**Exhibit10.2**

**EXECUTION COPY**

**Cdn.$850,000,000**

**CREDITAGREEMENT**

**dated as ofDecember 29, 2006**

*Among*

**CASCADES INC.CASCADES USA INC.CASCADES EUROPE SASCASCADES ARNSBERG GMBH**(*as Borrowers*)

- *and* —

**NATIONAL BANKFINANCIAL INC.SCOTIA CAPITALCIBC WORLD MARKETS**(*as Co-Lead Arrangers andJoint Bookrunners*)

- *and* —

**NATIONAL BANK OFCANADATHE BANK OF NOVA SCOTIA**(*as Co-AdministrativeAgents*)

- *and* —

**CIBC WORLD MARKETS**(*as Syndication Agent*)

- *and* —

**CAISSE CENTRALEDESJARDINS**(*as Documentation Agent*)

- *and* —

**THE LENDERSFROM TIME TO TIME PARTY HERETO**

**MCCARTHY TÉTRAULTLLP**

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**TABLEOF CONTENTS**
|                            | ** ** | ** **                                                                | ** ** | **Page**   |
|----------------------------|------------|---------------------------------------------------------------------------|------------|------------|
| ** **                 | ** ** | ** **                                                                | ** ** | ** ** |
| **1 -****Interpretation**  | ** ** | **1**                                                                     |
| ** **                 | ** ** | ** **                                                                |
| 1.1                        |       | Definitions                                                               |       | 1          |
| 1.2                        |       | Designated Subsidiaries                                                   |       | 12         |
| 1.3                        |       | Currency Conversions                                                      |       | 13         |
| 1.4                        |       | Accounting Terms, Calculations and Adjustments                            |       | 13         |
| 1.5                        |       | Time                                                                      |       | 13         |
| 1.6                        |       | Headings and Table of Contents                                            |       | 13         |
| 1.7                        |       | Governing Law                                                             |       | 13         |
| 1.8                        |       | Previous Agreements                                                       |       | 14         |
| 1.9                        |       | Inconsistency                                                             |       | 14         |
|                       |       |                                                                      |       |       |
| **2 -****The  Facilities** | ** ** | **14**                                                                    |
| ** **                 | ** ** | ** **                                                                |
| 2.1                        |       | The Revolving Facility                                                    |       | 14         |
| 2.2                        |       | Reallocation among Tranches                                               |       | 14         |
| 2.3                        |       | The Additional Revolving Facility                                         |       | 15         |
| 2.4                        |       | The Term Loan                                                             |       | 15         |
| 2.5                        |       | Purpose and Nature of the Facilities                                      |       | 16         |
| 2.6                        |       | Borrowing Options under the Revolving Facility                            |       | 16         |
| 2.7                        |       | Borrowing Options under the Facilities other than  the Revolving Facility |       | 17         |
| 2.8                        |       | Borrowing Base Limitations                                                |       | 17         |
| 2.9                        |       | Borrowings Proportionate to Commitments                                   |       | 17         |
| 2.10                       |       | Notice of Borrowings                                                      |       | 17         |
| 2.11                       |       | Swingline Utilizations                                                    |       | 18         |
| 2.12                       |       | Funding                                                                   |       | 19         |
| 2.13                       |       | Lender’s Failure to Fund                                             |       | 19         |
| 2.14                       |       | Conversions and Renewals                                                  |       | 19         |
| 2.15                       |       | Limitations on Lender’s Obligation to Fund                           |       | 20         |
| 2.16                       |       | Increase of Revolving Facility                                            |       | 20         |
| 2.17                       |       | Deemed Utilizations                                                       |       | 21         |
|                       |       |                                                                      |       |       |
| **3 -****Acceptances**     | ** ** | **22**                                                                    |
| ** **                 | ** ** | ** **                                                                |
| 3.1                        |       | Period and Amounts                                                        |       | 22         |
| 3.2                        |       | Disbursement                                                              |       | 22         |
| 3.3                        |       | Power of Attorney                                                         |       | 22         |
| 3.4                        |       | Depository Bills                                                          |       | 23         |
| 3.5                        |       | Availability                                                              |       | 23         |
|                       |       |                                                                      |       |       |
| **4 -****Libor  Loans**    | ** ** | **23**                                                                    |
| ** **                 | ** ** | ** **                                                                |
| 4.1                        |       | Amounts and Periods                                                       |       | 23         |
| 4.2                        |       | Changed Circumstances                                                     |       | 23         |
| 4.3                        |       | Conversion Prior to Maturity                                              |       | 24         |

 

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| **5 -****Letters  of Credit**                         | ** ** | **24**                                                    |
|-------------------------------------------------------|------------|-----------------------------------------------------------|
| ** **                                            | ** ** | ** **                                                |
| 5.1                                                   |       | Availability                                              |   | 24 |
| 5.2                                                   |       | Maturity of Letters of Credit                             |   | 24 |
| 5.3                                                   |       | Borrowings                                                |   | 24 |
| 5.4                                                   |       | Payments under Letters of Credit                          |   | 25 |
| 5.5                                                   |       | Currency Conversion                                       |   | 25 |
| 5.6                                                   |       | Indemnity                                                 |   | 25 |
| 5.7                                                   |       | I.C.C. Rules                                              |   | 25 |
|                                                  |       |                                                      |   |   |
| **6 -****Fees  And Interest**                         | ** ** | **26**                                                    |
| ** **                                            | ** ** | ** **                                                |
| 6.1                                                   |       | Commitment and Agency Fees                                |   | 26 |
| 6.2                                                   |       | Letter of Credit Fees                                     |   | 26 |
| 6.3                                                   |       | Administrative Charges with respect to Letters of  Credit |   | 26 |
| 6.4                                                   |       | Standby Fee                                               |   | 26 |
| 6.5                                                   |       | Acceptance Fees                                           |   | 26 |
| 6.6                                                   |       | Interest on Prime Rate Loans                              |   | 27 |
| 6.7                                                   |       | Interest on US Base Rate Loans                            |   | 27 |
| 6.8                                                   |       | Interest on European Loans                                |   | 27 |
| 6.9                                                   |       | Interest on Libor Loans                                   |   | 27 |
| 6.10                                                  |       | Calculation of Interest Rates                             |   | 27 |
| 6.11                                                  |       | Interest on Arrears                                       |   | 27 |
|                                                  |       |                                                      |   |   |
| **7 -****Repayment,  Prepayment and Reduction**       | ** ** | **28**                                                    |
| ** **                                            | ** ** | ** **                                                |
| 7.1                                                   |       | Repayment of the Facilities                               |   | 28 |
| 7.2                                                   |       | Mandatory Prepayments                                     |   | 28 |
| 7.3                                                   |       | Optional Prepayments                                      |   | 28 |
| 7.4                                                   |       | Exchange Rate Fluctuations                                |   | 29 |
| 7.5                                                   |       | Reduction of the Revolving Facility                       |   | 29 |
|                                                  |       |                                                      |   |   |
| **8 –****Place  of Payment, Currency and Taxes** | ** ** | **29**                                                    |
| ** **                                            | ** ** | ** **                                                |
| 8.1                                                   |       | Payments to the Agent                                     |   | 29 |
| 8.2                                                   |       | Manner of Payments                                        |   | 30 |
| 8.3                                                   |       | Currency                                                  |   | 30 |
| 8.4                                                   |       | Judgment Currency                                         |   | 30 |
| 8.5                                                   |       | Payments Net of Taxes                                     |   | 30 |
| 8.6                                                   |       | Obligations of Lenders in respect of Taxes                |   | 31 |
|                                                  |       |                                                      |   |   |
| **9 -****Conditions  Precedent to Borrowings**        | ** ** | **31**                                                    |
| ** **                                            | ** ** | ** **                                                |
| 9.1                                                   |       | Conditions Precedent to the Initial Borrowing             |   | 31 |
| 9.2                                                   |       | Conditions Precedent to all Borrowings                    |   | 32 |
| 9.3                                                   |       | Waiver of Conditions Precedent                            |   | 33 |
| 9.4                                                   |       | Termination of this Agreement                             |   | 33 |
|                                                  |       |                                                      |   |   |
| **10 –****Security**                             | ** ** | **33**                                                    |
| ** **                                            | ** ** | ** **                                                |
| 10.1                                                  |       | Guarantees                                                |   | 33 |
| 10.2                                                  |       | Security over Current Assets                              |   | 33 |

 

ii

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| 10.3                                        |       | Series 1 Charged Fixed Assets                         |       | 33         |
|---------------------------------------------|------------|------------------------------------------------------------|------------|------------|
| 10.4                                        |       | Series 2 Charged Fixed Assets                         |       | 34         |
| 10.5                                        |       | Fixed Assets Valuation Report                              |       | 35         |
| 10.6                                        |       | Insurance                                                  |       | 36         |
| 10.7                                        |       | Security for Hedging Agreements                            |       | 36         |
| 10.8                                        |       | Validity and Contents of Security Documents                |       | 36         |
| 10.9                                        |       | Exceptions for certain Credit Parties                      |       | 37         |
| 10.10                                       |       | Release of the Security                                    |       | 37         |
|                                        |       |                                                       |       |       |
| **11 -****Representations  and Warranties** | ** ** | **37**                                                     |
| ** **                                  | ** ** | ** **                                                 |
| 11.1                                        |       | Corporate Existence and Capacity                           |       | 37         |
| 11.2                                        |       | Authorization and Validity                                 |       | 37         |
| 11.3                                        |       | No Breach                                                  |       | 38         |
| 11.4                                        |       | Approvals                                                  |       | 38         |
| 11.5                                        |       | Compliance with Laws and Permits                           |       | 38         |
| 11.6                                        |       | Title to Assets                                            |       | 38         |
| 11.7                                        |       | Litigation                                                 |       | 38         |
| 11.8                                        |       | No Default                                                 |       | 38         |
| 11.9                                        |       | Solvency                                                   |       | 39         |
| 11.10                                       |       | Taxes                                                      |       | 39         |
| 11.11                                       |       | ERISA and Pension Plans                                    |       | 39         |
| 11.12                                       |       | Margin Stock Restrictions                                  |       | 39         |
| 11.13                                       |       | Investment Company Act                                     |       | 39         |
| 11.14                                       |       | Restriction on Payments                                    |       | 39         |
| 11.15                                       |       | Corporate Structure and Location of Assets                 |       | 39         |
| 11.16                                       |       | Financial Statements and Fiscal Year                       |       | 40         |
| 11.17                                       |       | No Material Change                                         |       | 40         |
| 11.18                                       |       | True and Complete Disclosure                               |       | 40         |
|                                        |       |                                                       |       |       |
| **12 -****Affirmative  Covenants**          | ** ** | **40**                                                     |
| ** **                                  | ** ** | ** **                                                 | ** ** | ** ** |
| 12.1                                        |       | General Covenants                                          |       | 40         |
| 12.2                                        |       | Use of Proceeds and Compliance with Indenture  Limitations |       | 41         |
| 12.3                                        | * *   | *USA Patriot Act*                                          |       | 41         |
| 12.4                                        |       | Further Assurances                                         |       | 42         |
| 12.5                                        |       | Representations and Warranties                             |       | 42         |
|                                        |       |                                                       |       |       |
| **13 -****Negative  Covenants**             | ** ** | **42**                                                     |
| ** **                                  | ** ** | ** **                                                 | ** ** | ** ** |
| 13.1                                        |       | Negative Pledge                                            |       | 42         |
| 13.2                                        |       | Indebtedness                                               |       | 42         |
| 13.3                                        |       | Limitations on Fundamental Changes                         |       | 43         |
| 13.4                                        |       | Investments                                                |       | 44         |
| 13.5                                        |       | Distributions                                              |       | 45         |
| 13.6                                        |       | Transactions with Related Parties                          |       | 45         |
|                                        |       |                                                       |       |       |
| **14 -****Financial  Ratios**               | ** ** | **45**                                                     |
| ** **                                  | ** ** | ** **                                                 | ** ** | ** ** |
| 14.1                                        |       | Funded Debt to Capitalization Ratio                        |       | 45         |
| 14.2                                        |       | Interest Coverage Ratio                                    |       | 45         |

 

iii

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| **15 -****Reporting  Requirements**                  | ** ** | **46**                                                               |
|------------------------------------------------------|------------|----------------------------------------------------------------------|
| ** **                                           | ** ** | ** **                                                           |
| 15.1                                                 |       | Annual Reporting                                                     |   | 46 |
| 15.2                                                 |       | Quarterly Reports                                                    |   | 46 |
| 15.3                                                 |       | ERISA                                                                |   | 46 |
| 15.4                                                 |       | Reporting from Time to Time                                          |   | 47 |
| 15.5                                                 |       | Hedging Agreements, Securitization and Factoring                     |   | 47 |
|                                                 |       |                                                                 |   |   |
| **16 -****Events  of Default and Remedies**          | ** ** | **48**                                                               |
| ** **                                           | ** ** | ** **                                                           | ** ** | ** ** |
| 16.1                                                 |       | Events of Default                                                    |   | 48 |
| 16.2                                                 |       | Remedies                                                             |   | 49 |
|                                                 |       |                                                                 |   |   |
| **17 -****Equality  Among Lenders**                  | ** ** | **49**                                                               |
| ** **                                           | ** ** | ** **                                                           |
| 17.1                                                 |       | Distribution among Lenders                                           |   | 49 |
| 17.2                                                 |       | Other Security                                                       |   | 49 |
| 17.3                                                 |       | Direct Payment to a Lender                                           |   | 50 |
| 17.4                                                 |       | Adjustments                                                          |   | 50 |
|                                                 |       |                                                                 |   |   |
| **18 -****The  Agent, the Co-Agent and The Lenders** | ** ** | **50**                                                               |
| ** **                                           | ** ** | ** **                                                           |
| 18.1                                                 |       | Appointment of the Agent and the Co-Agent                            |   | 50 |
| 18.2                                                 |       | Restrictions on the Powers of the Lenders                            |   | 50 |
| 18.3                                                 |       | Security Documents                                                   |   | 50 |
| 18.4                                                 |       | Action by the Agent or Co-Agent                                      |   | 51 |
| 18.5                                                 |       | Enforcement Measures                                                 |   | 51 |
| 18.6                                                 |       | Indemnification                                                      |   | 51 |
| 18.7                                                 |       | Reliance on Reports                                                  |   | 51 |
| 18.8                                                 |       | Liability of the Agent or the Co-Agent                               |   | 51 |
| 18.9                                                 |       | Liability of Lenders                                                 |   | 51 |
| 18.10                                                |       | Rights of the Agent or Co-Agent as Lender                            |   | 52 |
| 18.11                                                |       | Sharing of Information                                               |   | 52 |
| 18.12                                                |       | Competition                                                          |   | 52 |
| 18.13                                                |       | Successor Agent or Co-Agent                                          |   | 52 |
|                                                 |       |                                                                 |   |   |
| **19 -****Decisions,  Waivers and Amendments**       | ** ** | **53**                                                               |
| ** **                                           | ** ** | ** **                                                           | ** ** | ** ** |
| 19.1                                                 |       | Amendments and Waivers by the Majority Lenders                       |   | 53 |
| 19.2                                                 |       | Amendments and Waivers by Unanimous Approval                         |   | 53 |
| 19.3                                                 |       | Amendments relating to the Agents or an Issuing or  Swingline Lender |   | 53 |
|                                                 |       |                                                                 |   |   |
| **20 -****Miscellaneous**                            | ** ** | **54**                                                               |
| ** **                                           | ** ** | ** **                                                           | ** ** | ** ** |
| 20.1                                                 |       | Books and Accounts                                                   |   | 54 |
| 20.2                                                 |       | Determination                                                        |   | 54 |
| 20.3                                                 |       | Prohibition on Assignment by Borrowers                               |   | 54 |
| 20.4                                                 |       | Assignments and Participations                                       |   | 54 |
| 20.5                                                 |       | Designated Lenders                                                   |   | 55 |
| 20.6                                                 |       | Notes                                                                |   | 56 |
| 20.7                                                 |       | Costs and Expenses                                                   |   | 56 |
| 20.8                                                 |       | No Waiver                                                            |   | 56 |

 

iv

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| 20.9                                         |       | Irrevocability of Notices of Borrowings |   | 56     |
|----------------------------------------------|------------|-----------------------------------------|--------|--------|
| 20.10                                        |       | Set-off                                 |   | 56     |
| 20.11                                        |       | Indemnification                         |   | 57     |
| 20.12                                        |       | Mitigation of costs                     |   | 57     |
| 20.13                                        |       | Corrections of Errors                   |   | 58     |
| 20.14                                        |       | Communications                          |   | 58     |
| 20.15                                        |       | Counterparts                            |   | 58     |
| 20.16                                        |       | Waiver of Jury Trial                    |   | 58     |
|                                         |       |                                    |   |   |
| **21 -****Notices**                          | ** ** | **58**                                  |
| ** **                                   | ** ** | ** **                              |
| 21.1                                         |       | Sending of Notices                      |   | 58     |
| 21.2                                         |       | Receipt of Notices                      |   | 58     |
|                                         |       |                                    |   |   |
| **SCHEDULE “ A ”**                 | ** ** | **70**                                  |
| ** **                                   | ** ** | ** **                              |
| APPLICABLE  MARGINS OR RATES                 |       | 70                                      |
|                                         |       |                                    |
| **SCHEDULE “ B ”**                 | ** ** | **72**                                  |
| ** **                                   | ** ** | ** **                              |
| LIST OF  DESIGNATED SUBSIDIARIES             |       | 72                                      |
|                                         |       |                                    |
| **SCHEDULE “ C ”**                 | ** ** | **74**                                  |
| ** **                                   | ** ** | ** **                              |
| NOTICE OF  BORROWING [CONVERSION OR RENEWAL] |       | 74                                      |
|                                         |       |                                    |
| **SCHEDULE “ D ”**                 | ** ** | **75**                                  |
| ** **                                   | ** ** | ** **                              |
| COMPLIANCE  CERTIFICATE                      |       | 75                                      |
|                                         |       |                                    |
| **SCHEDULE “ E ”**                 | ** ** | **76**                                  |
| ** **                                   | ** ** | ** **                              |
| BORROWING BASE  REPORT                       |       | 76                                      |
|                                         |       |                                    |
| **SCHEDULE “ F ”**                 | ** ** | **77**                                  |
| ** **                                   | ** ** | ** **                              |
| FORM OF  ASSIGNMENT AND ASSUMPTION AGREEMENT |       | 77                                      |
|                                         |       |                                    |
| **SCHEDULE “ G ”**                 | ** ** | **81**                                  |
| ** **                                   | ** ** | ** **                              |
| ADDRESSES FOR  NOTICE PURPOSES               |       | 81                                      |

 

v

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**CREDIT AGREEMENT**

THISAGREEMENT is made as of December 29, 2006 among CASCADES INC., a corporationincorporated under the laws of the province of Quebec (“Cascades”), CASCADES USA  INC., acorporation incorporated under the laws of the State of Delaware (“Cascades US”),CASCADES EUROPE SAS, acorporation incorporated under the laws of France (“Cascades Europe”) and CASCADES ARNSBERG GMBH, a corporationincorporated under the laws of Germany (“Cascades Germany”) (each a “Borrower”and, collectively the “Borrowers”), *THEBANK OF NOVA SCOTIA**,a Canadian bank, as administrative agent and collateral agent (in suchcapacity, the “Agent”), National Bank of Canada, as co-administrative agent (insuch capacity, the “Co-Agent”) and each of the financial institutions havingexecuted this Agreement as a Lender.*

**Recitals**

A.                                   The Borrowers haverequested the Lenders to make available (i) to the Borrowers a 5-yearrevolving facility in a principal amount of $650,000,000, (ii) to Cascadesa 6-month additional revolving facility in a principal amount of $100,000,000,and (iii) to Cascades a term loan in a principal amount of $100,000,000.

B.                                     Each of theBorrowers other than Cascades is a Subsidiary of Cascades.

C.                                     The Lenders arewilling to make such credit facilities available to the Borrowers on the termsand subject to the conditions of this Agreement.

THEREFORE,**THE PARTIES AGREE ASFOLLOWS****:**

**1 -****Interpretation**

**1.1          Definitions**

In this Agreement, unlessthe context otherwise requires, the following terms have the respective meaningsset out below (and all such terms that are defined in the singular have thecorresponding meaning in the plural and *vice versa*).

“**Acceptance**”means: 

(a)                                  inrespect of a Lender who is a bank that customarily accepts bankers’acceptances, at such Lender’s discretion, either a depository bill subject tothe *Depository Bills and Notes Act* (Canada)or a bill of exchange subject to the *Bills of Exchange Act*(Canada), in each case, drawn by Cascades on and accepted by such Lender; and

(b)                                 inrespect of any other Lender, a promissory note bearing no interest, made byCascades to such Lender;

----

“**AdditionalRevolving Facility**” means the credit facility made available toCascades pursuant to Section 2.3;

“**Additional RevolvingFacility Maturity Date**” means, June 29, 2007;

“**Affiliate**”means, with respect to a Person, any other Person that directly or indirectlyControls, or is Controlled by, or is under common Control with, that Person;

“**Agent**” meansThe Bank of Nova Scotia or any successor agent appointed pursuant toSection 18.13;

“**Agent’s Office**”means the administrative office of the Agent designated by the Agent from timeto time as its administrative office for the purposes hereof, after notice tothe Lenders; 

“**Applicable Margin (orRate)**” means a margin (or rate) determined in accordance withSchedule ”A”;

“**Borrowing Base**”means the amount (expressed in Dollars) determined by the Agent as being thesum of:

(a)                                  80%of the book value of the trade accounts receivable of the Credit Parties whichare subject to the Security and are owed by customers located in Canada, theUnited States and Europe, but excluding accounts that have been outstanding formore than 90 days, accounts owed by Credit Parties, accounts subject toset-off, accounts in dispute and doubtful accounts, provided that,

(i)                                     such80% percentage will be increased to 90% for accounts receivable fully insuredby Export Development Canada or another credit insurer acceptable to theMajority Lenders but on the condition that the Agent will be loss payee underthe related policy,

(ii)                                  ifa Securitization or Factoring Program is in effect, the aggregate of theamounts determined pursuant to paragraphs (b), (c) and (d) below will beincluded in the Borrowing Base only up to 300% the amount determined under paragraph (a);

(b)                                 60%of the book value of the inventory of the Credit Parties which is subject tothe Security and is located in Canada, the United States and Europe, butexcluding work in process;

(c)                                  thelesser of $245,000,000 and 60% (rounded upwards to the next $5,000,000) of themarket value of the fixed assets of the Credit Parties which are subject to theSecurity in accordance with Section 10.3; and

(d)                                 60%(rounded upwards to the next $5,000,000) of the lesser of 5% of Cascades’ NetTangible Assets and the market value of the fixed assets of the Credit Partieswhich are subject to the Security in accordance with Section 10.4;

2

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less the excess of (i) a reasonable estimate of the aggregate ofall amounts owing to creditors (including governments) whose claims are securedor protected by a Lien capable of ranking *pari passu*with or prior to the Security with respect to such accounts receivables andinventory, over (ii) $10,000,000;

“**Borrowings**”means the Prime Rate Loans, the US Base Rate Loans, the Acceptances, the LiborLoans, the European Loans and the Letters of Credit;

“**Branch of Account**”means, with respect to any Facility or any Tranche of the Revolving Facility, abranch of a bank where the Agent has established an account for such Facilityor such Tranche or the Term Loan, in each case as may be designated by theAgent from time to time as the applicable branch of account, after consultationwith the applicable Borrowers, it being understood that unless otherwise agreedbetween the Agent and the Borrowers under Tranche C of the RevolvingFacility, the Branch of Account for such Tranche will be located in Canada;

“**Business Day**”means a day on which banks are open for business in Montreal and in Toronto,excluding Saturday and Sunday; where such term is used in the context of aUS Base Rate Loan, such day must also be a day on which banks are open forbusiness in New York City (and in Paris in the case of a US Base Rate Loanunder Tranche C) and where such term is used in the context of a LiborLoan or an European Loan, such day must also be a day on which banks are openfor business in London, England, in Paris and in the city where the applicableBranch of Account is located;

“**Cascades Indenture**”means the indenture dated February 5, 2003 for the 7 1/4% notes dueFebruary 15, 2013 of Cascades, as amended and supplemented from time totime;

“**CDOR Rate**” means, forany day, the arithmetic average of the bankers’ acceptances discount rates ofthe Canadian banks for the applicable period which appear on the Reuter’sScreen CDOR Page at 10:00 a.m., or if such day is not a Business Day, then onthe immediately preceding Business Day; provided however, that if such ratesare not available, then the CDOR Rate for any day will be the bankers’acceptances discount rate of the Agent for the applicable period as of 10:00a.m. on such day, or if said day is not a Business Day, then on the immediatelypreceding Business Day;

**“Co-Agent”** means National Bankof Canada or any successor co-agent appointed pursuant to Section 18.13;

“**Commitment**”means, with respect to each Lender, its proportion (expressed as a percentageor as an amount, as the case may be) of the aggregate amount of the Facilitiesor, as the case may be, of any Facility or of any of Tranche A,Tranche B or Tranche C of the Revolving Facility, as specifiedopposite its name on the signature pages of this Agreement, subject however toany readjustment resulting from a reduction in the amount of any Facility, achange in the amount of any Tranche of the Revolving Facility or from anassignment of Commitment made pursuant to this Agreement;

3

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“**Control**”(including any correlative term) means the possession, directly or indirectly,of the power to direct or cause the direction of the management or policies ofa Person (whether through ownership of securities or partnership or trustinterests, by contract or otherwise); without limiting the generality of theforegoing (i) a Person is deemed to Control a corporation if suchPerson (or such Person and its Affiliates) holds outstanding shares of thecorporation carrying votes in sufficient number to elect a majority of theboard of directors of the corporation, (ii) a Person is deemed to Controla partnership if such Person (or such Person and its Affiliates) holds more than50% in value of the equity of the partnership, (iii) a Person is deemed toControl a trust if such Person (or such Person and its Affiliates) holds morethan 50% in value of the beneficial interests in the trust, and (iv) aPerson that controls another Person is deemed to Control any Person controlledby that other Person;

“**Corporate Structure Chart**”means the description of the corporate and capital structure of Cascades andits Subsidiaries as at the date hereof (but giving effect to the Transaction),as described in the chart dated as of the date of this Agreement delivered tothe Agent and the Lenders prior to the execution of this Agreement; 

“**Credit Documents**”means this Agreement, the Security Documents, any note issued pursuant toSection 20.6 and any other present and future document relating to any ofthe foregoing, in each case, as amended, supplemented or restated;

“**Credit Parties**”means each of the Borrowers and their Subsidiaries, but excluding(i) Persons in which investments are classified under GAAP as jointventures or minority investments, and (ii) Metro Waste Paper Recovery Inc.and its Subsidiaries;

“**Default**” meansany event or circumstance which constitutes an Event of Default or which, withthe passage of time, the giving of a notice or both, would constitute an Eventof Default;

“**Designated Subsidiaries**”means the Subsidiaries of Cascades (other than a Borrower) designated asDesignated Subsidiaries pursuant to Section 1.2;

“**DiscountRate**” means on any day,

(a)                                  inrespect of any Acceptance accepted by a Lender that is a CanadianSchedule I bank, the CDOR Rate on such day for the applicable period; and

(b)                                 inrespect of any Acceptance to which clause (a) does not apply, the lesserof (x) the discount rate of such Lender in effect at or about 10:00 a.m.on the relevant date for bankers’ acceptances (or equivalent instruments ifsuch Lender does not customarily accept bankers’ acceptances) of such Lenderfor a period comparable to the period of such Acceptance and (y) the CDORRate plus 0.10%, provided that for greater certainty such latter rate willapply to any Lender that does not have a discount rate as contemplated in (x);

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“**Discounted Proceeds**”means, with respect to any issue of Acceptances, an amount (rounded to thenearest whole cent and with one-half of one cent being rounded up) calculatedby multiplying:

(a)                                  theaggregate face amount of such Acceptances; by

(b)                                 theprice, where the price is determined by dividing one by the sum of one plus theproduct of:

(i)                                     theDiscount Rate applicable to such Acceptances (expressed as a decimal); and

(ii)                                  afraction, the numerator of which is the number of days in the period of suchAcceptances and the denominator of which is 365;

with the price as so determined being rounded up ordown to the fifth decimal place and .000005 being rounded up;

“**Distribution**”means any payment in cash or in kind that provides an income (includinginterest or dividend) or a return on, or constitutes a distribution orredemption of, the equity or capital of a Person (other than by way of theissuance of new equity interests);

“**Dollar**” and thesymbol $ mean lawful money of Canada;

“**EBITDA**” means,with respect to a Person, the net income of such Person for the rollingfour-quarter period ending on the date that EBITDA is determined, plus thefollowing items, to the extent such items have been deducted in calculating netincome: 

(a)                                  InterestExpense;

(b)                                 incometaxes;

(c)                                  amortizationand depreciation; 

(d)                                 non-cashcompensation expenses for grants of performance shares or stock options to theextent same are not redeemable for cash;

(e)                                  othernon-cash items that do not represent an accrual of or reserve for cashexpenditures in any future period;

provided that net income is calculated excluding:

(f)                                    theequity of such Person in the net income of any other Person that is not aCredit Party to the extent same has not been distributed in cash to such Personby way of Distributions; (it being understood that cash dividends received bysuch Person from non-Credit Parties in each case are included in the net incomeof such Person);

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(g)                                 gainsor losses arising from extraordinary, unusual or non-recurring items (includingnon-recurring items referred to in financial statements as “specific items”) orfrom the translation of any long-term debt payable in a foreign currency aswell as unrealized gains or losses arising from Hedging Agreements;

(h)                                 non-cashitems that will not result in the receipt of cash payments in any futureperiod; and

(i)                                     thenet income of any Subsidiary to the extent that the payment of Distributions ofnet income by that Subsidiary is not at the date of determination permitted (i)without prior governmental approval (that has not been obtained), or(ii) pursuant to the terms of its constitutive documents or any agreement,order, law or regulation applicable to such Subsidiary or its shareholders;

“**Environmental Laws**”shall mean all laws, rules and regulations, and any orders or legally bindingpolicies, in each case as now or hereafter in effect, relating to theregulation or protection of human health, safety or the environment or toemissions, discharges, releases or threatened releases of pollutants,contaminants, chemicals or toxic or hazardous substances or wastes into theindoor or outdoor environment, including, without limitation, ambient air,soil, surface water, ground water, wetlands, land or subsurface strata, orotherwise relating to the manufacture, processing, distribution, use,treatment, storage, disposal, transport or handling of pollutants,contaminants, chemicals or toxic or hazardous substances or wastes;

“**ERISA**” means the *Employee Retirement Income Security Act* of 1974 of theUnited States, as amended from time to time;

“**ERISA Affiliate****”** means any corporation or tradeor business that is a member of any group of organizations (i) describedin Section 414(b) or (c) of the US Revenue Code of which any Credit Partyis a member and (ii) solely for purposes of potential liability underSection 302(c)(11) of ERISA and Section 412(c)(11) of the US RevenueCode and the lien created under Section 302(f) of ERISA andSection 412(n) of the US Revenue Code, described in Section 414(m) or(o) of the US Revenue Code of which any Credit Party is a member;

“**European Loan**” means aLoan denominated in Euros, Swedish Kronor or British Pounds and bearinginterest at the European Rate, plus the Applicable Margin;

“**European Rate**”means, for any day, the annual rate of interest for deposits in Euros, SwedishKronor or British Pounds (as applicable) with a term of 30 days in the Paris, London or Stockholm (respectively)interbank market which is shown on the applicable Telerate page of the TelerateService as of 11:00 a.m. (Paris, London or Stockholm time, as applicable)on such day, or if such day is not a Business Day, then on the immediatelypreceding Business Day; provided however that if such rate is not available,then the European Rate for any day will be the rate announced by the SwinglineLender under Tranche C as being its rate for similar deposits then ineffect on the relevant day, provided further that the Swingline Lender underTranche C and the Borrowers concerned may agree on an alternate referencerate for the determination of the European Rate;

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“**Facilities**”means the Revolving Facility, the Additional Revolving Facility and the TermLoan;

“**Funded Debt**”means, with respect to a Person, and without duplication, all obligations thatunder GAAP should be classified on such Person’s balance sheet as liabilitiesor to which reference should be made by footnotes thereto, (i) including,whether or not so classified, Guarantees and Liens granted in respect of FundedDebt of another Person, but (ii) excluding deferred taxes, minority interests,the settlement relating to Cascades Fine Papers, employees future benefits, thefair market value of and transitional deferred unrealized gains on financialderivative instruments, assets retirement obligations, deferred revenues, aswell as trade accounts payable, obligations under operating leases and otheraccrued obligations incurred in the ordinary course of business, and alsoexcluding Subordinated Debt;

“**Funded Debt toCapitalization Ratio**” means the ratio of Funded Debt to the sum ofFunded Debt and shareholders’ equity (with shareholders’ equity beingcalculated excluding the impact of adjustments relating to pension fundliabilities resulting from any change in GAAP after the date hereof);

“**GAAP**” meansgenerally accepted accounting principles in Canada or, where reference must bemade to GAAP in relation to any Credit Party organized under the laws of theUnited States, generally accepted accounting principles in the United States,in each case, which are in effect from time to time;

“**Guarantee**”means any obligation, contingent or not, directly or indirectly guaranteeingany liability or indebtedness of any Person or protecting a creditor of suchPerson from a loss in respect of any such liability or indebtedness or havingthe same economic effect;

“**Hedging Agreement**”means any foreign exchange contract, interest rate hedging contract and anyother financial contract or arrangement designed to protect a Credit Partyagainst fluctuations in currencies, interest rates or commodities;

“**Interest Coverage Ratio**”means the ratio of EBITDA to Interest Expense for the period EBITDA has beencalculated;

“**Interest Expense**”means, for any period, the aggregate amount of interest and other financingexpenses during such period in each case determined in accordance with GAAP,but (i) including interest and other financing charges which have beencapitalized, and (ii) excluding amortization of financing expenses, deferredgains or losses on the translation of any long-term debt payable in foreigncurrency or non-recurrent up front and financing costs, and (iii) alsoexcluding unrealized gains or losses arising from Hedging Agreements;

“**Issuing Lender**”means, in respect of any Tranche, the Lender who is the Swingline Lender undersuch Tranche, provided that the Borrowers concerned will be entitled with theconsent of the Agent and the Co-Agent to replace an Issuing Lender by anotherLender who has a Commitment under the applicable Tranche and is willing toissue Letters of Credit;

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“**Lender**” means each ofthe Persons having executed this Agreement as Lender and any other Person whobecomes a Lender pursuant to an assignment or a designation made in accordancewith Section 20.4 or Section 20.5;

“**Letter of Credit**”means a documentary or standby letter of credit or a letter of guarantee issuedpursuant to this Agreement; 

“**Libor**” means,with respect to any Libor Loan, the annual rate of interest determined by theAgent as being the rate (rounded upwards to the nearest multiple of 1/16%) fordeposits in US Dollars or in Euros (as applicable) in the London interbankmarket which is shown on the applicable Telerate page of the Telerate Serviceas of 11:00 a.m. (London, England time) on the second Business Day priorto the commencement of the applicable Libor Loan and for a comparable period,or if such rate is not available, the average (rounded up to the nearest 1/16%)of the rates per annum which leading banks in the London interbank market offerto the Agent for placing deposits in U.S. Dollars or Euros (as applicable)at approximately 11:00 a.m. (London time) on the second Business Day priorto the commencement of the applicable Libor Loan and for a comparable period;

“**Libor Loan**”means a loan denominated in US Dollars or in Euros bearing interest at Liborfor US Dollars or Euros, as applicable, plus the Applicable Margin; 

“**Lien**” means anyhypothec, security interest, mortgage, lien, right of preference, pledge,assignment by way of security or any other agreement or encumbrance of anynature that secures the performance of an obligation, and a Person is deemed toown subject to a Lien any property or assets that it has acquired or holdssubject to the right of a vendor or lessor under any conditional saleagreement, capital or synthetic lease or similar agreement (other than anoperating lease) relating to such property or assets;

“**Majority Lenders**”means any group of Lenders whose Commitments amount in the aggregate toat least 51% of the aggregate amount of the Facilities, provided that withrespect to a matter which adversely affects the Lenders under a Facilitydifferently from the Lenders generally, the Majority Lenders must also includeLenders whose Commitments amount in the aggregate to at least 51% of suchFacility;

“**Material Adverse Change**”means any change, condition, event or occurrence which, when consideredindividually or together with other changes, conditions, events or occurrences,could reasonably be expected to have a Material Adverse Effect;

“**Material Adverse Effect**”means (i) a material adverse effect on the condition (financial orotherwise), business, operations, assets, liabilities (absolute or contingent)or prospects of the Credit Parties taken as a whole, (ii) a materialadverse effect on the ability of Cascades or of the Credit Parties taken as awhole to perform their obligations under any Credit Document, or, (iii) amaterial impairment of the rights or remedies of the Lenders under any CreditDocument;

“**Material Contracts**”means (i) the share purchase agreement dated December 29, 2006entered into between Cascades, Domtar Inc. and Norampac Inc. relating to thepurchase of the

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shares of Norampac Inc.held by Domtar Inc.; (ii) the winding-up agreement dated December 29,2006 between Norampac Inc. and Cascades; and (iii) all agreementsevidencing that Cascades has become the successor of Norampac Inc. under the NorampacIndenture;

“**Net Tangible Assets**”means, in respect of Cascades, total assets, after deducting currentliabilities and non-controlling interests, and less, to the extent otherwiseincluded in total assets, the amounts of (without duplication)(i) reevaluations and other write-ups of assets subsequent toDecember 31, 2002, and (ii) goodwill and other intangible assets, ineach case calculated on an adjusted consolidated basis;

“**Non-DesignatedSubsidiaries**” means the Subsidiaries of Cascades (other than Borrowersand non-Credit Parties) that are not Designated Subsidiaries;

“**Norampac Indenture**”means the indenture dated as of May 28, 2003 for the 63⁄4 notes dueJune 1, 2013, as amended and supplemented from time to time;

“**PBGC**” shallmean the Pension Benefit Guaranty Corporation or any entity succeeding to anyor all of its functions under ERISA;

“**PermittedLiens**” means:

(a)                                  Liensimposed or arising by operation of law, in each case, in respect of obligationsnot yet due or which have been postponed or are being contested in good faithand by appropriate proceedings to the extent that adequate reserves aremaintained; 

(b)                                 pledgesor deposits made in the ordinary course of business in connection with bids ortenders or to comply with the requirements of any legislation or regulationapplicable to the Person concerned or its business or assets;

(c)                                  Liensgranted by Credit Parties incorporated in a member country of the EuropeanUnion on their accounts receivable and inventory not subject to the Securityand securing credit facilities made available to such Credit Parties in anaggregate amount at any time not exceeding $25,000,000;

(d)                                 Lienssecuring obligations incurred in connection with the purchase or the lease ofany real or immovable property, improvement thereto and equipment or securingany renewal, extension or replacement of such obligations, provided that anysuch Lien charges only the property purchased or leased and for an amount notin excess of the related obligation and that the aggregate of all outstandingamounts secured by such Liens (excluding amounts secured by Liens permittedpursuant to paragraph (f) below) does not at any time exceed for all CreditParties 5% of the Net Tangible Assets of Cascades and provided further that nosuch property is part of the fixed assets subject to the Security or ismaterial to the operations of such assets;

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(e)                                  Lienssecuring loans and advances made by a Credit Party to another Credit Party,provided such loans and advances are subject to the Security; and

(f)                                    Liensexisting on the date hereof and listed in the Permitted Liens list datedDecember 29, 2006 delivered to the Agent concurrently with the execution ofthis Agreement, or any renewal, extension or replacement of any such Lienprovided that no such renewal, extension or replacement may extend to propertyother than that initially charged by such Lien and that the aggregate of alloutstanding amounts secured by Liens permitted under this paragraph does not atany time exceed $50,000,000;

(g)                                 Lienssecuring obligations under a Securitization or Factoring Program, provided thatsuch Liens charge only accounts receivable sold pursuant to such program andprovided further that an intercreditor agreement in form and substancesatisfactory to the Majority Lenders is entered into between the Agent and theapplicable securitization provider or factor prior to the grant of such Liensfor the purposes of determining the respective rights and priorities of theparties over the accounts receivable of the relevant Credit Parties;

“**Person”** meansany natural person, legal person, corporation, company, partnership, jointventure, unincorporated organization, business trust or any other entity;

“**Plan**” means anemployee benefit or other plan established or maintained by a Credit Party orany ERISA Affiliate and that is covered by Title IV of ERISA;

“**Prime Rate**”means, for any day, the greater of:

(a)                                  theannual rate of interest established by the Agent as being its referencerate then in effect for determining interest rates for commercial loansdenominated in Dollars made in Canada; and

(b)                                 theCDOR Rate for bankers’ acceptances with a period of one month, plus 0.75%;

“**Prime Rate Loan**”means a loan denominated in Dollars bearing interest at the Prime Rate, plusthe Applicable Margin;

“**Revolving Facility**”means the revolving facility made available to the Borrowers pursuant toSection 2.1, by way of Tranche A, Tranche B and Tranche C;

“**Revolving FacilityMaturity Date**” means the fifth anniversary date of this Agreement;

“**Securitization orFactoring Program**” means any securitization or factoring programproviding for the sale of accounts receivable of any Credit Party, provided forgreater certainty that no such program may permit borrowing against the valueof accounts receivable or otherwise;

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“**Security**” meansthe security and subordinations granted and the guarantees, undertakings andacknowledgments provided to or for the benefit of the Lenders and the Agentpursuant to Article 10;

“**Security Documents**”means any document or agreement evidencing or relating to the Security,including any intercreditor agreement referred to in the definition ofPermitted Lien;

“**Solvent**” means,with respect to any Person, that as of the date of determination such Person is“solvent” within the meaning given to that term and similar terms underapplicable corporations laws or laws relating to voidable transactions orfraudulent transfers or conveyances; for such purpose, the amount of anycontingent liability at any time will be computed as the amount that, in lightof all of the facts and circumstances existing at such time, represents theamount that can reasonably be expected to become an actual or matured liability(irrespective of whether such contingent liabilities meet the criteria foraccrual under GAAP);

“**Subordinated Debt**”means any debt of Cascades which is fully subordinated and postponed to theobligations of the Credit Parties under the Facilities and the HedgingAgreements, and that the Agent, acting with the consent of the Majority Lenders,has agreed in writing to consider as such for the purposes of this Agreement;

“**Subsidiary**”means a Person that is under the Control of another Person;

“**Swingline Lender**”means, in respect of Tranche A, The Bank of Nova Scotia as Lender, inrespect of Tranche B, Comerica Bank as Lender, and in respect ofTranche C, BNP Paribas as Lender, provided that the Borrowers concernedwill be entitled with the consent of the Agent and the Co-Agent to replace aSwingline Lender by another Lender who agrees to become a Swingline Lender andhas a Commitment under the applicable Tranche;

“**Term Loan**”means the Term Loan made available to Cascades pursuant to Section 2.4;

“**Term Loan Maturity Date**”means October 31, 2012;

“**Tranche A**”means the portion of the Revolving Facility made available to Cascades asprovided in Section 2.1;

“**Tranche B**”means the portion of the Revolving Facility made available to Cascades US asprovided in Section 2.1;

“**Tranche C**”means the portion of the Revolving Facility made available to Cascades Europe,and Cascades Germany as provided in Section 2.1;

“**Transaction**”means the acquisition by Cascades of all outstanding shares of Norampac Inc.held by Domtar Inc. and the transfer of all assets and liabilities of NorampacInc. to Cascades and Cascades Canada Inc., as described in the CorporateStructure Chart;

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“**US Base Rate**”means, for any day, the greater of:

(a)                                  theannual rate of interest established by the Agent as being its referencerate then in effect for determining interest rates for commercial loansdenominated in US Dollars made in Canada (in the case of US Base Rate Loansmade under Tranche A and the Term Loan) or made in New York City (in thecase of US Base Rate Loans made under Tranches B and C); and

(b)                                 thefederal funds effective rate in effect on such day (and if such day is not aBusiness Day, then on the preceding Business Day), plus 0.50%; the term “federalfunds effective rate” means the rate usually designated as such and aspublished by the Federal Reserve Bank of New York for the relevantBusiness Day, or if such rate is not available on any Business Day, the ratethat the Agent is prepared to offer, at approximately 9:00 a.m. on suchday, for overnight deposits in US Dollars in New York;

“**US Base RateLoan**” means a loan denominated in US Dollars and bearinginterest at the US Base Rate, plus the Applicable Margin;

“**US Revenue **Code****”shall mean the Internal Revenue Code of 1986 of the United States, as amendedfrom time to time;

“**2005 Cascades CreditAgreement**” means the amended and restated credit agreement dated asof October 31, 2005 among (i) The Bank of Nova Scotia and National Bank ofCanada as agents, (ii) Cascades and the other borrowers party thereto, and(iii) the lenders party thereto;

“**2006 Norampac CreditAgreement**” means the amended and restated credit agreement dated asof March 15, 2006 among (i) Canadian Imperial Bank of Commerce as agent(ii) Norampac Inc. and the other borrowers party thereto, and(iii) the lenders party thereto.

**1.2****                               DesignatedSubsidiaries**

(a)                                  TheSubsidiaries of Cascades listed in Schedule ”B” hereof are herebydesignated as Designated Subsidiaries.

(b)                                 Cascadesmay designate any other of its Subsidiaries that is a Credit Party (other thana Borrower) as a Designated Subsidiary upon giving not less than 30 days’prior notice to the Agent. Any such designation will be effective on the firstday of the fiscal quarter of Cascades following the expiry of the notice periodand no such designation may be cancelled or revoked.

(c)                                  EachDesignated Subsidiary must be at all times a wholly-owned Subsidiary ofCascades and must provide Security as and to the extent required byArticle 10.

(d)                                 Cascadescovenants and agrees that the Non-Designated Subsidiaries will include noSubsidiary that has provided a Guarantee of the obligations of Cascades under

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the Cascades Indenture orof Norampac Inc. (or Cascades as successor thereof) under the NorampacIndenture or notes issued thereunder.

**1.3****                               CurrencyConversions**

Where any amount expressed in any currency has to be convertedor expressed in another currency, or where its equivalent in another currencyhas to be determined (or *vice versa*),the calculation is made at the exchange rate announced or quoted by the Agentor the Lender concerned (as applicable) in accordance with its normal practicesat or around noon on the relevant date for the relevant currency against theother currency (or *vice versa*).

**1.4****                               AccountingTerms, Calculations and Adjustments**

(a)                                  Unlessotherwise provided, (i) terms and expressions of an accounting orfinancial nature have the respective meanings given to such terms andexpressions under GAAP; (ii) calculations must be made in accordance withGAAP insofar as applicable, and (iii) financial ratios must be calculatedon an adjusted consolidated basis of Cascades.

(b)                                 Anyreference to calculations made or financial statements prepared on an adjustedconsolidated basis of Cascades refers to a consolidation that excludes allPersons who are not Credit Parties.

(c)                                  Thefinancial results of the business acquired pursuant to the Transaction will beincluded in the calculation of Cascades’ EBITDA and Interest Expense for anyfour-quarter period ending prior to December 31, 2007 as if such business hadbeen acquired on the first day of such four-quarter period.

**1.5****                               Time**

Except where otherwise indicated in this Agreement,any reference to time means local time in Montreal.

**1.6****                               Headingsand Table of Contents**

The headings and the Table of Contents are insertedfor convenience of reference only and do not affect the construction orinterpretation of this Agreement.

**1.7****                               GoverningLaw**

This Agreement is governed by and construed inaccordance with the laws of the Province of Quebec and the laws of Canadaapplicable therein.

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**1.8****                               PreviousAgreements**

This Agreement supersedes any previous agreement inconnection with the Facilities.

**1.9****                               Inconsistency**

In the event of inconsistency between this Agreementand any other Credit Document, the provisions of this Agreement must beaccorded precedence.

**2 -****THEFACILITIES**

**2.1****                               TheRevolving Facility**

The Lenders, individually, and not solidarily (i.e.not jointly and severally), agree to make available to the Borrowers arevolving facility (the “Revolving Facility”) in an aggregate maximum amount atany time not exceeding the total of the Commitments in effect at such time withrespect to the Revolving Facility. As of the date hereof, the Commitment ofeach Lender under the Revolving Facility is as specified opposite its name onthe signature pages of this Agreement and the collective Commitments of theLenders with respect to the Revolving Facility aggregate to****$650,000,000.****The Revolving Facility will be available in three tranches,Tranche A, Tranche B and Tranche C, as follows:

(a)                                  Tranche A,initially in the amount of $500,000,000, will be available to Cascades in theproportion as to each Lender of its Commitment under Tranche A;

(b)                                 Tranche B,initially in the amount of $75,000,000, will be available to Cascades US in theproportion as to each Lender of its Commitment under Tranche B; and

(c)                                  Tranche C,initially in the amount of $75,000,000, will be available to Cascades Europeand Cascades Germany in the proportion as to each Lender of its Commitmentunder Tranche C.

**2.2****                               Reallocationamong Tranches**

(a)                                  Upongiving not less than ten Business Days prior notice to the Agent, Cascades maychange the allocations among Tranches set forth in Section 2.1 (and,accordingly, the resulting available amounts of Tranche A, Tranche Band Tranche C), in multiples of $5,000,000.

(b)                                 Anyreallocation will result in a corresponding adjustment in the amounts of theCommitments of the Lenders under Tranche A, Tranche B andTranche C, in order that the percentage of each Lender’s Commitment underany Tranche be in the same percentage as under the Facility.

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(c)                                  Reallocationswill be effective on the first Business Day of the quarter following the expiryof said ten-day notice period. Any reallocation will remain in effect until theeffective date of any subsequent reallocation replacing same.

**2.3****                               TheAdditional Revolving Facility**

(a)                                  TheLenders, individually and not solidarily (i.e. not jointly and severally) agreeto make available to Cascades an additional revolving facility (the “AdditionalRevolving Facility”) in an aggregate amount at any time not exceeding the totalof the Commitments at such time with respect to the Additional RevolvingFacility. As of the date hereof, the Commitment of each Lender under theAdditional Revolving Facility is as specified opposite its name on thesignature page of this Agreement and the collective Commitments of the Lenderswith respect to the Additional Revolving Facility aggregate to $100,000,000.

(b)                                 Borrowingsunder the Additional Revolving Facility may be obtained only to the extent thatthere is no availability (taking into account Borrowing Base requirements)under the Revolving Facility at the time such Borrowings are requested.

(c)                                  Untilthe Additional Revolving Facility Maturity Date, upon giving not less than fiveBusiness Days prior notice to the Agent (the “transfer notice”), Cascades maytransfer to Tranche A the Commitments and the outstanding Borrowings under theAdditional Revolving Facility. On the date of the transfer, the RevolvingFacility will be increased by the aggregate amount of the Commitments sotransferred (with Tranche A being increased in a corresponding amount),the outstanding Borrowings under the Additional Revolving Facility will becomeoutstanding Borrowings under Tranche A and the Additional RevolvingFacility will terminate.

(d)                                 Forgreater certainty (i) all Borrowings so transferred to Tranche A willbecome secured by the Security and the Borrowing Base provisions of thisAgreement will apply to such Borrowings from the date of the transfer, and(ii) the transfer contemplated in Section 2.3(c) will not occur ifthe intended transfer date (as specified in the transfer notice) is later thanthe Additional Revolving Facility Maturity Date.

**2.4****                               TheTerm Loan**

The Lenders, individually and not solidarily (i.e. notjointly and severally) agree to make available to Cascades a Term Loan (the “TermLoan”) in an aggregate maximum amount at any time not exceeding the total ofthe Commitments at such time with respect to the Term Loan. As of the datehereof, the Commitment of each Lender under the Term Loan is as specifiedopposite its name on the signature pages of this Agreement and the collectiveCommitments of the Lenders with respect to the Term Loan aggregate to$100,000,000.

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**2.5****                               Purposeand Nature of the Facilities**

(a)                                  TheBorrowers will use the Facilities for general corporate purposes including tofinance the Transaction and to refinance the indebtedness under the 2005Cascades Credit Agreement and the 2006 Norampac Credit Agreement.

(b)                                 TheRevolving Facility and the Additional Revolving Facility will revolve and,accordingly, Borrowings may be obtained, repaid and re-borrowed by theBorrowers under such Facilities until their respective maturity dates.

(c)                                  TheTerm Loan may be drawn down by means of one single drawing on the date the conditionsprecedent set out in Section 9.1 have been met or waived but no later thanJanuary 31, 2007. After such date, the Term Loan will cease to be available.The Term Loan will not revolve and any amount repaid or prepaid may not bere-borrowed.

**2.6****                               BorrowingOptions under the Revolving Facility**

(a)                                  *Tranche A*– Borrowings may be obtained by Cascades underTranche A in the form of:

(i)                                     PrimeRate Loans;

(ii)                                  Acceptances;

(iii)                               USBase Rate Loans;

(iv)                              LiborLoans in US Dollars or Euros; and

(v)                                 Lettersof Credit;

(b)                                 *Tranche B*– Borrowings may be obtained by Cascades USunder Tranche B in the form of:

(i)                                     USBase Rate Loans;

(ii)                                  LiborLoans in US Dollars; and

(iii)                               Lettersof Credit;

(c)                                  *Tranche C*– Borrowings may be obtained by Cascades Europe orCascades Germany under Tranche C in the form of:

(i)                                     LiborLoans in US Dollars or****Euros;

(ii)                                  USBase Rate Loans;

(iii)                               Lettersof Credit; and

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(iv)                              EuropeanLoans, but only with the Swingline Lender under Tranche C.

**2.7****                               BorrowingOptions under the Facilities other than the Revolving Facility**

Borrowings may be obtained by Cascades under theAdditional Revolving Facility and the Term Loan in the form of:

(i)                                     PrimeRate Loans;

(ii)                                  Acceptances;

(iii)                               US Base Rate Loans; and

(iv)                              LiborLoans in US Dollars.

**2.8****                               BorrowingBase Limitations**

The Borrowers must ensure that the aggregate amount ofall outstanding Borrowings (expressed in Dollars) under the Revolving Facilityand the Term Loan will not at any time exceed the lesser of (i) theaggregate amount at such time of the Revolving Facility and the Term Loan, and(ii) the Borrowing Base. Accordingly, no Borrower may request a Borrowingif the making of such Borrowing would result in such limit being exceeded.

**2.9****                               BorrowingsProportionate to Commitments**

Each Borrowing will be made through the Agent at theapplicable Branch of Account and will be allocated by the Agent among theLenders approximately in the proportion of their respective Commitments underthe relevant Tranche of the Revolving Facility, the Additional RevolvingFacility or the Term Loan (as applicable) subject however to the provisions ofSection 2.11 (Swingline Utilizations) and of Article 5 (Letters ofCredit).

**2.10****                        Noticeof Borrowings**

To obtain a Borrowing (other than a Letter of Credit),the Borrower concerned must give a notice to the Agent specifying:

(a)                                  theapplicable Facility (and Tranche where applicable) and the selected form ofBorrowing;

(b)                                 theamount of the Borrowing, with a minimum of (i) $5,000,000 (orUS $5,000,000 or Euros 5,000,000 as the case may be) per Borrowing (otherthan Borrowings under Tranche B and Tranche C) and (ii) $2,000,000 (orUS $2,000,000 or Euros 2,000,000 as the case may be) per Borrowing underTranche B and Tranche C;

(c)                                  thedate of the Borrowing, which must be a Business Day; and

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(d)                                 tothe extent applicable, the period of the Borrowing.

The notice must be given by telephone not later than 11:00 a.m.two Business Days prior to the Borrowing, except in the case of a Libor Loanwhere the notice must be given not later than 10:00 a.m. three BusinessDays prior to the date of such Libor Loan. Each telephone notice must befollowed by a written confirmation on the same date, in the form ofSchedule ”C” or in any other manner as may be agreed between the Agent andthe relevant Borrower.

**2.11****                        SwinglineUtilizations**

(a)                                  Thenotice and minimum amount requirements otherwise applicable to Borrowings donot apply to Borrowings in the form of Prime Rate Loans, US Base RateLoans or European Loans (as applicable) obtained under the Revolving Facilityfrom any Swingline Lender by way of overdrafts in accounts opened for suchpurpose with such applicable Swingline Lender up to a maximum outstandingamount not exceeding $50,000,000 in Tranche A, $35,000,000 inTranche B and $30,000,000 in Tranche C (subject however, in the caseof Tranche C, to such currency sublimits as may be agreed upon between theBorrowers concerned and the Swingline Lender). Any cheque or paymentinstruction or debit authorization from the Borrower concerned and resulting inan overdraft in any such account will be deemed to be a request for such aBorrowing, in an amount that is sufficient to cover the overdraft.

(b)                                 Thesaid accounts may include accounts of the Borrower concerned and of itsAffiliates in respect of which set-off and netting arrangements have been madewith the applicable Swingline Lender, including any notional account reflectingany such arrangements.  The outstandingBorrowings owed to any Swingline Lender may be calculated after giving effect tosaid arrangements. 

(c)                                  TheLenders acknowledge that the Agent may permit that Prime Rate Loans,US Base Rate Loans and European Loans (as applicable) underTranche A, Tranche B or Tranche C be owing to the Lenders inproportions other than those of their respective Commitments underTranche A, Tranche B or Tranche C, as the case may be. However, theAgent may from time to time, and will upon the request of the applicableSwingline Lender, make adjustments among the Lenders under any Tranche so thatall Borrowings under such Tranche be approximately in the proportion of therespective Commitments of the Lenders (including the Swingline Lender) undersaid Tranche. In addition, if outstanding Borrowings by way of overdrafts witha Swingline Lender exceed for three consecutive Business Days US$10,000,000 inthe case of Tranche B or 6,000,000 Euros in the case ofTranche C, the applicable Swingline Lender will so notify the Agent andthe Agent will make adjustments among the Lenders under the applicable Tranchein amounts sufficient to eliminate the excess.

(d)                                 Forgreater certainty, (i) this Section 2.11 does not authorize the Agent toallow that Borrowings owing to a Lender (other than a Swingline Lender) underany

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Tranche exceed the amountof the Commitment of such Lender under such Tranche, and (ii) the aggregateamount of the Borrowings outstanding under any Tranche (including Borrowingsfrom the applicable Swingline Lender) may not exceed the amount of suchTranche, as determined pursuant to Sections 2.1, 2.2 and 2.3(c).

**2.12****                        Funding**

(a)                                  Atthe request of the Agent, (including following a request from a SwinglineLender where applicable), each Lender will promptly pay to the Agent suchLender’s share of any Borrowing made or to be made by the Agent on behalf ofthe Lenders and of any adjustment payable pursuant to Section 2.11(c). TheAgent will provide the Lenders with such information as may be necessary inorder for the Lenders to make payments to the Agent and fund their respectiveshares of any Borrowing.

(b)                                 Anyamount to be paid by a Lender to the Agent must be available to the Agent atthe Agent’s Office by 2:00 p.m. on the applicable day. Any amount to bedisbursed by the Agent to a Borrower will be made available to the relevantBorrower by crediting such Borrower’s account at the applicable Branch ofAccount or at any other place to be agreed upon from time to time between therelevant Borrower and the Agent.

**2.13****                        Lender’sFailure to Fund**

If a Lender fails to advance its share of anyBorrowing and, despite such failure, the Agent advances such amount to aBorrower, the Agent may recover such amount from such Lender or, if it isunable to do so, from such Borrower, with interest from the date ofdisbursement at the rate applicable to Borrowings in the same form under therelevant Facility. Nothing in this Section obliges the Agent to fund anyBorrowing or advance any sums on behalf of a Lender who has failed to complywith its obligations.

**2.14****                        Conversionsand Renewals**

(a)                                  ABorrower may convert from one form of permitted Borrowings to another form ofpermitted Borrowings the whole or any part of the outstanding Borrowings underthe applicable Tranche or Facility and renew Acceptances and Libor Loans,provided that (i) Acceptances and Libor Loans may not be converted priorto the maturity of their respective periods and (ii) Letters of Credit maynot be converted.

(b)                                 Sections 2.6to 2.13 apply to a conversion or a renewal with such modifications as may berequired.

(c)                                  Unlessthey are repaid, converted or renewed upon the maturity date of theirrespective periods, (i) Acceptances will then become Prime Rate Loans forthe

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face amount of suchAcceptances, (ii) Libor Loans in US Dollars will then become US BaseRate Loans, (iii) Libor Loans in Euros under Tranche A will becomePrime Rate Loans, and (iv) Libor Loans in Euros under Tranche C willthen become US Base Rate Loans. 

(d)                                 Whenmaking adjustments among Lenders pursuant to Section 2.11(c), the Agentmay convert outstanding European Loans into US Base Rate Loans.

(e)                                  Anyconversion to Borrowings in another currency will be effected by the repaymentof the Borrowings to be so converted and by the re-borrowing of an equivalentamount in the other currency.

**2.15****                        Limitationson Lender’s Obligation to Fund**

Each Lender’s obligation under this Agreement to fundBorrowings is limited to such Lender’s Commitment under the relevant Tranche orFacility (as applicable), subject however to the obligations of the SwinglineLenders pursuant to Section 2.11(a). The obligations of the Lendershereunder are not solidary and are not joint and several, and no Lender isresponsible for the obligations of any other Lender.

**2.16****                        Increaseof Revolving Facility**

(a)                                  Atany time following the execution of this Agreement but no later than the fifthanniversary date of this Agreement and so long as the aggregate amount of theRevolving Facility has not been reduced, Cascades may, by notice to the Agentand the Co-Agent, request an increase up to $150,000,000 in the aggregateamount of the Revolving Facility (an “Increase”). The notice must specify:

(i)                                     theamount of the proposed Increase, which must be a multiple of $5,000,000,provided that the aggregate amount of all Increases made pursuant to thisSection 2.16 may not exceed $150,000,000;

(ii)                                  theallocation of the Increase among the Tranches;

(iii)                               theproposed date of the Increase; and

(iv)                              thatno Default has occurred and is continuing.

(b)                                 Uponreceipt of such notice, the Agent and the Co-Agent will offer to the Lenders to participate in the Increase *pro rata* to their Commitments. If some but not all ofthe Lenders accept the offer, then the Agent and the Co-Agent will offer to theLenders who have then accepted a portion of the Increase to participate in theremaining unaccepted portion of the Increase *pro rata*to the Commitments of such Lenders. If after such offers, any portion of the Increase remainsunaccepted, then Cascades will have the right to offer such portion to Personswho are not Lenders (provided that any offer to any such Person would qualifyas an assignment of Commitment hereunder, as if such offer were an assignment).

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(c)                                  Ifoffers made pursuant to Section (b)have been accepted, the Agent, the Co-Agent,the Borrowers and the Lendersand other Persons who have accepted such offers will execute an amendment tothis Agreement providing that:

(i)                                     eachPerson who has accepted to participate in the Increase will have a Commitmentunder the Revolving Facility equal to the amount of its participation in theIncrease (or an additional Commitment equal to such amount in the case of aPerson who is already a Lender); and

(ii)                                  theamount of the Increase, when drawn, will become Borrowings under the RevolvingFacility and all such Borrowings will be governed by all provisions (includingpricing and repayment provisions) of the Revolving Facility.

(d)                                 Forgreater certainty, (i) nothingin this Section is intended to commit any Lender to participate or the Agent or the Co-Agent to arrangefor a participation in an Increase, and(ii) the aggregate amount of all Increases made pursuant to this Section 2.16may not exceed $150,000,000. Notwithstanding any other provision of thisAgreement, an amendment agreement giving effect to an Increase will not require the consent of Lenders other thanthose participating in the Increase.

**2.17        Deemed Utilizations**

(a)                                  Concurrentlywith the initial Borrowing hereunder, the borrowings (including acceptances andletters of credit) then outstanding and owing by Cascades and Norampac Inc.under the 2005 Cascades Credit Agreement and the 2006 Norampac Credit Agreementrespectively will be deemed to be Borrowings hereunder under Tranche A(except that borrowings under the Term Facility referred to in the 2005Cascades Credit Agreement will be deemed to be Borrowings under the Term Loan).Such Borrowings will be allocated by the Agent among the Lenders *pro rata* to their Commitments under Tranche A andthe Term Loan (as applicable). Canadian Imperial Bank of Commerce will be anIssuing Lender hereunder with respect to the letters of credit issued by itunder the 2006 Norampac Credit Agreement which will be deemed to have beenissued hereunder. The Bank of Nova Scotia was the issuing lender of the lettersof credit issued under the 2005 Cascades Credit Agreement which will be deemedto have been issued by it as an Issuing Lender hereunder. From the date of theinitial Borrowing hereunder, the provisions of this Agreement with respect tointerest and fees will apply to borrowings under the 2005 Cascades CreditAgreement and the 2006 Norampac Credit Agreement which will be deemed to beBorrowings hereunder and the Applicable Margin (or Rate) will apply to saidBorrowings from such date.

(b)                                 TheAgent will make among the Lenders such adjustments as are necessary to giveeffect to the foregoing, including to ensure that the non-accrued portion ofany Acceptance fee paid prior to the date hereof with respect to acceptancesthat

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will be deemed to beAcceptances hereunder is received by the Lenders at the Applicable Rate and *pro rata* to their Commitments. Any amount due by aLender as a result of such adjustments will be paid by it forthwith to theAgent and the Agent will forthwith remit to the applicable Lenders the amountsreceived by it as a result of such adjustments.

**3 -****Acceptances**

**3.1****                               Periodand Amounts**

Acceptances

(a)                                  arefor periods of one, two, three or six months, but must mature on a date whichis a Business Day and which is no later than the maturity date of theapplicable Facility;

(b)                                 aredenominated in Dollars, with a minimum of $5,000,000 per issue, provided thatthe Agent may round each Lender’s allocation of such issue to the nearest$100,000 increment;

(c)                                  constituteoutstanding Borrowings for their face amount;

(d)                                 donot bear interest nor carry any days of grace; and

(e)                                  maybe discounted by the Lenders for their own account or may be sold to thirdparties.

**3.2****                               Disbursement**

(a)                                  Theamount to be disbursed to Cascades with respect to Acceptances discounted bythe Lenders is the Discounted Proceeds of such Acceptances, less the applicableacceptance fee.

(b)                                 Inthe case of an issue of Acceptances for the purposes of replacing existingBorrowings, Cascades must, concurrently with such issue, pay to the Agent anamount equal to the aggregate amount of the Borrowings so replaced. The amountso paid to the Agent will be applied to the portion of the Borrowings whichhave been replaced by such Acceptances.

**3.3****                               Powerof Attorney**

(a)                                  Uponany issue of Acceptances, each Lender is authorized to sign, complete, endorseand deliver on behalf of Cascades the Acceptances to be so issued and to do allthings necessary or useful in order to facilitate such issuance. The Agent isalso authorized to make the necessary arrangements for the negotiation anddelivery of Acceptances intended to be sold on the money market.

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(b)                                 Inthe case of an issue of Acceptances by way of promissory notes to the order ofLenders who do not customarily accept banker’s acceptances (as provided inparagraph (b) of the definition of Acceptances), Cascades will be deemedto have issued the corresponding notes to such Lenders, without the necessityof physical execution and delivery of any note.

**3.4****                               DepositoryBills**

A Lender who accepts Acceptances that are “depositorybills” within the meaning of the *Depository Bills and NotesAct* (Canada) may deposit same with the Canadian Depository forSecurities Limited (“CDS”) and such Acceptances may be dealt with in accordancewith the rules and procedures of CDS.

**3.5****                               Availability**

The availability of Acceptances is subject to fundsbeing available for such purpose in the Canadian money market; the Agent willnotify Cascades if Acceptances cease to be so available as well as whenavailability resumes. Cascades must ensure that no more than ten differentissues of Acceptances are outstanding at any time, provided that on anoccasional basis the Agent may permit such limit to be exceeded.

**4 -****LiborLoans**

**4.1****                               Amountsand Periods**

(a)                                  LiborLoans may be obtained for periods of one, two, three or six months, but mustmature on a Business Day which is not later than the maturity date of theapplicable Facility;

(b)                                 LiborLoans must be in multiples of US $100,000 (or 100,000 Euros), with aminimum of (i) US $5,000,000 (or 5,000,000 Euros) under each Facility(other than Tranche B or Tranche C) or (ii) US $2,000,000 (or2,000,000 Euros) under Tranche B and Tranche C; and

(c)                                  TheBorrower must ensure that no more than ten different Borrowings by way ofLibor Loans are outstanding at any time under the Facilities, provided that onan occasional basis the Agent may permit such limit to be exceeded.

**4.2****                               ChangedCircumstances**

If a Lender determines that:

(a)                                  itis unable to obtain US Dollars or Euros in the London inter-bank market,

(b)                                 alaw, regulation, administrative decision or guideline, or a Court decision hasmade it unlawful or prohibits such Lender from making or maintaining Libor

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Loans in US Dollarsor in Euros, or has imposed costs or constraints on such Lender that do notexist on the date hereof in respect of Libor Loans in US Dollars or inEuros, or

(c)                                  Liboris less than its effective funding cost for making or maintaining Libor Loansin the applicable currency,

the Lender may so notify the Agent and the Borrower concerned and nonew Borrowing by way of Libor Loans in the applicable currency, no conversioninto Libor Loans in the applicable currency and no renewal of Libor Loans inthe applicable currency may be made with such Lender from the date of thenotice until the cause of such determination has ceased to exist. In any suchcase, Borrowings with such Lender that otherwise would have been made by way ofLibor Loans in the applicable currency will be made by way of US Base RateLoans notwithstanding Section 2.9.

**4.3****                               ConversionPrior to Maturity**

If it becomes unlawful or prohibited for a Lender tomaintain Libor Loans in US Dollars or in Euros, all Libor Loans owed to suchLender (in US Dollars or Euros, as applicable) will become US BaseRate Loans on the date of the notice given pursuant to Section 4.2.

**5 -****Lettersof Credit**

**5.1****                               Availability**

Letters of Credit will be issued by the applicableIssuing Lender in Dollars, US Dollars, Euros or any other freely tradablecurrency acceptable to such Issuing Lender, for such transactions and on suchterms and conditions as are mutually agreed upon between the Borrower concernedand the applicable Issuing Lender and are not inconsistent with the provisionsof this Article 5. Letters of Credit are available only under the RevolvingFacility and only up to an aggregate outstanding amount (expressed in Dollars)at any time not exceeding, in respect of any Tranche, 20% of the amount of suchTranche.

**5.2****                               Maturityof Letters of Credit**

No Letter of Credit may have at any time a remainingterm exceeding 365 days from such time or extending beyond the RevolvingFacility Maturity Date.

**5.3****                               Borrowings**

(a)                                  AnyLetter of Credit constitutes from the date of its issue an outstandingBorrowing under the applicable Tranche in a principal amount equal to themaximum amount of the obligation of the applicable Issuing Lender. Any IssuingLender will notify the Agent of the issue of any Letter of Credit at least oneBusiness Day prior to the date of such issue.

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(b)                                 Forgreater certainty, if Letters of Credit under any Tranche are outstanding onthe Revolving Facility Maturity Date or on the date the indebtedness of theBorrowers becomes repayable pursuant to Section 16.2, the aggregate amount ofsuch outstanding Letters of Credit will be included in the Borrowings to berepaid on any such date. However, if any such Letter of Credit expires or iscancelled without having been drawn, the amount repaid in respect of same willbe reimbursed to the Borrower concerned but only after performance of all otherobligations of, and payment of all other amounts payable by, the Credit Partiesunder the Credit Documents.

**5.4****                               Paymentsunder Letters of Credit**

Each amount paid by an Issuing Lender under a Letterof Credit issued under Tranche A will constitute, as of the date ofpayment, a Prime Rate Loan, if the payment is made in Dollars or in a currencyother than the US Dollar, and a US Base Rate Loan if the payment ismade in US Dollars. Each amount paid by an Issuing Lender under a Letterof Credit issued under Tranche B or Tranche C will constitute, as ofthe date of payment, a US Base Rate Loan. Any such Loan will be allocated amongthe Lenders *pro rata* to their respectiveCommitments under the applicable Tranche. Each Lender must fund such loan byremitting to the Agent (for the account of the applicable Issuing Lender) theamount of its share of such loan. The provisions of Section 2.12 will apply inthe event of non-disbursement by a Lender.

**5.5****                               CurrencyConversion**

If an Issuing Lender has paid an amount under a Letterof Credit in a currency other than the currency of the resulting Loan, suchamount will be converted into the applicable currency (as specified in Section 5.4)on the date of payment.

**5.6****                               Indemnity**

The Borrower concerned will pay all reasonable costsincurred and indemnify the Agent, any Issuing Lender and the Lenders in respectof any loss or damage suffered by them in connection with Letters of Credit,including legal fees and other costs of litigation, except for any loss, damageor cost resulting from wilful malfeasance of the Agent, the applicable IssuingLender or the Lenders.

**5.7****                               I.C.C.Rules**

Unless otherwise provided in this Agreement or in anyagreement relating to their issue, Letters of Credit are governed by theUniform Customs and Practice for Documentary Credits(I.C.C. Publication 500, 1993 revision).

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**6 -****Fees AndInterest**

**6.1****                               Commitmentand Agency Fees**

Cascades must pay, concurrently with the execution ofthis Agreement, the commitment fees specified in the fee letter and the agencyfee letter executed by Cascades prior to the date of this Agreement.

**6.2****                               Letterof Credit Fees**

The Borrower concerned must pay a fee for each Letterof Credit issued under the Revolving Facility. The fee for each Letter ofCredit which is either a non-documentary letter of credit or a letter ofguarantee will be at an annual rate equal to the Applicable Rate. The fee foreach documentary Letter of Credit will be determined on the basis of the ratethen offered by the applicable Issuing Lender to its customers for similardocumentary letters of credit. Fees are calculated on the face amount of eachLetter of Credit for the number of days included in the period of same. Anysuch fee must be paid to the applicable Issuing Lender quarterly in arrears onthe first Business Day of each quarter (commencing with the quarter followingthe issue of the relevant Letter of Credit), for distribution to the Lenders *pro rata* to their Commitments under the relevantTranche. Concurrently with the payment of any such fee, the Borrower concernedmust also pay to the applicable Issuing Lender, for its own account, a frontingfee at an annual rate equal to 0.125%, calculated as aforesaid.

**6.3****                               AdministrativeCharges with respect to Letters of Credit**

The Borrower concerned must pay to the applicableIssuing Lender administrative charges in connection with Letters of Credit atthe rates and on the terms generally applicable to the other customers of theAgent.

**6.4****                               StandbyFee**

Cascades must pay to the Agent, for distribution tothe Lenders *pro rata* to their Commitments underthe Revolving Facility and the Additional Revolving Facility a standby fee onthe unused portion of the Revolving Facility and the Additional RevolvingFacility. The standby fee will be calculated daily from the date of thisAgreement at an annual rate equal to the Applicable Rate and will be payablequarterly in arrears on the first Business Day of the following quarter.

**6.5****                               AcceptanceFees**

Upon the issue of any Acceptance, Cascades must pay tothe relevant Lender (or to the Agent for the account of such Lender) anacceptance fee at an annual rate equal to the Applicable Rate. The acceptancefee will be calculated on the face amount of the applicable Acceptance and forthe number of days included in the period of same. Any such payment may be madein the manner provided in Section 3.2(a).

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**6.6****                               Intereston Prime Rate Loans**

Prime Rate Loans bear interest until they are convertedor repaid in full (both before and after any Event of Default or judgment) atthe Prime Rate in effect from time to time, plus the Applicable Margin. Theinterest is payable monthly in arrears on the first Business Day of thefollowing month.

**6.7****                               Intereston US Base Rate Loans**

US Base Rate Loans bear interest until they areconverted or repaid in full (both before and after an Event of Default orjudgment) at the US Base Rate in effect from time to time, plus the ApplicableMargin. The interest is payable monthly in arrears on the first Business Day ofthe following month.

**6.8****                               Intereston European Loans**

European Loans bear interest until they are convertedor repaid in full (both before and after an Event of Default or judgment) atthe European Rate in effect from time to time, plus the Applicable Margin. Theinterest is payable monthly in arrears on the first Business Day of thefollowing month.

**6.9****                               Intereston Libor Loans**

Each Libor Loan bears interest at the Libor applicableto each such loan, plus the Applicable Margin. The interest is payable at thematurity of the period of the loan or, if the period of such loan is more thanthree months, at three-month intervals during the period of the loan.

**6.10****                        Calculationof Interest Rates**

(a)                                  Interestrates and fees calculated at the Applicable Margins or Rates are annual ratesand are calculated daily on the basis of a 365-day year, except for(i) Libor Loans, (ii) US Base Rate Loans under Tranche B andTranche C, and (iii) European Loans, where rates are calculated on thebasis of a 360-day year.

(b)                                 Forthe purposes of the *Interest Act*(Canada) only, the annual rate of interest equivalent to a rate otherwisecalculated under this Agreement is equal to the rate so calculated multipliedby the actual number of days included in a given year and divided by365 days (or by 360 days, in the case of a rate calculated on thebasis of a 360-day year Loan).

**6.11****                        Intereston Arrears**

(a)                                  Anyamount (other than an amount due on account of principal or interest) which isnot paid when due will bear interest at the Prime Rate in effect from time to

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time, increased by 2%, inthe case of an amount to be paid in Dollars, at the European Rate in effectfrom time to time, increased by 3%, in the case of an amount payable in Eurosand at the US Base Rate in effect from time to time, increased by 2%, inthe case of an amount to be paid in US Dollars or any other currency (otherthan the Dollar or the Euro).

(b)                                 Anyinterest which is not paid when due will bear interest at the rate that hasbeen used to calculate such unpaid interest.

(c)                                  Intereston arrears is compounded monthly and is payable on demand.

**7 -**Repayment, Prepayment and Reduction

**7.1****                               Repaymentof the Facilities**

(a)                                  Cascadesmust repay in full the outstanding Borrowings and pay all other amounts owingunder Tranche A on the Revolving Facility Maturity Date. Cascades USmust repay in full all outstanding Borrowings and pay all other amounts owingunder Tranche B on the Revolving Facility Maturity Date. Each of CascadesEurope and Cascades Germany must repay in full its outstanding Borrowings andpay all other amounts owing by it under Tranche C on the RevolvingFacility Maturity Date.

(b)                                 Cascadesmust repay in full the outstanding Borrowings and pay all other amounts owingunder the Additional Revolving Facility on the Additional Revolving FacilityMaturity Date (unless such outstanding Borrowing have been transferred to theRevolving Facility in accordance with Section 2.3(c)).

(c)                                  Cascadesmust repay in full the outstanding Borrowings and pay all other amounts owingunder the Term Loan on the Term Loan Maturity Date.

**7.2****                               MandatoryPrepayments**

Cascades must make (or cause other Borrowers to make)such prepayments as may be necessary to ensure that the aggregate amount of theoutstanding Borrowings (expressed in Dollars) under the Revolving Facility andthe Term Loan will not at any time exceed the lesser of (i) the aggregateamount of the Revolving Facility and the Term Loan, and (ii) the BorrowingBase. Any such prepayment must be applied first on outstanding Borrowings underthe Revolving Facility and second to outstanding Borrowings under the TermLoan; in the latter case, the amount of the Term Loan will be permanentlyreduced by the amount prepaid.

**7.3****                               OptionalPrepayments**

(a)                                  TheBorrowers concerned may at any time make prepayments on Borrowings outstandingunder Tranche A, Tranche B or Tranche C (as applicable) or underthe Additional Revolving Facility without affecting their right to re-borrowunder

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such Tranche or Facilityup to its maximum available amount. Any such prepayment (except for aprepayment applied to overdraft utilizations pursuant to Section 2.11) must bein an amount of at least $2,000,000, US $2,000,000 or 2,000,000 Euros(as applicable) and is subject to the Borrower concerned giving a one-BusinessDay prior notice to the Agent.

(b)                                 Cascadesmay at any time make prepayments on Borrowings outstanding under the Term Loanand amounts prepaid will permanently reduce the amount of the Term Loan. Any suchprepayment must be in an amount of at least $2,000,000 or US$2,000,000 and issubject to Cascades giving a three-Business Day prior notice to the Agent.

(c)                                  Nooptional prepayment may be made in respect of Acceptances before the maturitydate of their respective periods. For greater certainty, any prepayment inrespect of Libor Loans will be subject to Section 20.11(b).

**7.4****                               ExchangeRate Fluctuations**

If, at any time, due to fluctuations in the rate ofexchange of a currency against another currency, the outstanding amount of theBorrowings under any Facility, expressed in Dollars, exceeds the amount of suchFacility, Cascades must pay to the Agent, three Business Days following ademand to that effect, the amount of such excess. However, no such demand willbe made as long as the excess is not more than 5% and the Borrowing Base is notexceeded.

**7.5****                               Reductionof the Revolving Facility**

Cascades may, on giving not less than ten BusinessDays prior notice to the Agent, permanently reduce the aggregate amount of theRevolving Facility by amounts of not less than $5,000,000. Any such reductionwill result in a corresponding reduction of each of Tranche A,Tranche B and Tranche C, on a *pro rata*basis (such reduction to also apply on a *pro rata*basis as to each Lender). The notice of reduction must specify the amount ofthe reduction, and the Business Day when the reduction will be becomeeffective. On such date, the Borrowers must make repayments in amountssufficient for the outstanding Borrowings under any Tranche not to exceed thenew amount of such Tranche.

**8 –****Place ofPayment, Currency and Taxes**

**8.1****                               Paymentsto the Agent**

Unless otherwise provided or agreed between theBorrower concerned and the Agent, (i) all payments to be made by aBorrower must be made to the Agent at the applicable Branch of Account, exceptthat interest payments on outstanding Borrowings owing to a Swingline Lenderpursuant to Section 2.11 must be made to such Swingline Lender and interestpayments to Lenders under Tranche C whose lending offices are in Francemust be made directly to such Lenders, and (ii) all payments made to theAgent will be deemed to have been made to the Agent

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for the rateable benefitof the applicable Lenders. Any payment due by a Borrower may be charged to anaccount maintained by such Borrower with the Agent or the applicable Lender.

**8.2****                               Mannerof Payments**

Any payment that is due on a day that is not aBusiness Day may be made on the next Business Day but will bear interest untilreceived in full. All payments must be made free of any set-off or otherdeduction and in funds which are immediately available on the date on whichpayment is due.

**8.3****                               Currency**

Unless otherwise provided, (i) all amounts owingunder any Borrowing are payable in the currency of such Borrowing,(ii) Letter of Credit fees under Tranche A are payable in Dollars,except that any such fee owing as a result of a Letter of Credit issued inUS Dollars is payable in US Dollars, (iii) Letter of Credit feesunder Tranche B are payable in US Dollars, (iv) Letter of Creditfees under Tranche C are payable in Euros, (v) standby fees are payable inDollars, and (vi) all other amounts are payable in Dollars,US Dollars or Euros, as may be specified by the Agent.

**8.4****                               JudgmentCurrency**

If a judgment is rendered against a Borrower for anamount owed hereunder and if the judgment is rendered in a currency (“othercurrency”) other than that in which such amount is owed under this Agreement (“currencyof the Agreement”), such Borrower will pay, if applicable, at the date ofpayment of the judgment, an additional amount equal to the excess (i) ofthe said amount owed under this Agreement, expressed into the other currency asat the date of payment of the judgment, over (ii) the amount of thejudgment. For the purposes of obtaining the judgment and making the calculationreferred to in (i), the exchange rate will be the spot rate at which the Agent,on the relevant date, may in Toronto, sell the currency of the Agreement toobtain the other currency. Any additional amount owed under this Section willconstitute a cause of action distinct from the cause of action which gave riseto the judgment, and said judgment shall not constitute *res judicata*in that respect.

**8.5****                               PaymentsNet of Taxes**

If a Borrower, the Agent or any Lender is compelled bylaw to make any withholding or deduction due to any tax or if a Lender isliable to pay tax in respect of any payment due or made by a Borrower, theBorrower concerned must pay to the Agent or such Lender such additional amountas may be necessary in order that the payment actually received be equal to thepayment which otherwise would have been received in the absence of suchwithholding or deduction or tax (including in the absence of any additionalwithholding or deduction or tax in respect of any additional amount payablepursuant to this Section). However, this Section 8.5 will not apply in respectof a tax on the overall net income or capital of a Lender.

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**8.6****                               Obligationsof Lenders in respect of Taxes**

Each Lender under Tranche B who is notincorporated under the laws of the United States of America or a state thereofbut who is entitled to receive payments hereunder without deduction orwithholding of any United States federal income taxes must deliver to theBorrowers and the Agent two duly completed copies of the United States InternalRevenue Service Form W8BEN or W8ECI or otherwise successor applicable form, asthe case may be, certifying that it is entitled to receive payments under thisAgreement without any such deduction or withholding. Any such Lender who failsto deliver such forms will not be entitled to benefit from Section 8.5 to theextent that the applicable withholding or deductions would not have beennecessary if such forms had been delivered.

**9 -****ConditionsPrecedent to Borrowings**

**9.1****                               ConditionsPrecedent to the Initial Borrowing**

The Borrowers may not obtain any Borrowing under theFacilities until the following conditions precedent have been fulfilled to thesatisfaction of the Agent, the Co-Agent and the Lenders:

(a)                                  eachof the material conditions precedent set out in share purchase agreementreferred to in the definition of Material Contracts must have been fulfilledand not waived;

(b)                                 theTransaction must have been completed (except for the payment of the purchaseprice payable to Domtar Inc.);

(c)                                  allfees and expenses owing by the Borrowers to the Agent and the Lenders at thetime of execution of this Agreement must have been paid in full;

(d)                                 theAgent and the Lenders must have received, in form and substance satisfactory tothem, each of the following documents:

(i)                                     acopy of the constitutive documents of each of the Borrowers and the DesignatedSubsidiaries;

(ii)                                  acertificate as to the legal existence of each of the Borrowers and theDesignated Subsidiaries;

(iii)                               acopy of the documents evidencing the authority and attesting to theauthenticity of the signatures of the Persons acting on behalf of each of theBorrowers and the Designated Subsidiaries;

(iv)                              theSecurity Documents required to be provided pursuant to Article 10;

(v)                                 acopy of each of the Material Contracts;

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(vi)                              acompliance certificate in the form of Schedule ”D”, showing compliancewith the financial covenants herein, as of September 30, 2006, but givingeffect to the Transaction;

(vii)                           financialforecasts for the operations of Cascades for its next five fiscal years, on anadjusted consolidated basis;

(viii)                        aBorrowing Base report in the form of Schedule ”E”, as ofSeptember 30, 2006, but giving effect to the Transaction;

(ix)                                acertificate of the Chief Financial Officer of Cascades confirming that there isno Default hereunder and setting out the sources and uses of the funds requiredto complete the Transaction (including the amount of the purchase price payablethereunder);

(x)                                   thedocuments evidencing the cancellation of the facilities provided for under the2005 Cascades Credit Agreement and the 2006 Norampac Credit Agreement, andauthorizing the agents under such agreements to release the security grantedpursuant thereto;

(xi)                                acertificate evidencing the insurance coverage required to be maintained by theCredit Parties pursuant to this Agreement;

(xii)                             acertificate of the secretary of Cascades with respect to the governmental andregulatory approvals and third party consents required to be obtained for theTransaction; and

(xiii)                          legalopinions addressed to the Agent and the Lenders from counsel to the CreditParties and counsel to the Agent, relating to such matters as the Agent and theLenders may reasonably require.

**9.2****                               ConditionsPrecedent to all Borrowings**

The Borrowers may not obtain any Borrowing or convertor renew any Borrowing:

(a)                                  ifthe Agent has not received timely notice of such Borrowing, conversion orrenewal; or

(b)                                 ifa Default has occurred and is continuing or would occur after giving effect tosuch Borrowing, conversion or renewal.

Each notice of Borrowing or of the renewal or conversion of a Borrowingconstitutes a certification by the Borrowers that no Default has occurred andis continuing or would occur after giving effect thereto.

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**9.3****                               Waiverof Conditions Precedent**

The conditions precedent provided for in thisArticle 9 are for the sole benefit of the Agent and the Lenders. The Agentand the Lenders may waive such conditions precedent, in whole or in part, withor without conditions, without prejudice to any other rights that they mighthave against the Borrowers and any other Person.

**9.4****                               Terminationof this Agreement**

If all of the conditions precedent provided for inSection 9.1 have not been fulfilled or waived on or before January 31st, 2007, this Agreement willthen terminate.

**10 –**Security

**10.1****                        Guarantees**

Each Borrower must guarantee in favour of the Agentand the Lenders the performance of all obligations of the other Borrowers underthe Facilities and the Hedging Agreements and each Designated Subsidiary mustguarantee in favour of the Agent and the Lenders the performance of allobligations of the Borrowers under the Facilities and the Hedging Agreements.

**10.2****                        Securityover Current Assets**

To secure the performance of the obligations of theBorrowers under the Facilities (other than the Additional Revolving Facility)and the Hedging Agreements, each of the Borrowers and the DesignatedSubsidiaries that owns material inventory and accounts receivable must providein favour of the Agent and the Lenders security over all of its present andfuture inventory and accounts receivable (including related assets), presentand future.

**10.3****                        Series 1Charged Fixed Assets**

(a)                                  Tosecure the performance of the obligations of the Borrowers under the Facilities(other than the Additional Revolving Facility) and the Hedging Agreements,Cascades Canada Inc. and Cascades Fine Papers Group Inc. must provide in favourof the Agent and the Lenders security over the tissue plants of Cascades CanadaInc. located at 467 Marie-Victorin, Kingsey Falls, Quebec and 75Marie-Victorin, Candiac, Quebec as well as the fine paper plant of CascadesFine Papers Group Inc. located at 455 Rolland, St-Jérôme, Quebec,including related assets (together with other fixed assets which may becomesubject to the Security pursuant to this Section 10.3, the “Series 1Charged Fixed Assets”).

(b)                                 ForBorrowing Base purposes, the market value of the Series 1 Charged FixedAssets will be determined by the Agent and the Co-Agent initially using amarket value amount of $282,500,000, which amount represents the mid-point ofthe

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estimated valuesdetermined by Ernst & Young Orenda Corporate Finance Inc. in theirvaluation report dated December 15, 2005.

(c)                                  Afterthe date hereof, Cascades will have the option, but not the obligation, toincrease the Series 1 Charged Fixed Assets component of the Borrowing Baseby providing, or causing Designated Subsidiaries to provide, security over****other fixed assets acceptable to the Majority Lenders****by an amount equal to the market value of such assets asdetermined by a valuation report to be furnished to the Agent and the Co-Agentprior to the grant of the related security.

(d)                                 If,at any time after the date of this Agreement, the Majority Lenders havereasonable grounds to believe that the market value of the Series 1Charged Fixed Assets has reduced below the most recent amount determinedpursuant to this Section 10.3 (or below $405,000,000 if such most recent amountis greater than $405,000,000), Cascades will provide to the Agent and theCo-Agent, within 30 days from a request by the Agent and the Co-Agent, avaluation report on such assets.

(e)                                  Fromthe date a valuation report is provided to the Agent and the Co-Agent and untilsuch time a new valuation report is so provided pursuant to this Section 10.3,the market value of the Series 1 Charged Fixed Assets will be determinedfor Borrowing Base purposes on the basis of the most recent valuation.

(f)                                    Ifthere has been a decrease in the market value of the Series 1 ChargedFixed Assets or if a Credit Party proposes to sell assets which are part of theSeries 1 Charged Fixed Assets, Cascades will have the option, but not theobligation, to provide or to cause Designated Subsidiaries to provide securityover other fixed assets acceptable to the Majority Lenders to increase at ahigher level (or to maintain at its current level in the event of a proposedsale) the market value of the Series 1 Charged Fixed Assets component of theBorrowing Base. The market value of such other fixed assets will be determinedon the basis of a valuation report which Cascades undertakes to provide to theAgent and the Co-Agent at the time of any request made to the Majority Lenderspursuant to this paragraph. For greater certainty, (i) no such sale may bemade unless same is otherwise permitted by Section 13.3(b) and (ii) fromthe date of any such sale, the market value of the fixed assets so sold will nolonger be included in the Series 1 Charged Fixed Assets component of theBorrowing Base.

**10.4****                        Series 2Charged Fixed Assets**

(a)                                  Afterthe date hereof, Cascades will have the option, but not the obligation, to use(and, thereafter, to increase) the fixed assets component of paragraph (d)of the definition of Borrowing Base by providing or causing DesignatedSubsidiaries to provide security over fixed assets (other than Series 1Charged Fixed Assets) acceptable to the Majority Lenders (together with otherfixed assets which may become subject to the Security pursuant to this Section 10.4,the “Series 2

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Charged Fixed Assets”).The Security over the Series 2 Charged Fixed Assets will secure theperformance of the obligations of the Borrowers under the Facilities (otherthan the Additional Revolving Facility) and the Hedging Agreements.

(b)                                 ForBorrowing Base purposes, the market value of Series 2 Charged Fixed Assetswill be determined by the Agent and the Co-Agent initially using a valuationreport to be furnished by Cascades to the Agent and the Co-Agent prior to thegrant of the related security.

(c)                                  Ifat any time after Series 2 Charged Fixed Assets have become subject to theSecurity, the Majority Lenders have reasonable grounds to believe that themarket value of the Series 2 Charged Fixed Assets has reduced below themost recent amount determined pursuant to this Section 10.4, Cascades willprovide to the Agent and the Co-Agent, within 30 days from a request by theAgent and the Co-Agent, a valuation report on such assets.

(d)                                 Fromthe date a valuation report is provided to the Agent and the Co-Agent and untilsuch time a new valuation report is so provided pursuant to this Section 10.4,the market value of the Series 2 Charged Fixed Assets will be determinedfor Borrowing Base purposes on the basis of the most recent valuation.

(e)                                  Ifthere has been a decrease in the market value of the Series 2 ChargedFixed Assets or if a Credit Party proposes to sell assets which are part of theSeries 2 Charged Fixed Assets, Cascades will have the option, but not theobligation, to provide or to cause Designated Subsidiaries to provide securityover other fixed assets acceptable to the Majority Lenders to increase at ahigher level (or to maintain at its current level in the event of a proposedsale) the market value of the Series 2 Charged Fixed Assets component ofthe Borrowing Base. The market value of such other fixed assets will bedetermined on the basis of a valuation report which Cascades undertakes toprovide to the Agent and the Co-Agent at the time of any request made to theMajority Lenders pursuant to this paragraph. For greater certainty, (i) nosuch sale may be made unless same is otherwise permitted by Section 13.3(b) and(ii) from the date of any such sale, the market value of the fixed assetsso sold will no longer be included in the Series 2 Charged Fixed Assetscomponent of the Borrowing Base.

**10.5****                        FixedAssets Valuation Report**

Any valuation report to be provided to the Agent andthe Co-Agent pursuant to Sections 10.3 and 10.4 must be prepared by an independentappraiser acceptable to the Majority Lenders and be accompanied by (and takeinto account the contents of) an environmental review by a consultantacceptable to the Majority Lenders.

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**10.6****                        Insurance**

The Borrowers will cause the Agent (or its representative)to be named as loss payee on all insurance policies relating to the propertyand assets covered by the Security. Each policy covering immovable property andequipment must contain a “mortgage clause”.

**10.7****                        Securityfor Hedging Agreements**

(a)                                  TheAgent will act as agent for the Lenders in their capacity as counterpartiesunder Hedging Agreements (hereafter, the “hedging lenders”) for all purposes ofthe Security Documents, including the enforcement thereof. For such purposes,the provisions of Articles 17, 18 and 19 (adapted accordingly) will alsoapply to the hedging lenders. However, until termination and repayment in fullof the Facilities, the claims of the hedging lenders will not be taken intoaccount in the calculation of the Majority Lenders, including in any situationwhere a decision regarding the Security has to be made by the Majority Lenders.

(b)                                 Therights of the Lenders and the hedging lenders under the Security will rank *pari passu*, but only to the extent of an aggregatemaximum amount of $100,000,000 in respect of the claims of the hedging lendersunder Hedging Agreements (such amount to be calculated as provided in Section 10.7(c))*.* Any excess will rank after the rights of the Lenders underthe Facilities. Any proceeds of realization of the Security to be distributedto the hedging lenders will be allocated among them *pro rata*to their claims (irrespective of the dates of the related agreements ortransactions).

(c)                                  Eachhedging lender will calculate its claim under any Hedging Agreement inaccordance with normal market practices (using the mark-to-market methodwhenever applicable) and after giving effect to any close-out, nettingarrangement or right of set-off provided by contract or permitted by law.

(d)                                 TheHedging Agreements secured by the Security will include Hedging Agreements madewith a hedging lender who is (or was) a Lender at the time of the entering intoof such Hedging Agreement as well as Hedging Agreements made prior to thisAgreement with counterparties that are Lenders as at the date hereof. Forgreater certainty, the Security will continue to secure the obligations of anyBorrower to any hedging lender under Hedging Agreements after termination andrepayment in full of the Facilities.

**10.8****                        Validityand Contents of Security Documents**

The Security must be valid, perfected andfirst-ranking at all times with respect to all property intended to be coveredthereby, subject however to Permitted Liens. Each Security Document must be inform and substance satisfactory to the Agent and remain valid and in force atall times. The Security Documents will include such legal opinions, Liensearches and certificates of location or surveys as the Agent may reasonablyrequire.

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**10.9****                        Exceptionsfor certain Credit Parties**

Notwithstanding any other provision of the CreditDocuments, but except as otherwise provided in agreements subsequent to thedate hereof, (i) the obligations of each of Cascades Europe and CascadesGermany under the Credit Documents will exclude any obligation of any otherCredit Party, and (ii) none of Cascades Europe and Cascades Germany will berequired to guarantee the performance of any obligation of the other Borrowersor to provide security over its inventory and accounts receivable.

**10.10****                 Release of theSecurity**

In the event of a disposition to a non-Credit Partypermitted by and complying with Section 13.3(b) of property subject to theSecurity, the Agent will be authorized to release the Security with respect tosuch property and to execute on behalf of the Lenders any instrument evidencingsuch release.

**11 -**Representations and Warranties

Each of the Borrowersrepresents and warrants that:

**11.1****                        CorporateExistence and Capacity**

Each of the Credit Parties

(a)                                  isa Person duly constituted and organized, validly existing and in good standingunder the laws of the jurisdiction of its constitution;

(b)                                 hasall requisite corporate or other power necessary to own its assets and carry onits business as now being or as proposed to be conducted; and

(c)                                  isqualified to do business and is in good standing in all jurisdictions in whichthe nature of the business conducted by it makes such qualification necessaryand where failure so to qualify could have a Material Adverse Effect.

**11.2****                        Authorizationand Validity**

Each Credit Party has all necessary power, authorityand legal right to execute, deliver and perform its obligations under theCredit Documents to which it is a party, has duly authorized by all necessaryaction the execution, delivery and performance of its obligations under suchCredit Documents and has duly and validly executed and delivered the CreditDocuments to which it is a party. The obligations of each Credit Party underthe Credit Documents to which it is a party constitute legal, valid and bindingobligations, enforceable against such Credit Party in accordance with theirterms.

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**11.3****                        NoBreach**

The execution and delivery of the Credit Documents andthe performance by the Credit Parties of their respective obligationsthereunder will not conflict with, result in a breach of or require any consentunder, the constitutive documents or by-laws of any Credit Party, or anyapplicable law or regulation in any material respect, or any order or decisionof any court or governmental authority or agency, or any agreement (includingthe Cascades Indenture and the Norampac Indenture) to which any Credit Party isa party or by which it or any of its property is bound.

**11.4****                        Approvals**

Except for filings or registrations required toperfect the Security, no authorization, approval or consent of, nor any filingor registration with, any governmental or regulatory authority or agency, isnecessary for the execution, delivery or performance by each Credit Party ofthe Credit Documents to which it is a party or to ensure the legality, validityor enforceability thereof.

**11.5****                        Compliancewith Laws and Permits**

Each of the Credit Parties is in substantialcompliance in all material respects with all laws and regulations applicable toit and its business and assets, including Environmental Laws. Each of theCredit Parties holds all material permits, licenses, approvals, consents andother authorizations required under all such laws and regulations to own itsassets and to carry on its business as now being or as proposed to be conducted.

**11.6****                        Titleto Assets**

The assets of the Credit Parties, taken as a whole,are not subject to title defects or restrictions which could materially andadversely impair their value or normal use. The Credit Parties own or haverights of use for all property and assets (including intellectual property)necessary to carry on their businesses.

**11.7****                        Litigation**

There are no legal or arbitration proceedings at lawor in equity, or any proceedings by or before any governmental or regulatoryauthority or agency, or, to the best of its knowledge, any claim orinvestigation by any such authority or agency or under Environmental Laws, orany labor disputes, now pending or, to the best of its knowledge, threatenedagainst any of the Credit Parties or any of their properties or rights that, ifadversely determined, could have a Material Adverse Effect.

**11.8****                        NoDefault**

No Default has occurred and is continuing.

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**11.9****                        Solvency**

Each of the Credit Parties is Solvent.

**11.10****                 Taxes**

Each of the Credit Parties has filed all income taxreturns and all other material tax returns and paid all taxes material in theiramount that are required to be filed or paid by them. The charges, accruals andreserves on the books of the Credit Parties in respect of taxes and othergovernmental charges are adequate.

**11.11****                 ERISA andPension Plans**

Each Plan and each other pension or employee benefitplan of any Credit Party is in compliance in all material respects with theapplicable provisions of ERISA, the US Revenue Code and any other applicablelaw. No Credit Party has any material unfunded liability under any pension planon an ongoing or termination basis.

**11.12****                 Margin StockRestrictions**

None of the Credit Parties is engaged principally, oras one of its important activities, in the business of extending credit for thepurpose, of buying or carrying margin stock, and no part of the proceeds of anyextension of credit hereunder will be used to buy or carry any margin stock. “Marginstock” herein has the meaning specified in Regulations U and X of the Boardof Governors of the Federal Reserve System of the United States.

**11.13****                 InvestmentCompany Act**

None of the Credit Parties is an “investment company”,or a company “controlled” by an “investment company”, within the meaning of the*Investment Company Act* of 1940 of theUnited States, as amended.

**11.14****                 Restriction onPayments**

Except as provided in the Cascades Indenture and theNorampac Indenture, none of the Credit Parties is subject to any law,regulation, agreement or legal impediment that prohibits, restricts or imposesany condition upon the ability of a Credit Party to pay Distributions or tomake or repay loans or advances.

**11.15****                 CorporateStructure and Location of Assets**

The Corporate Structure Chart contains a complete andcorrect list of all of the Subsidiaries of Cascades and indicates (i) thejurisdiction of formation of each such entity, (ii) each Person holdingownership interests in each such entity, (iii) the nature of the ownershipinterests held by each such Person and the percentage of ownership representedby such

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ownership interests,(iv) the location of the registered and chief executive offices of eachCredit Party that must provide Security, (v) any prior name (including anypre-merger corporate name) of each such Credit Party and (vi) thejurisdictions where the material inventory and accounts receivable of each suchCredit Party are located.

**11.16****                 FinancialStatements and Fiscal Year**

The last audited financial statements of Cascades arecomplete and correct and fairly present the consolidated financial conditionand results of operation of Cascades as at their stated date, all in accordancewith GAAP. Except as reflected or disclosed in such financial statements, noneof the Credit Parties has on the date hereof any material contingentliabilities, liabilities for taxes, unusual forward or long-termcommitments or unrealized or anticipated losses from any unfavorablecommitments that have not been disclosed in writing to the Agent and theLenders. The fiscal year of each of the Credit Parties ends on December 31of each year.

**11.17****                 No MaterialChange**

There has been no Material Adverse Change sinceSeptember 30th,2006.

**11.18****                 True andComplete Disclosure**

The information, reports, financial statements anddocuments furnished or to be furnished by or on behalf of the Credit Parties tothe Agent or any Lender in connection with the negotiation, preparation,execution, delivery or performance of the Credit Documents, when taken as awhole, do not and will not contain any untrue statement of material fact oromit to state any material fact necessary to make the statements therein, inlight of the circumstances under which they were made, not misleading.

**12 -**Affirmative Covenants

**12.1****                        GeneralCovenants**

Each of the Borrowers will, and will cause each of theother Credit Parties to:

(a)                                  *Legal Existence* – subject to Section 13.3, preserve andmaintain its legal existence and all of its material rights, privileges,licenses and franchises;

(b)                                 *Legal Compliance* – substantially comply in all materialrespects with the requirements of all laws and regulations applicable to it andits business and assets (including Environmental Laws) and with all orders ofgovernmental or regulatory authorities;

(c)                                  *Payment of Taxes* – pay and discharge all taxes, assessmentsand governmental charges or levies imposed on it or on its income or profits oron any of its property or assets prior to the date on which penalties orinterest attach thereto, except for any such tax, assessment, charge or levythe payment of which is being

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contested in good faithand by proper proceedings and against which adequate reserves are beingmaintained;

(d)                                 *Maintenance of Property* – maintain all of its properties andassets used or useful in its business in good working order and condition,ordinary wear and tear excepted;

(e)                                  *Material Agreements* – perform its obligations under andpreserve and maintain in force all agreements to which it is a party that arenecessary for or material to its operations and business;

(f)                                    *Insurance* – insure and keep insured its property, assets andbusiness, and will maintain business interruption and civil liability(including product and environmental liability) insurance for such coverage asa prudent administrator would obtain for similar property, assets andbusinesses, in each case, with financially sound and reputable insurancecompanies;

(g)                                 *Records* – keep adequate records and books of account, inwhich complete entries will be made in accordance with GAAP; and

(h)                                 *Access* – permit representatives of the Agent and any Lender,upon reasonable prior notice and during normal business hours, to examine, copyand make extracts from its books and records, to inspect any of its propertiesor assets, and to discuss its business and affairs with its officers and auditors.

**12.2****                        Use ofProceeds and Compliance with Indenture Limitations**

(a)                                  TheBorrowers will use the proceeds of the Facilities****onlyfor the purposes permitted under this Agreement. The Borrowers will not use anyFacility to finance any private or public tender offer for the shares or othersecurities of a Person whose governing body has not approved such offer (“hostiletake-over”).

(b)                                 TheBorrowers will ensure that the outstanding Borrowings hereunder will not at anytime exceed the maximum amount permitted under the Cascades Indenture and theNorampac Indenture.

**12.3****                        USAPatriot Act**

Promptly, following a request by any Lender, theBorrowers will provide all documentation and other information which suchLender may reasonably request in order to comply with its ongoing obligationsunder applicable “know your customer” and anti-money laundering laws andregulations, including the *USA Patriot Act*(Title IIIof Pub. L. 107-56) (the “Act”). The Borrowers authorize any Lender torequest and obtain such information from any Person. The Borrowers alsoacknowledge that they have been notified that each Lender is required under theAct to obtain, verify and record information which allows such Lender toidentify each Borrower in accordance with the Act.

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**12.4****                        FurtherAssurances**

Each of the Borrowers will, and will cause each of theother Credit Parties to, cooperate with the Lenders and the Agent and executesuch further instruments and documents as the Agent may reasonably request tocarry out to its satisfaction the transactions contemplated by the CreditDocuments.

**12.5****                        Representationsand Warranties**

Each of the Borrowers will ensure that allrepresentations made in this Agreement are true and correct at all times,except for representations made as of a date expressly stated therein.

**13 -**Negative Covenants

Each of the Borrowerscovenants and agrees that:

**13.1****                        NegativePledge**

None of the Credit Parties will create, incur, assumeor suffer to exist any Lien on their present and future property or assetsexcept for the Security and Permitted Liens.

**13.2****                        Indebtedness**

None of the Credit Parties other than Cascades willcreate, incur, assume or permit to exist any Funded Debt other than:

(a)                                  indebtednessto the Agent and the Lenders under the Credit Documents;

(b)                                 indebtednessamong the Credit Parties;

(c)                                  indebtednesspermitted to be secured by Permitted Liens;

(d)                                 indebtednessunder Hedging Agreements provided same are not made for speculative purposes;

(e)                                  indebtednessunder the****Cascades Indenture and the Norampac Indenture;

(f)                                    indebtednessup to aggregate outstanding amount for all Credit Parties other than Cascadesnot exceeding at any time $45,000,000; and

(g)                                 existingindebtedness not exceeding $25,000,000 specified in the list of permittedindebtedness dated December 29, 2006 and delivered to the Lenders concurrentlywith the execution of this Agreement (as extended or renewed, as the case maybe) and any future indebtedness incurred for the purposes of refinancing anysuch existing indebtedness but only up to the amount to be refinanced.

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**13.3**                        Limitationson Fundamental Changes

None of the Credit Parties will:

(a)                                  enterinto any transaction of merger or amalgamation, or liquidate, wind up ordissolve itself, except that any Credit Party may merge or amalgamate with aBorrower or any other Credit Party provided that the following conditions arefulfilled:

(i)                                     noDefault occurs as a result of the merger or amalgamation;

(ii)                                  ifany of the merging or amalgamating entity is a Borrower or a DesignatedSubsidiary, the surviving or amalgamated entity executes and delivers to theAgent all such documents as may be necessary or advisable to confirm that suchentity is bound as successor of the merging or amalgamating entities by allCredit Documents to which such entities were parties;

(iii)                               ifthe surviving or amalgamated entity is a Credit Party other than a Borrower,such Credit Party must be a Designated Subsidiary, if any of the merging oramalgamating entities includes a Designated Subsidiary;

(iv)                              theAgent has been provided prior to or concurrently with the merger oramalgamation with satisfactory evidence of compliance with the requirements ofclauses (i), (ii) and (iii) including such financial information,certificates, documents and legal or other professional opinions as the Agentmay reasonably request; and

(v)                                 aseven-day prior notice is given to the Agent in the case of an amalgamation ormerger involving a Borrower.

(b)                                 sell,lease, transfer or otherwise dispose of, in one transaction or a series ofrelated transactions to any Person (in each case, a “disposition”), anyproperty (other than inventory sold in the ordinary course of business), exceptfor the following dispositions (in each case, provided that no Default occursas a result of the disposition):

(i)                                     adisposition of property with a value of less than $15,000,000;

(ii)                                  adisposition to another Credit Party provided the conditions of paragraph (a)above are fulfilled (as if the disposition were a merger and the transfereewere the surviving entity) and provided further that if the disposition relatesto substantially all of the property of the transferor, the latter (if not aBorrower) may wind-up or dissolve itself after completion of such disposition;

(iii)                               adisposition to any other Person (other than pursuant to a Securitization orFactoring Program), provided that the disposition is made for a

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consideration at leastequal to the fair market value of the related property, at least 75% of theconsideration is paid in cash and the available cash proceeds of thedisposition are used to permanently reduce the Facilities on a *pro rata* basis; for purposes of the foregoing, theavailable cash proceeds of a disposition are the cash proceeds of suchdisposition (net of related expenses and payments made to repay indebtednesssecured by Liens on the property sold), less the portion of such cash proceedswhich has been reinvested (or segregated for reinvestments pursuant to bindingcommitments) in Credit Parties within 360 days from the date of thedisposition; and

(iv)                              dispositionsof accounts receivable pursuant to a Securitization or Factoring Program to theextent such accounts receivable are not generated by a disposition of inventorysubject to the Security made after the occurrence of an Event of Defaultspecified in Section 16.1(f) or Section 16.1(g) or after the date theindebtedness of the Borrowers hereunder becomes repayable pursuant to a noticegiven under Section 16.2 and provided that no account receivable subjectto a Securitization or Factoring Program (in whole or in part) will be includedin the Borrowing Base, it being understood however that accounts receivablepermitted to be disposed pursuant to this clause (iv) will be excludedfrom the Security from the date of any such permitted disposition;

(c)                                  carryon any business, directly or indirectly, other than the businesses currentlycarried on by them and activities ancillary or reasonably related thereto (the “corebusiness”), or make any investment (other than investments referred to inclauses (ii) and (iii) of Section 13.4(b)) in a non-Credit Party who isnot in the same line of business as the core business, provided that businessesother than the core business may be carried on by Credit Parties and bynon-Credit Parties in which investments are made to the extent that theaggregate of the combined assets of such Credit Parties and of the value of allsuch investments in such non-Credit Parties does not at any time exceed 5% ofCascades’ Net Tangible Assets, provided however that the foregoing limitationwill not apply to the investments made by Cascades in Boralex Inc. prior to thedate of this Agreement.

**13.4**                        Investments

(a)                                  Noneof the Credit Parties will, directly or indirectly, make any investment in anyPerson who is not a Credit Party, if such investment would result in theaggregate amount of all investments made after February 5, 2003 in non-CreditParties being in excess of 5% of Cascades’ Net Tangible Assets.

(b)                                 However,the foregoing limitation will not apply to (i) investments funded from theproceeds of any issue of equity made by Cascades after February 5, 2003,(ii) temporary cash or cash equivalent investments made for cashmanagement

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purposes, and(iii) loans and advances to employees in an aggregate amount not exceeding$5,000,000 at any time.

**13.5**                        Distributions

(a)                                  Noneof the Credit Parties will make any Distribution (other than a direct orindirect Distribution to a Credit Party) if there is a Default or if suchDistribution could result in a Default or if, after giving effect to theDistribution, the aggregate amount of all Distributions made from January 1,2007 to non-Credit Parties were to exceed 50% of the adjusted consolidated netincome of Cascades for the period from January 1, 2007 to the end of its mostrecent fiscal quarter (treated as one accounting period) plus the sum of(i) the proceeds of any new issue of equity made by Cascades during thesame period up to the portion of same which is not used to finance theTransaction or fund investments in non-Credit Parties, and (ii) $25,000,000.

(b)                                 However,the foregoing limitation will not apply to (i) Distributions made pursuant tostock option plans and other plans or agreements with or for the benefit ofemployees or directors up to an aggregate amount not exceeding $7,500,000 perfiscal year and (ii) ordinary course of business Distributions on Cascades’shares and open market purchases of Cascades’ shares pursuant to stock buybackprograms, up to an aggregate amount of $25,000,000 per fiscal year.

**13.6**                        Transactionswith Related Parties

None of the CreditParties will engage in any material transactions with any related party onterms and conditions not less favourable in any material respect to therelevant Credit Party than those that could be obtained on an arm’s lengthbasis from unrelated third parties, provided that the foregoing requirementwill not apply to transactions among the Credit Parties.  For the purposes of this Section 13.6,(i) related party means, with respect to a Person, another Person thatControls or is Controlled by or is under common Control with the relevantPerson, and (ii) the definition of Control must be read replacing 50% by20%.

**14 -**Financial Ratios

**14.1**                        FundedDebt to Capitalization Ratio

Cascades must maintain at all times, on an adjustedconsolidated basis, a Funded Debt to Capitalization Ratio of not more than(i) 65% until June 30, 2008; and (ii) 60% thereafter.

**14.2**                        InterestCoverage Ratio

Cascades must maintain at all times,****on an adjusted consolidated basis, an Interest CoverageRatio not less than (i) 2.25:1.00 until December 31, 2007 and (ii) 2.50:1.00thereafter**.**

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**15 -**Reporting Requirements

**15.1**                        AnnualReporting

The Borrowers will deliver to the Agent, fordistribution to the Lenders, as soon as possible and, in any event, within90 days after the end of each fiscal year of the Borrowers:

(a)                                  theunqualified audited annual financial statements of Cascades, on a consolidatedbasis and the unaudited annual financial statements of Cascades, on an adjustedconsolidated basis;

(b)                                 theunaudited annual financial statements of each of the other Borrowers on aconsolidated basis;

(c)                                  theannual business plans and annual operating and capital budgets for the currentfiscal year of Cascades, on a consolidated and adjusted consolidated basis; and

(d)                                 theunaudited annual financial statements of each of the businesses operated withthe fixed assets subject to the Security.

**15.2**                        QuarterlyReports

The Borrowers will deliver to the Agent, fordistribution to the Lenders, as soon as possible and, in any event within60 days after the end of each fiscal quarter (including the fourthquarter):

(a)                                  theunaudited financial statements of Cascades for the relevant fiscal quarter, ona consolidated and adjusted consolidated basis;

(b)                                 theunaudited financial statements for the relevant fiscal quarter of each of theother Borrowers on a consolidated basis;

(c)                                  theunaudited financial statements for the relevant quarter of each of thebusinesses operated with the fixed assets subject to the Security;

(d)                                 acompliance certificate relating to the covenants herein in the form ofSchedule ”D” (with sufficient details to reconcile the financialstatements with the calculation base of the financial covenants);

(e)                                  aBorrowing Base report in the form of Schedule ”E”; and

(f)                                    copyof any filing with securities regulators.

**15.3**                        ERISA

Cascades US will inform the Agent as soon aspossible, and in any event within 10 days after it knows or has reason tobelieve that any of the events or conditions specified below has

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occurred or exists (andwill provide a copy of any report or notice required to be filed with or givento PBGC:

(a)                                  anyreportable event, as defined in Section 4043(b) of ERISA and theregulations issued thereunder, unless the 30-day notice requirement inrespect thereof has been waived by the PBGC;

(b)                                 anotice of intent to terminate any Plan or any action taken by a Credit Party toterminate any Plan, provided notice of intent to terminate is required pursuantto Section 4041(a)(2) of ERISA;

(c)                                  theinstitution by PBGC of proceedings under Section 4042 of ERISA for thetermination of, or the appointment of a trustee to administer, any Plan; and

(d)                                 theadoption of an amendment to any Plan that, pursuant to Section 401(a)(29)of the US Revenue Code or Section 307 of ERISA, would result in the lossof tax-exempt status of the trust of which such Plan is a part ifsecurity has not been provided in accordance with the provisions of theseSections.

**15.4**                        Reportingfrom Time to Time

The Borrowers will promptly notify the Agent of anyDefault and deliver to the Agent any auditor letter highlighting issues ordeficiencies that, if not addressed or corrected, could reasonably result in aMaterial Adverse Change. The Borrowers will also furnish the Agent allinformation, documents and records and allow any enquiry, study, audit orinspection that the Agent may reasonably request in connection with thebusiness, financial condition, property, assets or prospects of the CreditParties, or to verify compliance with the obligations of any of the CreditParties under any Credit Document.

**15.5**                        HedgingAgreements, Securitization and Factoring

(a)                                  TheBorrowers will provide to the Agent, concurrently with the compliancecertificates required to be delivered pursuant to Section 15.2, a reportlisting all outstanding Hedging Agreements and specifying the counterparties,notional amounts, dates, maturities and marked-to-market value****of all such agreements.

(b)                                 Priorto or concurrently with the coming into effect of any Securitization orFactoring Program (or any material amendment thereto), Cascades will provide tothe Agent (i) a description of such program (or of such material amendment),such description to include the criteria permitting the identification of theaccounts receivable subject to the program as well as the amount and term ofany such program, and (ii) an update (giving effect to the program or theamendment) of the most recent Borrowing Base report delivered pursuant toSection 15.2(e).

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**16 -**Events of Default and Remedies

**16.1**                        Eventsof Default

The occurrence of one or more of the following eventsconstitutes an event of default (“Event of Default”) under the CreditDocuments:

(a)                                  aBorrower defaults in the payment when due of any amount owing under anyFacility in respect of principal, interest or acceptance fee, or defaults formore than five Business Days in the payment of any other amount owing under aCredit Document or an Hedging Agreement with a Lender;

(b)                                 anyoneor more of the Credit Parties (i) fails or fail to make a payment or paymentsexceeding in the aggregate $30,000,000 in respect of any obligation orobligations (other than the Facilities), when and as due, or (ii) is orare in default under the Cascades Indenture or the Norampac Indenture and, ineach case, such failure or default continues after the applicable notice orgrace period, if any;

(c)                                  anyrepresentation, warranty or certification made or deemed made by a Credit Partyin any Credit Document proves to be false or misleading as of the time made inany material respect;

(d)                                 anyof the provisions of Article 10 is not complied with;

(e)                                  anyof the covenants contained in Article 14 and Sections 15.1 and 15.2is not complied with;

(f)                                    aCredit Party becomes unable to pay its debts generally as such debts become dueor is adjudicated bankrupt or insolvent;

(g)                                 aCredit Party (i) applies for or consents to or is the subject of an orderfor the appointment of a receiver, interim receiver, trustee (or any Personperforming similar functions) in respect of itself or of all or a substantialpart of its assets, (ii) makes a general assignment for the benefit of itscreditors, (iii) takes advantage of any law relating to bankruptcy,insolvency, reorganization, liquidation, dissolution, arrangement or winding-up,or (iv) takes any action for the purpose of effecting any of theforegoing;

(h)                                 aproceeding is commenced or any similar action is taken against a Credit Partyseeking (i) its bankruptcy, reorganization, liquidation, dissolution,arrangement or winding-up, or similar relief, (ii) the appointmentof a receiver, interim receiver, trustee (or any Person performing similarfunctions) in respect of itself or of all or any substantial part of itsassets, or (iii) the seizure or the attachment of, or the enforcement ofremedies on, any part of the assets of the Credit Parties having a value ofmore than $30,000,000 and, in each case, such proceeding (or similar action) isnot dismissed or withdrawn after a period of 60 days, provided that suchgrace period will apply only if such proceeding (or action) is diligentlycontested

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in good faith and doesnot disrupt the business or normal operations of the Credit Party concerned;

(i)                                     aCredit Party defaults in the performance of any of its other obligations undera Credit Document and such default continues unremedied for a period of 30 daysafter notice by the Agent to the Borrowers;

(j)                                     theControl of Cascades is acquired by any Person (or by a group of Persons actingin concert) other than Bernard Lemaire, Laurent Lemaire orAlain Lemaire (the term “Control” being read for the purposes of thisSection 16.1(j) by referring only to clauses (i) through (iv) of the definitionof Control in Section 1.1)**;** or

(k)                                  aMaterial Adverse Change.

**16.2**                        Remedies

If an Event of Default occurs and is continuing, theAgent may, on giving a notice to the Borrowers take any one or more of thefollowing actions:

(a)                                  terminatethe right of the Borrowers to use the Facilities;

(b)                                 declareall indebtedness of the Borrowers under the Credit Documents to be immediatelypayable and demand immediate payment of the whole or part thereof; and

(c)                                  exerciseall of the rights and remedies of the Agent and the Lenders including theirrights and remedies under any Credit Document;

provided that all indebtedness of the Borrowers under the CreditDocuments will automatically become due and payable without any notice upon theoccurrence of any Event of Default specified in Section 16.1(f) orSection 16.1(g).

**17 -**Equality Among Lenders

**17.1**                        Distributionamong Lenders

Any payment received by the Agent on account of theFacilities, including any amount received through the exercise of any right ofset-off and the enforcement of any Security, must be distributed amongthe Lenders proportionately to the amount of the indebtedness owing to themhereunder and which is then payable. Any such distribution must be madeforthwith but no later than the Business Day following the date of receipt ofthe payment.

**17.2**                        OtherSecurity

No Lender may take any Security or Lien in connectionwith the Facilities or Hedging Agreements except in accordance withArticle 10.

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**17.3**                        DirectPayment to a Lender

Subject to the other provisions of this Agreementpermitting direct payment to Lenders, if a Lender receives, otherwise thanthrough the Agent, a payment on account of the Facility (including any paymentreceived through the exercise of any right of set-off), such Lender willremit the payment to the Agent, for distribution among all Lenders.

**17.4**                        Adjustments

If, at any time, the amount of Borrowings owing to aLender under any Facility compared to the aggregate amount of all outstandingBorrowings under such Facility is not proportional to such Lender’s Commitmentunder the Facility, expressed as a percentage, the Agent may (and will, aftertermination of the Facilities) make from time to time such adjustments as maybe necessary in order that the outstanding Borrowings under the applicableFacility are in the proportions of the Commitments of the Lenders under suchFacility and the Lenders will make all such payments as the Agent may direct togive full effect to such adjustments. The Borrowers will be bound by suchadjustments.

**18 -**The Agent, the Co-Agent and The Lenders

**18.1**                        Appointmentof the Agent and the Co-Agent

Each Lender irrevocably appoints the Agent and theCo-Agent to exercise on its behalf the rights and powers delegated to the Agentor the Co-Agent (as applicable) hereunder and authorizes each of the Agent andthe Co-Agent to take any action necessary for the performance of its duties.Whenever acting in such capacity, the Agent or the Co-Agent (as applicable)represents and binds all Lenders.

**18.2**                        Restrictionson the Powers of the Lenders

No Lender may exercise individually the rights andpowers delegated to the Agent or the Co-Agent, including the enforcement ofremedies after the occurrence of an Event of Default.

**18.3**                        SecurityDocuments

The Agent is authorized to hold any Security on behalfof the Lenders and to execute in their name any Security Document. For greatercertainty, the Agent is authorized to act as representative (*fondé de pouvoir*) of the Lenders (notwithstanding that theAgent is also a Lender) for the purposes of any hypothec granted by any CreditParty pursuant to article 2692 of the *Civil Code of Quebe*cto secure debentures or similar instruments issued for the benefit of theLenders pursuant to the Security.

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**18.4**                        Actionby the Agent or Co-Agent

The duties of each of the Agent and the Co-Agent arelimited to those specifically conferred upon it in the Credit Documents. Exceptas otherwise provided, the Agent or the Co-Agent is not required toexercise any discretion or to take any action under the Credit Documents,unless it has been so required by the Majority Lenders (or by all Lenders wherethe consent of all Lenders is required). In no event, will the Agent or theCo-Agent be required to exercise any right or power, if in its judgment, doingso would contravene any Credit Document or applicable law or where the Agent orthe Co-Agent determines that the indemnity provided in Section 18.6 maynot be available or adequate.

**18.5**                        EnforcementMeasures

Any legal proceedings and enforcement measures onbehalf of the Lenders will be taken by the Agent; at the Agent’s request, allLenders must join the Agent in such proceedings or enforcement measures.

**18.6**                        Indemnification

Each Lender will indemnify each of the Agent and theCo-Agent (and their directors, officers, employees and agents), proportionatelyto its respective Commitment, from and against all losses suffered orliabilities or expenses incurred by the Agent or the Co-Agent of any kind ornature when exercising its rights and powers, save any losses, liabilities orexpenses resulting from the wilful misconduct or gross negligence of the Agentor the Co-Agent (or their directors, officers, employees or agents).

**18.7**                        Relianceon Reports

The Agent will be entitled to make any determinationof the Borrowing Base and of any Applicable Margin or Rate based on the mostrecent reports or certificates furnished by any Borrower in relation to suchmatters.

**18.8**                        Liabilityof the Agent or the Co-Agent

The Agent or the Co-Agent (as applicable) will only beliable to the Lenders for willful misconduct or gross negligence, and will haveno liability as a consequence of a failure of any Person to fulfil itsobligations or any action authorized by the Majority Lenders (or by all Lenderswhere the consent of all Lenders is required). The Agent or the Co-Agent (asapplicable) will be entitled to assume that there exists no Default, unless theAgent has been notified in writing of the existence of a Default.

**18.9**                        Liabilityof Lenders

Each Lender acknowledges that it has been and willcontinue to be solely responsible for making its own independent appraisal andinvestigation of the financial condition of the

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Borrowers and any otherCredit Party, and for the assessment of the risks arising from the Facilities.No Lender may rely on the Agent or the Co-Agent in this regard nor will theAgent or the Co-Agent be responsible for ensuring the validity or enforceabilityof any Credit Document.

**18.10**                 Rightsof the Agent or Co-Agent as Lender

In its capacity as Lender, each of the Agent and theCo-Agent has the same rights as the other Lenders and may exercise such rightsindependently of its role as Agent or Co-Agent; unless the context otherwiserequires, the expression “Lender” also refers to the Lender which is the Agentor Co-Agent.

**18.11**                 Sharingof Information

(a)                                  TheLenders may share with each other any information held by them regarding thefinancial condition, business or property of any Credit Party or relating tomatters contemplated by the Credit Documents or the Hedging Agreements.  The Lenders may provide such information on aconfidential and need-to-know basis to any financial institution which is anassignee or a prospective assignee of Commitments or a participant in theFacilities.

(b)                                 Eachof the Agent and the Co-Agent may disclose to any agency or organization thatassigns standard identification numbers to credit facilities such basic informationdescribing the Facilities as is necessary to assign unique identifiers (and, ifrequested, supply a copy of this Agreement), it being understood that thePerson to whom such disclosure is made will be informed of the confidentialnature of such information and instructed to make available to the public onlysuch information as such person normally makes available in the course of itsbusiness of assigning identification numbers. In addition, but afterconsultation with Cascades, each of the Agent and the Co-Agent may provide toLoan Pricing Corporation or other recognized publishers of information forcirculation in the loan market information of the type customarily provided byfinancial institutions to Loan Pricing Corporation.

**18.12**                 Competition

Subject to the other provisions of this Agreement, theAgent, the Co-Agent and each of the Lenders may enter into other transactionswith any Credit Party and they are not required to notify each other of suchtransactions.

**18.13**                 SuccessorAgent or Co-Agent

Each of the Agent and the Co-Agent may resign bygiving notice thereof to the Borrowers and to the Lenders. Each of the Agentand the Co-Agent may also be replaced by the Majority Lenders following itsfailure to perform its obligations under this Agreement. The resignation orreplacement of the Agent or the Co-Agent will be effective 30 days afterthe appointment by the Majority Lenders of a successor Agent or the Co-Agentfrom among the

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Lenders. Promptly afterbeing so appointed, any successor Agent or the Co-Agent must give noticethereof to the Borrowers and the Lenders. From the effective date of itsappointment, any successor Agent or Co-Agent will be vested with all therights, powers and duties of the Agent or Co-Agent under the Credit Documents.

**19 -**Decisions, Waivers and Amendments

**19.1**                        Amendmentsand Waivers by the Majority Lenders

Subject to Section 19.2, the provisions of the CreditDocuments may be amended or waived, and consents thereunder may be given, onlyby an instrument signed by the Agent and the Co-Agent, with the approval of theMajority Lenders, and in the case of an amendment, also signed by the relevantCredit Party.

**19.2**                        Amendmentsand Waivers by Unanimous Approval

Except as otherwise expressly provided in thisAgreement, an amendment, waiver or consent that relates to any of the followingmatters must be made or given by an instrument signed by the Agent and theCo-Agent, with the prior consent of all Lenders, and in the case of anamendment, also signed by the relevant Credit Party:

(a)                                  theextension of the maturity date of any Facility;

(b)                                 anyincrease in the amount of any Facility or in the Commitment of any Lender;

(c)                                  anypostponement of the due date, any subordination or any reduction of any amountpayable hereunder;

(d)                                 thereduction of any interest rate, discount rate or fee;

(e)                                  therelease or subordination of any portion of the Security; and

(f)                                    thedefinition of the “Majority Lenders” and the provisions of Section 9.1,Section 13.1, Sections 16.1(a), 16.1(f) and 16.1(g), Article 17,Article 18, Article 19 and Section 20.3.

**19.3**                        Amendmentsrelating to the Agents or an Issuing or Swingline Lender

No amendment affecting the rights and obligations ofthe Agent, the Co-Agent or an Issuing Lender or a Swingline Lender may be madewithout the consent of the Agent, the Co-Agent or such Issuing Lender or aSwingline Lender (as applicable).

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**20 -**Miscellaneous

**20.1**                        Booksand Accounts

The Agent will keep books and accounts evidencing thetransactions made pursuant to this Agreement. Absent manifest error, such booksand accounts will be deemed to represent accurately such transactions and theindebtedness of the Borrowers.

**20.2**                        Determination

In the absence of manifest error, any determinationmade by the Agent of the amounts payable hereunder will be conclusive andbinding upon the Lenders and the Borrowers.

**20.3**                        Prohibitionon Assignment by Borrowers

No Borrower may assign its rights under thisAgreement.

**20.4**                        Assignmentsand Participations

(a)                                  ALender (the “assignor”) may assign, in whole or in part, its Commitment underthe Facilities, including outstanding Borrowings owing to it, to any Person whomakes purchases or otherwise invests in commercial loans in the ordinary courseof its business (the “assignee”). The assignment must be made in an instrumentsubstantially in the form of Schedule ”F”. The assignor must pay to theAgent, for its own account, an assignment fee of $3,500. When the assignmentbecomes effective, the assignee will become a Lender and will benefit from therights and be liable for the obligations of the assignor, proportionally to theassigned Commitment, and, to the same extent, the assignor will be releasedfrom its obligations. The assignor and the assignee will be liable for allexpenses incurred by the Agent in connection with such assignment.

(b)                                 Nopartial assignment of a Commitment may be made (i) if the residual amount ofthe Commitment of the assignor or if the total Commitment of the assignee isless than $10,000,000 or (ii) in the case of the assignment of a Commitmentunder the Revolving Facility, if the assigned portion is not allocated amongTranches A, B and C in the same proportion as the Commitment of theassignor.

(c)                                  Concurrentlywith any assignment in favour of an assignee who is not, at the time of theassignment, party to this Agreement, the Borrowers and the DesignatedSubsidiaries must acknowledge that the assignee is entitled to the benefit ofthe Security.

(d)                                 Eachassignment by a Lender is subject to the prior consent of the Agent, of any IssuingLender and of any Swingline Lender, and, if made at a time when no Default iscontinuing, to the prior consent of the Borrowers (which consents will

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not be unreasonablywithheld). However, no such consent will be required if the assignee is anotherLender or an Affiliate of the assignor.

(e)                                  Sections 20.4(a)to (d) do not apply to (i) a participation that a Lender may grant to anotherfinancial institution or to an assignment by way of security to a FederalReserve Bank provided that no such participation or assignment will release anyLender of its obligations under the Credit Documents or confer upon anyparticipant any right against the Agent, and (ii) an assignment made afterDefault to effect any adjustment required to be made pursuant to Section 17.4.

(f)                                    Noassignment or participation made at the time when no Default is continuing mayincrease for any Borrower the costs of the Borrowings pursuant toSection 8.5.

**20.5**                        DesignatedLenders

(a)                                  Withthe written consent of the Agent (which will not be unreasonably withheld), aLender (the “designating Lender”) may designate one of its Affiliates oranother Lender or an Affiliate thereof (the “designated Lender”) for thepurposes of making available its Commitment in respect of Tranche B orTranche C. Upon its acceptance of the designation and as long as suchdesignation has not been terminated, the designated Lender (if not already aLender) will be deemed to be a Lender for all purposes of the Credit Documents,with a Commitment (or an additional Commitment if it is already a Lender)corresponding to the portion of the applicable Tranche to be made available toit and with the designating Lender’s Commitment under the Revolving Facilitybeing reduced accordingly. No such designation will reduce the obligations ofthe designating Lender under any Tranche in which it remains a Lender,including as a result of an increase in its Commitment due to a reallocationmade pursuant to Section 2.2.

(b)                                 Adesignating Lender may not make an assignment of its Commitment under theRevolving Facility without terminating the designation prior to making theassignment. For greater certainty, the assignee may also avail itself of theprovisions of Section 20.5(a). A designated Lender may not make anassignment in respect of the Tranche which is the subject of the designation.Any termination of a designation will result in the outstanding Borrowingsowing to the designated Lender in respect of the Tranche which was the subjectof the designation being automatically assigned to its designating Lender(notwithstanding anything to the contrary in Section 20.4 but subject toSection 20.4(f)), with the designating Lender being obligated to pay tothe designated Lender the price of the assignment in accordance with theiragreement relating to the designation.

(c)                                  Eachof Canadian Imperial Bank of Commerce, Caisse centrale Desjardins,Citibank, N.A., Canadian Branch, BNP Paribas (Canada), TheToronto-Dominion Bank, JPMorgan Chase Bank, N.A., RabobankNederland, Canadian Branch and Wachovia Capital Finance Corporation(Canada) designates as its designated

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Lender its Affiliatespecified below its name on the signature pages of this Agreement for thepurposes of making available its Commitment in respect of Tranche B orTranche C (as applicable). Each such designated Lender hereby accepts thedesignation made by its designating Lender.

(d)                                 Sections 20.4(c)and 20.4(f) will apply to any designation of a designated Lender made after thedate of this Agreement, as if the designation were an assignment and thedesignated Lender were an assignee.

**20.6**                        Notes

At the request of a Lender, any Borrower will executein favour of such Lender a note evidencing its indebtedness to such Lenderunder this Agreement.

**20.7**                        Costsand Expenses

The Borrowers must pay on demand the amount of allreasonable costs and expenses (including legal and other professional fees)incurred by the Agent and the Co-Agent in connection with the implementation ofthe Facilities and the preparation, negotiation, execution, syndication andadministration of the Credit Documents, as well as the reasonable costs andexpenses incurred by the Agent or the Lenders in connection with theenforcement of, or the preservation of any rights under, any Credit Document.

**20.8**                        NoWaiver

The omission by the Agent or any Lender to exerciseany of its rights will not be deemed to be a waiver of the exercise of any suchright subsequently. The omission by the Agent or any Lender to notify anyCredit Party of the occurrence of a Default will not be deemed to be a waiverof the right of the Agent or of such Lender to avail itself of such Default.

**20.9**                        Irrevocabilityof Notices of Borrowings

No Borrower may cancel a notice of Borrowing,conversion, renewal, reduction or prepayment. The Borrower concerned mustindemnify the Lenders in respect of any loss resulting from its failure to actin accordance with such notice.

**20.10**                 Set-off

If an Event of Default occurs and is continuing, theAgent and each Lender are authorized to set off and to apply any and alldeposits held for any Credit Party against any amount due and payable by anyCredit Party under the Credit Documents.

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**20.11**                 Indemnification

(a)                                  Ifany law, regulation, administrative decision or guideline or decision of aCourt (i) increases the cost of the Facilities for any Lender or(ii) reduces the income receivable by any Lender from the Facilities(including, without limitation, by reason of the imposition of reserves, taxesor requirements as to the capital adequacy of such Lender but in no event byreason of taxes on the overall net income of a Lender), such Lender may send tothe Borrower concerned a statement indicating the amount of such additionalcost or reduction of income; in the absence of manifest error, this statementshall be conclusive evidence of the amount of such additional cost or reductionof income and the Borrower concerned must pay forthwith said amount to suchLender.

(b)                                 TheBorrowers must pay on demand the amount of any breakage cost and other losssuffered by a Lender as a result of the conversion or repayment of a Borrowingbefore the maturity date of its period, irrespective of the cause of suchconversion or repayment (including a repayment resulting from a demand forpayment after the occurrence of an Event of Default). In the absence ofmanifest error, a statement prepared by the affected Lender indicating theamount of such cost or other loss and the method by which same was calculatedwill be binding and conclusive.

(c)                                  TheBorrowers must indemnify the Agent, the Co-Agent, the Lenders, their Affiliatesand their respective officers, directors, employees and agents (each, an “indemnitee”)and hold them harmless from and against all losses, liabilities, claims,damages or expenses (including costs to defend any claim) suffered or incurredby or made against any of them in any manner whatsoever arising from or relatedto the Credit Documents or the transactions contemplated thereby (including theuse of the proceeds from any Borrowing or as a result of any Default or non-complianceby any Credit Party with any Environmental Laws or of any claim underEnvironmental Laws in connection with the operations of, or any property ownedor operated by, any Credit Party). The foregoing indemnity will not howeverapply as to any indemnitee to losses, liabilities, claims, damages or expensesresulting from the gross negligence or wilfull misconduct of such indemnitee orfrom a breach in bad faith by such indemnitee of its obligations under a CreditDocument.

**20.12**                 Mitigationof costs

Each Lender will use its best efforts to avoid anyadditional cost or reduction of income for which a Borrower is required toindemnify such Lender pursuant to Section 20.11(a). However, nothingherein will require any Lender to take any action which would cause such Lenderto incur any expense which would not materially reduce any amount to bereceived pursuant to Section 20.11(a) or which the Lender determines inits sole judgment to be inadvisable for regulatory, competitive or internalmanagement reasons. The Borrowers will

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reimburse any Lender forany expense incurred by such Lender in taking any action pursuant to thisSection 20.12.

**20.13**                 Correctionsof Errors

The Agent is authorized to correct any typographicalerror or other error of an editorial nature in this Agreement and to substitutesuch corrected text in the counterparts of this Agreement, provided that suchcorrections do not modify the meaning or the interpretation of this Agreementand provided that copies of the corrected texts are remitted to each party.

**20.14**                 Communications

The Agent is entitled to rely in its dealings with anyBorrower upon any instruction or notice which the Agent believes in good faithto have been given by a Person authorized to give such instruction or notice orto make the applicable transaction.

**20.15**                 Counterparts

This Agreement may be executed in any number ofcounterparts, all of which taken together constitute one and the sameinstrument. A party may execute this Agreement by signing any counterpart.

**20.16**                 Waiverof Jury Trial

EACH OF THE BORROWERS, THE AGENT AND THE LENDERSIRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY ANDALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATINGTO THIS AGREEMENT OR THE OTHER CREDIT DOCUMENTS.

**21 -**Notices

**21.1**                        Sendingof Notices

Unless otherwise provided, any notice to be given to aparty in connection with this Agreement will be given in writing and will begiven by personal delivery, by a reputable delivery service, by telecopier or(except for any notice pursuant to Article 16) by electronic mail,addressed to the recipient at its address specified in Schedule ”G” hereofor at such other address as may be notified by such party to the otherspursuant to this Article.

**21.2**                        Receiptof Notices

Any notice given by personal delivery or by a deliveryservice will be conclusively deemed to have been given at the time of suchdelivery and, if given by telecopier or by electronic mail, on the day oftransmittal if before 3:00 p.m. on a Business Day, or on the followingBusiness Day if such transmission occurs on a day which is not a Business Dayor

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after 3:00 p.m. on aBusiness Day. If the telecopy or electronic transmission system suffers anyinterruptions by way of a strike, slow-down, a *forcemajeure*, or any other cause, a party giving a notice must do sousing another means of communication not affected by the disruption.

59

* *

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**INWITNESS WHEREOF** the parties have caused this Agreement to beduly executed as of the date and year first above written.
|            |   |   | ** **   | ** **   | **CASCADES INC.**                                                     |
|------------|--------|--------|--------------|--------------|-----------------------------------------------------------------------|
| ** ** |   |   | ** **   | ** **   | ** **                                                            |
|       |   |   |         |         | Per:                                                                  | (s) Christian Dubé |
|       |   |   |         |         |                                                                  |   |
|       |   |   |         |         | Per:                                                                  | (s) Allan Hogg |
|       |   |   |         |         |                                                                  |   |
|       |   |   |         |         |                                                                  |   |
| ** ** |   |   | ** **   |         | **CASCADES USA INC.**                                                 |
| ** ** |   |   | ** **   |         | ** **                                                            |
|       |   |   |         |         | Per:                                                                  | (s) Christian Dubé |
|       |   |   |         |         |                                                                  |   |
|       |   |   |         |         | Per:                                                                  | (s) Allan Hogg |
|       |   |   |         |         |                                                                  |   |
|       |   |   |         |         |                                                                  |   |
| ** ** |   |   | ** **   |         | **CASCADES EUROPE SAS**                                               |
| ** ** |   |   | ** **   |         | ** **                                                            |
|       |   |   |         |         | Per:                                                                  | (s) Christian Dubé |
|       |   |   |         |         |                                                                  |   |
|       |   |   |         |         |                                                                  |   |
| ** ** |   |   | ** **   |         | **CASCADES ARNSBERG GMBH**                                            |
| ** ** |   |   | ** **   |         | ** **                                                            |
|       |   |   |         |         | Per:                                                                  | (s) Christian Dubé |
|       |   |   |         |         |                                                                  |   |
|       |   |   |         |         | Per:                                                                  | (s) Allan Hogg |
|       |   |   |         |         |                                                                  |   |
|       |   |   |         |         |                                                                  |   |
| ** ** |   |   | ** **   | ** **   | **THE BANK OF NOVA  SCOTIA,** as Agent                                |
| ** ** |   |   | ** **   | ** **   | ** **                                                            |
| ** ** |   |   | ** **   | ** **   | ** **                                                            |
|       |   |   |         |         | Per:                                                                  | (s) David Angel |
|       |   |   |         |         |                                                                  |   |
|       |   |   |         |         |                                                                  |   |
|       |   |   | ** **   | ** **   | **NATIONAL BANK OF CANADA**, as  Co-Agent                             |
|       |   |   | ** **   | ** **   | ** **                                                            |
|       |   |   | ** **   | ** **   | ** **                                                            |
|       |   |   |         |         | Per:                                                                  | (s) Dominic Albanese |
|       |   |   |         |         |                                                                  |   |
|       |   |   |         |         | Per:                                                                  | (s) Roch Ledoux |
|       |   |   | *** *** | *** *** | *** ***                                                          | *** *** |
|       |   |   | *** *** | *** *** | ***(the names and signatures of  the Lenders are on the next page)*** |

 

**[Signaturepage – Credit Agreement]**

60

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** **
| Commitment Amounts      | ** **   | **Lenders**                                                                 |
|-------------------------|--------------|-----------------------------------------------------------------------------|
|                         |         |                                                                        |
| 1) Revolving Facility:  |         | **National Bank of Canada**                                                 |
| Tranche A:         | $70,000,000  |                                                                        |   |   |
| Tranche B:         | $10,500,000  |                                                                        |   | per : | (s) Dominic Albanese |
| Tranche C:         | $10,500,000  |                                                                        |   |   |
|                         |         | per:                                                                        | (s) Roch Ledoux |
| 2) Additional Revolving |         |                                                                        |
| Facility:               | $13,999,999  |                                                                        |   |   |
|                         |         | **National Bank of Canada,** New  York Branch                               |
| 3) Term Loan:           | $75,000,000  |                                                                        |   | (in respect of Tranche B)

  |
|                         |         | per :                                                                  | (s) Jeffrey Forgach |
| Total:                  | $180,000,000 |                                                                        |   |   |
|                         |         | per:                                                                        | (s) Vincent Lima |
|                    |         |                                                                        |
|                         |         |                                                                        |
| 1) Revolving Facility:  |         | **The Bank of Nova Scotia**                                                 |
| Tranche A:         | $50,000,000  |                                                                        |   |   |
| Tranche B:         | $7,500,000   |                                                                        |   | per : | (s) David Angel |
| Tranche C:         | $7,500,000   |                                                                        |   |   |
|                         |         | per:                                                                        | (s) David Loewen |
| 2) Additional Revolving |         |                                                                        |
| Facility:               | $10,000,000  |                                                                        |   |   |
|                         |         | **The Bank of Nova Scotia,**  Atlanta Agency (in respect of Tranche B) |
| 3) Term Loan:           | $25,000,000  |                                                                        |   |   |
|                         |         | per:                                                                        | (s) Chris J. Allen |
| Total:                  | $100,000,000 |                                                                        |   | ** ** |
|                    |         |                                                                        |
| 1) Revolving Facility:  |         |                                                                        |
| Tranche A:         | $66,666,668  |                                                                        |   |   |
| Tranche B:         | $10,000,000  |                                                                        |   | **Canadian Imperial Bank of Commerce** |
| Tranche C:         | $10,000,000  |                                                                        |   |   |
|                         |         | per :                                                                  | (s) Jens Paterson |
| 2) Additional Revolving |         |                                                                        |
| Facility:               | $13,333,332  |                                                                        |   | per: | (s) Steve Nishimura

  |
| 3) Term Loan:           | $0           |                                                                        |   |   |
|                         |         |                                                                        |
|                         |         | **CIBC Inc.,** as designated  Lender pursuant to                            |
| Total:                  | $100,000,000 |                                                                        |   | Section 20.5 with respect to Tranche B

  |
|                         |         | per :                                                                  | (s) Kathryn G. Casparian |
|                         |              |                                                                             |  |  |  |  |

 

**[Signaturepage – Credit Agreement]**

61

----

 
| Commitment Amounts      | ** **          | **Lenders**                                     |
|-------------------------|---------------------|-------------------------------------------------|
| 1) Revolving Facility:  |                | **Caisse centrale Desjardins**                  |
| Tranche A:         | $53,333,333         |                                            |   |   |
| Tranche B:         | $8,000,000          |                                            |   | per : | (s) France Joyal |
| Tranche C:         | $8,000,000          |                                            |   |   |
|                         |                | per:                                            | (s) Raymond Trempe |
| 2) Additional Revolving |                |                                            |
| Facility:               | $10,666,667

  |                                            |   |   |
| 3) Term Loan:           | $0                  |                                            |   | **Caisse centrale Desjardins US Branch,**  as |
|                         |                | designated Lender pursuant to Section 20.5 with |
| Total:                  | $80,000,000         |                                            |   | respect to Tranche B

  |
|                         |                | per:                                            | (s) Christian Roy |
|                    |                |                                            |
| 1) Revolving Facility:  |                | **Bank of Montreal**                            |
| Tranche A:         | $33,333,333         |                                            |   |   |
| Tranche B:         | $5,000,000          |                                            |   | per : | (s) Bruno Lemay |
| Tranche C:         | $5,000,000

   |                                            |   |   |
| 2) Additional Revolving |                |                                            |
| Facility:               | $6,666,667

   |                                            |   |   |
| 3) Term Loan:           | $0                  |                                            |   |   |
|                         |                | **Bank of Montreal,** Chicago  Branch           |
| Total:                  | $50,000,000         |                                            |   | (in respect of Tranche B)

** ** |
|                         |                | per :                                      | (s) Christina Burden |

 

**[Signaturepage – Credit Agreement]**

62

----

 
| Commitment Amounts      | ** **         | **Lenders**                                                      |
|-------------------------|--------------------|------------------------------------------------------------------|
| 1) Revolving Facility:  |               | **BNP Paribas (Canada)**                                         |
| Tranche A:         | $33,333,333        |                                                             |   |   |
| Tranche B:         | $5,000,000         |                                                             |   | per : | (s) Enrico Lamorte |
| Tranche C:         | $5,000,000         |                                                             |   |     |
|                         |               | per:                                                             | (s) Edouard Sinor |
| 2) Additional Revolving |               |                                                             |
| Facility:               | $6,666,667         |                                                             |   | **BNP Paribas,** as designated  Lender pursuant to |
|                         |               | Section 20.5 with respect to Tranche B and  Tranche  C |
| 3) Term Loan:           | $0                 |                                                             |   |  |
| Total:                  | $50,000,000        |                                                             |   | per : | (s) Nanette Baudon |
|                         |               |                                                             |
|                         |               | per:                                                             | (s) Angela B. Arnold |
|                    |               |                                                             |
| 1) Revolving Facility:  |               | **Comerica Bank,** Canada Branch                                 |
| Tranche A:         | $33,333,333        |                                                             |   |   |
| Tranche B:         | $5,000,000         |                                                             |   | per : | (s) Omer Ahmed |
| Tranche C:         | $5,000,000

  |                                                             |   |   |
| 2) Additional Revolving |               |                                                             |
| Facility:               | $6,666,667         |                                                             |   |   |
|                         |               | **Comerica Bank**                                                |
| 3) Term Loan:           | $0                 |                                                             |   | (in respect of Tranche B and Tranche C)

  |
| Total:                  | $50,000,000        |                                                             |   | per: | (s) James Lentner |
|                    |               |                                                             |
| 1) Revolving Facility:  |               | **The Toronto-Dominion Bank**                                    |
| Tranche A:         | $33,333,333        |                                                             |   |   |
| Tranche B:         | $5,000,000         |                                                             |   | per : | (s) Yves Bergeron |
| Tranche C:         | $5,000,000         |                                                             |   |   |
|                         |               | per:                                                             | (s) Serge Cloutier |
| 2) Additional Revolving |               |                                                             |
| Facility:               | $6,666,667         |                                                             |   |   |
|                         |               | **Toronto Dominion (Texas) LLC,**  as designated                 |
| 3) Term Loan:           | $0                 |                                                             |   | Lender pursuant to Section 20.5 with respect to |
|                         |               | Tranche B                                                   |
| Total:                  | $50,000,000        |                                                             |   |   |
|                         |               | per :                                                       | (s) Debbi L. Brito |
|                         |                    |                                                                  |  |  |  |  |  |

 

**[Signature page – Credit Agreement]**

63

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| Commitment Amounts      | ** **  | **Lenders**                                     |
|-------------------------|-------------|-------------------------------------------------|
| 1) Revolving Facility:  |        | **Royal Bank of Canada**                        |
| Tranche A:         | $23,333,333 |                                            |   |   |
| Tranche B:         | $3,500,000  |                                            |   | per : | (s) Rod Smith |
| Tranche C:         | $3,500,000  |                                            |   |   |
|          |        |                                            |
| 2) Additional Revolving |        |                                            |
| Facility:               | $4,666,667  |                                            |   |   |
|          |        |                                            |
| 3) Term Loan:           | $0          |                                            |   | per: | (s) Dustin Craven |
|          |        |                                            |
| Total:                  | $35,000,000 |                                            |   |   |
|                    |        |                                            |
| 1) Revolving Facility:  |        | **Deutsche Bank AG, Canada Branch**             |
| Tranche A:         | $16,666,667 |                                            |   | per : | (s) Robert A. Johnston |
| Tranche B:         | $2,500,000  |                                            |   |   |
| Tranche C:         | $2,500,000  |                                            |   | per: | (s) Marcellus Leung |
|          |        |                                            |
| 2) Additional Revolving |        |                                            |
| Facility:               | $3,333,333  |                                            |   | **Deutsche Bank AG,** New York  Branch, with |
|                         |        | respect to Tranche B and Tranche C    |
| 3) Term Loan:           | $0          |                                            |   |   |
|                         |        | per :                                      | (s) Carin Keegan |
| Total:                  | $25,000,000 |                                            |   |   |
|                         |        | per:                                            | (s) Omayra Laucella |
|                    |        |                                            |
| 1) Revolving Facility:  |        | **JPMorgan Chase Bank, N.A., Toronto Branch**   |
| Tranche A:         | $16,666,667 |                                            |   |   |
| Tranche B:         | $2,500,000  |                                            |   | per : | (s) Drew McDonald |
| Tranche C:         | $2,500,000  |                                            |   |   |
|          |        |                                            |
| 2) Additional Revolving |        | **JPMorgan Chase Bank, N.A.,**  with respect to |
| Facility:               | $3,333,333  |                                            |   | Tranche B |
|          |        |                                            |
| 3) Term Loan:           | $0          |                                            |   |   |
|                         |        | per :                                      | (s) Drew McDonald |
| Total:                  | $25,000,000 |                                            |   |   |
|                         |             |                                                 |  |  |  |  |  |  |

 

**[Signature page – CreditAgreement]**

64

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| Commitment Amounts      | ** **  | **Lenders**                                                              |
|-------------------------|-------------|--------------------------------------------------------------------------|
| 1) Revolving Facility:  |        | **Société Générale (Canada Branch)**                 |
| Tranche A:         | $16,666,667 |                                                                     |   |   |
| Tranche B:         | $2,500,000  |                                                                     |   | per : | (s) Pierre Matuszewski |
| Tranche C:         | $2,500,000  |                                                                     |   |   |
|                         |        | per;                                                                     | (s) Vincent Gonzalez |
| 2) Additional Revolving |        |                                                                     |
| Facility:               | $3,333,333  |                                                                     |   |   |
|                         |        | **Société Générale,** New York  Branch, with respect |
| 3) Term Loan:           | $0          |                                                                     |   | to Tranche B |
|          |        |                                                           |
| Total:                  | $25,000,000 |                                                                     |   | per : | (s) Nigel Elvey |
|                    |        |                                                                     |
| 1) Revolving Facility:  |        | **Bank of America, N. A.,** Canada  Branch                               |
| Tranche A:         | $13,333,333 |                                                                     |   |   |
| Tranche B:         | $2,000,000  |                                                                     |   | per : | (s) Medina Sales de Andrade |
| Tranche C:         | $2,000,000  |                                                                     |   |     |
|          |        |                                                           |
| 2) Additional Revolving |        | **Bank of America, N. A.,** with  respect to Tranche B                   |
| Facility:               | $2,666,667  |                                                                     |   |   |
|                         |        | per :                                                               | (s) Michael L. Letson, Jr. |
| 3) Term Loan:           | $0          |                                                                     |   |  

  |
| Total:                  | $20,000,000 |                                                                     |   |   |
|                    |        |                                                                     |
| 1) Revolving Facility:  |        | **Citibank, N.A., Canadian branch**                                      |
| Tranche A:         | $13,333,333 |                                                                     |   |   |
| Tranche B:         | $2,000,000  |                                                                     |   | per : | (s) Isabelle Côté |
| Tranche C:         | $2,000,000  |                                                                     |   |     |
|          |        |                                                           |
| 2) Additional Revolving |        | **Citicorp North America, Inc.,**  as designated                         |
| Facility:               | $2,666,667  |                                                                     |   | Lender pursuant to Section 20.5 with respect to |
|                         |        | Tranche B                                                           |
| 3) Term Loan:           | $0          |                                                                     |   |  |
| Total:                  | $20,000,000 |                                                                     |   | per : | (s) John W. Coons |
|                         |             |                                                                          |  |  |  |  |  |  |

 

**[Signature page – CreditAgreement]**

65

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| Commitment Amounts      | ** **  | **Lenders**                                             |
|-------------------------|-------------|---------------------------------------------------------|
|                         |        |                                                    |
| 1) Revolving Facility:  |        | **Rabobank Nederland,** Canadian  Branch                |
| Tranche A:         | $13,333,333 |                                                    |   |   |
| Tranche B:         | $2,000,000  |                                                    |   | per : | (s) Rommel J. Domingo |
| Tranche C:         | $2,000,000  |                                                    |   |   |
|                         |        | per:                                                    | (s) Anthony H. Liang |
| 2) Additional Revolving |        |                                                    |
| Facility:               | $2,666,667  |                                                    |   | **Cooperatieve Centrale Raiffeissen-** |
|                         |        | **Boerenleenbank B. A. “Rabobank Nederland”** |
| 3) Term Loan:           | $0          |                                                    |   | **New York Branch,** as designated  Lender pursuant |
|                         |        | to Section 20.5 with respect to Tranche B          |
| Total:                  | $20,000,000 |                                                    |   |   |
|                         |        | per :                                              | (s) Rebecca O. Morrow

  |
|                         |        | per:                                                    | (s) Ian Reece |
|                    |        |                                                    |
| 1) Revolving Facility:  |        | **Wachovia Capital Finance Corporation (Canada)**       |
| Tranche A:         | $13,333,333 |                                                    |   |   |
| Tranche B:         | $2,000,000  |                                                    |   |   |
| Tranche C:         | $2,000,000  |                                                    |   | per : | (s) Carmela Massari |
|          |        |                                                    |
| 2) Additional Revolving |        |                                                    |
| Facility:               | $2,666,667  |                                                    |   |   |
|                         |        | **Wachovia Bank, National Association,**  as            |
| 3) Term Loan:           | $0          |                                                    |   | designated Lender pursuant to Section 20.5 with |
|                         |        | respect to Tranche B and Tranche C.                     |
| Total:                  | $20,000,000 |                                                    |   |   |
|                         |        | per :                                              | (s) John M. Seckel |
|                         |             |                                                         |  |  |  |  |

 

**[Signature page – CreditAgreement]**

66

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**SCHEDULE“ A ”**

**APPLICABLE**MARGINS ORRATES****

**RevolvingFacility**
| **Rating**         | ** ** | **Prime, US Base** | ** ** | **Acceptance Fee / Libor  European Rate/L/C Fee** | ** ** | **Stand-By Fee** |
|--------------------|------------|-------------------------|------------|--------------------------------------------------------|------------|------------------|
| BBB/Baa2 or Higher |       | 0 bps                   |       | 65 bps                                                 |       | 13 bps           |
| BBB-/Baa3          |       | 0 bps                   |       | 75 bps                                                 |       | 15 bps           |
| BB+/Bal            |       | 0 bps                   |       | 95 bps                                                 |       | 20 bps           |
| BB/Ba2             |       | 25 bps                  |       | 125 bps                                                |       | 25 bps           |
| BB-/Ba3 or Lower   |       | 50 bps                  |       | 150 bps                                                |       | 35 bps           |

 

**TermLoan**
| **Rating**          | ** ** | **Prime, US Base** | ** ** | **Acceptance Fee / Libor** |
|---------------------|------------|-------------------------|------------|----------------------------|
| BBB-/Baa3 or Higher |       | 0 bps                   |       | 87.5 bps                   |
| BB+/Bal             |       | 7.5 bps                 |       | 107.5 bps                  |
| BB/Ba2              |       | 37.5 bps                |       | 137.5 bps                  |
| BB-/Ba3 or Lower    |       | 62.5 bps                |       | 162.5 bps                  |

 

**AdditionalRevolving Facility**
| **Prime, US Base** | ** ** | **Acceptance Fee  /Libor** | ** ** | **Stand-By Fee** |
|--------------------|------------|----------------------------|------------|------------------|
| 0 bps              |       | 100 bps                    |       | 25 bps           |

 

67

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**DETERMINATION OF APPLICABLE MARGIN OR RATE**

1.                                       The rates of the margins applicable to PrimeRate, US Base Rate, European Rate and Libor and the rates of the AcceptanceFees, stand-by fees and Letter of Credit fees under the Facilities (the “Rates”)will be determined as set forth in this Schedule.

2.                                       During any day that Cascades has a seniorsecured long-term debt rating from S&P or Moody’s without third-party creditenhancement (a “Rating”), the applicable Rates will be those which correspondto the Rating in effect at the close of business on such day, as specified inthe above grids.  If, on any day,Cascades has a Rating from both of S&P and Moody’s but the two Ratings arenot at the same level, then (i) the higher Rating will apply if the Ratings arenot more than one level apart, and (ii) the Rating which is at mid-point willapply if the Ratings are more than one level apart; if there is no mid-pointlevel, the higher of the two intermediate Ratings will apply.

3.                                       If, on any day, Cascades has no Rating, thenthe applicable Rates will be those which correspond to the Rating that would beone level higher than the S&P or Moody’s rating in effect on such day for thesenior unsecured long-term debt rating of Cascades; if on any day, Cascades hasreceived different senior unsecured long-term debt ratings from both S&Pand Moody’s, then the applicable Rates will be determined using the sameformula as in paragraph 2 for differentials in Ratings. If there existsany day that Cascades does not have any Rating or senior unsecured long-termdebt rating from S&P and Moody’s, the applicable Rates for such day will bethose which correspond to a Rating of lower than BB-/Ba3.

4.                                       Interest and stand-by fees will becalculated, for any day, using the applicable Rate in effect on the relevantday. Acceptance and Letter of Credit fees will be calculated using the Rate ineffect on the date such fees are payable. Any change in a Rating resulting in amodification of Rate will give rise to adjustments to Acceptance and Letter ofCredit fees previously calculated if the period of calculation extended beyondthe date of the modification. The adjustments will apply to the number of days remainingto accrue from the date of the modification. The adjustments will be calculatedby the Agent and be payable by the Borrower concerned or the Lenders (asapplicable) three Business Days after demand from the Agent.

5.                                       The Applicable Rate will be 66 2/3% ofthe rate otherwise applicable (as specified in the column governing Letter ofCredit fees in the Revolving Facility grid) for fees payable in respect ofLetters of Credit securing the performance by the Credit Parties of contracts(including bids) for the supply of goods or services by the Credit Parties totheir customers.

6.                                       Rates under the Additional Revolving Facilityare as set forth in the grid applicable to such Facility and paragraphs 2,3 and 4 do not apply to the Additional Revolving Facility.

7.                                       This Schedule does not apply to the Letter ofCredit fee applicable to a documentary Letter of Credit. As provided inSection 6.2 of the Credit Agreement, the fee payable in respect of anydocumentary Letter of Credit will be based on the rate then offered by theapplicable Issuing Lender to its customers for similar documentary letters ofcredit.

68

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**SCHEDULE“ B ”**

**LIST OF DESIGNATEDSUBSIDIARIES**
| **Name**                                                         | ** ** | **Jurisdiction** | ** ** | **Shareholder**                                  |
|------------------------------------------------------------------|------------|------------------|------------|--------------------------------------------------|
| Cascades Auburn Fiber Inc.                                       |       | Delaware         |       | Cascades USA Inc.                                |
| Cascades Canada Inc.                                             |       | Canada           |       | Cascades Inc.                                    |
| Cascades Delaware LLC                                            |       | Delaware         |       | Cascades USA Inc.                                |
| Cascades Diamond, Inc.                                           |       | Massachusetts    |       | Cascades USA Inc.                                |
| Cascades Moulded Pulp, Inc.                                      |       | North Carolina   |       | Cascades USA Inc.                                |
| Cascades Nova Scotia Company                                     |       | Nova Scotia      |       | 3815315 Canada Inc.                              |
| Cascades Plastics Inc.                                           |       | Delaware         |       | Cascades USA Inc.                                |
| Cascades Transport Inc.                                          |       | Canada           |       | Cascades Inc.                                    |
| Cascades Fine Papers Group Inc.                                  |       | Canada           |       | Cascades Inc.                                    |
| Cascades Fine Papers Group Thunder Bay Inc.                      |       | Canada           |       | Cascades Fine Papers Group Inc.                  |
| Kingsey Falls Investments Inc.                                   |       | Canada           |       | Cascades Inc.                                    |
| 6265462 Canada Inc.                                              |       | Canada           |       | Cascades Canada Inc.                             |
| Cascades Tissue Group – IFC Disposables Inc.                |       | Tennessee        |       | Cascades Tissue Group – North Carolina Inc. |
| Cascades Tissue Group – New York Inc.                       |       | Delaware         |       | Cascades Tissue Group – North Carolina Inc. |
| Cascades Tissue Group – North Carolina Inc.                 |       | North Carolina   |       | Cascades USA Inc.                                |
| Cascades Tissue Group – Oregon Inc.                         |       | Delaware         |       | Cascades Tissue Group – North Carolina Inc. |
| Cascades Tissue Group – Pennsylvania Inc.                   |       | Delaware         |       | Cascades Tissue Group – North Carolina Inc. |
| Cascades Tissue Group – Wisconsin Inc.                      |       | Delaware         |       | Cascades Tissue Group – North Carolina Inc. |
| Cascades Boxboard U.S., Inc.                                     |       | Delaware         |       | Cascades USA Inc.                                |
| Cascades Boxboard Group – Connecticut LLC                   |       | Connecticut      |       | Cascades Auburn Fiber Inc.                       |
| Cascades Groupe  Carton Plat Inc. / Cascades Boxboard Group Inc. |       | Canada           |       | Cascades Inc.                                    |
| Cascades Fine Papers Group (Sales) Inc.                          |       | Delaware         |       | Cascades Fine Papers Group (USA) Inc.            |
| Cascades Fine Papers Group (USA) Inc.                            |       | New York         |       | Cascades USA Inc.                                |
| 3815285 Canada Inc.                                              |       | Canada           |       | Cascades Canada Inc.                             |
| 3815315 Canada Inc.                                              |       | Canada           |       | Cascades Canada Inc.  3815285 Canada Inc.        |
| Conference Cup Ltd.                                              |       | Ontario          |       | Garven Incorporated                              |

 

69

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| **Name**                                     | ** ** | **Jurisdiction** | ** ** | **Shareholder**                                                              |
|----------------------------------------------|------------|------------------|------------|------------------------------------------------------------------------------|
| Dopaco Canada,  Inc.                         |       | Canada           |       | Cascades USA Inc.                                                            |
| Dopaco, Inc.                                 |       | Pennsylvania     |       | Cascades USA Inc.                                                            |
| Dopaco Limited  Partnership                  |       | Delaware         |       | General Partner: Dopaco Pacific LLC   Limited Partner: Dopaco, Inc.          |
| Dopaco Pacific  LLC                          |       | Delaware         |       | Dopaco, Inc.   Cascades USA Inc.                                             |
| Garven  Incorporated                         |       | Ontario          |       | Dopaco Canada, Inc.                                                          |
| Rabotage Lemay  Inc.                         |       | Québec      |       | Scierie Lemay Inc.                                                           |
| Scierie Lemay  Inc.                          |       | Québec      |       | 6265462 Canada Inc.                                                          |
| W.H. Smith Paper  Corporation                |       | New York         |       | Cascades Fine Papers Group (USA) Inc.                                        |
| Cascades Tissue  Group – Arizona Inc.   |       | Delaware         |       | Cascades Tissue Group – North Carolina Inc.                             |
| Cascades Tissue  Group – Sales Inc.     |       | Delaware         |       | Cascades Tissue Group – North Carolina Inc.                             |
| Cascades Tissue  Group – Tennessee Inc. |       | Delaware         |       | Cascades Tissue Group – North Carolina Inc.                             |
| Cascades Tissue  Group – Pickering Inc. |       | Canada           |       | Cascades Canada Inc.   Holders of preferred shares: Wyant & Company Inc. |
| Cascades Tissue  Group – Maryland LLC   |       | Delaware         |       | Cascades Auburn Fiber Inc.                                                   |
| Cascades Energy  Initiative Inc.             |       | Delaware         |       | Cascades USA Inc.                                                            |
| Norampac Inc.                                |       | Canada           |       | Cascades Inc.                                                                |
| Norampac New  York City Inc.                 |       | New York         |       | Norampac Holding US Inc.                                                     |
| Norampac  Leominster Inc.                    |       | Massachusetts    |       | Norampac Holding US Inc.                                                     |
| Norampac Finance  US Inc.                    |       | Delaware         |       | Norampac Holding US Inc.                                                     |
| Norampac  Industries Inc.                    |       | New York         |       | Norampac Finance US Inc.                                                     |
| Norampac Holding  US Inc.                    |       | Delaware         |       | Cascades USA Inc.                                                            |
| 3815251 Canada  Inc.                         |       | Canada           |       | Cascades Inc.                                                                |
| Norampac  Schenectady Inc.                   |       | New York         |       | Norampac Holding US Inc.                                                     |
| Norampac Nova  Scotia Company                |       | Nova Scotia      |       | 3815251 Canada Inc.                                                          |
| Norampac  Delaware LLC                       |       | Delaware         |       | Cascades Inc.                                                                |
| Norampac  Thompson Inc.                      |       | Connecticut      |       | Norampac Holding US Inc.                                                     |
| New C-Corp                                   |       | Canada           |       | Cascades Inc.                                                                |

 

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**SCHEDULE“ C ”**

**NOTICE OF BORROWING[CONVERSION OR RENEWAL]**

**[  Date  ]**

**The Bank of Nova Scotia** 720 King Street West, 4th FloorToronto, Ontario  M5V 2T3Attention:  Director

**RE:Credit Agreement dated as of December 29, 2006**

Sirs:

Reference is made to the above-mentioned Credit Agreement entered intobetween, *inter alia*, the undersigned and theLenders mentioned therein.

We confirm our request for a Borrowing [or for a conversion or renewal]to be made on [date], the details of which are as follows:

·              Applicable Trancheor Facility:

·              Form of Borrowing:[Prime Rate, Acceptances, US Base Rate Loan, Libor Loan in US Dollarsor Libor Loan in Euros]

·              Amount:

·              Date of Borrowing:[or of conversion or renewal]

·              Period:

On the date hereof, we certify that the representations and warrantiesset forth in the Credit Agreement are still true and correct in all materialrespects and that no Default has occurred and is continuing.
|        | ** ** | **[Name of the Borrower concerned]** |
|--------|------------|--------------------------------------|
|   | ** ** | ** **                           |
|   | ** ** | ** **                           |
| Per:   |       |                                 |

 

Note:      This form (adaptedaccordingly) may also be used for a notice of repayment.

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**SCHEDULE“ D ”**

**COMPLIANCE CERTIFICATE**

**[  Date  ]**

**TheBank of Nova Scotia**40 King Street WestScotia Plaza, 62nd FloorToronto, Ontario  M5W 2X6Attention:  Managing Director

**RE:Credit Agreement dated December 29, 2006**

Reference is made to the above-mentioned Credit Agreement entered intobetween, *inter alia*, Cascades Inc. (“Cascades”)and the Lenders mentioned therein. I am the Chief Financial Officer of Cascadesand I hereby certify in such capacity that, to the best of my knowledge, butafter reasonable enquiry, the representations and warranties set forth in theCredit Agreement are still true and correct in all material respects and thatno Default has occurred and is continuing.

I also certify that, on the last day of the last fiscal quarter ofCascades:

1.                                       theFunded Debt to Capitalization Ratio of Cascades calculated in accordance withthe Credit Agreement, was · to 1.00;

2.                                       theInterest Coverage Ratio of Cascades, calculated in accordance with the CreditAgreement, was · to 1.00.

3.                                       Theamount of the Net Tangible Assets of Cascades, calculated in accordance withthe Credit Agreement, was $•.

4.                                       Duringsuch fiscal quarter, there was no disposition of property or assets with avalue of more than $15,000,000 (other than inventory sold in the ordinarycourse of business) [except for the dispositions described in the attachedannex, which also contains the details of the consideration received and theuse of proceeds].

5.                                       Theaggregate amount of the Borrowings outstanding under the Credit Agreement didnot exceed the maximum amount permitted under the Cascades Indenture and theNorampac Indenture.

The details of all calculations supporting the above statements are setforth in the attached annex which also contains a list of all Subsidiaries ofCascades which have become Designated Subsidiaries after the date of the CreditAgreement.

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**SCHEDULE“ E ”**

**BORROWING BASE REPORT**

**[  Date  ]**

**TheBank of Nova Scotia**40 King Street WestScotia Plaza, 62nd FloorToronto, Ontario  M5W 2X6Attention:  Managing Director

**RE:Credit Agreement dated as of December 29, 2006**

Reference is made to the above-mentioned Credit Agreement entered intobetween, *inter alia*, Cascades Inc. (“Cascades”)and the Lenders mentioned therein. I am the Chief Financial Officer of Cascadesand I hereby certify in such capacity that:

1.                                       Asat [date], the Borrowing Base (expressed in Dollars) amounted to $·.The calculation has been made in accordance with the requirements of the CreditAgreement and the details of such calculation are set forth in the annexattached hereto.

2.                                       TheBorrowing Base has been calculated on the basis of qualifying inventory locatedin Canada and **[•]** and qualifying accountsreceivable due per customers located in Canada, the United States **[and •]**. For purposes of such calculation, thelocation of an account receivable is the billing address of the relevantcustomer.

3.                                       Theattached annex also contains a breakdown by Credit Party and by country of theinventory and accounts receivable included in the Borrowing Base. The breakdownalso specifies the accounts receivable included in the Borrowing Base which areinsured under a credit insurance policy which qualifies for Borrowing Basepurposes.

4.                                       Theinventory of the Credit Parties included in the Borrowing Base is still locatedin the jurisdictions specified for such Credit Parties in the CorporateStructure Chart [except for the following].

**[If any Securitization or Factoring Program isoutstanding, the annex must also contain information permitting the Lenders toidentify the classes of accounts receivable which are subject to such programand to distinguish such accounts receivable from those included in theBorrowing Base.]**

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**SCHEDULE“ F ”**

**FORM OF ASSIGNMENT ANDASSUMPTION AGREEMENT**

**ASSIGNMENT AND ASSUMPTION AGREEMENT**entered into in                           ,on this            day of                ,between                                                            (the “Assignor”) and                                                            (the “Assignee”)**.**

**WHEREAS** a credit agreement hasbeen entered into as of December 29, 2006 among Cascades Inc., CascadesUSA Inc., Cascades Europe SAS and Cascades Arnsberg GMBH, as Borrowers, TheBank of Nova Scotia, as Agent, National Bank of Canada, as Co-Agent, and theLenders (as amended and supplemented from time to time, the “Credit Agreement”);

**WHEREAS**the Assignor is a Lenderunder the Credit Agreement;

**WHEREAS**, as provided in theCredit Agreement, the Assignor has Commitments in respect of the Facilities,with $                    being allocated to Tranche A, with $                    being allocated to Tranche B, and with $                    being allocated to Tranche C, with $                    being allocated to the Term Loan and with $                    being allocated to the Additional Revolving Facility;

**WHEREAS** a Lender may assign, inwhole or in part, its Commitments with respect to the Facilities to any otherfinancial institution pursuant to Section 20.4 of the Credit Agreement;

**WHEREAS** the Assignor proposes toassign to the Assignee all of its rights under the Credit Agreement in respectof a portion of the Assignor’s Commitments, such assigned portion to be in theamount of $                    in respect of Tranche A, in the amount of $                    in respect of Tranche B, in the amount of $                    in respect of Tranche C, in the amount of $                    in respect of the Term Loan and in the amount of $                    in respect of the Additional Revolving Facility (the “Assigned Amounts”),together with a corresponding portion of the Borrowings owed to the Assignor,and the Assignee proposes to accept such assignment and assume thecorresponding obligations of the Assignor;

**NOW, THEREFORE,** the partieshereto agree as follows**:**

**1.****                                      Definitions**

Capitalized terms used but not defined herein have themeanings assigned to them in the Credit Agreement.

**2.****                                     ****Assignment**

The Assignor hereby assigns and sells to the Assigneeall of the rights of the Assignor (the “Assigned Rights”) under the CreditAgreement to the extent of the Assigned Amounts. This assignment will notresult in a novation of the portion of the Borrowings owed to the Assignorwhich is hereby assigned to the Assignee.

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**3.****                                     ****Assumption**

The Assignee hereby accepts such assignment andassumes all of the obligations of the Assignor (the “Assigned Obligations”)under the Credit Agreement to the extent of the Assigned Amounts, including,for greater certainty, the corresponding portion of the obligations of theAssignor under the Facilities.

**4.****                                     ****Effective********Date**

This Agreement will come into effect on                           (the “Effective Date”).

**5.****                                     ****Rights andObligations of the Parties**

Upon the execution and delivery of this Agreement bythe Assignor and the Assignee and the consent hereto by [the Borrowers] and theAgent:

i)                                         theAssignee will, as of the Effective Date, have the rights and be obligated toperform the obligations of a Lender under the Credit Agreement with Commitmentsin respect of the Facilities in an amount equal to the Assigned Amounts, with $                    being allocated to Tranche A, with $                    being allocated to Tranche B, with $                    being allocated to Tranche C, with $                    being allocated to the Term Loan and with $                    being allocated to the Additional Revolving Facility;

ii)                                      theCommitment of the Assignor in respect of the Facilities will, as of theEffective Date, be reduced by like amounts and the Assignor will be releasedfrom its obligations under the Credit Agreement to the extent of the AssignedObligations which are assumed by the Assignee; and

iii)                                   theAssignee will, as of the Effective Date, be bound by and entitled to the fullbenefit of the Credit Agreement and of the other Credit Documents (includingthe Security Documents) to the extent of the Assigned Rights and AssignedObligations as if it were an original party thereto.

**6.****                                     ****Payments**

From the Effective Date, the Agent will make allpayments in respect of the Assigned Rights to the Assignee, whether suchamounts have accrued prior to or after the Effective Date. The Assignor and theAssignee will make directly between themselves their own arrangements relatingto the payment by the Assignee to the Assignor of the price of assignment or tothe payment of adjustments (if any) on account of interest and fees accruedprior to or after the Effective Date.

**7.****                                      Non-Relianceon Assignor**

The Assignor makes no representation in connectionwith, and will have no responsibility with respect to the solvency or financialcondition or statements of any Credit Party or of any other Person, or thevalidity and enforceability of the Credit Documents. The

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Assignee acknowledges that it has, independently andwithout reliance on the Assignor, and based on such documents and informationas it has deemed appropriate, made its own credit analysis and decision to enterinto this Agreement and will continue to be responsible for making its ownindependent appraisal of the financial condition of any Credit Party or of anyother Person.

**8.****                                      Representations**

The Assignee represents and warrants to the Borrowersthat this assignment will not increase for the Borrowers the costs of theBorrowings pursuant to Section 8.5 of the Credit Agreement. The Assigneeand the Assignor represent and warrant to one another, and also to theBorrowers, the Agent and the other Lenders that they have the capacity, rightand power to execute this Agreement and to perform the obligations resultingtherefrom, [that they are Affiliates] and that they have taken all necessaryaction to authorize the execution of this Agreement. The Assignor representsand warrants to the Assignee that the Assignor has not granted any Lien on andhas not assigned the Assigned Rights to any other Person.

**9.****                                      Warranty**

Subject to Section 8, this assignment is madewithout any warranty, express or implied, from the Assignor.

**10.****                               ExistingLender**

The rights and obligations of the Assignee resultingform this Agreement are in addition to, and not in substitution for, the rightsand obligations that the Assignee may otherwise have as Lender under the CreditAgreement.

**11.****                               GoverningLaw**

This Agreement will be governed by and construed inaccordance with the laws of the Province of Quebec.

IN WITNESS WHEREOF, theparties have caused this Agreement to be executed in the place and on the datementioned on the first page hereof.
| [ASSIGNOR], as Lender |   | [ASSIGNEE] |
|-----------------------|--------|------------|
|                  |   |       |
|                  |   |       |
| By:                   |   |       | By: |   |
| Title:                |   | Title:     |
|                       |        |            |  |  |

 

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The Agent and theBorrowers consent to this Agreement. Each of the Borrowers and the DesignatedSubsidiaries acknowledges and agrees that the Security granted by it in favourof the Agent and the Lenders will also benefit the Assignee.
|        | ** ** | **[Names of the Borrowers]**                  |
|--------|------------|-----------------------------------------------|
|   | ** ** | ** **                                    |
|   | ** ** | ** **                                    |
| By:    |       |                                          |
| Title: |       |                                          |
|   |       |                                          |
|   |       |                                          |
|   |       |                                          |
|   | ** ** | **THE BANK OF NOVA SCOTIA,**acting  as  Agent |
|   | ** ** | ** **                                    |
|   | ** ** | ** **                                    |
| By:    |       |                                          |
| Title: |       |                                          |
|   |       |                                          |
|   |       |                                          |
|   | ** ** | **[Names of the Designated Subsidiaries]**    |
|   | ** ** | ** **                                    |
|   | ** ** | ** **                                    |
| By:    |       |                                          |
| Title: |       |                                          |

 

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**SCHEDULE“ G ”**

**ADDRESSES FOR NOTICEPURPOSES**

**[NTD:  TO BE UPDATED ONCE LIST OF LENDERS HAS BEENDETERMINED.]**
| **The Bank of Nova Scotia,**  as Agent                                                                                                                       |                         |                                                                                                  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------|-------------------------------------------------------------------------------------------------------|
| ** **                                                                                                                                                   |                         |                                                                                                  |
| For purposes of  all notices of utilization,  conversion, renewals or repayment and the  delivery of the financial information pursuant to  Article 15: |                         | For all other purposes:  40 King Street West  Scotia Plaza, 62nd Floor  Toronto, Ontario M5W 2X6 |
| 720 King Street  West, 4th Floor                                                                                                                        |                         |                                                                                                  |
| Toronto, Ontario  M5V 2T3                                                                                                                                    |                         | Attention:                                                                                            | Corporate  Banking – Loan Syndication |
|                                                                                                                                                         |                         | Fax:                                                                                                  | (416) 866-3329 |
| Attention:                                                                                                                                                   | IBD Loan  Administrative and |                                                                                                  |   |
|                                                                                                                                                         | Agency Services              |                                                                                                  |   |
| Fax:                                                                                                                                                         | (416) 866-5991               |                                                                                                  |   |
|                                                                                                                                                         |                         |                                                                                                  |
|                                                                                                                                                         |                         |                                                                                                  |
| **National Bank of  Canada,** as Co-Agent                                                                                                                    |                         | **National Bank of  Canada,** as Lender                                                               |
| c/o National  Bank Financial                                                                                                                                 |                         | c/o National  Bank Financial                                                                          |
| 1155 Metcalfe  Street                                                                                                                                        |                         | 1155 Metcalfe  Street                                                                                 |
| Montreal,  Quebec, H3B 4S9                                                                                                                                   |                         | Montreal,  Quebec, H3B 4S9                                                                            |
|                                                                                                                                                         |                         |                                                                                                  |
| Attention:                                                                                                                                                   | Director                     |                                                                                                  | Attention: | Director |
| Fax:                                                                                                                                                         | (514) 390-7840               |                                                                                                  | Fax: | (514) 390-7840 |
|                                                                                                                                                         |                         |                                                                                                  |
| ** **                                                                                                                                                   |                         |                                                                                                  |
| **The Bank of Nova  Scotia,** as Lender                                                                                                                      |                         | **Canadian Imperial Bank of Commerce,** as                                                            |
| c/o Scotia  Capital                                                                                                                                          |                         | Lender                                                                                                |
| 1002 Sherbrooke  Street West, 9th Floor                                                                                                                 |                         | c/o CIBC World  Markets                                                                               |
| Montreal, Quebec,  H3A 3L6                                                                                                                                   |                         | Credit Capital  Markets                                                                               |
|                                                                                                                                                         |                         | BCE Place, 8th Floor                                                                             |
| Attention:                                                                                                                                                   | Director                     |                                                                                                  | 161 Bay Street |
| Fax:                                                                                                                                                         | (514) 499-5504               | ** **                                                                                            | Toronto,  Ontario, M5J 2S8 |
|                                                                                                                                                         | ** **                   |                                                                                                  |
|                                                                                                                                                         |                         | Attention:                                                                                            | Director |
|                                                                                                                                                         |                         | Fax:                                                                                                  | (416) 956-6680 |

 

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| **Caisse centrale Desjardins,**  as Lender                   |           | **Bank of Montreal,**  as Lender                                                             |
|--------------------------------------------------------------|----------------|----------------------------------------------------------------------------------------------|
| 1, Complexe  Desjardins, Suite 2822                          |           | c/o BMO Capital  Markets                                                                     |
| Montreal, Quebec,  H5B 1B3                                   |           | Tour McGill  College                                                                         |
|                                                         |           | 1501 McGill  College Avenue, Suite 3200                                                      |
| Attention:                                                   | Director       |                                                                                         | Montreal, Quebec, H3A 3M8 |
| Fax:                                                         | (514) 281-7083 |                                                                                         |   |
|                                                         |           | Attention:                                                                                   | Director |
| with a copy  to :                                       |           | Fax:                                                                                         | (514) 282-5920 |
|                                                         |           |                                                                                         |
| **Caisse centrale  Desjardins US Branch**                    |           | ** **                                                                                   |
| 1001 East  Hallandale Beach Blvd., Suite 200                 |           |                                                                                         |
| Hallandale,  Florida 33009-4429                              |           |                                                                                         |
|                                                         |           |                                                                                         |
| Attention:                                                   | Director       |                                                                                         |   |
| Fax : (954) 457-7927                                    |           |                                                                                         |
|                                                         |           |                                                                                         |
| **BNP Paribas (Canada),**  as Lender                         |           | **Comerica Bank,**  as Lender                                                                |
| 1981 McGill  College Ave, 4th Floor                     |           | Comerica Tower                                                                               |
| Montreal,  Quebec, H3A 2W8                                   |           | 1 Detroit Center                                                                             |
|                                                         |           | 500 Woodward  Ave.                                                                           |
| Attention:                                                   | Director       |                                                                                         | Mail code: 3328 |
| Fax:                                                         | (514) 285-2906 |                                                                                         | Detroit, Michigan, 48226 |
|                                                         |           | U.S.A.                                                                                       |
|                                                         |           |                                                                                         |
|                                                         | ** **     | Attention:                                                                                   | Director |
|                                                         | ** **     | Fax:                                                                                         | (313) 222-3377 |
|                                                         |           |                                                                                         |
|                                                         |           |                                                                                         |
| **The Toronto-Dominion  Bank,** as Lender                    |           | **Royal Bank of Canada**                                                                     |
| c/o TD Bank  Financial Group                                 |           | c/o •                                                                                   |
| 500 rue  St-Jacques, 9th Floor                          |           | •                                                                                       |
| Montreal,  Quebec, H2Y 1S1                                   |           | •                                                                                       |
|                                                         |           |                                                                                         |
| Attention:                                                   | Director       |                                                                                         | Attention:    • |
| Fax:      (514)  289-0788      |           | Fax:      (•)•                                       |
|                                                         |           |                                                                                         |
| **Deutsche Bank AG**                                         |           | **J.P. Morgan Canada**                                                                       |
| c/o •                                                   |           | c/o •                                                                                   |
| •                                                       |           | •                                                                                       |
| •                                                       |           | •                                                                                       |
|                                                         |           |                                                                                         |
| Attention:    •                     |           | Attention:    •                                                     |
| Fax:      (•)•       |           | Fax:      (•)•                                       |
| ** **                                                   |           |                                                                                         |
| **Société Générale  (Canada),**as Lender |           | **Bank of America**                                                                          |
| 1501 McGill  College Avenue, Suite 1800                      |           | c/o •                                                                                   |
| Montreal,  Quebec, H3A 3M8                                   |           | •                                                                                       |
|                                                         |           | •                                                                                       |
| Attention:                                                   | Director       |                                                                                         |   |
| Fax:                                                         | (514) 841-6259 |                                                                                         | Attention:    • |
|                                                         |           | Fax:              (•)• |

 

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| **Citibank, N.A. Canadian branch**                                                           |   | **Rabobank Nederland,  Canadian Branch**                                                     |
|----------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|
| c/o •                                                                                   |   | c/o •                                                                                   |
| •                                                                                       |   | •                                                                                       |
| •                                                                                       |   | •                                                                                       |
|                                                                                         |   |                                                                                         |
| Attention:    •                                                     |   | Attention:    •                                                     |
| Fax:      (•)•                                       |   | Fax:              (•)• |
|                                                                                         |   |                                                                                         |
| **Wachovia Capital  Finance**                                                                |   |                                                                                         |
| **Corporation (Canada)**                                                                     |   |                                                                                         |
| c/o •                                                                                   |   |                                                                                         |
| •                                                                                       |   |                                                                                         |
| •                                                                                       |   |                                                                                         |
|                                                                                         |   |                                                                                         |
| Attention:    •                                                     |   |                                                                                         |
| Fax:              (•)• |   |                                                                                         |
|                                                                                         |   |                                                                                         |

 

**[NOTE:   TO BE UPDATED BYLENDERS]**
| **All notices to the Borrowers collectively or to** |   | **Cascades Inc.**             |
|-----------------------------------------------------|--------|-------------------------------|
| **anyone of them may be addressed to:**             |   | 404 Marie-Victorin Street     |
| ** **                                          |   | Kingsey Falls, Quebec J0A 1B0 |
|                                                |   |                          |
|                                                |   | Attention:                    | Vice President and Chief Financial |
|                                                |   |                          | Officer (with a copy to the Vice |
|                                                |   |                          | President and Corporate Secretary and |
|                                                |   |                          | to the Treasurer) |
|                                                |   | Fax:                          | (819) 363-5127 |

 

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