be made as of a specific date, the
representations and warranties made in this Agreement shall survive the
execution of this Agreement and all other Credit Documents, and shall be deemed
to be repeated as of the date of each Advance (including any deemed Advance),
subject to modifications made by NSCL to the Lenders in writing and accepted by
the Majority Lenders, acting reasonably. The Lenders shall be deemed to have
relied upon such representations and warranties at each such time as a condition
of making an Advance hereunder or continuing to extend the Credits hereunder.


                                    ARTICLE X
                            COVENANTS AND CONDITIONS

10.1        FINANCIAL COVENANTS

10.1.1 During the term of this Agreement, NSCL shall at all times maintain an
Interest Coverage Ratio of not less than 2.75 to 1 except that, if the
Acquisition is completed by 31


<PAGE>

                                     - 74 -

August 2001, during the period from completion of the Acquisition to 31 December
2002 NSCL need only maintain an Interest Coverage Ratio of not less than 2.50 to
1.

10.1.2 During the term of this Agreement, the Funded Debt Ratio shall not at any
time exceed the following:

<TABLE>
<CAPTION>
            Period                                             Funded Debt Ratio
            ------                                             -----------------
            <S>                                                <C>
            to 31 December 2001                                0.60 to 1
            from 1 January 2002 to 29 June 2003                0.55 to 1
            on and after 30 June 2003                          0.50 to 1
</TABLE>

Notwithstanding the foregoing, if the Acquisition is completed by 31 August
2001, then the Funded Debt Ratio shall not at any time exceed the following:

<TABLE>
<CAPTION>
            Period                                             Funded Debt Ratio
            <S>                                                <C>
            to 31 December 2002                                0.60 to 1
            from 1 January 2003 to 31 December 2003            0.55 to 1
            on and after 1 January 2004                        0.50 to 1
</TABLE>

10.1.3    During the term of this Agreement, NSCL shall at all times maintain a
consolidated shareholders' equity of not less than a minimum of $625,000,000.
That minimum shall increase to $750,000,000 on and after the date the
Acquisition is completed. Whichever of those minimums is applicable, depending
on whether the Acquisition is completed, shall then increase annually as of 31
December in each year, beginning in 2001, by an amount equal to 50% of NSCL's
consolidated net income for each year, excluding any year in which NSCL incurs a
consolidated net loss.

10.1.4    If the Acquisition is completed by 31 August 2001, the Secured Debt
Ratio shall not at any time exceed 0.40 to 1, and the aggregate amount of
Funded Debt that is secured by any Encumbrance shall not at any time exceed the
Threshold Amount.

10.2        POSITIVE COVENANTS

            During the term of this Agreement, each Restricted Party shall
perform the covenants specified below.

10.2.1      AMALGAMATION FOLLOWING ACQUISITION


<PAGE>

                                     - 75 -

            In the case of the NSCL, it shall cause the amalgamation of NSCL and
Pacifica to be completed in accordance with the provisions of the CANADA
BUSINESS CORPORATIONS ACT within five Business Days following the completion of
the Acquisition.

10.2.2      PAYMENT; OPERATION OF BUSINESS

            (a)   It shall duly and punctually pay the Obligations, either as
                  Borrower or in accordance with its guarantee of the
                  Obligations, at the times and places and in the manner
                  required by the terms thereof.

            (b)   It shall keep proper books of account and record, maintain its
                  corporate status in all jurisdictions where it carries on
                  business, operate its business in accordance with sound
                  business practice and in compliance in all material respects
                  with all applicable Requirements of Law (including but not
                  limited to those regarding ownership of persons carrying on
                  the type of business that it carries on) and Material
                  Contracts and Material Permits.

            (c)   It shall maintain in good standing and shall obtain, as and
                  when required, all Permits and Contracts which may be material
                  to permit it to acquire, own, operate and maintain its
                  business and Property, lease any land forming part of its
                  Property, and perform its obligations under the Credit
                  Documents to which it is or will be a party.

            (d)   It shall not (i) amend any provision of any Material Contract
                  to which it is a party or give any consent, concession or
                  waiver with respect thereto which, in either case, would cause
                  a Material Adverse Change, or (ii) cancel, terminate or accept
                  the surrender of any Material Contract if the cancellation,
                  termination or surrender would cause a Material Adverse
                  Change, unless a Replacement Contract is entered into in
                  respect of the Material Contract in question.

10.2.3      INSPECTION

            It shall at all reasonable times and from time to time upon
reasonable notice, permit representatives of the Lenders to inspect any of its
Property and to examine and take extracts from its financial books, accounts and
records, including but not limited to accounts and records stored in computer
data banks and computer software systems, and to discuss its financial condition
with its senior officers and (in the presence of such of its representatives as
it may designate) its auditors, the reasonable expense of all of which shall be
paid by the Borrower provided that:

            (a)   the Lenders' exercise of their rights under this paragraph
                  does not

<PAGE>

                                     - 76 -

                  unreasonably interfere with the operations of the Restricted
                  Parties;

            (b)   the Lenders maintain the confidentiality of all information
                  they receive in accordance with usual requirements of banker /
                  customer confidentiality, and do not disclose or use it except
                  for the purposes of this Agreement;

            (c)   any representative of a Lender who is not an employee of that
                  Lender has executed and delivered an agreement in favour of
                  the Restricted Parties and the Lenders to use any information
                  obtained as a result of any inspection or examination on
                  behalf of a Lender only for the purposes of this Agreement,
                  and has established to the reasonable satisfaction of NSCL and
                  the Lenders that there is no inherent conflict of interest
                  between the business and clientele of the Restricted Parties
                  and the business and clientele (other than the Lenders) of
                  that representative.

10.2.4      INSURANCE

            (a)   It shall maintain insurance on all its Property with
                  financially sound and reputable insurance companies or
                  associations including all-risk property insurance,
                  comprehensive general liability insurance and business
                  interruption insurance, in amounts, with deductibles or
                  retentions, and against risks that would be maintained by a
                  prudent owner carrying on similar businesses in similar
                  locations, and shall furnish to the Agent, on written request,
                  satisfactory evidence of the insurance carried.

            (b)   It shall cause policies of insurance referred to above to
                  contain a standard mortgage clause and other customary
                  endorsements for the benefit of lenders (including
                  endorsements naming the Trustee as loss payee and additional
                  insured as required by the Agent), all in a form acceptable to
                  the Lenders acting reasonably, and a provision that such
                  policies will not be amended in any manner which is
                  prejudicial to the Lenders or be cancelled without 30 days'
                  prior written notice being given to the Trustee by the issuers
                  thereof. It shall also, subject to Section 10.6, cause all of
                  the proceeds of insurance under such policies to be made
                  payable and to be paid to the Trustee.

            (c)   Whenever reasonably requested in writing by the Agent, it
                  shall cause certified copies of the policies of insurance
                  carried pursuant to this Section to be delivered to the Agent.

            (d)   It shall provide the Agent promptly with such other evidence
                  of the insurance as the Lenders may from time to time
                  reasonably require.


<PAGE>

                                     - 77 -

10.2.5      TAXES, ENCUMBRANCES AND WITHHOLDINGS

            (a)   It shall pay all Taxes and Encumbrances in respect of itself
                  or its Property as they become due and payable unless they are
                  being contested in good faith by appropriate proceedings and
                  it has made adequate provision for payment of the contested
                  amount.

            (b)   It shall withhold from each payment made to any of its past or
                  present employees, officers or directors, and to any
                  non-resident of the country in which it is resident, the
                  amount of all Taxes and other deductions required to be
                  withheld therefrom and pay the same to the appropriate tax
                  authority within the time required under any applicable
                  Requirement of Law.

            (c)   It shall collect from all Persons the amount of all Taxes
                  required to be collected from them and remit the same to the
                  proper tax or other receiving officers within the time
                  required under any applicable Requirement of Law.

10.2.6      OTHER MATTERS

            (a)   It shall, immediately upon receipt, deliver to the Trustee
                  certificates representing all Capital Stock of other
                  Restricted Parties or of other persons in which it owns
                  Capital Stock that it acquires after the date that Capital
                  Stock of the Restricted Parties or other persons is first
                  delivered as part of the Trustee Security, together with
                  executed stock powers of attorney relating to those
                  certificates (or if certificates in respect of such Capital
                  Stock are not available, take such other steps to perfect the
                  Trustee Security relating to such Capital Stock as the Agent
                  requires).

            (b)   It shall observe and comply in all material respects at all
                  times with the provisions of all Environmental Laws and shall
                  provide such evidence of on-going compliance with
                  Environmental Laws as the Majority Lenders may reasonably
                  require from time to time including, without limitation, if so
                  requested by the Majority Lenders, acting reasonably upon
                  reasonable cause, arranging for one or more environmental site
                  assessment and/or compliance audits (each consisting of a
                  non-intrusive phase I audit and recommendations with respect
                  to the findings described therein and such other audits or
                  investigations recommended in each such phase I audit,
                  including, without limitation, an intrusive phase II audit)
                  and reports thereon by an independent consultant engaged by
                  the Restricted Parties and acceptable to the Majority Lenders,
                  acting reasonably. It shall also remove, clean up or otherwise
                  remedy the matters referred to in Section 10.3.2(d).


<PAGE>

                                     - 78 -

            (c)   If it is listed on Schedule I, it shall comply with the limits
                  on its Property, business activities and other matters
                  described on that Schedule and, if it owns Capital Stock of
                  any other person listed on Schedule I, it shall cause that
                  person to comply with the limits on its Property, business
                  activities and other matters described on that Schedule.

            (d)   It shall diligently and in good faith use all commercially
                  reasonable efforts to obtain agreements in form and substance
                  satisfactory to the Agent from other parties to Material
                  Contracts that have been specifically assigned as part of the
                  Trustee Security within 60 days following the initial Advance
                  to the extent that the Agent has permitted such agreements to
                  be obtained after the date of the initial Advance.

            (e)   It shall diligently and in good faith use all commercially
                  reasonable efforts to obtain consents in respect of the
                  Security in form and substance satisfactory to the Agent from
                  landlords of leasehold real property designated by the Agent
                  from time to time in which any Restricted Party carries on
                  business.

            (f)   In the case of NSCL, if it issues the NSCL Notes after
                  completion of the Acquisition, or if it issues Permitted
                  Senior Indebtedness or Permitted Subordinated Indebtedness, it
                  shall concurrently deliver a certificate with copies of all
                  documents necessary to fully and fairly disclose all material
                  terms thereof.

            (g)   In the case of the Borrower, if requested by a Term Credit B
                  Lender, it shall prepare, execute and deliver to such Lender a
                  promissory note payable to the order of such Lender in a form
                  approved by the Administration Agent to further evidence the
                  Advances made by such Lender.

            (h)   Without limiting its obligations under the Credit Documents,
                  if it is a party to any Material Contract, it shall comply
                  with all covenants contained in the assignments of Material
                  Contracts forming part of the Trustee Security to which it is
                  a party.

10.3        REPORTING AND NOTICE REQUIREMENTS

            During the term of this Agreement, NSCL shall deliver or cause the
delivery of the periodic reports specified below and shall give notices in the
circumstances specified below, or cause notices to be given. All financial
statements and other reports shall be in a form satisfactory to the Lenders and
all financial statements shall be prepared in accordance with GAAP. NSCL shall,
as directed by the Agent from time to time, either distribute financial
statements and other reports directly to the Lenders or supply the Agent with
sufficient copies


<PAGE>

                                     - 79 -

of financial statements and other reports to allow the Agent to distribute them
to the Lenders.

10.3.1      PERIODIC REPORTS

            (a)   NSCL shall, as soon as practicable and in any event within 45
                  days of the end of each of its fiscal quarters (including the
                  fourth quarter), prepare and deliver its interim unaudited
                  consolidated financial statements, modified to exclude persons
                  that are not Restricted Parties, and the interim unaudited
                  financial statements of the Borrower, as at the end of such
                  quarter, in each case including, without limitation, balance
                  sheet, statement of income and retained earnings and statement
                  of changes in financial position.

            (b)   NSCL shall, as soon as practicable and in any event within 90
                  days after the end of each of its fiscal years, prepare and
                  deliver its modified consolidated annual financial statements
                  (and the annual financial statements of the Borrower)
                  including, without limitation, balance sheet, statement of
                  income and retained earnings and statement of changes in
                  financial position for such fiscal year, which shall be
                  audited by an internationally recognized accounting firm.

            (c)   NSCL shall, concurrently with the delivery of each of its
                  quarterly and annual financial statements, prepare and deliver
                  a Compliance Certificate.

            (d)   NSCL shall, as soon as practicable and in any event not later
                  than 30 days before the beginning of each of its fiscal years,
                  prepare and deliver its financial forecast for the following
                  five fiscal years (or six years in the case of the forecast to
                  be delivered by 1 December 2001), which shall cover NSCL on a
                  consolidated basis and shall include, without limitation, a
                  projected income statement, a projected statement of changes
                  in funds, estimates of capital expenditures and tax losses and
                  deferrals.

            (e)   NSCL shall promptly deliver copies of all information
                  concerning its financial condition and Property that is
                  provided to the Noteholders and the holders of the Permitted
                  Senior Indebtedness and the Permitted Subordinated
                  Indebtedness and not otherwise provided to the Lenders, copies
                  of all notices received from the Noteholders and the holders
                  of the Permitted Senior Indebtedness and the Permitted
                  Subordinated Indebtedness, and all other information
                  reasonably requested by the Lenders from time to time
                  concerning the business, financial condition and Property of
                  the Restricted Parties.

                  If  there is any change in a subsequent period from the
                  accounting policies, practices


<PAGE>

                                     - 80 -

and calculation methods used by NSCL in preparing its financial statements for
its fiscal year ended 31 December 2000, or components thereof, NSCL shall
provide the Lenders with all information that the Lenders require to ensure that
reports provided to the Lenders after any change are comparable to previous
reports. In addition, all calculations made for the purposes of this Agreement
shall continue to be made based on the accounting policies, practices and
calculation methods that were used in preparing NSCL's financial statements for
its fiscal year ended 31 December 2000 if the changed policies, practices and
methods would materially affect the results of those calculations.

10.3.2      REQUIREMENTS FOR NOTICE

            (a)   NSCL shall promptly notify the Lenders of any Event of Default
                  or Pending Event of Default;

            (b)   NSCL shall promptly notify the Lenders of (i) any material
                  default (either by a Restricted Party or by any other party)
                  under any Material Contract or Material Permit, (ii) any event
                  which, with or without the giving of notice, lapse of time or
                  any other condition subsequent, would be a material default or
                  would otherwise allow the termination of any Material Contract
                  or Material Permit or the imposition of any material sanction
                  on any party to a Material Contract or Material Permit, (iii)
                  the occurrence of any "force majeure" event as described in
                  any Material Contract, (iv) any litigation or arbitration
                  proceedings concerning any Material Contract, and (v) any
                  matters requiring the consent of any other party to a Material
                  Contract, and shall from time to time provide the Lenders with
                  all information reasonably requested by any of the Lenders
                  concerning the status thereof.

            (c)   NSCL shall promptly notify the Lenders on becoming aware of
                  the occurrence of any litigation, dispute, arbitration,
                  proceeding, labour or industrial dispute or any other
                  circumstance affecting it, the result of which if determined
                  adversely would cause a Material Adverse Change, and shall
                  from time to time provide the Lenders with all reasonable
                  information requested by any of the Lenders concerning the
                  status thereof.

            (d)   NSCL shall promptly notify the Agent upon (i) learning of the
                  existence of Hazardous Materials located on, above or below
                  the surface of any land which any Restricted Party occupies or
                  controls, or contained in the soil or water constituting such
                  land, in each case except those being stored, used or
                  otherwise handled or existing in substantial compliance with
                  applicable Requirements of Law or that do not exceed levels
                  prescribed under applicable Requirements of Law, guidelines or
                  policies of applicable regulatory authorities or which would
                  not constitute a breach of or non-compliance with

<PAGE>

                                     - 81 -

                  any Requirements of Law, (ii) the occurrence of any release of
                  Hazardous Materials that has occurred on or from such land and
                  is reportable under applicable Requirements of Law, and (iii)
                  any material enforcement actions, special investigations,
                  control orders, stop orders, injunctions, prosecutions or
                  civil proceedings under any Environmental Law or based on any
                  allegation of material environmental damage or material
                  release of Hazardous Materials, and shall provide the Agent
                  with details, including cost, of the work required to remove,
                  clean up or otherwise remedy the matters referred to in the
                  notice.

            (e)   NSCL shall provide notice to the Agent with copies of all
                  relevant documentation promptly upon becoming aware of (i) the
                  institution of any steps by any Restricted Party or any
                  applicable regulatory authority to terminate any Pension Plan
                  (wholly or in part) which could result in any Restricted Party
                  being required to make an additional contribution to the
                  Pension Plan in excess of $1,000,000, (ii) the failure to make
                  a required contribution to any Pension Plan if such failure is
                  sufficient to give rise to a lien or charge under any
                  applicable pension benefits laws of any other jurisdiction
                  that, individually or in the aggregate could reasonably be
                  expected to cause a Material Adverse Change, (iii) the taking
                  of any action with respect to a Pension Plan which could
                  reasonably be expected to result in the requirement that any
                  Restricted Party furnish a bond or other security to such
                  Pension Plan or any applicable regulatory authority that,
                  individually or in the aggregate could reasonably be expected
                  to cause a Material Adverse Change, (iv) the occurrence of any
                  event which could reasonably be expected to result in the
                  incurrence by any Restricted Party of any material liability,
                  fine or penalty with respect to any Pension Plan, other than
                  liabilities associated with benefit enhancements granted under
                  a Pension Plan in the ordinary course of the Restricted
                  Party's business, or (v) the occurrence of any event which
                  could reasonably be expected to result in any increase in
                  excess of $1,000,000 in the contingent liability of any
                  Restricted Party with respect to any post- retirement Welfare
                  Plan benefit.

            (f)   NSCL shall promptly notify the Agent if any change occurs in
                  the ratings used to determine the Applicable Fee Rate and the
                  Applicable Margin or if it learns that any change is being
                  considered by the relevant ratings agencies.

            (g)   NSCL shall promptly notify the Agent if the aggregate of the
                  Market Values of all Other Secured Obligations that are Swaps
                  to exchange one of Canadian Dollars, US Dollars and Japanese
                  yen to another of those currencies, or that are Swaps to
                  provide for the exchange of floating interest rate obligations
                  for fixed interest rate obligations, is at any time negative
                  from the Restricted Parties' perspective (that is, the
                  Restricted Parties are "out of the money") to


<PAGE>

                                     - 82 -

                  the extent of $140,000,000, and promptly provide such further
                  reports concerning Market Value as the Agent may require while
                  the negative Market Value continues to exceed $140,000,000.

10.4        OWNERSHIP OF THE RESTRICTED PARTIES

            During the term of this Agreement, there shall not, without the
prior written consent of the Majority Lenders (which shall not be unreasonably
withheld), be any change in the ownership or control of the Restricted Parties
other than NSCL from that described on Schedule F, except as otherwise expressly
permitted in this Agreement. In addition, there shall not be any change of
control of NSCL which results in the Reference Debt Rating by Moody's or S&P
being lowered. For the purpose of this Agreement, a change in control of NSCL
shall be deemed to have occurred only in the following circumstances:

            (a)   if the Existing Major Shareholder then holds Capital Stock of
                  NSCL to which is attached 30% or more of the votes that may be
                  cast to elect directors of NSCL and 30% or more of the total
                  shareholders' equity of NSCL, a change of control shall be
                  deemed to have occurred if Capital Stock of NSCL is held by or
                  for the benefit of any person or group of persons acting
                  jointly or in concert, other than by way of security only, in
                  a quantity to which is attached more of the votes or more of
                  the shareholders' equity than are attached to the Capital
                  Stock of NSCL then held by the Existing Major Shareholder, or

            (b)   if the Existing Major Shareholder does not then hold Capital
                  Stock of NSCL to which is attached 30% or more of the votes
                  that may be cast to elect directors of NSCL and 30% or more of
                  the total shareholders' equity of NSCL, a change of control
                  shall be deemed to have occurred if Capital Stock of NSCL to
                  which is attached 30% or more of the votes that may be cast to
                  elect directors of NSCL or 30% or more of the total
                  shareholders' equity of NSCL is held by or for the benefit of
                  any person or group of persons acting jointly or in concert,
                  other than by way of security only.

10.5        NEGATIVE COVENANTS

            During the term of this Agreement, the Restricted Parties shall not
do any of the things specified in this Section without the prior written consent
of the Agent, which shall only be given subject to and in accordance with
Sections 12.7.2, 12.7.3, 12.7.4 and 12.7.5 and which shall not be unreasonably
withheld.

10.5.1      FINANCIAL TRANSACTIONS AND ENCUMBRANCES

            No Restricted Party shall:

<PAGE>

                                     - 83 -

            (a)   create, incur or assume or suffer to exist or cause or permit
                  any Encumbrance upon or in respect of any of its Property,
                  except for Permitted Encumbrances;

            (b)   do or permit anything to adversely affect the ranking or
                  validity of the Security except by incurring a Permitted
                  Encumbrance;

            (c)   create, incur, assume or permit any debts, liabilities or
                  obligations of any kind (including contingent liabilities) to
                  remain outstanding, other than Permitted Obligations;

            (d)   prepay, redeem, defease, repurchase or make other payments in
                  respect of any of its Debt for borrowed money, other than:

                  (i)      the Obligations;

                  (ii)     scheduled interest payments under the Bridge Loan,
                           and repayment of the principal amount of the Bridge
                           Loan from the proceeds of the NSCL Notes;

                  (iii)    scheduled interest and principal payments under the
                           Pacifica Notes, the NSCL Notes and any Permitted
                           Senior Indebtedness (including additional interest
                           that may be payable as a result of delays in
                           effecting registration of the NSCL Notes under the
                           SECURITIES ACT OF 1933 (United States) in accordance
                           with the terms of the NSCL Notes);

                  (iv)     scheduled interest payments under any Permitted
                           Subordinated Indebtedness as long as no Event of
                           Default or Pending Event of Default has occurred and
                           is continuing or would result from payment being
                           made;

                  (v)      the purchase money and other obligations contemplated
                           in Section 1.1.87(l);

                  (vi)     Debts owing by any Restricted Party to another
                           Restricted Party;

                  (vii)    payments made with the proceeds of any issuance of
                           Capital Stock, any right to acquire Capital Stock or
                           any equity-equivalent security, to the extent not
                           required by this Agreement to be paid on account of
                           the Obligations;

            (e)   make loans to any other person, guarantee, endorse or
                  otherwise become

<PAGE>

                                     - 84 -

                  liable for any debts, liabilities or obligations of any other
                  person, or give other financial assistance of any kind to any
                  other person, except for:

                  (i)      the guarantees given as part of the Security or in
                           connection with other debentures permitted to be
                           issued under the Trustee Security;

                  (ii)     loans and advances to other Restricted Parties that
                           are incorporated in Canada;

                  (iii)    guarantees of debts, liabilities and obligations of
                           other Restricted Parties that are Permitted
                           Obligations;

                  (iv)     financial assistance in an aggregate amount of not
                           greater than $5,000,000 to persons other than another
                           Restricted Party that is incorporated in Canada;

            (f)   enter into any Swap except for Swaps secured by the Trustee
                  Security as Other Secured Obligations or other unsecured
                  Swaps, or enter into any Swap if the notional amount or the
                  term of the proposed transaction would adversely affect the
                  Borrower's ability to make principal payments required under
                  the terms of this Agreement or, in the case of interest rate
                  Swaps and similar transactions, the aggregate notional amount
                  swapped by all Restricted Parties at any time (net of
                  offsetting transactions) exceeds the outstanding amount of the
                  Credits at that time.

10.5.2      BUSINESS AND PROPERTY

            No Restricted Party shall:

            (a)   effect any material change in the nature of its business,
                  being the manufacture and sale of paper, pulp and
                  containerboard, except that the Restricted Parties generally
                  may discontinue their containerboard business and any
                  Restricted Party may discontinue any aspect of its business
                  that is transferred to and continued by another Restricted
                  Party;

            (b)   have any Subsidiaries or hold or acquire Capital Stock or
                  other securities of, or make investments in, any other person,
                  or acquire any Property that is not wholly-owned (apart from
                  the interest of the lessor in Property leased by a Restricted
                  Party), except:

                  (i)      other Restricted Parties as specified on Schedule F
                           and any other wholly owned Subsidiaries;

<PAGE>

                                     - 85 -

                  (ii)     investments in Powell River Energy Inc. and other
                           joint ventures existing as of the date of this
                           Agreement, as specified on Schedule F;

                  (iii)    other non-wholly-owned Property or persons, the value
                           of which does not at any time exceed 10% of the value
                           of Consolidated Net Tangible Assets;

            (c)   permit any sale, lease, sale and lease-back or other
                  disposition of any part of its Property (including Capital
                  Stock it holds) except for (i) sales of inventory and obsolete
                  or redundant equipment in the ordinary course of business,
                  (ii) redemption of the shares of Pope & Talbot Mackenzie Pulp
                  Operations Ltd. referred to in Section 1.1.87(m), if the
                  proceeds are used to repay the debt secured by the pledge of
                  those shares, (iii) dispositions to another Restricted Party,
                  provided that Property owned by a Restricted Party
                  incorporated in Canada is not transferred to a Restricted
                  Party not incorporated in Canada and Property located in
                  Canada is not transferred outside Canada, (iv) dispositions in
                  connection with transactions permitted by Section 10.5.3(a),
                  (v) other dispositions of Property (including Capital Stock of
                  any other person) having a fair market value for all
                  Restricted Parties up to an aggregate for all Restricted
                  Parties during the term of this Agreement of 12.5% of the
                  Consolidated Net Tangible Assets valued immediately before any
                  disposition, (vi) dispositions from which the proceeds are
                  used to acquire other Property or offered for prepayment of
                  the Credits in accordance with Section 5.1;

            (d)   permit any single or related series of sales, leases, sale and
                  lease-backs or other dispositions of any part of its Property
                  (including Capital Stock it holds) having a value greater than
                  10% of the Consolidated Net Tangible Assets valued immediately
                  before any disposition, without the prior written consent of
                  the Majority Lenders;

            (e)   except for transactions between two or more Restricted Parties
                  each of which is incorporated in the same jurisdiction, enter
                  into any transaction of any kind with any affiliate or
                  associate (as those terms are defined in the CANADA BUSINESS
                  CORPORATIONS ACT), or person of which it is an associate
                  except on terms that are no more onerous to a Restricted Party
                  than if it were dealing with such person on an arm's length
                  basis.

10.5.3      CORPORATE MATTERS

            No Restricted Party shall:

            (a)   consolidate, amalgamate or merge with any other person, enter
                  into any

<PAGE>

                                     - 86 -

                  corporate reorganization or other transaction intended to
                  effect or otherwise permit a change in its existing Constating
                  Documents, liquidate, wind-up or dissolve itself, or permit
                  any liquidation, winding-up or dissolution, except for
                  transactions involving only one or more Restricted Parties
                  (including but not limited to the continuation of NSCL under
                  the CANADA BUSINESS CORPORATIONS ACT, the amalgamation of NSCL
                  with Pacifica, the amalgamation of Norske Skog Canada Pulp
                  Operations Limited with Export Sales Company Limited, and the
                  reorganization of Pacifica Papers Co. LP into a general
                  partnership between NSCL and Norske Skog Canada Pulp
                  Operations Limited, in each case if the Acquisition is
                  completed) if NSCL gives the Agent reasonable advance notice
                  of the transactions and immediately takes whatever steps and
                  delivers whatever documents (including opinions of counsel
                  satisfactory to the Lenders) are reasonably required to ensure
                  that the Lenders' rights are not adversely affected as a
                  result;

            (b)   change its name without providing the Lenders with prior
                  written notice thereof and promptly taking other steps, if
                  any, as the Lenders reasonably request to permit the Trustee
                  and/or Agent to perfect the Security with respect to the
                  change in name;

            (c)   change the location of its Property (except for goods in
                  transit) or the location of its chief executive office from
                  the respective jurisdictions specified on Schedule F without
                  providing the Agent with prior written notice thereof and
                  promptly taking other steps, if any, as the Lenders reasonably
                  request to permit the Trustee and/or Agent to perfect the
                  Security with respect to the change in location;

            (d)   allow inventory to be located in any jurisdiction where the
                  Trustee Security over inventory has not been registered in
                  accordance with local requirements unless (i) the amount of
                  all such inventory for all Restricted Parties in each such
                  jurisdiction is less than 15,000 tonnes and (ii) the net book
                  value of all such inventory for all Restricted Parties in all
                  such jurisdictions, measured on 30 June of each year with an
                  adjustment for any unusual movements of inventory on or before
                  that date, is less than 30% of then-existing consolidated net
                  book value of NSCL's inventory;

            (e)   allow Property other than inventory to be located in any
                  jurisdiction where the Trustee Security over that Property has
                  not been registered in accordance with local requirements
                  unless the net book value of all such Property for all
                  Restricted Parties in all such jurisdictions is less than 4%
                  of then-existing consolidated net book value of NSCL's fixed
                  assets; for greater certainty, accounts receivable of a
                  Restricted Party shall be considered for the purpose


<PAGE>

                                     - 87 -

                  of this item to be located where the chief executive office
                  of the Restricted Party is located;

            (f)   in the case of NSCL and the Borrower, change its fiscal year
                  end, being 31 December;

            (g)   change its auditors, unless an internationally recognized
                  accounting firm is appointed;

            (h)   be a party to any amendment or waiver of the terms of the
                  Permitted Senior Indebtedness or the Permitted Subordinated
                  Indebtedness, unless expressly permitted by any applicable
                  Intercreditor Agreement;

            (i)   be a party to any amendment or waiver to the terms of the
                  Pacifica Notes, Bridge Loan or NSCL Notes or any documents
                  relating to any of them if the amendment would adversely
                  affect the rights of any Lender or make the terms thereof more
                  onerous to any Restricted Party (including but not limited to
                  any amendment that would shorten the maturity, require any
                  additional prepayment, increase the interest rate or other
                  compensation payable to Noteholders, impose additional
                  requirements for securing the Noteholders or further limit the
                  rights of the Restricted Parties to incur Debt or grant
                  Encumbrances), or be a party to any amendment of any kind
                  without immediately providing the Agent with copies of all
                  documents and other information relating to the amendment.

10.6        USE OF INSURANCE PROCEEDS

10.6.1      Unless otherwise specified in this Section 10.6, all proceeds of
insurance required to be maintained by the Restricted Parties under the terms of
this Agreement shall be paid to the Trustee.

10.6.2      Proceeds of liability insurance shall be paid to the person to whom
the affected Restricted Party is liable. Proceeds of insurance covering loss of
or damage to property in an amount of less than $25,000,000 per claim may be
paid by the insurer directly to the affected Restricted Party unless, if an
Event of Default or Pending Event of Default has occurred and is continuing,
the Agent requires that payment be made to the Trustee. Proceeds paid to the
Restricted Parties shall be used in accordance with Section 5.1.

10.6.3      Subject to the rights of any holder of a Permitted Encumbrance that
has priority over the Security, proceeds of insurance covering loss of or damage
to property in an amount of $25,000,000 per claim or more shall be paid to the
Trustee and the Agent shall direct the Trustee to disburse the proceeds to the
affected Restricted Party on conditions customary for

<PAGE>

                                     - 88 -

construction or equipment financing, to fund the repair or replacement of the
property in respect of which the insurance proceeds are payable, or to acquire
revenue producing Property within the core business of the Restricted Parties,
provided that:

            (a)   no Event of Default (including but not limited to one relating
                  to Material Adverse Change) or Pending Event of Default has
                  occurred and is continuing;

            (b)   the Majority Lenders are satisfied, acting reasonably, that,
                  if repair or replacement is contemplated, the proceeds of such
                  insurance together with other resources available to the
                  affected Restricted Party (the use of which would not
                  contravene this Agreement) are sufficient to fully repair or
                  replace the property in respect of which the insurance
                  proceeds are payable within the remaining term of the
                  then-outstanding Credits or within 365 days, whichever is
                  less.

10.6.4      The proceeds of business interruption insurance shall be used to
repay the Operating Credit, without prejudice to the Borrower's rights to
further Advances under that Credit. If the Operating Credit is repaid in full at
any time, the proceeds may be used to carry on the business of the Restricted
Parties as long as the Majority Lenders are satisfied, acting reasonably, that
adequate provision has been made for payment of the Obligations and any other
obligations secured by the Security (payment of which is permitted in accordance
with this Agreement).

10.7        MARKET VALUE OF SWAPS

            If the aggregate of the Market Values of all Other Secured
Obligations that are Swaps to exchange one of Canadian Dollars, US Dollars and
Japanese yen to another of those currencies, or that are Swaps to provide for
the exchange of floating interest rate obligations for fixed interest rate
obligations, is at any time negative from the Restricted Parties' perspective
(that is, the Restricted Parties on an aggregate basis are "out of the money")
to the extent of $150,000,000 or more, the Restricted Parties shall, within five
Business Days of receiving notice from the Agent, terminate or re-price one or
more Swaps or take other action acceptable to the Agent acting reasonably so
that the Market Value of those Swaps is immediately reduced to a negative Market
Value of not more than $135,000,000. The definition of Market Value in this
Agreement shall not, however, be binding on the Restricted Parties or any Lender
for the purpose of determining the price or other basis on which any such action
is taken.


                                   ARTICLE XI
                                     DEFAULT


<PAGE>

                                     - 89 -

11.1        EVENTS OF DEFAULT

            Each of the following events shall constitute an Event of Default
under this Agreement:

            (a)   the Borrower fails to pay any amount of principal, interest,
                  fees or other Obligations (including any amount relating to a
                  Bankers' Acceptance or an L/C) within five Business Days of
                  when due; or

            (b)   a Restricted Party makes any representation or warranty under
                  any of the Credit Documents which is incorrect or incomplete
                  in any material respect when made or deemed to be made, it
                  being agreed that an incorrect representation that there is no
                  Pending Event of Default shall not result in the Restricted
                  Parties being disentitled to any cure period otherwise
                  associated with the Pending Event of Default; or

            (c)   a Restricted Party ceases or threatens to cease to carry on
                  its business, except as expressly permitted in this Agreement,
                  or admits its inability or fails to pay its debts generally;
                  or

            (d)   a Restricted Party permits any default under one or more
                  agreements or instruments relating to its Debt other than the
                  Obligations (including but not limited to the Debt under the
                  Pacifica Notes, Bridge Loan, NSCL Notes, the Permitted Senior
                  Indebtedness and the Permitted Subordinated Indebtedness to
                  the extent they are outstanding) or permits any other event to
                  occur and to continue without being waived or cured after any
                  applicable grace period specified in such agreements or
                  instruments, if the effect of one or more of such events is to
                  accelerate, or to permit (in accordance with any applicable
                  inter-creditor and subordination arrangements) the
                  acceleration of, the date on which Debt in an aggregate amount
                  of $25,000,000 or more becomes due (whether or not
                  acceleration actually occurs); or

            (e)   a Restricted Party becomes a bankrupt (voluntarily or
                  involuntarily); or becomes subject to any proceeding seeking
                  liquidation, arrangement, relief of creditors or the
                  appointment of a receiver or trustee over, or any judgment or
                  order which has or might have a material and adverse effect
                  on, any material part of its Property, and such proceeding, if
                  instituted against the Restricted Party, or such judgment or
                  order, is not contested diligently, in good faith and on a
                  timely basis and dismissed or stayed within 30 days of its
                  commencement or issuance; or

            (f)   a Restricted Party denies, to any material extent, its
                  obligations under the

<PAGE>

                                     - 90 -

                  Credit Documents or claims any of the Credit Documents to be
                  invalid, with drawn or terminated in whole or in part; or any
                  of the Credit Documents is invalidated in any material respect
                  by any act, regulation or governmental action or is determined
                  to be invalid in any material respect by a court or other
                  judicial entity and such determination has not been stayed
                  pending appeal; or

            (g)   one or more final judgments, writs of execution, garnishments
                  or attachments or similar processes representing claims in an
                  aggregate of $25,000,000 or more for all Restricted Parties at
                  any time are issued or levied against any of their Property
                  and are not released, bonded, satisfied, discharged, vacated,
                  stayed or accepted for payment by an insurer within 30 days
                  after their entry, commencement or levy, unless such process
                  is contested diligently, in good faith and on a timely basis
                  and the applicable Restricted Party has made sufficient cash
                  offset or other arrangements satisfactory to the Lenders with
                  respect thereto; or

            (h)   an Encumbrancer takes possession of all or a substantial
                  portion of the Property of a Restricted Party by appointment
                  of a receiver, receiver and manager, or otherwise; or

            (i)   one or more transactions, events or conditions occur or exist
                  which, when taken together, have a material adverse effect on
                  the Agent's or the Lenders' ability to enforce their rights or
                  remedies under any of the Credit Documents, or the financial
                  condition, business or prospects of NSCL and its Subsidiaries,
                  taken as a whole, in each case as determined by the Majority
                  Lenders, acting in good faith and on commercially reasonable
                  grounds; or

            (j)   there is a breach of Section 10.1 and NSCL does not, within 30
                  days after it first identifies the breach, receive proceeds of
                  an equity investment in a form and an amount sufficient to
                  satisfy the Agent that the breach would not have occurred had
                  the equity investment been made at the beginning of the
                  relevant period for measurement of the provision of Section
                  10.1 that has been breached; or

            (k)   there is a breach of any other provision of any of the Credit
                  Documents and such breach is not corrected or otherwise
                  satisfied within 30 days after the Agent, for and on behalf of
                  the Lenders, gives written notice thereof; or

            (l)   there is a change in the ownership or control of a Restricted
                  Party which is not permitted by this Agreement; or

            (m)   any Material Permit expires or is withdrawn, cancelled,
                  terminated, or

<PAGE>

                                     - 91 -

                  modified so as to cause a Material Adverse Change, and is not
                  reinstated or replaced within 30 days thereafter so as to
                  reverse the Material Adverse Change; or

            (n)   a default under any Material Contract by a Restricted Party or
                  any other party to a Material Contract occurs, or any other
                  event occurs under any Material Contract, and continues
                  without being waived after any applicable grace period
                  specified in the Material Contract, if the effect of the
                  default or other event (if not waived) is to terminate the
                  Material Contract or if the default or other event results in
                  a declaration of non-performance being issued or similar step
                  being taken with respect to a Restricted Party, and the
                  termination, declaration or similar step, if it arose from a
                  breach by or other event relating to a Restricted Party, would
                  cause a Material Adverse Change or, if it relates to a
                  Material Contract listed in Part A of Schedule G and arose
                  from a breach by or other event relating to a Person other
                  than a Restricted Party, would cause an Event of Default under
                  clause (i) above or would have a material adverse effect on
                  the ability of the Restricted Parties as a whole to perform
                  and discharge their obligations under this Agreement or the
                  Material Contracts taken as a whole, in each case unless a
                  Replacement Contract is entered into in respect of the
                  Material Contract in question.

11.2        ACCELERATION AND TERMINATION OF RIGHTS

            If any Event of Default occurs, no Lender shall be under any further
obligation to make Advances and the Majority Lenders may instruct the Agent to
give notice to the Borrower (i) declaring the Lenders' obligations to make
Advances to be terminated, whereupon the same shall forthwith terminate, (ii)
declaring the Obligations or any of them to be forthwith due and payable,
whereupon they shall become and be forthwith due and payable without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower, and/or (iii) demanding that the
Borrower deposit forthwith with the Agent for the Lenders' benefit Collateral
equal to the full principal amount at maturity of all L/Cs and Bankers'
Acceptances then outstanding for its account.

            Notwithstanding the preceding paragraph, if a Restricted Party
becomes a bankrupt (voluntarily or involuntarily), or institutes any proceeding
seeking liquidation, rearrangement, relief of debtors or creditor or the
appointment of a receiver or trustee over any material part of its Property,
then without prejudice to the other rights of the Lenders as a result of any
such event, without any notice or action of any kind by the Agent or the
Lenders, and without presentment, demand or protest, the Lenders' obligation to
make Advances shall immediately terminate, the Obligations shall immediately
become due and payable and the Borrower shall be obligated to deposit forthwith
with the Agent for the Lenders' benefit Collateral equal to the full principal
amount at maturity of all L/Cs and Bankers' Acceptances then outstanding


<PAGE>

                                     - 92 -

for its account.

11.3        PAYMENT OF L/CS

            Immediately upon any Obligations becoming due and payable under
Section 11.2, the Borrower shall, without necessity of further act or evidence,
be and become thereby unconditionally obligated to deposit forthwith with the
Agent for the Lenders' benefit Collateral equal to the full principal amount at
maturity of all L/Cs and Bankers' Acceptances then outstanding for its account
and the Borrower hereby unconditionally promises and agrees to deposit with the
Agent immediately upon such demand Collateral in the amount so demanded. The
Borrower authorizes the Lenders, or any of them, to debit its accounts with the
amount required to pay such L/Cs and to pay such Bankers' Acceptances,
notwithstanding that such Bankers' Acceptances may be held by the Lenders, or
any of them, in their own right at maturity. Amounts paid to the Agent pursuant
to such a demand in respect of Bankers' Acceptances and L/Cs shall be applied
against, and shall reduce, PRO RATA among the Lenders, to the extent of the
amounts paid to the Agent in respect of Bankers' Acceptances and L/Cs,
respectively, the obligations of the Borrower to pay amounts then or thereafter
payable under Bankers' Acceptances and L/Cs, respectively, at the times amounts
become payable thereunder.

            The Borrower shall be entitled to receive interest on cash held as
Collateral in accordance with Section 14.16.

11.4        REMEDIES

            Upon the occurrence of any event by which any of the Obligations
become due and payable under Section 11.2, the Security shall become immediately
enforceable and the Majority Lenders may instruct the Agent to take such action
or proceedings on behalf of the Lenders and in compliance with applicable
Requirements of Law as the Majority Lenders in their sole discretion deem
expedient to enforce the same, all without any additional notice, presentment,
demand, protest or other formality, all of which are hereby expressly waived by
the Restricted Parties.

11.5        SAVING

            The Lenders shall not be under any obligation to the Restricted
Parties or any other person to realize any collateral or enforce the Security or
any part thereof or to allow any of the collateral to be sold, dealt with or
otherwise disposed of. The Lenders shall not be responsible or liable to the
Restricted Parties or any other person for any loss or damage upon the
realization or enforcement of, the failure to realize or enforce the collateral
or any part thereof or the failure to allow any of the collateral to be sold,
dealt with or otherwise disposed of or for any act or omission on their
respective parts or on the part of any director, officer,


<PAGE>

                                     - 93 -

agent, servant or adviser in connection with any of the foregoing, except that a
Lender may be responsible or liable for any loss or damage arising from the
wilful misconduct or gross negligence of that Lender.

11.6        PERFORM OBLIGATIONS

            If an Event of Default has occurred and is continuing and if any
Restricted Party has failed to perform any of its covenants or agreements in the
Credit Documents, the Majority Lenders, may, but shall be under no obligation
to, instruct the Agent on behalf of the Lenders to perform any such covenants or
agreements in any manner deemed fit by the Majority Lenders without thereby
waiving any rights to enforce the Credit Documents. The reasonable expenses
(including any legal costs) paid by the Agent and/or the Lenders in respect of
the foregoing shall be secured by the Security.

11.7        THIRD PARTIES

            No person dealing with the Lenders or any agent of the Lenders shall
be concerned to inquire whether the Security has become enforceable, or whether
the powers which the Lenders are purporting to exercise have become exercisable,
or whether any Obligations remain outstanding upon the security thereof, or as
to the necessity or expediency of the stipu lations and conditions subject to
which any sale shall be made, or otherwise as to the propriety or regularity of
any sale or other disposition or any other dealing with the collateral charged
by such Security or any part thereof.

11.8        POWER OF ATTORNEY

            Effective upon occurrence of an Event of Default, each Restricted
Party hereby irrevocably constitutes and appoints any Vice-President, Managing
Director or more senior officer of the Agent its due and lawful attorney with
full power of substitution in its name and on its behalf, during the continuance
of an Event of Default, to enforce any right, title or interest of the Lenders
in, to or under the Security or any part thereof or any obligation to that
Restricted Party or remedy available to that Restricted Party. This appointment
is irrevocable to the maximum extent permitted by applicable law.

11.9        REMEDIES CUMULATIVE

            The rights and remedies of the Lenders under the Credit Documents
are cumulative and are in addition to and not in substitution for any rights or
remedies provided by law. Any single or partial exercise by the Lenders of any
right or remedy for a default or breach of any term, covenant, condition or
agreement herein contained shall not be deemed to be a waiver of or to alter,
affect, or prejudice any other right or remedy or other rights or remedies to
which the Lenders may be lawfully entitled for the same default or breach. Any
waiver by

<PAGE>

                                     - 94 -

the Lenders of the strict observance, performance or compliance with any term,
covenant, condition or agreement herein contained, and any indulgence granted by
the Lenders shall be deemed not to be a waiver of any subsequent default.

11.10       SET-OFF OR COMPENSATION

            In addition to and not in limitation of any rights now or hereafter
granted under applicable law, if the Obligations become due and payable pursuant
to Section 11.2, the Lenders, or any of them, may at any time and from time to
time without notice to the Restricted Parties or any other person, any notice
being expressly waived by the Restricted Parties, set-off and compensate and
apply any and all deposits, general or special, time or demand, provisional or
final, matured or unmatured, and any other indebtedness at any time owing by the
Lenders, or any of them, to or for the credit of or the account of any
Restricted Party against and on account of the Obligations notwithstanding that
any of them are contingent or unmatured.


                                   ARTICLE XII
                            THE AGENT AND THE LENDERS

12.1        AUTHORIZATION OF AGENT AND RELATIONSHIP

            Each Lender hereby appoints TD as Agent and TD hereby accepts such
appointment. The appointment may only be terminated as expressly provided in
this Agreement. Each Lender hereby authorizes the Agent to take all action on
its behalf and to exercise such powers and perform such duties under this
Agreement as are expressly delegated to the Agent by its terms, together with
all powers reasonably incidental thereto. The Agent shall have only those duties
and responsibilities which are of a solely mechanical and administrative nature
and which are expressly specified in this Agreement, and it may perform such
duties by or through its agents or employees, but shall not by reason of this
Agreement have a fiduciary duty in respect of any Lender. As to any matters not
expressly provided for by this Agreement, the Agent is not required to exercise
any discretion or to take any action, but is required to act or to refrain from
acting (and is fully protected in so acting or refraining from acting) upon the
instructions of the Lenders or the Majority Lenders, as the case may be. Those
instructions shall be binding upon all Lenders, but the Agent is not required to
take any action which exposes the Agent to personal liability or which is
contrary to this Agreement or applicable law.

            Without limiting the foregoing, each of the Lenders hereby grants to
the Agent a power of attorney, for the purposes of laws applicable to the
Security from time to time, to sign documents comprising the Security from time
to time (as the party accepting the grant of the security), and also grants to
the Agent the right to delegate its authority as attorney to


<PAGE>

                                     - 95 -

any other person, whether or not an officer or employee of the Agent. Each of
the Lenders also hereby grants to the Agent, while it is acting as collateral
agent or trustee in connection with the Security, a power of attorney, for the
purposes of Article 2692 of the Civil Code of Quebec and for the purposes of
other laws applicable to the Security from time to time, to sign documents
comprising the Security from time to time (as the party accepting the grant of
the security), and also grants to the Agent in that capacity the right to
delegate its authority as attorney to any other person, whether or not an
officer or employee of the Agent.

            Without limiting the foregoing, the Agent may perform its duties
through one or more of its offices, may designate different offices for the
performance of different duties from time to time and may delegate its duties to
one or more of its affiliates from time to time, including but not limited to
the US Agent. The provisions of this Agreement regarding the Agent shall apply
MUTATIS MUTANDIS to the US Agent and other affiliates of the Agent to whom
duties may be delegated from time to time.

            Neither the Arrangers nor the Syndication Agents have any
responsibility to the Borrower or the Lenders in that capacity.

12.2        DISCLAIMER OF AGENT

            The Agent makes no representation or warranty, and assumes no
responsibility with respect to the due execution, legality, validity,
sufficiency, enforceability or collectability of this Agreement or any other
Credit Document. The Agent assumes no responsibility for the financial condition
of the Restricted Parties, or for the performance of the obligations of the
Restricted Parties under this Agreement or any other Credit Document. The Agent
assumes no responsibility with respect to the accuracy, authenticity, legality,
validity, sufficiency or enforceability of any documents, papers, materials or
other information furnished by the Restricted Parties to the Agent on behalf of
the Lenders. The Agent shall not be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained herein or as to the use of the proceeds of the Credits
or (unless the officers or employees of the Lender acting as Agent active in
their capacity as officers or employees on the Restricted Parties' accounts have
actual knowledge thereof, or have been notified thereof in writing by a
Restricted Party or a Lender) of the existence or possible existence of any
Event of Default or Pending Event of Default. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them as Agent under or in connection with the
Agreement except for its or their own gross negligence or wilful misconduct.
With respect to its Commitment, the Lender acting as Agent shall have the same
rights and powers hereunder as any other Lender, and may exercise the same as
though it were not performing the duties and functions delegated to it as Agent
hereunder.

12.3        FAILURE OF LENDER TO FUND


<PAGE>

                                     - 96 -

12.3.1      Unless the Agent has actual knowledge that a Lender has not made or
will not make available to the Agent for value on a Drawdown Date the applicable
amount required from such Lender pursuant to Sections 8.11 or 8.15, the Agent
shall be entitled to assume that such amount has been or will be received from
such Lender when so due and the Agent may (but shall not be obliged to), in
reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not in fact received by the Agent from such Lender on
such Drawdown Date and the Agent has made available a corresponding amount to
the Borrower on such Drawdown Date as aforesaid, such Lender shall pay to the
Agent on demand an amount equal to the product of (i) the Interbank Reference
Rate per annum multiplied by (ii) the amount that should have been paid to the
Agent by such Lender on such Drawdown Date and was not, multiplied by (iii) a
fraction, the numerator of which is the number of days that have elapsed from
and including such Drawdown Date to but excluding the date on which the amount
is received by the Agent from such Lender and the denominator of which is 365. A
certificate of the Agent containing details of the amount owing by a Lender
under this Section shall be binding and conclusive in the absence of manifest
error. If any such amount is not in fact received by the Agent from such Lender
on such Drawdown Date, the Agent shall be entitled to recover from the Borrower,
on demand, the related amount made available by the Agent to the Borrower as
aforesaid together with interest thereon at the applicable rate per annum
payable by the Borrower hereunder.

12.3.2      Notwithstanding the provisions of Section 12.3.1, if any Lender
fails to make available to the Agent its Proportionate Share of any Advance
(such Lender being herein called the "DEFAULTING LENDER"), the Agent shall
forthwith give notice of such failure by the Defaulting Lender to the Borrower
and the other Lenders. The Agent shall then forthwith give notice to the other
Lenders that any Lender may make available to the Agent all or any portion of
the Defaulting Lender's Proportionate Share of such Advance (but in no way shall
any other Lender or the Agent be obliged to do so) in the place of the
Defaulting Lender. If more than one Lender gives notice that it is prepared to
make funds available in the place of a Defaulting Lender in such circumstances
and the aggregate of the funds which such Lenders (herein collectively called
the "CONTRIBUTING LENDERS" and individually called the "CONTRIBUTING LENDER")
are prepared to make available exceeds the amount of the Advance which the
Defaulting Lender failed to make, then each Contributing Lender shall be deemed
to have given notice that it is prepared to make available its Proportionate
Share of such Advance based on the Contributing Lenders' relative commitments to
advance in such circumstances. If any Contributing Lender makes funds available
in the place of a Defaulting Lender in such circumstances, then the Defaulting
Lender shall pay to any Contributing Lender making the funds available in its
place, forthwith on demand, any amount advanced on its behalf together with
interest thereon at the rate applicable to such Advance from the date of advance
to the date of payment, against payment by the Contributing Lender making the
funds available of all interest received in respect of the Advance from the
Borrower. The failure of any Lender to make available to the Agent its
Proportionate Share of any Advance as required herein shall not relieve any
other Lender of its obligations to make available to


<PAGE>

                                     - 97 -

the Agent its Proportionate Share of any Advance as required herein.

12.4        PAYMENTS BY THE BORROWER

            All payments made by or on behalf of the Borrower pursuant to this
Agreement shall be made to and received by the Agent and shall be distributed by
the Agent to the Lenders as soon as possible upon receipt by the Agent. Except
as required to make payments in respect of the Other Secured Obligations or as
otherwise provided in this Agreement (including but not limited to Sections
5.1.7 and 12.5), the Agent shall distribute:

            (a)   payments of interest in accordance with each Lender's
                  Proportionate Share of the relevant Credit;

            (b)   repayments of principal in accordance with each Lender's
                  Proportionate Share of the relevant Credit; or

            (c)   all other payments received by the Agent including, without
                  limitation, amounts received upon the realization of Security,
                  in accordance with each Lender's Proportionate Share of the
                  relevant Credit provided, however, that with respect to
                  proceeds of realization, no Lender shall receive an amount in
                  excess of the amounts owing to it in respect of the
                  Obligations.

            If the Agent does not distribute a Lender's share of a payment made
by the Borrower to that Lender for value on the day that payment is made or
deemed to have been made to the Agent, the Agent shall pay to the Lender on
demand an amount equal to the product of (i) the Interbank Reference Rate per
annum multiplied by (ii) the Lender's share of the amount received by the Agent
from the Borrower and not so distributed, multiplied by (iii) a fraction, the
numerator of which is the number of days that have elapsed from and including
the date of receipt of the payment by the Agent to but excluding the date on
which the payment is made by the Agent to such Lender and the denominator of
which is 365.

12.5        PAYMENTS BY AGENT

12.5.1 For greater certainty, the following provisions shall apply to any and
all payments made by the Agent to the Lenders hereunder:

            (a)   the Agent shall be under no obligation to make any payment
                  (whether in respect of principal, interest, fees or otherwise)
                  to any Lender until an amount in respect of such payment has
                  been received by the Agent from the Borrower;

            (b)   if the Agent receives less than the full amount of any payment
                  of principal,

<PAGE>

                                     - 98 -

                  interest, fees or other amount owing by the Borrower under
                  this Agreement, the Agent shall have no obligation to remit to
                  each Lender any amount other than such Lender's Proportionate
                  Share of that amount which is the amount actually received by
                  the Agent;

            (c)   if any Lender advances more or less than its Proportionate
                  Share of a Credit, such Lender's entitlement to such payment
                  shall be increased or reduced, as the case may be, in
                  proportion to the amount actually advanced by such Lender;

            (d)   if a Lender's Proportionate Share of an Advance has been
                  advanced, or a Lender's Commitment has been outstanding, for
                  less than the full period to which any payment (other than a
                  payment of principal) by the Borrower relates, such Lender's
                  entitlement to such payment shall be reduced in proportion to
                  the length of time such Lender's Proportionate Share of the
                  relevant Credit or such Lender's Commitment, as the case may
                  be, has actually been outstanding;

            (e)   the Agent acting reasonably and in good faith shall, after
                  consultation with the Lenders in the case of any dispute,
                  determine in all cases the amount of all payments to which
                  each Lender is entitled and such determination shall, in the
                  absence of manifest error, be binding and conclusive; and

            (f)   upon request, the Agent shall deliver a statement detailing
                  any of the payments to the Lenders referred to herein.

12.5.2      Unless the Agent has actual knowledge that the Borrower has not made
or will not make a payment to the Agent for value on the date in respect of
which the Borrower has notified the Agent that the payment will be made, the
Agent shall be entitled to assume that such payment has been or will be received
from the Borrower when due and the Agent may (but shall not be obliged to), in
reliance upon such assumption, pay the Lenders corresponding amounts. If the
payment by such Borrower is in fact not received by the Agent on the required
date and the Agent has made available corresponding amounts to the Lenders, the
Borrower shall, without limiting its other obligations under this Agreement,
indemnify the Agent against any and all liabilities, obligations, losses,
damages, penalties, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on or incurred by the Agent as a result, except
for those arising from the Agent's gross negligence or wilful misconduct. A
certificate of the Agent with respect to any amount owing by the Borrower under
this Section shall be conclusive evidence of the amount owing in the absence of
manifest error. If the payment is not received by the Agent from the Borrower
within a reasonable time following the disbursement to the Lenders by the Agent,
the Lenders shall return the amounts received by them to the Agent with interest
at the Interbank Reference


<PAGE>

                                     - 99 -

Rate.

12.6        DIRECT PAYMENTS

            The Lenders agree among themselves that, except as otherwise
provided for in this Agreement (including but not limited to Sections 14.14 and
14.15), except as necessary to adjust for Advances that are not in each Lender's
Proportionate Share under the Credits, and except for receipts relating to the
Other Secured Obligations, all sums received by a Lender relating to this
Agreement or by virtue of the Security, whether received by voluntary payment,
by the exercise of the right of set-off or compensation or by counterclaim,
cross-action or as proceeds of realization of any Security or otherwise, shall
be shared by each Lender in its Proportionate Share under the Credits and each
Lender undertakes to do all such things as may be reasonably required to give
full effect to this Section, including without limitation, the purchase from
other Lenders of such notes or a portion thereof by the Lender who has received
an amount in excess of its Proportionate Share under the Credits as shall be
necessary to cause such purchasing Lender to share the excess amount rateably in
its Proportionate Share under the Credits with the other Lenders. If any sum
which is so shared is later recovered from the Lenders who originally received
it, the Lender shall restore its Proportionate Share under the Credits of such
sum to such Lenders, without interest. If any Lender shall obtain any payment of
moneys due under this Agreement as referred to above, it shall forthwith remit
such payment to the Agent and, upon receipt, the Agent shall distribute such
payment in accordance with the provisions of Section 12.5.

12.7        ADMINISTRATION OF THE CREDITS

12.7.1      Unless otherwise specified herein, the Agent shall perform the
following duties under this Agreement:

            (a)   prior to an Advance, ensure that all conditions precedent have
                  been fulfilled in accordance with the terms of this Agreement,
                  subject to Section 12.8.2 and any other applicable terms of
                  this Agreement;

            (b)   take delivery of each Lender's Proportionate Share of an
                  Advance and make all Advances hereunder in accordance with the
                  procedures set forth in Sections 8.11 and 8.15;

            (c)   use reasonable efforts to collect promptly all sums due and
                  payable by the Borrower pursuant to this Agreement;

            (d)   make all payments to the Lenders in accordance with the
                  provisions hereof;

            (e)   hold the Security other than the Trustee Security on behalf of
                  the Lenders and

<PAGE>

                                     - 100 -

                  take all necessary steps to comply with registration
                  requirements so that the Security remains perfected under
                  applicable laws, but each Lender shall notify the Agent of any
                  circumstance that might affect the perfection of the Security
                  of which the Lender becomes aware;

            (f)   hold all legal documents relating to the Credits, maintain
                  complete and accurate records showing all Advances made by the
                  Lenders, all remittances and payments made by the Borrower to
                  the Agent, all remittances and payments made by the Agent to
                  the Lenders and all fees or any other sums received by the
                  Agent and, except for accounts, records and documents relating
                  to the fees payable under the Fee Agreement, allow each Lender
                  and their respective advisors to examine such accounts,
                  records and documents at their own expense, and provide any
                  Lender, upon reasonable notice, with such copies thereof as
                  such Lender may reasonably require from time to time at the
                  Lender's expense;

            (g)   except as otherwise specifically provided for in this
                  Agreement, promptly advise each Lender upon receipt of each
                  notice and deliver to each Lender, promptly upon receipt, all
                  other written communications furnished by the Restricted
                  Parties to the Agent on behalf of the Lenders pursuant to this
                  Agreement, including without limitation copies of financial
                  reports and certificates which are to be furnished to the
                  Agent;

            (h)   forward to each of the Lenders, upon request and at the
                  expense of the Lender so requesting (other than customary
                  record books which shall be provided at the expense of the
                  Borrower), copies of this Agreement, the Security and other
                  Credit Documents (other than the Fee Agreement);

            (i)   promptly forward to each Lender, upon request, an up-to-date
                  loan status report; and

            (j)   upon learning of same, promptly advise each Lender in writing
                  of the occurrence of an Event of Default or Pending Event of
                  Default or the occurrence of any event, condition or
                  circumstance which would cause a Material Adverse Change or of
                  any material adverse information coming to the attention of
                  the Agent (using reasonable efforts) relative to the Security,
                  provided that, except as aforesaid, the Agent shall be under
                  no duty or obligation whatsoever to provide any notice to the
                  Lenders and further provided that each Lender hereby agrees to
                  notify the Agent of any Event of Default or Pending Event of
                  Default of which it may reasonably become aware.

<PAGE>

                                     - 101 -

12.7.2      The Agent may take the following actions only with the prior consent
of the Majority Lenders, unless otherwise specified in this Agreement:

            (a)   subject to Sections 12.7.4 and 12.7.3, exercise any and all
                  rights of approval conferred upon the Lenders by this
                  Agreement;

            (b)   give written notice to the Restricted Parties in respect of
                  any matter in respect of which notice may be required,
                  permitted, necessary or desirable in accordance with or
                  pursuant to this Agreement, promptly after receiving the
                  consent of the Majority Lenders, except that the Agent shall,
                  without direction from the Lenders, immediately give the
                  Borrower notice of any payment that is due or overdue under
                  the terms of this Agreement unless the Agent considers that it
                  should request the direction of the Majority Lenders, in which
                  case the Agent shall promptly request that direction;

            (c)   amend, modify or waive any of the terms of this Agreement,
                  including waiver of an Event of Default or Pending Event of
                  Default, if such action is not otherwise provided for in
                  Sections 12.7.4 or 12.7.3;

            (d)   declare an Event of Default or take action to enforce
                  performance of the Obligations and to realize upon the
                  Security including the appointment of a receiver, the exercise
                  of powers of distress, lease or sale given by the Security or
                  by law and take foreclosure proceedings and/or pursue any
                  other legal remedy necessary;

            (e)   decide to accelerate the amounts outstanding under the
                  Credits;

            (f)   pay insurance premiums, taxes and any other sums as may be
                  reasonably required to protect the interests of the Lenders;
                  and

            (g)   enter into or amend, modify or waive any term of any
                  Intercreditor Agreement.

12.7.3      Unless otherwise specified herein, the Agent may take the following
actions only on the following basis:

            (a)   amend, modify, discharge, terminate or waive any of the terms
                  of this Agreement in a manner that adversely affects the
                  rights in respect of payments due to the Operating Credit
                  Lenders, the Term Credit A Lenders or the Term Credit B
                  Lenders as classes in a way that is different from the way the
                  other classes of Lenders are affected (such as by changing the
                  way in which payments are shared among classes), except with
                  the prior consent of Lenders

<PAGE>

                                     - 102 -

                  holding at least 66 2/3% of the outstanding Commitments in
                  each class of Lenders that is adversely affected;

            (b)   amend, modify, discharge, terminate or waive the right of the
                  Term Credit B Lenders to decline prepayment in accordance with
                  Section 5.1.7 except with the prior consent of Term Credit B
                  Lenders holding at least 66 2/3% of the outstanding
                  Commitments in respect of Term Credit B.

12.7.4      The Agent may take the following actions only if the prior unanimous
consent of the Lenders is obtained, unless otherwise specified herein:

            (a)   amend, modify, discharge, terminate or waive any of the terms
                  of the Security, other than the pledge of the Capital Stock of
                  Pope & Talbot, Inc. required under Section 6.1.1(d), which may
                  be released by the Agent as set forth in Section 6.1;

            (b)   amend, modify, discharge, terminate or waive any of the terms
                  of this Agreement if such amendment, modification, discharge,
                  termination or waiver would increase the amount of any Credit,
                  amend the purpose of any Credit, reduce the interest rates and
                  similar charges applicable to any Credit, reduce the fees
                  payable with respect to any Credit, extend any date fixed for
                  payment of principal, interest or any other amount relating to
                  any Credit or extend the term of any Credit (for greater
                  certainty, any extension of the Operating Credit shall be made
                  in accordance with Section 2.4 and individual Term Credit B
                  Lenders are entitled to decline payments to the extent
                  permitted by Section 5.1.7); and

            (c)   amend the definition of "Majority Lenders" or this Section
                  12.7.4.

            For greater certainty, no Lender's Commitment or Proportionate Share
may be amended without the consent of that Lender.

12.7.5      Notwithstanding Sections 12.7.2, 12.7.4 and 12.7.3, the Agent may,
without the consent of the Lenders, make amendments to the Credit Documents that
are for the sole purpose of curing any immaterial or administrative ambiguity,
defect or inconsistency, but shall immediately notify the Lenders of any such
action. The Agent may also consent to any change to the list of Material
Contracts contained in Schedule G and may discharge any Security (or direct the
Trustee to do so) to the extent necessary to allow any Restricted Party to
complete any sale or other disposition of Property permitted by this Agreement.

12.7.6      As between the Restricted Parties, on the one hand, and the Agent
and the Lenders, on the other hand:


<PAGE>

                                     - 103 -

            (a)   all statements, certificates, consents and other documents
                  which the Agent purports to deliver on behalf of the Lenders
                  or the Majority Lenders shall be binding on each of the
                  Lenders, and the Restricted Parties shall not be required to
                  ascertain or confirm the authority of the Agent in delivering
                  such documents;

            (b)   all certificates, statements, notices and other documents
                  which are delivered by the Restricted Parties to the Agent in
                  accordance with this Agreement shall be deemed to have been
                  duly delivered to each of the Lenders;

            (c)   all payments which are delivered by the Borrower to the Agent
                  in accordance with this Agreement shall be deemed to have been
                  duly delivered to each of the Lenders;

            (d)   unless an Event of Default or Pending Event of Default has
                  occurred and is continuing, NSCL's consent to the appointment
                  of any Successor Agent must be obtained, but NSCL's consent
                  shall not be unreasonably withheld.

12.8        RIGHTS OF AGENT

12.8.1 In administering the Credits, the Agent may retain, at the expense of the
Lenders if such expenses are not recoverable from the Borrower, such solicitors,
counsel, auditors and other experts and agents as the Agent may select, in its
sole discretion, acting reasonably and in good faith after consultation with the
Lenders.

12.8.2      The Agent shall be entitled to rely on any communication, instrument
or document believed by it to be genuine and correct and to have been signed by
the proper individual or individuals, and shall be entitled to rely and shall be
protected in relying as to legal matters upon opinions of independent legal
advisors selected by it. The Agent may also assume that any representation made
by a Restricted Party is true and that no Event of Default or Pending Event of
Default has occurred unless the officers or employees of the Lender acting as
Agent, active in their capacity as officers or employees responsible for the
Restricted Parties' account have actual knowledge to the contrary or have
received notice to the contrary from any other party to this Agreement.

12.8.3      The Agent may, without any liability to account, accept deposits
from and lend money to and generally engage in any kind of banking, or other
business with the Restricted Parties, as if it were not the Agent.

12.8.4      Except in its own right as a Lender, the Agent shall not be required
to advance its own funds for any purpose, and in particular, shall not be
required to pay with its own funds insurance premiums, taxes or public utility
charges or the cost of repairs or maintenance with

<PAGE>

                                     - 104 -

respect to the assets which are the subject matter of the Security, nor shall it
be required to pay with its own funds the fees of solicitors, counsel, auditors,
experts or agents engaged by it as permitted hereby.

12.8.5      The Agent shall be entitled to receive a fee for acting as Agent as
agreed in the Fee Agreement or as otherwise agreed between the Agent and NSCL
from time to time.

12.9        ACKNOWLEDGEMENTS, REPRESENTATIONS AND COVENANTS OF LENDERS

12.9.1      It is acknowledged and agreed by each Lender that it has itself
been, and will continue to be, solely responsible for making its own independent
appraisal of and investigations into the financial condition, creditworthiness,
property, affairs, status and nature of the Restricted Parties. Accordingly,
each Lender confirms to the Agent that it has not relied, and will not hereafter
rely, on the Agent (a) to check or inquire on its behalf into the adequacy or
completeness of any information provided by the Restricted Parties under or in
connection with this Agreement or the transactions herein contemplated (whether
or not such information has been or is hereafter distributed to such Lender by
the Agent) or (b) to assess or keep under review on its behalf the financial
condition, creditworthiness, property, affairs, status or nature of the
Restricted Parties.

12.9.2      Each Lender represents and warrants that it has the legal capacity
to enter into this Agreement pursuant to its charter and any applicable
legislation and has not violated its charter, constating documents or any
applicable legislation by so doing.

12.9.3      Each Lender agrees to indemnify the Agent (to the extent not
reimbursed by the Borrower), rateably according to its Proportionate Share from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Agent in any way relating to or arising out of the Credit Documents or the
transactions therein contemplated, provided that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Agent's gross negligence or wilful misconduct. Without limiting the generality
of the foregoing, each Lender agrees to reimburse the Agent for its
Proportionate Share of any out-of-pocket expenses (including counsel fees)
incurred by the Agent in connection with the preservation of any rights of the
Agent or the Lenders under, or the enforcement of, or legal advice in respect of
rights or responsibilities under this Agreement, to the extent that the Agent is
not reimbursed for such expenses by the Borrower. The obligation of the Lenders
to indemnify the Agent shall survive the termination of this Agreement and shall
be performed by the Lenders promptly upon demand by the Agent.

12.9.4      Each of the Lenders acknowledges and confirms that in the event that
the Agent


<PAGE>

                                     - 105 -

does not receive payment in accordance with this Agreement, it shall not be the
obligation of the Agent to maintain the Credits in good standing nor shall any
Lender have recourse to the Agent in respect of any amounts owing to such Lender
under this Agreement.

12.9.5      Each Lender acknowledges and agrees that its obligation to advance
its Proportionate Share of Advances in accordance with the terms of this
Agreement is independent and in no way related to the obligation of any other
Lender hereunder.

12.9.6      Each Lender hereby acknowledges receipt of a copy of this Agreement
and the Security (to the extent that the Security has been delivered) and
acknowledges that it is satisfied with the form and content of such documents.

12.10       COLLECTIVE ACTION OF THE LENDERS

            Each of the Lenders hereby acknowledges that to the extent permitted
by applicable law, the Security and the remedies provided under the Credit
Documents to the Lenders are for the benefit of the Lenders collectively and
acting together and not severally and further acknowledges that its rights
hereunder and under the Security are to be exercised not severally, but by the
Agent upon the decision of the Majority Lenders or Lenders as required by this
Agreement. Accordingly, notwithstanding any of the provisions contained herein
or in the Security each of the Lenders hereby covenants and agrees that it shall
not be entitled to take any action hereunder or thereunder including, without
limitation, any declaration of default hereunder or thereunder but that any such
action shall be taken only by the Agent with the prior written agreement of the
Majority Lenders. Each of the Lenders hereby further covenants and agrees that
upon any such written agreement being given by the Majority Lenders, it shall
co-operate fully with the Agent to the extent requested by the Agent.
Notwithstanding the foregoing, in the absence of instructions from the Lenders
and where in the sole opinion of the Agent, acting reasonably and in good faith,
the exigencies of the situation warrant such action, the Agent may without
notice to or consent of the Lenders take such action on behalf of the Lenders as
it deems appropriate or desirable in the interest of the Lenders.

12.11       SUCCESSOR AGENT

            Subject to the appointment and acceptance of a Successor Agent as
provided in this Section, and subject to Section 12.7.6(d), the Agent may resign
at any time by giving 30 days' written notice thereof to the Lenders and NSCL,
and may be removed at any time by the Majority Lenders upon 30 days' written
notice. Upon receipt of notice by the Lenders of the resignation of the Agent,
or upon giving notice of termination to the Agent, the Majority Lenders may,
within 21 days, appoint a successor from among the Lenders or, if no Lender is
willing to accept such an appointment, from among other banks to which the BANK
ACT (Canada) applies, which each have combined capital and reserves in excess of
$250,000,000,


<PAGE>

                                     - 106 -

and which have offices in Vancouver, Toronto and New York (the "SUCCESSOR
AGENT"). If no Successor Agent has been so appointed and has accepted such
appointment within 21 days after the retiring Agent's giving of notice of
resignation or receiving of notice of termination, then the retiring Agent may,
on behalf of the Lenders, appoint a Successor Agent. Upon the acceptance of any
appointment as Agent hereunder by a Successor Agent, the retiring Agent shall
pay the Successor Agent any unearned portion of any fee paid to the Agent for
acting as such, and the Successor Agent shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its further duties and obligations as
Agent under this Agreement and the other Credit Documents. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Article shall
continue to enure to its benefit and be binding upon it as to any actions taken
or omitted to be taken by it while it was Agent hereunder.

12.12       PROVISIONS OPERATIVE BETWEEN LENDERS AND AGENT ONLY

            Except for the provisions of Sections 12.7.6, 12.9.2, 12.9.5, 12.10,
12.11 and 12.12, the provisions of this Article relating to the rights and
obligations of the Lenders and the Agent INTER SE shall be operative as between
the Lenders and the Agent only, and the Restricted Parties shall not have any
rights or obligations under or be entitled to rely for any purpose upon such
provisions.


                                  ARTICLE XIII
                               ADDITIONAL LENDERS,
                             SUCCESSORS AND ASSIGNS

13.1        SUCCESSORS AND ASSIGNS

13.1.1      The Credit Documents shall be binding upon and enure to the benefit
of the Agent, the Arrangers, each Lender, the Restricted Parties and their
respective successors and permitted assigns, except that the Restricted Parties
shall not assign any rights or obligations with respect to this Agreement or any
of the other Credit Documents without the prior written consent of each Lender.

            The collective rights and obligations of the Lenders under this
greement are assignable in whole or in part (PRO RATA) and any Lender shall be
entitled to assign in whole or in part its individual rights and obligations
hereunder or to permit other financial institutions to participate in the
Credits, all in accordance with the provisions of Section 13.2 and the other
terms of this Agreement. The Restricted Parties hereby consent to the disclosure
of any information relating to the Restricted Parties to any potential Lender or
participant provided that the potential Lender or participant agrees in writing
to keep the information confidential.


<PAGE>

                                     - 107 -

            No assignment shall be made in respect of an aggregate Commitment of
less than $5,000,000 in respect of the Operating Credit and/or Term Credit A, or
less than US $1,000,000 in respect of Term Credit B. No assignment may result in
the Commitment of any Lender, determined as of the effective date of the
Assignment Agreement with respect to such assignment, being less than
$10,000,000, except that the Commitment of any Term Credit B Lender or the
aggregate of the Commitment of any Term Credit B Lender and its Affiliated Funds
may be not less than US $1,000,000 in respect of Term Credit B.

            Notwithstanding any other provisions of this Agreement, each Lender
agrees that it shall not offer to assign or assign any portion of its rights and
obligations under this Agreement including, without limitation, any portion of
its Commitment, without the prior written consent of the Agent and NSCL, which
consent shall not be unreasonably withheld, except that (i) the consent of the
Agent and NSCL shall not be required for an assignment of its interest in Term
Credit B by a Lender to an Affiliated Fund of that Lender or to another Lender
and (ii) the consent of NSCL shall not be required if an Event of Default has
occurred and is continuing or in connection with an assignment by TD, RBC or
Merrill Lynch Capital Canada Inc. The Lenders agree that NSCL's consent shall
not be considered to be unreasonably withheld if the proposed assignment would
result in any material additional cost being incurred by the Borrower, including
but not limited to any gross-up for withholding tax under Section 14.14.
Notwithstanding the foregoing, the Borrower may not withhold its consent because
of any increase in the discount rate applicable to Bankers' Acceptances of the
proposed assignee compared to the assignor or any gross-up for withholding tax
that may be applicable as a result of an assignment by TD, RBC and/or Merrill
Lynch Capital Canada Inc. in order to achieve their desired hold positions in
the syndication of the Credits.

13.1.2      Notwithstanding Section 13.1.1, any Lender may at any time pledge or
assign a security interest in all or any portion of its rights under this
Agreement to secure obligations of such Lender, including without limitation (i)
any pledge or assignment to secure obligations to a Federal Reserve Bank and
(ii) in the case of any Lender that is a Fund, any pledge or assignment to any
holders of obligations owed, or securities issued, by such Lender including to
any trustee for, or any other representative of, such holders; provided that no
such pledge or assignment of a security interest shall release a Lender from any
of its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto; and provided that the Borrower and the Restricted
Parties shall not be liable for any increased costs as a result of such pledge
or assignment, including any payment required to be made to a Federal Reserve
Bank and any other such pledgee or assignee.

13.1.3      A participation by a Lender of its interest (or a part thereof)
hereunder or a payment by a participant to a Lender as a result of the
participation will not constitute a payment hereunder to the Lender or an
Advance to the Borrower. A payment (excluding the effect of any premium or
discount) made by an assignee to an assigning Lender in order for the assignee
to assume its Proportionate Share of Advances made by the assigning Lender will

<PAGE>

                                     - 108 -

reduce the Advances owing by the Borrower to the assigning Lender by the amount
of the payment and will be result in Advances in the amount of the payment
becoming owed to the assignee by the Borrowers as of the date that the payment
is made. However, no such payment shall, as between the Borrowers and the
Lenders, be or be deemed to be a repayment by the Borrowers or a new Advance by
the Lenders.

13.2        ASSIGNMENTS

13.2.1      Subject to Section 13.1 and the other terms of this Agreement, the
Lenders collectively or individually may assign to one or more assignees all or
a portion of their respective rights and obligations under this Agreement
(including, without limitation, all or a portion of their respective
Commitments). The parties to each such assignment shall execute and deliver an
Assignment Agreement to the Agent, for its consent (if necessary) and recording
in the Register and, except in the case of the initial assignments of Term
Credit B by TD, RBC and Merrill Lynch Capital Canada Inc. to persons who are not
Lenders at the date of this Agreement but who have at the date of this Agreement
provided commitments to become Lenders, and assignments by TD, RBC and Merrill
Lynch Capital Canada Inc. to each other, shall pay a processing and recording
fee to the Agent in the amount of $3500 in the case of each assignment by an
Operating Credit Lender or Term Credit A Lender or US $3500 in the case of each
assignment by a Term Credit B Lender. After such execution, delivery, consent
and recording (i) the assignee thereunder shall be a party to this Agreement
and, to the extent that rights and obligations hereunder have been assigned to
it, have the rights and obligations of a Lender hereunder and (ii) the assigning
Lender thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment Agreement, relinquish its
rights, other than rights to expense reimbursement and indemnification to which
it is then entitled hereunder, and be released from its obligations under this
Agreement, other than obligations in respect of which it is then in default and
liabilities arising from its actions prior to the assignment. In the case of an
Assignment Agreement covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto.

13.2.2      The agreements of an assignee contained in an Assignment Agreement
shall benefit the assigning Lender thereunder, the other Lenders and the Agent
in accordance with the terms of the Assignment Agreement.

13.2.3      The Agent shall maintain at its address referred to herein a copy
of each Assignment Agreement delivered to and acknowledged by it and a register
for recording the names and addresses of the Lenders and the Commitment under
the Credits of each Lender from time to time (the "REGISTER"). The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error. The Borrower, the Agent and each of the Lenders may treat each person
whose name is recorded in the Register as a Lender hereunder for all purposes of
this Agreement, and need not recognize any person as a Lender unless it

<PAGE>

                                     - 109 -

is recorded in the Register as a Lender. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.

13.2.4      Upon its receipt of an Assignment Agreement executed by an assigning
Lender and an assignee and approved by the Agent (as evidenced by its execution
thereof), the Agent shall, if the Assignment Agreement has been completed and is
in the required form with such immaterial changes as are acceptable to the
Agent, record the information contained therein in the Register and update
Schedule E. The Agent shall provide NSCL with an updated version of Schedule E
not less frequently than quarterly.

13.3        PARTICIPATIONS

            Each Lender may (subject to the provisions of Section 13.1) sell
participations to one or more financial institutions or other persons in or to
all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment), but the participant
shall not become a Lender and:

            (a)   the Lender's obligations under this Agreement (including,
                  without limitation, its Commitment) shall remain unchanged;

            (b)   the Lender shall remain solely responsible to the other
                  parties hereto for the performance of such obligations;

            (c)   the Borrower, the Agent and the other Lenders shall continue
                  to deal solely and directly with the Lender in connection with
                  the Lender's rights and obligations under this Agreement;

            (d)   no participant shall have any right to approve any amendment
                  or waiver of any provision of this Agreement, or any consent
                  to any departure by any person therefrom.

            Notwithstanding the foregoing, each participant shall have the same
benefit, as if it was a Lender, with respect to the rights provided to the
Lenders in Section 14.15. Each participant shall also have the right to be
provided by the Lender from whom it has obtained its participation with all
information relating to the Restricted Parties which is provided to any Lender.
Without limiting the foregoing, no participant shall have the benefit of Section
14.14 except to the extent that the Lender from whom it has obtained its
participation is itself entitled to compensation under that Section.

<PAGE>

                                     - 110 -

                                   ARTICLE XIV
                            MISCELLANEOUS PROVISIONS

14.1        HEADINGS AND TABLE OF CONTENTS

            The headings of the Articles and Sections and the Table of Contents
are inserted for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.

14.2        ACCOUNTING TERMS

            Each accounting term used in this Agreement, unless otherwise
defined herein, has the meaning assigned to it under GAAP.

14.3        CAPITALIZED TERMS

            All capitalized terms used in any of the Credit Documents (other
than this Agreement) which are defined in this Agreement shall have the meaning
defined herein unless otherwise defined in the other document.

14.4        SEVERABILITY

            Any provision of this Agreement which is or becomes prohibited or
unenforceable in any relevant jurisdiction shall not invalidate or impair the
remaining provisions hereof which shall be deemed severable from such prohibited
or unenforceable provision and any such prohibition or unenforceability in any
such jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. Should this Agreement fail to provide for any relevant
matter, the validity, legality or enforceability of this Agreement shall not
thereby be affected.

14.5        NUMBER AND GENDER

            Unless the context otherwise requires, words importing the singular
number shall include the plural and vice versa, words importing any gender
include all genders and references to agreements and other contractual
instruments shall be deemed to include all present or future amendments,
supplements, restatements or replacements thereof or thereto.

14.6        AMENDMENT, SUPPLEMENT OR WAIVER

            No amendment, supplement or waiver of any provision of the Credit
Documents, nor any consent to any departure by a Restricted Party therefrom,
shall in any event be effective unless it is in writing, makes express reference
to the provision affected thereby and is signed by the Agent for and on behalf
of the Lenders or the Majority Lenders, as the case


<PAGE>

                                     - 111 -

may be, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. In addition, any
amendment or supplement shall require the written consent of the other parties
to the Credit Document in question. No waiver or act or omission of the Agent,
the Lenders, or any of them, shall extend to or be taken in any manner
whatsoever to affect any subsequent Event of Default or breach by a Restricted
Party of any provision of the Credit Documents or the rights resulting
therefrom.

14.7        GOVERNING LAW

            Each of the Credit Documents, except for those which expressly
provide otherwise, shall be conclusively deemed to be a contract made under, and
shall for all purposes be exclusively governed by and construed in accordance
with, the laws of the Province of British Columbia and the laws of Canada
applicable in British Columbia. Each party to this Agreement hereby irrevocably
and unconditionally attorns to the non-exclusive jurisdiction of the courts of
British Columbia and all courts competent to hear appeals therefrom.

14.8        THIS AGREEMENT TO GOVERN

            In the event of any conflict between the terms of this Agreement and
the terms of any other Credit Document (other than the Fee Agreement and any
Intercreditor Agreement, which shall prevail as against this Agreement), the
provisions of this Agreement shall govern to the extent necessary to remove the
conflict.

14.9        PERMITTED ENCUMBRANCES

            The designation of an Encumbrance as a Permitted Encumbrance is not,
and shall not be deemed to be, an acknowledgment by the Lenders that the
Encumbrance shall have priority over the Security.

14.10       CURRENCY

            All payments made hereunder shall be made in the currency in respect
of which the obligation requiring such payment arose. Unless the context
otherwise requires, all amounts expressed in this Agreement in terms of money
shall refer to Canadian Dollars.

            Except as otherwise expressly provided in this Agreement, wherever
this Agreement contemplates or requires the calculation of the equivalent in one
currency of an amount expressed in another currency, the calculation shall be
made on the basis of the Exchange Rate at the effective date of the calculation.

14.11       LIABILITY OF LENDERS


<PAGE>

                                     - 112 -

            The liability of the Lenders in respect of all matters relating to
this Agreement and the other Credit Documents is several and not joint or joint
and several. Without limiting that statement, the obligations of the Lenders to
make Advances is limited to their respective Proportionate Shares of any Advance
that is requested, and, in the aggregate, to their respective Proportionate
Shares of the total amounts of the Credits.

14.12       EXPENSES AND INDEMNITY

            All statements, reports, certificates, opinions, appraisals and
other documents or information required to be furnished to the Lenders, the
Agent, or any of them, by the Restricted Parties under this Agreement shall be
supplied without cost to the Lenders, the Agent, or any of them. The Borrower
shall pay on demand all reasonable third party costs and expenses of the
Lenders, or any of them (including, without limitation, the reasonable fees and
expenses of counsel for the Lenders and the Agent collectively, but not
separately for individual Lenders and the Agent, on a solicitor and own client
basis), incurred in connection with (i) the preparation, execution, delivery,
administration, periodic review and enforcement of the Credit Documents; (ii)
obtaining advice as to their rights and responsibilities in connection with the
Credits and the Credit Documents; (iii) reviewing, inspecting and appraising the
collateral that is the subject of the Security at reasonable intervals; (iv) the
syndication of the Credits; (v) due diligence; and (vi) other matters relating
to the Credits. Such costs and expenses shall be payable whether or not an
Advance is made under this Agreement.

            The Borrower shall indemnify the Lenders, the Agent, the Arrangers,
the Syndication Agents, and each of them, and their respective officers,
directors, trustees, employees and agents against any liability, obligation,
loss or expense which any of them may sustain or incur as a consequence of (i)
any representation or warranty made herein by a Restricted Party which was
incorrect at the time it was made or deemed to have been made, (ii) a default by
the Borrower in the payment of any sum due from it under or in connection with
the Credit Documents (irrespective of whether an Advance is deemed to be made to
pay the amount that has not been paid), including, but not limited to, all sums
(whether in respect of principal, interest or any other amount) paid or payable
to lenders of funds borrowed by the Lenders, the Agent, or any of them, in order
to fund the amount of any such unpaid amount to the extent the Lenders, the
Agent, or any of them, are not reimbursed pursuant to any other provisions of
this Agreement, (iii) the failure of the Borrower to complete any Advance or
make any payment after notice therefor has been given under this Agreement, (iv)
the failure of a purchaser of Bankers' Acceptances (other than one of the
Lenders) to pay for and take delivery of them in any arrangement for sale made
by the Borrower and communicated to the Agent, (v) any other default by a
Restricted Party hereunder, and (vi) generally, the Lenders and the Agent having
entered into this Agreement and the other Credit Documents and made Advances to
the Borrower. A certificate of a Lender or the Agent as to the amount of any
such loss or expense shall be conclusive evidence as to the amount


<PAGE>

                                     - 113 -

thereof, in the absence of manifest error provided that the Lender determines
the amount owing to it in good faith using any reasonable method and provides a
detailed description of its calculation of the amount owing to it.

            In no event shall any party to this Agreement be liable for
consequential damages suffered by any other party.

            The agreements in this Section shall survive the termination of this
Agreement and repayment of the Obligations.

14.13       ENVIRONMENTAL INDEMNITY

            The Borrower shall protect, indemnify and hold the Agent and the
Lenders and all directors, officers, employees and agents of the Agent or the
Lenders harmless from and against any and all actual or potential claims,
liabilities, damages, losses, fines, penalties, sanctions, judgments, awards,
costs and expenses whatsoever (including, without limitation, costs and expenses
of investigating, denying or defending any of the foregoing and costs and
expenses for preparing any necessary environmental assessment report or other
such reports) which arise out of or relate in any way to:

            (a)   the presence, use, handling, production, transportation,
                  storage, release, deposit, discharge or disposal of any
                  Hazardous Materials in, on or about any Property owned,
                  operated or occupied by the Restricted Parties and their
                  Subsidiaries, whether by the Restricted Parties or any other
                  person;

            (b)   any remedial action taken by the Agent or any Lender in
                  connection with any matter referred to in paragraph (a),
                  including without limitation any repair, clean-up, remediation
                  or detoxification of any of such Property and the preparation
                  of any closure or other required plans; and

            (c) any breach by any Restricted Party of any Environmental Law.

            Notwithstanding anything to the contrary contained in this
Agreement, (i) the indemnity provisions set forth above shall not apply with
respect to Hazardous Materials, contaminants, wastes or other substances which
the Borrower establishes were first placed on, in, under or about the property
in question after the Agent or a Lender or other indemnified party took actual
and exclusive possession of the property (either through foreclosure or
otherwise), and (ii) the indemnity provisions set forth above are not intended
to indemnify any indemnified party for its own gross negligence or wilful
misconduct.

            If any Hazardous Materials are caused to be removed by any
Restricted Party, the Agent, a Lender or any other indemnified party, then such
Hazardous Materials will be and


<PAGE>

                                     - 114 -

remain the property of the Restricted Party to which they belonged before
removal, and such Restricted Party will assume any and all liability for such
removed Hazardous Materials. The Borrower understands that its liability to the
indemnified parties under this Section will survive the termination of this
Agreement and repayment of the Obligations.

14.14       MANNER OF PAYMENT AND TAXES

            All payments to be made by or on behalf of the Restricted Parties
(or in the case of upfront fees and indemnity fees, by the Agent or any Lender
to another Lender or to an assignee of an interest in the Credits) in connection
with the Credit Documents are to be made without set-off, compensation or
counterclaim, free and clear of and without deduction for or on account of any
Tax, including but not limited to withholding taxes, other than Excluded Taxes,
except if such deduction is required by law or the administration thereof. If
any Tax, other than Excluded Taxes, is deducted or withheld from any payments
under the Credit Documents (including the remittance provided for in this
Section), the Restricted Party making payment shall promptly remit to the Agent
for the Lenders' benefit in the currency in which such payment was made, the
equivalent of the amount of Tax so deducted or withheld together with the
relevant receipt issued by the taxing or other receiving authority. Subject to
Section 8.28, if the Borrower is prevented by operation of law or otherwise from
paying, causing to be paid or remitting such Tax, the interest or other amount
payable under the Credit Documents will be increased to such rates as are
necessary to yield and remit to the Lenders the principal sum advanced or made
available together with interest at the rates specified in the Credit Documents
after provision for payment of such Tax.

            If any Lender or the Agent becomes liable for any Tax in the
jurisdiction in which the person making a payment under the Credit Documents is
located as a result of a payment being made without the required Tax in that
jurisdiction having been deducted or withheld, the payer shall indemnify the
Lender or the Agent, as the case may be, for such Tax and any interest and
penalties thereon, and the indemnity payment shall be increased as necessary so
that after the imposition of any Tax in that jurisdiction on the indemnity
payment (including Tax in respect of any such increase in the indemnity
payment), the Lender or the Agent shall receive the full amount of Taxes,
interest and penalties for which it is liable in that jurisdiction as a result
of the failure to deduct or withhold Tax.

14.15       INCREASED COSTS ETC.

            If the introduction of or any change in or in the interpretation of,
or any change in the application to any Restricted Party or any Lender of, any
law or any regulation or guideline from any central bank or other governmental
authority that is binding on any Restricted Party or any Lender (whether or not
having the force of law), including but not limited to any reserve or special
deposit requirement or any Tax (other than Excluded Taxes) or any capital
requirement, has due to the Lenders' compliance therewith the effect, directly


<PAGE>

                                     - 115 -

or indirectly, of (i) increasing the cost to the Lenders, or any of them, of
performing their respective obligations hereunder; (ii) reducing any amount
received or receivable by the Lenders, or any of them, hereunder or its
effective return hereunder or on its capital; or (iii) causing the Lenders, or
any of them, to make any payment or to forego any return based on any amount
received or receivable by the Lenders, or any of them, hereunder, then upon
demand from time to time the affected Restricted Party shall pay such amount as
shall compensate the Lenders for any such cost, reduction, payment or foregone
return that is not fully offset by an increase in the applicable interest rate
or rates or fees hereunder. Any certificate of a Lender in respect of the
foregoing will be conclusive evidence of the foregoing, except for manifest
error, provided that the Lender determines the amounts owing to it in good faith
using any reasonable averaging and attribution methods and provides a detailed
description of its calculation of the amounts owing to it.

14.16       INTEREST ON MISCELLANEOUS AMOUNTS

            If a Restricted Party fails to pay any amount payable hereunder
(other than principal, interest thereon or interest upon interest which is
payable as otherwise provided in this Agreement) on the due date, that
Restricted Party shall, on demand, pay interest on such overdue amount to the
Agent from and including such due date up to but excluding the date of actual
payment, both before and after demand, default or judgment, at a rate of
interest per annum equal to the sum of the Prime Rate plus 3.0% per annum,
compounded monthly.

            If the Borrower deposits cash as Collateral pursuant to a
requirement under this Agreement, the Lender or Lenders holding the cash shall
pay the Borrower interest on the cash while it continues to be held as
Collateral at the rate offered by the relevant Lenders from time to time for
deposits in the relevant currency of comparable size and term.

14.17       CURRENCY INDEMNITY

            In the event of a judgment or order being rendered by any court or
tribunal for the payment of any amounts owing to the Lenders or any of them
under this Agreement or for the payment of damages in respect of any breach of
this Agreement or under or in respect of a judgment or order of another court or
tribunal for the payment of such amounts or damages, such judgment or order
being expressed in a currency (the "JUDGMENT CURRENCY") other than the currency
payable hereunder or thereunder ("the AGREED CURRENCY"), the party against whom
the judgment or order is made shall indemnify and hold the Lenders harmless
against any deficiency in terms of the Agreed Currency in the amounts received
by the Lenders arising or resulting from any variation as between (i) the
exchange rate at which the Agreed Currency is converted into the Judgment
Currency for the purposes of such judgment or order, and (ii) the exchange rate
at which each Lender is able to purchase the Agreed Currency with the amount of
the Judgment Currency actually received by the Lender on the date of such
receipt. The indemnity in this Section shall constitute a separate and


<PAGE>

                                     - 116 -

independent obligation from the other obligations of the Restricted Parties
hereunder, shall apply irrespective of any indulgence granted by the Lenders,
and shall be secured by the Security.

14.18       ADDRESS FOR NOTICE

            Notice to be given under the Credit Documents shall, except as
otherwise specifically provided, be in writing addressed to the party for whom
it is intended and, unless the law or a specific provision in another Credit
Document deems a particular notice to be received earlier, a notice shall not be
deemed received until actual receipt thereof by the other party. The addresses
of the parties hereto for the purposes hereof shall be the addresses specified
beside their respective signatures to this Agreement or on any Assignment
Agreement, or such other mailing or telecopier addresses as each party from time
to time may notify the other as aforesaid. Notice to the other Restricted
Parties shall be sent in care of NSCL.

14.19       TIME OF THE ESSENCE

            Time shall be of the essence in this Agreement.

14.20       FURTHER ASSURANCES

            The Restricted Parties shall, at the request of the Agent acting on
the instructions of the Majority Lenders, do all such further acts and execute
and deliver all such further documents as may, in the reasonable opinion of the
Majority Lenders, be necessary or desirable in order to fully perform and carry
out the purpose and intent of the Credit Documents.

14.21       TERM OF AGREEMENT

            Except as otherwise provided herein, this Agreement shall remain in
full force and effect until the payment and performance in full of all of the
Obligations.

14.22       PAYMENTS ON BUSINESS DAY

            Whenever any payment or performance under the Credit Documents would
otherwise be due on a day other than a Business Day, such payment shall be made
on the following Business Day, unless the following Business Day is in a
different calendar month, in which case the payment shall be made on the
preceding Business Day.

14.23       COUNTERPARTS AND FACSIMILE


<PAGE>

                                     - 117 -

            This Agreement may be executed in any number of counterparts, each
of which when executed and delivered shall be deemed to be an original, and such
counterparts together shall constitute one and the same agreement. For the
purposes of this Section, the delivery of a facsimile copy of an executed
counterpart of this Agreement shall be deemed to be valid execution and delivery
of this Agreement, but the party delivering a facsimile copy shall deliver an
original copy of this Agreement as soon as possible after delivering the
facsimile copy.

14.24       WAIVER OF JURY TRIAL, CONSEQUENTIAL DAMAGES ETC.

            Each party hereto hereby waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in any legal proceeding
directly or indirectly arising out of or relating to this the Credit Documents,
the transactions contemplated thereby or any course of conduct, course of
dealing, statements (whether oral or written) or actions of any party (whether
based on contract, tort or any other theory).

            No party shall assert, and each party hereby waives (to the fullest
extent permitted by applicable law), any claim against any other party on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, the Credit Documents, the transactions contemplated thereby or
any course of conduct, course of dealing, statements (whether oral or written)
or actions of any party (whether based on contract, tort or any other theory).

            The Restricted Parties acknowledge and agree that none of the Agent
or the Lenders shall have any liability to them in relation to any due diligence
investigations conducted by any of them in connection with the transactions
contemplated hereby or be under any obligation whatsoever to disclose to them
any information received or facts disclosed by any such investigations. The
Restricted Parties further acknowledge and agree that they are not relying, will
not rely, and will not be deemed, in any respect whatsoever, to have relied upon
the facts received by and information disclosed to any of the Agent or the
Lenders under or in connection with such due diligence investigations.

            Each party hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing
provisions and (b) acknowledges that it and the other parties hereto have been
induced to enter into this Agreement by, among other things, the waivers,
acknowledgments and certifications in this Section.


<PAGE>

                                     - 118 -

14.25       ENTIRE AGREEMENT

            Except as expressly provided in the commitment letter, summary of
terms and conditions and fee letter dated 25 July 2001 issued by TD, Merrill
Lynch Capital Canada Inc. and RBC as underwriters to NSCL, this Agreement, the
Fee Agreement and the Intercreditor Agreements constitute the entire agreement
between the parties hereto concerning the matters addressed in this Agreement,
and cancel and supersede any prior agreements, undertakings, declarations or
representations, written or verbal, in respect thereof. Without limiting the
foregoing, the commitment letter, summary of terms and conditions and fee letter
referred to above are cancelled and superseded except as expressly provided
therein.

14.26       DATE OF AGREEMENT

            This Agreement may be referred to as being dated 14 August 2001 or
as of 14 August 2001, notwithstanding the actual date of execution.



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<PAGE>


                                     - 119 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on ___
August 2001.

ADDRESS FOR NOTICE                             THE TORONTO-DOMINION
                                               BANK, as Administration Agent
The Toronto-Dominion Bank
Corporate and Investment Banking               By:         /s/ Frazer Scott
66 Wellington Street West, 38th Floor                  ------------------------
Toronto-Dominion Bank Tower                            Name:  Frazer Scott
Toronto, Ontario                                       Title: Vice President
M5K 1A2

Attention:      Vice President, Loan            By:
                Syndications - Agency                   ------------------------
Facsimile:      416-982-5535                            Name:
                                                        Title:



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                                     - 120 -


ADDRESS FOR NOTICE                             THE TORONTO-DOMINION
                                               BANK, as Lender
The Toronto-Dominion Bank
TD Tower - Suite 660                           By:         /s/ Dean Sanga
700 West Georgia Street                                -------------------------
Vancouver, BC                                          Name:  Dean Sanga
V7Y 1A2                                                Title: Vice President

Attention:        Vice President, Corporate &
                  Investment Banking           By:
Facsimile:        604-654-3166                          ------------------------
                                                        Name:
                                                        Title:



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                                     - 121 -


ADDRESS FOR NOTICE                             THE TORONTO-DOMINION
                                               BANK, Houston Agency
The Toronto-Dominion Bank
909 Fannin Street, Suite 1700
Houston, Texas                                 By:      /s/ Jeffery R. Lents
77010                                              -----------------------------
                                                   Name:  Jeffery R. Lents
                                                   Title: Mgr., Syndications &
Attention:        Jeff Lents                              Credit Admin.
Facsimile:        713-951-0033

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



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                                     - 122 -


ADDRESS FOR NOTICE                          ROYAL BANK OF CANADA

Royal Bank of Canada
Global Banking                              By:      /s/ Gerald W. Derbyshire
Suite 2100, Park Place,                          -------------------------------
666 Burrard Street                               Gerald W. Derbyshire
Vancouver, B.C.                                  Managing Director, Global
V6C 3B1                                          Banking

Attention:      Managing Director           By:         /s/ Baljit Mann
Facsimile:      604-665-6465                     -------------------------------
                                                 Baljit Mann
                                                 Associate




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                                     - 123 -


ADDRESS FOR NOTICE                          MERRILL LYNCH CAPITAL
                                            CANADA INC.
Merrill Lynch Capital Canada Inc.
181 Bay Street
5th Floor                                   By:        /s/ Andrew Maleckyj
Toronto, Ontario                                 -------------------------------
M5J 2V8                                          Name:  Andrew Maleckyi
                                                 Title:

Attention:     Carol Feeley, c/o Andrew
               Maleckyj                     By:
Facsimile:     416-369-2106                      -------------------------------
                                                 Name:
                                                 Title:



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
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                                     - 124 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on ___
August, 2001.

ADDRESS FOR NOTICE                            TORONTO DOMINION (TEXAS), INC.
                                              Houston Agency
Toronto Dominion (Texas), Inc.
909 Fannin Street, Suite 1700                 By:     /s/ Jeffery R. Lents
Houston, TX                                        -----------------------------
USA  77010                                         Name:  Jeffery R. Lents
                                                   Title: Vice President

Attention:        Jeff Lents
Facsimile:        713-951-0033



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
NORSKE SKOG CANADA LIMITED ET AL]


<PAGE>


                                     - 125 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on ___
August, 2001.

ADDRESS FOR NOTICE                            TORONTO DOMINION (TEXAS), INC.
                                              as U.S. Administrative Agent
Toronto Dominion (Texas), Inc.
909 Fannin Street, Suite 1700                 By:     /s/ Jeffery R. Lents
Houston, TX                                        -----------------------------
USA  77010                                         Name:  Jeffery R. Lents
                                                   Title: Vice President

Attention:        Jeff Lents
Facsimile:        713-951-0033



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
NORSKE SKOG CANADA LIMITED ET AL]

<PAGE>


                                     - 126 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on 14
August, 2001.

ADDRESS FOR NOTICE                          THE BANK OF NOVA SCOTIA

The Bank of Nova Scotia
650 West Georgia Street                     By:       /s/ K. R. Foellmer
18th Floor                                       ------------------------------
Vancouver, BC                                    Name:  K. R. Foellmer
V6B 4N7                                          Title: Director


Attention:    Kurt Foellmer                 By:       /s/ A. A. Okamoto
Facsimile:    604-661-1474                       -------------------------------
                                                 Name:  A. A. Okamoto
                                                 Title: Associate Director



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
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                                     - 127 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on 14
August, 2001.


ADDRESS FOR NOTICE                             BANK OF MONTREAL

Bank of Montreal
1501 McGill College Avenue,                    By:      /s/ Bruno Jarry
32nd Floor                                           ---------------------------
Montreal, QC                                         Name:  Bruno Jarry
H3A 3M8                                              Title: Director

                                                     Asset Portfolio Management

Attention:        Bruno Jarry
Facsimile:        514-282-5920
                                               By:
                                                     ---------------------------
                                                     Name:
                                                     Title:



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
NORSKE SKOG CANADA LIMITED ET AL]


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                                     - 128 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on ___
August, 2001.


ADDRESS FOR NOTICE                          NATIONAL BANK OF CANADA

National Bank of Canada
1155 Metcalfe Street                        By:       /s/ Yanick Blanchard
5th Floor                                        ----------------------------
Montreal, QC                                     Name:  Yanick Blanchard
H3B 4S9                                          Title: Financial Analyst


Attention:      Rejean Guevremont           By:       /s/ Reseau Euevremont
Facsimile:      514-394-6938                     ----------------------------
                                                 Name:  Reseau Euevremont
                                                 Title: Assistant Vice President



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
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                                    - 129 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on 13
August, 2001.


ADDRESS FOR NOTICE                         HSBC BANK CANADA

HSBC Bank Canada
885 West Georgia Street                    By:      /s/ Ralph Hilton
Suite 200                                       --------------------------------
Vancouver, BC                                   Name:  Ralph Hilton
V6C 3E9                                         Title: AVP, Commercial Banking


Attention:        Ralph Hilton             By:      /s/ G. J. Sprung
Facsimile:        604-641-3095                  --------------------------------
                                                Name:  G. J. Sprung
                                                Title: VP, Commercial Banking



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
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<PAGE>


                                     - 130 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on ___
August, 2001.


ADDRESS FOR NOTICE                           CAISSE DE DEPOT ET PLACEMENT DU
                                             QUEBEC

Caisse De Depot Et Placement Du Quebec
2001 McGill College Avenue                    By:       /s/ Jean-Pierre Jette
Suite 600                                          -----------------------------
Montreal, QC                                       Name:  Jean-Pierre Jette
H3A 1G1                                            Title: Manager


Attention:        Francois Maheu              By:      /s/ Francois Maheu
Facsimile:        514-847-2493                     -----------------------------
                                                   Name:  Francois Maheu
                                                   Title: Manager



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<PAGE>


                                     - 131 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on 13
August, 2001.


ADDRESS FOR NOTICE                           LAURENTIAN BANK OF CANADA

Laurentian Bank of Canada                    By:     /s/ W. A. Galbraith
130 Adelaide Street West                          ------------------------------
Toronto, ON                                       Name:  W. A. Galbraith
M5H 3P5                                           Title: Vice-President


Attention:        William Galbraith          By:    /s/ V. Pereira
Facsimile:        416-865-5717                    ------------------------------
                                                  Name:  V. Pereira
                                                  Title: Senior Manager



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                                     - 132 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on 13
August, 2001.

ADDRESS FOR NOTICE                          COMERICA BANK CANADA

Comerica Bank Canada
South Tower, Royal Bank Plaza               By:     /s/ C. David Wright
Suite 2210                                       ---------------------------
Toronto, ON                                      Name:  C. David Wright
M5J 2J2                                          Title: Assistant Vice President

Attention:        Robert Rosen              By:
Facsimile:        416-367-2460                   -------------------------------
                                                 Name:
                                                 Title:



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
NORSKE SKOG CANADA LIMITED ET AL]

<PAGE>


                                     - 133 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on 14
August, 2001.


ADDRESS FOR NOTICE                           CANADIAN WESTERN BANK

Canadian Western Bank
Park Place Branch                            By:    /s/ Bob Duffield
666 Burrard Street                               -------------------------------
Suite 100                                        Name:  Bob Duffield
Vancouver, BC                                    Title: Assistant Vice President
V6C 2X8

Attention:        Bob Duffield               By     /s/ Valerie Irvine
Facsimile:        604-688-7117                   -------------------------------
                                                 Name:  Valerie Irvine
                                                 Title: Manager



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
NORSKE SKOG CANADA LIMITED ET AL]


<PAGE>


                                     - 134 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on ___
August, 2001.


ADDRESS FOR NOTICE                               THE TRAVELERS INSURANCE COMPANY

The Travelers Insurance Company
One Tower Square                                 By:    /s/ Allen R. Cantreli
Securities Department, 9-PB                           --------------------------
Hartford, CT                                          Name:  Allen R. Cantreli
USA  06183-2030                                       Title: Investment Officer


Attention:        Teddi McGuire
Facsimile:        860-954-3730



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
NORSKE SKOG CANADA LIMITED ET AL]


<PAGE>


                                     - 135 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on ___
August, 2001.


ADDRESS FOR NOTICE                           TRAVELERS CORPORATE LOAN
                                             FUND, INC.
                                             By Travelers Asset Management
Travelers Corporate Loan Fund, Inc.          International Company LLC
One Tower Square
Securities Department, 9-PB
Hartford, CT
USA  06183-2030                               By:    /s/ Allen R. Cantreli
                                                  ------------------------------
                                                  Name:  Allen R. Cantreli
Attention:        Teddi McGuire                   Title: Investment Officer
Facsimile:        860-954-3730



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
NORSKE SKOG CANADA LIMITED ET AL]


<PAGE>


                                     - 136 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on ___
August, 2001.


ADDRESS FOR NOTICE                           MERRILL LYNCH CAPITAL CORP.

Merrill Lynch Capital Corp.
4 World Financial Center,                    By:    /s/ Harold A. Siegel, Jr.
7th Floor                                         ------------------------------
New York, NY                                      Name:  Harold A. Siegel, Jr.
USA  10080                                        Title: Vice President

Attention:        Paul Fox                   By:
Facsimile:        212-738-1649                    ------------------------------
                                                  Name:
                                                  Title:



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
NORSKE SKOG CANADA LIMITED ET AL]


<PAGE>


                                     - 137 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on ___
August, 2001.


ADDRESS FOR NOTICE                           OPPENHEIMER SENIOR FLOATING
                                             RATE FUND

Oppenheimer Senior Floating Rate Fund
c/o OppenheimerFunds, Inc.
6803 South Tucson Way                         By:     /s/ David Foxhoven
Englewood, CO                                      -----------------------------
USA  80112-3924                                    David Foxhoven
                                                   AVP Department Manager
Attention:        Myk Pleet
Facsimile:        303-845-0933                By:     /s/ Lisa Chaffee
                                                   -----------------------------
                                                   Lisa Chaffee
                                                   Manager Banking Operations



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
NORSKE SKOG CANADA LIMITED ET AL]


<PAGE>


                                     - 138 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on ___
August, 2001.



ADDRESS FOR NOTICE                           KZH SHOSHONE LLC

KZH Shoshone LLC
c/o The Chase Manhattan Bank                 By:      /s/ Susan Lee
140 East 45th Street, 11th Floor                   -----------------------------
New York, NY                                       Name:  Susan Lee
USA  10017                                         Title: Authorized Agent

Attention:        Virginia Conway            By:
Facsimile:        212-622-0123                     -----------------------------
                                                   Name:
                                                   Title:



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
NORSKE SKOG CANADA LIMITED ET AL]


<PAGE>


                                     - 139 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on 14
August, 2001.


ADDRESS FOR NOTICE                           KZH ING-1 LLC

KZH ING-1 LLC
c/o The Chase Manhattan Bank                 By:       /s/ Susan Lee
140 East 45th Street, 11th Floor                   -----------------------------
New York, NY                                       Name:  Susan Lee
USA  10017                                         Title: Authorized Agent

Attention:        Virginia Conway            By:
Facsimile:        212-622-0123                     -----------------------------
                                                   Name:
                                                   Title:



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
NORSKE SKOG CANADA LIMITED ET AL]


<PAGE>


                                     - 140 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on ___
August, 2001.


ADDRESS FOR NOTICE                           SCUDDER FLOATING RATE FUND

Scudder Floating Rate Fund
c/o Zurich Scudder Investments, Inc.         By:     /s/ Kelly D. Babson
Two International Place                            -----------------------------
Boston, MA                                         Name:  Kelly D. Babson
USA  02110-4103                                    Title: Managing Director

Attention:     Kelly Babson / Tony Borges    By:
Facsimile:     617-295-4059                        -----------------------------
                                                   Name:
                                                   Title:



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
NORSKE SKOG CANADA LIMITED ET AL]


<PAGE>


                                     - 141 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on 14
August, 2001.


ADDRESS FOR NOTICE                           KZH RIVERSIDE LLC

KZH Riverside LLC
c/o The Chase Manhattan Bank                 By:     /s/ Susan Lee
140 East 45th Street, 11th Floor                   -----------------------------
New York, NY                                       Name:  Susan Lee
USA  10017                                         Title: Authorized Agent

Attention:        Virginia Conway            By:
Facsimile:        212-622-1151                     -----------------------------
                                                   Name:
                                                   Title:



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
NORSKE SKOG CANADA LIMITED ET AL]


<PAGE>


                                     - 142 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on ___
August, 2001.


ADDRESS FOR NOTICE                           PRINCIPAL LIFE INSURANCE COMPANY

Principal Life Insurance Company             By:     /s/ Douglas A. Drees
711 High Street                                   ------------------------------
Des Moines, IO                                    Name:  Douglas A. Drees
USA  50392                                        Title: Counsel

Attention:        Jon C. Heiny, Esq.         By:    /s/ JoEllen J. Watts
Facsimile:        515-248-0483                    ------------------------------
                                                  Name:  JoEllen J. Watts
                                                  Title: Counsel



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
NORSKE SKOG CANADA LIMITED ET AL]


<PAGE>


                                     - 143 -


         IN WITNESS OF WHICH, the parties have executed this Agreement on ___
August, 2001.


ADDRESS FOR NOTICE                           CARLYLE HIGH YIELD
                                             PARTNERS II, LTD.

Carlyle High Yield Partners II, Ltd.
520 Madison Avenue, 41st Floor
New York, NY                                 By:     /s/ Linda M. Pace
USA  10022                                        ------------------------------
                                                  Name:  Linda M. Pace
                                                  Title: Vice President

Attention:        Linda Pace                 By:
Facsimile:        212-381-4950                    ------------------------------
                                                  Name:
                                                  Title:



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
NORSKE SKOG CANADA LIMITED ET AL]


<PAGE>


                                     - 144 -


ADDRESS FOR NOTICE                          NORSKE SKOG CANADA LIMITED

Norske Skog Canada Limited
9th Floor
700 West Georgia Street                     By:        /s/ Peter Staiger
Vancouver, British Columbia                      ---------------------------
V7Y 1J7                                          Peter Staiger
                                                 Controller Treasurer

Attention:   Chief Financial Officer        By:       /s/ Ralph Leverton
Facsimile:   604-654-4070                        ---------------------------
                                                 Ralph Leverton
                                                 Vice President Finance, Chief
with a copy to:                                  Financial Officer and Secretary

Lawson Lundell
Barristers and Solicitors                        NORSKE SKOG CANADA
Suite 1600 Cathedral Place                       FINANCE LIMITED
925 West Georgia Street
Vancouver, British Columbia
V6C 3L2                                     By:        /s/ Ralph Leverton
                                                 -------------------------------
                                                 Ralph Leverton
Attention:        David J. Smith                 Secretary
Facsimile:        604-669-1620

                                             NORSKE SKOG CANADA PULP
                                             OPERATIONS LIMITED


                                             By:        /s/ Ralph Leverton
                                                   -----------------------------
                                                   Ralph Leverton
                                                   Vice President Finance


                                             ELK FALLS PULP AND PAPER
                                             LIMITED


                                             By:        /s/ Ralph Leverton
                                                   -----------------------------
                                                   Ralph Leverton
                                                   President



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
NORSKE SKOG CANADA LIMITED ET AL]


<PAGE>


                                     - 145 -


                                             NORSKE SKOG CANADA PULP
                                             SALES INC.

                                             By:        /s/ Ralph Leverton
                                                  ------------------------------
                                                  Ralph Leverton
                                                  Vice President Finance

                                             NORSKE SKOG CANADA SALES
                                             INC.

                                             By:        /s/ Ralph Leverton
                                                  ------------------------------
                                                  Ralph Leverton
                                                  Vice President Finance

                                             NSCL HOLDINGS INC.

                                             By:        /s/ Ralph Leverton
                                                  ------------------------------
                                                   Ralph Leverton
                                                   Vice President Finance

                                             NORSKE SKOG PAPER COMPANY

                                             By:        /s/ Ralph Leverton
                                                  ------------------------------
                                                  Ralph Leverton
                                                  Vice President Finance

                                             NORSKE SKOG CANADA (JAPAN) LTD.

                                             By:       /s/ James E. Armitage
                                                  ------------------------------
                                                  James E. Armitage
                                                  Director

                                             NORSKE SKOG PULP SALES
                                             (JAPAN) LTD.

                                              By:        /s/ Paul D. Simkin
                                                  ------------------------------
                                                  Paul D. Simkin
                                                  Director



[SIGNATURE PAGE FOR CREDIT AGREEMENT DATED AS OF 14 AUGUST 2001 RELATING TO
NORSKE SKOG CANADA LIMITED ET AL]
<PAGE>

                                   SCHEDULE A

                          NOTICE OF ADVANCE OR PAYMENT

                         [SEE REFERENCE IN SECTION 8.6]

TO:      THE TORONTO-DOMINION BANK
         Corporate and Investment Banking
         66 Wellington Street West, 38th Floor
         Toronto-Dominion Bank Tower
         Toronto, Ontario
         M5K 1A2

         Attention:        Vice President, Loan Syndications - Agency
         Facsimile:        416-982-5535

         We refer to the credit agreement dated as of 14 August 2001 between
Norske Skog Canada Limited and others as Restricted Parties, The
Toronto-Dominion Bank as Administration Agent and the Lenders, Arrangers and
Syndication Agents named therein, as amended, supplemented, restated or replaced
from time to time (the "Credit Agreement"). All capitalized terms used in this
certificate and defined in the Credit Agreement have the meanings defined in the
Credit Agreement.

REQUEST FOR ADVANCE

         Notice is hereby given pursuant to Section 8.6 of the Credit Agreement
that the undersigned hereby irrevocably requests as follows:

         (A) that an Advance be made under the following Credit [CHECK ONE]:

<TABLE>
<S>                                                                        <C>
                  Operating Credit 1                                       (  )
                  Term Credit A                                            (  )
                  Term Credit B                                            (  )
</TABLE>

         (B) the requested Advance represents the following [CHECK ONE OR MORE]:

<TABLE>
                  <S>                                                           <C>
                  initial Advance under the Credit                              (  )
                  increase in Advances under the Credit                         (  )
                  rollover of existing Advances under the Credit                (  )
                  conversion of existing Advances to another type of Advance    (  )
</TABLE>

         (C) the Drawdown Date shall be

         (D) the Advance shall be in the form of [CHECK ONE OR MORE AND COMPLETE
             DETAILS]:

<PAGE>

                                      - 2 -

<TABLE>

                    <S>                                                    <C>

                    Prime Rate Advance                                     (  )
                          Amount           $
                                             ---------------

                    Bankers' Acceptances                                   (  )
                          Face Amount:
                                             ---------------
                          Term:

                    Base Rate Advance                                      (  )
                          Amount           US$
                                              --------------

                    US Prime Rate Advance                                  (  )
                           Amount           US$
                                               -------------

                    LIBOR Advance                                          (  )
                           Currency:           -------------
                           Amount:             -------------
                           End of LIBOR Period:  -----------

                     L/C                                                   (  )
                           Nominal amount:      ------------
                           Expiry date:         ------------
                           [NOTE:  ATTACH PROPOSED FORM OR DETAILS]
</TABLE>

         (E) the proceeds of the Advance shall be deposited in [SPECIFY
             DESIGNATED ACCOUNT]

         The undersigned hereby confirms as follows:

         (a)      the representations and warranties made in Section 9.1 of the
                  Credit Agreement, other than those expressly stated to be made
                  as of a specific date, are true on and as of the date hereof
                  with the same effect as if such representations and warranties
                  had been made on and as of the date hereof, subject to
                  modifications made by NSCL to the Lenders in writing and
                  accepted by the Majority Lenders;

         (b)      no Pending Event of Default or Event of Default has occurred
                  and is continuing on the date hereof or will result from the
                  Advance(s) requested herein [EXCEPT O];

         (c)      after reasonable inquiry, there is no reason to believe that
                  NSCL will not be in compliance with all covenants contained in
                  Section 10.1 of the Credit Agreement at the end of its current
                  fiscal quarter and was not in compliance with those covenants
                  at the end of its immediately preceding fiscal quarter if it
                  has not yet


<PAGE>

                                      - 3 -

                  delivered its Compliance Certificate for that quarter
                  [EXCEPT O];

         (d)      the undersigned will immediately notify you if it becomes
                  aware of the occurrence of any event which would mean that the
                  statements in the immediately preceding paragraphs (a), (b)
                  and (c) would not be true if made on the Drawdown Date;

         (e)      all other conditions precedent set out in Section 7.3 [AND
                  SECTION 7.1] of the Credit Agreement have been fulfilled.

         Notice of Payment

         Pursuant to Section 8.6 of the Credit Agreement, the undersigned hereby
irrevocably notifies you of the following:

         (a) that a payment will be made under the following Credit [CHECK ONE]:

<TABLE>
<S>                                                                         <C>
                  Operating Credit 1                                        (  )
                  Term Credit A                                             (  )
                  Term Credit B                                             (  )

         (b) the payment represents the following [CHECK ONE OR MORE]:

                  reduction in Advances under the Credit                    (  )
                  payment of existing Advances which will be rolled over
                  as the same type of Advance under the Credit              (  )
                  payment of existing Advances which will be converted to
                  another type of Advance under the Credit                  (  )

         (c)      the payment date shall be
                                            ------------------

         (d)      the Advance to be paid shall be in the form of [CHECK ONE OR
                  MORE AND COMPLETE DETAILS]:

                     Prime Rate Advance                                     (  )
                           Amount                $
                                                     ------------

                           Bankers' Acceptances                             (  )
                                    Face Amount:     ------------
                                    Maturity Date:   ------------

</TABLE>


<PAGE>

                                      - 4 -

<TABLE>
                    <S>                                                     <C>
                    Base Rate Advance                                       (  )
                         Amount                  US$
                                                     -----------

                    US Prime Rate Advance                                   (  )
                         Amount                  US$
                                                     -----------

                    LIBOR Advance                                           (  )
                         Currency:                   -----------
                         Amount:
                         Start of current LIBOR Period: ---------
</TABLE>


         DATED
               ------------------------------


                                                   NORSKE SKOG CANADA FINANCE
                                                   LIMITED


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





<PAGE>


                                   SCHEDULE B

                     AGREEMENT OF NEW RESTRICTED SUBSIDIARY

                         SUPPLEMENT TO CREDIT AGREEMENT

                         [SEE REFERENCE IN SECTION 6.1]

         THIS AGREEMENT supplements the credit agreement dated as of 14 August
2001 between Norske Skog Canada Limited and others as Restricted Parties, The
Toronto-Dominion Bank as Administration Agent and the Lenders, Arrangers and
Syndication Agents named therein, as amended, supplemented, restated or replaced
from time to time (the "Credit Agreement").

RECITALS

A. Capitalized terms used and not defined in this Agreement have the meanings
defined in the Credit Agreement.

B. The Credit Agreement contemplates that Pacifica, each of its material
Subsidiaries and further Subsidiaries of NSCL shall become Restricted Parties in
certain circumstances.

C. o (the "New Subsidiary") is required by the Credit Agreement to become a
Restricted Party.

D. The New Subsidiary has delivered the documents listed on Appendix A to this
Agreement, which form part of the Security, an opinion of its counsel and other
resolutions and ancillary documents required by the Agent, and a pledge of all
shares of the New Subsidiary owned by the other Restricted Parties has also been
delivered as part of the Security.

         THEREFORE, for value received, and intending to be legally bound by
this Agreement, the parties agree as follows:

1. The New Subsidiary hereby acknowledges and agrees to the terms of the Credit
Agreement and agrees to be bound by all obligations of a Restricted Party under
the Credit Agreement as if it had been an original signatory thereto.

2. The Agent, on behalf of the Lenders, acknowledges that the New Subsidiary
shall be a Restricted Party as of the date of this Agreement.


<PAGE>

                                      - 2 -


         IN WITNESS OF WHICH, the undersigned have executed this Agreement as of
o.

                                            THE TORONTO-DOMINION BANK as Agent



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


                                            [NEW SUBSIDIARY]



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


                             [NOTE:  APPENDIX A TO BE ATTACHED TO LIST SECURITY]





<PAGE>

                                   SCHEDULE C

                             COMPLIANCE CERTIFICATE

                        [SEE REFERENCE IN SECTION 1.1.25]

TO:          THE LENDERS (as defined in the Credit Agreement referred to below)

AND TO:      THE TORONTO-DOMINION BANK, as Agent

--------------------------------------------------------------------------------

         We refer to Section 10.3.1(c) of the credit agreement dated as of 14
August 2001 between Norske Skog Canada Limited and others as Restricted Parties,
The Toronto-Dominion Bank as Administration Agent and the Lenders, Arrangers and
Syndication Agents named therein, as amended, supplemented, restated or replaced
from time to time (the "Credit Agreement"). All capitalized terms used in this
certificate and defined in the Credit Agreement have the meanings defined in the
Credit Agreement.

1.       The undersigned hereby certifies that:

         (a)      the representations and warranties made in Section 9.1 of the
                  Credit Agreement, other than those expressly stated to be made
                  as of a specific date, are true on and as of the date hereof
                  with the same effect as if such representations and warranties
                  had been made on and as of the date hereof, subject to
                  modifications made by the undersigned to the Lenders in
                  writing and accepted by the Majority Lenders;

         (b)      no Pending Event of Default or Event of Default has occurred
                  and is continuing on the date hereof [OR AS THE CASE MAY BE].

2.       The undersigned hereby certifies that, as of the end of its
         most-recently completed fiscal quarter, which ended on ________,

         (a)      the Interest Coverage Ratio is   _______: 1.

         (b)      the Funded Debt Ratio is  ________ : 1.

         (c)      the Secured Debt Ratio is ________ : 1.

         (d)      the value of its Consolidated Net Tangible Assets is $_______.

         (e)      [OMIT IF ACQUISITION NOT COMPLETED] its "Consolidated Fixed
                  Charge Coverage Ratio" as defined under the Pacifica Indenture
                  is _______ :1.

         (f)      [OMIT IF ACQUISITION NOT COMPLETED] the Threshold Amount
                  is $ _________ .


<PAGE>

                                      - 2 -

         (g) [INCLUDE FOR YEAR END ONLY] its shareholders equity is $_________.

3.       Appendix A attached sets out the calculations of the amounts referred
         to in paragraph 2 above.

4.       Appendix B attached contains a list of all sales or other dispositions
         of any Property of Restricted Parties (including Capital Stock of any
         other person) during the term of this Agreement, other than
         dispositions to another Restricted Party and sales of inventory in the
         ordinary course of its business, and a list of all material Property of
         a Restricted Party which has been expropriated, condemned, destroyed,
         damaged or otherwise lost, with a description of the use of the
         proceeds of disposition, insurance or other compensation.

5.       Appendix C attached contains details of all Other Secured Obligations
         as of the end of the undersigned's most-recently completed fiscal
         quarter and the Market Value thereof.

6.       Appendix D attached is an up to date version of Schedule F to the
         Credit Agreement. [OR There has been no change to the information
         contained in the version of Schedule F to the Credit Agreement dated o]

7.       The undersigned hereby certifies that the current Reference Debt
         Ratings established by Moody's and S&P are o and o, respectively.
         Accordingly, the Applicable Fee Rate is o% per annum and the Applicable
         Margins are as follows:

         For the Operating Credit and Term Credit A:

         Margin for Prime Rate Advances/ Base Rate Advances - o%
         Margin for LIBO Rate Advances - o%

         For Term Credit B:

         Margin for US Prime Rate Advances - o%
         Margin for LIBO Rate Advances - o%

8.       [INCLUDE WITH REPORT FOR QUARTER IN WHICH 30 JUNE FALLS] The
         undersigned hereby certifies that the consolidated net book value of
         its inventory as at 30 June [YEAR] is $o and the net book value of all
         inventory located in any jurisdiction where the Security has not been
         registered over inventory in accordance with local requirements is $o
         as at that date.

9.       The undersigned hereby certifies that there is no jurisdiction where
         the Security has not been registered over inventory in accordance with
         local requirements in which the amount of


<PAGE>

                                      - 3 -


         inventory for all Restricted Parties is greater than 15,000 tonnes.

10.      The undersigned hereby certifies that the current consolidated net book
         value of its fixed assets is $o and the net book value of all Property
         other than inventory located in any jurisdiction where the Security
         over such Property has not been registered in accordance with local
         requirements is $o.

11.      Appendix E attached is an up to date version of Schedule G to the
         Credit Agreement. [OR There has been no change to the information
         contained in the version of Schedule G to the Credit Agreement dated o]

         DATED


                                            NORSKE SKOG CANADA LIMITED



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


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






<PAGE>


                                   SCHEDULE D

                              ASSIGNMENT AGREEMENT

                        [SEE REFERENCE IN SECTION 1.1.9]

         The undersigned refer to the credit agreement dated as of 14 August
2001 between Norske Skog Canada Limited and others as Restricted Parties, The
Toronto-Dominion Bank as Administration Agent and the Lenders, Arrangers and
Syndication Agents named therein as amended, supplemented, restated or replaced
from time to time (the "Credit Agreement"). All capitalized terms used in this
Assignment Agreement and defined in the Credit Agreement have the meanings
defined in the Credit Agreement.

         For value received, the "Assignor" and the "Assignee" named below
hereby agree as follows:

1. The Assignor hereby sells and assigns, without recourse, to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, the Proportionate
Share specified on Appendix 1 in and to the Assignor's rights and obligations
under the Credit Agreement, the Security and all other Credit Documents.

2. The Assignor (a) represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder, that such interest is free
and clear of any lien or security interest and that it is entitled to enter into
this Assignment Agreement; (b) makes no representation or warranty, other than
as provided in this Assignment Agreement and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or any
other Credit Document; and (c) makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Restricted
Parties or any other guarantor or the performance or observance by the
Restricted Parties or any other guarantor of any of the obligations under the
Credit Agreement or any other Credit Document.

3. The Assignee, for the benefit of the Restricted Parties, the Agent and all
Lenders from time to time, including the Assignor, (a) acknowledges receipt of
any upfront fee payable by the Assignor, (b) confirms that it has received a
copy of the Credit Agreement, together with such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into this Assignment Agreement; (c) agrees that it will, independently and
without reliance upon the Agent, the Assignor or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (d) appoints and authorizes the Agent to take such action
on its behalf and to exercise such powers and discretion under the Credit
Agreement as are delegated to the Agent by the terms thereof, together with such
powers and discretion as are reasonably incidental thereto; (e) ratifies and
adopts the powers of attorney and related powers given to the Agent under the
Credit Agreement; (f)


<PAGE>

                                      - 2 -


agrees that it will perform in accordance with their terms all of the
obligations that by the terms of the Credit Agreement are required to be
performed by it as a Lender, (g) agrees to be bound by the terms of all
Intercreditor Agreements, and (h) specifies as its address for notice and
payments its office at the address set forth on Appendix 1 hereto.

4. Following the execution of this Assignment Agreement, it shall immediately be
delivered to the Agent, together with the processing and recording fee specified
in Section 13.2.1 of the Credit Agreement if applicable, for approval and
recording by the Agent, and NSCL, if applicable. The Assignee's agreement to
become a Lender, as constituted by this Assignment Agreement, is irrevocable,
unless the Assignee is not approved by the Agent, and NSCL if applicable. The
Assignee shall become a Lender, and shall be bound by the obligations and
entitled to the benefits in the Credit Agreement, immediately upon this
Assignment Agreement being approved and recorded by the Agent and NSCL, if
applicable (the "Effective Date"). On the Effective Date, the Assignee (a) shall
pay the Assignor an amount equal to the Assignee's Proportionate Share of Prime
Rate Advances, Base Rate Advances and US Prime Rate Advances made by the
Assignor as of the Effective Date and (b) shall become entitled to receive
standby fees in accordance with the Credit Agreement in respect of its
Proportionate Share of the aggregate amount of the Credit that has not been
advanced by the Lenders. The Assignee shall make further Advances to the
Borrower beginning on the first Drawdown Date that is at least three Business
Days following the Effective Date, as LIBOR Advances and Advances by way of
Bankers' Acceptances made by the Assignor mature, until the Assignee has made
Advances in an amount equal to its Proportionate Share of the aggregate Advances
made by all Lenders under the Credit Agreement.

5. If Advances made by the Assignee to the Borrower are for any reason less than
the Assignee's Proportionate Share of the aggregate Advances made by all Lenders
under the Credit Agreement, the Assignee shall, on demand, indemnify the
Assignor in respect of the principal amount of the corresponding Advances made
by the Assignor in excess of the Assignor's Proportionate Share. The Advances by
the Assignor in respect of which the Assignee is bound to indemnify the Assignor
are set out on Appendix 2 to this Assignment Agreement. The Assignor shall pay
the Assignee indemnity fees during the period in which the Assignee is obliged
to indemnify the Assignor. The fee shall be in the amount specified on Appendix
2 and shall be payable on the Effective Date in respect of Advances by way of
Bankers' Acceptances, and on each date on which the Borrower pays interest on
LIBOR Advances, in respect of LIBOR Advances.

6. This Assignment Agreement shall be exclusively governed by, and construed in
accordance with the laws of the Province of British Columbia, Canada.

7. This Assignment Agreement may be executed in any number of counterparts and
by


<PAGE>

                                      - 3 -

different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of
this Assignment Agreement by telecopier shall be effective as delivery of a
manually executed counterpart of this Assignment Agreement.

         IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment Agreement to be executed by their duly authorized officers as of the
dates specified below.

                                       Assignor:
                                                -------------------------------



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

                                                Dated:
                                                      -------------------------



                                       Assignee:
                                                -------------------------------




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

                                                Dated:
                                                      -------------------------


<PAGE>

                                      - 4 -

<TABLE>

<S>                                         <C>
Approved on                                 [IF APPLICABLE] Approved on

THE TORONTO-DOMINION BANK,                  NORSKE SKOG CANADA LIMITED
as Agent


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

Effective Date:                             Date:
                ------------------               ---------------------

</TABLE>





<PAGE>


                                      - 5 -


                                   APPENDIX 1
                                       TO
                              ASSIGNMENT AGREEMENT


Proportionate Share assigned by Assignor:
                                              --------------------------------

Proportionate Share retained by Assignor:
                                              --------------------------------

Payment Details, including address of Assignee for notices:





                                   APPENDIX 2
                                       TO
                              ASSIGNMENT AGREEMENT


Advances in respect of which the Assignee is to indemnify the Assignor, as of
the Effective Date:


TYPE OF ADVANCE       MATURITY DATE OF ADVANCE       PRINCIPAL AMOUNT OF ADVANCE







INDEMNITY FEE:





<PAGE>



                                   SCHEDULE E

                         PROPORTIONATE SHARES OF LENDERS

      [SEE REFERENCES IN SECTIONS 1.1.60, 1.1.96, 1.1.77, 1.1.117, 1.1.119,
                                  8.2, 13.2.4]

                              [NOTE: SEE ATTACHED]








<PAGE>


                                   SCHEDULE F

                    DETAILS OF CAPITAL STOCK, PROPERTY ETC.

    [SEE REFERENCES IN SECTIONS 9.1.5(A), 10.4, 10.5.2(B)(I), 10.5.2(B)(II),
                                   10.5.3(C)]

1.       NORSKE SKOG CANADA LIMITED

Capital Stock:     Public Company

Head Office:      9th Floor, 700 West Georgia Street
                  P.O. Box 10058 Pacific Centre
                  Vancouver, British Columbia
                  V7Y 1J7

Real Property:

         Owned:

<TABLE>
<CAPTION>
PID:              LEGAL DESCRIPTION:
<S>               <C>
005 932 092       Those parts of Lot 2 Section 5 Range 9 Chemainus District Plan 5803 shown
                  outlined in red on Plan 925 RW
007 388 004       Lot 1 Section 3 Range 10 Chemainus District Plan 1471 except parts in
                  Plans 11613, 13731 and 16471
009 024 212       That part of Parcel C (DD 36578I) of Section 2 Range 7 Chemainus District
                  outlined in red on Plan 920 RW
005 419 239       That part of Lot 1 Section 2 Range 7 Chemainus District Plan 8697 in Plan
                  920 RW
009 024 174       That part of Parcel B (DD 99604I) of Section 5 Range 10 Chemainus
                  District outlined in red on Plan 925 RW
005  932 190      That part of Lot 2 Section 5 Range 9 Chemainus District Plan 5803 lying to
                  the south east of the south easterly boundary of Plan 925 RW
009 024 336       That part of Section 3 Range 8 Chemainus District outlined in red on Plan
                  920 RW
009 024 310       That part of Section 4 Range 9 Chemainus District outlined in red on Plan
                  925 RW
009 024 379       That part of Parcel E (DD 141335I) of Section 4 Range 8 Chemainus
                  District outlined in red on Plan 920 RW
009 024 417       That part of Parcel D (DD 65699I) of Section 4 Range 9 Chemainus District
                  outlined in red on Plan 920 RW
009 044 132       That part of Parcel D (DD 118337I) of Section 4 and 5 Range 8 Chemainus
                  District outlined in red on Plan 920 RW and lying wholly within Section 4
005 968 585       That portion of that part of Lot 3 Section 1 Range 7 Chemainus District Plan
                  5467 lying to the West of the Westerly boundary of Plan 645 RW shown

</TABLE>

<PAGE>

                                      - 2 -

<TABLE>
<CAPTION>
PID:              LEGAL DESCRIPTION:
<S>               <C>
                  outlined in red on Plan 911 RW and containing 1.27 acres more or less
009 739 637       Section 8 Range 9 Chemainus District
009 739 611       Section 7 Range 9 Chemainus District
009 739 718       Those parts of Section 9 Range 8 Chemainus District lying East of the
                  Chemainus River, including all that part of a strip of land 33 feet wide as
                  shown coloured purple and green on Plan 16 BL known as Mainguy Road
009 739 688       Those parts of Section 8 Range 8 Chemainus District lying East of the
                  Chemainus River, including all that part of a strip of land 33 feet wide as
                  shown coloured purple and green on Plan 16 BL, known as Mainguy Road
009 739 653       Those parts of Section 7 Range 8 Chemainus District, lying East of the
                  Chemainus River including all that part of a strip of land 33 feet wide as
                  shown coloured purple and green on Plan 16 BL, known as Mainguy Road
009 739 785       Lot 2A Chemainus District
009 739 777       Lot 2 Chemainus District
003 982 840       Lot 1 Section 3 Range 10 Chemainus District Plan 16471
004 798 619       Lot 1 Section 1 Range 7 Chemainus District Plan 12696
004 979 087       Lot 1 Sections 3 and 4 Ranges 9 and 10 Chemainus District Plan 12168
006 244 637       Lot 2 Section 4 Range 10 Chemainus District Plan 3198
009 956 069       Section 3 Range 9 Chemainus District except parts in Plans 920 RW and
                  921 RW
009 573 488       That part of Section 5 Renfrew District (situate in Cowichan Lake District)
                  as shown outlined in red on Plan 457 BL
006 912 524       Lot 3 Bl 3 Section 5 Renfrew District (situate in Cowichan Lake District)
                  Plan 1750
006 912 516       Lot 2 Bl 3 Section 5 Renfrew District (situate in Cowichan Lake District)
                  Plan 1750
008 768 820       District Lot 101 Cowichan Lake District
006 912 567       Lot 4 Bl 3 Section 5 Renfrew District (situate in Cowichan Lake District)
                  Plan 1750
006 912 494       Lot 1 Bl 3 Section 5 Renfrew District (situate in Cowichan Lake District)
                  Plan 1750
006 912 451       Lot 1 Bl 2 Section 5 Renfrew District (situate in Cowichan Lake District)
                  Plan 1750
007 655 517       Block 3 DL 12 Cowichan Lake District Plan 1231 except part in Plan 31221
005 145 473       Lot 1 DL 12 Cowichan Lake District Plan 11206
007 663 544       That part of District Lot 12 Cowichan Lake District being that portion of
                  Fern Road dedicated by Plan 1231 and closed by
                  Order-In-Council No. 1754 dated 16th day of July, 1956 as
                  shown outlined in red on Plan 458 BL
018 195 326       Lot 2 Section 20 Range 4 Quamichan District Plan VIP56262
005 338 859       That part of Lot 1 Section 17 Range 4 Quamichan District Plan 9537 shown

</TABLE>

<PAGE>

                                      - 3 -


<TABLE>
<CAPTION>
PID:              LEGAL DESCRIPTION:
<S>               <C>
                  in red on Plan 903 RW
009 662 481       That part of Parcel G (DD 36290I) of Sections 18 and 19 Range 4
                  Quamichan District shown outlined in red on Plan 903 RW and containing
                  0.08 acres and 0.30 acres more or less
009 662 278       That part of Parcel P (DD 76080I) of Sections 17, 18 and 19 Range 4
                  Quamichan District shown outlined in red on Plan 903 RW and lying
                  entirely in Section 18
006 360 564       That part of Lot 10 Sections 17 and 18 Range 4 Quamichan District Plan
                  2785 shown in red on Plan 903 RW
006 738 567       That part of Lot 4 Bl 1 Section 20 Range 4 Quamichan District Plan 1908
                  shown outlined in red on Plan 903 RW
006 738 524       That part of Lot 3 Bl 1 Section 20 Range 4 Quamichan District Plan 1908
                  shown outlined in red on Plan 903 RW
006 738 354       That part of Lot 2 Bl 1 Section 20 Range 4 Quamichan District Plan 1908
                  shown outlined in red on Plan 903 RW
006 360 742       That part of Lot 11 Section 17 Range 4 Quamichan District Plan 2785
                  shown in red on Plan 903 RW
006 157 971       That part of Lot 1 Section 19 Range 4 Quamichan District Plan 3853
                  outlined red on Plan 903 RW
009 668 314       That part of Parcel D (DD 106367I) of Section 19 Range 4 Quamichan
                  District shown outlined in red on Plan 903 RW
006 068 065       That part of Lot 1 Section 19 Range 4 Quamichan District Plan 4134 shown
                  in red on Plan 903 RW
004 680 499       Lot A Section 19 Range 4 Quamichan District Plan 12945
005 586 445       Lot 6 Section 17 Range 5 Quamichan District Plan 8636
005 586 437       Lot 5 Section 17 Range 5 Quamichan District Plan 8636
005 586 429       Lot 4 Section 17 Range 5 Quamichan District Plan 8636
006 442 382       That part of Lot 9 Section 10 Range 4 Somenos District Plan 2196 shown
                  outlined in red on Plan 910 RW
008 162 794       That part of Lot 4 Bl 1 Section 1 Range 4 Somenos District Plan 972 shown
                  outlined in red on Plan 903 RW
009 797 807       That part of Section 20 Range 7 Somenos District outlined in red on Plan
                  911 RW and containing 0.66 acres more or less
009 797 939       That part of Section 19 Range 7 Somenos District lying West of Parcel A
                  (DD 43540I) outlined in red on Plan 911 RW and containing 0.67 acres
                  more or less
009 744 495       That part of the East 70 acres of Section 17 Range 6 Somenos District
                  shown outlined in red on Plan 911 RW
006 406 891       That part of Lot 2 Section 2 Range 4 Somenos District Plan 2825 shown
                  outlined in red on Plan 902 RW
</TABLE>


<PAGE>

                                      - 4 -

<TABLE>
<CAPTION>
PID:              LEGAL DESCRIPTION:
<S>               <C>
006 405 754       That part of Lot 1 Section 2 Range 4 Somenos District Plan 2825 shown
                  outlined in red on Plan 902 RW
005 557 755       Lot 5 Section 1 Range 4 Somenos District Plan 9162
007 104 057       That part of Lot 1 Bl 1 Section 6 Range 4 Somenos District Plan 1599
                  shown outlined in red on Plan 902 RW
008 162 760       That part of Lot 3 Bl 1 Section 1 Range 4 Somenos District Plan 972 shown
                  outlined in red on Plan 903 RW
005 934 389       That part of Lot 3 Section 16 Range 6 Somenos District Plan 5814 shown
                  outlined in red on Plan 911 RW
009 796 649       That part of Parcel A (DD 43540I) of Sections 19 and 20 Range 7 Somenos
                  District lying within Section 19 included in Plan 911 RW
009 772 995       That part of Parcel A (DD 42185I) of Section 12 Range 5 Somenos District
                  shown outlined in red on Plan 910 RW
009 773 398       That part of Section 13 Range 5 Somenos District outlined in red on Plan
                  910 RW
005 934 354       That part of Lot 2 Section 16 Range 6 Somenos District Plan 5814 shown
                  outlined in red on Plan 911 RW
008 162 824       That part of Lot 5 Bl 1 Section 1 Range 4 Somenos District Plan 972 shown
                  outlined in red on Plan 903 RW
007 105 045       That part of Lot 4 Bl 1 Section 6 Range 4 Somenos District Plan 1599
                  shown outlined in red on Plan 902 RW
009 773 185       That part of Section 12 Range 5 Somenos District lying to the south of
                  Parcel A (DD 42185I) shown outlined in red on Plan 910 RW
009 774 483       Those parts of Parcel A (DD 89348I) of Sections 14 and 15 Range 5
                  Somenos District outlined in red on Plans 910 RW and 911 RW except part
                  in Plan 15076
006 248 110       That part of Lot 3 Sections 15 and 16 Range 5 Somenos District Plan 3313
                  shown outlined in red on Plan 827R included within Plan 911 RW
006 441 980       That part of Lot 8 Sections 9 and 10 Range 4 Somenos District Plan 2196
                  shown outlined in red on Plan 910 RW
006 246 541       That part of Lot 1 Sections 15 and 16 Range 5 Somenos District Plan 3313
                  shown outlined in red on Plan 911 RW except that part in Plan 15076
009 744 517       That part of the west 50 acres of Section 18 Range 7 Somenos District
                  shown outlined in red on Plan 911 RW
009 744 444       That part of Parcel B (DD 77714I) of Lot 82 Somenos District shown
                  outlined in red on Plan 911 RW
009 744 509       That part of the West 50 acres of Section 17 Range 7 Somenos District
                  shown outlined in red on plan deposited under DD 23410 included in Plan
                  911 RW
009 744 487       Those parts of Parcel A (DD 77714I) of Section 16 Range 6 Somenos
</TABLE>


<PAGE>

                                      - 5 -

<TABLE>
<CAPTION>
<S>               <C>
                  District shown outlined in red on Plan 911 RW
006 582 311       That part of Lot B Section 7 Range 4 Somenos District Plan 2457 shown
                  outlined in red on Plan 902 RW
006 568 556       That part of Lot 7 Section 2 Range 3 Somenos District Plan 2461 shown in
                  red on Plan 902 RW
009 872 906       That part of the south 1/2 of Section 8 Range 4 Somenos District shown
                  outlined in red on Plan 902 RW
006 441 505       That part of Lot 5 Sections 8 and 9 Somenos District Plan 2196 shown
                  outlined in red on Plan 902 RW
006 563 643       That part of Lot 1 Section 4 Range 4 Somenos District Plan 2458 shown
                  outlined in red on Plan 902 RW
006 609 007       That part of Lot D Section 7 Range 4 Somenos District Plan 2457 shown
                  outlined in red on Plan 902 RW
006 246 851       That part of Lot 2 Section 15 Range 5 Somenos District Plan 3313 shown
                  outlined in red on Plan 911 RW except that part in Plan 15076
006 442 641       That part of Lot 16 Section 11 Range 5 Somenos District Plan 2196 shown
                  outlined in red on Plan 910 RW
006 442 561       That part of Lot 10 Section 10 Range 4 Somenos District Plan 2196 shown
                  outlined in red on Plan 910 RW
005 576 695       That part of Section 11 Range 4 Somenos District shown outlined in red on
                  Plan 910 RW
009 759 492       That part of Section 4 Range 3 Somenos District shown outlined in red on
                  Plan 902 RW
006 407 234       That part of Lot 4 Section 2 Range 4 Somenos District Plan 2825 shown
                  outlined in red on Plan 902 RW
009 774 939       That part of Parcel C (DD 174586I) of Section 14 Range 5 Somenos District
                  outlined in red on Plan 910 RW
006 581 684       That part of Lot A Section 7 Range 4 Somenos District Plan 2457 shown
                  outlined in red on Plan 902 RW
006 608 787       That part of Lot C Section 7 Range 4 Somenos District Plan 2457 shown
                  outlined in red on Plan 902 RW
009 764 151       That part of Section 5 Range 4 Somenos District shown outlined in red on
                  Plan 902 RW
005 576 571       That part of Lot 2 Section 1 Range 4 Somenos District Plan 8611 shown in
                  red on Plan 903 RW
006 440 347       That part of Lot 3 Section 9 Range 4 Somenos District Plan 2196 shown
                  outlined in red on Plan 910 RW
007 104 375       That part of Lot 2 Bl 1 Section 6 Range 4 Somenos District Plan 1599
                  shown outlined in red on Plan 902 RW
006 406 939       That part of Lot 3 Section 2 Range 4 Somenos District Plan 2825 shown
</TABLE>

<PAGE>


                                      - 6 -

<TABLE>
<CAPTION>
PID:              LEGAL DESCRIPTION:
<S>               <C>
                  outlined in red on Plan 902 RW
007 104 936       That part of Lot 3 Bl 1 Section 6 Range 4 Somenos District Plan 1599
                  shown outlined in red on Plan 902 RW
006 373 968       That part of Lot 2 Section 3 Ranges 3 and 4 Somenos District Plan 2794
                  shown in red on Plan 902 RW
006 383 025       That part of Lot 1 Section 3 Range 3 Somenos District Plan 2776 shown
                  outlined in red on Plan 902 RW
005 576 539       Lot 1 Section 1 Range 4 Somenos District Plan 8611
003 733 998       Lot 1 Section 9 Range 4 Somenos District Plan 19355
007 388 209       Lot 15 Section 3 Range 10 Chemainus District Plan 1471 Except part in
                  Plan 11574
013 194 976       That part of Section 5 Ranges 8, 9 and 10 and Section 4 Range 8 Chemainus
                  District shown outlined in red in DD 27614
013 194 470       That part of Sections 4 and 5 Range 8 Chemainus District shown outlined
                  in red on plan attached to DD 24931
013 194 381       That part of Section 4 Range 8 Chemainus District shown outlined in red on
                  plan attached to DD 23242
013 143 123       That part of Sections 5 and 6 Range 10 and that part of the foreshore of
                  District Lot 172 Chemainus District shown coloured red on plan deposited
                  under DD 14529I
009 922 431       That part of Section 1 Range 11 Chemainus District lying to the North of the
                  Northerly boundary of Chaplin Street as said street is shown on Plan 739 and
                  the production easterly of the said northerly boundary, except parts in Plans
                  4257 and 23431
009 920 145       That part of Section 5 Range 9 Chemainus District lying Northerly and
                  Westerly of Plan 5803, except parts in Plans 4302 and 9775
009 925 431       District Lot 4 Chemainus District
009 921 168       That part of Section 2 Ranges 10 and 11 Chemainus District in Plan DD
                  8239I containing 31.7 acres more or less except part in Plan 856 BL
009 862 021       District Lot 8 Chemainus District
005 852 293       Lot 1 District Lot 7 Chemainus District Plan 6538
009 034 595       District Lot 7 Chemainus District except part in Plan 6538
009 861 998       District Lot 6 Chemainus District
004 627 938       Lot 3 Chemainus District
009 926 887       District Lot 172 Chemainus District except that part included in the right of
                  way of the Esquimalt and Nanaimo Railway Company
006 116 981       That part of Lot 1 Section 1 Range 10 Chemainus District Plan 4357 shown
                  outlined in red on Plan 815 R
000 167 886       Lot A Section 4 Range 9 Chemainus District Plan 32612
004 169 948       Lot 1 Section 4 Range 10 Chemainus District Plan 15020
</TABLE>

<PAGE>


                                                     - 7 -

<TABLE>
<CAPTION>
PID:              LEGAL DESCRIPTION:
<S>               <C>
000 573 736       Lot 1 Section 4 Range 10 Chemainus District Plan 5180 except part in Plan
                  15020 and 41332
006 116 965       That part of Lot 1 Section 1 Range 10 Chemainus District Plan 4357 lying
                  to the north of  a boundary parallel to the northerly boundary of said lot and
                  extending from a point on the easterly boundary of said lot distant 1.515 chs.
                  from the north east corner of said lot
006 116 973       That part of Lot 1 Section 1 Range 10 Chemainus District Plan 4357 lying
                  south of a boundary parallel to the northern boundary of said lot and
                  extending from a point on the easterly boundary thereof distant 1.515 chs.
                  from the north east corner of said lot, except that part thereof shown outlined
                  in red on Plan 815R
006 066 551       Lot 1 Section 1 Range 11 Chemainus District Plan 4257
009 921 958       That part of Section 6 Range 10 Chemainus District lying to the north of the
                  right of way of the Esquimalt and Nanaimo Railway Company
009 920 196       Section 6 Range 9 Chemainus District except parts in Plans 4302 and 5803
009 920 803       Section 4 Range 9 Chemainus District except the west 30 chains and except
                  parts in Plans 925 RW, 13072, 22398 and 32612
009 920 064       That part of Section 5 Range 8 Chemainus District lying easterly of the
                  centre line of Tsussie Creek (which is the easterly bondary of Plan 4302) and
                  to the north of the northerly boundary of the right of way of the Esquimalt
                  and Nanaimo Railway Company shown on Plan DD 27614, except parts in
                  Plans 5803 and 9775
024 662 666       Lot 1 of Sections 4, 5 & 6 Range 10 Chemainus District Plan VIP69811
024 662 674       Lot 2 of Sections 2, 3 & 4 Ranges 10 & 11 Chemainus District and of
                  Sections 5 & 6 Range 10 Chemainus District and of District
                  Lots 141 and 475 Cowichan District Plan VIP69811
024 663 018       Lot 3 of Sections 2, 3, & 4 Ranges 10 & 11 and District Lot 107 Chemainus
                  District and of District Lots 141 and 145 Cowichan District Plan VIP69811
024 663 034       Lot 4 of Sections 2, 3 & 4 Range 10 Plan VIP69811
024 663 115       Lot 5 Section 2 Ranges 10 and 11 Chemainus District Plan VIP69811
</TABLE>

         Leased:

         REAL PROPERTY LEASES

<TABLE>
<CAPTION>
PID:              LEGAL DESCRIPTION:
<S>               <C>
005-003-580       District Lot 541, Block 52 (EP9962), Plan 210 and Parcels A, B, C et al,
                  Toronto Dominion Tower, 700 West Georgia, Vancouver (Originally 81760
                  Sq. Ft. Floors 7-11 amended numerous times) Head Lease Bos HQ FCCL

</TABLE>


<PAGE>

                                      - 8 -


<TABLE>
<CAPTION>
PID:              LEGAL DESCRIPTION:
<S>               <C>
                  (also month to month lease of space on 19th Floor - Yr. 2001) (Fletcher
                  Challenge Canada Limited)
007-388-411       Sections 2 and 3, Chemainus Lot 6, Range 10, Plan 1471, Gas Monitoring
                  Trailer Site, Cecil Street, Crofton  P&P (Fletcher Challenge Canada
                  Limited)
009-021-558       Section 2, Chemainus Lot A Range 6 and 7, Plan 45436, Gas Monitoring
                  Trailer Site, Nimmo Road, Crofton P&P (Fletcher Challenge Canada
                  Limited)
000-222-437       Sections 12 and 13, Lot 4, Range 2, Plan 32988, Comaiken, Gas Monitoring
                  Trailer Site Located at 7338 Walton Mountain Road, Crofton P&P (Fletcher
                  Challenge Canada Limited)
                  District Lot 196, PT Lots 25, 26, 27, 28, Block 43, District
                  Plan 198, 625 Powell Street, Vancouver (basement storage
                  space) Bos FCCL (also contains TWFL historical records)
                  (Fletcher Challenge Canada Limited)
N/A               District Lots 12 and 13, Lot 1, NWD Plan 29318, Proposed
                  Warehouse Distribution Centre (under negotiation by the Wesik
                  Group) Distribution Pulp FCCL (ownership not available at this
                  time)
</TABLE>

         PROVINCIAL WATER LOT LEASES

         Crofton Facility:

         W/Lot Lease #102130 - District Lot 107G; Blk D Chemainus (Prev. #13180)
         Log Booming & Wharfage (Sublet 15 Dec 1993 Stuart Channel Wharves)
         W/Lot Lease #102653 - District Lot 107G; Blk A & B Chemainus (Prev.
         #13181) Warehouse & Dock #1 & #2 & Part Stuart Channel Wharves Dock #3
         (.2274 AC. SCW) W/Lot Lease #101412 - Lot 161; Blk B Cowichan Log
         Storage, Shipping & Industrial PT W/Lot Lease #106051 - DL 565, 676,
         2008; Blk E Cowichan (Prev. #101709 & PT 103929) Log Dumping, Booming,
         Storage, Scow & Chip Barge Moorage, Industrial Purposes

         Elk Falls Facility:

         W/Lot Lease #101447 - Blk A Lot 1504; Sayward (Prev. #29554) Duncan Bay
         Fronting Pulp Mill Complex W/Lot Lease #100785 - Lot 411 and Lot 1516;
         Blk B Sayward Duncan Bay next to Middle Point Barge Tie Up & Log
         Storage (Upland DL 2,26)

         FEDERAL WATER LOT LEASES

         W/Lot Lease #05020, between the North Fraser Port Authority (landlord)
         and Norske Skog


<PAGE>


                                      - 9 -


         Canada Limited (tenant), for a Chip Loading Site Fronting Kent Avenue
(0.806 ha.)

Nature of Business:  Paper Manufacturing

Jurisdictions in which its property other than accounts receivable is located:
British Columbia

Capital Stock Holdings:
<TABLE>
<CAPTION>

<S>                                 <C>                       <C>
CORPORATION                         CERTIFICATE NO.           NUMBER AND CLASS OF SECURITIES

BPC Holdings Ltd.                   7-A                       2,230 Class A Preference Shares
                                    8-A                       1,900 Class A Preference Shares
                                    9-A                       819 Class A Preference Shares
                                    10-A                      4,095 Class A Preference Shares
                                    11-A                      5,430 Class A Preference Shares
                                    12-A                      740 Class A Preference Shares
                                    7                         1 common share
                                    8                         80,000,000 common shares
                                    9                         2,417,782 common shares
                                    10                        11,100,689 common shares

Elk Falls Pulp and Paper
 Limited                            3                         1 common share

Norske Skog Canada
 (Japan) Ltd.                       C No.002                  1,000 shares

Norske Skog Canada
 Pulp Operations Limited            6                         53,683,253 common shares
                                    7                         46,026,332 common shares
                                    8                         24,474,668 common shares
                                    9                         1 common share

Norske Skog Canada
 Sales Inc.                         7                         1,000 common shares

1076899 Holdings Ltd.               1-C                       101 common shares

1203819 Ontario Limited             C-1                       1 common share
</TABLE>


<PAGE>


                                     - 10 -

<TABLE>
<CAPTION>

<S>                                 <C>                       <C>
CORPORATION                         CERTIFICATE NO.           NUMBER AND CLASS OF SECURITIES

3264904 Canada Limited              3                         1 common share

468327 B.C. Ltd.                    1-C                       2,000 common shares

566816 B.C. Ltd.                    2                         100 common shares

British Columbia Forest
 Products Limited                   2                         1 common share

Catalyst Paper Corporation
 (B.C.)                             1                         1 common share

Catalyst Paper Corporation
 (Canada)                           1                         1 common share

Crofton Pulp and Paper
 Limited                            7                         1 common share
                                    8                         1 common share

Echelon Paper Corporation
 (B.C.)                             1                         1 common share

Echelon Paper Corporation
 (Canada)                           1                         1 common share

NSC Holdings
 (Barbados) Limited                                           100% of Capital
                                                              Stock (details
                                                              unknown)

NSC Holdings
 (Philippines) Inc.               (unknown)                 79,475 common shares

 NSCL Holdings Inc.                 4                       1,000 common stock

Pope & Talbot Inc.               CS20955                 1,750,000 common shares
</TABLE>

2.       NORSKE SKOG CANADA FINANCE LIMITED

Capital Stock:        Authorized Capital: 10,000 Common Shares without par value


<PAGE>


                                     - 11 -


                  Issued and outstanding Shares: 10 Common Shares
                  Members: Norske Skog Pulp Operations Limited

Head Office:      9th Floor, 700 West Georgia Street
                  P.O. Box 10058 Pacific Centre
                  Vancouver, British Columbia
                  V7Y 1J7

Real Property:

         Owned:            Nil

         Leased:           Nil

Nature of Business:     To borrow funds and lend them on to the Norske Group of
                        Companies

Jurisdictions in which its property other than accounts receivable is located:
British Columbia

Capital Stock Holdings:  Nil

3.       NORSKE SKOG CANADA PULP OPERATIONS LIMITED

Capital Stock:    Authorized capital:  unlimited number of common shares
                  Issued and outstanding shares:  124,189,254 common shares
                  Members:  Norske Skog Canada Limited

Head Office:      9th Floor, 700 West Georgia Street
                  P.O. Box 10058 Pacific Centre
                  Vancouver, British Columbia
                  V7Y 1J7

Real Property:

         Owned:            Nil

         Leased:           Real Property Leases

         FEDERAL WATER LOT LEASES


<PAGE>


                                     - 12 -


         W/Lot Lease #E-04-06, between the Fraser River Port Authority
         (landlord) and 3264912 Canada Limited (now Norske Skog Canada Pulp
         Operations Limited), for a Barge Tie-up & Fiber Supply Loading Area
         near Port Mann (2.248 ha.)

Nature of Business:  Pulp Manufacturing

Jurisdictions in which its property other than accounts receivable is located:
British Columbia

Capital Stock Holdings:

<TABLE>
<CAPTION>
<S>                               <C>                   <C>
CORPORATION                       CERTIFICATE NO.       NUMBER AND CLASS OF
                                  SECURITIES
Norske Skog Canada Pulp
 Sales Inc.                       3                      1 common share
Norske Skog Pulp Sales
 (Japan) Ltd.                     B No.001               600 shares
Norske Skog Canada
 Finance Limited                  2                      10 common shares
Allwin Technical Services Inc.    2                      1 common share
                                  4                      1,349,999 common shares
</TABLE>

4.       ELK FALLS PULP AND PAPER LIMITED

Capital Stock:   Authorized capital:  10,000,000 common shares without par value
                 Issued and outstanding shares:  1 common
                 Members:  Norske Skog Canada Limited

Head Office:     9th Floor, 700 West Georgia Street
                 P.O. Box 10058 Pacific Centre
                 Vancouver, British Columbia
                 V7Y 1J7

Real Property:

         Owned:

<TABLE>
<CAPTION>
<S>               <C>
PID:              LEGAL DESCRIPTION:

000 849 731       District Lot 120 (DD 2157781) Sayward District Except Part in Plans 14946
                  and VIP57724
</TABLE>


<PAGE>


                                                     - 13 -

<TABLE>
<CAPTION>
<S>               <C>
PID:              LEGAL DESCRIPTION:

000 849 821       That part of District Lot 67 Sayward District shown outlined in red on Plan
                  1374 RW
000 848 905       Lot A DL 68 Sayward District Plan 20538
000 849 561       That part of DL 151 Sayward District shown outlined in red on Plan 1433R
000 849 502       That Part of DL 163 Sayward District shown outlined in red on Plan 1431R
001 233 475       Block B of Lot 1504 Sayward District
001 233 467       Block C of Lot 1504 Sayward District
001 233 459       Block D of Lot 1504, Sayward District
000 848 913       Lot 1 DL 68 Sayward District Plan 16712
000 849 855       That part of DL 52 Sayward District shown outlined in red on Plan 659 RW
000 849 847       That part of DL 67 Sayward District shown outlined in red on Plan 659 RW
000 849 910       District Lot 26 Sayward District except part in Plans 34604 and 42540
000 848 921       Lot 1 DL 109 Sayward District Plan 16956
000 849 430       District Lot 164 Sayward District shown outlined in red on Plan 1431R
001 233 432       District Lot 109 Sayward District except Parcel A (DD 285472-I) and those
                  parts in Plans 1373-R, 16956, 19371, 50636 and VIP54479 and VIP64521
001 233 441       Lot 1599 Sayward District except that portion in Plan VIP 64521
000 846 287       District Lot 2 Sayward District except those parts in Plans 19371, 42540,
                  50636, VIP 64521 and VIP 64522
015 101 231       Amended Bl 24 (See 235568L) DL 313 Plan 827
015 101 240       Lot A (See M51221L) Bl 23 DL 313 Plan 827
</TABLE>

Note: Elk Falls Pulp and Paper Limited holds legal title only to the above
properties. Norske Skog Canada Limited holds beneficial title.

         Leased:
<TABLE>
<CAPTION>
<S>               <C>
PID:              LEGAL DESCRIPTION:

N/A               Site Lease CNR #10763, NWD PT FR Sections 1 and 2, B5NR2W
                  TP38, Port Mann Chip Loading Site, 14021 Port Mann Shore
                  District of Surrey, Fibre Supply EFFIL (Elk Falls Pulp and
                  Paper Limited)
</TABLE>

Nature of Business:  Bare Trust Company

Jurisdictions in which its property other than accounts receivable is located:
British Columbia

Capital Stock Holdings:  Nil


<PAGE>


                                     - 14 -

5.       NORSKE SKOG CANADA SALES INC.

Capital Stock:    Authorized capital:  10,000 common shares without par value
                  Issued and outstanding shares:  1,000 common shares
                  Members:  Norske Skog Canada Limited

Head Office:      9th Floor, 700 West Georgia Street
                  P.O. Box 10058 Pacific Centre
                  Vancouver, British Columbia
                  V7Y 1J7

Real Property:

         Owned:            Nil

         Leased:           Nil

Nature of Business:  Paper Sales

Jurisdictions in which its property other than accounts receivable is located:
         British Columbia

Capital Stock Holdings:  Nil

6.       NORSKE SKOG CANADA PULP SALES INC.

Capital Stock:  Authorized capital:  100,000,000 common shares without par value
                Issued and outstanding shares:  1 common share
                Members:  Norske Skog Canada Pulp Operations Limited

Head Office:    9th Floor, 700 West Georgia Street
                P.O. Box 10058 Pacific Centre
                Vancouver, British Columbia
                V7Y 1J7

Real Property:

         Owned:            Nil

         Leased:           Nil

Nature of Business:  Pulp Sales


<PAGE>


                                     - 15 -


Jurisdictions in which its property other than accounts receivable is located:
         British Columbia, Ontario, New Jersey, New York, Wisconsin,
         Michigan, Illinois, Washington, Australia, Belgium, Germany, United
         Kingdom, Japan, Italy, France, Switzerland, Spain

Capital Stock Holdings:  Nil

NORSKE SKOG PULP SALES (JAPAN) LTD.

Capital Stock: Authorized capital:  800 shares with a par value of(Y)50,000 each
               Issued and outstanding shares:  600 shares
               Members:  Norske Skog Canada Pulp Operations Limited

Head Office:      Seiki Building, 5th Floor
                  3-6, Kudan Kita 1-chome,
                  Chiyoda-ku
                  Tokyo, Japan

Real Property:

                  Owned:            Nil
                  Leased:           Nil

Nature of Business:  Pulp Sales

Jurisdictions in which its property other than accounts receivable is located:
Japan

Capital Stock Holdings:  Nil

7.       NORSKE SKOG CANADA (JAPAN) LTD.

(known as Fletcher Challenge Paper Sales (Japan) Ltd. until 1 August 2001)

Capital Stock:    Authorized capital:  4,000 shares with a par value of
                  (Y)50,000 each
                  Issued and outstanding shares:  1,000 shares (value of
                  (Y)50,000 each)
                  Members:  Norske Skog Canada Limited

Head Office:      Ginza Fujiya Building 6F
                  3-1 Ginza 1-chome, Chuo-ku
                  Tokyo 104-0061, Japan


<PAGE>


                                     - 16 -


Real Property:

         Owned:            Nil

         Leased:           Nil

Nature of Business:  Paper Sales

Jurisdictions in which its property other than accounts receivable is located:
Japan

Capital Stock Holdings:  Nil

8.       NSCL HOLDINGS INC.

Capital Stock:    Authorized capital:  1,000,000 common stock with a par value
                  of US$1
                  Issued and outstanding shares:  1,000 common stock
                  Members: Norske Skog Canada Limited

Head Office:      The Corporation Trust Company
                  Corporation Trust Center
                  1209 Orange Street
                  Wilmington, DE 19801 USA

Chief Executive Office:             800 South Broadway, Suite 210
                                    Walnut Creek,
                                    California  94596

Real Property:

         Owned:            Nil

         Leased:           Nil

Nature of Business:  Holding Company

Jurisdictions in which its property other than accounts receivable is located:
         not applicable (holding company)

Capital Stock Holdings:


<PAGE>


                                     - 17 -


<TABLE>
<CAPTION>
CORPORATION                         CERTIFICATE NO.           NUMBER AND CLASS OF SECURITIES
<S>                                 <C>                       <C>
Norske Skog Paper Company           4                          1,000 common stock
Arizona Newsprint Industries
 Corporation                        2                          1,000 common stock
NSC Fibre Inc.                      2                          1,000 common stock
</TABLE>

9.       NORSKE SKOG PAPER COMPANY

Capital Stock:    Authorized capital:  1,000,000 common shares
                  Issued and outstanding shares:  1,000 common shares
                  Member: NSCL Holdings Inc.

Head Office:      800 South Broadway, Suite 210
                  Walnut Creek,
                  California  94596

Real Property:

         Owned:            Nil

         Leased:           Nil

Nature of Business:  Paper Sales

Jurisdictions in which its property other than accounts receivable is located:
         California, Colorado, Illinois, Washington, Oregon

Capital Stock Holdings:  Nil




<PAGE>


                                   SCHEDULE G

                               MATERIAL CONTRACTS

                      [SEE REFERENCE IN SECTION 1.1.67(A)]

                           Norske Skog Canada Limited

PART A

Fibre Supply Material Contracts:

1. Chip and sawlog supply agreement made the 8th day of September, 1980 between
British Columbia Forest Products Limited (which changed its name to Fletcher
Challenge Canada Limited, which changed its name to Norske Skog Canada Limited)
and Doman Industries Limited, as amended by a letter agreement dated May 26,
1995 from Fletcher Challenge Canada to Doman Forest Products Limited and by a
letter agreement dated July 14, 1998 from Fletcher Challenge Canada Limited to
Doman Forest Products Limited

Current Parties:  Norske Skog Canada Limited and Doman Industries Limited

2. Sawdust purchase agreement made as of the 1st day of January, 1987 between
Doman Forest Products Limited and Crown Forest Industries Limited, as amended by
a letter agreement dated May 26, 1995 from Fletcher Challenge Canada to Doman
Forest Products Limited and by a letter agreement dated July 14, 1998 between
Fletcher Challenge Canada Limited to Doman Forest Products Limited

Current Parties: Crown Forest Industries Limited and Doman Forest Products
Limited

3. Chip and pulplog supply agreement dated December 30, 1991 among Fletcher
Challenge Canada Limited (which is now named Norske Skog Canada Limited), Crown
Forest Industries Limited and International Forest Products Limited, as amended
by an amending agreement dated the 18th day of June, 1997 among International
Forest Products Limited, Fletcher Challenge Canada Limited and Crown Forest
Industries Limited, as assigned by Crown Forest Industries Limited to Elk Falls
Forest Industries Limited pursuant to an assignment made the 25th day of
September, 2000 among Crown Forest Industries Limited, Elk Falls Forest
Industries Limited and International Forest Products Limited, and then assigned
by Elk Falls Forest Industries Limited to Norske Skog Canada Limited pursuant to
an assumption and distribution agreement made the 1st day of January, 2001
between Elk Falls Forest Industries Limited and Norske Skog Canada Limited in
connection with the wind-up of Elk Falls Forest Industries Limited

Current Parties:  Norske Skog Canada Limited and International Forest Products
Limited

4. Residual fibre supply agreement dated December 30, 1991 among Fletcher
Challenge


<PAGE>


                                      - 2 -


Canada Limited (which is now named Norske Skog Canada Limited), Crown Forest
Industries Limited and International Forest Products Limited, as assigned by
Crown Forest Industries Limited to Elk Falls Forest Industries Limited pursuant
to an assignment made the 25th day of September, 2000 among Crown Forest
Industries Limited, Elk Falls Forest Industries Limited and International Forest
Products Limited, and then assigned by Elk Falls Forest Industries Limited to
Norske Skog Canada Limited pursuant to an assumption and distribution agreement
made the 1st day of January, 2001 between Elk Falls Forest Industries Limited
and Norske Skog Canada Limited in connection with the wind-up of Elk Falls
Forest Industries Limited

Current Parties:  Norske Skog Canada Limited and International Forest Products
Limited

5. Chip supply agreement dated November 19, 1992 between Crown Forest Industries
Limited and Riverside Forest Products Limited, as assigned by Crown Forest
Industries Limited to Elk Falls Forest Industries Limited pursuant to an
assignment made the 6th day of July, 2000 between Crown Forest Industries
Limited, Elk Falls Forest Industries Limited and Riverside Forest Products
Limited, and then assigned by Elk Falls Forest Industries Limited to Norske Skog
Canada Limited pursuant to an assignment and distribution agreement made the 1st
day of January, 2001 between Elk Falls Forest Industries Limited and Norske Skog
Canada Limited in connection with the wind-up of Elk Falls Forest Industries
Limited

Current Parties: Norske Skog Canada Limited and Riverside Forest Products
Limited

6. Amended and restated chip and pulplog supply agreement made as of the 23rd
day of June, 1997 between 3264891 Canada Limited and 3264812 Canada Limited
(which subsequently amalgamated with 3264939 Canada Limited to form 3418146
Canada Limited, which changed its name to Fletcher Challenge Canada Pulp
Operations Limited) and TimberWest Forest Limited (which changed its name to TFL
Forest Ltd.), as assigned in part by TimberWest Forest Limited to TimberWest
Forest Company, a partnership of TimberWest Forest Corp., TFL Forest Ltd. and
PFP Forest Ltd. pursuant to an unwritten assignment and amended by chip and
pulplog supply agreement amendment made as of the 1st day of January, 1999
between Fletcher Challenge Canada Pulp Operations Limited (which changed its
name to Norske Skog Canada Limited), TFL Forest Ltd. and TimberWest Forest
Company, a partnership of TimberWest Forest Corp., TFL Forest Ltd. and PFP
Forest Ltd.

Current Parties: Norske Skog Canada Pulp Operations Limited and TFL Forest Ltd.
and TimberWest Forest Company, a partnership of TimberWest Forest Corp., TFL
Forest Ltd. and PFP Forest Ltd.

7. Amended and restated timber harvesting management agreement made as of the
1st day of January, 1999 between Fletcher Challenge Canada Limited (which
changed its name to Norske


<PAGE>


                                      - 3 -


Skog Canada Limited), TimberWest Forest Corp. and TimberWest Forest Company, a
partnership of TimberWest Forest Corp., TFL Forest Ltd. and PFP Forest Ltd.

Current Parties: Norske Skog Canada Limited and TimberWest Forest Corp. and
TimberWest Forest Company, a partnership of TimberWest Forest Corp., TFL Forest
Ltd. and PFP Forest Ltd.

Non-Fibre Supply Material Contracts:

8. Pulp Contract of Affreightment dated September 13, 2000 between Star Shipping
A/S and Fletcher Challenge Canada Pulp Operations Limited for Star Shipping A/S
to ship wood pulp from Norske Skog mills to North Europe, the Mediterranean,
Japan and Korea

Current Parties: Norske Skog Canada Pulp Operations Limited and Star Shipping
A/S

9. Norsul Contract of Affreightment dated April 11, 2000 between Companhia de
Navegacao Norsul (Brasil) and Norske Skog Canada Limited for Companhia de
Navegacao Norsul (Brasil) to ship newsprint from British Columbia to Central and
East Coast South America

Current Parties: Companhia de Navegacao Norsul (Brasil) and Norske Skog Canada
Limited

10. Distribution Centre Services Agreement dated June 1, 1999 between Sylvan
Distribution Ltd. and Fletcher Challenge Canada Limited for Sylvan Distribution
Ltd. to provide distribution centre services; including handling, storage and
cross docking, to Norske Skog Canada Limited at its leased warehouse space in
Surrey

Current Parties: Sylvan Distribution Ltd. and Norske Skog Canada Limited

11. Sublease of Upland Lease dated June 12, 1998 between Wesik Enterprises Ltd.
("Wesik"), as sublandlord, and Fletcher Challenge Canada Limited, as subtenant

Current Parties: Wesik Enterprises Ltd. and Norske Skog Canada Limited

12. Option to Renew Upland Lease dated June 12, 1998 between Wesik and Fletcher
Challenge Canada Limited

Current Parties: Wesik Enterprises Ltd. and Norske Skog Canada Limited

13. Sublease of Waterlot Lease dated June 12, 1998 between Wesik, as
sublandlord, and Fletcher Challenge Canada Limited, as subtenant


<PAGE>


                                      - 4 -


Current Parties: Wesik Enterprises Ltd. and Norske Skog Canada Limited

14. Property Management Services Agreement dated March 1, 1999 between Wesik and
the Corporation for Wesik to provide property management services for the Upland
Lease, the Waterlot Lease and the improvements on the leased properties

Current Parties: Wesik Enterprises Ltd. and Norske Skog Canada Limited

15. Rail Spur Sublicence dated June 18, 1998 between Wesik, as sublicensor, and
the Fletcher Challenge Canada Limited, as sublicensee, permitting the
Corporation to use the rail spur on the leased properties

Current Parties: Wesik Enterprises Ltd. and Norske Skog Canada Limited

16. Vancouver Island Gas Restated Joint Venture Agreement dated November 4, 1994
among Harmac Pacific Inc., Howe Sound Pulp, MacMillan Bloedel Limited, Western
Pulp Limited Partnership and the Fletcher Challenge Canada Limited (known as
"Vancouver Island Gas Restated Joint Venture")

Current Parties: Pope & Talbot Ltd., Howe Sound Pulp and Paper Limited, Pacifica
Papers Inc., Western Pulp Limited Partnership and the Norske Skog Canada Limited

17. Addendum to the Vancouver Island Gas Restated Joint Venture Agreement dated
July 4, 1995 among Harmac Pacific Inc., Howe Sound Pulp, MacMillan Bloedel
Limited, Western Pulp Limited Partnership and the Fletcher Challenge Canada
Limited (known as "Vancouver Island Gas Restated Joint Venture") wherein the
joint venturers agreed to enter into good faith negotiations to fix the tolls to
be charged for the transportation of gas on the Pacific Coast Energy Corporation
system

Current Parties: Pope & Talbot Ltd., Howe Sound Pulp and Paper Limited, Pacifica
Papers Inc., Western Pulp Limited Partnership and the Norske Skog Canada Limited

18. Oxygen Supply Agreement dated September 1, 1993 between Praxair Canada Inc.
("Praxair") and Fletcher Challenge Canada Limited, as amended by Amending
Agreement to the Air Separation Services Amending Agreement dated September 1,
1993 and Amending Agreement to the Air Services Amending Agreement Dated
September 1, 1993 dated January 1, 1995, for the supply of oxygen and separation
services for the compressed air delivered to Fletcher Challenge Canada Limited
at Praxair's Facility at the Crofton pulp mill

Current Parties: Praxair Canada Inc. and Norske Skog Canada Limited


<PAGE>


                                      - 5 -


19. Air Separation Services Agreement dated October 1, 1993 between Praxair and
Fletcher Challenge Canada Limited, as amended by Amending Agreement to the Air
Separation Services Agreement Dated October 1, 1993 dated January 1, 1995, for
the supply of oxygen and separation services to Fletcher Challenge Canada Pulp
Operations Limited at Praxair's Facility at the Elk Falls pulp mill

Current Parties: Praxair Canada Inc. and Norske Skog Canada Limited

20. Oxygen Supply Agreement dated March 1, 1990 between Linde Canada Inc.
(formerly Linde Division, Union Carbide Canada Limited) and Fletcher Challenge
Canada Limited for Linde Canada Inc. to construct a facility at the Crofton pulp
mill and to supply oxygen to Fletcher Challenge Canada Limited

Current Parties: Praxair Canada Inc. and Norske Skog Canada Limited

PART B

Fibre Supply Material Contracts:

21. Chip and pulplog supply agreement dated April 5, 1993 between Fletcher
Challenge Canada Limited (which is now named Norske Skog Canada Limited) and
Columbia River Shake & Shingle Ltd., J.S. Jones Holdings Ltd., J.S. Jones Timber
Ltd., Teal Cedar Products (1977) Ltd. and Teal Cedar Products Ltd. (which are
now Columbia River Shake & Shingle Ltd. and Teal Cedar Products Ltd. as a result
of amalgamations)

Current Parties: Norske Skog Canada Limited and Columbia River Shake & Shingle
Ltd. and Teal Cedar Products Ltd.

22. Stag/Pitt Lake fibre supply agreement dated April 5, 1993 between Fletcher
Challenge Canada Limited (which is now named Norske Skog Canada Limited) and
Columbia River Shake & Shingle Ltd., J.S. Jone Holdings Ltd., J.S. Jones Timber
Ltd., Teal Cedar Products (1977) Ltd. and Teal Cedar Products Ltd. (which are
now Columbia River Shake & Shingle Ltd. and Teal Cedar Products Ltd. as a result
of amalgamations)

Current Parties: Norske Skog Canada Limited and Columbia River Shake & Shingle
Ltd. and Teal Cedar Products Ltd.

23. Chip purchase agreement made as of January 16, 1995 between West Chilcotin
Forest Products Ltd. and Fletcher Challenge Canada Limited (which changed its
name to Norske Skog Canada Limited)


<PAGE>


                                      - 6 -


Current Parties: Norske Skog Canada Limited and West Chilcotin Forest Products
Ltd.

24. Amended and restated woodchip purchase agreement made as of April 1, 1995
between Summit Timber Company and Fletcher Challenge Canada Limited, as amended
by woodchip purchase agreement amendment made as of the 1st day of May, 1996
between Summit Timber Company and Fletcher Challenge Canada Limited (which
changed its name to Norske Skog Canada Limited)

Current Parties:  Norske Skog Canada Limited and Summit Timber Company

25. De-inked pulp sales agreement with an effective day of April 1, 1999 between
Newstech Recycling Inc. and Fletcher Challenge Canada Limited (which changed its
name to Norske Skog Canada Limited)

Current Parties:  Norske Skog Canada Limited and Newstech Recycling Inc.

26. Log supply agreement dated December 30, 1991 among Fletcher Challenge Canada
Limited (which is now named Norske Skog Canada Limited), Crown Forest Industries
Limited and International Forest Products Limited, as assigned by Crown Forest
Industries Limited to Elk Falls Forest Industries Limited pursuant to an
assignment made the 25th day of September, 2000 among Crown Forest Industries
Limited, Elk Falls Forest Industries Limited and International Forest Products
Limited, and then assigned by Elk Falls Forest Industries Limited to Norske Skog
Canada Limited pursuant to an assumption and distribution agreement made the 1st
day of January, 2001 between Elk Falls Forest Industries Limited and Norske Skog
Canada Limited in connection with the wind-up of Elk Falls Forest Industries
Limited

Current Parties: Norske Skog Canada Limited and International Forest Products
Limited

27. Fibre products rights agreement dated November 19, 1992 between Crown Forest
Industries Limited and Riverside Forest Products Limited, as assigned by Crown
Forest Industries Limited to Elk Falls Forest Industries Limited pursuant to an
assignment made the 6th day of July, 2000 between Crown Forest Industries
Limited, Elk Falls Forest Industries Limited and Riverside Forest Products
Limited, and then assigned by Elk Falls Forest Industries Limited to Norske Skog
Canada Limited pursuant to an assignment and distribution agreement made the 1st
day of January, 2001 between Elk Falls Forest Industries Limited and Norske Skog
Canada Limited in connection with the wind-up of Elk Falls Forest Industries
Limited

Current Parties: Norske Skog Canada Limited and Riverside Forest Products
Limited

Non-Fibre Supply Material Contracts:


<PAGE>


                                      - 7 -


28. Forest Terminals San Diego Clerking Services Agreement dated March 1, 1995
made between Fletcher Challenge Paper Company and NPSCL for NPSCL to perform the
clerking services for all inbound, water-borne goods at the Port of San Diego,
California

Current Parties: Norske Skog Paper Company and Norsk Pacific Steamship Company
Limited

29. Long Beach Terminal Services Agreement dated March 1, 1995 for NPSCL to
perform terminal services for inbound water-borne goods at the Port of Long
Beach, California, Pier D, Berth D50, D52, D53 and D54

Current Parties: Norske Skog Paper Company and Norsk Pacific Steamship Company
Limited

30. Contract of Affreightment dated January 3, 1981 between NPSCL and Crown
Zellerbach Corporation, as assigned to Fletcher Challenge Paper Company for
NPSCL to ship cargo from British Columbia to California, as amended by
Thorseggen Amending Agreement dated March 30, 1983, Addendum to Contract of
Affreightment dated August 14, 1989 and Second Amendment to Contract of
Affreightment dated April 1, 1995

Current Parties: Norske Skog Paper Company and Norsk Pacific Steamship Company
Limited

31. Full Service Agreement dated October 26, 1999 between 3538109 Canada Inc.
("3538109") and Fletcher Challenge Canada Pulp Operations Limited for 3538109 to
provide maintenance services to the pulp mills

Current Parties: Norske Skog Canada Pulp Operations Limited and Allwin Technical
Services Inc.

32. Licence Agreement dated October 26, 1999 among 3538109, Fletcher Challenge
Canada Pulp Operations Limited and ASEA Brown Boweri Inc. for 3538109 to manage
ASEA Brown Boweri Inc.'s proprietary assets

Current Parties: Norske Skog Canada Pulp Operations Limited and Allwin Technical
Services Inc. and ASEA Brown Boweri Inc.

33. Maintenance Area Use Agreement (Crofton) dated October 26, 1999 between
3538109 and Norske Skog Canada Pulp Operations Limited for Norske Skog Canada
Pulp Operations Limited to lease or licence certain portions of buildings within
the Crofton pulp mill

Current Parties: Norske Skog Canada Pulp Operations Limited and Allwin Technical
Services Inc.


<PAGE>


                                      - 8 -


34. Maintenance Area Use Agreement (Elk Falls) dated October 26, 1999 between
3538109 and Norske Skog Canada Pulp Operations Limited for Norske Skog Canada
Pulp Operations Limited to lease or licence certain portions of buildings within
the Elk Falls pulp mill

Current Parties: Norske Skog Canada Pulp Operations Limited and Allwin Technical
Services Inc.

35. PCC Supply Agreement dated October 14,1997 between Specialty Minerals Inc.
and Fletcher Challenge Canada Limited for the purchase of precipitated calcium
carbonate for paper filling and coating applications

Current Parties: Specialty Minerals Inc. and Norske Skog Canada Limited

36. Chip Barge Transportation Contract dated May 31, 1979, between Crown
Zellerbach Canada Limited, as assigned to Fletcher Challenge Canada Limited, and
Norsk Pacific Steamship Company Limited ("NPSCL") to supply tugs and barges to
provide transportation and to receive, carry and deliver wood chips, sawdust and
hog fuel from mills in British Columbia to consuming pulp mills as requested by
Crown, as amended by First Amendment to Chip Barge Transportation Contract dated
May 31, 1994

Current Parties: Norske Skog Canada Limited and Norsk Pacific Steamship Company
Limited

37. Switching and Delivery Agreement dated March 15, 2000 between Fletcher
Challenge Canada Limited and Canadian Pacific Railway Company and Soo Line
Railway Company (together, the "Railway") for the Railway to provide switching
and delivery services to Norske Skog Canada Limited

Current Parties: Norske Skog Canada Limited and Canadian Pacific Railway Company
and Soo Line Railway Company

38. Electricity Supply Agreement (Elk Falls) dated April 1, 2001 between British
Columbia Hydro and Power Authority and Norske Skog Canada Limited for the supply
of electricity to Norske Skog Canada Limited at point of delivery near Duncan
Bay, B.C. from April 1, 2001 for a period of one year.

Current Parties: British Columbia Hydro and Power Authority and Norske Skog
Canada Limited

39. Electricity Supply Agreement (Crofton) dated April 1, 2001 between British
Columbia Hydro and Power Authority and Norske Skog Canada Limited for the supply
of electricity to


<PAGE>


                                      - 9 -


Norske Skog Canada Limited at point of delivery at Crofton, B.C. from April 1,
2001 for a period of one year

Current Parties: British Columbia Hydro and Power Authority and Norske Skog
Canada Limited

40. Share Purchase Agreement and related agreements amongst BPC Holdings
Limited, Fletcher Challenge Canada Limited, Fletcher Challenge Limited and
Fletcher Challenge Industries Canada Inc. dated September 29, 1997.

41. Share Purchase Agreement amongst Fletcher Challenge Industries Canada Inc.,
Fletcher Challenge Canada Limited, Fletcher Challenge Limited, Elk Falls Forest
Industries Limited and Fletcher Challenge Limited dated June 27, 1997, amended
January 1, 2001 by Amended Share Purchase Agreement amongst 3848051 Canada Inc.,
Norske Skog Canada Limited, Elk Falls Forest Industries Limited and Norske Skog
Industrier ASA.



                              Pacifica Papers Inc.

PART A

Fibre Supply Material Contracts:

1. Chip and log supply agreement dated for reference the 8th day of June, 1998
between MacMillan Bloedel Limited (now Weyerhaeuser Company Limited) and MB
Paper Limited (now Pacifica Papers Inc.)

Current Parties:  Weyerhaeuser Company Limited and Pacifica Papers Inc.

2. Hog fuel supply agreement made as of the 8th day of June, 1998 between
MacMillan Bloedel Limited (now Weyerhaeuser Company Limited) and MB Paper
Limited (now Pacifica Papers Inc.)

Current Parties:  Weyerhaeuser Company Limited and Pacifica Papers Inc.

3. Letter agreement dated August 24, 1999 between Pacifica Papers Inc. and Gates
Construction Inc.

Current Parties:  Gates Construction Inc. and Pacifica Papers Inc.


<PAGE>


                                     - 10 -


4. Newstech Asset Purchase Agreement dated June 15, 1990 among Newstech
Recycling Inc., MacMillan Bloedel Limited and Fletcher Challenge Canada Limited
to provide for the rights of the parties in certain circumstances arising under
the Deinked Pulp Sales Agreement.

Current Parties: Newstech Recycling Inc., MacMillan Bloedel Limited and Fletcher
Challenge Canada Limited

5. Deinked Pulp Sales Agreement dated April 1, 1999 between Newstech Recycling
Inc. and Pacifica Papers Inc. in which Newstech agrees to sell and deliver
deinked newsprint pulp from the Newstech Mill.

Current Parties:  Newstech Recycling Inc. and Pacifica Papers Inc.

Non-Fibre Supply Material Contracts:

6. Transportation Service Agreement dated December 14, 1995 among Pacific Coast
Energy Corporation (now Centra Gas B.C. Inc.) and MacMillan Bloedel Limited,
Howe Sound Pulp and Paper Limited, Fletcher Challenge Canada Limited, Western
Pulp Limited Partnership and Harmac Pacific Inc. to provide MacMillan Bloedel
with transportation service in respect of gas.

Current Parties: Pacific Coast Energy Corporation (now Centra Gas B.C. Inc.) and
MacMillan Bloedel Limited, Howe Sound Pulp and Paper Limited, Fletcher Challenge
Canada Limited, Western Pulp Limited Partnership and Harmac Pacific Inc.

7. Transportation, Terminal and Warehouse Services Agreement dated December 22,
1997 between MB Paper Limited and Fraser River Terminal Inc. for the provision
of transportation, terminal and warehouse services to MB Paper.

Current Parties:  MB Paper Limited and Fraser River Terminal Inc.

8. Transportation Services Contract dated October 23, 1997 between MB Paper
Limited, Kingcome Navigation Company and Seaspan International Ltd. for Kingcome
to provide a log barging, log towing and railcar barging and related
transportation services to MB Paper.

Current Parties: MB Paper Limited, Kingcome Navigation Company and Seaspan
International Ltd.

9. Interchange/Operating Agreement dated April 11, 2000 (date on letter attached
to Agreement) among E&N Railway Company (1998) Ltd. and Alberni Specialities
(Division of Pacifica Papers) and Alberni Pacific Railway for interchange on
railway lines.


<PAGE>


                                     - 11 -


Current Parties: E&N Railway Company (1998) Ltd. and Alberni Specialities
(Division of Pacifica Papers) and Alberni Pacific Railway

10. Barge Transportation Rate Agreement dated August 31, 2000 between Seaspan
International Ltd. and Pacifica Papers Inc. confirming the towing rates between
Powell River and various terminals on an "as required" basis.

Current Parties:  Seaspan International Ltd. and Pacifica Papers Inc.

11. Canadian Pacific Railway Confidential Contract (CPRS 129829) dated September
1, 1998 between Canadian Pacific Railway and Pacifica Papers Co. Ltd.
Partnership for rail transportation service for shipments for Pacifica.

Current Parties: Canadian Pacific Railway and Pacifica Papers Co. Ltd.
Partnership

12. Confidential Contract CPRS 133433 dated July 15, 1999 between Canadian
Pacific Railway and Pacifica Papers Co. Ltd. Partnership for rail transportation
service.

Current Parties: Canadian Pacific Railway and Pacifica Papers Co. Ltd.
Partnership

13. Power Purchase Agreement between Pacifica Papers Inc. and Powell River
Energy Inc. dated January 31, 2001.

Current Parties: Pacifica Papers Inc. and Powell River Energy Inc.

14. Shared Facilities Agreement between Pacifica Pacifica Papers Inc. and Powell
River Energy Inc. dated January 30, 2001.

Current Parties: Pacifica Papers Inc. and Powell River Energy Inc.

PART B

Non-Fibre Supply Material Contracts:

15. Partnering Agreement dated September 1, 1995 between MacMillan Bloedel
Limited and Anglo-American Clays Corporation for the supply of clay products to
the Port Alberni and Powell River Mills.

Current Parties:  MacMillan Bloedel Limited and Anglo-American Clays Corporation


<PAGE>


                                     - 12 -


16. Electricity Supply Agreement dated June 1, 1998 between British Columbia
Hydro and Power Authority and Pacific Papers Inc. for the supply of electricity
to the Port Alberni Mill.

Current Parties: British Columbia Hydro and Power Authority and Pacific Papers
Inc.

17. Electricity Supply Agreement dated June 1, 1998 between British Columbia
Hydro and Power Authority and Pacifica Papers Inc. for the supply of electricity
to the Powell River Mill.

Current Parties: British Columbia Hydro and Power Authority and Pacifica Papers
Inc.

18. Guaranty dated January 18, 2001 between Pacifica Papers Inc. and Enron North
America Corp. in the amount of $20 million in favour of Pacifica.

Current Parties:  Pacifica Papers Inc. and Enron North America Corp.



<PAGE>


                                   SCHEDULE H

                            OTHER SECURED OBLIGATIONS

                         [SEE REFERENCE IN SECTION 6.2]


US Dollar to Canadian Dollar foreign exchange contracts between Norske Skog
Canada Sales Inc. and RBC existing as of the date of this Agreement in an
aggregate notional amount of US $155,000,000.

US Dollar to Japanese yen foreign exchange contracts between Norske Skog Canada
Sales Inc. and RBC existing as of the date of this Agreement in an aggregate
notional amount of 143,000,000 Japanese yen.

US Dollar collar option agreements between Norske Skog Canada Sales Inc. and RBC
existing as of the date of this Agreement in an aggregate notional amount of US
$45,000,000.

US Dollar to Canadian Dollar foreign exchange contracts between Norske Skog
Canada Sales Inc. and TD existing as of the date of this Agreement in an
aggregate notional amount of US $40,000,000.

US Dollar collar option agreements between Norske Skog Canada Limited and The
Bank of Nova Scotia existing as of the date of this Agreement in an aggregate
notional amount of US $12,000,000.

US Dollar to Canadian Dollar foreign exchange contracts between Norske Skog
Canada Sales Inc. and The Bank of Nova Scotia existing as of the date of this
Agreement in an aggregate notional amount of US $30,000,000.






<PAGE>



                                   SCHEDULE I

            LIMITATIONS ON CERTAIN SUBSIDIARIES OF RESTRICTED PARTIES

                   [SEE REFERENCES IN SECTIONS 6.1, 10.2.6(c)]


None of 3264904 Canada Limited, Catalyst Paper Corporation (a British Columbia
company), Catalyst Paper Corporation (a CANADA BUSINESS CORPORATIONS ACT
company), Echelon Paper Corporation (a British Columbia company), Echelon Paper
Corporation (a CANADA BUSINESS CORPORATIONS ACT company), 566816 B.C. Ltd.,
1203819 Ontario Limited, Mackenzie Forest Products Limited, Crofton Pulp & Paper
Limited, Fletcher Resources Limited, 468327 B.C. Ltd., 1076899 Holdings Ltd.,
British Columbia Forest Products Limited, FCC Holdings (Philippines) Inc., NSC
Holdings (Barbados) Limited , NSC Fibre Inc., BPC Holdings Ltd. and Arizona
Newsprint Corporation shall at any time carry on any business or have any
material Property unless it first becomes a Restricted Party in accordance with
this Agreement.






<PAGE>


                                   SCHEDULE J

                      LITIGATION AND ENVIRONMENTAL MATTERS

                 [SEE REFERENCES IN SECTIONS 9.1.3(a), 9.1.6(a)]


A.       LITIGATION

<TABLE>
<CAPTION>
       PLAINTIFF              DEFENDANT                   NATURE                      STATUS
<S>    <C>                    <C>                         <C>                         <C>
1.     US Department          Norske Skog                 Request for                 A subpoena has been
       of Justice             Canada Limited              assistance with             served on Norske
       AntiTrust                                          alleged anti-               Skog  demanding
       Investigation                                      competitive practice        further
                                                          in the newsprint            documentation.
                                                          industry                    Company believes
                                                                                      investigation is
                                                                                      complete. No
                                                                                      correspondence
                                                                                      since June 2000.

2.     Avenor Inc.            Norske Skog                 Claim for                   Unknown.
                              Canada Limited              contribution or
                                                          indemnity in respect
                                                          of any judgment
                                                          International Forest
                                                          Products Limited
                                                          may obtain against
                                                          Avenor Inc. in
                                                          respect of
                                                          contaminants and
                                                          other hazardous or
                                                          toxic substances

3.     International          Crown Forest                Contamination of            Writ of Summons
       Forest Products        Industries Limited,         Crown Forest                issued and
       Limited                Fletcher Challenge          Industries Limited          Appearance entered.
                              Canada Limited,             former Fraser Mill          International Forest
                              Elk Falls Forest            site                        Products Limited
                              Industries Limited                                      has agreed to
                              and Elk Falls Pulp                                      discontinue its
                              and Paper Limited                                       action against Elk
                                                                                      Falls Forest
                                                                                      Industries Limited.
</TABLE>


<PAGE>


                                      - 2 -


B.       GRIEVANCES

None which meet the materiality threshold.

C.       WASTE DISPOSAL AND LANDFILL

1.         Refuse Permit: PR-00506 for Sec 2 & 3; Rge 10 & 11 Chemainus
           Industrial Waste (Asbestos, Lime Mud, Black Liquor, Oxidation Tank
           Cleanings, Electrostatic Precipitator Catch Dregs) Crofton P&P FCCL

2.         Refuse Permit: PR-00507 Modified Sanitary Landfill within Millsite
           Sec 5 & 6; PCL D 08-928 (Newsprint Wrapper, Newsprint Paper Cores,
           Wood Plugs, Cinders, Flyash etc.) Crofton P&P FCCL *Cancelled 9 May
           96*

3.         Refuse Permit: PR-01602 Industrial Refuse to Landfill DL 2 & 26 (No
           Original Permit & not all Amendments on File) Elk Falls P&P EFFIL

4.         Refuse Permit: PR-06712 Landfill at Swallowfield Farm from Pulp/Paper
           Mill Complex (Permit in Joint Name of FCCL/Denis & Joan St. Denis)
           Crofton P&P FCCL **Abandoned Effective 16 Sep/96 Subject to MOE
           Monitoring Requirements**

5.         Refuse Permit: PR-07399 11 Hectare Landfill Secs 3 & 4 Rge
           9 Chemainus Filter Plant Crofton P&P FCCL


<PAGE>


                                   SCHEDULE K

                              INTELLECTUAL PROPERTY


                       [SEE REFERENCE IN SECTION 9.1.5(d)]

                            TRADE-MARK REGISTRATIONS

                           NORSKE SKOG CANADA LIMITED

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
            MARK                 APP.           APP. NO.             WARES/SERVICES                        STATUS
                                 DATE
-----------------------------------------------------------------------------------------------------------------------------------
                                                  CANADIAN TRADE-MARKS
-----------------------------------------------------------------------------------------------------------------------------------

<S>                          <C>               <C>                   <C>                               <C>
EXPRESS                      Reg. Date:        Reg. No.:             paper                             o Registered
                             April 12,         TMDA 04923
                             1894                                                                      o Expires April 12, 2004
                             (by E.B.
                             Eddy)
-----------------------------------------------------------------------------------------------------------------------------------
EXPRESS                      Reg. Date:        Reg. No.:             paper used for commercial         o Registered
                             May 7,            TMA511,604            printing
                             1999                                                                      o Expires May 7, 2014
                                                                     the custom  development and
                                                                     manufacture of commercial
                                                                     printing paper for others, and
                                                                     advising others on the
                                                                     selection and utilization of
                                                                     commercial printing paper
-----------------------------------------------------------------------------------------------------------------------------------
ADVANCE                      Reg. Date:        Reg. No.:             paper used for commercial         o Registered
                             April 26,         TMA456,870            printing
                             1996                                                                      o Expires April 26, 2011
                                                                     the custom development and
                                                                     manufacture of commercial
                                                                     printing paper for others, and
                                                                     advising others on the
                                                                     selection and utilization of
                                                                     commercial printing paper
-----------------------------------------------------------------------------------------------------------------------------------
MARATHON                     October 19,       795,321               newsprint                         o Pursuant to agreement,
                             1995                                                                        mark transferred to Fort
                                                                     technical consulting services       James Operating Company
                                                                     in the field of newsprint           on November 17, 1999
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>


                                      - 2 -

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
            MARK                 APP.           APP. NO.             WARES/SERVICES                        STATUS
                                 DATE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>               <C>                   <C>                               <C>
MARATHON                     April 16,         1,012,300             consulting services in the        o Response to Office Action
                             1999                                    field of printing and the use       filed September 15, 2000
                                                                     of newsprint in printing;

                                                                     technical consultation
                                                                     services to operators of
                                                                     commercial newsprint printing
                                                                     presses, namely, to minimize
                                                                     press downtime, minimize
                                                                     newsprint waste, and maximize
                                                                     the speed of printing press
                                                                     operations.
-----------------------------------------------------------------------------------------------------------------------------------
TRIAX                        Reg. Date:        Reg. No.:             pulp                              o Registered
                             Aug. 21,          TMA481,248
                             1997                                                                      o Expires August 21, 2012
-----------------------------------------------------------------------------------------------------------------------------------
Tri-Delta Design             Reg. Date:        Reg. No.:             pulp                              o Registered
                             Aug. 14,          TMA480,569
                             1997                                                                      o Expires August 14, 2012
-----------------------------------------------------------------------------------------------------------------------------------
CATALYST                     Reg. Date:        Reg. No.:             paper for printing                o Registered
                             Dec. 9,           TMA436,998            directories
                             1994                                                                      o Expires Dec. 9, 2009
-----------------------------------------------------------------------------------------------------------------------------------
CATALYST & design            Reg. Date:        Reg. No.:             paper for printing                o Registered
                             Nov. 24,          TMA450,829            directories
                             1995                                                                      o Expires Nov. 24, 2010
                                                                     consulting services in the
                                                                     field of directory paper
-----------------------------------------------------------------------------------------------------------------------------------
PROTOCOL V.S.O.P.            Reg. Date:        Reg. No.:             wood pulp                         o Registered
                             Oct. 13,          TMA448,912
                             1995                                    the operation of a business       o Expires October 13, 2010
                                                                     selling, transporting and
                                                                     exporting wood pulp to others
-----------------------------------------------------------------------------------------------------------------------------------
CIRCLE & ARROW               Reg. Date:        Reg. No.:             rough, dressed or otherwise       o Registered
design                       June 4,           TMA140,658            processed lumber, plywood,
                             1965                                    shingles, paper pulp and          o Expires June 4, 2010
                                                                     newsprint
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>



<PAGE>


                                      - 3 -

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
            MARK                 APP.           APP. NO.             WARES/SERVICES                        STATUS
                                 DATE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>               <C>                   <C>                               <C>
Curved Sheets Design         Reg. Date:        Reg. No.:             container board                   o Registered
                             December          TMA452,217
                             22, 1995                                technical consulting services     o Expires December 22, 2010
                                                                     in the field of container
                                                                     board packaging
-----------------------------------------------------------------------------------------------------------------------------------
BRONZELINER                  Reg. Date:        Reg. No.:             container board                   o Registered
                             Jan. 5, 1996      TMA452,760
                                                                                                       o Expires 5 January 2011
-----------------------------------------------------------------------------------------------------------------------------------
CHROMIUMLINER                Reg. Date:        Reg. No.:             container board                   o Registered
                             Feb. 2, 1996      TMA453,483
                                                                                                       o Expires 2 February 2011
-----------------------------------------------------------------------------------------------------------------------------------
PLATINUMLINER                App Date:         App. No.:             container board                   o Filing Receipt issued
                             April 2,          1,098,182                                                 April 20, 2001
                             2001                                    technical consulting services
                                                                     in the field of container
                                                                     board packaging
-----------------------------------------------------------------------------------------------------------------------------------
SILVERLINER                  Reg. Date:        Reg. No.:             container board                   o Registered
                             Jan. 23,          TMA469,588
                             1997                                    technical consulting services     o Expires Jan. 23, 2012
                                                                     in the field of container
                                                                     board packaging
-----------------------------------------------------------------------------------------------------------------------------------
TITANIUMLINER                Reg. Date:        Reg. No.:             container board                   o Registered
                             Feb. 2, 1996      TMA453,484
                                                                                                       o Expires February 2, 2011
-----------------------------------------------------------------------------------------------------------------------------------
MILLENNIA                    January 27,       867,651               Newsprint                         o Application abandoned per
                             1998                                                                        instructions of Marcia
                                                                     Technical and consulting            Mohs
                                                                     services in the field of
                                                                     newsprint and the use and
                                                                     handling of newsprint in
                                                                     printing operations
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>


                                      - 4 -


<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
            MARK                 APP.           APP. NO.             WARES/SERVICES                        STATUS
                                 DATE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>               <C>                   <C>                               <C>
FC & Design                  Reg.              Reg. No.:             lumber, plywood, veneer,          o Davis & Company entered
                             Aug. 17,          TMA372,004            wood chips, particle board,         as representative for
                             1990                                    wafer board, hog fuel, bark         service January 17, 2001
                                                                     mulch; pulp, newsprint,
                                                                     kraft paper, newsprint sheets     o Registration expires
                                                                     ... packaging equipment             August 17, 2005

                                                                     marine towing services,
                                                                     logging services, road
                                                                     maintenance services...
-----------------------------------------------------------------------------------------------------------------------------------
MARATHON &                   February 2,       1,003,936             Newsprint                         o Response to Office Action
Design                       1999                                                                        filed February 8, 2000
                                                                     Technical and consulting
                                                                     services in the field of
                                                                     newsprint
-----------------------------------------------------------------------------------------------------------------------------------
Stylized M Design            March 13,         TMA524,745            Newsprint                         o Registered
                             2000
                                                                     Technical and consulting          o Expires:  March 13, 2015
                                                                     services in the field of
                                                                     newsprint
-----------------------------------------------------------------------------------------------------------------------------------
MILLENNIA                    Sept. 10,         1,028,562             Paper, paper used for             o Abandoned December 11,
                             1999                                    commercial printing, paper          2000, per instructions of
                                                                     for printing directories,           Marcia Mohs
                                                                     newsprint printing paper,
                                                                     cardboard, gummed paper,
                                                                     lightweight coated papers,
                                                                     paper bags, kraft paper,
                                                                     wrapping paper, waxed
                                                                     paper, paper napkins, paper
                                                                     freezer wrap, and stationery;
                                                                     pulp; and container board
-----------------------------------------------------------------------------------------------------------------------------------
FORTIS                       Sept. 10,         1,028,561
                             1999
-----------------------------------------------------------------------------------------------------------------------------------
QUALIS                       Sept. 10,         1,028,558
                             1999
-----------------------------------------------------------------------------------------------------------------------------------
ACCELENT                     Sept. 10,         1,028,556
                             1999
-----------------------------------------------------------------------------------------------------------------------------------
APTIS                        Sept. 10,         1,028,554
                             1999
-----------------------------------------------------------------------------------------------------------------------------------
CENOVA                       Sept. 10,         1,028,553
                             1999
-----------------------------------------------------------------------------------------------------------------------------------
CRESSET                      Sept. 15,         1,029,016             advising others on the
                             1999                                    selection and utilization of
                                                                     commercial printing paper;
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>



<PAGE>


                                      - 5 -

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------------------------------
            MARK                 APP.           APP. NO.             WARES/SERVICES                        STATUS
                                 DATE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>               <C>                   <C>                               <C>
INTERLIANT                   Sept. 15,         1,029,015             technical and consulting
                             1999                                    services in the field of printing
                                                                     and the use of newsprint in
                                                                     printing; technical
                                                                     consultation services to
                                                                     operators of commercial
                                                                     newsprint printing
                                                                     presses, namely to minimize
                                                                     newsprint waste, and maximize
                                                                     the speed of printing press
                                                                     operations; technical
                                                                     consulting services in the field
                                                                     of container board packaging;
                                                                     and the operation of a
                                                                     business selling, transporting,
                                                                     and exporting wood pulp
                                                                     to others.
-----------------------------------------------------------------------------------------------------------------------------------

                                                       U.S. TRADE-MARKS
-----------------------------------------------------------------------------------------------------------------------------------
EXPRESS                      Nov. 28,          75/024863             Class 16:  paper used for         o registration pending
                             1995                                    commercial printing

                                                                     Class 42:  the custom
                                                                     development and
                                                                     manufacture of commercial
                                                                     printing paper for others,
                                                                     and advising others on the
                                                                     selection and utilization
                                                                     of commercial printing
                                                                     paper.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>



<PAGE>


                                      - 6 -

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
            MARK                 APP.           APP. NO.             WARES/SERVICES                        STATUS
                                 DATE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>               <C>                   <C>                               <C>
ADVANCE                      Reg. Date:        Reg. No.:             Class 16:  paper for              o Registered
                             Dec. 17,          2,023,388             commercial printing
                             1996                                                                      o Affidavit of Use to be
                                                                     Class 42:  consulting               filed between Dec. 17,
                                                                     services, namely, custom            2001 and Dec. 17, 2002
                                                                     developing and
                                                                     manufacturing of                  o Expires Dec. 17, 2006
                                                                     commercial printing paper
                                                                     for others, and advising
                                                                     others on the selection and
                                                                     utilization of commercial
                                                                     printing paper
-----------------------------------------------------------------------------------------------------------------------------------
MARATHON                     Reg. Date:        2,300,259             Class 42:  technical              o Registered
                             Dec. 14,                                consulting services relating
                             1999                                    to printing and the handling      o Affidavit of Use to be
                                                                     and distribution of printed         filed between Dec. 14,
                                                                     material                            2004 and Dec. 14, 2005
-----------------------------------------------------------------------------------------------------------------------------------
TRIAX                        Reg. Date:        Reg. No.:             Class 1:  pulp                    o Registered
                             June 9,           2,163,229
                             1998
                             ------------------------------------------------------------------------------------------------------
                             Reg. Date:        Reg. No.:             Class 42:  Technical              o Registered
                             June 9,           2,163,231             consulting services in the
                             1998                                    field of pulp
-----------------------------------------------------------------------------------------------------------------------------------
Tri-Delta design             Reg. Date:        Reg. No.:             Class 1:  pulp                    o Registered
                             June 9,           2,163,230
                             1998
-----------------------------------------------------------------------------------------------------------------------------------
CATALYST                     Reg. Date:        Reg. No.:             Class 16:  paper for printing     o Registered
                             Sept. 12,         1,918,830             directories
                             1995                                                                      o Affidavit of Use to be
                                                                                                         filed between Sept. 12,
                                                                                                         2000 and Sept. 12, 2001

                                                                                                       o Expires Sept. 12, 2005
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>



<PAGE>


                                      - 7 -

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
            MARK                 APP.           APP. NO.             WARES/SERVICES                        STATUS
                                 DATE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>               <C>                   <C>                               <C>
CATALYST & design            Reg. Date:        Reg. No.:             Class 16:  paper for printing     o Registered
                             April 8,          2,050,179             directories
                             1997                                                                      o Affidavit of Use to be
                                                                     Class 42:  consulting               filed between April 8,
                                                                     services in the field of            2002 and April 8, 2003
                                                                     directory paper
                                                                                                       o Expires April 8, 2007
-----------------------------------------------------------------------------------------------------------------------------------
PLATINUMLINER                App. Date:        App. No.:             container board                   o PENDING

                                                                     technical consulting services
                                                                     in the field of container
                                                                     board packaging
-----------------------------------------------------------------------------------------------------------------------------------
BRONZELINER                  Reg. Date:        Reg. No.:             Class 16:  container board        o Registered
                             June 25,          1,983,053
                             1996                                                                      o Affidavit of Use to be
                                                                                                         filed between June 25,
                                                                                                         2001 and June 25, 2002

                                                                                                       o Expires June 25, 2006
-----------------------------------------------------------------------------------------------------------------------------------
CHROMIUMLIUM                 Reg. Date:        Reg. No.:             Class 16:  container board        o Registered
                             June 25,          1,983,054
                             1996                                                                      o Affidavit of Use to be
                                                                                                         filed between June 25,
                                                                                                         2001 and June 25, 2002

                                                                                                       o Expires June 25, 2006
-----------------------------------------------------------------------------------------------------------------------------------
TITANIUMLINER                Reg. Date:        Reg. No.:             Class 16:  container board        o Registered
                             May 21,           1,975,423
                             1996                                                                      o Affidavit of Use to be
                                                                                                         filed between May 21, 2001
                                                                                                         and May 21, 2002

                                                                                                       o Expires May 21, 2006
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>


                                      - 8 -

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
            MARK                 APP.           APP. NO.             WARES/SERVICES                        STATUS
                                 DATE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>               <C>                   <C>                               <C>
Curved Sheets Design         Reg. Date:        Reg. No.:             Class 16:  container board        o Registered
                             July 9, 1996      1,986,280
                                                                     Class 42:  technical              o Affidavit of Use to be
                                                                     consulting services in the          filed between July 9, 2001
                                                                     field of container board            and July 9, 2002
                                                                     packaging
                                                                                                       o Expires July 9, 2006
-----------------------------------------------------------------------------------------------------------------------------------
SILVERLINER                  Reg. Date:        Reg. No.:             Class 16:  container board        o Registered (related
                             June 17,          2,071,194                                                 application in Class 42
                             1997                                                                        abandoned)

                                                                                                       o Affidavit of Use to be
                                                                                                         filed between June 17,
                                                                                                         2002 and June 17, 2003

                                                                                                       o Expires June 17, 2007
-----------------------------------------------------------------------------------------------------------------------------------
FC & design                  Reg. Date:        Reg. No.:             Class 16:  Newsprint paper,       o Registered
                             Nov. 12,          1,664,078             vapour barrier plastic,
                             1991                                    plastic bags for packaging,
                                                                     plastic film for wrapping,
                                                                     paper bags, kraft paper,
                                                                     wrapping paper, waxed
                                                                     paper, paper napkins,
                                                                     plastic and paper
                                                                     freezer wrap, and
                                                                     corrugated cardboard
                                                                     containers

                                                                     Class 19:  plywood, veneer,
                                                                     lumber
                             ------------------------------------------------------------------------------------------------------
                             Reg. Date:        Reg. No.:             Class 1:  wood pulp as a raw      o Registered
                             Nov. 26,          1,665,579             material
                             1991
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>


                                      - 9 -

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
            MARK                 APP.           APP. NO.             WARES/SERVICES                        STATUS
                                 DATE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>               <C>                   <C>                               <C>
MILLENNIA                    February 3,       75/428,000            Class 16:  newsprint              o Application abandoned per
                             1998                                                                        instructions of Marcia
                                                                     Class 42:  technical and            Mohs
                                                                     consulting services in the
                                                                     field of newsprint and the
                                                                     use and handling of
                                                                     newsprint in printing
                                                                     operations
-----------------------------------------------------------------------------------------------------------------------------------
Stylized M Design            February          Reg. No.:             Class 16:  newsprint              o Registered - Affidavit of
                             23, 1999          2,338,090                                                 Use to be filed between
                             April 4,                                                                    April 4, 2005 and April 4,
                             2000                                                                        2006
                                               ------------------------------------------------------------------------------------
                                               Reg. No.:             Class 42:  technical and          o Registered - Affidavit of
                                               2,343,324             consulting services in the          Use to be filed between
                                                                     field of newsprint                  April 18, 2005 and
                                                                                                         April 18, 2006
-----------------------------------------------------------------------------------------------------------------------------------
MARATHON &                   February          75/650,324            Class 42:  technical and          o Allowed - application
Design                       26, 1999                                consulting services in the          suspended pending
                                                                     field of newsprint                  issuance of Canadian
                                                                                                         registration
-----------------------------------------------------------------------------------------------------------------------------------

                                                       JAPANESE TRADE-MARKS
-----------------------------------------------------------------------------------------------------------------------------------
FC & design                  n/a               Reg. No.:             Class 09                          o Davis & Company entered
                                               2,434,235                                                 as representative for
                                               ------------------------------------------------------    service with Japanese
                                               Reg. No.:             Class 25                            Agents
                                               2440179
                                               ------------------------------------------------------
                                               Reg. No.:             Class 34
                                               2475146
                                               ------------------------------------------------------
                                               Reg. No.:             Class 18
                                               2428094
                                               ------------------------------------------------------
                                               Reg. No.:             Class 07
                                               2448312
----------------------------------------------------------------------------------------------------------------------------------

                                                        U.K. TRADE-MARKS
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>



<PAGE>


                                     - 10 -


<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
            MARK                 APP.           APP. NO.             WARES/SERVICES                        STATUS
                                 DATE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>               <C>                   <C>                               <C>
lion head design             Reg. Date:        Reg. No.:             Class 1:  pulp                    o Renewed
(FC & design)                August 12,        1373502
                             1988                                                                      o Expires August 12, 2005
                                               ------------------------------------------------------------------------------------
                                               Reg. No.:             Class 16:  newsprint, plastic     o Renewed
                                               1373504               bags, plastic wrap, kraft
                                                                     paper, wrapping paper,            o Expires August 12, 2005
                                                                     waxed paper, paper napkins,
                                                                     freezer wrap, corrugated
                                                                     cardboard containers,
                                                                     packing tissue, paper towels,
                                                                     gummed paper tapes, toilet
                                                                     tissue
                                               ------------------------------------------------------------------------------------
                                               Reg. No.:             Class 19:  plywood, veneer,       o Renewed
                                               1373505               lumber, particle board,
                                                                     wafer board                       o Expires August 12, 2005
-----------------------------------------------------------------------------------------------------------------------------------

                                                      SINGAPOREAN TRADE-MARKS
-----------------------------------------------------------------------------------------------------------------------------------
FC & design                  Feb. 24,          1569/94               Class 1:  pulp (wood)             o Registered as of filing
                             1994                                                                        date

                                                                                                       o Expires Feb. 24, 2004
                             ------------------------------------------------------------------------------------------------------
                             Feb. 24,          1570/94               Class 16:  paper                  o Registered as of filing
                             1994                                                                        date

                                                                                                       o Expires Feb. 24, 2004
-----------------------------------------------------------------------------------------------------------------------------------

                                                     SOUTH KOREAN TRADE-MARKS
-----------------------------------------------------------------------------------------------------------------------------------
FC & design                  Reg. Date:        Reg. No.:             Class 24:  ground wood            o Registered
                             June 8,           315038                pulps, chemical pulps,
                             1995                                    refiner-ground pulps;             o Expires June 8, 2005
                                                                     phermo-mechanical
                                                                     pulps, sulforous
                                                                     acid pulps,kraft
                                                                     pulps, isserving
                                                                     pulps, synthetic
                                                                     pulps, bast pulps
                                                                     (sic)
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>



<PAGE>


                                     - 11 -

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
            MARK                 APP.           APP. NO.             WARES/SERVICES                        STATUS
                                 DATE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>               <C>                   <C>                               <C>
                             Reg. Date:        Reg. No.:             Class 21:  newsprint papers,      o Registered
                             March 19,         335,485               printing papers, kraft paper,
                             1996                                    wrapping papers, coated           o Expires March 19, 2006
                                                                     papers, waxed papers, wet
                                                                     towel of paper, napkin
                                                                     papers, toilet waters, test
                                                                     papers (sic)
-----------------------------------------------------------------------------------------------------------------------------------

                                                       TAIWANESE TRADE-MARKS
-----------------------------------------------------------------------------------------------------------------------------------
FC & design                  Reg. Date:        Reg. No.:             Class 48:  paper                  o Registered
                             April 16,         677903
                             1995                                                                      o Expires April 15, 2005
                             ------------------------------------------------------------------------------------------------------
                             Reg. Date:        Reg. No.:             Class 61:  pulp                   o Registered
                             Nov. 16,          661,697
                             1994                                                                      o Expires Nov. 15, 2004
-----------------------------------------------------------------------------------------------------------------------------------

                                                        MEXICAN TRADE-MARKS
-----------------------------------------------------------------------------------------------------------------------------------
PLATINUMLINER                App. Date:        App. No.:             Class 16:  container board        o examination pending
                             April 30,         483,023
                             2001                                                                      o certified copy of Canadian
                                                                                                         application due July 15,
                                                                                                         2001
                             ------------------------------------------------------------------------------------------------------
                             App. Date:        App. No.:             Class 35:  technical              o examination pending
                             April 30,         483,024               consulting services in the
                             2001                                    field of container board          o certified copy of Canadian
                                                                                                         application due July 15,
                                                                                                         2001

-----------------------------------------------------------------------------------------------------------------------------------

                                                      HONG KONG TRADE-MARKS
-----------------------------------------------------------------------------------------------------------------------------------
FC & design                  Reg. Date:        432/96                Class 1:  pulp                    o Registration expires
                             Feb. 24,                                                                    February 24, 2015
                             1994
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>



<PAGE>


                                     - 12 -

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
            MARK                 APP.           APP. NO.             WARES/SERVICES                        STATUS
                                 DATE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>               <C>                   <C>                               <C>
                                               431/96                Class 16:  paper, newsprint,
                                                                     kraft paper, newsprint sheets,
                                                                     coated papers, paper napkins,
                                                                     freezer wrap, packing tissue,
                                                                     paper bags, paper towels,
                                                                     waxed specialty papers,
                                                                     gummed tapes, toilet tissue,
                                                                     corrugated papers
-----------------------------------------------------------------------------------------------------------------------------------

                                                      CHINESE TRADE-MARKS
-----------------------------------------------------------------------------------------------------------------------------------
FC & design                  Reg. Date:        Reg. No.:             Class 1:  paper pulp              o Registered
                             21 Oct.           784,240
                             1995                                                                      o Expires October 20, 2005
                                               ------------------------------------------------------------------------------------
                                               Reg. No.:             Class 16:  paper                  o Registered
                                               801,322
                                                                                                       o Expires December 21, 2005
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>



                             COPYRIGHT REGISTRATIONS

                            NORSKE SKOG CANADA LIMITED


<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
                                                CANADIAN COPYRIGHT REGISTRATIONS
-----------------------------------------------------------------------------------------------------------------------------------
       TITLE OF WORK             NATURE           AUTHORS           REG.           REG. NO.                    STATUS
                                OF WORK                             DATE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>            <C>                  <C>         <C>                  <C>
CATALYST design              Artistic       Paul Joseph          June        444423               Copyright Registered
                                            Belserene            30/95
                                            Donald Robert        ------------------------------------------------------------------
                                            Chisholm             June        45666                Assignment to FCCL
                                            Peter Mason          30/95                            Registered
                                            Woods
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>





<PAGE>


                                     - 13 -

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
       TITLE OF WORK             NATURE           AUTHORS           REG.           REG. NO.                    STATUS
                                OF WORK                             DATE
-----------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>            <C>                  <C>         <C>                  <C>
Curved Sheets Design         Artistic       Paul Joseph          July        444890               Registered
                                            Belserene            21/95
                                            Donald Robert        ------------------------------------------------------------------
                                            Chisholm             July        45696                Assignment to FCCL
                                            Peter Mason          21/95                            Registered
                                            Woods
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>






<PAGE>


                                     - 14 -


                             TRADE-MARK REGISTRATIONS

                         FLETCHER CHALLENGE CANADA LIMITED

                               TRADE-MARK:  CATALYST


           THIS SERIES OF MARKS WAS FOR CATALYST/ECHELON - PROJECT ZEN

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
  JURISDICTION           APP. DATE            APP. NO.                             STATUS
--------------------------------------------------------------------------------------------------------
<S>                 <C>                 <C>                  <C>
Canada              Sept. 10, 1999      1,028,555            o Advertised January 31, 2001
--------------------------------------------------------------------------------------------------------
Japan               March 10,           023572/2000          o Application filed - examination pending
                    2000
                    Priority Date:
                    September 10,
                    1999
--------------------------------------------------------------------------------------------------------
Brazil              March 10,           822528363            o Advertised for Opposition Purposes on
                    2000                (Class 42)             July 24, 2000 - final approval not
                    Priority Date:      ---------------        expected until Summer 2002
                    September 10,       822528380
                    1999                (Class 16)
--------------------------------------------------------------------------------------------------------
Philippines         March 8, 2000       4-2000-0001769       o Application filed - examination pending
                    Priority Date:
                    September 10,
                    1999
--------------------------------------------------------------------------------------------------------
Europe              March 10,           0015478080           o Approved for publication
                    2000
                    Priority Date:
                    September 10,
                    1999
--------------------------------------------------------------------------------------------------------
</TABLE>




<PAGE>


                                     - 15 -

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
  JURISDICTION           APP. DATE            APP. NO.                             STATUS
--------------------------------------------------------------------------------------------------------
<S>                 <C>                 <C>                   <C>
Hong Kong           March 7, 2000       2000/4658             o Registrations expire September 9, 2006
                    Priority Date:      (Class 16)
                    September 10,       Reg. 37/2001          o Certificates of Registration Received
                    1999                ----------------
                                        2000/4659
                                        (Class 42)
                                        Reg. 38/2001
--------------------------------------------------------------------------------------------------------
China               March 7, 2000       2000025488            o Approved for registration (preliminary)
                    Priority Date:      (Class 16)              Opposition period ends July 7, 2001
                    September 10,       ----------------
                    1999                2000025489
                                        (Class 42)
--------------------------------------------------------------------------------------------------------
Malaysia            March 9, 2000       2000-02696            o Filing Receipt issued March 9, 2000 -
                    Priority Date:      (Class 16)              examination pending (approx. 2-3
                    September 10,       ----------------        years)
                    1999                2000-02695
                                        (Class 42)
--------------------------------------------------------------------------------------------------------
New Zealand         March 8, 2000       609778 (Class         o Advertised March 30, 2001.
                    Priority Date:      16)                     Registration should issue by September
                    September 10,       ----------------        2001
                    1999                609779 (Class
                                        35)
--------------------------------------------------------------------------------------------------------
Australia           March 2, 2000       not yet available     o Agent instructed on response to 2nd
                    Priority Date:                              Office Action April 3, 2001
                    September 10,
                    1999
--------------------------------------------------------------------------------------------------------
Singapore           March 7, 2000       T00/04213A            o Examination complete - advertised on
                    Priority Date:      (Class 16)              December 5, 2000
                    September 10,                               - registration should issue in August
                    1999                                          2001
                                        ----------------------------------------------------------------
                                        T00/04214Z            o Registered. Expires September 10,
                                        (Class 42)               2009
--------------------------------------------------------------------------------------------------------
Netherlands         Registered          Reg. No.:             o Registered. Expires March 9, 2010
Antilles            March 9, 2000       22178
                    Priority Date:
                    September 10,
                    1999
--------------------------------------------------------------------------------------------------------
</TABLE>





<PAGE>


                                     - 16 -


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
  JURISDICTION           APP. DATE            APP. NO.                             STATUS
--------------------------------------------------------------------------------------------------------
<S>                 <C>                 <C>                   <C>
Chile               March 10,           478,588 (Class        o Application Approved - registration
                    2000                16)                     pending
                    Priority Date:      ----------------
                    September 10,       478,586 (Class        o Status inquiry made January 15, 2001
                    1999                42)
--------------------------------------------------------------------------------------------------------
Barbados            March 10,           P7675 (Class          o advertisement pending
                    2000                16)
                    Priority Date:      ----------------      o Status inquiry made January 15, 2001
                    September 10,       P7679 (Class
                    1999                42)
--------------------------------------------------------------------------------------------------------
Br. Virgin          May 2, 2000         Reg. 3496             o Registered June 13, 2000
Islands             Registered:
                    June 13, 2000                             o Registration expires June 13, 2014
--------------------------------------------------------------------------------------------------------
United States       March 8, 2000       not yet available     o Response to ,OA filed January 3, 2001
                    Priority Date:
                    September 10,
                    1999
--------------------------------------------------------------------------------------------------------
Mexico              March 7, 2000       414,322 (Class        o Registered (expires March 7, 2010)
                    Priority Date:      16)
                    September 10,       Reg. 676,740          o Affidavit of Use due October 31, 2003
                    1999                ----------------
                                        414,324 (Class
                                        35)
--------------------------------------------------------------------------------------------------------
</TABLE>










<PAGE>



                                   SCHEDULE L

                                  EXISTING L/CS


                          [SEE REFERENCE IN SECTION 2.8]


<TABLE>
<CAPTION>

BENEFICIARY                         REFERENCE       ISSUE DATE        EXPIRY             AMOUNT
                                    NUMBER                            DATE

<S>                                 <C>             <C>               <C>                <C>
The Canada Trust Co. (re            21522           27 Nov. '91       31 Mar. '02        $27,399,000.00
executive pension)

Foothill Capital                    97417           12 Aug. '98       11 Aug. '01        US$1,500,000.00
Corporation  California
(re Summit Timber fibre
supply contract)

Registrar Supreme Court             115993          15 May '01        14 May '02         $91,300.11
of BC (re Crofton lien
dispute)

Her Majesty the Queen in            24914           13 Apr. '92       12 Apr. '02        $100,000.00
Right of the Province of
BC (Minister of Lands &
Parks) (re waterlot leases)

Wells Fargo Bank                    117340          14 Aug. '01       30 Sept. '01       US$1,692,027
Minnesota, National
Association (re bond yield
spread)
</TABLE>







<PAGE>



                                 TABLE OF CONTENTS

<TABLE>
<CAPTION>

ARTICLE I - INTERPRETATION

<S>               <C>                                                                                           <C>
         1.1      Defined Terms..................................................................................2

ARTICLE II - OPERATING CREDIT

         2.1      Amount and Availment Options..................................................................28
         2.2      Revolving Credit..............................................................................29
         2.3      Use of Operating Credit.......................................................................29
         2.4      Term and Repayment............................................................................29
         2.5      Interest Rates and Fees.......................................................................30
         2.6      Commitment Fee................................................................................31
         2.8      Existing L/Cs.................................................................................31

ARTICLE III - TERM CREDIT A

         3.1      Amount and Availment Options..................................................................32
         3.2      Non-Revolving Credit..........................................................................32
         3.3      Use of Term Credit A..........................................................................32
         3.4      Term and Repayment............................................................................32
         3.5      Interest Rates and Fees.......................................................................33
         3.6      Commitment Fee................................................................................33

ARTICLE IV - TERM CREDIT B

         4.1      Amount and Availment Options..................................................................33
         4.2      Non-Revolving Credit..........................................................................34
         4.3      Use of Term Credit B..........................................................................34
         4.4      Term and Repayment............................................................................34
         4.5      Interest Rates................................................................................34
         4.6      Escrow for Advance............................................................................34

ARTICLE V - PREPAYMENTS OF CREDITS

         5.1      Prepayments of Credits........................................................................35

ARTICLE VI - SECURITY AND EXCHANGE RATE FLUCTUATIONS

         6.1      Security......................................................................................39
         6.2      Obligations Secured by the Trustee Security...................................................41
         6.3      Consent to Assignment of Contracts............................................................43
         6.4      Exchange Rate Fluctuations....................................................................43
</TABLE>



<PAGE>


                                       - 2 -


<TABLE>
<CAPTION>

ARTICLE VII - DISBURSEMENT CONDITIONS

<S>               <C>                                                                                           <C>
         7.1      Conditions Precedent to Initial Advance.......................................................44
         7.1.1    Special Distribution..........................................................................44
         7.1.3    Financial Information.........................................................................44
         7.1.4    Security and Other Documents..................................................................45
         7.1.5    Corporate and Other Information...............................................................45
         7.1.6    Opinions......................................................................................46
         7.1.7    Other Matters.................................................................................46
         7.1.8    Deadline for Advance..........................................................................47
         7.2      Conditions Precedent to Acquisition...........................................................47
         7.2.1    Acquisition of Pacifica.......................................................................47
         7.2.2    Other Matters.................................................................................48
         7.3      Conditions Precedent to all Advances..........................................................48

ARTICLE VIII - ADVANCES

         8.1      Lenders' Obligations Relating to L/Cs and Operating Credits 1 and 2...........................49
         8.2      Adjustment of Proportionate Shares for Specific Credits.......................................50
         8.3      Exceptions Regarding Particular Credits.......................................................50
         8.4      Evidence of Indebtedness......................................................................51
         8.5      Conversions...................................................................................51
         8.6      Notice of Advances and Payments...............................................................52
         8.7      Prepayments and Reductions....................................................................52
         8.8      Prime Rate, Base Rate, US Prime Rate and LIBOR Advances.......................................53
         8.9      LIBOR Periods.................................................................................54
         8.10     Termination of LIBOR Advances.................................................................54
         8.11     Co-ordination of Prime Rate, Base Rate, US Prime Rate and LIBOR Advances......................55
         8.12     Execution of Bankers' Acceptances.............................................................55
         8.13     Sale of Bankers' Acceptances..................................................................56
         8.14     Size and Maturity of Bankers' Acceptances and Rollovers.......................................56
         8.15     Co-ordination of BA Advances..................................................................57
         8.16     Payment of Bankers' Acceptances...............................................................58
         8.17     Deemed Advance - Bankers' Acceptances.........................................................59
         8.18     Waiver........................................................................................59
         8.19     Degree of Care................................................................................59
         8.20     Indemnity.....................................................................................59
         8.21     Obligations Absolute..........................................................................59
</TABLE>



<PAGE>


                                       - 3 -

<TABLE>
<S>               <C>                                                                                           <C>
         8.22     Shortfall on Drawdowns, Rollovers and Conversions.............................................60
         8.23     Prohibited Use of L/Cs and Bankers' Acceptances...............................................60
         8.24     Issuance and Maturity of L/Cs.................................................................60
         8.25     Payment of L/C Fees...........................................................................61
         8.26     Payment of L/Cs...............................................................................61
         8.27     Deemed Advance - L/Cs.........................................................................62
         8.28     Prohibited Rates of Interest..................................................................62

ARTICLE IX - REPRESENTATIONS AND WARRANTIES

         9.1      Representations and Warranties................................................................63
         9.1.1    Corporate Matters.............................................................................63
         9.1.2    Credit Documents..............................................................................64
         9.1.3    Litigation, Financial Statements Etc..........................................................65
         9.1.4    Other Debt....................................................................................66
         9.1.5    Property and Capital Stock....................................................................66
         9.1.6    Environmental Matters.........................................................................67
         9.1.7    Taxes and Withholdings........................................................................67
         9.1.8    Pension Plans.................................................................................68
         9.1.9    Aboriginal Claims.............................................................................69
         9.1.10   Other Matters.................................................................................70
         9.2      Survival of Representations and Warranties....................................................70

ARTICLE X - COVENANTS AND CONDITIONS

         10.1     Financial Covenants...........................................................................70
         10.2     Positive Covenants............................................................................71
         10.2.1   Amalgamation Following Acquisition............................................................71
         10.2.2   Payment; Operation of Business................................................................71
         10.2.3   Inspection....................................................................................72
         10.2.4   Insurance.....................................................................................73
         10.2.5   Taxes, Encumbrances and Withholdings..........................................................73
         10.2.6   Other Matters.................................................................................74
         10.3     Reporting and Notice Requirements.............................................................75
         10.3.1   Periodic Reports..............................................................................75
         10.3.2   Requirements for Notice.......................................................................76
         10.4     Ownership of the Restricted Parties...........................................................78
         10.5     Negative Covenants............................................................................79
         10.5.1   Financial Transactions and Encumbrances.......................................................79
         10.5.2   Business and Property.........................................................................81
</TABLE>




<PAGE>


                                       - 4 -

<TABLE>
<S>               <C>                                                                                           <C>
         10.5.3   Corporate Matters.............................................................................82
         10.6     Use of Insurance Proceeds.....................................................................83
         10.7     Market Value of Swaps.........................................................................84

ARTICLE XI - DEFAULT

         11.1     Events of Default.............................................................................85
         11.2     Acceleration and Termination of Rights........................................................87
         11.3     Payment of L/Cs...............................................................................88
         11.4     Remedies......................................................................................88
         11.5     Saving........................................................................................88
         11.6     Perform Obligations...........................................................................89
         11.7     Third Parties.................................................................................89
         11.8     Power of Attorney.............................................................................89
         11.9     Remedies Cumulative...........................................................................89
         11.10    Set-Off or Compensation.......................................................................90

ARTICLE XII - THE AGENT AND THE LENDERS

         12.1     Authorization of Agent and Relationship.......................................................90
         12.2     Disclaimer of Agent...........................................................................91
         12.3     Failure of Lender to Fund.....................................................................91
         12.4     Payments by the Borrower......................................................................93
         12.5     Payments by Agent.............................................................................93
         12.6     Direct Payments...............................................................................94
         12.7     Administration of the Credits.................................................................95
         12.8     Rights of Agent...............................................................................99
         12.9     Acknowledgements, Representations and Covenants of Lenders....................................99
         12.10    Collective Action of the Lenders.............................................................100
         12.11    Successor Agent..............................................................................101
         12.12    Provisions Operative Between Lenders and Agent Only..........................................101

ARTICLE XIII - ADDITIONAL LENDERS, SUCCESSORS AND ASSIGNS

         13.1     Successors and Assigns.......................................................................102
         13.2     Assignments..................................................................................103
         13.3     Participations...............................................................................104
</TABLE>





<PAGE>

                                                     - 5 -

ARTICLE XIV - MISCELLANEOUS PROVISIONS

<TABLE>
<S>               <C>                                                                                          <C>
         14.1     Headings and Table of Contents...............................................................105
         14.2     Accounting Terms.............................................................................105
         14.3     Capitalized Terms............................................................................105
         14.4     Severability.................................................................................105
         14.5     Number and Gender............................................................................106
         14.6     Amendment, Supplement or Waiver..............................................................106
         14.7     Governing Law................................................................................106
         14.8     This Agreement to Govern.....................................................................106
         14.9     Permitted Encumbrances.......................................................................106
         14.10    Currency.....................................................................................107
         14.11    Liability of Lenders.........................................................................107
         14.12    Expenses and Indemnity.......................................................................107
         14.13    Environmental Indemnity......................................................................108
         14.14    Manner of Payment and Taxes..................................................................109
         14.15    Increased Costs etc..........................................................................110
         14.16    Interest on Miscellaneous Amounts............................................................110
         14.17    Currency Indemnity...........................................................................110
         14.18    Address for Notice...........................................................................111
         14.19    Time of the Essence..........................................................................111
         14.20    Further Assurances...........................................................................111
         14.21    Term of Agreement............................................................................111
         14.22    Payments on Business Day.....................................................................111
         14.23    Counterparts and Facsimile...................................................................112
         14.24    Waiver of Jury Trial, Consequential Damages Etc..............................................112
         14.25    Entire Agreement.............................................................................113
         14.26    Date of Agreement............................................................................113
</TABLE>

SCHEDULE A - NOTICE OF ADVANCE OR PAYMENT

SCHEDULE B - AGREEMENT OF NEW RESTRICTED SUBSIDIARY

SCHEDULE C - COMPLIANCE CERTIFICATE

SCHEDULE D - ASSIGNMENT AGREEMENT

SCHEDULE E - PROPORTIONATE SHARES OF LENDERS

SCHEDULE F - DETAILS OF CAPITAL STOCK, PROPERTY ETC.

SCHEDULE G - MATERIAL CONTRACTS




<PAGE>


                                                     - 6 -


SCHEDULE H - OTHER SECURED OBLIGATIONS

SCHEDULE I - LIMITATIONS ON CERTAIN SUBSIDIARIES OF RESTRICTED PARTIES

SCHEDULE J - LITIGATION AND ENVIRONMENTAL MATTERS

SCHEDULE K - INTELLECTUAL PROPERTY

SCHEDULE L - EXISTING L/Cs



<PAGE>

           THIS FIRST AMENDING AGREEMENT is made as of 30 January 2002


BETWEEN:

         NORSKE SKOG CANADA LIMITED, NORSKE SKOG CANADA FINANCE LIMITED

               AND THE OTHER RESTRICTED PARTIES FROM TIME TO TIME

                                     - and -

                           THE LENDERS WHO ARE PARTIES
                        TO THE EXISTING CREDIT AGREEMENT

                                     - and -

                            THE TORONTO-DOMINION BANK
                     in its capacity as Administration Agent

                                  (the "Agent")

RECITALS:

A. The parties to this agreement are also parties to a credit agreement dated as
of 14 August 2001 (the "EXISTING CREDIT AGREEMENT").

B. Capitalized terms used in this agreement and not otherwise defined have the
meanings defined in the Existing Credit Agreement.

C. The parties have agreed to certain amendments to the Existing Credit
Agreement and are therefore entering into this agreement to amend the provisions
of the Existing Credit Agreement as agreed by the parties.

D. This agreement is being signed by the Agent on behalf of the Lenders pursuant
to the approval of the Majority Lenders.

   THEREFORE, for value received, and intending to be legally bound by this
agreement, the parties agree as follows:

1. AMENDMENT TO SECTION 1.1 OF EXISTING CREDIT AGREEMENT

   Section 1.1.122 of the Existing Credit Agreement is deleted and replaced by
the following:

   "Total Interest Expense" means, for any particular period, without
   duplication, the difference between (a) the aggregate expense incurred for
   interest and equivalent costs of borrowing (taking into account the effect of
   any relevant Swaps), including but not limited to (i) bankers' acceptance
   fees, (ii) discounts on bankers' acceptances, (iii) the interest portion of
   any capital lease, and (iv) all fees and other compensation paid to any
   person that has extended credit to the Restricted Parties, but excluding any
   upfront, extension and similar non-recurring fees paid to the Agent or
   Lenders or paid in connection with the NSCL Notes or Pacifica Notes, in each
   case whether or not actually paid (unless paid by the issuance of


<PAGE>

                                       -2-

   securities constituting Debt), and (b) the aggregate income earned from
   interest, in the case of each of (a) and (b), calculated in accordance with
   GAAP in respect of NSCL on a consolidated basis, omitting amounts that are
   not attributable to Restricted Parties.

2. AMENDMENT TO SECTION 10.1.1 OF EXISTING CREDIT AGREEMENT

   Section 10.1.1 of the Existing Credit Agreement is deleted and replaced by
the following:

   "During the term of this Agreement, NSCL shall at all times maintain an
   Interest Coverage Ratio of not less than the following:

<TABLE>
<CAPTION>
   PERIOD                                    INTEREST COVERAGE RATIO

   <S>                                       <C>
   to 3l December 2001                       2.50 to 1
   from 1 January 2002 to 31 March 2002      1.50 to 1
   from 1 April 2002 to 31 December 2002     1.10 to 1
   from 1 January 2003 to 31 March 2003      1.75 to 1
   from 1 April 2003 to 30 June 2003         2.00 to 1
   from 1 July 2003 to 31 December 2003      2.50 to 1
   on and after 1 January 2004               2.75 to 1"
</TABLE>

3. AMENDMENT TO SECTION 10.1.2 OF EXISTING CREDIT AGREEMENT

   Section 10.1.2 of the Existing Credit Agreement is deleted and replaced by
the following:

   "During the term of this Agreement, the Funded Debt Ratio shall not at any
   time exceed the following:

<TABLE>
<CAPTION>
   PERIOD                                                  FUNDED DEBT RATIO

   <S>                                                     <C>
   to 31 December 2002                                     0.60 to 1
   from 1 January 2003 to 30 June 2003                     0.575 to 1
   from 1 July 2003 to 31 December 2003                    0.55 to 1
   on and after 1 January 2004                             0.50 to 1"
</TABLE>

4. AMENDMENT TO SECTION 10.3 OF EXISTING CREDIT AGREEMENT

   Section 10.3.1(d) of the Existing Credit Agreement is deleted and replaced by
the following:

   "NSCL shall, as soon as practicable and in any event not later than 120 days
   after the beginning of each of its fiscal years, prepare and deliver its
   financial forecast for the current fiscal year and the following four fiscal
   years (or five years in the case of the forecast to be delivered by 30 April
   2002), which shall cover NSCL on a consolidated basis and shall include,
   without limitation, a projected income statement, a projected statement of
   changes in funds, estimates of capital expenditures and tax losses and
   deferrals."


<PAGE>

                                       -3-

5. AMENDMENT TO SECTION 13.1 OF EXISTING CREDIT AGREEMENT

   The third paragraph of Section 13.1.1 of the Existing Credit Agreement is
deleted and replaced by the following:

   "No assignment shall be made in respect of an aggregate Commitment of less
   than $5,000,000 in respect of the Operating Credit and/or Term Credit A, or
   less than US $1,000,000 in respect of Term Credit B. No assignment may result
   in the Commitment of any Lender, determined as of the effective date of the
   Assignment Agreement with respect to such assignment, being less than
   $10,000,000, except that the Commitment of any Term Credit B Lender or the
   aggregate of the Commitment of any Term Credit B Lender and its Affiliated
   Funds may be not less than US $1,000,000 in respect of Term Credit B.
   However, notwithstanding the other provisions in this paragraph, an affiliate
   (as defined in the CANADA BUSINESS CORPORATIONS ACT) of a Lender which has
   entered into or will promptly upon becoming a Lender enter into one or more
   Swaps which will be Other Secured Obligations, may receive an assignment of a
   Commitment of US $10,000 in respect of Term Credit B."

6. REPRESENTATIONS OF RESTRICTED PARTIES

   The Restricted Parties acknowledge that this agreement is a Credit Document
and that all of their representations and warranties concerning Credit Documents
that are contained in the Existing Credit Agreement apply to this agreement and
are deemed to be repeated on their execution of this agreement as if set out in
full in this agreement. The Restricted Parties also represent that there are no
consents or other agreements required from third parties to avoid this agreement
causing a breach or default under any other agreement to which any Restricted
Party is a party.

7. WAIVER BY MAJORITY LENDERS

   In connection with the change of name of Norske Skog Paper Company to Norske
Skog Canada (USA) Inc. on 17 September 2001, the Majority Lenders hereby waive
the requirement for prior written notice in Section 10.5.3(b) of the Existing
Credit Agreement.

8. RATIFICATION AND CONFIRMATION

   The Existing Credit Agreement, as amended by this agreement, remains in full
force and effect and is hereby ratified and confirmed. Without in any way
limiting the terms of the Existing Credit Agreement or the other Credit
Documents, the Restricted Parties confirm that the existing Security shall
continue to secure all of the Obligations, including but not limited to any
arising as a result of this agreement.

9. COUNTERPARTS AND FACSIMILE

   This agreement may be executed in any number of counterparts, each of which
when executed and delivered shall be deemed to be an original, and such
counterparts together shall constitute one and the same agreement. The delivery
of a facsimile copy of an executed counterpart of this agreement shall be deemed
to be valid execution and delivery of this


<PAGE>

                                       -4-

agreement, but the party delivering a facsimile copy shall deliver an original
copy of this agreement as soon as possible after delivering the facsimile copy.



                         [NOTE: SIGNATURE PAGES FOLLOW]


<PAGE>

                                       -5-

   IN WITNESS OF WHICH, the parties have executed this agreement.


                                      NORSKE SKOG CANADA LIMITED

                                      By: /s/ P. Staiger
                                          --------------------------------------
                                          Peter Staiger
                                          Treasurer

                                      By: /s/ R. Leverton
                                          --------------------------------------
                                          Ralph Leverton
                                          Vice President, Finance
                                          Chief Financial Officer and Secretary


                                      NORSKE SKOG CANADA FINANCE LIMITED

                                      By: /s/ R. Leverton
                                          -----------------------------------
                                          Ralph Leverton
                                          Secretary


                                      NORSKE SKOG CANADA PULP OPERATIONS
                                      LIMITED

                                      By: /s/ R. Leverton
                                          -----------------------------------
                                          Ralph Leverton
                                          Vice President, Finance
                                          Chief Financial Officer and Secretary


                                      ELK FALLS PULP AND PAPER LIMITED

                                      By: /s/ R. Leverton
                                          -----------------------------------
                                          Ralph Leverton
                                          President


[SIGNATURE PAGE FOR FIRST AMENDING AGREEMENT DATED AS OF 30 JANUARY 2002
RELATING TO NORSKE SKOG CANADA LIMITED ET AL]

<Page>

                                      -6-

                                      NORSKE SKOG CANADA PULP SALES INC.

                                      By: /s/ R. Leverton
                                          -----------------------------------
                                          Ralph Leverton
                                          Vice President, Finance
                                          Chief Financial Officer and Secretary

                                      NORSKE SKOG CANADA SALES INC.

                                      By: /s/ R. Leverton
                                          -----------------------------------
                                          Ralph Leverton
                                          Vice President, Finance
                                          Chief Financial Officer and Secretary

                                      NSCL HOLDINGS INC.

                                      By: /s/ R. Leverton
                                          -----------------------------------
                                          Ralph Leverton
                                          Vice President, Finance
                                          Chief Financial Officer and Secretary

                                      NORSKE SKOG CANADA (USA) INC.

                                      By: /s/ R. Leverton
                                          -----------------------------------
                                          Ralph Leverton
                                          Vice-President, Finance
                                          Chief Financial Officer and Secretary

                                      NORSKE SKOG CANADA (JAPAN) LTD.

                                      By: /s/ James E. Armitage
                                          -----------------------------------
                                          James E. Armitage
                                          Director and Auditor



[SIGNATURE PAGE FOR FIRST AMENDING AGREEMENT DATED AS OF 30 JANUARY 2002
RELATING TO NORSKE SKOG CANADA LIMITED ET AL]

<Page>

                                      -7-

                                      NORSKE SKOG PULP SALES (JAPAN) LTD.

                                      By: /s/ P. D. Simkin
                                          -----------------------------------
                                          Paul D. Simkin
                                          Director

                                      PACIFICA PAPERS SALES LTD.

                                      By: /s/ R. Leverton
                                          -----------------------------------
                                          Ralph Leverton
                                          Vice President, Finance
                                          Chief Financial Officer and Secretary

                                      PACIFICA PAPERS SALES INC.

                                      By: /s/ R. Leverton
                                          -----------------------------------
                                          Ralph Leverton
                                          Secretary

                                      PACIFICA PAPERS K.K.

                                      By: /s/ P. Staiger
                                          -----------------------------------
                                          Peter M. Staiger
                                          Representative Director

                                      PACIFICA PAPERS U.S. INC.

                                      By: /s/ R. Leverton
                                          -----------------------------------
                                          Ralph Leverton
                                          Secretary


[SIGNATURE PAGE FOR FIRST AMENDING AGREEMENT DATED AS OF 30 JANUARY 2002
RELATING TO NORSKE SKOG CANADA LIMITED ET AL]

<Page>

                                      -8-

                                      PACIFICA POPLARS LTD.

                                      By: /s/ R. Leverton
                                          -----------------------------------
                                          Ralph Leverton
                                          Vice President, Finance
                                          Chief Financial Officer and Secretary

                                      PACIFICA POPLARS LTD.

                                      By: /s/ R. Leverton
                                          -----------------------------------
                                          Ralph Leverton
                                          Secretary


                                     NORSKECANADA, a partnership
                                     By its Partners:

                                          NORSKE SKOG CANADA LIMITED

                                          By: /s/ R. Leverton
                                              ---------------------------------
                                              Ralph Leverton
                                              Vice-President, Finance
                                              Chief Financial Officer and
                                              Secretary

                                          NORSKE SKOG CANADA PULP
                                          OPERATIONS LIMITED

                                          By: /s/ R. Leverton
                                              ---------------------------------
                                              Ralph Leverton
                                              Vice-President, Finance
                                              Chief Financial Officer and
                                              Secretary


[SIGNATURE PAGE FOR FIRST AMENDING AGREEMENT DATED AS OF 30 JANUARY 2002
RELATING TO NORSKE SKOG CANADA LIMITED ET ALL

<Page>

                                      -9-

                                          THE TORONTO-DOMINION BANK, as Agent

                                          By: /s/ Nigel Sharpley
                                              ---------------------------------
                                              Name: Nigel Sharpley
                                              Title: Vice President, Loan
                                              Syndications - Agency


[SIGNATURE PAGE FOR FIRST AMENDING AGREEMENT DATED AS OF 30 JANUARY 2002
RELATING TO NORSKE SKOG CANADA LIMITED ET AL]