<PAGE>

                                                                     EXHIBIT 4.4

                            WORKING CAPITAL FACILITY
<PAGE>

                               FINANCING AGREEMENT

                         CIT BUSINESS CREDIT CANADA INC.

                                   (AS LENDER)

                                       AND

                          WESTERN FOREST PRODUCTS INC.

                                 (AS BORROWER)

                                       AND

      WESTERN PULP LIMITED, WFP LUMBER SALES LIMITED, DOMAN FOREST PRODUCTS
LIMITED AND DOMAN-WESTERN LUMBER LTD.

                                 (AS GUARANTORS)

                              DATED: JULY 27, 2004

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                    PAGE
<S>                                                                 <C>
ARTICLE 1     DEFINITIONS ......................................      2

ARTICLE 2     CONDITIONS PRECEDENT .............................     19

ARTICLE 3     REVOLVING LOANS ..................................     23

ARTICLE 4     BA EQUIVALENT LOANS ..............................     28

ARTICLE 5     LETTERS OF CREDIT ................................     28

ARTICLE 6     COLLATERAL .......................................     30

ARTICLE 7     REPRESENTATIONS, WARRANTIES AND COVENANTS ........     32

ARTICLE 8     INTEREST, FEES AND EXPENSES ......................     42

ARTICLE 9     POWERS ...........................................     45

ARTICLE 10    EVENTS OF DEFAULT AND REMEDIES ...................     46

ARTICLE 11    TERMINATION ......................................     50

ARTICLE 12    ASSIGNMENTS ......................................     50

ARTICLE 13    MISCELLANEOUS ....................................     51
</TABLE>

                                      -i-
<PAGE>


EXHIBITS

      Exhibit A - Form of Borrowing Base Certificate

      Exhibit B - Form of Officer's Certificate

SCHEDULES

Schedule 1 - Collateral Information, etc.

Schedule 2 - Material Agreements

Schedule 3 - Forest and Timber Tenures, Licences of Occupation Environment
Permits, Aquatic Leases, Water Licences and Permits, and Other Authorizations
and their respective expiry dates

<PAGE>

            THIS FINANCING AGREEMENT (this "Agreement") dated as of July 27,
2004 is entered into among Western Forest Products Inc. (the "Borrower"),
Western Pulp Limited ("WPL"), WFP Lumber Sales Limited ("Salesco") Doman Forest
Products Limited ("Doman FP") and Doman-Western Lumber Ltd. ("Doman WL"), and
together with WPL, Salesco and Doman FP, the "Guarantors" and individually a
"Guarantor"), and CIT Business Credit Canada Inc. (the "Lender"). Reference is
made to the Introductory Statements below and Section 1.1 hereof for the
definition of certain capitalized terms used herein.

INTRODUCTORY STATEMENTS:

A. Pursuant to that certain Financing Agreement, dated as of March 1, 2002 (as
amended, supplemented or otherwise modified or restated from time to time, the
"Pre-Filing Financing Agreement"), among Doman Forest Products Limited, Western
Pulp Limited Partnership, Western Forest Products Limited, Western Pulp Inc. and
Eacom Timber Sales Ltd. (collectively, the "Pre-Filing Borrowers"), Doman's
Freightways Ltd., Doman Investments Limited, Doman Log Supply Ltd.,
Doman-Western Lumber Ltd., Diamond Lumber Sales Limited, Quatsino Navigation
Company Limited and Alpine Projects Limited (the "Pre-Filing Guarantors"), Doman
Industries Limited (the "Pre-Filing Parent"), and the Lender, the Lender made
loans and advances to, and arranged for the issuance of letters of credit for
and/or provided other financial accommodations to, or on behalf of, the
Pre-Filing Borrowers (collectively, the "Pre-Filing Loans");

B. The obligations of the Pre-Filing Borrowers and the Pre-Filing Guarantors in
respect of the Pre-Filing Loans were secured by valid, binding, enforceable and
perfected liens, security interests and hypothecs in substantially all the
inventory, accounts receivable and other current assets of the Pre-Filing
Borrowers and the Pre-Filing Guarantors as set out in the Pre-Filing Financing
Agreement;

C. On November 7, 2002, the Pre-Filing Parent, the Pre-Filing Borrowers, the
Pre-Filing Guarantors, and certain of their direct or indirect subsidiaries
commenced proceedings under the Companies Creditors Arrangement Act (the "CCAA")
the Company Act (British Columbia) (the "BCCA"), the Canada Business
Corporations Act (the "CBCA"), and the Partnership Act (British Columbia) (the
"BCPA"), and a plan of reorganization and of compromise and arrangement (as such
plan of reorganization and of compromise and arrangement may be amended,
modified or supplemented in accordance with its terms, the "Plan of
Arrangement") was filed with the Supreme Court of British Columbia (the "Court")
on April 30, 2004;

D. The Plan of Arrangement was sanctioned and approved by the Court on June 14,
2004;

E. Pursuant to the Plan of Arrangement, the obligations of the Pre-Filing
Borrowers and the Pre-Filing Guarantors in respect of the Pre-Filing Loans and
other obligations under the Pre-Filing Credit Agreement (collectively,
"Pre-Filing Secured Claims") are to be repaid with the proceeds of loans to be
made to the Borrower under this Agreement;

F. Pursuant to the Plan of Arrangement and the Sanction Order, through a series
of transactions, the Pre-Filing Borrowers, the Pre-Filing Guarantors and the
Pre-Filing Parent will complete a corporate reorganization on the plan
implementation date as defined in the Plan (the

<PAGE>

                                     - 2 -

"Plan Implementation Date"), with the result that the Lumber Assets (as defined
in the Plan of Arrangement) will become the assets of the Borrower and the Pulp
Assets (as defined in the Plan of Arrangement) will become the assets of WPL,
respectively;

G. Pursuant to Section 8.4(f) of the Plan of Arrangement, the Borrower is
required, on or before the Plan Implementation Date, to have entered into this
Agreement whereby the Lender will establish in favour of the Borrower a working
capital facility in an amount not less than Cdn.$100,000,000, and the Lender has
agreed to provide such working capital facility to the Borrower on the terms and
conditions set forth herein.

            NOW THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Lender, the Borrower and each
Guarantor hereby agree as follows.

                                    ARTICLE 1
                                   DEFINITIONS

1.1 In this Financing Agreement, the following terms shall have the following
meanings unless the context expressly or by necessary implication otherwise
requires:

ACCESS AGREEMENTS shall mean access agreements between the Lender and the
various landlords of locations at which Collateral or Guarantor's Collateral is
located, providing the Lender access rights to the Collateral or the Guarantor's
Collateral, as applicable, in form and substance satisfactory to the Lender in
its sole and absolute discretion.

ACCOMMODATION shall mean: (i) any advance made by way of a Prime Rate Loan at
the request of the Borrower or which is deemed to be made by the Lender
hereunder; (ii) any BA Equivalent Loan created hereunder; and (iii) any
assistance provided by the Lender to the Borrower to obtain Letters of Credit
and/or the granting of any Letter of Credit Guarantee by the Lender.

ACCOUNTS shall mean any and all of the Borrower's and each Guarantor's existing
and future: (a) accounts (as defined in the PPSA), and any and all other
receivables (whether or not specifically listed on schedules furnished to the
Lender), including all accounts created by, or arising from, all sales, leases,
rentals of goods or renditions of services to its customers, including those
accounts arising under the Borrower's or a Guarantor's trade names or styles, or
through the Borrower's or a Guarantor's divisions; (b) any and all instruments,
documents, chattel paper (including electronic chattel paper); (c)
indemnification rights and tax refunds; (d) the proceeds or royalties of any and
all licensing agreements or arrangements between the Borrower or a Guarantor and
any licencee of the Borrower's or a Guarantor's General Intangibles; (e)
reserves and credit balances arising in connection with or pursuant hereto; (f)
guarantees, supporting obligations, payment intangibles and letter of credit
rights (all as defined in the PPSA); (g) insurance policies or rights or claims
relating to any of the foregoing; (h) any and all rights to payment, including,
without limitation, those arising in connection with bank and non-bank credit
cards; (i) any and all books and records and any electronic media and software
relating to any and all of the foregoing (including any access codes in respect
thereof); (j) notes, deposits or property of account debtors securing the
obligations of any such account debtors to the Borrower or a Guarantor; (k) cash
and non-cash proceeds (as defined in the PPSA) of any and all of the foregoing;
(1) all demands, monies, choses in action and claims for monies now or hereafter
due and payable in connection with any and all of the foregoing or otherwise;

<PAGE>

                                     - 3 -

and (m) all unpaid sellers or lessors rights (including rescission, replevin,
reclamation, repossession and stoppage in transit) relating to the foregoing or
arising therefrom and all rights to any goods represented by any of the
foregoing, including rights to returned, reclaimed or repossessed goods.

ADMINISTRATIVE MANAGEMENT FEE shall have the meaning provided for in Section 8.6
of this Financing Agreement.

ASSETS shall mean, with respect to any Person, all property, assets and
undertakings of such Person, both real and personal, of every kind and
wheresoever situate, whether now owned or hereafter acquired.

AUTHORIZATION shall mean, with respect to any Person, any authorization, order,
permit, approval, tenure, grant, waiver, exemption, concession, lease, licence,
consent, right, franchise, privilege, certificate, judgment, writ, injunction,
award, determination, direction, decree, by-law, rule or regulation of any
Governmental Entity or other Person having jurisdiction over such Person,
whether or not having the force of law.

AVAILABILITY RESERVE shall mean the sum of: (a) (i) (3) months rental payments
or similar charges for the Borrower's or a Guarantor's leased premises where
Collateral is stored or located or other locations where Collateral is stored or
located which the Borrower or a Guarantor does not own and has not delivered to
the Lender a waiver in form and substance satisfactory to the Lender, plus (ii)
an amount equal to the greater of (x) (3) months estimated payments plus any
other fees or charges which may become payable, or (y) the amount owing by the
Borrower or a Guarantor to any applicable warehousemen, third party processor,
lessor, licensor or other Person in possession or control of Collateral (as
determined by the Lender in its reasonable business judgment), provided that any
of the foregoing amounts shall be adjusted from time to time hereafter upon, (A)
delivery to the Lender of any such acceptable form of waiver confirming the
Lender's first perfected priority security interest, subject to Permitted
Encumbrances, and unfettered access to such location to take possession of the
Collateral, (B) the opening or closing of a Collateral location, and/or (C) any
change in the amount of rental, storage lease, licence or processor payments or
similar charges; (b) $40,000,000 as a net availability reserve, provided that,
at any time after the date which is nine months after the Closing Date, the
Borrower may require, by written notice to the Lender, that this net
availability reserve be reduced from $40,000,000 to $25,000,000 if the Fixed
Charge Coverage Ratio for the most recently completed Rolling Period is not less
than 1.10:1.00 (the "NET AVAILABILITY BLOCK"); and (c) any reserve which the
Lender may reasonably require from time to time pursuant to this Financing
Agreement, including in respect of any and all indemnities provided by the
Lender to The Toronto-Dominion Bank in respect of any outstanding letters of
credit and any and all lease or licence payments or similar charges to ensure
unfettered access to the Collateral, in respect of any claim or Encumbrance
against any part of the Collateral which may be in priority to the Lender,
including concerning any Taxes, pension and other benefits, Royalties, Priority
Payables, any credit memos which have not yet been issued, debit memos, unpaid
seller's thirty (30) day goods rights to repossess goods, unpaid sellers rights
of stoppage in transit, Inventory value adjustments (not to exceed ten percent
(10%) of the Borrower's or a Guarantor's cost of such Inventory in the absence
of a Default or an Event of Default and the Lender cannot verify the market
value of such Inventory to its satisfaction) from time to time to

<PAGE>

                                     - 4 -

reflect an Inventory value of the lower of cost or market (without duplication
to the calculation of the Borrowing Base).

BA EQUIVALENT LOAN shall mean an accommodation of credit made hereunder by the
Lender up to the maximum amount of $25,000,000 based on the BA Equivalent Rate
for the applicable Interest Period.

BA EQUIVALENT RATE shall mean, for the Interest Period applicable to the
Revolving Loan, the simple average of the annual rates for Canadian dollar
Bankers' Acceptances, having such specified term (or a term as closely as
possible comparable to such specified term), of CIBC that appears on the Reuters
Screen CDOR Page as of 10:00 a.m. on such day that the Accommodation is made
(or, if such day is not a Business Day, as of 10:00 a.m. on the immediately
preceding Business Day), plus two and one quarter of one percent (2 1/4%) per
annum.

BANKERS' ACCEPTANCE shall mean a non-interest bearing bill of exchange
denominated in Canadian dollars in a form acceptable to a Schedule I bank under
the Bank Act (Canada) drawn and endorsed by or in the name of the Borrower and
accepted by a Schedule I bank under the Bank Act (Canada).

BLOCKED ACCOUNTS shall have the meaning provided for in Section 3.4(b) of
Article 3 of this Financing Agreement.

BLOCKED ACCOUNTS AGREEMENT shall have the meaning provided for in Section 3.4(b)
of Article 3 of this Financing Agreement.

BOND INDENTURE shall mean the indenture dated as of June 26, 2004 executed and
delivered by the Borrower and the Guarantor in favour of the Bond Trustee and
governing the issuance of the Borrower's 15% secured bonds due June 28, 2009.

BOND TRUSTEE means The Bank of New York, in its capacity as trustee under the
Bond Indenture.

BORROWER shall have the meaning provided for in the introductory paragraph of
this Agreement and shall extend to all of its successors and assigns.

BORROWING BASE shall mean, subject to the Revolving Line of Credit, the sum of
(a) eighty-five percent (85%) of the Borrower's and the Guarantors' aggregate
outstanding Eligible Trade Receivables ("MARGINABLE TRADE RECEIVABLES"), plus
(b) the lesser of (i) sixty-five percent (65%) of the aggregate value of the
Borrower's and the Guarantors' Eligible Inventory, valued, on a monthly basis,
at the lower of the Borrower's or the applicable Guarantor's cost and market, on
an average cost basis, (ii) eighty percent (80%) of the aggregate appraised net
recovery value of the Borrower's and the Guarantors' Eligible Inventory, and
(iii) the Inventory Loan Cap, less (c) any applicable Availability Reserves.

BORROWING BASE CERTIFICATE shall mean a certificate delivered by a designated
authorized signing officer of the Borrower (for itself and on behalf of the
Guarantors) in the form attached hereto as Exhibit A.

<PAGE>

                                     - 5 -

BUSINESS DAY shall mean any day on which the Lender is open for business in
Toronto, Ontario.

CIBC shall mean Canadian Imperial Bank of Commerce and any chartered bank which
is its successor.

CLAIM shall mean any claim of any nature whatsoever, including, without
limitation, any demand, liability, obligation, debt, action, cause of action,
suit, proceeding, judgment, award, assessment and reassessment.

CLOSING DATE shall mean the date that this Financing Agreement has been duly
executed by the parties hereto, delivered to the Lender out of escrow and the
initial Accommodation has been made following the satisfaction or waiver of the
conditions precedent in Section 2.1.

COLLATERAL shall mean:

(i) all present and future Accounts, Inventory (including any and all returned
or repossessed merchandise or other goods which by sale resulted in Accounts)
and Other Collateral of the Borrower and each Guarantor;

(ii) all books, records, ledger cards, files, correspondence, invoices,
documents, papers, electronically recorded data, computer programs, tapes, disks
and related software (owned by the Borrower or a Guarantor or in which the
Borrower or a Guarantor has an interest, including any and all access codes in
respect thereof) which at any time evidence or contain information relating to
any Accounts, Inventory, Other Collateral or Policies or are otherwise necessary
or helpful in the collection thereof or realization thereupon, and all computer
hardware, software and systems (owned by the Borrower or a Guarantor or in which
the Borrower or a Guarantor has an interest, including any and all access codes
in respect thereof) which at any time evidence or contain information relating
to any Accounts, Inventory, Other Collateral or Policies or are otherwise
necessary or helpful in the collection thereof or realization thereupon, and all
computer hardware, software and systems (owned by the Borrower or a Guarantor or
in which the Borrower or a Guarantor has an interest) which are part of or are
used in connection with any of the above-mentioned electronically recorded data,
computer programs, tapes, disks or software;

(iii) all Documents of Title, policies and certificates of insurance pertaining
to the Collateral, including comprehensive/umbrella property and casualty and
business interruption insurance relating to the Borrower's or a Guarantor's
respective businesses and credit/receivables insurance, all policies of
insurance issued by Export Development Corporation and any other export insurer,
together with any and all schedules and endorsements thereto from time to time
and any and all monies and other sums payable to or receivable by the Borrower
or a Guarantor from time to time under any of the foregoing, together with any
and all present and future rights and benefits of the Borrower or a Guarantor
under and in connection with any of the foregoing and all agreements,
permissions, approvals and consents from time to time granted to the Borrower or
a Guarantor under any or in connection with any of the foregoing, and all
covenants, terms, conditions, representations and warranties made or expressed
therein or implied by law in relation thereto, and all rights granted to the
Borrower or a Guarantor under any of the foregoing to make claims, enforce
performance, sue for and collect amounts owing, give consents or approvals, make
selections, exercise options, participate in arbitration or other legal
proceedings and/or give notices and declare defaults thereunder (collectively,
the "POLICIES"), securities, and

<PAGE>

                                     - 6 -

other documents or instruments at any time evidencing or pertaining to any
Accounts, Inventory, Other Collateral or Policies and all rights of the Borrower
or a Guarantor thereunder;

(iv) all guaranties, letters of credit, letters of guarantee, Encumbrances on
real or personal property, leases and other agreements and property which at any
time in any way secure or relate to any Accounts, Inventory, Other Collateral or
Policies, or are acquired for the purpose of securing and enforcing any item
thereof;

(v) (A) all cash or other property at any time on deposit with or held by any
financial institution for the account of the Borrower or a Guarantor (whether
for safekeeping, custody, pledge, transmission or otherwise), (B) all present
and future deposit accounts (whether time or demand or interest or non-interest
bearing) of the Borrower or a Guarantor with any financial institution including
those to which any such cash may at any time and from time to time be credited,
(C) all investments and reinvestments (however evidenced) of amounts from time
to time credited to such accounts, and (D) all interest, dividends,
distributions and other proceeds payable on or with respect to (x) such
investments and reinvestments, and (y) such accounts; provided that the
foregoing shall not extend to any "Cash Collateral Account" established pursuant
to Article 13 of the Bond Indenture or to any cash or other property contained
in any such "Cash Collateral Account"; and provided further that with respect to
(I) any monies or credits transferred or assigned to third parties for the
purpose of making payments to the Borrower's or a Guarantor's employees; and
(II) any monies or credits transferred or assigned to any financial institution
as security for the Borrower's or a Guarantor's obligation to reimburse such
financial institution with respect to any letters of credit or similar financial
instruments issued by such institution in favour of any third party at the
Borrower's or a Guarantor's request, the Lender's security interest shall rank
in priority after the interests of: (III) with respect to the third parties and
employees referenced in subparagraph (I). above, the interests of such third
parties and of such employees; and (IV) with respect to the financial
institutions and third parties referenced in subparagraph (II) above, the
interests of such financial institutions and third parties (all of the employees
and financial institutions referenced in subparagraphs (III) and (IV) are
collectively the "payees"), and such payees shall be entitled to such monies and
credits free and clear of the Lender's security interests;

(vi) all products and proceeds of (i) to (v) above (including all claims to
items referred to in (i) to (v) above) and all claims of the Borrower or a
Guarantor against third parties for loss of, damage to, or destruction of, and
payments due or to become due under leases, rentals and hires of, any or all of
(i) to (v) above and proceeds payable under, or unearned premiums with respect
to policies of insurance in whatever form (including the Policies) with respect
to (i) to (v) above;

but specifically excluding the Excluded Assets. For greater certainty,
"COLLATERAL" shall also refer to the "COLLATERAL" of a Guarantor as the context
so requires.

COLLATERAL SECURITY AGREEMENTS shall mean, collectively, the security agreements
entered into on the Plan Implementation Date by each of the Borrower and the
Guarantors in favour of the Bond Trustee pursuant to the Bond Indenture, as such
agreements exist on the date hereof.

COMMITMENT FEE shall mean the fee in the amount of $100,000 paid by the Borrower
to the Lender on April 2, 2004 under the terms of the Commitment Letter.

<PAGE>

                                     - 7 -

COMMITMENT LETTER shall mean the commitment letter, dated April 2, 2004, issued
by the Lender to, and accepted by, the Pre-Filing Parent as permitted under the
Meeting Order.

COMPUTER ACCESS AGREEMENTS shall have the meaning ascribed thereto in Section
7.20 of this Financing Agreement.

CONSOLIDATED BALANCE SHEET shall mean a consolidated balance sheet for the
Borrower, prepared in accordance with GAAP.

DEFAULT shall mean any event specified in Section 10.1 of Article 10 hereof,
whether or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, event or act, has been satisfied.

DEFAULT RATE OF INTEREST shall mean a rate of interest per annum on any
Obligation hereunder, equal to the sum of: (i) (a) two percent (2%) per annum,
and (b) the applicable increment over the Prime Rate (as set forth in Section
8.1 of Article 8 hereof) plus the Prime Rate, or (ii) (a) two percent (2%) per
annum, and the applicable increment over the BA Equivalent Rate plus the BA
Equivalent Rate, which the Lender shall be entitled to charge the Borrower on
all Obligations due the Lender by the Borrower, as further set forth in Section
10.2 of Article 10 of this Financing Agreement.

DEPOSITORY ACCOUNTS shall mean the Lender's collection accounts as may be
designated by the Lender from time to time.

DOCUMENTS OF TITLE shall mean all present and future documents of title (as
defined in the PPSA), and any and all warehouse receipts, bills of lading,
shipping documents, chattel paper, instruments and similar documents, all
whether negotiable or not and all goods and Inventory relating thereto and all
cash and non-cash proceeds of the foregoing.

EARLY TERMINATION DATE shall mean the date on which the Borrower terminates this
Financing Agreement or the Revolving Line of Credit prior to the then applicable
Maturity Date.

EARLY TERMINATION FEE shall: (a) mean the fee the Lender is entitled to charge
the Borrower in the event this Financing Agreement is terminated on a date prior
to a Maturity Date; and (b) be determined by multiplying the maximum authorized
Revolving Line of Credit by (x) two percent (2%) if the Early Termination Date
occurs on or before one (1) year from the Closing Date, (y) one percent (1%) if
the Early Termination Date occurs any time after one (1) year from, but on or
prior to, two (2) years from the Closing Date, and (z) one half of one percent
(0.50%) if the Early Termination Date occurs any time after two (2) years from,
but prior to, a Maturity Date.

EBITDA means, for any Person or Persons on a consolidated basis and for any
period, without duplication, the amount equal to net income less any non-cash
income included in net income, plus, to the extent deducted in determining net
income, all interest expense (including foreign exchange losses on the
translation of U.S.-Dollar-denominated debt, amortization of debt issue
expenses, and non-cash interest accretion), depreciation and amortization
expense and cash income tax expenses.

EDC means Export Development Corporation (Canada).

<PAGE>

                                     - 8 -

ELIGIBLE INVENTORY shall mean the gross amount of the Borrower's and each
Guarantor's finished and unfinished log, lumber and/or pulp, including northern
bleached softwood, kraft pulp and wood chips, that is subject to a valid, first
priority and fully perfected security interest in favour of the Lender, subject
to Permitted Encumbrances, which at all times conform to the representations and
warranties contained herein and otherwise continues to be acceptable to the
Lender in the exercise of its reasonable business judgement, excluding, without
duplication (a) pulp work in process, (b) raw materials other than logs or
chips, (c) spare parts used for maintenance and repair of, and accessories to,
machinery and equipment, (d) packaging materials and supplies, (e) unharvested,
uncut or standing timber, (f) Inventory located outside the Province of British
Columbia or not located at the Collateral Locations set out on Schedule 1 to
this Financing Agreement unless the Lender is satisfied in its sole and absolute
discretion that it has a first entitlement and priority perfected security
interest in such Inventory, and (g) Inventory in transit from third parties
unless the Lender is satisfied in its sole and absolute discretion that it has a
first entitlement and priority perfected security interest in such Inventory,
subject to Permitted Encumbrances; and less any reserves required by the Lender
in its reasonable discretion, for special order goods, discontinued, slow
moving, defective, rejected and obsolete Inventory, market value declines, bill
and hold (deferred shipment), consignment sales, shrinkage and any applicable
customs, freight, duties and Taxes, the non-payment of which could result in an
Encumbrance in priority to the Lender's first secured priority position.

ELIGIBLE TRADE RECEIVABLES shall mean the gross amount of the Borrower's and
each Guarantor's Trade Receivables that are subject to a valid, first priority
and fully perfected security interest in favour of the Lender, subject to
Permitted Encumbrances, which, at all times, conform to the representations and
warranties contained herein and otherwise continue to be acceptable to the
Lender in the exercise of its reasonable business judgment, less, without
duplication, the sum of: (a) any returns, rejections, repossessions, discounts,
claims, rebates, guarantees, indemnities, set-offs, credits, fees, allowances
and any other dilutive factor of any nature (whether issued, owing, granted,
claimed or outstanding), and (b) reserves for any such Trade Receivables that
arise from or are subject to or include: (i) sales to any Governmental Entity of
the United States of America, or to any Governmental Entity of Canada, except
for any such sales in relation to which the Borrower or a Guarantor has complied
with any applicable legislation concerning the assignment of Accounts of such
Governmental Entities as is needed to ensure that the Lender holds a valid,
enforceable and first priority perfected security interest in such Trade
Receivable, subject to Permitted Encumbrances, to the Lender's satisfaction in
the exercise of its reasonable business judgment; (ii) foreign sales (sales to
customers residing outside of Canada or the United States of America), other
than (x) sales which otherwise comply with all of the other criteria for
eligibility hereunder and are secured by letters of credit (in form and
substance satisfactory to the Lender) issued or confirmed by, and payable at,
banks acceptable to the Lender in its sole and absolute discretion, or (y) are
subject to accounts receivable insurance acceptable to the Lender in its sole
and absolute discretion which has been assigned to the Lender, in form and
content acceptable to the Lender in its reasonable business judgement; (iii)
Trade Receivables, other than from the sale of pulp, that remain unpaid for more
than thirty (30) days from the due date, and Trade Receivables from the sale of
pulp that remain unpaid for more than sixty (60) days from the due date; (iv)
contra accounts; (v) sales to any employee, officer, agent, director,
shareholder, subsidiary (as defined in the Company Act (British Columbia), or to
any company affiliated (as defined in the Company Act (British Columbia) with
any of the foregoing in any way; (vi) bill and hold (deferred shipment),
guaranteed, conditional or consignment sales; (vii) sales to any customer which
is: (A) insolvent,

<PAGE>

                                     - 9 -

(B) the debtor in any bankruptcy, insolvency, arrangement, restructuring,
reorganization, receivership, liquidation or similar proceedings under any
federal, provincial or state law, or (C) negotiating, or has called a meeting of
its creditors for purposes of negotiating, a compromise of its debts; unless
such Trade Receivables meet the requirements set out in (ii)(y) above; or (D) is
financially unacceptable to the Lender or has a credit rating unacceptable to
the Lender in its absolute and sole discretion, (viii) all sales to any customer
if fifty percent (50%) or more of the aggregate dollar amount of all outstanding
invoices to such customer, other than in respect of sales of pulp, are unpaid
for more than thirty (30) days from the due date and are unpaid for more than
sixty (60) days from due date in respect of sales of pulp; (ix) pre-billed Trade
Receivables and Trade Receivables arising from progress billing; (x) sales not
payable in Canadian or United States currency unless such sales are foreign
sales contemplated by and in compliance with the requirements set out in (ii)
above; and (xi) Trade Receivables that have been sold, assigned, transferred,
encumbered or factored by the Borrower or a Guarantor to any Person.

ENCUMBRANCE shall mean any lien, charge, mortgage, hypothec, pledge, security
interest, claim and any other right or interest of a similar nature of third
parties relating to any of the Collateral or the Guarantor Collateral, as
applicable.

ENVIRONMENTAL LAWS shall mean all applicable Laws relating to Hazardous
Substances or pollution or relating to: (i) on-site or off-site contamination;
(ii) releases of pollutants, contaminants, chemicals or other industrial, toxic
or radioactive substances or Hazardous Substances into the environment; and
(iii) the manufacture, processing, distribution, use, treatment, storage,
transport or handling of Hazardous Substances, including the Waste Management
Act (British Columbia), Water Act (British Columbia), Environmental Management
Act (British Columbia), the Fisheries Act (Canada) and the Canadian
Environmental Protection Act, 1999.

EVENT(S) OF DEFAULT shall have the meaning provided for in Section 10.1 of
Article 10 of this Financing Agreement.

EXCLUDED ASSETS shall mean:

(i) all machinery, equipment and other tangible personal property (i.e. other
goods, and money, instruments, securities, chattel paper, and documents of title
pertaining to same) used in the processing of Inventory or otherwise used in the
carrying on of business from any of the Trustee Charged Operations, including
all inventories of spare parts and accessories (whether the same are fixtures or
not) but excluding, for greater certainty, all other Inventory as determined in
accordance with GAAP and also excluding all money, instruments, securities,
chattel paper and documents of title that are proceeds of or evidence or pertain
to such Inventory;

(ii) any "Cash Collateral Account" (as defined under the Bond Indenture)
established under Article 13 of the Bond Indenture, including all money,
securities, instruments or other investments and any interest or other income
earned or accruing thereon that may from time to time be deposited therein or
otherwise placed with or made or acquired by the Bond Trustee under Article 13
of the Bond Indenture or any other agreement or document entered into in
connection therewith;

<PAGE>

                                     - 10 -

(iii) all present and future tree farm licences, forest licences, timber sale
licences, timber licences, pulpwood agreements, wood lot licences and other
forest tenures an agreements (as defined in the Forest Act (British Columbia))
and any other rights, licences or permits relating to or accruing under any of
the foregoing from time to time, together with any and all renewals, amendments,
modifications, consolidations, replacements or substitutions thereof or thereto;
and all unharvested timber and rights to harvest timber within or arising
pursuant to the forest tenures and all unharvested timber situate on any
privately owned lands (the "Forest Tenures");

(iv) any and all permits, licences, approvals, consents, orders, rights,
certificates, writs, injunctions, determinations, directions, decrees,
authorizations, franchises, privileges, grants, waivers, exemptions and other
concessions, whether or not having the force of law, of, by or from any
Governmental Entity, relating to or in connection with any of the Trustee
Charged Operations, including any and all leases and licences of aquatic lands
or water lots, conditional or other water rights, permits or licences and road
or road building rights, permits or licences (the "LICENCES");

(v) the lands and premises, including any aquatic lands or waterlots and related
leases or licences, and any other interests in real property, comprising or
appurtenant to any of the Trustee Charged Operations; and

(vi) all proceeds from time to time owing to or received by the Borrower in
respect of any disposition of, or any expropriation, condemnation or casualty
involving an actual or constructive loss of, all or any portion of:

      (A)   any of the assets listed in clauses (ii) through (v) inclusive
            above;

      (B)   all goods, other than Inventory and proceeds of Inventory, which are
            in transit to or which are now or at any time hereafter located at
            any of the Trustee Charged Operations;

      (C)   all chattel paper, documents of title and intangibles, other than
            Accounts and other than chattel paper, documents of title and
            intangibles that are proceeds of or evidence or pertain to
            Inventory, now or hereafter located at, forming part of, pertaining
            to, used or acquired for use in connection with, arising out of or
            necessary for the ownership, maintenance, use or operation of any of
            the Trustee Charged Operations; or

      (D)   any proceeds of any assets covered by (A), (B) or (C) above;

EXPIRY DATE shall have the meaning provided for in Section 4.2 of this Financing
Agreement.

EQUIVALENT AMOUNT shall mean on any day, with respect to an amount of Canadian
dollars, the amount of United States dollars required to purchase that amount of
Canadian dollars at CIBC's opening rate on such day, or, if such day is not a
Business Day, on the next Business Day.

FISCAL QUARTER shall mean, with respect to the Borrower, each three (3) month
period ending on March 31, June 30, September 30 and December 31 of each Fiscal
Year.

<PAGE>

                                     - 11 -

FISCAL YEAR shall mear each twelve (12) month period commencing on January 1 of
each year and ending on the following December 31.

FOREST TENURES shall have the meaning provided for in the definition of
"Excluded Assets" in this Financing Agreement.

FIXED CHARGE COVERAGE RATIO means, as of the last day of any Fiscal Quarter, the
ratio of (a) EBITDA for the Rolling Period ended on that date minus capital
expenditures made by the Borrower and its Subsidiaries during such Rolling
Period to (b) the sum of (i) interest expense of the Borrower and its
Subsidiaries for such Rolling Period plus (ii) the aggregate of all scheduled
principal payments on Indebtedness made by the Borrower and its Subsidiaries
during such Rolling Period and all scheduled capital lease payments made by the
Borrower and its Subsidiaries during such Rolling Period.

GAAP shall mean generally accepted accounting principles in Canada as in effect
from time to time and for the period as to which such accounting principles are
to apply, provided that in the event the Borrower modifies its accounting
principles and procedures as applied as of the Closing Date, the Borrower shall
provide to the Lender such statements of reconciliation as shall be in form and
substance reasonably acceptable to the Lender.

GENERAL INTANGIBLES shall mean all present and hereafter acquired intangibles
(as defined in the PPSA), and shall include all present and future right, title
and interest in and to: (a) all Trademarks, tradenames, corporate names,
business names, logos and any other designs or sources of business identities;
(b) Patents, together with any improvements on said Patents, utility models,
industrial models, and designs; (c) Copyrights; (d) trade secrets; (e) licenses,
permits and franchises; (f) all applications with respect to the foregoing; (g)
all right, title and interest in and to any and all extensions and renewals; (h)
all goodwill with respect to any of the foregoing; (i) any other forms of
similar intellectual property, and; (j) all customer lists, distribution
agreements, supply agreements and blueprints.

GOVERNMENTAL ENTITY shall mean the Government of Canada, any other nation or any
political subdivision thereof, whether provincial, state, territorial or local,
and any agency, authority, instrumentality, regulatory body, court, central
bank, fiscal or monetary authority or other authority regulating financial
institutions, and any other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government, including the Bank Committee on Banking Regulation and Supervisory
Practices of the Bank of International Settlements.

GUARANTOR and GUARANTORS shall have the meaning provided for in the introductory
statements of this Agreement and shall extend to each Guarantor's successors and
assigns.

GUARANTOR COLLATERAL shall mean, with respect to a Guarantor, any and all of the
Assets of such Guarantor which would be Collateral if such Guarantor were the
Borrower under this Financing Agreement.

HAZARDOUS SUBSTANCE shall mean any Substance which is or is deemed by applicable
Law to be, alone or in any combination, hazardous, hazardous waste, toxic, a
pollutant, a deleterious substance, a contaminant or a source of pollution or
contamination under any Environmental Laws, whether or not such Substance is
defined as hazardous under any Environmental Laws.

<PAGE>

                                     - 12 -

INDEMNIFIED PARTY shall have the meaning provided for in Section 7.11 of Article
7 of this Financing Agreement.

INITIAL APPRAISAL shall have the meaning provided for in subsection 2.1(v) of
this Financing Agreement;

INTERCREDITOR AGREEMENT shall mean that certain intercreditor agreement dated as
of the date hereof among the Lender and the Bond Trustee.

INTEREST PERIOD shall mean the period of 30, 60 and 90 days selected as the
period of reference for the setting of the BA Equivalent Rate.

INVENTORY shall mean any and all of the Borrower's and each Guarantor's present
and hereafter acquired inventory (as defined in the PPSA), including all
merchandise, inventory and goods, and all additions, substitutions and
replacements thereof, wherever located, including the Trustee Charged
Operations, together with all goods and materials used or usable in
manufacturing, processing, reprocessing, packaging or shipping same in all
stages of production from raw materials through work-in-process to finished
goods and all proceeds thereof of whatever sort together with any unpaid
seller's or lessor's rights (including rescission, replevin, reclamation,
repossession and stoppage in transit relating to any of the foregoing or arising
therefrom) to reclaim or repossess goods.

INVENTORY LOAN CAP shall mean the amount of $175,000,000, as increased or
decreased from time to time pursuant to Section 3.8 of Article 3 of this
Financing Agreement.

ISSUING BANK shall mean the bank issuing Letters of Credit for the Borrower.

LAWS shall mean all federal, provincial, municipal, foreign and international
statutes, acts, codes, ordinances, decrees, treaties, rules, regulations,
municipal by-laws, judicial or arbitral or administrative or ministerial or
departmental or regulatory judgments, orders, decisions, rulings or awards or
any provisions of the foregoing, including general principles of common and
civil law and equity, and all policies, practices and guidelines of any
Governmental Entity binding on or affecting the Person referred to in the
context in which such word is used (including, in the case of tax matters, any
accepted practice or application or official interpretation of any relevant
taxation authority); and "Law" means any one or more of the foregoing.

LETTERS OF CREDIT shall mean all Canadian and United States dollar letters of
credit issued with the assistance of the Lender in accordance with Article 5
hereof by the Issuing Bank for or on behalf of the Borrower.

LETTER OF CREDIT FEE shall mean the fee payable to the Lender, chargeable to the
Borrower under Article 8 of this Financing Agreement for (a) issuing a Letter of
Credit Guarantee, and/or (b) otherwise assisting the Borrower in obtaining
Letters of Credit, all pursuant to Article 5 hereof.

LETTER OF CREDIT GUARANTEE shall mean the guarantee delivered by the Lender to
the Issuing Bank of Borrower's reimbursement obligations under the Issuing
Bank's reimbursement agreement, application for Letters of Credit or other like
documents.

<PAGE>

                                     - 13 -

LETTER OF CREDIT SUB-LINE shall mean the commitment of the Lender to assist the
Borrower in obtaining Letters of Credit, pursuant to Article 5 hereof, to a
maximum aggregate amount of $10,000,000 or an Equivalent Amount.

LICENCES shall have the meaning provided for in the definition of "Excluded
Assets" in this Financing Agreement.

LINE OF CREDIT shall mean the commitment of the Lender to (a) make Revolving
Loans pursuant to Articles 3 and 4 of this Financing Agreement, and (b) assist
the Borrower in obtaining Letters of Credit pursuant to Article 5 of this
Financing Agreement; provided that nothing herein shall be deemed to increase
the Lender's commitment hereunder.

LINE OF CREDIT FEE shall: (a) mean the fee payable by the Borrower to the Lender
at the end of each month for the Line of Credit pursuant to Article 8 of this
Financing Agreement, and (b) be determined by multiplying the difference between
(i) the maximum authorized Revolving Line of Credit, and (ii) the sum, for such
month, of (x) the average daily balance of Revolving Loans, plus (y) the average
daily balance of the face amount of all outstanding Letters of Credit for such
month, by three-eighths of one percent (0.375%) per annum, for the number of
days in said month, calculated on the basis of a 365 day year.

LOAN DOCUMENTS shall mean this Financing Agreement, the Security Agreements, all
other certificates, instruments, agreements, acknowledgements, indemnities and
documents whatsoever executed from time to time in connection with this
Financing Agreement, all as may be amended, renewed, extended, increased,
replaced or supplemented from time to time.

LOAN FACILITY FEE shall mean the fee in the amount of $350,000 minus the amount
of the Commitment Fee payable by the Borrower to the Lender on the Closing Date
in accordance with, and pursuant to, the provisions of Article 8 of this
Financing Agreement.

MARGINABLE TRADE RECEIVABLES shall have the meaning provided for in the
definition of "Borrowing Base" in this Financing Agreement.

MATERIAL ADVERSE EFFECT shall mean a material adverse effect (or a series of
adverse effects, none of which is material in and of itself but which,
cumulatively, results in a material adverse effect), in the sole determination
of the Lender, on: (i) the business, operations, Assets or financial condition
of the Borrower as it relates to the Collateral or the first secured priority
position of the Lender, (ii) the ability of the Borrower or a Guarantor to
perform any of its obligations under this Financing Agreement or any other Loan
Document, (iii) the ability of the Lender to realize on the Collateral or
satisfy the Obligations from such realization or to enforce any of the
obligations of the Borrower or a Guarantor under this Financing Agreement or any
other Loan Document in accordance with applicable Laws, or (iv) the Collateral,
the Lender's Encumbrances on the Collateral or the priority of such
Encumbrances. This definition shall apply, mutatis mutandis, to the Guarantors
where the context so requires.

MATERIAL AGREEMENT shall mean those instruments, documents, contracts and
agreements listed on Schedule 2 of this Financing Agreement.

MATURITY DATE shall mean the date occurring three (3) years from the Closing
Date and, if this Financing Agreement is renewed from time to time pursuant to
Section 11.1 of this Financing

<PAGE>

                                     - 14 -

Agreement, the same date occurring every year thereafter, subject to this
Financing Agreement being terminated earlier in accordance with the provisions
of this Agreement.

MEETING ORDER means the Order dated April 30, 2004 issued by the Honourable Mr.
Justice Tysoe of the Supreme Court of British Columbia in the proceeding
relating to the Plan of Arrangement.

NET AVAILABILITY shall mean at any time the amount by which the Borrowing Base
exceeds the outstanding aggregate amount of all Revolving Loans and the face
amount of all Letters of Credit.

NET AVAILABILITY BLOCK shall have the meaning provided for in the definition of
"Availability Reserve" in this Financing Agreement.

NOTICE shall mean any claim, citation, directive, request for information,
statement of claim, notice of investigation or other similar communication from
any Person.

OBLIGATIONS shall mean, without duplication, all loans, advances and extensions
of credit made or deemed to be made by the Lender to the Borrower, or to others
for the Borrower's account pursuant to this Financing Agreement, (including any
and all indemnities provided to The Toronto-Dominion Bank by the Lender in
respect of any outstanding Letters of Credit;), any and all payments made on the
Borrower's behalf pursuant to any Computer Access Agreements and any and all
Revolving Loans and Letter of Credit Guarantees; any and all indebtedness and
obligations which may at any time be owing by the Borrower to the Lender
pursuant to this Financing Agreement howsoever arising, whether now in existence
or incurred by the Borrower from time to time hereafter; whether principal,
interest, fees, costs, expenses or otherwise; whether such indebtedness is
absolute or contingent, joint or several, matured or unmatured, direct or
indirect and whether the Borrower is liable to the Lender for such indebtedness
as principal, surety, endorser, guarantor or otherwise. Obligations shall also
include, without limitation, indebtedness owing to the Lender by the Borrower or
any Guarantor under any Loan Document, any indemnity under this Financing
Agreement or under any other agreement or arrangement now or hereafter entered
into between the Borrower or any Guarantor and the Lender relating to the
Accommodations made pursuant to this Financing Agreement; indebtedness,
liabilities, obligations or penalties incurred by, or imposed on, the Lender as
a result of environmental claims arising out of the Borrower's or any
Guarantor's operations, premises or waste disposal practices or sites; the
Borrower's liability to the Lender as maker or endorser of any promissory note
or other instrument for the payment of money; the Borrower's liability to the
Lender under any instrument of guarantee or indemnity, or arising under any
guarantee, endorsement or undertaking which the Lender may make or issue to
others for the Borrower's account, including any Letter of Credit Guarantee or
other accommodation extended by the Lender with respect to applications for
Letters of Credit, the Lender's acceptance of drafts, the Lender's endorsement
of notes or other instruments for the Borrower's account and benefit.

ORDER shall mean any judicial or arbitral or administrative or ministerial or
departmental or regulatory notice, decree, judgement, decision, ruling, award or
order of any kind.

OTHER COLLATERAL shall mean all now owned and hereafter acquired lockbox,
Blocked Accounts and any other deposit accounts maintained with any bank or
financial institutions into which the

<PAGE>

                                     - 15 -

proceeds of any Collateral or Guarantor Collateral, as applicable, are or may be
deposited and all cash and other monies and properties in the possession or
control of the Lender.

OUT-OF-POCKET EXPENSES shall mean all of the Lender's present and future fees,
costs and expenses incurred relative to this Financing Agreement or any other
Loan Document, whether incurred heretofore or hereafter, which fees, costs and
expenses shall include the cost of retaining external legal counsel, record
searches, all costs and expenses incurred by the Lender in opening bank
accounts, depositing cheques, receiving and transferring funds, and wire
transfer charges, any charges imposed on the Lender due to returned items and
"insufficient funds" of deposited cheques, and the Lender's standard fees
relating thereto, any amounts paid by, incurred by or charged to, the Lender by
the Issuing Bank under a Letter of Credit Guarantee or the Borrower's
reimbursement agreement, application for Letters of Credit or other like
document which pertain either directly or indirectly to such Letters of Credit,
and the Lender's standard fees relating to the Letters of Credit and any drafts
thereunder, travel, lodging, and similar expenses of the Lender's personnel in
connection with inspecting and monitoring the Collateral from time to time
hereunder, any applicable counsel fees and disbursements, fees and Taxes
relating to same, and all expenses, costs and fees set forth herein.

PERMITTED ENCUMBRANCES shall mean: (a) Encumbrances in favour of the Bond
Trustee arising under the Bond Indenture and other Encumbrances expressly
permitted, or consented to in writing by the Lender; (b) inchoate liens on the
Collateral or Guarantor Collateral of local or provincial authorities for Taxes
and claims imposed by Law for amounts not yet due and are not enforceable or
registered against any of the Collateral or Guarantor Collateral; (c) liens of
landlords and liens of carriers, warehousemen, bailees, mechanics, materialmen
and other like liens imposed by Law, created in the ordinary course of business
and for amounts not yet due (or which are being contested in good faith, by
appropriate proceedings or other appropriate actions which are sufficient to
prevent enforcement of such liens) and with respect to which adequate reserves
or other appropriate provisions are being maintained in accordance with GAAP;
(d) deposits made (and liens thereon) in the ordinary course of business
(including reasonable security deposits for leases, indemnity bonds, surety
bonds and appeal bonds) in connection with workers' compensation, unemployment
insurance and other types of social security benefits or to secure the
performance of tenders, bids, contracts (other than for the repayment or
guarantee of borrowed money), statutory obligations and other similar
obligations arising as a result of progress payments under government contracts;
(e) Encumbrances granted to the Lender by the Borrower or any Guarantor; (f)
liens of judgment creditors provided such liens do not exceed, in the aggregate,
at any time, $1,000,000, other than liens bonded or insured to the reasonable
satisfaction of the Lender; (g) liens in respect of Taxes for amounts which are
not yet due and payable or which are being diligently contested in good faith by
appropriate proceedings, and which liens are not (x) filed in any public
records, (y) enforceable against the Collateral or the Guarantor Collateral, as
applicable, or (z) for Taxes due to any Governmental Entity of Canada, the
United States of America or any province or state thereof having similar
priority statutes, as further set forth in Section 7.6 of this Financing
Agreement which have become enforceable; and (h) liens or security interests
granted against the Collateral or the Guarantor Collateral which are fully and
unconditionally postponed and subordinate to the liens and security interests
granted to the Lender, provided that any such subordinated creditor executes and
delivers to and in favour of the Lender a priority, inter-creditor and
standstill agreement in form and substance acceptable to the Lender, in its sole
and absolute discretion.

<PAGE>

                                     - 16 -

PERSON shall mean an individual, partnership, corporation, trust, unincorporated
association, joint venture, Governmental Entity or other entity whatsoever and
pronouns have a similar extended meaning.

POLICIES shall have the meaning provided for in the definition of "Collateral"
in this Financing Agreement.

PPSA shall mean the Personal Property Security Act of the Province of British
Columbia as the same may be amended, supplemented or replaced and in effect from
time to time.

PRIME RATE shall mean the rate of interest per annum announced by CIBC from time
to time as its prime rate in effect for Canadian dollar commercial loans in
Canada at its principal office in Toronto, Ontario, which is not intended to be
the lowest rate of interest charged by CIBC to its borrowers.

PRIORITY PAYABLES shall have the meaning provided for in Section 7.6 of this
Financing Agreement.

PRIME RATE LOANS shall mean any loans or advances pursuant to this Financing
Agreement made or maintained at a rate of interest based upon the Prime Rate.

PULPCO NOTE shall mean the Secured Term Promissory Note of WPL, dated July 27,
2004, issued in favour of Western Pulp Limited Partnership and subsequently
assigned to (and held on the Closing Date by) the Borrower, in the aggregate
principal amount of Cdn.$110,000,000.

REVOLVING LINE OF CREDIT shall mean, subject to the Borrowing Base, the
aggregate commitment of the Lender to make loans, advances and extensions of
credit pursuant to Articles 3 and 4 of this Financing Agreement and to assist in
the issuance of Letters of Credit to the Borrower pursuant to Article 5 hereof,
up to the maximum aggregate amount of $100,000,000.

REVOLVING LOAN ACCOUNT shall mean the account on the Lender's books, in the
Borrower's name, in which the Borrower will be charged with all Obligations
under this Financing Agreement.

REVOLVING LOANS shall mean the loans, advances and extensions of credit made,
from time to time, to or for the account of the Borrower by the Lender, pursuant
to Articles 3 and 4 of this Financing Agreement.

ROLLING PERIOD means, commencing with the Fiscal Quarter ending September 30,
2004, each Fiscal Quarter taken together with the three immediately preceding
Fiscal Quarters.

ROYALTIES shall have the meaning provided for in Section 7.6 of this Financing
Agreement.

SANCTION ORDER means the Order of the Supreme Court of British Columbia in the
proceedings relating to the Plan of Arrangement, sanctioning and approving the
implementation of the Plan of Arrangement dated as of June 14, 2004.

SECURED NOTES means the secured bonds issued by the Borrower pursuant to the
Bond Indenture.

<PAGE>

                                     - 17 -

SECURITY AGREEMENTS shall have the meaning provided for in Article 6 of this
Financing Agreement.

SUBSIDIARY means, with respect to any Person (the "parent") at any date, any
corporation, limited liability company, partnership, limited partnership,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent's consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership, limited
partnership, association or other entity (a) of which securities or other
ownership interests representing more than 50% of the equity or more than 50% of
the ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held,
or (b) that is, as of such date, otherwise controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries of
the parent.

SUBSTANCE means any substance, waste, liquid, gaseous or solid matter, fuel,
micro-organism, sound, vibration, ray, heat, odour, radiation, energy vector,
plasma and organic or inorganic matter.

TAXES shall mean all taxes, charges, fees, levies, imposts and other
assessments, including all income, sales, use, goods and services, value added,
capital, capital gains, alternative, net worth, transfer, profits, withholding,
payroll, employer health, excise, real property and personal property taxes, and
any other taxes, customs duties, fees, assessments, or similar charges in the
nature of a tax, including Canada Pension Plan and provincial pension plan
contributions, unemployment insurance payments and workers' compensation
premiums, together with any installments with respect thereto, and any interest,
fines and penalties with respect thereto, imposed by any Governmental Entity
(any federal, state, provincial, municipal or foreign Governmental Entity), and
whether disputed or not.

TRADE RECEIVABLES shall mean any and all Accounts arising from the sale or
distribution of logs, lumber and/or pulp, including Accounts arising from the
sale or distribution of northern bleached softwood kraft pulp and chips.

TRANSFEREE shall have the meaning provided for in Section 12.1 of this Financing
Agreement.

TRADEMARKS shall mean all present and hereafter acquired trademarks, trademark
registrations, recordings, applications, tradenames, trade styles, service
marks, prints and labels (on which any of the foregoing may appear), licences,
issues, renewals, and any other intellectual property and trademark rights
pertaining to any of the foregoing, together with the goodwill associated
therewith and all cash and non-cash proceeds thereof.

TRUSTEE CHARGED OPERATIONS shall mean, collectively:

(i) the sawmill and related facilities, businesses and operations comprised by
or carried on from the lands and premises located at or about 9401 Trans Canada
Highway, North Cowichan, B.C., including, without limitation, any appurtenant
aquatic lands or waterlots, and related leases or licences, and any other
interests in any real property appurtenant thereto, all being (as of June 18,
1999) the lands with Parcel Identifiers 006 648 509, 004 802 161, and 004 601
572;
<PAGE>

                                     - 18 -

(ii) the value-added lumber remanufacturing plant and related facilities,
businesses and operations comprised by or carried on from the lands and premises
located at 3400 River Road, Chemainus, B.C., including, without limitation, any
appurtenant aquatic lands or waterlots, and related leases or licences, and any
other interests in any real property appurtenant thereto, all being (as of June
18, 1999) the lands with Parcel Identifier 023 017 775;

(iii) the sawmill and related facilities, businesses and operations comprised by
or carried on from the lands and premises located at or about 500 Duke Point
Highway, North Cowichan, B.C., including, without limitation, any appurtenant
aquatic lands or waterlots, and related leases or licences, and any other
interests in any real property appurtenant thereto, all being (as of June 18,
1999) the lands with Parcel Identifier 005 788 561 and the Provincial Crown
granted water lot licenses bearing nos. 103726, 103612, and 103674;

(iv) the sawmill and related facilities, businesses and operations comprised by
or carried on from the lands and premises located at or near the foot of Ludlow
Road, Ladysmith, B.C., including, without limitation, any appurtenant aquatic
lands or waterlots, and related leases or licences, and any other interests in
any real property appurtenant thereto, all being (as of June 18, 1999) the lands
with Parcel Identifiers 009 449 914 and 009 450 092;

(v) the sawmill and related facilities, businesses and operations comprised by
or carried on from the lands and premises located at 12308 Raven Road,
Ladysmith, B.C., including, without limitation, any appurtenant aquatic lands or
waterlots, and related leases or licences, and any other interests in any real
property appurtenant thereto, all being (as of June 18, 1999) the lands with
Parcel Identifiers 009 579 541, 009 579 630, 009 596 542, 009 579 591, and 009
450 068 and the Provincial Crown granted water lot lease bearing no. 120040;

(vi) the sawmill and related facilities, businesses and operations comprised by
or carried on from the lands and premises located at or about 500 Maughan Road,
Nanaimo, B.C., including, without limitation, any appurtenant aquatic lands or
waterlots, and related leases or licences, and any other interests in any real
property appurtenant thereto, all being (as of June 18, 1999) the lands with
Parcel Identifier 001 038 095 and the Provincial Crown granted water lot lease
bearing no. 101523;

(vii) the pulp mill and related facilities, businesses and operations comprised
by or carried on from the lands and premises located at or near Squamish, B.C.,
including, without limitation, any appurtenant aquatic lands or waterlots, and
related leases or licences, and any other interests in any real property
appurtenant thereto, all being (as of June 18, 1999) the lands with Parcel
Identifiers 015 910 717, 015 895 963, 015 822 061, 015 791 459, and 015 791 611
and the Provincial Crown granted water lot lease bearing nos. 233113, 234399,
233410, 231566, 231574 and 236807;

(viii) the sawmill and related facilities, businesses and operations comprised
by or carried on from the lands and premises located at or near Tahsis, B.C.,
including, without limitation, any appurtenant aquatic lands or waterlots, and
related leases or licences, and any other interests in any real property
appurtenant thereto, all being (as of June 18, 1999) the lands with Parcel
Identifier 006 894 607 and the Provincial Crown granted water lot lease bearing
no. 105393;

(ix) the sawmill and related facilities, businesses and operations comprised by
or carried on from the lands and premises located at 9001 Heather Street,
Vancouver, B.C., including, without

<PAGE>

                                     - 19 -

limitation, any appurtenant aquatic lands or waterlots, and related leases or
licences, and any other interests in any real property appurtenant thereto, all
being (as of June 18, 1999) the lands with Parcel Identifiers 008 238 057, 013
038 796, 011 263 873 and 013 206 222 and the Provincial Crown granted water lot
leases bearing nos. 05004, 05005, 05006, 05007 and 05008; and

(x) the sawmill and related facilities, businesses and operations comprised by
or carried on from the lands and premises located at or about 520 East Kent
Avenue South, Vancouver, B.C., including, without limitation, any appurtenant
aquatic lands or waterlots, and related leases or licences, and any other
interests in any real property appurtenant thereto, all being (as of June 18,
1999) the lands with Parcel Identifiers 015 120 384, 015 120 392, 015 120 406,
015 101 436 and 009 742 697 and the Provincial Crown granted water lot leases
bearing nos. 05023, 05025, 05021, 05022 and 05062; and, except where the plain
meaning or context may otherwise require, the term "Trustee Charged Operations"
shall include each or any part of such Trustee Charged Operations taken
separately.

                                    ARTICLE 2
                              CONDITIONS PRECEDENT

2.1 The obligation of the Lender to make the initial Accommodation hereunder is
subject to the following conditions to be fulfilled or performed at or prior to
the Closing Date, which conditions are for the exclusive benefit of the Lender
and may be waived in whole are in part by the Lender in its sole discretion:

      (a)   LIEN SEARCHES - The Lender shall have received Tax, executions, Bank
            Act (Canada), litigation, PPSA and any other searches reasonably
            required by the Lender with results satisfactory to the Lender for
            all locations and names presently and previously used by the
            Borrower and each Guarantor.

      (b)   INSURANCE - The Borrower shall have delivered to the Lender evidence
            satisfactory to the Lender that property, casualty,
            comprehensive/umbrella and business interruption insurance policies
            listing the Lender as an additional insured, first loss payee or
            mortgagee with respect to the Collateral and the Guarantor
            Collateral, as applicable, are in full force and effect, all as set
            forth in-Section 7.5 of Article 7 of this Financing Agreement.

      (c)   PPSA FILINGS - Any financing statements required to be filed in
            order to create, in favour of the Lender, a first priority perfected
            security interest in the Collateral and the Guarantor Collateral,
            subject only to the Permitted Encumbrances, shall have been properly
            filed in each office in each jurisdiction required in order to
            create in favour of the Lender a first priority perfected security
            interest in the Collateral and the Guarantor Collateral, subject to
            Permitted Encumbrances. The Lender shall have received
            acknowledgement copies of all such filings (or, in lieu thereof, the
            Lender shall have received other evidence satisfactory to the Lender
            that all such filings have been made) and the Lender shall have
            received evidence that all necessary filing fees and all Taxes or
            other expenses related to such filings have been paid in full.

<PAGE>

                                     - 20 -

      (d)   BOARD RESOLUTION - The Lender shall have received copies of the
            minutes or resolutions of the board of directors of each of the
            Borrower and each Guarantor, as applicable, confirming that the
            execution and delivery of the Loan Documents is in the "best
            interests" of such Person and authorizing the execution, delivery
            and performance of (i) this Financing Agreement, (ii) the other Loan
            Documents, (iii) and any other related or ancillary documents, in
            each case certified by a designated authorized signing officer of
            the Borrower or the applicable Guarantor, as of the date hereof,
            together with a certificate of a designated authorized signing
            officer of each of the Borrower and the applicable Guarantor as to
            the incumbency and signature of the officers of each the Borrower
            and the applicable Guarantor executing this Financing Agreement, the
            other Loan Documents and any other certificate, agreements or
            documents to be delivered by them pursuant hereto, together with
            evidence of the incumbency of such designated authorized signing
            officer.

      (e)   SANCTION ORDER - The Sanction Order shall have been issued and shall
            be in form and substance satisfactory to the Lender; the Sanction
            Order shall not have been stayed by any court having jurisdiction to
            issue any such stay, and the time to appeal the Sanction Order or to
            seek review, rehearing or certiorari with respect to the Sanction
            Order shall have expired; no appeal or petition for review,
            rehearing or certiorari with respect to the Sanction Order shall be
            pending, and the Sanction Order shall otherwise be in full force and
            effect; and the corporate transactions contemplated by Section 3 of
            the Plan of Arrangement (including the transfer of all Lumber Assets
            (as defined in the Plan of Arrangement) to the Borrower and all Pulp
            Assets (as defined in the Plan of Arrangement) to WPL) shall have
            been completed pursuant to documentation satisfactory in form and
            substance to the Lender.

      (f)   PLAN OF ARRANGEMENT NOT AMENDED, ETC. - The Plan of Arrangement
            shall not have been amended, supplemented, restated or otherwise
            modified in any manner not approved by the Lender.

      (g)   FEES - The Borrower shall have paid to the Lender the Loan Facility
            Fee.

      (h)   BOND INDENTURE - The Bond Indenture shall have been executed and
            delivered by the parties thereto and all conditions thereunder shall
            have been satisfied or waived.

      (i)   CORPORATE ORGANIZATION - The Lender shall have received (i) copies
            of the Certificates of Incorporation of the Borrower and each
            Guarantor certified by an officer of the Borrower and the applicable
            Guarantor, and (ii) a copy of the Articles and by laws of each of
            the Borrower and each Guarantor certified by a designated authorized
            signing officer thereof, all as amended through the date hereof.

      (j)   OPINIONS - Counsel for the Borrower and each Guarantor shall have
            delivered to the Lender legal opinions relating to the transactions
            contemplated herein, in form and substance satisfactory to the
            Lender.

<PAGE>

                                     - 21 -

      (k)   ABSENCE OF DEFAULT - No Default or Event of Default shall have
            occurred or will occur upon the Lender making the initial
            Accommodation to the Borrower hereunder and no Material Adverse
            Effect, to the extent it affects the Lenders' first priority secured
            position, the Collateral, the Guarantor Collateral, the Borrowing
            Base or the Net Availability, shall have occurred since April 2,
            2004 (the date of the Commitment Letter).

      (l)   LEGAL RESTRAINTS/LITIGATION - As of the Closing Date, there shall be
            no: (x) litigation, investigation or proceeding (judicial or
            administrative) pending or threatened against the Borrower or any
            Guarantor or their respective Assets, by any Person or Governmental
            Entity arising out of this Financing Agreement or the Plan of
            Arrangement; (y) injunction, writ or restraining order restraining
            or prohibiting the consummation of the financing arrangements
            contemplated under this Financing Agreement or the Plan of
            Arrangement; or (z) suit, action, investigation or proceeding
            (judicial or administrative) pending against the Borrower or any
            Guarantor or their respective Assets, which, in the opinion of the
            Lender, if adversely determined, could have a Material Adverse
            Effect.

      (m)   INTER-CREDITOR AGREEMENT - The Bond Trustee shall have executed and
            delivered to and in favour of the Lender, an inter-creditor
            agreement, in form and substance satisfactory to the Lender
            confirming, among other things, the Lender's first priority
            perfected security lien on and security interest in the Collateral
            and the Guarantor Collateral, as applicable.

      (n)   CASH BUDGET PROJECTIONS - The Lender shall have received, reviewed
            and been satisfied with a six (6) month cash budget projection (July
            to December 2004) in the Borrower's standard form approved by the
            Lender.

      (o)   ADDITIONAL DOCUMENTS - The Borrower and the Guarantor shall have
            executed and delivered to the Lender, all Loan Documents necessary
            to consummate the lending arrangements contemplated between the
            Borrower, the Guarantors and the Lender, all in form and substance
            satisfactory to the Lender.

      (p)   EXAMINATION & VERIFICATION - The Lender shall have completed, to its
            satisfaction, an examination of the Bond Indenture and any and all
            insurance policies required hereunder and an examination and
            verification of the Collateral, the Guarantor Collateral and
            financial statements and books and records of the Borrower and the
            Guarantors. Such examination shall indicate that, after giving
            effect to all Revolving Loans and other Accommodations to be made on
            the Closing Date, the Borrower shall have an opening Net
            Availability of at least $10,000,000 (after giving effect to the Net
            Availability Block) as evidenced by a Borrowing Base Certificate to
            be delivered by the Borrower to the Lender as of the Closing Date.
            It is understood that such requirement contemplates that all debts
            and obligations are current, and that all payables are being handled
            in the normal course of the Borrower's businesses and consistent
            with their past practice.

      (q)   BLOCKED ACCOUNTS - The Borrower shall have established a system of
            bank accounts with respect to, among other things, the collection of
            Trade Receivables

<PAGE>

                                     - 22 -

            of the Borrower and the Guarantor as shall be acceptable to the
            Lender in all respects. Such accounts shall be subject to
            multi-party agreements (among the Borrower, the Guarantors (if
            applicable), the Lender and the depository bank), which shall be in
            form and substance satisfactory to the Lender.

      (r)   EXISTING REVOLVING LOAN - The Pre-Filing Financing Agreement shall
            be concurrently terminated, and all loans and obligations of the
            Pre-Filing Borrower thereunder shall be paid or satisfied in full,
            including through utilization of the proceeds of the initial
            Revolving Loans to be made under this Financing Agreement.

      (s)   SCHEDULES - The Borrower and the Guarantors or their counsel shall
            provide the Lender with the Schedules of information contemplated
            herein, including locations where any of the Collateral and the
            Guarantor Collateral is or may be stored or located.

      (t)   ACKNOWLEDGEMENTS - The Borrower and each Guarantor shall have
            delivered to the Lender, any and all estoppels, acknowledgements,
            confirmations, documents, waivers, subordinations, postponements,
            discharges (including any and all registrations in favour of the
            Crown under the Miscellaneous Registrations Act (British Columbia)
            with respect to the Social Services Tax Act (British Columbia)),
            priority agreements, standstill agreements, access agreements,
            consents and inter-creditor and non-disturbance agreements, it may
            reasonably require to ensure its first priority, subject to
            Permitted Encumbrances, over and unfettered access to, the
            Collateral and the Guarantor Collateral.

      (u)   REVIEW - The Lender shall have reviewed the Borrower's and each
            Guarantor's corporate and ownership structure and status, including,
            the Borrower's and each Guarantor's books and records; the
            Borrower's and each Guarantor's accounting records concerning any
            and all exports duties imposed by any Governmental Authority; any
            and all laws affecting the Borrower's and any Guarantor's operations
            and financial performance concerning such export duties, the
            Collateral, the Guarantor's Collateral, the Borrower's and each
            Guarantor's inventory control systems and collateral reporting
            capabilities; any and all Material Agreements, all material supply
            and customer contracts and any other due diligence, including
            management and bank reference checks, a review of the Borrower's
            rights to future supply of Eligible Inventory and the Forest
            Tenures, Licences and other Authorizations, the Lender may require,
            all with results satisfactory to the Lender.

      (v)   MINISTRY OF FORESTS - The Lender shall have received written
            confirmation from the Ministry of Forests as to the existence and
            status of all such Forest Tenures, Licences and other
            Authorizations.

      (w)   FINANCIAL STATEMENTS - The Lender shall have received and reviewed
            any and all consolidated financial statements and projections of the
            Borrower and the Guarantors, including income statements, balance
            sheets and cash flow statements, with results satisfactory to the
            Lender.

<PAGE>

                                     - 23 -

      (x)   FIELD EXAMINATION REPORT AND APPRAISAL REPORTS - The Lender shall
            have received and reviewed a field examination report with results
            satisfactory to the Lender.

2.2 CONDITIONS TO EACH EXTENSION OF CREDIT

            Subject to the terms of this Financing Agreement, including the
Lender's rights pursuant to Section 10.2 of Article 10 hereof, the obligations
of the Lender to make any Accommodation on any date (including the initial
Accommodation) is subject to the following conditions, which conditions are for
the exclusive benefit of the Lender and may be waived in whole or in part by the
Lender:

      (a)   REPRESENTATIONS AND WARRANTIES - Each of the representations and
            warranties made by the Borrower and the Guarantors in or pursuant to
            this Financing Agreement shall be true and correct in all material
            respects on and as of such date, as if made on and as of such date,
            except for those representations and warranties which speak to a
            specific date which shall be true and correct as of such date.

      (b)   NO DEFAULT - No Default or Event of Default shall have occurred and
            be continuing on such date or would occur after giving effect to the
            Accommodation requested to be made on such date.

      (c)   BORROWING BASE - Except as may be otherwise agreed to from time to
            time by the Lender and the Borrower in writing, after giving effect
            to any Accommodation requested to be made by the Borrower on such
            date, the aggregate outstanding balance of the Revolving Loans and
            outstanding Letters of Credit owing by the Borrower will not exceed
            the lesser of (i) the Revolving Line of Credit, or (ii) the
            Borrowing Base.

Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower and the Guarantors as of the date of such Accommodation
that each of the representations, warranties and covenants contained in the
Financing Agreement has been satisfied and is true and correct as of such date
except for those representations and warranties which speak to a specific date
which shall be true and correct as of such date, except as the Borrower, the
Guarantors and the Lender shall otherwise agree herein or in a separate writing.

                                    ARTICLE 3
                                REVOLVING LOANS

3.1   (a)   The Lender agrees, subject to the Revolving Line of Credit and the
            terms and conditions of this Financing Agreement, from time to time,
            but not prior to the Closing Date, on any Business Day prior to the
            Maturity Date, to make Canadian dollar loans and advances to the
            Borrower on a revolving basis by way of Prime Rate Loans and BA
            Equivalent Loans and subject to the limitations set forth herein,
            the Borrower may borrow, repay and reborrow such Revolving Loans.
            Such requests for Accommodations, subject to the Revolving Line of
            Credit, shall be in amounts not to exceed the Net Availability. All
            requests for loans and advances must be received by an officer of
            the Lender no later than 11:00 A.M., Toronto time (i) of the
            Business Day on which any such Prime Rate Loan is

<PAGE>

                                     - 24 -

            required if such request is for an amount less than $25,000,000 and,
            (ii) one (1) Business Day prior to the Business Day on which any
            such Prime Rate Loan is required if such request is for an amount
            equal to or greater than $25,000,000.

      (b)   Whenever the Borrower requests the Lender to make a Revolving Loan,
            it shall give the Lender notice in writing or irrevocable telephonic
            notice confirmed promptly in writing (but prior to any advance),
            specifying (A) the amount to be borrowed, (B) the requested
            borrowing date (which shall be a Business Day and shall be prior to
            a Maturity Date, and if applicable, any Early Termination Date, or
            prior to any effective termination date of this Financing Agreement,
            all as further set forth herein), and (C) specify whether the
            requested Revolving Loan shall be by way of a Prime Rate or BA
            Equivalent Loan and, if by way of a BA Equivalent Loan, the
            applicable Interest Period, in accordance with the provisions set
            forth herein. The Lender shall make loans and advances to the
            disbursement account of the Borrower with The Toronto-Dominion Bank
            at 700 West Georgia Street, Vancouver, B.C. or to such other
            disbursement account as may be agreed in writing between the
            Borrower and the Lender.

      (c)   The Borrower shall not use any Accommodation other than for working
            capital purposes, for capital expenditures and other corporate
            purposes to the extent not otherwise prohibited or restricted by
            this Financing Agreement.

      (d)   Unless demand is made earlier pursuant to the provisions of this
            Financing Agreement, the Borrower shall repay, and there shall
            become due and payable, the Obligations and all accrued and unpaid
            interest thereon, on the earlier of the Early Termination Date and
            the Maturity Date.

3.2 In furtherance of the continuing assignment and security interest in the
Collateral and the Guarantor's Collateral, as applicable, the Borrower covenants
and agrees to provide to the Lender various reports and information with respect
to the Borrower and Guarantors as may be requested by the Lender, all in form
and substance satisfactory to the Lender, including, without limitation, the
following reports and information:

      (a)   As at the last day of each month and within ten (10) Business Days
            of each month end;

            (i)   a Borrowing Base Certificate as at such month end, including,
                  without limitation, a summary of sales and collections
                  journals;

            (ii)  a monthly summary of aging of Trade Receivables by due date
                  for the Borrower and the Guarantors. Notwithstanding the
                  above, the Lender reserves the right to require each of the
                  Borrower and the Guarantors to provide it with a detailed
                  listing of aging of Trade Receivables at any time upon the
                  Lender's request;

            (iii) a detailed monthly aging of accounts payable of the Borrower
                  and the Guarantors;

<PAGE>

                                     - 25 -

            (iv)  a calculation and listing of the Trade Receivables which would
                  not meet the criteria of an Eligible Trade Receivable;

            (v)   an aged listing of the ten (10) largest Trade Receivables and
                  accounts payable of the Borrower and the Guarantors for the
                  month; and

            (vi)  a reconciliation prepared by the Borrower of the cash receipts
                  journal to the Blocked Accounts.

      (b)   In addition to Section 3.2(a) above, the Borrower covenants and
            agrees to provide the Lender with the reports and information set
            out in 3.2(a)(i), (ii) and (iii) above within five (5) Business Days
            of the 15th day of each month, prepared as of the 15th day of such
            month and the following reports and information within five (5)
            Business Days of the 15th day of each month, prepared as at the
            previous month end:

            (i)   a detailed monthly Inventory summary and physical Inventory
                  listing;

            (ii)  a calculation and listing of the Inventory which would not
                  meet the criteria of Eligible Inventory;

            (iii) a reconciliation of the monthly Inventory summaries to the
                  general ledger and to the financial statements of each of the
                  Borrower and the Guarantors as at month end;

            (iv)  a reconciliation of aging of Trade Receivables and accounts
                  payable to the divisional trial balances, and the Borrower's
                  and each Guarantor's general ledgers and to the consolidated
                  financial statements for the Borrower, as at month end; and

            (v)   a listing of all other Accounts and accounts payable of each
                  of the Borrower and the Guarantors, including accruals, which
                  are not aged.

      (c)   In addition, upon the Lender's request, each of the Borrower and the
            Guarantors covenant and agree to provide the Lender with copies of
            agreements with, or purchase orders from, the Borrower's and the
            Guarantors' customers, and copies of invoices to customers, proof of
            shipment or delivery, access to their computers, electronic media
            and software programs associated therewith (including any access
            codes, electronic records, contracts and signatures) and such other
            documentation and information relating to said Accounts, any other
            Collateral and the Guarantor Collateral as the Lender may reasonably
            require, provided that such access does not constitute a violation
            of the Personal Information Protection and Electronic Documents Act
            (Canada) or any similar provincial privacy legislation in effect
            from time to time. The Borrower and the Guarantors hereby authorize
            the Lender to regard the Borrower's or the Guarantors' printed name
            or rubber stamp signature on assignment schedules or invoices as the
            equivalent of a manual signature by one of the Borrower's authorized
            signing officers or agents;

<PAGE>

                                     - 26 -

            Notwithstanding the above, the Lender reserves the right at any time
            to request additional reports and information, and on a more
            frequent basis, as it may reasonably require.

3.3 The Borrower and the Guarantors covenant and agree with the Lender that any
and all Taxes or fees relating to their business, their sales, the Collateral or
the Guarantors' Collateral, as applicable, relating thereto, are their sole
responsibility and that same will be paid by the relevant Person when due,
subject to Section 7.6 of Article 7 of this Financing Agreement and that none of
said Taxes or fees results in or represents an enforceable Encumbrance on or
claim against the Collateral or the Guarantor's Collateral which has not been
disclosed to the Lender, is not being contested in good faith by appropriate
proceedings or actions sufficient to prevent the enforcement of any such
Encumbrances and with respect to which adequate reserves are not being
maintained by the Borrower or a Guarantor, as applicable, in accordance with
GAAP. The Borrower and the Guarantors covenant and agree to make all of their
books and records available to the Lender at its premises upon one (1) day
notice during normal business hours, including any records handled or maintained
for them by any other Person whatsoever. The Borrower and Guarantors also
covenant and agree to make any and all environmental reports and reports and/or
communications to the Ministry of Forests available to the Lender forthwith upon
the Lender's reasonable request.

3.4 Until the Lender has advised the Borrower to the contrary upon the
occurrence of a Default or an Event of Default, and subject to the provisions
below, the Borrower and the Guarantors, at their expense, can enforce, collect
and receive all amounts owing on the Trade Receivables in the ordinary course of
its business. Upon the occurrence of a Default or an Event of Default which is
continuing, any cheques, cash, credit card sales and receipts, notes or other
instruments or property received by the Borrower or a Guarantor with respect to
any Collateral, including Accounts, shall be held by the Borrower or a Guarantor
in trust for the Lender, on behalf of the Lenders, separate from the Borrower's
and the Guarantor's own property and funds, and upon the request of the Lender
promptly turned over to the Lender with proper assignments or endorsements for
deposit to the Depository Accounts. Upon the occurrence of a Default or an Event
of Default which is continuing, the Borrower and the Guarantors shall, at the
Lender's election: (i) indicate on all of its invoices that funds should be
delivered to and deposited in a Depository Account; (ii) direct all of its
account debtors to deposit any and all proceeds of Collateral into the
Depository Accounts; (iii) irrevocably authorize and direct any banks which
maintain the Borrower's and the Guarantor's initial receipt of cash, cheques and
other items to promptly wire transfer all available funds to a Depository
Account; and (iv) advise all such banks of the Lender's security interest in
such funds. The Borrower and the Guarantors covenant and agree to provide the
Lender with prior written notice of any and all deposit or disbursement accounts
opened or to be opened subsequent to the Closing Date by any one or more of the
Borrower or the Guarantors. All amounts received by the Lender in payment of
Accounts will be credited to the Revolving Loan Account when the Lender is
advised by its bank of its receipt of "collected funds" at the Depository
Account in Toronto, Ontario on the Business Day of such advise if advised no
later than 10:00 A.M. Toronto time or on the next succeeding Business Day if so
advised after 10:00 A.M. Toronto time. No cheques, drafts or other instrument
received by the Lender shall constitute final payment to the Lender unless and
until such instruments have actually been collected. The Borrower shall
establish and maintain, in its name and at its expense, deposit accounts with
The Toronto-Dominion Bank (the "BLOCKED ACCOUNTS") into which the Borrower and
the Guarantors shall thereafter promptly cause to be deposited into such Blocked
Accounts, all Trade Receivables received by the Borrower and the Guarantors,

<PAGE>

                                     - 27 -

including all amounts payable to the Borrower from credit card issuers and
credit card processors, all insurance proceeds and all proceeds from the sale of
Collateral, except for amounts comprising or relating to Excluded Assets, and
other Assets of the Borrower which are not Collateral and upon the occurrence of
a Default or an Event of Default which is continuing, in addition to the above
and subject to the above exclusion with respect of Excluded Amounts, all amounts
on deposit in deposit accounts used by the Borrower, except for the term
deposits held by The Toronto-Dominion Bank as cash collateral in respect of
outstanding letters of credit, payroll, services and foreign exchange contracts.
The Toronto-Dominion Bank shall enter into an agreement, in form and substance
satisfactory to the Lender (the "BLOCKED ACCOUNTS AGREEMENT"), providing that
all cash, cheques and items received or deposited in the Blocked Accounts are
the property of the Lender, that the depository bank has no lien, security
interest or other Encumbrance in or claim upon, or right of set-off against, the
Blocked Accounts and any cash, cheques, items, wires or other funds from time to
time on deposit therein, except as otherwise provided in the Blocked Accounts
Agreement, and that automatically, on a daily basis, the depository bank will
wire, or otherwise transfer, in immediately available funds, all funds received
or deposited into the Blocked Accounts to such Depository Account as the Lender
may from time to time designate for such purpose. The Lender may instruct the
depository banks at which the Blocked Accounts are maintained to transfer all
funds received or deposited into the Blocked Accounts to the Depository Account
at any time. The Borrower and the Guarantors hereby confirm and agree that all
amounts deposited in such Blocked Accounts and any other funds received and
collected by the Lender, except for amounts comprising Excluded Assets, whether
as proceeds of Collateral or otherwise, shall be the property of the Lender. For
greater certainty, the same arrangements shall be made in respect of the
corresponding accounts of each Guarantor.

3.5 The Borrower and each Guarantor covenants and agrees to notify the Lender:
(a) of any matters materially adversely affecting the value, enforceability or
collectability of any Account and of all customer disputes, offsets, defences,
counterclaims, returns, rejections and all reclaimed or repossessed merchandise
or goods, of any adverse effect in the value of their Inventory in such detail
as the Lender may reasonably require from time to time, and
(b) promptly of any such matters which are material, as a whole, to the
Collateral. The Borrower and each Guarantor agree to issue credit memoranda
promptly with duplicates to the Lender upon its reasonable request, after the
occurrence of a Default or an Event of Default, upon accepting returns or
granting allowances.

3.6 The Lender shall maintain a Revolving Loan Account on its books in which the
Borrower will be charged with all loans and advances made by the Lender to it or
for its account, and with any other Obligations, including any and all costs,
expenses and reasonable legal fees which the Lender may incur in connection with
the exercise of any of the rights or powers herein conferred upon the Lender, or
in the prosecution or defence of any action or proceeding to enforce or protect
any rights of the Lender in connection with this Financing Agreement, the other
Loan Documents or the Collateral and the Guarantor Collateral, or any
Obligations owing by the Borrower. The Borrower will be credited with all
amounts received by the Lender from the Borrower or from others for the
Borrower's account, including as above set forth, all amounts received by the
Lender in payment of Accounts, and such amounts will be applied to payment of
the Obligations as set forth herein. In no event shall prior recourse to any
Accounts or other security granted to or by the Borrower or the Guarantor be a
prerequisite to the Lender's right to demand payment of any Obligation. Further,
it is understood that the Lender shall have

<PAGE>

                                     - 28 -

no obligation whatsoever to perform in any respect the Borrower's contracts or
obligations relating to the Accounts or any other Collateral.

3.7 After the end of each month, the Lender shall promptly send the Borrower a
statement showing the accounting for the charges, loans, advances and other
transactions occurring between the Lender and the Borrower during that month;
provided that any failure by the Lender to send any such statement shall not
affect in any way the Borrower's or the Guarantor's continuing liability in
respect of the obligations. The monthly statements shall constitute an account
stated between the Borrower and the Lender and, absent manifest error, shall be
deemed correct and binding on the Borrower unless the Lender receives a written
statement of the exceptions within thirty (30) days of the receipt of the
monthly statement by the Borrower.

3.8 Upon the request of the Borrower and provided the Borrower is in compliance
with all other terms and conditions under this Financing Agreement, the
Inventory Loan Cap may be increased from $175,000,000 to $200,000,000 for a
maximum period of one hundred and twenty (120) days once per year during each
Fiscal Year of the term of this Financing Agreement, provided further that the
Net Availability Block is maintained at any and all times during such period
(and, if the Borrower has required that the Net Availability Block be reduced
from $40,000,000 to $25,000,000 as contemplated by the definition of
"Availability Reserve", the Borrower shall also maintain the required Fixed
Charge Coverage Ratio of 1.10:1.00 at all time during such period). Upon the
Borrower not being in compliance with all of the terms and conditions of this
Financing Agreement at any time during such one hundred and twenty (120) day
period, the Inventory Loan Cap will thereafter revert back to $175,000,000 but
will not impact the ability to increase the Inventory Loan Cap in subsequent
years.

                                    ARTICLE 4
                              BA EQUIVALENT LOANS

4.1 Upon receipt of a request for an advance given in accordance with this
Financing Agreement and subject to the provisions of this Financing Agreement,
the Lender may make BA Equivalent Loans to the Borrower on a revolving basis up
to a maximum principal amount of $25,000,000 at the BA Equivalent Rate for the
applicable Interest Period within the scope and subject to the limits of the
Revolving Line of Credit from time to time after the Closing Date.

4.2 BA Equivalent Loans may be drawn down by the Borrower at any time and from
time to time in a minimum principal amount of $5,000,000 and amounts in excess
thereof in integral multiples of $1,000,000 for the selected Interest Period
(provided that in no event will a maturity date for a BA Equivalent Loan
("EXPIRY DATE") be a date beyond the then applicable Maturity Date of this
Financing Agreement) and by irrevocable written notice of its request for a BA
Equivalent Loan given to the Lender not later than 11:00 A.M. (Toronto time) two
(2) Business Days prior to the requested drawdown date of the BA Equivalent
Loan. Upon an Event of Default which is continuing, or if the Borrower fails to
give the Lender written notice of its intention to renew any outstanding BA
Equivalent Loan not later than 11:00 A.M. (Toronto time) two (2) Business Days
prior to any applicable Expiry Date, all such outstanding BA Equivalent Loans
shall be converted to Prime Rate Loans on the applicable Expiry Date.

<PAGE>

                                     - 29 -

                                    ARTICLE 5
                               LETTERS OF CREDIT

5.1 In order to assist the Borrower in establishing or opening Letters of Credit
with an Issuing Bank, the Borrower have requested the Lender, to join in the
applications for such Letters of Credit, and/or guarantee payment or performance
of such Letters of Credit and any drafts or acceptances thereunder through the
issuance of the Letter of Credit Guarantees, thereby lending the Lender's credit
to the Borrower and the Lender has agreed, subject to the Letter of Credit
Sub-Line, to do so. These arrangements shall be handled by the Lender subject to
the terms and conditions set forth below.

5.2 Within the Revolving Line of Credit and Net Availability, the Lender shall
assist the Borrower in obtaining Letter(s) of Credit in an aggregate amount not
to exceed the outstanding amount of the Letter of Credit Sub-Line, provided that
(i) no Default or Event of Default exists hereunder, and (ii) such Letter(s) of
Credit shall not have a term that ends subsequent to any applicable Maturity
Date. The Lender's assistance for amounts in excess of the limitation set forth
herein shall at all times and in all respects be in the Lender's sole
discretion. It is understood that the term, form and purpose of each Letter of
Credit and all documentation in connection therewith, and any amendments,
modifications or extensions thereof, must be mutually acceptable to the Lender,
the Issuing Bank and the Borrower. Any and all outstanding Letters of Credit
shall reduce Net Availability.

5.3 The Lender shall have the right, without notice to the Borrower, to charge
the Borrower's Revolving Loan Account with the amount of any and all
indebtedness, liability or obligation of any kind incurred by the Lender under
the Letters of Credit Guarantee at the earlier of (a) payment by the Lender
under the Letters of Credit Guarantee, or (b) the occurrence of Default or an
Event of Default. Any amount charged to the Borrower's Revolving Loan Account
shall be deemed a Revolving Loan hereunder and shall incur interest at the rate
applicable to Prime Rate Loans.

5.4 The Borrower hereby agrees to indemnify the Lender and their respective
officers, directors, agents, representatives, advisors, employees and affiliates
and holds each of them harmless from and against any and all damages, penalties,
charges, costs, expenses, losses, claims, actions, proceedings, obligations,
demands or liabilities incurred by any of them arising from any transactions or
occurrences relating to Letters of Credit established or opened for the
Borrower's account, the collateral relating thereto and any drafts or
acceptances thereunder, and all obligations thereunder, including any such loss,
claim, damages, penalties, costs, expenses, actions, proceedings, obligations,
demands or liabilities due to any errors, omissions, negligence, misconduct or
action taken by any Issuing Bank, other than for any such loss, claim or
liability arising out of the gross negligence or wilful misconduct by any of
them under the Letters of Credit. This indemnity shall be severable from and
shall survive termination of this Financing Agreement. The Borrower agrees that
any charges, disbursements, costs and expenses incurred by the Lender for the
Borrower's account by the Issuing Bank shall be conclusive and may be charged to
the Borrower's Revolving Loan Account.

5.5 The Borrower agrees that, absent gross negligence or wilful misconduct, any
action taken by the Lender, if taken in good faith, or any action taken by any
Issuing Bank, under or in connection with Letters of Credit or the Letter of
Credit Guarantees, shall be binding on the Borrower and shall not result in any
liability whatsoever of the Lender to the Borrower. In

<PAGE>

                                     - 30 -

furtherance thereof, the Lender shall have the full right and authority to: (a)
clear and resolve any questions of non-compliance of documents; (b) give any
instructions as to acceptance or rejection of any documents or goods; (c)
execute any and all steamship or airways guarantees (and applications therefor),
indemnities or delivery orders; (d) grant any extensions of the maturity of,
time of payment for, or time of presentation of, any drafts, acceptances, or
documents; and (e) agree to any amendments, renewals, extensions, modifications,
changes or cancellations of any of the terms or conditions of any of the
applications, Letters of Credit, drafts or acceptances; all in the Lender's sole
name. The Issuing Bank shall be entitled to comply with and honour any and all
such documents or instruments executed by or received solely from the Lender,
all without any notice to or any consent from the Borrower. Notwithstanding any
prior course of conduct or dealing with respect to the foregoing, including
amendments and non-compliance with documents and/or the Borrower's instructions
with respect thereto, the Lender may exercise its rights hereunder in its sole
and reasonable judgment. In addition, without the Lender's express consent and
endorsement in writing, the Borrower agree: (a) not to execute any and all
applications for steamship or airway guarantees, indemnities or delivery orders;
to grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances or documents; or to agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letters of Credit, drafts
or acceptances; and (b) after the occurrence of a Default or an Event of Default
which is not cured within any applicable grace period, if any, or waived by the
Lender, not to (i) clear and resolve any questions of non-compliance of
documents, or (ii) give any instructions as to acceptances or rejection of any
documents or goods.

5.6 The Borrower agree that: (a) any necessary import, export or other licenses
or certificates for the import or handling of the goods will have been promptly
procured; (b) all foreign and domestic Laws in regard to the shipment and
importation of the goods, or the financing thereof will have been promptly and
fully complied with; and (c) any certificates in that regard that the Lender may
at any time request will be promptly furnished. In connection herewith, the
Borrower represents and warrants that all shipments made under any such Letters
of Credit are in accordance with the Laws of the jurisdictions in which the
shipments originate and terminate, and are not prohibited by any such Laws. The
Borrower assumes all risk, liability and responsibility for, and agrees to pay
and discharge, all present and future local, state, provincial, federal or
foreign Taxes, duties, or levies. Any embargo, restriction, laws, customs, rules
or regulations of any Governmental Entity, where the goods are or may be
located, or wherein payments are to be made, or wherein drafts may be drawn,
negotiated, accepted, or paid, shall be solely the Borrower's risk, liability
and responsibility.

5.7 Any letter of credit issued with the assistance of the Lender pursuant to
the Pre-Filing Financing Agreement and which remains outstanding on the Closing
Date shall be deemed, from and after the Closing Date, to have been issued with
the assistance of the Lender pursuant to this Financing Agreement.

                                    ARTICLE 6
                                   COLLATERAL

6.1 As security for the prompt payment in full and performance of, all of the
Obligations, (i) the Borrower will grant to the Lender, a continuing general
collateral lien upon, and security interest in, the Collateral pursuant to a
security agreement in form and substance

<PAGE>

                                     - 31 -

acceptable to the Lender, (ii) each Guarantor will execute and deliver to and in
favour of the Lender an unlimited guarantee of the Obligations of the Borrower
to the Lender, (iii) each Guarantor will grant to the Lender, a continuing
general collateral lien upon, and security interest in, the Guarantor Collateral
pursuant to a security agreement in form and substance acceptable to the Lender,
(iv) each of the Borrower and Guarantors will execute and deliver to and in
favour of the Lender, assignments of insurance and directions to pay in
connection with the insurance requirements set out in Section 7.5 of this
Financing Agreement, including concerning the Policies, in form and substance
acceptable to the Lender, and (v) any other guarantees and security the Lender
may require from the Borrower or the Guarantors relating to Accounts, Inventory,
Other Collateral and Policies, the Collateral and the Guarantor Collateral, as
applicable, from time to time, at its sole discretion (all of which are
hereinafter collectively referred to as the "Security Agreements").

6.2 The security interests granted under the Security Agreements shall extend
and attach to the Collateral and the Guarantor's Collateral, as applicable, upon
the execution thereof.

6.3 The Borrower and the Guarantors covenant and agree to safeguard, protect and
hold all Inventory for the Lender's account and make no disposition thereof
except in the ordinary course of its business or, if out of the ordinary course
of its business, upon the prior written notice to the Lender. Upon a Default or
an Event of Default, the Lender may exercise, in the Borrower's name, the rights
of an unpaid seller, including stoppage in transit, replevin, rescission and
reclamation. Upon a Default or an Event of Default which is continuing and the
request of the Lender, the Borrower and the Guarantors hereby agree to
immediately forward any and all proceeds of Collateral or the Guarantor
Collateral to the Depository Account, and to hold any such proceeds (including
any notes and instruments), in trust for the Lender pending delivery to the
Lender. The Borrower and the Guarantors agree to use their best efforts to
obtain and deliver to the Lender, within 30 days after the Closing Date, a duly
executed Access Agreement from each landlord of each premises leased by the
Borrower or a Guarantor and at which Collateral or Guarantor's Collateral is
located, and to provide to the Lender a weekly status update on any Access
Agreement which is not delivered to the Lender within 30 days after the Closing
Date.

6.4 The rights and security interests granted to the Lender under any Security
Agreements are to continue in full force and effect, notwithstanding the
termination of this Financing Agreement or the fact that the Revolving Loan
Account may from time to time be temporarily in a credit position, until the
final indefeasible payment in full to the Lender and performance of all
Obligations and the termination of this Financing Agreement. Any delay or
omission by the Lender to exercise any right hereunder shall not be deemed a
waiver thereof, or be deemed a waiver of any other right, unless such waiver
shall be in writing and signed by the Lender. A waiver on any one occasion shall
not be construed as a bar to, or waiver of, any right or remedy on any future
occasion.

6.5 Notwithstanding the Lender's security interests and to the extent that the
Obligations are now or hereafter secured by any Assets other than the Collateral
or by the guarantee, endorsement, assets or property of any other Person, the
Lender shall have the right in its sole discretion to determine which rights,
liens, security interests or remedies the Lender shall at any time pursue,
foreclose upon, relinquish, subordinate, modify or take any other action with

<PAGE>

                                     - 32 -

respect to, without in any way modifying or affecting any of them, or any of the
Lender's rights hereunder.

6.6 Any balances to the credit of the Borrower and any Collateral or the
Guarantor Collateral in the possession or control of the Lender may be held by
the Lender as security for any Obligations and applied in whole or partial
satisfaction of such Obligations when due as it sees fit. The liens and security
interests granted in the Security Agreements, and any other lien or security
interest the Lender may have, shall secure payment and performance of all now
existing and future Obligations (or, in the case of the Guarantor, the
Guarantors' obligations in respect thereof). The Lender may, in its discretion,
charge any or all of the Obligations to the Revolving Loan Account when due.

                                    ARTICLE 7
                   REPRESENTATIONS, WARRANTIES AND COVENANTS

7.1 To induce the Lender to enter into this Financing Agreement and to make
Accommodations available to the Borrower, each of the Borrower and Guarantors
hereby jointly and severally represents and warrants to the Lender, and
acknowledges that the Lender is relying on such representations and warranties
in entering into this Financing Agreement, that:

      (a)   the Borrower and each Guarantor is a corporation duly incorporated,
            organized and validly subsisting under the federal laws of Canada,
            and each of the Borrower and Guarantors has full power and capacity
            to own its Assets and to carry on its business as conducted and is
            duly qualified, registered and in good standing in every
            jurisdiction in which the Borrower or applicable Guarantor has
            Assets, an office or otherwise conducts or operates its business and
            the Guarantors and WFP Quatsino Navigation Limited are all of the
            Subsidiaries of the Borrower and WFP Quatsino Navigation Limited has
            one employee and no Assets;

      (b)   the Borrower and each Guarantor has obtained all Forest Tenures,
            Licences and other Authorizations required to operate its business,
            and except as disclosed in writing by them to the Lender from time
            to time, they are not in default and have not received any Order or
            notice of any Claim or default with respect to any such Forest
            Tenures, Licences and other Authorizations, where such default or
            claim would have a Material Adverse Effect;

      (c)   the Borrower and each Guarantor has full power and authority and
            full legal right to enter into and perform its obligations under the
            Loan Documents and to obtain Accommodations hereunder and has taken
            all action necessary to be taken by it to authorize such acts;

      (d)   each Loan Document and all agreements and undertakings of the
            Borrower and Guarantors to which they are a party, are legal, valid
            and binding obligations enforceable against each of them in
            accordance with their respective terms, subject only to any
            applicable bankruptcy, insolvency, winding-up, reorganization,
            arrangement, moratorium or other laws or equitable remedies
            affecting creditors' rights generally;

<PAGE>

                                     - 33 -

      (e)   the consummation of the transactions herein contemplated, and the
            compliance with the terms, conditions and provisions of the Loan
            Documents will not conflict with, contravene or result in a breach
            of, or constitute a default under, any of the terms, conditions or
            provisions of the constating documents of the Borrower or Guarantors
            or any indenture, instrument, document, mortgage, agreement or
            undertaking, including the Bond Indenture, any collective bargaining
            agreement, or any Material Agreement to which they are a party or by
            which they are bound, or any Laws or Authorizations, or result in
            the creation or imposition of any Encumbrance (other than pursuant
            to the Security Agreements) upon any of their Assets;

      (f)   the Borrower and each Guarantor is in compliance with all applicable
            Laws, including all Environmental Laws, Authorizations and Material
            Agreements, the Bond Indenture and any collective bargaining
            agreements and mortgages relating to any of their real property
            except where non-compliance would not have a Material Adverse
            Effect. No Default or Event of Default has occurred and is
            continuing;

      (g)   the Borrower's and the Guarantors' books and records are true,
            complete and accurate in all material respects and all financial
            statements delivered to the Lender fairly present the consolidated
            financial position of the Borrower and the Guarantors as at the date
            thereof and the consolidated results of the operations of the
            Borrower and the Guarantors for the period referred to therein, and,
            except as noted therein, have been prepared by the Borrower and its
            auditors in accordance with GAAP;

      (h)   the Borrower and each Guarantor:

                  (i)   is in compliance with all legally binding Orders to
                        which it is subject, if any, relating to any Laws or
                        Environmental Laws, except where the non-compliance
                        thereof would not have a Material Adverse Effect; and

                  (ii)  except as disclosed in writing to the Lender from time
                        to time, is not the subject of any existing or, to the
                        knowledge of the Borrower or the applicable Guarantor,
                        threatened actions, suits, proceedings, investigations
                        or Orders relating to Environmental Laws, Laws or
                        otherwise against the Borrower, the applicable
                        Guarantor, the Collateral or the Guarantor Collateral,
                        which if adversely determined, would have a Material
                        Adverse Effect.

      (i)   the Borrower and each Guarantor has good and marketable title to and
            legal and beneficial ownership of all of its Assets, the Collateral
            and Guarantor Collateral, as applicable, free and clear of any
            Encumbrances, other than Permitted Encumbrances;

      (j)   no Person has any written or oral agreement, option, understanding
            or commitment, or any right or privilege capable of becoming such
            for the purchase from the Borrower or any Guarantor of any of the
            Collateral and Guarantor Collateral, as applicable, other than in
            the ordinary course of its business;

<PAGE>

                                     - 34 -

      (k)   each Trade Receivable is based on an actual and bona fide sale and
            delivery of Inventory or rendition of services by the Borrower and
            the Guarantors to their customers in the ordinary course of their
            business and to the best of the Borrower's and the Guarantors'
            knowledge, are not subject to any present, future or contingent
            defence, offset, counterclaim, dispute or other dilutive factor
            which has not been disclosed to the Lender and for which an
            appropriate reserve has not been made by the Lender;

      (l)   all the work and services performed and goods supplied under any
            contract or agreement (oral or written) giving rise to any Accounts
            have been fully performed or supplied to acceptable standards as
            required by Law and by the terms (whether express or implied) of any
            such contract or agreement in respect thereof and to the
            satisfaction of the applicable customer of the Borrower and the
            applicable Guarantor and the work and services performed and goods
            supplied have been accepted by such customer, and where goods have
            been supplied, legal and proper delivery has been made and accepted
            by such customer;

      (m)   at the time of issuance of each invoice, the amount payable by any
            customer of the Borrower or any Guarantor is not less than the face
            value of such invoice and such Accounts are due and payable not
            later than the date specified on such invoice, all as recorded in
            their respective books and records;

      (n)   as of the date hereof, Schedules 1, 2 and 3 hereto correctly and
            completely set forth, for each of the Borrower and each Guarantor,
            its: (A) chief executive office, (B) Collateral and Guarantor
            Collateral locations, (C) predecessor names, (D) tradenames, (E)
            subsidiaries and affiliates (all as defined in the Canada Business
            Corporations Act), (F) deposit and disbursement bank accounts, (G)
            tenures, licences, permits, leases and other Authorizations, (H)
            Material Agreements, and (I) other information listed on said
            Schedules;

      (o)   except for the Permitted Encumbrances, after filing of financing
            statements or other similar registrations in the applicable public
            office at the locations set forth in Schedule 1, the Security
            Agreements, in the jurisdictions of such locations set forth in
            Schedule 1, create a valid, perfected and first priority security
            interest in the Collateral and the Guarantor Collateral, as
            applicable, in the jurisdictions of such locations set forth in
            Schedule 1, subject to Permitted Encumbrances; the security
            interests granted constitute and shall at all times, subject to
            Permitted Encumbrances, constitute a first priority lien on, and
            security interest in, the Collateral and the Guarantor Collateral,
            as applicable, in the jurisdictions of such locations set forth in
            Schedule 1, and the Collateral and the Guarantor Collateral are not
            subject to any Encumbrance in favour of any Person (other than the
            Lender);

      (p)   except for the Permitted Encumbrances, the Borrower and each
            Guarantor is, or will be, at the time additional Collateral or
            Guarantor Collateral, as applicable, is acquired by it, the absolute
            owner of the Collateral or Guarantor Collateral, as applicable, with
            full right to pledge, sell, assign, transfer and create a security
            interest therein, free and clear of any and all Encumbrances in
            favour of others;

<PAGE>

                                     - 35 -

      (q)   the Borrower and each Guarantor will, at its expense, forever
            warrant and, at the Lender's request, defend the Collateral and the
            Guarantor Collateral from any and all Claims of any other Person
            other than a holder of a Permitted Encumbrance;

      (r)   all statements, information, reports, listings, schedules and
            certificates made or given to the Lender by all officers, directors
            and authorized representatives of the Borrower and the Guarantors
            are true, complete and accurate in all material respects;

      (s)   no Person other than IBM Canada Ltd., J.D. Edwards World Solutions
            Company, Telus Enterprise Solutions Inc., Software Business Systems
            Inc. and Group West Systems Ltd. is supplying the Borrower and the
            Guarantor, nor has an Encumbrance on, any computer hardware,
            software or systems of the Borrower or the Guarantor;

      (t)   the Borrower and each Guarantor possess all General Intangibles and
            rights thereto necessary to conduct their business as conducted as
            of the Closing Date;

      (u)   the Borrower and the Guarantors have not withheld from or failed to
            disclose to the Lender, any matter or thing whatsoever which could
            reasonably be expected to be material to the Lender, including any
            proceedings commenced under the Woodworker Lien Act (British
            Columbia) or by any First Nations groups against any of their
            respective Assets.

Each of the representations and warranties contained in Section 7.1 shall
survive the execution and delivery of this Financing Agreement and be deemed to
be repeated by the Borrower and the Guarantors at the time and date of each
Accommodation notwithstanding any investigation made at any time by or on behalf
of the Lender.

7.2 The Borrower and Guarantors covenant and agree to maintain books and records
pertaining to the Collateral, the Guarantor Collateral and their Assets, as
applicable, in accordance with GAAP. The Borrower and Guarantors covenant and
agree that the Lender or its representatives may following a request on not less
than one (1) Business Day notice, enter upon their respective premises, and any
other premises where the Collateral and the Guarantor Collateral, as applicable,
may be located, at any time during normal business hours for the purpose of
inspecting the Collateral and the Guarantors Collateral, as applicable, and any
and all records pertaining thereto. The Borrower and Guarantors covenant and
agree to provide the Lender with, as soon as practicable, prior written notice
of any change in the location of any Collateral and the Guarantor Collateral, as
applicable, or its chief executive office, other than to locations, that as of
the Closing Date, are known to the Lender and at which the Lender has filed
financing statements and otherwise fully perfected its liens and security
interests thereon. The Borrower and Guarantors also hereby consent to the Lender
contacting any and all third parties the Lender may reasonably require from time
to time, including the Ministry of Forests, the Ministry of Water, Air and Land
Protection, the Ministry of Sustainable Resource Management, Canada Customs and
Revenue Agency and other Governmental Entities concerning social services tax,
corporation capital tax, logging tax, workers compensation, employment
standards, the Forest Act, the Forest Practices Code, the Logging Act and the
Waste Management Act, for purposes of verifying the state of the Collateral, the
Guarantor Collateral, their respective businesses, Authorizations and Tax
position, and the Borrower and each Guarantor covenants

<PAGE>

                                     - 36 -

and agrees to execute and deliver any authorization and consent requested by the
Lender in respect thereof.

7.3 The Borrower and the Guarantors covenant and agree to execute and deliver to
the Lender, from time to time, solely for the Lender's purpose of monitoring the
Collateral and the Guarantor Collateral, such written statements, reports and
schedules as the Lender and the Borrower may reasonably agree upon, designating,
quantifying, qualifying, identifying or describing the Collateral and the
Guarantor Collateral to the extent possible in the Borrower's standard form as
approved by the Lender, acting reasonably. Their failure, however, to promptly
give the Lender such statements, reports or schedules shall not in any way be
deemed to affect, diminish, modify or otherwise limit the Lender's security
interests in, or liens on, the Collateral or the Guarantor Collateral.

7.4 The Borrower and the Guarantors covenant and agree to comply with the
requirements of all applicable Laws in order to grant to the Lender a valid and
perfected first security interest and lien in the Collateral and the Guarantor
Collateral, subject only to the Permitted Encumbrances. The Lender is hereby
authorized by the Borrower and each Guarantor to file (including pursuant to the
applicable terms of the PPSA or similar statutes in other applicable
jurisdictions) from time to time any financing statements, continuations or
amendments covering the Collateral and the Guarantor Collateral, whether or not
the Borrower's or the Guarantors' signatures appear thereon. The Borrower and
the Guarantors hereby consent to and ratify any and all execution and/or filing
of financing statements on or prior to the Closing Date by the Lender. The
Borrower and the Guarantors covenant and agree to do whatever the Lender may
reasonably request, from time to time, by way of: (a) filing notices of
Encumbrances, financing statements, amendments, renewals and continuations
thereof; (b) cooperating with the Lender's agents, representatives, advisors and
employees; (c) keeping records of the Collateral and the Guarantor Collateral;
(d) transferring proceeds of the Collateral and the Guarantor Collateral to the
Lender's possession upon a Default or an Event of Default; and (e) performing
such further acts as the Lender may reasonably require in order to effect the
purposes of this Financing Agreement.

7.5 The Borrower and the Guarantors hereby covenant and agree to maintain
comprehensive/umbrella, property and casualty insurance and business
interruption insurance on the Collateral and Guarantor Collateral, as
applicable, and their respective businesses under such policies of insurance,
with such insurance companies, in such reasonable amounts and covering such
insurable risks as are at all times reasonably satisfactory to the Lender. All
policies covering the Assets are, subject to the rights of any holders of claims
against the Excluded Collateral, to be made payable to the Lender, in case of
loss, under a standard non-contributory "mortgagee", "lender" or "secured party"
clause and are to contain such other provisions as the Lender may require to
fully protect the Lender its interest in the Collateral and the Guarantor
Collateral and to any payments to be made under such policies. Copies of the
policies are to be delivered to the Lender, with the loss payable endorsement in
the Lender's favour and shall provide for not less than fifteen (15) days prior
written notice to the Lender of any material supplement, addition or amendment
or of any renewal, expiration, termination or cancellation. At the Borrower's or
a Guarantor's request, or if the Borrower or a Guarantor fail to maintain such
insurance, the Lender may arrange for such insurance, but at the Borrower's
expense and without any responsibility on the Lender's part for: (i) obtaining
the insurance; (ii) the solvency of the insurance companies; (iii) the adequacy
of the coverage; or (iv) the collection of claims

<PAGE>

                                     - 37 -

thereunder. Upon the occurrence of a Default or an Event of Default, the Lender
shall, subject to the rights of any holders holding claims against the Excluded
Assets, have the sole right, and at its option, in the name of the Lender or the
Borrower and the Guarantors, as the case may be, to file claims under any such
insurance policies relating to the Collateral or the Guarantor Collateral, to
receive, receipt and give acquittance for any payments that may be payable
thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to effect
the collection, compromise or settlement of any such claims under any such
insurance policies. In the event of any loss or damage by fire or other
casualty, insurance proceeds relating to Inventory shall be applied to reduce
the Borrower's Revolving Loan. The insurance acquired by the Lender may, but
need not, protect the Borrower's interest in the Collateral or the Guarantors'
interest in the Guarantor Collateral and therefore such insurance may not pay
claims which the Borrower or the Guarantors may have with respect to the
Collateral or the Guarantor Collateral or pay any claim which may be made
against the Borrower or the Guarantors in connection with the Collateral or the
Guarantor Collateral. In the event the Lender purchases, obtains or acquires
insurance covering all or any portion of the Collateral or the Guarantor
Collateral, the Borrower covenants and agrees to be responsible for all of the
applicable costs of such insurance, including premiums, interest (subject to the
right to charge the Default Rate of Interest hereunder, at the applicable
interest rate for Revolving Loans), fees and any other charges with respect
thereto, until the effective date of the cancellation or the expiration of such
insurance. The Lender may charge all of such premiums, fees, costs, interest and
other charges to the Borrower's Revolving Loan Account. The Borrower and the
Guarantors hereby acknowledge that the costs of the premiums of any insurance
acquired by the Lender may exceed the costs of insurance which the Borrower and
the Guarantor may be able to purchase on its own. In the event that the Lender
purchases such insurance, the Lender will notify the Borrower of said purchase
within thirty (30) days of the date of such purchase. If, within thirty (30)
days after the receipt of such notice, the Borrower provides the Lender with
proof that the Borrower or the Guarantors had the insurance coverage required
pursuant to this Section 7.5(in form and substance satisfactory to the Lender)
as of the date on which the Lender purchased insurance and the Borrower or the
Guarantors continued at all times to have such insurance, then the Lender agrees
to cancel the insurance purchased by the Lender.

7.6 The Borrower and the Guarantors covenant and agree to pay, when due, all
Taxes, any and all rental, stumpage, scaling, permit fees and expenses,
royalties and other amounts payable to the Crown under the Forest Act (British
Columbia) and the Forest Practices Code (British Columbia) or otherwise
("ROYALTIES") and all other amounts, the non payment of which may result in an
Encumbrance in priority to the Lender ("PRIORITY PAYABLES"), including any and
all amounts owing or accruing due under the Workers Compensation Act (British
Columbia), Employment Standards Act (British Columbia), the Woodworker Lien Act
(British Columbia) and the Social Services Tax Act (British Columbia), pension
benefit payments required to be contributed or funded by them, sales and excise
taxes and duties, assessments, claims and other charges lawfully levied or
assessed upon the Borrower and the Guarantors, unless such Taxes, Royalties or
Priority Payables are being diligently contested in good faith by the Borrower
or the Guarantor by appropriate proceedings sufficient to prevent any
enforcement with respect to same and adequate reserves are established in
accordance with GAAP. Notwithstanding the foregoing, if any garnishment shall be
issued or any Encumbrance shall be filed or claimed thereunder (a) for Taxes,
Royalties or Priority Payables due any Governmental Entity, or (b) which in the
Lender's opinion might create a valid obligation having priority over the
Lender's security over
<PAGE>

                                     - 38 -

the Collateral or the Guarantor Collateral, such Encumbrance or claim shall not
be deemed to be a Permitted Encumbrance hereunder and the Borrower or the
Guarantors shall immediately pay such Taxes, Royalties or Priority Payables and
discharge the Encumbrance or garnishment unless such amount is being diligently
contested in good faith by appropriate proceedings sufficient to prevent any
enforcement with respect to same and adequate reserves are established in
accordance with GAAP. If the Borrower or the Guarantors fail to do so promptly,
then at the Lender's election, the Lender may (i) create an Availability Reserve
in such amount as it may deem appropriate in its sole business judgment, or (ii)
upon the occurrence of a Default or Event of Default, imminent risk of seizure
or garnishment, filing of any priority Encumbrance, claim, forfeiture, or sale
of the Collateral or the Guarantor Collateral, pay any such amounts on the
Borrower's or the Guarantors' behalf, and the amount thereof shall be an
Obligation secured hereby and due on demand.

7.7 The Borrower and Guarantors: (a) covenant and agree to comply with all Laws,
including all Environmental Laws which the failure to comply with could have a
Material Adverse Effect, provided that the Borrower or any Guarantor may contest
any acts, rules, regulations, orders and directions of any Governmental Entity
in any reasonable manner which will not, in the Lender's opinion, materially and
adversely affect the Lender's priority in the Collateral or the Guarantor
Collateral as determined by the Lender in its sole discretion; (b) covenant and
agree to maintain and comply with any and all Authorizations required for the
Borrower and the Guarantors to operate their business, including the Forest
Tenures, Licences and any annual timber cutting rights, and any and all Laws as
presently existing or as adopted or amended in the future, applicable to the
Collateral or the Guarantor Collateral, the ownership and/or use of any of their
real property and the operation of their business, which the failure to comply
with would have a Material Adverse Effect; and (c) shall not be deemed to have
breached any provision of this Section 7.7 if, (i) the failure to comply with
the requirements of this Section 7.7 resulted from good faith error or innocent
omission, (ii) the Borrower promptly commences and diligently pursues a cure of
such breach, and (iii) such failure is cured within twenty (20) days following
the Borrower's or the Guarantor's knowledge or receipt of notice (whichever is
earlier) of such failure, or if such failure cannot in good faith be cured
within twenty (20) days, such breach is cured within a reasonable time frame
based upon the extent and nature of the breach and the necessary remediation,
and in conformity with any applicable consent order, consensual agreement and
applicable Law and with the consent of the Lender, not to be unreasonably
withheld.

7.8 Until termination of this Financing Agreement and indefeasible payment and
satisfaction of all Obligations due hereunder, the Borrower and the Guarantors
covenant and agree that, unless the Lender shall have otherwise consented in
writing, in addition to the reports and information set forth in Section 3.2 of
this Financing Agreement, the Borrower will furnish to the Lender: (a) within
ninety (90) days after the end of each Fiscal Year of the Borrower, an audited
Consolidated Balance Sheet and all related consolidating work papers, as at the
close of such year, and statements of profit and loss, cash flow and
reconciliation of surplus of the Borrower for such year, audited by independent
chartered accountants; (b) within sixty (60) days after the end of each Fiscal
Quarter (except in respect of the last Fiscal Quarter of a Fiscal Year, which
shall be delivered within ninety (90) days after the end of such Fiscal Quarter)
a Consolidated Balance Sheet as at the end of such period and statements of
profit and loss, cash flow and surplus of the Borrower, certified by an
authorized financial or accounting officer of the Borrower, and if the Net
Availability Reserve has been reduced from $40,000,000 to

<PAGE>

                                     - 39 -

$25,000,000 as contemplated in the definition of "Net Availability Reserve", a
certificate of an authorized financial or accounting officer of the Borrower
confirming the Fixed Charge Coverage Ratio for the Rolling Period ended on the
last day of such Fiscal Quarter; (c) within thirty (30) days after the end of
each month a Consolidated Balance Sheet as at the end of such period and
statements of profit and loss, cash flow and surplus of the Borrower for such
period, certified by an authorized financial or accounting officer of the
Borrower; (d) copies of all reports provided to the Bond Trustee pursuant to
Section 10.17 of the Bond Indenture, at the same time such reports are provided
to the Bond Trustee, and (e) from time to time, such further information
regarding the business affairs and financial condition of the Borrower and the
Guarantors as the Lender may reasonably request, including, (i) the accountant's
management practice letter, (ii) annual cash flow projections in the Borrower's
standard form as approved by the Lender, acting reasonably; (iii) copies of any
and all annual compliance opinions given by the Borrower's counsel to the
trustee under the Bond Indenture, (iv) any and all material reports, notices or
communications with the Ministry of Forests concerning its annual timber cutting
rights, the Forest Tenures, the Licences and other Authorizations required to
operate its business, and (v) any and all material reports, notices or
communications with any First Nations group or its representatives regarding
land claims or compensation therefor. The Borrower and the Guarantors covenant
and agree to authorize and direct the Ministry of Forests to provide the Lender
with all Ministry of Forests accounts receivable weekly aged balance printouts
for each of the Borrower and the Guarantors (for the purposes of the Lender
monitoring whether there are any arrears that could be secured by an
Encumbrance) at the frequency which the Lender may determine in its sole
discretion from time to time and in any event at least semi-monthly and more
frequently in the Lender's sole discretion upon a Default or an Event of Default
which is continuing. Each financial statement which the Borrower is required to
submit hereunder must be accompanied by an officer's certificate, signed by a
designated authorized signing officer of the Borrower, pursuant to which such
officer must certify that: (x) the financial statement(s) fairly and accurately
represent(s) the Borrower's and the Guarantors' financial condition at the end
of the particular accounting period, as well as the Borrower's and the
Guarantors' operating results during such accounting period, subject to year-end
audit adjustments; (y) during the particular accounting period: (A) there has
been no Default or Event of Default under this Financing Agreement, provided
however, that if any such officer has knowledge that any Default or Event of
Default has occurred during such period, the existence of and a detailed
description of same shall be set forth in such officer's certificate; (B) the
Borrower and the Guarantors have not received any notice of cancellation with
respect to any of its insurance policies, including the Policies, which it is
required to maintain or is contemplated pursuant hereto; and (C) the Borrower
and the Guarantors have not received any notice that could result in a Material
Adverse Effect, including from any Person under the Woodworker Lien Act (British
Columbia) or from any Governmental Entity concerning duties, Taxes, Royalties,
Priority Payables, cutting rights, the Forest Tenures, the Licences or other
Authorizations required to operate their business; and (Z) they are current with
respect to any and all pension benefit obligations, Taxes, Royalties and
Priority Payables (unless such amounts are being diligently contested in good
faith by appropriate proceedings sufficient to prevent any enforcement with
respect to same, adequate reserves have been established in accordance with GAAP
and such matters, in sufficient detail, are set forth in such Officers'
certificate); substantially in the form attached hereto as Exhibit B.

7.9 Until termination of the Financing Agreement and indefeasible payment and
satisfaction of all Obligations hereunder, the Borrower and the Guarantors
covenant and agree

<PAGE>

                                     - 40 -

that, without the prior written consent of the Lender, except as otherwise
herein provided, the Borrower and the Guarantors will not:

      (a)   mortgage, assign, pledge or otherwise permit any Encumbrance or
            judgment, to exist on or claim to become enforceable against any of
            the property or assets of the Borrower or a Guarantor, except for
            Permitted Encumbrances;

      (b)   sell, assign, transfer, lease, rent, factor or otherwise dispose of
            any of the Collateral or the Guarantor Collateral other than in the
            ordinary course of business and on terms and conditions satisfactory
            to the Lender in its absolute and sole discretion;

      (c)   except for the transactions contemplated by the Plan of Arrangement,
            enter into any amalgamation, consolidation, reorganization, merger,
            continuance into another jurisdiction, restructuring or plan of
            arrangement resulting in a reorganization of share capital or file
            for a stay of proceedings under the Companies' Creditors
            Arrangements Act (Canada) or the Bankruptcy and Insolvency Act
            (Canada) staying the rights and remedies of the Lender;

      (d)   cease to be engaged primarily in the forest products business;

      (e)   move any Inventory forming part of the Collateral or the Guarantor
            Collateral from any location set out from time to time in Schedule 1
            other than in the ordinary course of business. The Borrower and the
            Guarantors shall have the right to remove or add any locations set
            out at any time in Schedule 1, provided that the lender's security
            in the Collateral or the Guarantor Collateral is not, in the sole
            opinion of the Lender, adversely affected and that the Lender may
            not consider such Assets at any such additional location to be
            Eligible Inventory unless, if applicable, appropriate Availability
            Reserves or a landlord waiver, bailee waiver or access agreement to
            the Lender's satisfaction in its absolute and sole discretion has
            been delivered in respect of such location;

      (f)   compromise, adjust or extend the time for payment of any Accounts
            forming part of the Collateral or the Guarantor Collateral or grant
            any discounts, allowances or credits thereon in each case other than
            in the normal course of business consistent with past practice;

      (g)   Pay any management fees, declare any dividends, make any loans or
            repay any indebtedness or other amounts or make any other similar
            payments to their shareholders other than, payment of principal and
            interest when due under the Bond Indenture;

      (h)   make or agree to make any voluntary redemption of Secured Bonds or
            any purchase of Secured Bonds in the open market, whether pursuant
            to Section 11.10 of the Bond Indenture or otherwise, or exercise any
            defeasance right under Article 14 of the Bond Indenture;

<PAGE>

                                     - 41 -

      (i)   permit the Fixed Charge Coverage Ratio to be less than 1.10:1.00 at
            any time after the Net Availability Reserve has been reduced from
            $40,000,000 to $25,000,000 as contemplated in the definition of "Net
            Availability Reserve".

7.10 The Borrower and the Guarantors covenant and agree to: (a) deliver to the
Lender any other documents, statements, certificates, records, appraisals,
notices, communications, printouts, reports and information (including
concerning any of the Policies, environmental reports and the Ministry of
Forests accounts receivable weekly aged balance printouts), the Lender may
reasonably require from time to time; (b) maintain any and all Authorizations
required to operate its business and shall immediately notify the Lender in
writing of any termination, suspension, rescission, amendment, supplement,
cancellation, change or expiration of such Authorizations and of any violation
of any Authorizations, industry standard or Laws which could have a Material
Adverse Effect; (c) fulfil and perform, in the ordinary course of its business,
any and all obligations to its customers which could impact the recoverability
of any Account; (d) forthwith notify the Lender in writing of any matter which
could have a Material Adverse Effect, including any proceeding commenced by any
Person under the Woodworker Lien Act (British Columbia) or any First Nations
group against the Borrower's or Guarantor's Assets or any claim made or
threatened by any Governmental Entity concerning duties relating to the
Borrower's and the Guarantors' business; and (e) forthwith notify the Lender in
writing of any matter which could jeopardize its first secured priority
position, subject to Permitted Encumbrances, over the Collateral and the
Guarantor's Collateral.

7.11 The Borrower and the Guarantors hereby covenant and agree, on a joint and
several basis, to indemnify and hold harmless the Lender and its officers,
directors, employees, agents, representatives, advisors and affiliates (each an
"INDEMNIFIED PARTY") from, and holds each of them harmless from and against, any
and all losses, liabilities, obligations, claims, actions, proceedings, demands,
damages, penalties, costs, fees and expenses (including legal fees) and any
payments made by the Lender pursuant to any indemnity provided by it with
respect to or to which any Indemnified Party could be subject insofar as such
losses, liabilities, obligations, claims, actions, damages, penalties,
disbursements, costs, fees or expenses relate to the Loan Documents, including
those which may arise from or relate to: (a) the Depository Account, the Blocked
Accounts, any depository account of the Borrower and/or the agreements executed
in connection therewith and any indemnity given by the Lender to The Toronto
Dominion Bank in respect of standby letters of credit or otherwise; (b) any and
all claims, costs, expenses or fees asserted against or incurred by the Lender
as a result of the Borrower's or any Guarantor's failure to (i) comply with any
Authorizations required for it to operate its business or any environmental
pollution, hazardous material or environmental clean-up relating to any of its
Collateral or Guarantor' Collateral locations, or (ii) pay any amounts to any
Person who is in possession and/or control of any of the Collateral or the
Guarantor Collateral; (c) or any claim or expense which results from the
Borrower's or any Guarantor's operations and use of any of its Collateral or
Guarantor Collateral locations, which the Lender may sustain or incur, all
whether through the alleged or actual negligence of such person or otherwise,
except and to the extent that the same results solely and directly from the
gross negligence or wilful misconduct of such Indemnified Party as finally
determined by a court of competent jurisdiction. The Borrower and the Guarantors
hereby agree that this indemnity shall be severable from and shall survive any
termination of this Financing Agreement, as well as payments of Obligations
which may be due hereunder. The Lender may, in its sole business judgement,
establish such Availability Reserves with respect thereto as it may deem
advisable under the circumstances and, upon any termination

<PAGE>

                                     - 42 -

hereof, hold such reserves as cash reserves in a cash collateral account as
continuing general collateral security or otherwise for any such contingent
liabilities.

7.12 The Lender shall be entitled to obtain Inventory appraisal reports on an
annual basis, and more frequently as the Lender may require in its reasonable
business judgement, from an appraiser mutually acceptable to the Borrower and
the Lender, at the Borrower's sole cost and expense.

7.13 The Borrower and the Guarantors covenant and agree to provide access to the
Lender and its agents, representatives, appraisers, examiners and employees to
all Collateral and Guarantor Collateral locations in respect of any and all such
appraisals and field examinations and audits.

7.14 The Borrower and the Guarantors covenant and agree to defend the Collateral
and Guarantor Collateral against the claims and demands of all persons.

7.15 The Borrower and the Guarantors covenant and agree not to amend or extend
any payment terms or do any other act or thing where doing so would result in
any Trade Receivable being excluded under coverage under any Policy or affect
the ability to make a claim thereunder.

7.16 The Borrower and the Guarantors covenant and agree not to change any of
their respective legal names without providing the Lender thirty (30) days prior
written notice of their intention to make such change.

7.17 The Borrower and the Guarantors covenant and agree to keep any and all
computer hardware, software and/or systems relating to the Collateral and the
Guarantor Collateral at the Collateral and the Guarantor Collateral locations
unless and until a satisfactory access agreement is executed and delivered to
and in favour of the Lender, in form in substance satisfactory to the Lender,
acting reasonably.

7.18 The Borrower and the Guarantors covenant and agree to maintain any and all
worker's compensation or similar insurance as may be required under the laws of
any jurisdiction in which they operate.

7.19 The Borrower and each Guarantor covenants and agrees to maintain its rights
in, and the value of, its General Intangibles in the ordinary course of its
business, including by making timely payment with respect to any applicable
licensed rights, including any Royalties required to be paid to the Ministry of
Forests, unless failure to do so would not have a Material Adverse Effect,
result in an Encumbrance against any of the Collateral or prevent the Lender
from having unfettered access to the Collateral at all times.

7.20 The Borrower and each Guarantor covenants and agrees to execute and deliver
to and in favour of the Lender any and all data processing services and licenced
hardware and software use and access agreements ("COMPUTER ACCESS AGREEMENTS")
the Lender may reasonably require in connection with this Financing Agreement.

7.21 Each of the Borrower and the Guarantors covenant and agree that the
indebtedness evidenced by the Pulpco Note is hereby subordinated and postponed
to the prior indefeasible payment in full of the Obligations, and any security
interest granted to secure the

<PAGE>

                                     - 43 -

obligations evidenced by the Pulpco Note are hereby subordinated and postponed
to the security interests granted under the Security Agreement. Neither the
Borrower nor any Guarantor will take or permit any action which is inconsistent
with such subordinations and postponements.

                                    ARTICLE 8
                          INTEREST, FEES AND EXPENSES

8.1 Interest on Prime Rate Loans shall be payable monthly, in arrears, to the
Lender as of the end of each month and interest on BA Equivalent Loans shall be
payable to the Lender on the applicable Expiry Date, in arrears, based on a 365
day year and a 366 day year in the case of a leap year. Interest on Prime Rate
Loans shall be an amount equal to the Prime Rate plus three-quarters of one
percent (0.75%) per annum on the balance owing by the Borrower to the Lender in
the Revolving Loan Account for Prime Rate Loans at the close of each day during
such month. In the event of any change in the Prime Rate, the rate hereunder for
Prime Rate Loans shall change, as of the date of such change, so as to remain
three-quarters of one percent (0.75%) above the Prime Rate. The Lender shall be
entitled to charge the Borrower's Revolving Loan Account for any and all fees,
costs and expenses incurred by the Lender and permitted to be charged by the
Lender under this Financing Agreement at the rate provided for herein for Prime
Rate Loans when due until all such Obligations have been indefeasibly paid in
full. Upon and after the occurrence of a Default or an Event of Default which is
continuing and the giving of any required notice by the Lender in accordance
with the provisions hereof, all Obligations shall bear interest at the Default
Rate of Interest.

8.2 In consideration of the Lender's assistance with the issuance of Letters of
Credit, the Borrower shall pay the Lender the Letter of Credit Fee which shall
be an amount equal to two and three-quarters of one percent (2-3/4%) per annum,
payable monthly in advance, on the face amount of each Letter of Credit;
provided that upon and after the occurrence of a Default or an Event of Default
which is continuing and the giving of any required notice by the Lender in
accordance with the provisions hereof, the Letter of Credit Fee shall be an
amount equal to four and three-quarters of one percent (4-3/4%) per annum.

8.3 Any and all charges, fees, commission, costs and expenses charged to the
Lender for the Borrower's account by an Issuing Bank in connection with, or
arising out of, Letters of Credit or out of transactions relating thereto will
be charged to the Revolving Loan Account in full when charged to, or paid by the
Lender, or as may be due upon any termination of this Financing Agreement.

8.4 Upon the last Business Day of each month, commencing on the last Business
Day of the month that this Financing Agreement is executed and delivered, the
Borrower shall pay to the Lender the Line of Credit Fee.

8.5 To induce the Lender to enter into this Financing Agreement and to make
Accommodations to the Borrower, the Borrower shall pay to the Lender, on the
Closing Date, the Loan Facility Fee.

8.6 The Borrower shall pay to the Lender on the Closing Date and on the first
Business Day of each month thereafter an administrative management fee in the
amount of $5,000, which the Borrower acknowledges and agrees shall be fully
earned when paid (the "ADMINISTRATIVE MANAGEMENT FEE").

<PAGE>

                                     - 44 -

8.7 The Borrower shall promptly reimburse or pay the Lender for any and all
Out-of-Pocket Expenses.

8.8 The Borrower shall pay the Lender's standard charges, fees, costs and
expenses for (i) the Lender's field examinations and audits in an amount equal
to $1,500 per person per day plus such field examiner's and auditor's
out-of-pocket expenses, (ii) protecting, safeguarding, preserving or disposing
of all or any part of the Collateral or Guarantor Collateral, and (iii)
enforcing any of the Lender's rights hereunder or under any other Loan Document
(which fees shall be in addition to any and all Out-of-Pocket Expenses), as
incurred by the Lender.

8.9 The Borrower hereby authorizes and directs the Lender to charge the
Revolving Loan Account with the amount of all payments due hereunder as such
payments become due. The Borrower acknowledge and confirm that any charges which
the Lender may so make to the Revolving Loan Account as herein provided will be
made as an Accommodation to the Borrower.

8.10 In the event that the Lender (or any financial institution which may from
time to time become a Lender hereunder (hereafter a "PARTICIPANT")) shall have
determined in the exercise of its reasonable business judgment that, subsequent
to the Closing Date, any change in applicable Law or guideline regarding capital
adequacy, or any change in the interpretation or administration thereof, or
compliance by the Lender or such participant with any new request or directive
regarding capital adequacy (whether or not having the force of Law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the Lender's or such participant's capital as a
consequence of its obligations hereunder to a level below that which the Lender
or such participant could have achieved but for such adoption, change or
compliance (taking into consideration the Lender or such participant's policies
with respect to capital adequacy) by an amount reasonably deemed by the Lender
or such participant to be material, then, from time to time, the Borrower shall
pay, no later than five (5) days following the Lender's or such participant's
demand, to the Lender or such participant such additional amount or amounts as
will compensate the Lender's or such participant's for such reduction. In
determining such amount or amounts, the Lender or such participant may use any
reasonable averaging or attribution methods. The protection of this Section 8.10
of Article 8 shall be available to the Lender or such participant regardless of
any possible contention of invalidity or inapplicability with respect to the
applicable Law or condition. A certificate of the Lender or such participant
setting forth such amount or amounts as shall be necessary to compensate the
Lender or such participant with respect to this Section 8.10 of Article 8 and
the calculation thereof when delivered to the Borrower shall be, absent manifest
error, prima facie evidence of such amount. Notwithstanding anything in this
Section to the contrary, in the event the Lender or such participant has
exercised its rights pursuant to this Section, and subsequent thereto determines
that the additional amounts paid by the Borrower in whole or in part exceed the
amount which the Lender or such participant actually required to be made whole,
the excess, if any, shall be returned to the Borrower by the Lender or such
participant.

8.11 In the event that any applicable Law or treaty, or any change therein or in
the interpretation or application thereof, or compliance by the Lender or such
participant with any request or directive (whether or not having the force of
Law) from any central bank or other financial, monetary or other authority,
shall:

<PAGE>

                                     - 45 -

      (a)   subject the Lender or such participant to any tax of any kind
            whatsoever with respect to this Financing Agreement or change the
            basis of taxation of payments to the Lender or such participant of
            principal, fees, interest or any other amount payable hereunder or
            under any other documents (except for changes in the rate of tax on
            the overall net income of the Lender or such participant by the
            federal government or the jurisdiction in which it maintains its
            principal office);

      (b)   impose, modify or hold applicable any reserve, special deposit,
            assessment or similar requirement against assets held by, or
            deposits in or for the account of, advances or loans by, or other
            credit extended by the Lender or such participant by reason of or in
            respect to this Financing Agreement or the other Loan Documents; or

      (c)   impose on the Lender or such participant any other condition with
            respect to this Financing Agreement or any other Loan Document;

and the result of any of the foregoing is to increase the cost to the Lender or
such participant of making, renewing or maintaining its loans hereunder by an
amount that the Lender or such participant deems to be material in the exercise
of its reasonable business judgment and acting in good faith or to reduce the
amount of any payment (whether of principal, interest or otherwise) in respect
of any of the loans by an amount that the Lender or such participant deems to be
material in the exercise of its reasonable business judgment and acting in good
faith, then, in any case the Borrower shall pay the Lender or such participant,
within five (5) days following its demand, such additional cost or such
reduction, as the case may be. For purposes of this Section 8.11, the term
"taxes" does not include income taxes, franchise taxes or capital taxes imposed
on the Lender or such participant. If the Lender and any participant becomes
entitled to claim any additional amount pursuant to this Section 8.11, it shall
notify the Borrower of the event by reason of which it has become so entitled
upon the Lender becoming aware of such event. The Lender or such participant
shall certify the amount of such additional cost or reduced amount to the
Borrower and the calculation thereof and such certification shall be, absent
manifest error, prima facie evidence of such amount. Notwithstanding anything in
this Section 8.11 to the contrary, in the event the Lender or such participant
has exercised its rights pursuant to this Section, and subsequent thereto
determine that the additional amounts paid by the Borrower in whole or in part
exceed the amount which the Lender or such participant actually required
pursuant hereto, the excess, if any, shall be returned to the Borrower by the
Lender or such participant.

                                    ARTICLE 9
                                     POWERS

9.1 The Borrower and each Guarantor hereby constitutes the Lender, or any Person
or agent the Lender may designate, as its attorney-in-fact, at the Borrower's
cost and expense, and upon the occurrence of a Default or an Event of Default
which is continuing, the Lender may exercise all of the following powers, which
being coupled with an interest, shall be irrevocable until all Obligations to
the Lender have been indefeasibly paid in full:

      (a)   to receive, take, endorse, sign, assign and deliver, all in the name
            of the Lender or the Borrower or any Guarantor, as applicable, any
            and all cheques, notes, drafts,

<PAGE>

                                     - 46 -

            and other documents or instruments relating to the Collateral and
            the Guarantor Collateral, as applicable;

      (b)   to request from customers indebted on Accounts at any time, in the
            name of the Lender, information concerning the amounts owing on the
            Accounts;

      (c)   to request from customers indebted on Accounts at any time, in the
            name of the Borrower or any Guarantor, as applicable, in the name of
            chartered accountants designated by the Lender or in the name of the
            Lender's designee, information concerning the amounts owing on the
            Accounts;

      (d)   to transmit to customers indebted on Accounts notice of the Lender's
            interest therein and to notify customers indebted on Accounts to
            make payment directly to the Lender for the Borrower's or any
            Guarantor's account, as applicable;

      (e)   to take or bring, in the name of the Lender, or the Borrower or any
            Guarantor, as applicable, all steps, actions, suits or proceedings
            deemed by the Lender necessary or desirable to enforce or effect
            collection of the Accounts; and

      (f)   to request from any Persons or Governmental Entities contemplated in
            Section 7.2 of Article 7 hereof, any and all information concerning
            the Borrower or any Guarantor relating to any and all matters
            contemplated in Section 7.2 of Article 7 hereof.

                                   ARTICLE 10
                         EVENTS OF DEFAULT AND REMEDIES

10.1 Notwithstanding anything hereinabove to the contrary, the Lender may
terminate this Financing Agreement immediately upon the occurrence of any of the
following Events of Default:

      (a)   failure of the Borrower to pay any of the Obligations within three
            (3) days of the due date thereof, provided that nothing contained
            herein shall prohibit the Lender from charging such amounts to the
            Revolving Loan Account on the due date thereof;

      (b)   any representation or warranty made or deemed to be made by the
            Borrower or any Guarantor under this Financing Agreement or any
            other Loan Document shall prove to have been incorrect in any
            material respect when made or deemed to be made;

      (c)   the Borrower or any Guarantor shall fail to perform or observe any
            term, covenant or agreement contained in this Financing Agreement or
            any other Loan Document on its part to be performed or observed and
            such failure shall remain unremedied for ten (10) days after written
            notice thereof shall have been given to the Borrower by the Lender;

      (d)   a breach by the Borrower or any Guarantor of any representation,
            warranty, covenant or obligation under any Material Agreement (other
            than the non

<PAGE>

                                     - 47 -

            payment of interest under the Indentures), any mortgage of any real
            property or any collective bargaining agreement which breach could
            result in a Material Adverse Effect and which remains unremedied
            within the applicable period provided for in such agreement;

      (e)   a default or event of default under the Bond Indenture which remains
            unremedied within the applicable period provided for in the Bond
            Indenture;

      (f)   the failure of the Borrower or any Guarantor to pay any and all
            Royalties, Taxes and Priority Payables when due, unless failure to
            pay such amounts is disclosed to the Lender, being diligently
            contested in good faith by appropriate proceedings sufficient to
            prevent any enforcement with respect to same and adequate reserves
            have been established in accordance with GAAP;

      (g)   if the Borrower or any Guarantor breaches or is in violation of any
            Authorization, Law or industry standard, in connection with the
            operation of its business which breach or violation would have a
            Material Adverse Effect and which remains unremedied for ten (10)
            days;

      (h)   the Borrower or any Guarantor shall: (i) admit in writing its
            inability to pay its debts generally, or make a general assignment
            for the benefit of creditors; (ii) file a notice of intention to
            file a proposal under any Law relating to bankruptcy, insolvency or
            reorganization or relief of creditors; (iii) institute or have
            instituted against it any proceeding seeking (x) to adjudicate it a
            bankrupt or insolvent, (y) any liquidation, winding-up,
            reorganization, arrangement, adjustment, protection, relief or
            composition of it or its debts under any Law relating to bankruptcy,
            insolvency or reorganization or relief of debtors, or (z) the entry
            of an order for relief or the appointment of a receiver, trustee or
            other similar official for it or for any substantial part of its
            Assets, and, in the case of any such proceeding instituted against
            it (but not instituted by it), such proceeding shall remain
            undismissed or unstayed for a period of ten (10) days or any of the
            actions sought in such proceeding (including the entry of an order
            for relief against it or the appointment of a receiver, trustee,
            custodian or other similar official for it or for any substantial
            part of its Assets) shall occur; or (iv) take any action to
            authorize any of the foregoing events;

      (i)   any legally binding judgment or order for the payment of money in
            excess of $5,000,000 shall be rendered against the Borrower or any
            Guarantor and, if such judgment remains unpaid, either: (i)
            enforcement proceedings shall have been commenced by any creditor
            upon such judgment or order; or (ii) there shall be any period of
            ten (10) consecutive days during which a stay of enforcement of such
            judgment or order, by reason of a pending appeal or otherwise, shall
            not be in effect;

      (j)   any failure to deal with any money in accordance with the cash
            management and Blocked Accounts arrangements contemplated in this
            Financing Agreement other than if the Borrower and the Guarantors
            provide their customers with appropriate notice and instructions in
            order to comply with such cash management and Blocked Accounts
            arrangements and notwithstanding such notice and

<PAGE>

                                     - 48 -

            instructions, a customer inadvertently uses the old, incorrect wire
            transfer instructions and other than in respect of inadvertent
            clerical errors or inadvertent errors made by The Toronto-Dominion
            Bank (or any other applicable cash management bank), which are
            forthwith rectified;

      (k)   the loss, damage, destruction or confiscation of any material part
            of the Borrower's Collateral or any of the Guarantor's Collateral,
            unless upon such event, at the option of the Lender, the Borrower or
            the applicable Guarantor pays to the Lender such amount as the
            Lender in its absolute and sole discretion determines is
            satisfactory, including insurance proceeds forthwith upon receipt of
            such insurance proceeds, if any; or

      (l)   if any execution, sequestration, garnishment, claim, extent or other
            process of any court, tribunal or other Person becomes enforceable
            against the Borrower or any Guarantor for an amount in excess of
            $5,000,000 or if a distress or analogous process for an amount in
            excess of $5,000,000 becomes enforceable against or is levied upon
            the Collateral or the Guarantor Collateral and with respect to any
            such enforcement before judgement under the Laws of the Province of
            British Columbia, is not stayed or dismissed within fifteen (15)
            days after the date of such enforcement before judgement.

10.2 Upon the occurrence of an Event of Default which is continuing, the Lender
may declare that the Revolving Line of Credit provided for in this Financing
Agreement, and the obligation of the Lender to make Revolving Loans, assist with
the opening of Letters of Credit and provide Letter of Credit Guarantees or make
other accommodations of credit available to the Borrower, shall immediately
terminate and cease without any further notice or demand to the Borrower or
Guarantors whatsoever and, for greater certainty, it is hereby understood and
agreed by the Borrower and the Guarantors that the Revolving Line of Credit
shall be capped at the amount of the outstanding Obligations owing on the date
and at the time of the occurrence of such Event of Default and at the amount of
the outstanding Obligations owing at the end of business of each day thereafter,
that no Accommodations shall be made or required to be made, notwithstanding any
margining availability calculated in accordance with the terms and provisions
hereof, that the definition of "Revolving Line of Credit" hereunder shall
automatically be amended at the end of business of each day accordingly to
reflect the revised maximum authorized credit limit established hereunder and
that the Borrower shall continue to be required to comply with its obligations
under Section 3.4 of this Financing Agreement notwithstanding the termination of
the Revolving Line of Credit, unless such Event of Default is waived in writing
by the Lender or cured to the Lender's satisfaction in the exercise of the
Lender's reasonable judgment. In addition, upon the occurrence of an Event of
Default which is continuing, the Lender may declare that: (a) all Obligations
shall become immediately due and payable, including the face amount of all
outstanding Letters of Credit and any and all interest accrued thereon up to the
date thereof and with respect to BA Equivalent Loans, on a pro-rated basis,
given the applicable Interest Period; (b) the Lender may charge the Borrower the
Default Rate of Interest on all then outstanding or thereafter incurred
Obligations in lieu of the interest otherwise provided for in this Financing
Agreement, provided that, with respect to this Section 10.2 the Lender has given
the Borrower written notice of the Event of Default; and (c) the Lender may
immediately terminate this Financing Agreement. The exercise of any remedy is

<PAGE>

                                     - 49 -

not excluding any other remedy, which may be exercised at any time and from time
to time by the Lender.

10.3 Immediately upon the occurrence of any Event of Default which is continuing
and upon the enforcement of its security in accordance with applicable Law, in
addition to all of its rights and remedies under the PPSA and any other like
statute in other jurisdictions, the Lender may, to the extent permitted by Law:
(a) remove from any premises where same may be located, any and all books and
records, computers, electronic media and software programs associated with any
Collateral or Guarantor Collateral (including any electronic records, contracts
and signatures pertaining thereto), documents, instruments, files and records,
and any receptacles or cabinets containing same, relating to the Accounts, or
the Lender may use, at the Borrower's expense, such of the Borrower's personnel,
supplies or space at the Borrower's or the Guarantors' places of business or
otherwise, as may be necessary to properly administer and control the Accounts
or the handling of collections and realizations thereon; (b) collect any
Accounts, and bring suit, in the name of the Borrower or any Guarantor, as
applicable, or the Lender, and generally shall have all other rights respecting
Accounts, including the right to accelerate or extend the time of payment,
settle, compromise, release in whole or in part any amounts owing on any
Accounts and issue credits in the name of the Borrower or any Guarantor, as
applicable, or the Lender; (c) sell, assign and deliver the Collateral or
Guarantor Collateral and any returned, reclaimed or repossessed Inventory, with
or without advertisement, at public or private sale, for cash, on credit or
otherwise, at the Lender's sole option and discretion, and the Lender may bid or
become a purchaser at any such sale; (d) foreclose the security interests in the
Collateral or the Guarantor Collateral created by the Loan Documents by any
available legal procedure, or to take possession of any or all of the
Collateral, including, without limitation, any Inventory and/or other Collateral
or Guarantor Collateral without judicial process, and to enter any premises
where any Inventory and/or other Collateral or Guarantor Collateral may be
located for the purpose of taking possession of or removing the same; and (e)
exercise any other rights and remedies provided in law, in equity, by contract
or otherwise. The Lender shall have the right, without notice or advertisement,
to sell, lease, or otherwise dispose of all or any part of the Collateral or the
Guarantor Collateral, whether in its then condition or after further preparation
or processing, in the name of the Borrower or any Guarantor or the Lender, or in
the name of such other party as the Lender may designate, either at public or
private sale, in lots or in bulk, for cash or for credit, with or without
warranties or representations, and upon such other terms and conditions as the
Lender in its sole discretion may deem advisable, and the Lender shall have the
right to purchase at any such sale. If any Collateral or Guarantor Collateral
shall require rebuilding, repairing, maintenance or preparation, the Lender
shall have the right, at its option, to do such of the aforesaid as is
necessary, for the purpose of putting the Collateral or Guarantor Collateral in
such saleable form as the Lender shall deem appropriate and any such costs shall
be deemed an Obligation hereunder. The Borrower and the Guarantors agree, at the
request of the Lender, to assemble the Collateral or Guarantor Collateral and to
make it available to the Lender at its premises and to make available to the
Lender its premises and facilities for the purpose of the Lender's taking
possession of, removing or putting the Collateral or Guarantor Collateral in
saleable form. The net cash proceeds resulting from the Lender's exercise of any
of the foregoing rights, (after deducting all charges, costs and expenses,
including reasonable legal fees) shall be applied by the Lender to the payment
of the Obligations, whether due or to become due, in such order as the Lender
may elect, and the Borrower and the Guarantors shall remain liable to the Lender
for any deficiencies, and the Lender in turn agrees to remit to the Borrower and
the Guarantor or its successors or assigns, any surplus resulting therefrom. The
enumeration

<PAGE>

                                     - 50 -

of the foregoing rights is not intended to be exhaustive and the exercise of any
right shall not preclude the exercise of any other rights, all of which shall be
cumulative. The Borrower and the Guarantors, on a joint and several basis,
hereby indemnify the Lender and hold the Lender harmless from and against any
and all losses, damages, costs, expenses, claims, obligations, actions, suits,
proceedings, demands, penalties, liabilities, Out-of-Pocket Expenses or
otherwise, incurred or imposed on them by reason of the exercise of any of its
rights, remedies and interests hereunder, including from any sale or transfer of
Collateral or the Guarantor Collateral, preserving, maintaining or securing the
Collateral or the Guarantor Collateral, defending its interests in Collateral or
the Guarantor Collateral (including pursuant to any claims brought by the
Borrower or any Guarantor, the Borrower or any Guarantor as
debtor-in-possession, any secured or unsecured creditors of the Borrower or any
Guarantor, any trustee, monitor, liquidator, receiver or receiver and manager,
or otherwise), and the Borrower and the Guarantors, on a joint and several
basis, hereby agree to so indemnify and hold the Lender harmless, absent their
gross negligence or wilful misconduct as finally determined by a court of
competent jurisdiction. The foregoing indemnification shall be severable from
and shall survive any termination of this Financing Agreement until such time as
all Obligations (including the foregoing) have been finally and indefeasibly
paid in full.

                                   ARTICLE 11
                                   TERMINATION

11.1 Unless terminated in accordance with Article 10 or this Section 11.1, the
Maturity Date shall automatically be renewed after the initial three (3) years
from the date hereof for successive one (1) year periods. For greater certainty,
the Lender may terminate this Financing Agreement immediately upon the
occurrence and continuance of an Event of Default. The Borrower may terminate
this Financing Agreement at any time upon sixty (60) days' written notice to the
Lender prior to the then applicable Maturity Date, provided that the Borrower
pay to the Lender, immediately on demand, the Early Termination Fee, if the
termination does not fall on a Maturity Date. Each of the Borrower and the
Lender shall have the right not to renew this Financing Agreement at the end of
any applicable Maturity Date upon ninety (90) days prior written notice to the
other during the initial three (3) years from the date hereof and on ninety (90)
days prior written notice to the other thereafter. All Obligations shall become
due and payable as of any termination under this Section 11.1 or under Article
10 hereof and, pending a final accounting, the Lender may withhold any balances
in the Borrower's account (unless supplied with an indemnity satisfactory to the
Lender) to cover all of the Obligations, whether absolute or contingent,
including, but not limited to, cash reserves for any contingent Obligations,
including, without limitation, an amount equal to one hundred percent (102%) of
the face amount of any outstanding Letters of Credit. All of the Lender's
rights, liens and security interests shall continue after any termination until
all Obligations have been indefeasibly paid and satisfied in full.

                                   ARTICLE 12
                                   ASSIGNMENTS

12.1 The Lender shall have the right at any time to assign to one or more
commercial banks, commercial finance lenders or other financial institutions all
or a portion of its rights and obligations under this Financing Agreement
(including, without limitation, its obligations under the Revolving Loans and
its rights and obligations with respect to Letters of Credit). Upon

<PAGE>

                                     - 51 -

execution of an assignment and transfer agreement (a) the assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such assignment, have the rights and
obligations of the Lender hereunder, and (b) the Lender shall, to the extent
that its rights and obligations hereunder have been assigned by it pursuant to
such assignment, relinquish its rights and be released from its obligations
under this Financing Agreement. The Borrower and the Guarantors shall, if
necessary, execute any documents reasonably required to effectuate the
assignments. It shall be a condition of any assignment by the Lender hereunder
that (i) the amount being assigned shall, if there is no Event of Default which
is continuing, in no event be less than the lesser of $10,000,000 or the entire
interest of the Lender hereunder, and the parties to such assignment shall
execute and deliver to the Lender an assignment and transfer agreement.

                                   ARTICLE 13
                                 MISCELLANEOUS

13.1 This Financing Agreement, the Loan Documents executed and delivered in
connection therewith and prior to the Closing Date, the Commitment Letter,
constitute the entire agreement between the Borrower, the Guarantors and the
Lender; supersede any prior agreements; can be changed only by a writing signed
by the Borrower, the Lender and the Guarantors; and shall bind and benefit the
Borrower, the Lender, the Guarantors and their respective successors and
assigns.

13.2 For purposes of the Interest Act (Canada): (i) whenever any interest or fee
under this Financing Agreement is calculated using a rate based on a year of 360
or 365 days, as applicable, such rate determined pursuant to such calculation,
when expressed as an annual rate, is equivalent to (x) such calculated rate, (y)
multiplied by the actual number of days in the calendar year in which the period
for which such interest or fee is calculated ends, and (z) divided by 360 or
365, as applicable, (ii) the principle of deemed reinvestment of interest shall
not apply to any interest calculation under this Agreement; and (iii) the rates
of interest stipulated in this Agreement are intended to be nominal rates and
not effective rates or yields.

13.3 Notwithstanding any provision to the contrary contained in this Financing
Agreement, in no event shall the aggregate "INTEREST" (as defined in Article 347
of the Criminal Code, Revised Statutes of Canada, 1985, c.46 as the same may be
amended, replaced or re-enacted from time to time) payable under this Financing
Agreement exceed the maximum amount of interest on the "CREDIT ADVANCED" (as
defined in that Article) under this Financing Agreement lawfully permitted under
that Article and, if any payment, collection or demand pursuant to this
Financing Agreement in respect of "INTEREST" (as defined in that Article) is
determined to be contrary to the provisions of that Article, such payment,
collection or demand shall be deemed to have been made by mutual mistake of the
Borrower and the Lender and the amount of such payment or collection shall be
refunded to the Borrower. For purposes of this Financing Agreement, the
effective annual rate of interest shall be determined in accordance with
generally accepted actuarial practices and principles over the term the Line of
Credit is outstanding on the basis of annual compounding of the lawfully
permitted rate of interest and, in the event of dispute, a certificate of a
fellow of the Canadian Institute of Actuaries appointed by the Lender will be
conclusive for the purposes of such determination.

13.4 If any provision hereof or of any other agreement made in connection
herewith is held to be illegal or unenforceable, such provision shall be fully
severable, and the remaining

<PAGE>

                                     - 52 -

provisions of the applicable agreement shall remain in full force and effect and
shall not be affected by such provision's severance.

13.5 Except as otherwise herein provided, any notice or other communication
required hereunder shall be in writing (provided that, any electronic
communications from the Borrower or the Guarantors with respect to any request,
transmission, document, electronic signature, electronic mail or facsimile
transmission shall be deemed binding on the Borrower or the Guarantors for
purposes of this Financing Agreement, provided further that any such
transmission shall not relieve the Borrower or the Guarantors from any other
obligation hereunder to communicate further in writing), and shall be deemed to
have been validly served, given or delivered when hand delivered or sent by
facsimile, or three (3) days after deposit in the mail, with proper first class
postage prepaid and addressed to the party to be notified or to such other
address as any party hereto may designate for itself by like notice, as follows:

(A)   if to the Lender, at:

      CIT Business Credit Canada Inc.
      207 Queens Quay West, Suite 700
      Toronto, Ontario M5J 1A7

      Attn: Account Executive
      Fax No.: (416) 507-5100

      with a copy to:

      Blake, Cassels &: Graydon LLP
      Suite 2800, 199 Bay Street
      Commerce Court West
      Toronto, Ontario M5L 1A9

      Attn: Michael R. Harquail
      Fax No.: (416) 863-2653

(B)   if to the Borrower or a Guarantor, at:

      c/o Western Forest Products Inc.
      3rd Floor
      435 Trunk Road
      Duncan, British Columbia V9L 2P0

      Attn: President
      Fax No: (250) 748-6045

<PAGE>

                                     - 53 -

      With a copy to:

      Fasken Martineau Dumoulin LLP
      Suite 2100, 1075 West Georgia Street
      Vancouver, British Columbia V6E 3G2

      Attn: Michael Fitch
      Fax No.: 604-631-4779

provided, however, that the failure of the Lender to provide the Borrower's and
the Guarantors' counsel with a copy of such notice shall not invalidate any
notice given to the Borrower and the Guarantor and shall not give the Borrower
or any Guarantor any rights, claims or defences due to the failure of the Lender
to provide such additional notice.

13.6 Unless otherwise specified herein, all statements of or references to
dollar amounts shall mean the lawful money of Canada.

13.7 The validity, interpretation and enforcement of this Financing Agreement
and the other Loan Documents shall be exclusively (without regard to principles
relating to conflicts of laws) governed by and enforced in accordance with the
laws of the Province of British Columbia and the federal laws of Canada
applicable therein.

13.8 Words denoting the singular include the plural and vice versa and words
denoting any gender include all genders; headings shall not affect the
interpretation of this Financing Agreement; the word "INCLUDING" shall mean
"INCLUDING, WITHOUT LIMITATION" and "INCLUDES" shall mean "INCLUDES, WITHOUT
LIMITATION".

13.9 No failure on the part of the Lender to exercise, and no delay in
exercising any right under this Financing Agreement or any other Loan Document
shall operate as a waiver of such right; nor shall any single or partial
exercise of any right under this Financing Agreement or any other Loan Document
preclude any other or further exercise thereof or the exercise of any other
right; nor shall any waiver of one provision be deemed to constitute a waiver of
any other provision (whether or not similar). No waiver of any of the provisions
of this Financing Agreement or any other Loan Document shall be effective unless
it is in writing duly executed by the waiving party.

13.10 In the event of any conflict or inconsistency between any of the
provisions of this Financing Agreement or any other Loan Document, the
provisions of this Financing Agreement shall prevail to the extent of such
conflict or inconsistency.

13.11 Time shall be of the essence of this Financing Agreement.

13.12 Each party hereto intends that this Financing Agreement shall not benefit
or create any right or cause of action in or on behalf of any other Person,
other than the parties hereto and any other Person who may become a party hereto
and no other Person shall be entitled to rely on any of the provisions hereof in
any action, suit, proceeding, hearing or other forum.

<PAGE>

                                     - 54 -

13.13 This Financing Agreement shall enure to the benefit of and be binding upon
the parties hereto and any Person becoming a party to this Financing Agreement
pursuant hereto, and their respective successors and permitted assigns.

13.14 This Financing Agreement may be executed in one or more counterparts by
facsimile transmission, each of which shall be deemed to be an original and all
of which, when taken together, shall constitute one and the same agreement.

13.15 Except as otherwise expressly provided for in this Financing Agreement,
the covenants, representations and warranties, indemnities and power of
attorneys contained in this Financing Agreement and the other Loan Document
shall not merge and shall survive the closing of the financing transaction
contemplated herein, and notwithstanding such closing, or any investigation made
by or on behalf of any party, shall continue in full force and effect.

13.16 The Borrower and the Guarantors hereby consent to the Lender publishing
and disclosing such details of the financing transaction contemplated herein in
national publications as the Lender deems appropriate for advertising or public
relations purposes.

13.17 The Borrower and each Guarantor hereby waives all rights to receive from
the Lender a copy of any financing statement, financing change statement or
verification statement filed at any time or from time to time in respect of any
Security Agreement.

            IN WITNESS WHEREOF, the parties hereto have caused this Financing
Agreement to be effective, executed, accepted and delivered by their proper and
duly authorized officers as of the date first set forth above.

CIT BUSINESS CREDIT CANADA INC.

By: /s/ E. Dennis McCluskey
    -------------------------
    E. Dennis McCluskey
    President

By: /s/ Donald Rogers
    -------------------------
    Donald Rogers
    Vice President
<PAGE>

                                     - 55 -

WESTERN FOREST PRODUCTS INC.                      WESTERN PULP LIMITED

By: /s/ P.G. Hosier                               By: /s/ P.G. Hosier
    --------------------------                        --------------------------
    Name: Philip G. Hosier                            Name: Philip G. Hosier
    Title: Corporate Secretary                        Title: Corporate Secretary

By: _________________________                     By: __________________________
    Name:                                             Name:
    Title:                                            Title:

DOMAN FOREST PRODUCTS LIMITED                     DOMAN-WESTERN LUMBER LTD.

By: /s/ P.G. Hosier                               By: /s/ P.G. Hosier
    --------------------------                        --------------------------
    Name: Philip G. Hosier                            Name: Philip G. Hosier
    Title: Corporate Secretary                        Title: Corporate Secretary

By: _________________________                     By: __________________________
    Name:                                             Name:
    Title:                                            Title:

WFP LUMBER SALES LIMITED

By: /s/ P.G. Hosier
    --------------------------
    Name: Philip G. Hosier
    Title: Corporate Secretary

By: _________________________
    Name:
    Title:

<PAGE>

                                    EXHIBIT A

                       FORM OF BORROWING BASE CERTIFICATE

CIT BUSINESS CREDIT CANADA INC.                                   REPORT#:
(as Lender)

Borrowing Base Certificate                                        Date _________

Client: WESTERN FOREST PRODUCTS INC., (, the "BORROWER")

<TABLE>
<CAPTION>
                                                                                   ACCOUNTS
                                                                                  RECEIVABLE       INVENTORY
                                                                                  ----------       ---------
<S>                                                                          <C>  <C>              <C>
1.  TOTAL COLLATERAL (line 7 of previous report)                                  $                $
                                                                                  ------------     --------------

2.  GROSS SALES (per attached report)                                         (+) ------------

    CREDIT MEMOS (per attached report)                                        (-) ------------

3.  INVENTORY CHANGE (per attached report)                                   (+/-)                 --------------

4.  (+/-) MISC. ADJUSTMENTS (back-up attached)                               (+/-)                 --------------

5.  NET COLLECTIONS (per attached report)                                    (-)  -------------

6.  DISCOUNTS ALLOWED (per attached report)                                  (-)  -------------

7.  TOTAL COLLATERAL (per this report)                                            $                $
                                                                                  ------------     --------------

8.  A.   MONTHLY INELIGIBLES                                                      $                $
                                                                                  ------------     --------------

    B.   OTHERS
                                                                                  ------------     --------------

    C.   TOTAL INELIGIBLES                                                   (-)  $                $
                                                                                  ------------     --------------

9.  TOTAL ELIGIBLE COLLATERAL (line 7 minus 8C)                                   $                $

10. MAXIMUM AVAILABLE: (Revolving Limit)

    A.  Accounts Receivable at 85% of Line 9                                      $
                                                                                  -----------

    B.  Inventory at the lower of, 65% at the lower of                                              $
        Borrower's cost or market, and 80% of appraised net                                         -------------
        realizable value of Line 9


11. INVENTORY LOAN LIMIT (the lower of Line 10B or                                                 $
    $175,000,000)                                                                 -----------      --------------

12. TOTAL AVAILABILITY RESERVES                                                   $
                                                                                  ----------

13. BORROWING BASE (total of line 10 minus 12)                                    $
                                                                                  ----------

                                                                                  CAD              USD
                                                                                  ---              ---
14. LOAN BALANCE (Previous Report dated ______________)                           ----------       --------------


15. ADVANCES                                                                 (+)  ----------       --------------

16. CHARGES OR CREDITS                                                      (+/-) ----------       --------------

17. NET COLLECTIONS                                                           (-) ----------       --------------

18. IN TRANSIT COLLECTIONS                                                    (+) ----------       --------------

19. A.  REVOLVING LINE OF CREDIT BALANCE per this                                 $         -      $           -
report                                                                            -----------      --------------

        EXCHANGE RATE                                                                              $
                                                                                                   --------------
</TABLE>

<PAGE>

                                     - 2 -

<TABLE>
<S>                                                                               <C>              <C>
    B.  REVOLVING LOAN BALANCE IN CAD                                             $          -
                                                                                  ------------

                                                                                  CAD              USD
                                                                                  ---              ---

20. LETTERS OF CREDIT                                                             $                $
                                                                                  ------------     ----------------

21. NET AVAILABILITY (line 13 minus 19B and 20)                                   $
                                                                                  ------------

22. NET AVAILABILITY BLOCK                                                        $
                                                                                  ------------

23. SURPLUS AVAILABILITY                                                          $
                                                                                  ------------
</TABLE>

Pursuant to, and in accordance with, the terms and provisions of that certain
Financing Agreement ("Agreement"), between the Lender, the Borrower, and Western
Pulp Limited and WFP Lumber Sales Limited (the "Guarantors"), is executing and
delivering to the Lender, this Borrowing Base Certificate accompanied by
supporting data (collectively referred to as "Report"). The Borrower represents
and warrants to the Lender that this Report is true, correct, and based on
information contained in the Borrower's financial accounting records. The
Borrower, by the executing of this Report, hereby ratifies, confirms and affirms
as to the terms, conditions, and provisions of the Agreement, and further
certifies on this_______day of____________________, 20___, that the Borrower and
the Guarantors are in compliance with said Agreement and that there are no
arrears for rent, any pension benefit obligation contributions, Royalties or any
Priority Payables.

AUTHORIZED SIGNATURE:                             DATE:

__________________________                        ________________________

<PAGE>

                                    EXHIBIT B

                         FORM OF OFFICER'S CERTIFICATE

TO: CIT BUSINESS CREDIT CANADA INC. (THE "LENDER")

The undersigned,      [TITLE], of WESTERN FOREST PRODUCTS INC. (the "BORROWER"),
pursuant to Article 7 of the financing agreement dated July 27, 2004, among,
inter alia, the Lender, the Borrower, Western Pulp Limited and WFP Lumber Sales
Limited (the "GUARANTORS") (the "FINANCING AGREEMENT"), DOES HEREBY CERTIFY in
his capacity as an authorized signing officer of the Borrower, and not in his
personal capacity and without personal liability that:

1.    The financial statements attached hereto fairly and accurately represent
      the Borrower's financial condition at the end of the particular accounting
      period set out in such financial statements, as well as the Borrower's
      consolidated operating results during such accounting period, subject to
      year-end audit adjustments; and

2.    During the accounting period set out in such financial statements:

      (A)   there has been no Default or Event of Default (as defined in the
            Financing Agreement) under the Financing Agreement [NOTE TO DRAFT:
            PROVIDED HOWEVER, THAT IF ANY SUCH OFFICER HAS KNOWLEDGE THAT ANY
            SUCH DEFAULT OR EVENT OF DEFAULT, INCLUDING, WITHOUT LIMITATION,
            NON-COMPLIANCE WITH ANY ORDERS, HAS OCCURRED DURING SUCH PERIOD, THE
            EXISTENCE OF AND A DETAILED DESCRIPTION OF SAME SHALL BE SET FORTH
            BELOW];

      (B)   neither the Borrower nor any Guarantor has received any notice of
            cancellation with respect to any of its insurance policies which it
            is required to maintain under the Financing Agreement, including,
            without limitation, the Policies (as defined in the Financing
            Agreement);

      (C)   neither the Borrower nor any Guarantor has received any notice that
            could result in a Material Adverse Effect (as defined in the
            Financing Agreement), including, without limitation, from any
            Governmental Entity concerning duties, Taxes, Royalties, Priority
            Payables, the Forest Tenures, the Licences or other Authorizations
            required to operate its business (capitalized terms, are as defined
            in the Financing Agreement); and

      (D)   the Borrower and the Guarantors are current with respect to any and
            all pension benefit obligations, Taxes, Royalties and Priority
            Payables. [NOTE TO DRAFT: UNLESS AN AMOUNT IS BEING DILIGENTLY
            CONTESTED IN GOOD FAITH, ETC., THE DETAILED DESCRIPTION OF WHICH
            SHALL BE SET FORTH BELOW.]

<PAGE>

                                     - 2 -

IN WITNESS WHEREOF, the undersigned has executed this Officer's Certificate on
behalf of the Borrower and the Guarantors as of the         day of
       , 200      .

                                                 ___________________________
                                                 Name:
                                                 Title:

<PAGE>

                       SCHEDULE 1 - COLLATERAL INFORMATION

Exact Name and Jurisdiction of Organization of the Borrower and Guarantor:

Borrower:       Western Forest Products Inc. - CBCA
Guarantor:      Western Pulp Limited - CBCA
Guarantor:      WFP Lumber Sales Limited - CBCA
Guarantor:      Doman Forest Products Limited - CBCA
Guarantor:      Doman-Western Lumber Ltd. - CBCA

PREDECESSOR NAMES AND TRADENAMES:

Borrower:       4204247 Canada Inc. - Predecessor Name
Guarantor:      (WPL) 4204255 Canada Inc. - Predecessor Name
Guarantor:      (Salsco) 4204697 Canada Inc. - Predecessor Name
Guarantor:      Doman FP 4018940 Canada Inc. - Predecessor Name
Guarantor:      Doman WL 4018982 Canada Inc. - Predecessor Name

SUBSIDIARIES AND AFFILIATES:

See attached corporate chart appended to this Schedule 1 as 1-A illustrating the
corporate structure of the Borrower, including all subsidiaries as at the Plan
Implementation Date.

JURISDICTION OF INCORPORATION OR FORMATION:

Canada Business Corporations Act

CHIEF EXECUTIVE OFFICE:

For the Borrower and Guarantor the chief executive office is as follows:

         3rd Floor
         435 Trunk Road
         Duncan, B.C.,
         V9L 2PQ

         PHONE:  (250) 748-3711
         FAX:    (250) 748-6045

COLLATERAL AND GUARANTOR COLLATERAL LOCATIONS:

See attached lists appended to this Schedule 1 a 1-B and 1-C.

<PAGE>

                                     - 2 -

                                  SCHEDULE 1-A

                Western Forest Products Inc. Corporate Structure

                                  [FLOW CHART]
<PAGE>

                             REAL PROPERTY LOCATIONS

<TABLE>
<CAPTION>
                               PROPERTY
                               IDENTIFICATION
PROPERTY LOCATION              NUMBER             PROPERTY DESCRIPTION
-----------------              --------------     --------------------
<S>                            <C>                <C>
Chemainus Sawmill              004-601-572        Lot A, Section 14, Range 4, Chemainus
                                                  District, Plan 13619 except part in plan
                                                  VIP73021

                               004-802-161        Lot 2 of Section 14, Ranges 4 and 5,
                                                  Chemainus District Plan 12657, except
                                                  that part in plans 13619, VIP72173, and
                                                  VIP73020

                               006-648-509        That part of Lot 13, Section 13, Range
                                                  4, Chemainus District, Plan 2051, lying
                                                  to the north east of Plan 798 RW

Chemainus Value Added          023-017-775        Lot A, Sections 14 and 15, Ranges 3 and 4,
Plant and Cowichan                                Chemainus District, Plan VIP60627
Wholesale Yard

Cowichan Bay Sawmill           003-723-674        Lot 1, Section 12, Ranges 2 and 3,
                                                  Cowichan District, plan 19378

                               005-787-408        Section 13, Range 3, Cowichan District,
                                                  except part in plans 22505 and 37455

                               005-787-491        That part of District Lot 160, Cowichan
                                                  District, lying between the range and
                                                  section lines encompassing section 13,
                                                  Range 3, Cowichan District, as shown on
                                                  plan attached to original Crown grant,
                                                  dated 15/01/1872 (DD 25711), except part
                                                  in plans 23400 and 37455

                               005-788-561        Fractional section 12, Range 3, Cowichan
                                                  District, except parts in plan 19378 and
                                                  37455

                               005-788-749        That part of Section 12, Range 2,
                                                  Cowichan District, shown coloured red on
                                                  plan attached to Crown grant no. 1863
                                                  deposited under DD 263021, except out of
                                                  said section 12, Ranges 2 and 3, that
                                                  part thereof shown outlined in red on
                                                  plan 936R and except those parts of said
                                                  section 12, range 3, included within the
                                                  boundaries of plan 19378

Nanaimo, Duke Point Sawmill    001-038-087        Lot 22, Section 9, and District Lots 370
                                                  and 429, Nanaimo District Plan 37924,
                                                  except parts in plans 42196 and VIP63511

                               001-038-095        Lot 23, Sections 8 and 9, and District
                                                  Lots 370 and 429,
</TABLE>

<PAGE>

                                          - 2 -

<TABLE>
<S>                            <C>                <C>
                                                  Nanaimo District, plan 37924

Other                          013-181-131        Parcel "D" (Reference plan 6576),
                                                  Section 3 Block 6 North Range 1 East New
                                                  Westminster District

Squamish Pulp Sawmill          015-910-717        District Lot 2351 Group 1 New
                                                  Westminster District

                               015-895-963        District Lot 2802, Group 1, New
                                                  Westminster District

                               015-822-061        District Lot 5899, Group 1, New
                                                  Westminster District, except part in
                                                  reference plan 5238

                               015-791-459        District Lot 6232, Group 1, New
                                                  Westminster District

                               015-791-611        District Lot 6237, Group 1, New
                                                  Westminster District

                               004-184-653        District Lot 3357 Group 1 New
                                                  Westminster District

                               004-206-550        That Part of Lot 5681 Adjoining Lot 3357
                                                  and Shown Coloured Red on Sketch Annexed
                                                  to Crown Grant Registered under No.
                                                  84274H Group 1 New Westminster District

Vancouver Sawmill              008-238-057        Lot B, Block 4, District Lot 311, Plan
                                                  4803

                               011-263-873        Lot A (explanatory plan 1976), except
                                                  part in reference plan 3327, south part
                                                  of Block 5, District Lot 311, Plan 847

                               013-038-796        Lot E, Blocks 4,C,D,Y and Z, District
                                                  Lots 311, 319, 323, 324, Plan 22094

                               013-206-222        Lot B, Blocks C, D, Y and Z, District
                                                  Lot 319 Plan 22095

Mission                        001-722-549        Lot I, District Lot 436, Group 1 New
                                                  Westminster District, Plan 69567

                               014-842-386        Parcel "C" (reference plan 4578) ,
                                                  District Lot 436, Group 1, except:

                                                  Firstly: Parcel "D" (reference plan
                                                  2583) Secondly: Parcel "B" (reference
                                                  plan 4577) Thirdly: Parcel "H"
                                                  (reference plan 5558) Fourthly: Parcel
                                                  "H" (reference plan 6700) Fifthly: Part
                                                  on plan 4898 Sixthly: Part subdivided by
                                                  plan 23384, New Westminster District
</TABLE>

<PAGE>

                                           - 3 -
<PAGE>

                                      1-C

                 LOCATIONS WHERE INVENTORY STORED OTHER THAN DESTINATIONS
                            OWNED BY THE BORROWER OR GUARANTOR

      WESTERN FOREST PRODUCTS INC.

      LIST OF LOCATIONS WHERE INVENTORY IS LOCATED

<TABLE>
<CAPTION>
CODE  DESCRIPTION                       COUNTRY   NAME & MAILING ADDRESS           CONTACT            PHONE          FAX
<S>   <C>                               <C>       <C>                              <C>                <C>            <C>
CBD   Cowichan Bay Dock                 Canada    Westcan Terminals Limited        John Milligan      250-386-1321   250-386-2734
                                                  P.O. Box 1442
                                                  189 Dallas Rd.
                                                  Victoria, B. C. V8W 2X2

DEC   Desticon - Coquitlam, BC          Canada    Desticon Transportation          Fatima Hussain     604-931-7724
                                                  Services Inc.
                                                  225 North Road,
                                                  Coquitlam, B.C.

TBN   DryTeck - Surrey, BC              Canada    DryTeck Lumber Services,                            604-513-1131   604-513-1126
                                                  9356 193rd Street,
                                                  Surrey, B. C. V4N 4E8

FVC   Fraserview - Surrey, BC           Canada    Fraserview Cedar Reman,          Gary [ILLEGIBLE]   604-590-3355
                                                  6630 - 144th Street
                                                  Surrey, B. C. V3W 5R5

GPT   Global Pacific - N Vancouver, BC  Canada    Global Pacific Terminals Inc.                       604-924-3566
                                                  200 Bridge Street,
                                                  North Vancouver, B.C. V7H 1W7
</TABLE>

<PAGE>

                                     - 2 -

<TABLE>
<S>   <C>                              <C>        <C>                                    <C>            <C>           <C>
MVR   Mountain View - Abbotsford, BC   Canada     Mountain View Reload Inc.              Rick Pike      604-850-5788  604-850-5789
                                                  419 Sumas Way,
                                                  Abbotsford, B.C. V2S 8C4

NAW   Nanaimo Assembly - Nanaimo, BC   Canada     Nanaimo Port Authority                 Gord Koster    250-754-7701  250-753-4899
                                                  P. O. Box 131, 104 Front Street,
                                                  Nanaimo, B.C. V9R 5K4

NAR   North American - Cloverdale, BC  Canada     North American Reload                  Brad Clark     604-574-0900  604-574-9077
                                                  #101 - 17618 - 58th Avenue,
                                                  Cloverdale, B. C. V3S 1L3

PLR   Pacific Lumber Reman - Surrey,   Canada     Pacific Lumber Remanufacturing         Rob Sohi       604-582-0705  604-582-0704
      BC

                                                  13482 - 116th Avenue,
                                                  Surrey, B. C. V3R 9W4

scw   Stuart Channel - Crofton, BC     Canada     TFL Forest Ltd.                        Brian Crosson  250-246-3234  250-246-9300
                                                  Stuart Channel Wharves
                                                  P. O. Box 40,
                                                  Crofton, B. C. VR 1R0

SHW   Shawood Lumber - Langley, BC     Canada     Shawood Lumber Inc.                    Ken Kiers      604-888-2225  604-888-8446
                                                  20039 - 96th Avenue
                                                  Langley, B.C. V1M 3C6

SMW   Surrey Mill Work - Richmond, BC  Canada     Surrey Millwork (1990) Ltd.            Kurt Bonnes    604-276-2843  604-276-2852
                                                  15360 Knox Way,
                                                  Richmond, B. C. V6V 1L5

UWP   Uneeda Wood - Chilliwack, BC     Canada     Uneeda Wood Products                   Bob            604-858-3431  604-858-6347
                                                                                         Goldsworthy

                                                  655 Unsworth Road,
                                                  Chilliwack, B.C. V2R 4P4

WCC   Westree - Abbotsford, BC         Canada     Westree Custom Cedar Products          Mark Dumont    604-855-0933  604-855-1521
</TABLE>

<PAGE>

                                     - 3 -

<TABLE>
<S>   <C>                              <C>      <C>                                    <C>                <C>           <C>
                                                720 Riverside Road,
                                                Abbotsford, B.C. V2S 7N8

WES   Westran - New Westminster, BC    Canada   Westran Services Limited               Hugh [ILLEGIBLE]   604-520-6366  604-520-1024
                                                76 Braid Street
                                                New Westminster, B. C. V3L 3P3

WRD   Western Road - Abbotsford, BC    Canada   Western Road Road Systems Inc.         Wes [ILLEGIBLE]    604-864-4945  604-864-8178
                                                P. O. Box 8000, 34499 McClary Ave
                                                Abbotsford, B. C, V2S 6H1

BLB   Berth 122, Long Beach            USA      Fremont Forest Products                Jim [ILLEGIBLE]    562-945-2911  562-696-8574
                                                13215 E. Penn Street, Suite 319,
                                                Whittier, CA 90607

CCK   Cedar Creek Wholesale            USA      Cedar Creek Wholesale Inc.             Mark [ILLEGIBLE]   800-621-2611  816-965-5575
                                                13720 Botts Road,
                                                Grandview, Missouri 64030

CCL   Cedar Creek Wholesale            USA      Cedar Creek Wholesale Inc.             Dave [ILLEGIBLE]   918-258-9688  918-251-6405
                                                6500 S. 145th East Avenue,
                                                P. O. Box 1900,
                                                Broken Arrow, OK  74013

DAL   Dallas, Texas                    USA      Warehouse Specialist, Inc.                                214-660-8820
                                                12110 Garland Road
                                                Dallas, Texas

DES   Desticon - Sumas, WA             USA      Desticon Transportation Services Inc.  Bethan [ILLEGIBLE] 360-988-6444  360-988-0944
                                                300 Bob Mitchell Road, Box 1270,
                                                Sumas, WA  98295

DET   Desticon - Irving, TX            USA      Desticon Transportation Services Inc.                     972-785-8844
                                                2731 Carl Road,
                                                Irving, Texas 75062

MWR   Midwest Reload - Big Lake, MN    USA      Division of Central Missouri           Harold [ILLEGIBLE] 816-471-6754
                                                P. O. Box 1056,
</TABLE>

<PAGE>

                                     - 4 -

<TABLE>
<S>   <C>                              <C>    <C>                                    <C>                <C>             <C>
                                              Blue Springs, MO 64013

MWL   Midwest Reload - Kansas City, MO USA    Midwest Reload, Inc.                   Harold Mellon      816-471-6754
                                              Division of Central Missouri
                                              P. O. Box 1056,
                                              Blue Springs, MO 64013

OLY   Port of Olympia - Olympia, WA    USA    Port of Olympia                        John Wolfe         360-528-8042    604-528-8094
                                              1022 Marine Drive, N.E.
                                              Olympia, Washington  98501-6961

PCI   PCI Reload - Galena Park, TX     USA    PCI Transportation Inc.                                   713-673-6120    713-673-3973
                                              P. O. Box 4,
                                              Galena, Texas 77547


PE    Port Everglade, FL (was Eacom)   USA    Gulf Atlantic Lumber Sales Inc.        Frank Morrison     813-623-3933    813-621-9436
                                              4001-B McLane Drive,
                                              Tampa, Florida 33610-7440


RIG   Reload Inc - Glendale, AZ        USA    Reload Inc. & Reload Express                              602-939-9262
                                              P. O. Box 15179,                                          AII A/P
                                              St. Louis, MO 63110

RRF   Robbins Reload - Fontana, CA     USA    Robbins Reload Inc.                    Randy Robbins      909-355-1577    909-355-4956
                                              P. O. Box 757,
                                              Fontana, CA 92334-0757

RUS   Russin - Montgomery, NY          USA    Russin Lumber Corp..                   Brent Stuart       845-457-4000    845-457-4010
                                              21 Leonards Drive,
                                              Montgomery, New York 12549

SHP   Saga - Lumber enroute to US      USA    Saga Forest Carriers                   Jordan Welch       604-684-7569    604-684-7240
                                              Suite 1350, 409 Granville Street,
                                              Vancouver, B. C. V6C 1T2

WCP   Weiss Cascade - Centralia, WA    USA    Weiss Cascade                          Mike Jensen        360-807-9105
                                              1703 Lum Road,
                                              Centralia, Washington
</TABLE>

<PAGE>

                        SCHEDULE 2 - MATERIAL AGREEMENTS

A.    MATERIAL CUSTOMER AGREEMENTS

1.    Wood Pulp Contract No. 01/NBKP/1003/WP

      Supply Agreement made October 1, 2003 between Western Pulp Limited
      Partnership, as seller, and with APP Asia Pulp & Paper/Sinar Mas Group, as
      buyer, for the purchase and sale of Northern Softwood kraft pulp,
      "Squamish" brand, Canadian origin.

2.    Wood Pulp Contract No. W-052/98-I

      Supply Agreement made January 25, 1999 between Western Pulp Limited
      Partnership, as seller, and Ascoli Paper S.R.L., as buyer, for the
      purchase and sale of Bleached Softwood Sulphate pulp, "Squamish" brand,
      Canadian origin, and addendum thereto effective January 1, 1999.

3.    Wood Pulp Contract No. W-062/03-G

      Supply Agreement made June 04, 2003 between Western Pulp Limited
      Partnership, as seller, and Athens Paper Mill Co. S.A., as buyer, for the
      purchase and sale of Bleached Softwood Sulphate pulp, "Squamish" brand,
      Canadian origin.

4.    Wood Pulp Contract No. W-028/90-I

      Supply Agreement made November 16, 1989 between Western Pulp Limited
      Partnership, as seller, and Cartiere Burgo SpA, as buyer, for the purchase
      and sale of Squamish Bleached Softwood pulp, and addendum thereto
      effective February 9, 1993.

5.    Wood Pulp Contract No. W-035/94-I

      Supply Agreement made May 17, 1994 between Western Pulp Limited
      Partnership, as seller, and Cartiere Burgo SpA, as buyer, for the
      purchase and sale of Squamish Bleached Softwood pulp, and addendums
      thereto effective May 26, 1994.

6.    Wood Pulp Contract No. W-054/99-I

      Undated Supply Agreement between Western Pulp Limited Partnership, as
      seller, and Cartiere Burgo SpA, as buyer, executed by seller and buyer in
      October and September 1999, for the purchase and sale of Bleached Softwood
      Sulphate pulp, "Squamish" brand, Canadian origin, and addendum thereto
      effective October 15, 1999.

7.    Wood Pulp Contract No. W-060/03-I

      Supply Agreement made April 7, 2003 between Western Pulp Limited
      Partnership, as seller, and Cartiere Burgo SpA, as buyer, for the purchase
      and sale of Bleached Softwood Sulphate pulp, "Squamish" brand, Canadian
      origin, and addendum thereto effective January 1, 2003.

8.    Wood Pulp Contract No. W-053/99-I

<PAGE>

                                     - 2 -

      Undated Supply Agreement made September 9, 1999 between Western Pulp
      Limited Partnership, as seller, and Delfinet Sarl Luxembourg, as buyer,
      executed by seller and buyer in September 1999 for the purchase and sale
      of Bleached Softwood Sulphate pulp, "Squamish" brand, Canadian origin, and
      addendum thereto effective April 1, 1999.

9.    Wood Pulp Contract No. W-040/96-I

      Supply Agreement dated May 13, 1996 between Western Pulp Limited
      Partnership, as seller, and Delicarta SpA., as buyer, for the purchase and
      sale of Squamish-K (SQ-K) Bleached Softwood Pulp packed in unitized bales,
      and addendum thereto dated May 13, 1996.

10.   Wood Pulp Contract No. W-043/97-K

      Undated Supply Agreement made April 7, 2003 between Western Pulp Limited
      Partnership, as seller, and Hankuk Paper Mfg. Co. Ltd., as buyer, for the
      purchase and sale of Squamish-K (SQ-K) Bleached Softwood Pulp, and
      addendum thereto effective February 1, 1997.

11.   Wood Pulp Contract No. W-063/03-K

      Supply Agreement made January 26, 2004 between Western Pulp Limited
      Partnership, as seller, and Hankuk Paper Manufacturing Co. Ltd., as buyer,
      for the purchase and sale of Bleached Softwood Sulphate pulp, "Squamish"
      brand, Canadian origin,, and addendum thereto effective October 1, 2003.

12.   Wood Pulp Contract No. W-065/04-K

      Supply Agreement made April 2, 2004 between Western Pulp Limited
      Partnership, as seller, and MonaLisa Co., Ltd., as buyer, for the purchase
      and sale of Bleached Softwood Sulphate pulp, "Squamish" brand, Canadian
      origin,, and addendum thereto effective January 1, 2004.

13.   Wood Pulp Contract No. W-059/02-U

      Supply Agreement made March 1, 2004 between Western Pulp Limited
      Partnership, as seller, and Noramex, L.L.C. d.b.a. Korimpeks Pulp & Paper,
      as buyer, for the purchase and sale of Bleached Softwood Sulphate pulp,
      "Squamish" brand, Canadian origin.

14.   Wood Pulp Contract No. W-055/00-A

      Supply Agreement made May 8, 2000 between Western Pulp Limited
      Partnership, as seller, and Sappi Europe SA, as buyer, for the purchase
      and sale of Bleached Softwood Sulphate pulp, "Squamish" brand, Canadian
      origin, addendum thereto effective April 1, 2000, and undated addendum
      thereto executed April 22, 2002.

15.   Wood Pulp Contract No. W-064/03-G

      Supply Agreement made November 9, 2003 between Western Pulp Limited
      Partnership, as seller, and SCA Hygiene Products GMBH, as buyer, for the
      purchase and sale of

<PAGE>

                                     - 3 -

      Bleached Softwood Sulphate pulp, "Squamish" brand, Canadian origin, and
      addendum thereto effective April 1, 2003.

16.   Wood Pulp Contract No. W-049/98-J

      Supply Agreement made April 1, 1998 between Western Pulp Limited
      Partnership, as seller, and Tokyo Pulp & Paper International Co., Ltd., as
      buyer, for the purchase and sale of Bleached Softwood Sulphate pulp and
      addendum thereto dated April 1, 1998.

B.    MATERIAL FIBRE SUPPLY AGREEMENTS

1.    Crown Sawlog Agreement for the sale by TimberWest Holdings Ltd. and the
      purchase by Doman Forest Products Limited of 330,000m3 to 350,000m3 of
      sawlogs per annum in perpetuity.

2.    Norske Agreements:

(a) Hog Fuel Purchase Agreement dated April 14, 1978 between Doman Forest
Products Limited and British Columbia Forest Products Limited (predecessor of
Norske Skog Canada Limited).

(b) Chip and Sawlog Supply Agreement dated September 8, 1980 between British
Columbia Forest Products Limited and Doman Industries Limited whereby Doman
Industries Limited sells 180,000 units of chips to Norske Skog Canada Limited in
consideration for Norske Skog Canada Limited selling sawlogs to Doman Industries
Limited based on a 1.3m3/unit ratio.

(c) Sawdust Purchase Agreement dated January 1, 1987 between Crown Forest
Industries Limited and Doman Forest Products Limited.

(d) Letter Agreement dated November 15, 2002 to Doman Forest Products Limited
from Norske Skog Canada Limited concerning payment terms for chips, sawdust, hog
fuel and sawlogs.

(e) Letter Agreement dated December 2, 2002 to Doman Forest Products Limited
from Norske Skog Canada Limited concerning variation in supply arrangements.

(f) Two Letter Agreements, both dated June 11, 2003, to Doman Forest Products
Limited from Norske Skog Canada Limited - one concerning supply arrangements for
chips sawdust, hog fuel and sawlogs, the other specifically concerning the
supply of sawdust.

<PAGE>

        SCHEDULE 3 - TENURES, LICENCES, PERMITS AND OTHER AUTHORIZATIONS

(a)   Timber Tenures;

(b)   Crown Leases and Licences of Occupation - Ministry of Sustainable Resource
      Management;

(c)   Port Authority Leases;

(d)   Special Use Permits - Ministry of Forests;

(e)   Water Licences and Permits; and

(f)   Environmental Permits.
<PAGE>

                                     - 2 -

                                 TIMBER TENURES

<TABLE>
<CAPTION>
                                             CURRENT EXPIRY                           FOREST REGION/
  LICENSEE                 TENURE                DATE               CURRENT AAC      FOREST DISTRICT
-----------------       -------------        --------------         -----------      ---------------
<S>                     <C>                  <C>                    <C>              <C>
Western Forest          Forest Licence       Oct 29, 2013               83,981          Vancouver/
  Products Inc.             A19240                                                    Campbell River
                                                                                      & Port NcNeill

Doman-Western           Forest Licence       Aug. 31, 2013             193,734          Vancouver/
  Lumber Ltd.               A16847                                                      Mid Coast

 Western Forest         Forest Licence       Oct. 31, 2013             275,762          Vancouver/
  Products Inc.             A16845                                                      Mid Coast

Doman-Western           Forest Licence       Aug. 19, 2013              58,466          Vancouver/
  Lumber Ltd.               A19216                                                       Squamish

Doman-Western           Forest Licence       Oct. 18, 2013             355,814          Vancouver/
  Lumber Ltd.               A19231                                                   Campbell River

Doman-Western           Forest Licence       Nov. 11, 2013              33,545          Vancouver/
  Lumber Ltd.               A19228                                                   Sunshine Coast

Doman-Western           Forest Licence       Aug. 23, 2013              33,896          Vancouver/
  Lumber Ltd.               A19205                                                      Chilliwack

 Western Forest           Tree Farm          Feb. 28, 2025           1,446,758          Vancouver/
  Products Inc.           Licence 6                                                   Port McNeill

Doman-Western             Tree Farm          Dec. 31, 2026             894,132          Vancouver/
  Lumber Ltd.             Licence 19                                                 Campbell River

 Western Forest           Tree Farm          May 20, 2024              643,674          Vancouver/
  Products Inc.           Licence 25                                                 Campbell River
                                                                                     & South Island
</TABLE>

<PAGE>

                                     - 3 -

                     CROWN LEASES & LICENCES OF OCCUPATION -
                  MINISTRY OF SUSTAINABLE RESOURCE MANAGEMENT
             (ADMINISTERED BY LAND AND WATER BRITISH COLUMBIA INC.)

<TABLE>
<CAPTION>
LEGAL DESCRIPTION [LOCATION/OPERATION]                    FILE #          DOCUMENT #
--------------------------------------                    ------          ----------
<S>                                                       <C>             <C>
District Lot 475 and 403 Nanaimo District [Nanaimo,
Duke Point Sawrnill - Log handling and storage for                        Lease
sawmill]                                                  # 1400767       #101523

[Hecate Bay - Aeroplane Float]                                            Licence
                                                          # 1402021       #105114

District Lot 474, Nanaimo District [Duke Point                            Lease
Sawmill - log storage and handling purposes]              # 1405599       #103961

Unsurveyed foreshore or land covered by water being
part of the bed of Esperanza Inlet, Nootka District                       Licence #
[Brodick Creek - Log dump & booming grounds]              # 1405281       107548

Unsurveyed foreshore or land covered by water being
part of the bed of Esperanza Inlet, Nootka District
[Brodick Creek - Wharf & floats for boats & aircraft                      Licence
moorage]                                                  # 1405282       #109044

That part of District Lot 160, Cowichan District
[Cowichan Bay Sawmill - Log booming and storage                           Licence #
purposes]                                                 # 1405508       109033

That part of Sections 11 and 12, Range 1, Cowichan
District [Cowichan Bay Sawmill - powerline, waterline,                    Licence #
pumphouse, well and access]                               # 1405520       109037

That part of District Lot 160, together with
unsurveyed foreshore or land covered by water being part
of the bed of Cowichan Bay, both of Cowichan District                     Licence #
[Sawmill - log storage]                                   # 1406547       109253

Those two sites consisting of unsurveyed foreshore or
land covered by water being part of the bed of Hardy
Inlet, Range 2, Coast District [MacNair - Log handling,                   Licence #
storage & moorage]                                        # 5404951       515245

All that parcel or tract of land in the vicinity of
the mouth of Doris Creek, Range 2, Coast District                         Licence #
[logging camp, repair shop & fuel tank storage area]      # 5405961       514698

[Holberg, Camp - Camp residential]                                        Lease #
                                                          # 0086884       120619

District Lot 927, Renfrew District, containing 4.29                       Lease #
hectares [Jordan River - Dump, Booming & Storage]         # 0124310       109389

Port McNeill, Block A of Lot 1711, Rupert District                        Lease #
[Port McNeill - Log dump, booming, & storage]             # 0129930       101107

Holberg Inlet - Log booming & storage, storage tanks,                     Lease #
causeway, scow (un)loading & tie-up                       # 0137584       120531

Unsurveyed foreshore or land covered by water being
part of the bed of Becher Bay, Metchosin District                         Licence #
[Becher Bay - Log Storage, Booming]                       # 0139176       108873
</TABLE>

<PAGE>

                                     - 4 -

<TABLE>
<CAPTION>
LEGAL DESCRIPTION [LOCATION/OPERATION]                    FILE #          DOCUMENT #
--------------------------------------                    ------          ----------
<S>                                                       <C>             <C>
District Lot 6039, Group 1, New Westminster District                      Lease #
[Andys Bay - Log booming & storage]                       # 0165212       233408

Lot 6058, Group 1, New Westminster District [Andys                        Lease #
Bay - Booming ground & log storage]                       # 0172838       231859

Block B of District Lot 6167, Group 1, New
Westminster District [Andys Bay - Log booming &                           Lease #
storage]                                                  # 0176109       235913

[Port McNeill - Booming & log storage]                                    Lease #
                                                          # 0195648       120481

Lot 2085, Rupert District [Holberg - Booming grounds                      Licence #
& log storage]                                            # 0202654       100975

District Lot 136, Metchosin District [Becher Bay - Log                    Lease #
Storage]                                                  # 0208842       104788

District Lot 2986, Queen Charlotte District [Moresby -                    Licence #
Wharfsite]                                                # 0210372       633419

Lot 2092, Rupert District [Neroutsos Inlet                # 0210673       Lease #
Boomstick, Boomchain]                                                     102189

District Lot 2094 and 2307, Rupert District                               Lease #
[Port Alice - Log dump, storage]                          # 0210675       101591

[Ketchen Island - log handling/storage]                   #  210681       Lease #
                                                                          101590

Block B of District Lot 6169, Group 1, New
Westminster District [Andys Bay - Log booming,                            Lease #
storage & towing]                                         # 0211020       238525

District Lots 2104 and 2127, Rupert District [Mahatta                     Lease #
River - Log handling & barge moorage]                     # 0217003       106498

Julian Cove - Log Storage                                                 Lease #
                                                          # 0233447       120243

Lot 2117, Rupert District [Thurburn Bay - dump,                           Lease #
sorting, booming]                                         # 0233448       120182

Mahatta River - Log Storage                                               Lease #
                                                          # 0243702       120386

Lot 2238, Rupert District [Coal Harbour - Log Storage]                    Lease #
                                                          # 0260680       101039

Lot 2239, Rupert District [Coal Harbour - Dump, DLS,                      Lease #
log storage]                                              # 0260681       101062

That part of District Lot 3034, Queen Charlotte District                  Licence #
[Newcombe Inlet - Floating dock & moorage]                # 0260691       635077


District Lot 3035, Queen Charlotte District [Sewell
Inlet, Dryland Sort - Dryland sort, log dumping, storage,                 Lease #
barge landing & docking facilities]                       # 0260693       635079

Lot 2244, Rupert District [Mahatta River - Log Storage]                   Lease #
                                                          # 0263493       101364

District Lot 399, Rupert District [Jeune Landing, QDLS                    Lease #
- Boom, Store. Barge Load]                                # 0276688       103276

District Lot 138, Rupert District [Winter Harbour - Log                   Lease #
storage]                                                  # 0278712       106590

Unsurveyed foreshore or land covered by water being
part of the bed of Holberg Inlet, Rupert District [Log                    Licence #
handling & storage]                                       # 0287519       104964
</TABLE>

<PAGE>

                                     - 5 -

<TABLE>
<CAPTION>
LEGAL DESCRIPTION [LOCATION/OPERATION]                    FILE #          DOCUMENT #
--------------------------------------                    ------          ----------
<S>                                                       <C>             <C>
District Lot 6866, Group 1, New Westminster District      # 0295534       Lease #
[Andys Bay - Log storage]                                                 236151

District Lot 165, Rupert District [Holberg Inlet - Log    # 0297040       Lease #
storage]                                                                  103616


Block A of District Lot 140, Rupert District [Holberg                     Lease #
- Community hall, baseball field & recreation facility]   # 0299137       103588

District Lot 121, Queen Charlotte District [Sewell Inlet  # 0308435       Lease #
- Log storage, booming and barge loading]                                 740613

[Kultus Cove - Log storage & barge loading]               # 0318076       Lease #
                                                                          120426

Lot 309, Rupert District [Winter Harbour - Log dumping    # 0319349       Lease #
booming]                                                                  101027

District Lot 305, Range 1 Coast District [Heydon Bay -                    Lease #
Log storage & boom tie-up]                                # 0331109       107582

Lot 353, Rupert District [Naka Creek - Wharf site, log                    Lease #
dumping, booming & sorting]                               # 0333779       101670

District Lot 396, Rupert District [Schloss Island - Log                   Lease #
Storage]                                                  # 0333988       102716

District Lot 1416, Rupert District [Mahatta River - Log                   Lease #
booming & storage]                                        # 0336224       106033

Lot 306, Range 1 Coast District [Heydon Bay - Boom,                       Lease #
storage]                                                  # 0336794       101361

District Lot 391 and 449, Rupert District [Ingersoll -                    Lease #
Dump,Boom,Storage]                                        # 0337203       104519

District Lot 398, Rupert District [Robson Cove - Dump,                    Lease #
Booming]                                                  # 0348089       102248

District Lot 405, Rupert District [Coal Harbour - Log                     Lease #
handling, storage, tie-up]                                # 0354386       109384

District Lot 441, Rupert District [Hushamu creek - Dump,                  Lease #
& storage]                                                # 0356422       109631

District Lot 444, Rupert District [Hushamu creek -                        Lease #
Storage, Boom Tie-up]                                     # 0356423       103993

Rupert Arm - Dump, Booming, Sorting                                       Lease #
                                                          # 0356736       104306

District Lot 445, Rupert District [Rupert Arm -                           Lease #
Storage, Boom Tie-up]                                     # 1400146       104283

Part of the bed of Holberg Inlet, lying adjacent to
Section 1, Rupert District [Holberg - Sewer outfall                       R/W
Statutory Right of Way]                                   # 1402064       #122527

District Lot 269, Range 1, Coast District [Heydon Bay -                   Lease #
Log dumping, booming & wharfsite]                         # 1402563       105118

Unsurveyed foreshore or land covered by water being
part of the bed of Neroutsos Inlet, Rupert District                       Licence #
[Pender Point - Log Storage]                              # 1404014       106196

Unsurveyed foreshore or land covered by water being
part of the bed of Neroutsos Inlet, Rupert District                       Licence #
[Thurburn B - Boat dock]                                   # 1404039      106038
</TABLE>

<PAGE>

                                     - 6 -

<TABLE>
<CAPTION>
LEGAL DESCRIPTION [LOCATION/OPERATION]                    FILE #          DOCUMENT #
--------------------------------------                    ------          ----------
<S>                                                       <C>             <C>
That part of District Lot 1983, and all that
foreshore or land covered by water being part of the
bed of Heydon Bay, Range 1, Coast District [Heydon                        Licence #
Bay - Log handling & storage]                             # 1405920       107620

Unsurveyed foreshore or land covered by water being
part of Neroutsos Inlet, Rupert District [Port Alice                      Licence #
- Log handling & storage]                                 # 1406050       107617

That part of Block B of District Lot 819, Rupert                          Licence #
District [Holberg - Boat moorage and launch]              # 1406692       105012

That part of District Lot 1982; together with
unsurveyed foreshore or land covered by water being
part of the bed of Frazer Bay, Range 1, Coast                             Licence #
District [Log handling]                                   # 1407101       109449

That part of Blocks A and B of District Lot 307,                          Licence #
Rupert District [Michelson Point - Log Dump]              # 1408338       105635

All that unsurveyed foreshore or land covered by
water being part of the bed of Stafford Lake, Range                       Licence #
1, Coast District [Heli drop sites, booming & storage]    # 1412178       109974

That part of district lot 1145, together with
unsurveyed foreshore or land covered by water being
part of the bed of Harrison Lake, Yale Division of
Yale District [Harrison Lake, S of Silver Ck, N of                        Licence #
Bear Ck - Heli drop zones]                                # 2407187       237634

District Lot 103 together with adjoining unsurveyed
foreshore or land covered by water, being part of
the bed of Smith Inlet, all in Range 2, Coast
District [Piper River - Log dump, bundling, storage,                      Licence #
dock and camp barge moorage]                              # 5404489       515198

Unsurveyed foreshore or land covered by water, being
part of the bed of Yeo Cove, Range 3, Coast District                      Licence #
[Log storage & float camp]                                # 5404857       514704

Unsurveyed foreshore or land covered by water being
part of the bed of Ingram Bay, Spiller Inlet, Range 2,
Coast District [Log handling, storage, float camp &                       Licence #
dock]                                                     # 5405106       514874

Those parcels or tracts of land adjacent to Ingram
Creek and Spiller Inlet, Range 2, Coast District
[Dryland sort, log storage, repair shop, waste site,                      Licence #
water tank & fuel]                                        # 5406043       514895

All that parcel or tract of land in the vicinity of
District Lot 134, Range 3, Coast District [Yeo                            Licence #
Island, Dove Pt - Campsite]                               # 5406130       514825

All those five sites or parcels of land consisting of
unsurveyed foreshore or land covered by water being
part of the bed of Dean Channel, Range 3, Coast                           Licence
District [Kimsquit - Heli Drop zones]                     # 5406287       # 515061

Unsurveyed foreshore or land covered by water being
part of the bed of Mathieson Channel, Range 3, Coast                      Licence
District [McPherson Creek - Log storage]                  # 5406428       # 515292

All that foreshore or land covered by water being part
of the bed of Gordon Cove, Queen Charlotte District                       Licence
[Log dumping & storage]                                   # 6403419       # 633321
</TABLE>
<PAGE>

                                     - 7 -

<TABLE>
<CAPTION>
LEGAL DESCRIPTION [LOCATION/OPERATION]                      FILE #         DOCUMENT #
--------------------------------------                      ---------      ----------
<S>                                                         <C>            <C>
Unsurveyed foreshore or land covered by water being
part of the bed of Griffin Passage, Range 3, Coast                         Licence #
District [Log dumping, storage, breakwater & wharf]         # 6404952      704226

All that unsurveyed Crown foreshore being part of the
bed of Sheep Passage, within Range 3, Coast District                       Licence #
[Sheep Passage .. Log dumping, handling & storage]          # 6405949      740642

All that unsurveyed Crown foreshore being part of the
bed of Thurston Harbour, Queen Charlotte District                          Lease #
[Thurston Harbour - Log handling & storage]                 # 6406149      740643

All that unsurveyed Crown foreshore being part of the
bed of Green Inlet, Range 3, Coast District [Green Inlet,
Baffle Point - Log Storage, Barge load & Heli drop                         Licence #
zones]                                                      # 6406212      740638

All that unsurveyed Crown foreshore being part of the
bed of James Bay, Range 3, Coast District [Log dump,                       Licence #
sort, barge moorage]                                        # 6406214      635184

Unsurveyed Crown foreshore being part of the bed of
Griffin Passage, Range 3, Coast District [E of                             Licence #
Griffin Lake - log handling]                                # 6406406      635172

Unsurveyed Crown foreshore being part of the bed of
Mathieson Channel, Range 3, Coast District [Hird                           Licence #
Point - Log handling]                                       # 6406407      635439

All that foreshore of land covered by water being part
of the bed of Aaltanhash Inlet, Range 4, Coast District                    Licence #
[Log handling]                                              # 6406408      635037

All that foreshore of land covered by water being part of
the bed of Klekane Inlet, Range 4, Coast District                          Licence #
[Klekane Inlet, W shore, E of Scow Bay - log handling]      # 6406409      635076

Saltair Sawmill - Millsite, jackladder, chip barge
storage, barge loading, boom breakdown and log              # 0081822      107564
storage

Ladysmith Marina, (Ivy Green) - commercial marina           # 0114642      109797

Woods Island, across from Ladysmith sawmill - Log
Storage                                                     # 0128587      105568

Tahsis sawmill - sawmill , log handling and marina
purposes                                                    # 0157142      105393

Harrison Lake - Log handling and storage                    # 0160406      237517

Head Bay - Garage, docking facility, log dumping,
booming & storage                                           # 0202227      104912

Tahsis Inlet - Log Booming & Storage                        # 0205654      101662

Tahis Inlet, West Bay - Log storage                         # 0207943      120272

Jacklah Bay - Log booming & storage                         # 0210462      102824

Maurelle Island, Calm Channel - Log dumping, booming &
storage                                                     # 0233710      105345

Blowhole Bay - Moorage, Dryland Sort, log dump, booming
& storage                                                   # 0236752      105561

Kilbella Bay - Log booming and loading                      # 0249061      512739

Santiago Creek - Log booming storage & boat house           # 0253976      105300

Kendrick Inlet - Log dumping, booming & storage             # 0257490      100882
</TABLE>

<PAGE>

                                     - 8 -

<TABLE>
<CAPTION>
LEGAL DESCRIPTION [LOCATION/OPERATION]                   FILE #       DOCUMENT #
--------------------------------------                   ---------    ----------
<S>                                                      <C>          <C>
Jacklah Bay - Log storage & booming                      # 0257508    100732

McCurdy Creek - Log dumping & storage                    # 0257509    105322

Tahsis Inlet - Log storage                               # 0271327    101403

Jacklah - Log storage                                    # 0279515    103515

Tahsis, 230 Head Bay Rd - scow berths & log storage      # 0279943    103141

Matchlee Bay - Log storage                               # 0282016    120212

Plumper Harbour - Log storage                            # 0293032    105700

Hanna Channel - Log storage                              # 0298449    107545

McCurdy Creek - Log storage, float & moorage water
lot                                                      # 0306435    105563

Tahsis - Power line                                      # 0308613    1927

Port Eliza - Log dump, storage, booming ground &
boat tie up                                              # 0313069    104876

Nesook Bay - Log handling                                # 0324552    104502

Houston Creek - Log handling                             # 0324553    104925

Zeballos Inlet - Log dump, booming & storage             # 0324740    105519

Espinosa Inlet - Log dump, boom & storage, wharf &
float camp                                               # 0327268    109155

Tsowwin River - Log dumping, booming, storage & dock     # 0327789    106595

Tahsis Inlet, N of Mozino Pt - Log dumping booming &
storing                                                  # 0332211    105336

Muchalat Inlet - Log storage                             # 0347226    106088

Blowhole Bay - Log storage                               # 0348803    106325

Ladysmith, Burleith Arm - Log Storage & Sorting          # 1400256    103451

Ladysmith, Woods Island - Log Storage                    # 1400257    109117

Woods Island, across from Saltair sawmill - Log
Storage                                                  # 1400984    107523

Kleeptee, Williamson Passage - Log handling &
storage                                                  # 1402115    109796

Houston River - Log handling, booming and storage        # 1402799    100748

Jacklah Bay - log storage                                # 1402800    103172

Plumper Harbour - Log dumping & storage                  # 1402943    101394

Ladysmith, Burleith Arm - Log Sorting                    # 1404231    107632

Zeballos, Campsite - Residential, light industry         # 1404832    105721

Gold River Pit - Gravel quarry, sawmill, asphalt
plant                                                    # 1405228    107686

Zeballos - log dumping, booming & storage, wharf &
scow grid                                                # 1405380    103981

Gold River, Log dump - log dumping, handling and
storage                                                  # 1408097    105637

Gold River, Dryland Sort - Dryland Sort                  # 1408328    105811

Silverado - Log dump, booming, barge grid, dock, ramp
& habitat compensation reef                              # 1408725    108702

Bligh I., Fidalgo Passage - Log dumping booming &
storage                                                  # 1408835    109077

Gold River, VIH Heli facility - Helicopter facility
(office, hanger, landing area, fuel tanks)               # 1408858    107782

Tahsis Inlet, N of Tahsis Narrows - Tie Up for heli
barges                                                   # 1409389    107789

Hanna Channel - Log storage & booming                    # 1409470    108834

Kings Passage - Heli water drop and log storage          # 1409684    109267
</TABLE>

<PAGE>

                                     - 9 -

<TABLE>
<CAPTION>
LEGAL DESCRIPTION [LOCATION/OPERATION]                   FILE #       DOCUMENT #
--------------------------------------                   ---------    ----------
<S>                                                      <C>          <C>
Harrison Lake - Log handling                             # 2404220    237263

Harrison Lake, Long Island - Log handling & storage      # 2407941    238140

Sheemahant - Log handling, storage, Floating logging
camp, docks & barge ramp                                 # 5400801    514683

Owikeno Lake, 1st Narrows - Log Dump, storage, booming,
floats, dock & barge ramp                                # 5401882    704363

Shotbolt Bay, West shore - Log storage, barge and ship
loading                                                  # 5402061    512106

Kilbella Bay - Log sorting, bundling, dumping & barge    # 5402417    515180

Owikeno Lake - Log handling, storage & loadout           # 5405641    514667

Sheemahant - Airstrip & Logging Camp                     # 5405685    514870

Machmell - Campsite                                      # 5405687    514862

Owikeno Lake, east of first narrows - Heli water drop
sites, temp booming area                                 # 5406506    704395

Tahsis Inlet - Log storage & booming                     # 0235216    120294

Tahsis Inlet - Log storage                               # 0235217    104304
</TABLE>

SQUAMISH PULP MILL

<TABLE>
<CAPTION>
LOCATION/OPERATION                                       FILE #       DOCUMENT #
--------------------------------------                   ---------    ----------
<S>                                                      <C>          <C>
[WoodFibre, Squamish Pulpmill - Log storage, barge                    Lease #
moorage]                                                 # 0044927    233113

Lot 2804, Group 1, New Westminster District [WoodFibre,               Lease #
Watts Pt 1 - Log storage]                                # 0138766    231574

District Lot 6001, Group 1, New Westminster District                  Lease #
[WoodFibre, Watts Pt #2 - Log storage & booming]         # 0158375    238401

Block A of District Lot 6053, Group 1, New Westminster                Lease #
District [WoodFibre, N. Bluffs - Log storage]            # 0167009    234399

District Lot 3279, Group 1, New Westminster District                  Lease #
[WoodFibre, S. Bluff - Log storage]                      # 0311786    233410

District Lot 3231, Group 1, New Westminster District                  Lease #
[WoodFibre, Watts IV - Log Handling]                     # 2402937    236807

Block A of District lots 6847 and 7790, Group I, New
Westminster District [Silverdale - Barge loading, log                 Lease #
Storage & handling of wood products]                     # 0348756    238239

District Lot 7758, Group 1, New Westminster District                  Lease #
[Silverdale - Log Storage]                               # 2404873    235156
</TABLE>
<PAGE>

                                     - 10 -

                              PORT AUTHORITY LEASES

NORTH FRASER PORT AUTHORITY

<TABLE>
<CAPTION>
LOCATION/OPERATION                                                       DOCUMENT #
------------------                                                       -----------
<S>                                                                      <C>
Vancouver Sawmill - Sawmill                                              L # NF05004

Vancouver Sawmill - Sawmill scow moorage and barge loading facilities    L # NF05005

Vancouver Sawmill - Sawmill, scow berth, pond, sort area & floats        L # NF05006

Vancouver Sawmill - Sawmill                                              L # NF05007

Vancouver Sawmill - Mill site, pond & log pockets                        L # NF05008

Silvertree Sawmill - Scow Moorage area and related piles and
dolphins                                                                 L # NF05021

Silvertree Sawmill - Barge mooring                                       L # NF05022

Silvertree Sawmill - millsite                                            L # NF05023

Silvertree Sawmill - Log sorting and/or holding grounds                  L # NF05025

Silvertree Sawmill - Maintenance and operation of a log holding area     L # NF05062

Richmond Lumber Sales - A wharf site and scow berth, and related
works and structures.                                                    L # NF05073

Richmond, ABC - Storage, Booming                                         L # NF05035

Mitchell Island - log storage and booming area                           L # NF05038

Richmond, No Sag - Log boom storage                                      L # NF05083

Twigg Island - Storage, Booming                                          L # NF05089

F&K, Eburne Island - Scow Moor, Store, Boom                              L # NF05090

Burnaby, Big Bend - Log storage & booming                                L # NF08004
</TABLE>

FRASER RIVER PORT AUTHORITY

<TABLE>
<CAPTION>
LOCATION/OPERATION                                                     DOCUMENT #
------------------                                                     ----------
<S>                                                                    <C>
Surrey, AP#10, Port Mann - Log storage                                 L # W32-00

Surrey, AP#3 - Log Storage                                             L # W32-02

AP #2, Pitt River - Storage                                            L # W32-06

AP #1, Pitt River - Storage                                            L # W32-07

Poplar Island - Storage                                                L # W32-09

Surrey, Port Mann, AP # 9 - Storage                                    L # W32-11

Surrey, AP#5, Wing Dam - Booming, storage                              L # W32-12

Barnston Island, AP # 7 - Log storage                                  L # W32-14

New Westminster, Evco - log storage                                    L # W32-18
</TABLE>

<PAGE>

                                     - 11 -

NANAIMO PORT AUTHORITY

<TABLE>
<CAPTION>
LOCATION/OPERATION                                                        DOCUMENT #
------------------                                                       -------------
<S>                                                                      <C>
Nanaimo, Duke Point Sawmill - Barge Loadout (Lot 1, Part Plan VIP        L # NH#1 &
42197 NLD & Part Lot 447)                                                447

Nanaimo Sawmill - Log Storage                                            L # NH#106

Nanaimo Sawmill - Sawmill site                                           L # NHC FL
                                                                         300

Nanaimo Sawmill -                                                        L # NH#103
</TABLE>
<PAGE>

                                     - 12 -

                              SPECIAL USE PERMITS-
                               MINISTRY OF FORESTS

<TABLE>
<CAPTION>
LOCATION/OPERATION                        PERMIT #   FOREST DISTRICT
---------------------------------------   --------   -----------------------------
<S>                                       <C>        <C>
Kimsquit - Camp & Air Strip               SUP11637   North Island - Central Coast
                                                     Forest District

MacNair - Log dump & Dryland sort         SUP17712   North Island - Central Coast
                                                     Forest District

MacNair - Dryland sort waste disposal     SUP17719   North Island - Central Coast
site                                                 Forest District

Brodick Creek - Dryland sort and          SUP17737   Campbell River Forest
logging camp site                                    District

MacNair - Rock quarry                     SUP21783   North Island - Central Coast
                                                     Forest District

Tom Bay - DLS, camp & shop, waste         SUP23407   North Island - Central Coast
disposal site                                        Forest District

Heydon Bay - Dryland sort                 SUP11656   Campbell River Forest
                                                     District

Botel Lake - Solid waste disposal site    SUP20138   North Island - Central Coast
                                                     Forest District

San Josef - Rock quarry                   SUP20991   North Island - Central Coast
                                                     Forest District

Pegattem Cr - Road surfacing quarry       SUP21086   North Island - Central Coast
                                                     Forest District

Yeo Island - Gravel pit & rock quarry     SUP21571   North Island - Central Coast
                                                     Forest District

Yeo Island - DLS waste disposal           SUP21854   North Island - Central Coast
                                                     Forest District

Varney Main - Gravel pit                  SUP22316   North Island - Central Coast
                                                     Forest District

Michelson Point - Log Dump                SUP22366   North Island - Central Coast
                                                     Forest District

Jeune Landing - Gravel pit                SUP22486   North Island - Central Coast
                                                     Forest District

Mount Pickering - Repeater site           SUP22600   North Island - Central Coast
                                                     Forest District

Holberg - Disposal, solid waste           SUP22785   North Island - Central Coast
                                                     Forest District

William Lake - Rock quarry                SUP22885   North Island - Central Coast
                                                     Forest District

Holberg, Macjack 30 - Quarry              SUP22942   North Island - Central Coast
                                                     Forest District

James Bay - Temporary Camp, future shop   SUP23384   North Island - Central Coast
facility                                             Forest District

Koprino, Simpson 101 - Rock quarry        SUP23425   North Island - Central Coast
                                                     Forest District (possibly
                                                     South Island Forest District)

Thurburn Bay, Dump - Shop, dump &         SUP23485   North Island - Central Coast
fuel storage                                         Forest District

Roderick, DLS debris dump - DLS           SUP23532   North Island - Central Coast
</TABLE>

<PAGE>

                                     - 13 -

<TABLE>
<S>                                       <C>        <C>
Debris disposal                                      Forest District

Jordan River, Loss Ck - Rock quarry       SUP23558   South Island Forest District

Naka Creek - Dryland Sort, shop, waste    SUP23580   Campbell River Forest District
disposal & burn sites

Naka Creek - Campsite, fuel tanks         SUP23588   Campbell River Forest District

Stafford Lake - Camp & DLS waste          SUP23622   Campbell River Forest District
disposal site

Holberg, NE 66 & Br 602 - Gravel pit      SUP23678   North Island - Central Coast
                                                     Forest District

Winter Harbour, Log dump - Log dump       SUP23773   North Island - Central Coast
                                                     Forest District

Botel Mn, shop & bone yard - shop &       SUP23774   North Island - Central Coast
bone yard                                            Forest District

Holberg, South Mn - Log dump              SUP23775   North Island - Central Coast
                                                     Forest District

Koprino - Log dump & fuel station         SUP23776   North Island - Central Coast
                                                     Forest District

Koprino - Powder magazine                 SUP23777   North Island - Central Coast
                                                     Forest District

Ingersoll - Dump                          SUP23801   North Island - Central Coast
                                                     Forest District

Mahatta River - Camp, dump & boneyard     SUP23803   North Island - Central Coast
                                                     Forest District

Jeune landing, N of QDLS - Gravel pit     SUP23805   North Island - Central Coast
                                                     Forest District

Holberg, Ronning 140 - Rock Pit           SUP23970   North Island - Central Coast
                                                     Forest District

Holberg, NE Mn - Rock Pit                 SUP23979   North Island - Central Coast
                                                     Forest District

Holberg, Ronning 211 - Rock Pit           SUP23985   North Island - Central Coast
                                                     Forest District

Holberg, Quatsino Mn - Rock Pit           SUP23993   North Island - Central Coast
                                                     Forest District

Sewell - logging camp                     SUP24155   Queen Charlotte Island
                                                     FOREST DISTRICT

Sewel - dryland sort                      SUP24156   Queen Charlotte Island
                                                     FOREST DISTRICT

Sewell - powder magazine caps             SUP24157   Queen Charlotte Island
                                                     FOREST DISTRICT

Sewell - powder magazine                  SUP24158   Queen Charlotte Island
                                                     FOREST DISTRICT

Sewell - communications tower             SUP24159   Queen Charlotte Island
                                                     FOREST DISTRICT

Sewell - temporary timber processing      SUP24160   Queen Charlotte Island
site                                                 FOREST DISTRICT

Sewell - fuel station                     SUP24161   Queen Charlotte Island
                                                     FOREST DISTRICT

Sewell - metal recycling site             SUP24162   Queen Charlotte Island
                                                     FOREST DISTRICT

Sewell - DLS waste site                   SUP24163   Queen Charlotte Island
</TABLE>

<PAGE>

                                     - 14 -

<TABLE>
<S>                                       <C>        <C>
                                                     FOREST DISTRICT

Sewell - dock/fuel station                SUP24164   Queen Charlotte Island
                                                     FOREST DISTRICT

Thurston Harbour - undeveloped land       SUP24165   Queen Charlotte Island
                                                     FOREST DISTRICT

Sewell - gravel pits / log dump           SUP24166   Queen Charlotte Island
                                                     FOREST DISTRICT

Kendrick Inlet - Log dump & storage       SUP03457   Campbell River Forest
                                                     District

Blowhole Bay - Log dump & camp            SUP05728   Campbell River Forest
                                                     District

Kendrick Inlet - Campsite                 SUP07189   Campbell River Forest
                                                     District

Port Eliza - Log Dump or dry land sort    SUP07190   Campbell River Forest
                                                     District

Pt Eliza, Peculiar Point - Campsite       SUP07298   Campbell River Forest
                                                     District

Oktwanch River - gravel pit & heli        SUP08056   Campbell River Forest
service landings                                     District

Sheemahant - Waste disposal, airstrip     SUP10757   North Island - Central Coast
                                                     Forest District

Kilbella Bay - Camp                       SUP10788   North Island - Central Coast
                                                     Forest District

Machmell - Airstrip, disposal site        SUP11630   North Island - Central Coast
                                                     Forest District

Kilbella Bay - Dryland Sort burn          SUP11634   North Island - Central Coast
site/disposal site                                   Forest District

Big Silver River - Campsite               SUP12927   Chilliwack Forest District

Kendrick Inlet - Landing debris dump      SUP12941   Campbell River Forest
                                                     District

Sheemahant - quarries, pits, Heli sites   SUP14078   North Island - Central Coast
& zones, explosives                                  Forest District

Beano Creek - Gravel pit                  SUP15476   Campbell River Forest
                                                     District

Plumper Harbour - Equipment storage       SUP15500   Campbell River Forest
area                                                 District

Kilbella - Gravel pit                     SUP15518   North Island - Central Coast
                                                     Forest District

Plumper Harbour - Camp                    SUP15529   Campbell River Forest
                                                     District

Harrison Lake - Rock quarry & Gravel      SUP17114   Chilliwack Forest District
pit

Port Eliza - Dryland sort waste           SUP17155   Campbell River Forest
disposal site                                        District

Machmell - Gravel pits                    SUP17716   North Island - Central Coast
                                                     Forest District

Maurelle Island, Calm Channel - Dryland   SUP20014   Campbell River Forest
Sort & Log dump                                      District

Houston River - Waste Disposal Site       SUP21606   Campbell River Forest
                                                     District

Nesook Bay - Dryland Sort & shop site     SUP21625   Campbell River Forest
</TABLE>

<PAGE>

                                     - 15 -

<TABLE>
<S>                                       <C>        <C>
                                                     District

Gold River, Camp site - Campsite          SUP21626   Campbell River Forest
                                                     District

Tsowwin Narrows, DLS - Log dump,          SUP22497   Campbell River Forest
dryland sort, shop & fuel storage                    District

Muchalat Inlet - Dryland sort, camp,      SUP22498   Campbell River Forest
shop & boneyard                                      District

West Tahsis Inlet - Log dump & dryland    SUP22499   Campbell River Forest
sort                                                 District

Head Bay - Dryland sort & dump            SUP22500   Campbell River Forest
                                                     District

Silverado Creek - Dryland Sort            SUP22555   Campbell River Forest
                                                     District

Callaghan Main, West - Gravel pits        SUP22646   Sunshine Coast Forest
                                                     District

Rutherford Creek - Dryland Sort           SUP22948   Sunshine Coast Forest
                                                     District

Little Zeballos R - Log dump, dryland     SUP23037   Campbell River Forest
sort & waste disposal                                District

Head Bay - Waste disposal site            SUP23182   Campbell River Forest
                                                     District

Squamish, Calalaghan - Rock quarry        SUP23474   Squamish Forest District

West Tahsis, DLS - DLS Refuse site        SUP23562   Campbell River Forest
                                                     District

Owikeno Lake, NE of Phinney Ck - Log      SUP23595   North Island - Central Coast
dump or DLS                                          Forest District

Harrison Lake, Clear Ck FSR - Gravel      SUP23618   Chilliwack Forest District
Pit

Blowhole Bay - Waste disposal site for    SUP23681   Campbell River Forest
DLS refuse                                           District
</TABLE>

SQUAMISH PULP MILL

<TABLE>
<S>                                       <C>
WoodFibre, Mill Ck - Garbage dump         SUP7103    Squamish Forest District
</TABLE>
<PAGE>

                                     - 16 -

                       WATER LICENCES AND RELATED PERMITS

Water licences and permits, all of which are presently held by Western Pulp Inc.
as a general partner of and on behalf of Western Pulp Limited Partnership.

SQUAMISH PULP MILL

<TABLE>
<CAPTION>
                                           LICENSE AND
ISSUED TO                                 PERMIT NO.'S.     DATE ISSUED     DESCRIPTION
---------                                 -------------     -----------     -----------
<S>                                       <C>               <C>             <C>
Whalen Pulp and Paper Mills Limited       F.W.L. 4896       Aug. 5/25       Sylvia Lake

Whalen Pulp and Paper Mills Limited       F.W.L. 4897       Aug. 5/25       Sylvia Lake

Whalen Pulp and Paper Mills Limited       Permit            Nov. 9/22       App. to Lot 2351
                                                                            N.W.D.

B.C. Pulp and Paper Company Limited       F.W.L. 7218       Dec. 16/29      Woodfibre Creek

Whalen Pulp and Paper Mills Limited       Permit            Aug. 31/21      Part of Lots 1337 &
                                                                            3359, N.W.D.

B.C. Pulp and Paper Company Limited       F.W.L. 7219       Dec. 16/29      Sulphite Creek

Whalen Pulp and Paper Mills Limited       Permit            Aug. 31/21      Part of Lot 1337

B.C. Pulp and Paper Company Limited       F.W.L. 7220       Dec. 16/29      Woodfibre Creek

Alaska Pine and Cellulose Ltd.            F.W.L. 17264      May 1/59        Henriette Lake

Alaska Pine and Cellulose Ltd.            Permit 4512       May 1/59        Crown land around
                                                                            Henriette Lake

Rayonier Canada Ltd.                      F.W.L. 17345      Feb. 1/60       Sylvia Lake

Rayonier Canada Ltd.                      Permit 4607       Feb. 1/60       Crown land in Group 1,
                                                                            N.W.D.

Rayonier Canada Ltd.                      F.W.L. 17346      Feb. 1/60       Henriette Lake

Rayonier Canada Ltd.                      F.W.L. 17347      Feb. 1/60       Mill Creek

Rayonier Canada Ltd.                      Permit 4606       Feb. 1/60       Lot l337, N.W.D.

Rayonier Canada Ltd.                      F.W.L. 17348      Feb. 1/60       Henriette Lake

Rayonier Canada Ltd.                      Permit 4605       Feb. 1/60       Lots 1337 7 3359
                                                                            Group 1, N.W.D.

Rayonier Canada Ltd.                      F.W.L. 17350      Feb. 1/60       Woodfibre Creek

B.C. Pulp and Paper Company Limited       Permit            June 21/28      Lot 2351, N.W.D.

Rayonier Canada Ltd.                      F.W.L. 17351      Feb. 1/60       Henriette Lake

Rayonier Canada Ltd.                      Permit 4608       Feb. 1/60       bed of Henriette
                                                                            Lake and Lot 3357
</TABLE>

<PAGE>

                                     - 17 -

<TABLE>
<CAPTION>
                                          LICENSE AND
ISSUED TO                                 PERMIT NO.'S.      DATE ISSUED     DESCRIPTION
---------                                 -------------      -----------     -----------
<S>                                       <C>                <C>             <C>
Rayonier Canada (B.C.) Ltd.               F.W.L. 44329       June 16/75      Woodfibre Creek

Rayonier Canada (B.C.) Ltd.               F.W.L. 44330       June 16/75      Mill Creek
</TABLE>

<PAGE>

                                     - 18 -

                              ENVIRONMENTAL PERMITS

SQUAMISH PULP MILL

<TABLE>
<CAPTION>
LOCATION                        PERMIT #                         TYPE
--------                        --------                   -----------------
<S>                             <C>                        <C>
Woodfibre                       PE-01239                        Effluent

Woodfibre                       PA-01647                          Air

Woodfibre                       PE-02334                        Effluent

Woodfibre                       PR-07322                   Refuse (Landfill)
</TABLE>