EMPLOYMENT AGREEMENT

THIS  AGREEMENT  dated  for  reference  the  7th  day  of  August,  2003.

BETWEEN:

          MERCER  INTERNATIONAL  INC.,  a Massachusetts business trust organized
          ---------------------------
          under  the laws of the State of Washington with an office at Suite 282
          -  14900  Interurban  Avenue  South,  Seattle,  Washington,  USA 98168

          (hereinafter  referred  to  as  the  "Corporation")

                                                               OF THE FIRST PART
AND:

          DAVID  M.  GANDOSSI,  Businessman
          -------------------

          (hereinafter  referred  to  as  the  "Executive")

                                                              OF THE SECOND PART

WHEREAS:

A.   The Corporation is engaged in the business of pulp and paper production and
     related  activities  and, among other things, operates a kraft pulp mill in
     Germany,  referred to as the "Rosenthal Mill", that produces softwood kraft
     pulp  and  two  paper mills in Heidenau and Fahrbruke, Germany, and owns an
     interest  in and is implementing a "greenfield" project, referred to as the
     "Stendal  Project",  to  construct  a softwood kraft pulp mill near Stendal
     Germany;

B.   The  Corporation  recognizes that the Executive has acquired special skills
     and  experience  in  the  pulp and paper industry and desires to employ the
     Executive  as  the  Chief  Financial  Officer, Executive Vice-President and
     Secretary  of  the  Corporation  as  of  the  Effective  Date;  and

C.   Both  the Corporation and the Executive wish formally to agree to the terms
     and  conditions  of the Executive's employment with the Corporation and the
     terms  and  conditions  that will, in certain circumstances hereinafter set
     forth,  govern  in  the  event  of  a  termination of the employment of the
     Executive  by  the  Corporation.


<PAGE>


                                        2


NOW  THEREFORE  in  consideration  of  the  premises  hereof  and  of the mutual
covenants  and  agreements hereinafter set forth and for other good and valuable
consideration,  the  receipt and sufficiency of which are hereby acknowledged by
each  of  the  parties hereto, the parties hereby covenant and agree as follows:


                                    ARTICLE I
                                    RECITALS

1.1  Recitals.  The parties hereby represent and warrant that the above recitals
     are  true  and  correct.


                                   ARTICLE II
                                 INTERPRETATION

2.1  Headings. The headings of the Articles, Sections and subsections herein are
     inserted for convenience of reference only and shall not affect the meaning
     or  construction  hereof.

2.2  Definitions.  For the purposes of this Agreement, the following terms shall
     have  the  following  meanings,  respectively:

     (a)  "Accrued Benefits" has the meaning ascribed to such term in subsection
          4.1(b)(iv)  hereof;

     (b)  "Agreement"  means  this  Employment  Agreement  and all schedules and
          amendments  hereto;

     (c)  "Annual Bonus" has the meaning ascribed to such term in Section 3.6(a)
          hereof;

     (d)  "Base  Salary" has the meaning ascribed to such term in Section 3.6(a)
          hereof;

     (e)  "Board"  means  the  board  of  Trustees  of  the  Corporation;

     (f)  "Change  of  Control"  means  the  occurrence  of any of the following
          events:

          (i)  The  receipt  by  the  Corporation  of  a  Schedule  13D or other
               statement  filed  under  Section  13(d)  of  the  Exchange  Act
               indicating  that  any  "person" (as such term is used in Sections
               13(d)  and  14(d)  of  the  Exchange  Act):  (a)  has  become the
               "beneficial  owner"  (as defined in Rule 13d-3 under the Exchange
               Act),  directly  or  indirectly, of securities of the Corporation
               representing  more than 20% of the Common Shares; or (b) has sole
               and/or shared voting, or dispositive, power over more than 20% of
               the  Common  Shares;  or


<PAGE>


                                        3


          (ii) A  change  in  the  composition  of  the Board occurring within a
               two-year  period prior to such change, as a result of which fewer
               than  a  majority  of  the  Trustees  are  Incumbent  Trustees.
               "Incumbent  Trustees"  shall  mean  Trustees  who are either: (a)
               Trustees  of  the  Corporation  as  of the Effective Date; or (b)
               elected,  or  nominated  for  election,  to  the  Board  with the
               affirmative  votes of at least a majority of the Trustees who had
               been  Trustees  two  (2)  years prior to such change and who were
               still  in  office  at the time of such election or nomination; or

          (iii) The solicitation of a dissident proxy, or any proxy not approved
               by  the Incumbent Trustees, the purpose of which is to change the
               composition  of  the  Board with the result, or potential result,
               that  fewer  than  a  majority  of the Trustees will be Incumbent
               Trustees;  or

          (iv) The  consummation  of  a merger, amalgamation or consolidation of
               the  Corporation  with  or  into  another  entity  or  any  other
               corporate reorganization, if more than 50% of the combined voting
               power  of  the  continuing  or  surviving  entity's  securities
               outstanding  immediately  after  such  merger,  amalgamation,
               consolidation or reorganization are owned by persons who were not
               stockholders of the Corporation immediately prior to such merger,
               amalgamation,  consolidation  or  reorganization;  or

          (v)  The  commencement  by  an entity, person or group (other than the
               Corporation or a wholly owned subsidiary of the Corporation) of a
               tender  offer,  an  exchange  offer or any other offer or bid for
               more  than  20%  of  the  Common  Shares;  or

          (vi) The  consummation  of  a  sale,  transfer  or  disposition by the
               Corporation  of  all  or  substantially  all of the assets of the
               Corporation;  or

          (vii) The commencement of any proceeding by or against the Corporation
               seeking  to  adjudicate  it  a  bankrupt or insolvent, or seeking
               liquidation, winding-up, reorganization, arrangement, adjustment,
               protection,  relief  or  composition  of  the  Corporation or its
               debts,  under  any  law  relating  to  bankruptcy,  insolvency or
               reorganization  or  relief of debtors, or seeking the entry of an
               order  for  relief or for the appointment of a receiver, trustee,
               custodian or other similar official for it or for any substantial
               part  of  its  property;  or

          (viii)  The  approval by the shareholders of the Corporation of a plan
               of  complete  liquidation  or  dissolution  of  the  Corporation.

          In  the  case  of  the  occurrence  of  any of the events set forth in
          subsection  2.2.(f)(vii), a Change of Control shall be deemed to occur
          immediately prior to the occurrence of any such events. An event shall
          not  constitute  a  Change of Control if its sole purpose is to change
          the  jurisdiction  of  the  Corporation's


<PAGE>


                                        4


          organization or to create a holding company, partnership or trust that
          will be owned in substantially the same proportions by the persons who
          held  the  Corporation's  securities  immediately  before  such event.
          Additionally, a Change of Control will not be deemed to have occurred,
          with  respect  to  the  Executive,  if  the  Executive  is  part  of a
          purchasing  group  that  consummates  the  Change  of  Control  event;

     (g)  "Common  Shares" means the issued and outstanding shares of beneficial
          interest  of  the  Corporation;

     (h)  "Compensation  Committee" means the independent committee of the Board
          consisting  of  two  or more Trustees, not employed by the Corporation
          and  each  of whom is a Disinterested Trustee (as defined in the Stock
          Option  Plan),  which  committee is responsible for making any and all
          decisions  to  award  stock  options  under  the  Stock Option Plan to
          officers of the Corporation, and in the event the Corporation does not
          have  a  Compensation  Committee all references herein to Compensation
          Committee  shall  be  deemed  to  refer  to  the  Board  as  a  whole;

     (i)  "Date of Termination" means the date of termination of the Executive's
          employment  with  the  Corporation;

     (j)  "Disability"  shall  mean  the  Executive's  failure  to substantially
          perform  his  material duties for the Corporation on a full-time basis
          for  twelve  (12) consecutive months as a result of physical or mental
          incapacity;

     (k)  "Disability  Termination"  has the meaning ascribed thereto in Section
          4.1  hereof;

     (l)  "Effective  Date"  means  August  15,  2003;

     (m)  "Exchange  Act"  means  the  Securities  Exchange Act of 1934, and the
          rules  and  regulations  promulgated  thereunder,  as  the same may be
          amended,  modified  or  restated  and  any  successor  or  replacement
          thereto;

     (n)  "Good Reason" means, without the written consent of the Executive, the
          occurrence  of  any  of  the  following  events:

          (i)  Any  material  reduction or diminution (except temporarily during
               any  period of physical or mental incapacity or disability of the
               Executive)  in  the  Executive's titles, status or positions, any
               material  reduction  or  diminution in the Executive's authority,
               duties  or  responsibilities  with the Corporation (including any
               position  or  duties  as  a  Trustee  of  the Corporation and the
               failure to re-elect the Executive as a Trustee and to the Board),
               it  being  acknowledged that, in the event any entity becomes the
               owner,  directly,  indirectly,  beneficially or otherwise of more
               than  50%  of  the  Common Shares, it shall be Good Reason if the
               Executive  is  not  the  Chief  Financial Officer of such entity;


<PAGE>


                                        5


          (ii) A  breach  by  the  Corporation of any material provision of this
               Agreement,  including,  but  not  limited  to,  a  breach  of the
               obligations  of  the  Corporation under Sections 3.6, 5.1 and 6.8
               (other  than a reduction in the Executive's Base Salary that does
               not  exceed  an aggregate of ten percent (10%) of the Executive's
               then  current  Base  Salary and which reduction applies, in equal
               percentages,  to  all  senior officers of the Corporation) or any
               failure  to  timely  pay any part of the Executive's compensation
               hereunder,  including,  without  limitation, the Executive's Base
               Salary,  Annual  Bonus and any other bonuses payable to him or to
               materially  provide,  in  the  aggregate,  the  level of benefits
               contemplated  herein;

          (iii)  The  failure  of  the  Corporation to obtain and deliver to the
               Executive  a  written  agreement, in the form satisfactory to the
               Executive  acting  reasonably,  to  be  entered  into  with  any
               successor,  assignee  or  transferee of the Corporation to assume
               and  agree  to  perform this Agreement in accordance with Section
               6.10  hereof,  other  than in the case of a Permitted Assignment;

          (iv) Any  failure  by  or of the Corporation to continue in effect any
               benefit,  bonus,  profit  sharing,  incentive,  remuneration,
               compensation, stock ownership, stock purchase, stock option, life
               insurance,  disability,  pension or retirement plans in which the
               Executive  is  participating  or  entitled to participate, or the
               Corporation  takes,  or fails to take, any action that materially
               adversely  affects  the  Executive's participation in, or reduces
               his  rights  or benefits, under or pursuant to such plans, or the
               Corporation  fails to increase or improve such rights or benefits
               on  a  basis  consistent  with  practices in effect prior to such
               failure,  or with practices implemented subsequent to a Change of
               Control,  with  respect  to  senior  officers of the Corporation;

          (v)  Any  failure by the Corporation to provide the Executive with the
               number  of  paid  vacation  days  to which he is entitled, as set
               forth  herein,  or  the Corporation failing to increase such paid
               vacation  days  on  a  basis  consistent with practices in effect
               prior  to  such failure, or with practices implemented subsequent
               to  a  Change  of Control, with respect to the senior officers of
               the  Corporation;  and

          (vi) The Corporation taking any action to deprive the Executive of any
               material  fringe benefit enjoyed by him immediately prior to such
               deprivation  or  the  Corporation  failing to increase or improve
               such  material  fringe  benefits  on  a  basis  consistent  with
               practices  in effect prior to such deprivation, or with practices
               implemented  subsequent  to  a Change of Control, with respect to
               senior  officers  of  the  Corporation;

     (o)  "Incumbent  Trustees"  has  the  meaning  ascribed  thereto in Section
          2.2(f)(ii);


<PAGE>


                                        6


     (p)  "Incentive  Plan"  means the 2002 Employee Incentive Bonus Plan of the
          Corporation,  as the same may be amended, modified or restated and any
          replacement  or  successor  thereto;

     (q)  "Just  Cause"  means  the  occurrence  of any of the following events:

          (i)  Serious  misconduct,  dishonesty  or  disloyalty of the Executive
               directly  related  to  the  performance  of  his  duties  for the
               Corporation  which results from a willful act or omission or from
               gross  negligence  and  which  is  materially  injurious  to  the
               operations,  financial  condition  or  business reputation of the
               Corporation;

          (ii) Willful  and  continued failure by the Executive to substantially
               perform  his  duties  under  this  Agreement (other than any such
               failure  resulting  from his incapacity due to physical or mental
               disability  or  impairment);

          (iii) Any other material breach of this Agreement by the Executive; or

          (iv) Any  event  or  circumstance  that  would  constitute  cause  for
               termination  of  employment  at  law.

          For  purposes  of  this  Agreement,  no act, or failure to act, by the
          Executive shall be "willful" unless it is done, or omitted to be done,
          in  bad faith and without a reasonable belief that the act or omission
          was  in  the  best  interests  of  the  Corporation;

     (r)  "Market  Price"  means  on  any  date, the average market price of the
          Common Shares calculated as the simple average of the closing price of
          the  Common Shares as quoted through NASDAQ on each of the 10 business
          days  preceding  such  date  on  which  a  closing  price  was quoted;

     (s)  "NASDAQ"  means  the  National  Association of Stock Dealers Automated
          Quotation  System;

     (t)  "Permitted  Assignment"  means an assignment by the Corporation of the
          rights  and obligations of the Corporation contained in this Agreement
          to  a  wholly-owned  subsidiary of the Corporation resident in Canada,
          provided  that the Corporation is not, as a result of such assignment,
          relieved  of  its  liabilities,  obligations  and  duties  under  this
          Agreement;

     (u)  "Prime  Rate" means the rate of interest expressed as a rate per annum
          that  the  Royal  Bank  of  Canada,  at  its main branch in Vancouver,
          British  Columbia,  establishes and announces from time to time as the
          reference  rate  of  interest  that it will charge for Canadian dollar
          demand  loans to its customers in Canada and which it refers to as its
          "prime  rate";


<PAGE>


                                        7


     (v)  "Prorated  Bonus"  has the meaning ascribed to such term in subsection
          4.1(c)  hereof;

     (w)  "Stock  Option Plan" means the Amended and Restated 1992 Non-Qualified
          Stock  Option  Plan  of  the  Corporation, as the same may be amended,
          modified  or  restated  and  any replacement or successor thereto; and

     (x)  "Trustees"  means the trustees of the Corporation, and "Trustee" means
          any  one  of  them.


                                   ARTICLE III
                       TERMS AND CONDITIONS OF EMPLOYMENT

3.1  Employment.  The  Corporation does hereby employ the Executive as its Chief
     Financial  Officer,  Executive  Vice-President  and  Secretary,  and  the
     Executive  hereby  accepts  such  employment  by the Corporation, as of the
     Effective  Date,  all  upon and subject to the terms and conditions of this
     Agreement. The Executive agrees to serve, at no additional remuneration, in
     such  other  executive  capacities  and to assume such responsibilities and
     perform  such  duties  consonant  with  his position as an executive of the
     Corporation  as  the Chief Executive Officer ("CEO") of the Corporation may
     require and assign to him from time to time, including with subsidiaries of
     the  Corporation.

3.2  Duties  and  Functions.  The  Executive  shall  be responsible to and shall
     report  to  the  CEO.  The CEO may vary the conditions, duties and services
     provided  by  the  Executive from time to time according to the operational
     and  other  needs  of  the  business  of the Corporation, provided that his
     duties  will  reasonably  reflect  the  responsibilities  conferred by this
     Agreement. The Corporation expects the Executive to produce timely and good
     quality  work,  acting  in  a  competent, truthworthy and loyal manner. The
     Executive  agrees  to  carryout, using his reasonable best efforts and in a
     manner  that will promote the interests of the business of the Corporation,
     such  duties  and  functions  as  the  CEO  may  request from time to time,
     including,  but  not  limited  to,  the  duties  and functions set forth in
     Schedule  "A"  hereto.

3.3  Orders  of  Board.  The  Executive  shall always act in accordance with any
     reasonable  decision  of  and  obey and carry out all lawful and reasonable
     orders  given  to  him  by  the  CEO  and/or  the  Board.

3.4  Time  and  Energy.  Unless  prevented  by ill health, or physical or mental
     disability  or  impairment,  the  Executive  shall, during the term hereof,
     devote  sufficient business time, care and attention to the business of the
     Corporation  in  order  to  properly  discharge  his  duties  hereunder.

3.5  Faithful  Service.  The  Executive  shall  well  and  faithfully  serve the
     Corporation and use his reasonable efforts to promote the interests thereof
     and  shall  not  use  for  his own


<PAGE>


                                        8


     purposes,  or  for  any  purposes  other than those of the Corporation, any
     non-public information he may acquire with respect to the business, affairs
     and  operations  of  the  Corporation.

3.6  Compensation. During the term of this Agreement, and any extension thereof,
     the  Corporation  shall  pay  and  provide  the  Executive  the  following:

     (a)  Signing  Bonus  and  Annual Cash Compensation. In consideration of the
          Executive  accepting  employment with the Corporation upon and subject
          to  the  terms  and  conditions  of  this  Agreement and the Executive
          foregoing  other employment opportunities, the Corporation shall, upon
          execution  of  this  Agreement,  pay  the Executive a one-time signing
          bonus of $75,000. As compensation for his services to the Corporation,
          the  Executive  shall receive a base salary (the "Base Salary") and in
          addition to the Base Salary shall be eligible to receive in respect of
          each  calendar  year  (or  portion  thereof)  additional variable cash
          compensation,  in  an  amount determined in accordance with any bonus,
          profit  sharing or short term incentive compensation program which may
          be  established  by  the  Board either for the Executive or for senior
          officers  of the Corporation (the "Annual Bonus"). As of the Effective
          Date, the Executive's annualized Base Salary shall be $320,000. During
          the term of this Agreement the Board shall review the Executive's Base
          Salary  and  Annual  Bonus  then in effect at least annually to ensure
          that  such  amounts  are  competitive with awards granted to similarly
          situated  executives  of  publicly  held  companies  comparable to the
          Corporation  and shall increase such amounts as the Board may approve.
          The  Board  shall not reduce the Executive's Base Salary except as set
          forth  herein.  The  Board  may  reduce  the  Executive's  Base Salary
          provided such reduction in the Executive's Base Salary does not exceed
          an aggregate total of ten percent (10%) of the Executive's Base Salary
          in  effect  as  of  the Effective Date and which reduction applies, in
          equal  percentages,  to  all  senior  officers of the Corporation. The
          Executive's  Base  Salary  and  Annual  Bonus  shall  be  payable  in
          accordance  with  the  Corporation's  normal  payroll  practices,  as
          applicable, and shall be subject to deductions in respect of statutory
          remittances, including, without limitation, deductions for income tax,
          pension  plan  premiums and employment insurance premiums. No increase
          in  the  Executive's  Base  Salary  and  Annual Bonus shall be used to
          offset  or  otherwise reduce any obligations of the Corporation to the
          Executive  hereunder  or  otherwise.

     (b)  Incentive  Plan. The Executive shall be entitled to participate in the
          Incentive  Plan in accordance with the terms thereof as in effect from
          time to time. The Corporation agrees, in each fiscal year, to grant to
          the  Executive  units under the Incentive Plan in such amount annually
          as  determined  by  the Board based on the Executive's Base Salary and
          Annual  Bonus  in  such year, before deduction for income tax, pension
          plan  premiums,  employment  insurance  premiums  and  other statutory
          remittances.


<PAGE>


                                        9


     (c)  Employee  Benefits.  The  Executive  shall, to the extent eligible, be
          entitled  to  participate at a level commensurate with his position in
          all  of  the  Corporation's  employee  benefit, welfare and retirement
          plans  and programs, as well as equity plans, employee incentive plans
          and bonus plans, provided by the Corporation to its senior officers in
          accordance  with  the  terms  thereof  as in effect from time to time.

     (d)  Automobile. The Executive shall be entitled to the lease and use of an
          automobile  pursuant  to  the  Corporation's policy on automobiles for
          executives  as  may  be  in  effect  from  time  to  time.

     (e)  Perquisites.  The  Corporation  shall  provide  the  Executive, at the
          Corporation's  cost,  with all perquisites which other senior officers
          of  the Corporation are entitled to receive and such other perquisites
          which  are  suitable to the character of the Executive's position with
          the  Corporation  and  adequate  for  the  performance  of  his duties
          hereunder.  To  the  extent legally permissible under applicable laws,
          the  Corporation  shall  not  treat  such  amounts  as  income  to the
          Executive.

     (f)  Business  and  Entertainment  Expenses. Upon submission of appropriate
          documentation  in  accordance with its policies in effect from time to
          time,  the  Corporation  shall  pay or reimburse the Executive for all
          business expenses which the Executive incurs in the performance of his
          duties  under  this  Agreement, including, but not limited to, travel,
          entertainment,  professional  dues  and  subscriptions,  and all dues,
          fees, and expenses associated with membership in various professional,
          business,  and civic associations and societies in which the Executive
          participates  in  accordance with the Corporation's policies in effect
          from  time  to  time.

3.7  Term.  Subject  to  the  terms  of  Article IV hereof, this Agreement shall
     remain  in effect for a period of thirty-six (36) months from the Effective
     Date.  In the event that the Corporation does not deliver written notice to
     the  Executive,  not  later  than  12 months prior to the expiration of the
     original  term, that the Corporation does not wish to renew this Agreement,
     the  term  hereof  shall  renew  automatically  for an additional period of
     twelve (12) months from the expiration of the original term. Thereafter, it
     shall  automatically  renew  for successive periods of 12 months unless the
     Corporation  provides written notice to the Executive that it does not wish
     to  renew  the term of this Agreement at least 360 days prior to the expiry
     of  the  applicable  term  hereof.

3.8  Amounts  Payable  considered  Debt.  All amounts payable by the Corporation
     under  this  Agreement  shall constitute a debt owing by the Corporation to
     the  Executive.


<PAGE>


                                        10


                                   ARTICLE IV
                 OBLIGATIONS OF THE CORPORATION UPON TERMINATION

4.1  Death  or  Disability.  The  Corporation  may  terminate  the  Executive's
     employment  in  the  event  the  Executive  has  been unable to perform his
     material  duties  hereunder  because  of Disability by giving the Executive
     notice  of  such termination while such Disability continues (a "Disability
     Termination").  The Executive's employment shall automatically terminate on
     the  Executive's  death.  In  the event the Executive's employment with the
     Corporation  terminates  during the term of this Agreement by reason of the
     Executive's death or as a result of a Disability Termination, then upon and
     immediately  effective  the  Date  of  Termination:

     (a)  the  Executive  shall  be fully and immediately vested in the unvested
          options  or equity awards granted by the Corporation to the Executive,
          that  are unvested on the Date of Termination so that such options and
          equity  awards are fully and immediately exercisable by the Executive;

     (b)  the  Corporation  shall  promptly pay and provide the Executive (or in
          the  event  of  the  Executive's  death,  the  Executive's  estate):

          (i)  any  unpaid  Base  Salary and any outstanding and accrued regular
               and  special  vacation  pay  through  the  Date  of  Termination;

          (ii) any unpaid Annual Bonus and other bonuses accrued with respect to
               the  fiscal  year ending on or preceding the Date of Termination;

          (iii)  reimbursement for any unreimbursed expenses incurred through to
               the  Date  of  Termination;

          (iv) all  other  payments,  benefits  or  fringe benefits to which the
               Executive  may  be entitled subject to and in accordance with the
               terms  of  any  applicable  compensation  arrangement or benefit,
               equity  or  fringe  benefit plan or program or grant, and amounts
               which  may become due under this Agreement (the payments referred
               to  herein  in  subsections  4.1(b)(i)  to  4.1(b)(iv)  shall,
               collectively,  be  referred  to  as  "Accrued  Benefits");  and

          (v)  any  unpaid amounts payable under the Incentive Plan with respect
               to  the  fiscal  year  ending  on  or  preceding  the  Date  of
               Termination;  and

     (c)  the  Corporation  shall  pay  to the Executive (or in the event of the
          Executive's  death,  the  Executive's estate) at the time other senior
          executives  are paid under any cash bonus or long term incentive plan,
          a  pro  rata Annual Bonus equal to the amount the Executive would have
          received  if  his  employment  continued  (without  any  discretionary
          cutback) multiplied by a fraction where the numerator is the number of
          days  in  each  respective  bonus  period  prior  to  the  Executive's


<PAGE>


                                        11


          termination  and  the  denominator  is the number of days in the bonus
          period  (the  "Prorated  Bonus").

4.2  Termination  for  Just Cause. The Corporation may terminate the Executive's
     employment  for  Just  Cause.  In the event that the Executive's employment
     with the Corporation is terminated during the term of this Agreement by the
     Corporation  for  Just  Cause,  the  Executive shall not be entitled to any
     additional  payments  or benefits hereunder (including, without limitation,
     any  payments  under  the  Incentive Plan), other than the Accrued Benefits
     (including,  but  not  limited to, any then vested options or equity grants
     granted  by  the Corporation to the Executive) and the Prorated Bonus which
     the  Corporation shall pay or provide to the Executive immediately upon the
     Date  of  Termination.

4.3  Voluntary  Termination  for Good Reason; Involuntary Termination Other Than
     for  Just  Cause.  The  Executive  may  terminate  his  employment with the
     Corporation  for  Good  Reason  at any time within one hundred eighty (180)
     days after the occurrence of the Good Reason event by written notice to the
     Corporation.  If  the  Executive's  employment  with  the  Corporation  is
     voluntarily  terminated  by  the  Executive  for  "Good  Reason"  or  is
     involuntarily  terminated  by  the Corporation other than for "Just Cause",
     then the Corporation shall pay or provide the Executive with the following:

     (a)  any  Accrued  Benefits;

     (b)  any  unpaid  amounts  payable under the Incentive Plan with respect to
          the  fiscal  year  ending  on  or  preceding  the Date of Termination;

     (c)  subject  to (d) below, a severance amount equal to the sum of: (A) the
          Executive's  then Base Salary payable in respect of the then remaining
          term of this Agreement; and (B) the Executive's Annual Bonuses payable
          in  respect of the calendar years (or portions thereof) then remaining
          in  the term of this Agreement, which bonuses will be calculated based
          on  the  higher  of (x) the Executive's then current Annual Bonus, (y)
          the highest variable pay and incentive bonus received by the Executive
          from  the Corporation for the three (3) fiscal years last ending prior
          to such termination and (z) the amount equal to 50% of the Executive's
          then  current  Base  Salary,  which  severance  amount  is  payable in
          substantially equal installments over twelve (12) months in accordance
          with  the  Corporation's standard payroll practice; provided, however,
          that  in  the event of a Change of Control following such termination,
          the  unpaid portion of such severance amount, if any, shall be paid to
          the  Executive  in  full in a single lump sum cash payment immediately
          following  such  Change  of  Control;

     (d)  if  such  termination  occurs  in contemplation of, at the time of, or
          within  eighteen  (18) months after a Change of Control, the Executive
          shall  instead  be  entitled  to  a  lump sum cash payment immediately
          following  such  termination  equal to three (3) times the sum of: (A)
          the  Executive's  then  Base  Salary;  and  (B)  the higher of (x) the
          Executive's  then  current  Annual Bonus, (y) the highest variable pay
          and


<PAGE>


                                        12


          annual  incentive  bonus  received  by the Executive for the three (3)
          fiscal  years last ending prior to such termination and (z) the amount
          equal  to  50%  of  the  Executive's  then  current  Base  Salary; and

     (e)  the  Executive  shall  be fully and immediately vested in the unvested
          options  or  equity awards granted by the Corporation to the Executive
          so  that  such  options  and  equity  awards are fully and immediately
          exercisable  by  the  Executive.

     For  greater  certainty, if such termination occurs in contemplation of, at
     the  time of, or within eighteen (18) months after a Change of Control, the
     Executive  shall  be  entitled to the payments set out in Subsection 4.3(d)
     hereof  and  will  not  be  entitled to any payments or other amounts under
     Subsection  4.3(c)  hereof  and  any amounts paid by the Corporation to the
     Executive  pursuant  to Subsection 4.3(c) shall be setoff from and credited
     as payments made by the Corporation to the Executive pursuant to Subsection
     4.3(d)  hereof.

4.4  Without Good Reason. The Executive may terminate his employment at any time
     without Good Reason by written notice to the Corporation. In the event that
     the  Executive's  employment  with the Corporation is terminated during the
     term  of this Agreement by the Executive without Good Reason, the Executive
     shall  not  be  entitled  to  any additional payments or benefits hereunder
     (including,  without  limitation,  any  payments under the Incentive Plan),
     other than Accrued Benefits (including, but not limited to, any then vested
     options  or  equity grants granted by the Corporation to the Executive) and
     the  Prorated  Bonus  which  the  Corporation  shall  pay or provide to the
     Executive  immediately  upon  the  Date  of  Termination.

4.5  Mitigation  and  Offset. In the event of the termination of the Executive's
     employment  under  this  Agreement;

     (a)  The Executive shall be under no obligation to seek other employment or
          otherwise  mitigate  the  value  of  any  compensation  or  benefits
          contemplated  by  this  Agreement,  nor shall any such compensation or
          benefits  be  reduced  in  any respect in the event that the Executive
          shall  secure,  or shall not reasonably pursue, alternative employment
          or  earnings or benefits that the Executive may receive from any other
          source;  and

     (b)  Except  as  otherwise  set  forth  herein,  the amounts payable by the
          Corporation  hereunder  shall  not  be  subject  to  setoff,  offset,
          counterclaim, recoupment, defence or other right which the Corporation
          may  have  against  the  Executive  or  others.

4.6  Change  of  Control  Vesting  Acceleration.  In  the  event of a "Change of
     Control",  immediately  effective  the  date of such Change of Control, the
     Executive  shall be fully and immediately vested in the unvested options or
     equity  awards  granted  by  the  Corporation  to  the  Executive, that are
     unvested  on the Date of Termination so that such options and equity awards
     are  fully  and  immediately  exercisable  by  the  Executive.


<PAGE>


                                        13


                                    ARTICLE V
                                 INDEMNIFICATION

5.1  Indemnification.  The  Corporation  hereby covenants and agrees that if the
     Executive  is  made  a  party,  or is threatened to be made a party, to any
     action,  suit  or  proceeding,  whether  civil, criminal, administrative or
     investigative  of  any nature whatsoever (a "Proceeding"), by reason of, or
     as a result of, the fact that he is or was an officer, employee, trustee or
     agent  of  the  Corporation  or  is  or  was  serving at the request of the
     Corporation  as  a trustee, director, officer, member, employee or agent of
     another corporation, partnership, joint venture, trust or other enterprise,
     including  service  with  respect to employee benefit plans, whether or not
     the  basis  of  such  Proceeding  is  the  Executive's alleged action in an
     official  capacity  while serving as an officer, employee, trustee or agent
     of the Corporation, the Executive shall be indemnified and held harmless by
     the  Corporation  to  the fullest extent legally permitted or authorized by
     the  Corporation's  constating  documents  or,  if  greater,  by applicable
     federal,  state  or  provincial  legislation,  against all costs, expenses,
     liability  and  losses  of  any  nature  whatsoever  (including,  without
     limitation, attorney's fees, judgments, fines, interest, taxes or penalties
     and  amounts  paid  or  to  be  paid  in settlement) reasonably incurred or
     suffered  by  the  Executive  in  connection  therewith  (collectively, the
     "Indemnification  Amounts"),  and such indemnification shall continue as to
     the  Executive  even  if he has ceased to be a officer, director, employee,
     trustee  or agent of the Corporation or other entity and shall inure to the
     benefit  of  the  Executive's  heirs,  executors  and  administrators.

5.2  Standard of Conduct. Neither the failure of the Corporation or the Board to
     have  made  a  determination  prior  to  the commencement of any proceeding
     concerning  payment  of  amounts claimed by the Executive under Section 5.1
     hereof  that  indemnification of the Executive is proper because he has met
     the  applicable standard of conduct, nor a determination by the Corporation
     or  the  Board  that  the Executive has not met such applicable standard of
     conduct,  shall  create  a  presumption  that the Executive has not met the
     applicable  standard  of  conduct.


                                   ARTICLE VI
                                     GENERAL

6.1  No  Prohibition on Employment. The Executive shall not be prohibited in any
     manner  whatsoever  from  obtaining employment with or otherwise forming or
     participating  in a business competitive to the business of the Corporation
     after  termination  of  employment  with  the  Corporation.

6.2  Resignation  of  Positions.  The Executive agrees that after termination of
     his employment with the Corporation he will tender his resignation from any
     position  he may hold as an officer, director or trustee of the Corporation
     or  any  of  its  affiliated or associated companies if so requested by the
     Board.


<PAGE>


                                        14


6.3  Rights  and  Obligations  Survive. The respective rights and obligations of
     the  parties  hereunder  shall  survive  any termination of the Executive's
     employment to the extent necessary to preserve such rights and obligations.
     For  greater  certainty,  notwithstanding  anything to the contrary in this
     Agreement, the parties hereto acknowledge and agree that Sections 4.1, 4.2,
     4.3,  4.5,  4.6, 5.1, 6.3, 6.5, 6.7, 6.8, 6.13, 6.14 and 6.16 shall survive
     the  termination  of  the  Executive's  employment with the Corporation and
     remain  in  full  force  and  effect.

6.4  Beneficiaries.  The  Executive  shall  be entitled, to the extent permitted
     under  any  applicable  law,  to  select  and  change  a  beneficiary  or
     beneficiaries  to  receive  any  compensation  or benefit payable hereunder
     following  the  Executive's  death by giving the Corporation written notice
     thereof.  In the event of the Executive's death or a judicial determination
     of  his incompetence, reference in this Agreement to the Executive shall be
     deemed,  where  appropriate,  to  refer to his beneficiary, estate or other
     legal  representative.

6.5  Independent  Legal  Advice. The Executive hereby represents and warrants to
     the  Corporation and acknowledges and agrees that he had the opportunity to
     seek, was not prevented nor discouraged by the Corporation from seeking and
     did obtain, independent legal advice prior to the execution and delivery of
     this  Agreement.

6.6  Fair  and  Reasonable Provisions. The Corporation and Executive acknowledge
     and  agree that the provisions of this Agreement regarding further payments
     of  the  Executive's  Base  Salary, Annual Bonus and other bonuses, and the
     exercisability  and  vesting of the options or equity grants granted by the
     Corporation to the Executive, constitute fair and reasonable provisions for
     the consequences of such termination, do not constitute a penalty, and such
     payments  and  benefits  shall  not  be  limited  or reduced by amounts the
     Executive  might  earn  or  be  able  to  earn from any other employment or
     ventures  during  the  remainder  of  the  agreed  term  of this Agreement.

6.7  Lump  Sum  Payment.  Except  as  otherwise  specifically  provided  in this
     Agreement, the Corporation shall pay the Executive any lump sum payment due
     to  him  under  this Agreement within ten (10) business days of the Date of
     Termination.  Any  payments  due to the Executive under this Agreement that
     are  not paid within such time shall accrue interest, compounded quarterly,
     on  the  total unpaid amount payable under this Agreement, such interest to
     be  calculated  at  a  rate equal to 2% in excess of the Prime Rate then in
     effect  from  time  to  time  during  the  period  of  such  non-payment.

6.8  Liability  Insurance. The Corporation shall use its reasonable best efforts
     to  obtain  and  continue  coverage  of  the  Executive  under trustees and
     officers  liability  insurance  both  during and, while potential liability
     exists,  after  the Executive's employment with the Corporation in the same
     amount  and to the same extent, if any, as the Corporation covers its other
     trustees  and/or  officers.

6.9  No  Derogation  of  Rights.  Nothing  herein  derogates from any rights the
     Executive  may  have  under  applicable  law.


<PAGE>


                                        15


6.10 Assignability.  This  Agreement  shall  be  binding  upon  and inure to the
     benefit  of  the  parties hereto and their respective successors, heirs (in
     the  case  of  the  Executive) and assigns. No rights or obligations of the
     Corporation  under  this  Agreement  may  be assigned or transferred by the
     Corporation  except:  (i) in the case of a "Permitted Assignment"; and (ii)
     such  rights  or  obligations  may be assigned or transferred pursuant to a
     merger, amalgamation, reorganization, continuance or consolidation in which
     the Corporation is not the continuing entity, or the sale or liquidation of
     all  or  substantially  all of the assets of the Corporation, provided that
     the  assignee or transferee is the successor to all or substantially all of
     the  assets  of the Corporation and such assignee or transferee assumes the
     liabilities,  obligations  and  duties  of the Corporation, as contained in
     this  Agreement,  either  contractually or as a matter of law. No rights or
     obligations  of  the  Executive  under  this  Agreement  may be assigned or
     transferred by the Executive other than: (a) his rights to compensation and
     benefits, in whole or in part, which may be transferred by the Executive to
     (i)  a  corporation  owned or controlled by the Executive or members of the
     Executive's  family,  and  (ii) a trust, the beneficiaries of which are the
     Executive  or  members  of  the  Executive's  family;  (b) to a corporation
     through  which  the  Executive  shall  provide the services required of him
     hereunder;  and  (c)  as  provided  in  Section  6.4  hereof.

6.11 Authorization.  The  Corporation  represents  and warrants that it is fully
     authorized  and  empowered  to  enter  into  this Agreement and perform its
     obligations  hereunder,  which  performance  will not violate any agreement
     between  the  Corporation  and  any  other person, firm or organization nor
     breach any provisions of its constating documents or governing legislation.

6.12 Amendment  or  Waiver. No provision in this Agreement may be amended unless
     such  amendment  is agreed to in writing and signed by the Executive and an
     authorized  officer of the Corporation. No waiver by either party hereto of
     any  breach  by  the  other  party  hereto  of  any  condition or provision
     contained  in  this  Agreement to be performed by such other party shall be
     deemed  a  waiver  of a similar or dissimilar condition or provision at the
     same  or  any  prior  or subsequent time. Any waiver must be in writing and
     signed by the Executive or an authorized officer of the Corporation, as the
     case  may  be.

6.13 Interpretation  of Incentive Plan, Stock Option Plan and Option Agreements.
     In  the  event  of  a  conflict between, or inconsistency with, any, or any
     part,  of  the  terms  or  provisions  of  this  Agreement and the terms or
     provisions  of  the  Incentive  Plan,  the  Stock Option Plan or any option
     agreements  entered into pursuant to the Stock Option Plan, as the case may
     be,  the  terms and provisions of this Agreement shall be deemed to govern,
     supersede,  and take precedence over such inconsistent or conflicting terms
     and  provisions  contained in the Incentive Plan, the Stock Option Plan and
     the  option  agreements  entered into pursuant to the Stock Option Plan, as
     the  case  may  be.

6.14 Governing  Law and Venue. This Agreement shall be construed and interpreted
     in  accordance  with  the laws of the Province of British Columbia, and the
     federal  laws  of  Canada  applicable  therein.  Each of the parties hereby
     irrevocably  attorns to the non-exclusive jurisdiction of the Supreme Court
     of  British  Columbia, situate in Vancouver, British Columbia, with respect
     to  any  matters  arising  out  of  this  Agreement.


<PAGE>


                                        16


6.15 Notices.  Any notice required or permitted to be given under this Agreement
     shall  be  in writing and shall be properly given if delivered or mailed by
     prepaid  registered  mail  addressed  as  follows:

     (a)  in  the  case  of  the  Corporation:

          Mercer International Inc.
          Suite 14900 Interurban Avenue South
          Seattle, Washington,  USA  98168

     (b)  in  the  case  of  the  Executive:

          to the last address of the Executive in the records of the Corporation
          and  its subsidiaries or to such other address as the parties may from
          time  to  time  specify  by  notice  given  in  accordance  herewith.

          Any notice so given shall be conclusively deemed to have been given or
          made  on the day of delivery, if delivered, or if mailed as aforesaid,
          upon  the  date  shown  on  the postal return receipt as the date upon
          which the envelope containing such notice was actually received by the
          addressee.

6.16 Severability. If any provision contained herein is determined to be void or
     unenforceable  for  any reason, in whole or in part, it shall not be deemed
     to  affect  or  impair the validity of any other provision contained herein
     and  the  remaining provisions shall remain in full force and effect to the
     fullest  extent  permissible  by  law.

6.17 Entire  Agreement. Other than the Officer's Indemnity Agreement between the
     Executive  and  the  Corporation  of  even  date  herewith  (the "Indemnity
     Agreement"), this Agreement contains the entire understanding and agreement
     between the parties concerning the subject matter hereof and supersedes all
     prior  agreements,  understandings,  discussions,  negotiations  and
     undertakings,  whether  written  or  oral, between the parties with respect
     thereto. For greater certainty, notwithstanding anything to the contrary in
     this  Agreement,  the  parties  hereto  acknowledge  and agree that nothing
     contained herein is intended to modify, abridge, limit or affect any of the
     rights  or  obligations  of  the  parties hereto contained in the Indemnity
     Agreement.

6.18 Currency.  Unless  otherwise  specified  herein all references to dollar or
     dollars  are  references  to  Canadian  dollars.

6.19 Further  Assurances.  Each  of  the  Executive and the Corporation will do,
     execute  and deliver, or will cause to be done, executed and delivered, all
     such further acts, documents and things as the Executive or the Corporation
     may  require  for  the  purposes  of  giving  effect  to  this  Agreement.


<PAGE>


                                        17


6.20 Counterparts/Facsimile Execution. This Agreement may be executed in several
     parts  in  the  same  form, and by facsimile, and such parts as so executed
     shall  together  constitute  one original document, and such parts, if more
     than  one,  shall  be  read  together  and  construed as if all the signing
     parties  had  executed  one  copy  of  the  said  Agreement.

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first
above  written.


MERCER  INTERNATIONAL  INC.

By: /s/ Jimmy Lee
    ----------------------------------------
Name:  Jimmy Lee
      --------------------------------------
Title: President
      --------------------------------------

SIGNED,  SEALED  and  DELIVERED     )
by  DAVID  M.  GANDOSSI             )
in  the  presence  of:              )
/s/ M.Y. Ho                         )     /s/ David Gandossi
----------------------------------  )     --------------------------
Witness                             )     DAVID  M.  GANDOSSI
1620 - 400 Burrard Street           )
----------------------------------  )
Address                             )
Vancouver, B.C.                     )
----------------------------------  )
----------------------------------  )
----------------------------------  )
Occupation


<PAGE>


                                       A-1


                                   SCHEDULE A


                               EXECUTIVE'S DUTIES


1.   Supervision  and  management  of  all  accounting  and  financial reporting
     functions  of  the  Corporation;

2.   Supervision  and  management  of  all  treasury,  receivable  and  payable
     functions  of  the  Corporation;

3.   Supervision  and management of all banking arrangements of the Corporation;

4.   Supervision  and  management  of all other internal financial functions and
     controls  of  the  Corporation;

5.   Supervision and management of all employees in the financial and accounting
     departments  of  the  Corporation;

6.   Supervision  and management of investor relations and corporate information
     dissemination  of  the  Corporation;

7.   Supervision  and  management  of all corporate secretarial functions of the
     Corporation,  including,  without  limitation, preparation of, or providing
     assistance in the preparation of, all materials in connection with meetings
     of  the  Board,  preparation of, or providing assistance in the preparation
     of,  all  materials  in  connection  with meetings of holders of the Common
     Shares,  and  maintaining  the  corporate  minute books of the Corporation.

8.   Preparation  of  all budgets and business plans, and reporting on the same;

9.   Participation in the development of policies and programs, and reporting on
     the  same;  and

10.  Performance  of  such  other  functions  and duties normally performed by a
     chief  financial  officer  and/or executive vice-president of publicly held
     companies  comparable  to  the  Corporation,  and  such  other  duties  and
     functions  consistent  with  the  Executive's position which the CEO shall,
     from  time  to  time,  reasonably  direct.