<PAGE>   1
 
                                  EXHIBIT 3.2
 
                     CORPORATION DES ENTREPRISES REPAP INC.
 
                       REPAP ENTERPRISES CORPORATION INC.
 
                        RESOLUTION OF THE SOLE DIRECTOR
 
RESOLVED:
 
      THAT the following By-Law No. 1986-1 relating to the transaction of the
      business and affairs of Repap Enterprises Corporation Inc. (the
      "Corporation") be and it is hereby enacted;
 
      THAT By-Law No. XXVI of the Corporation adopted on April 9, 1980 be and
      the same is hereby repealed and rescinded, with the exception of that
      provision of By-Law No. XXVI by which all previous by-laws of the
      Corporation, as at April 9, 1980, with the exception of by-laws Nos XXIII
      and XXIV, were repealed and rescinded.
                            ------------------------
 
                               BY-LAW NO. 1986-1
 
 A BY-LAW RELATING GENERALLY TO THE TRANSACTION OF THE BUSINESS AND AFFAIRS OF
                       REPAP ENTERPRISES CORPORATION INC.
 
                                    CONTENTS
 
<TABLE>
<S>                <C>
SECTION ONE.....   INTERPRETATION
SECTION TWO.....   BUSINESS OF THE CORPORATION
SECTION THREE...   BORROWING AND SECURITIES
SECTION FOUR....   DIRECTORS
SECTION FIVE....   COMMITTEES
SECTION SIX.....   OFFICERS
SECTION SEVEN...   PROTECTION OF DIRECTORS, OFFICERS AND OTHERS
SECTION EIGHT...   SHARES
SECTION NINE....   DIVIDENDS AND RIGHTS
SECTION TEN.....   MEETINGS OF SHAREHOLDERS
SECTION
  ELEVEN........   DIVISIONS AND DEPARTMENTS
SECTION
  TWELVE........   NOTICES
SECTION
  THIRTEEN......   EFFECTIVE DATE
</TABLE>
 
                                  SECTION ONE
 
                                 INTERPRETATION
 
1.01   DEFINITIONS  In this By-Law of the Corporation, unless the context
otherwise requires:
 
      "ACT" means the Canada Business Corporations Act, and any statute that may
      be substituted therefor, as from time to time amended;
 
                    appoint includes "elect" and vice versa;
 
      "ARTICLES" means the Articles of Continuance of the Corporation attached
      to the Certificate of Continuance of the Corporation dated April 9, 1980,
      as from time to time amended or restated;
 
      "BOARD" means the board of directors of the Corporation;
 
      "BY-LAWS" means this by-law and all other by-laws of the Corporation from
      time to time in force and effect;
 
      "CORPORATION" means Repap Enterprises Corporation Inc., a corporation
      continued under the provisions of the Canada Business by Certificate of
      Continuance dated April 9, 1980;
 
      "MEETING OF SHAREHOLDERS" includes an annual meeting of shareholders and a
      special meeting of shareholders;
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      "SPECIAL MEETING OF SHAREHOLDERS" includes a meeting of any class or
      classes of shareholders and a special meeting of all shareholders entitled
      to vote at an annual meeting of shareholders;
 
      "RECORDED ADDRESS" means in the case of a shareholder his address as
      recorded in the securities register of the Corporation; and in the case of
      joint shareholders the address appearing in the securities register in
      respect of such joint holding or the first address so appearing if there
      are more than one; and in the case of a director, officer, auditor or
      member of a committee of the board, his latest address as recorded in the
      records of the Corporation; and "signing officer" means, in relation to
      any instrument, any person authorized to sign the same on behalf of the
      Corporation by section 2.04 or by a resolution passed pursuant thereto.
 
1.02   EXPRESSIONS DEFINED IN THE ACT  Save as aforesaid, words and expressions
defined in the Act have the same meanings when used herein.
 
1.03   INTERPRETATION  Words importing the singular number include the plural
and vice versa; words importing gender include the masculine, feminine and
neuter genders; and words importing persons include individuals, bodies
corporate, partnerships, trusts and unincorporated organizations.
 
                                  SECTION TWO
 
                          BUSINESS OF THE CORPORATION
 
2.01   REGISTERED OFFICE  Until changed in accordance with the provisions of the
Act, the registered office of the Corporation shall be in the Montreal Urban
Community, in the Province of Quebec, Canada; and at such location therein as
the board may from time to time determine.
 
2.02   CORPORATE SEAL  Until changed by the board, the corporate seal of the
Corporation shall be in the form impressed hereon.
 
2.03   FINANCIAL YEAR  The financial year of the Corporation shall end on such
date in each year as shall be determined from time to time by resolution of the
directors.
 
2.04   EXECUTION OF INSTRUMENTS  Deeds, transfers, assignments, contracts,
obligations, certificates and other instruments may be signed on behalf of the
Corporation by two persons, (i) one of whom holds the office of Chairman of the
Board, Managing Director, President, Vice-President or director (ii) and the
other of whom holds one of the said offices or the office of Secretary,
Treasurer, Assistant Secretary or Assistant Treasurer or any other office
created by by-law or by resolution of the board. In addition, the board may from
time to time direct the manner in which and the person or persons by whom any
particular instrument or class of instruments may or shall be signed. Any
signing officer may affix the corporate seal to any instrument requiring the
same.
 
2.05   BANKING ARRANGEMENTS  The banking business of the Corporation including,
without limitation, the borrowing of money and the giving of security therefor,
shall be transacted with such banks, trust companies or other bodies corporate
or organizations as may from time to time be designated by or under the
authority of the board. Such banking business or any part thereof shall be
transacted under such agreements, instructions and delegations of powers as the
board may from time to time prescribe or authorize.
 
2.06   VOTING RIGHTS IN OTHER BODIES CORPORATE  The signing officers of the
Corporation may execute and deliver proxies and arrange for the issuance of
voting certificates or other evidence of the right to exercise the voting rights
attaching to any securities held by the Corporation. Such instruments,
certificates or other evidence shall be in favor of such person or persons as
may be determined by the officers executing such proxies or arranging for the
issuance of voting certificates or such other evidence of the right to exercise
such voting rights. In addition, the board may from time to time direct the
manner in which and the person or persons by whom any particular voting rights
or class of voting rights may or shall be exercised.
 
                                 SECTION THREE
 
                            BORROWING AND SECURITIES
 
3.01   BORROWING POWER  Without limiting the borrowing powers of the Corporation
as set forth in the Act or as set forth in the Articles of the Corporation, the
board may from time to time:
 
      (a)   borrow money upon the credit of the Corporation;
 
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<PAGE>   3
 
      (b)   issue, reissue, sell or pledge bonds, debentures, notes or other
           evidences of indebtedness or guarantee of the Corporation, whether
           secured or unsecured; and
 
      (c)   charge, mortgage, hypothecate, pledge or otherwise create a security
           interest in all or any currently owned or subsequently acquired real
           or personal, movable or immovable property of the Corporation,
           including book debts, rights, powers, franchises and undertaking, to
           secure any such bonds, debentures, notes or other evidences of
           indebtedness or guarantee or any other present or future indebtedness
           or liability of the Corporation.
 
Nothing in this section limits or restricts the borrowing of money by the
Corporation on bills of exchange or promissory notes made, drawn, accepted or
endorsed by or on behalf of the Corporation.
 
3.02   DELEGATION  The board may from time to time delegate to such one or more
of the directors and officers of the Corporation as may be designated by the
board all or any of the powers conferred on the board by section 3.01 or by the
Act to such extent and in such manner as the board shall determine at the time
of each such delegation.
 
                                  SECTION FOUR
 
                                   DIRECTORS
 
4.01   NUMBER OF DIRECTORS AND QUORUM  Until changed in accordance with the
provisions of the Act, the board shall consist of a minimum of one (1) and of a
maximum of fifteen (15) directors. Subject to section 4.08, the quorum for the
transaction of business at any meeting of the board shall consist of the
majority or such greater number of directors as the board may from time to time
determine.
 
4.02   QUALIFICATION  No person shall be qualified for election as a director:
(i) if he is less than 18 years of age, (ii) if he is of unsound mind and has
been so found by a court in Canada or elsewhere, (iii) if he is not an
individual, or (iv) if he has the status of a bankrupt. A director need not be a
shareholder of the Corporation. A majority of the directors shall be resident
Canadians. At least two directors shall not be officers or employees of the
Corporation or its affiliates.
 
4.03   ELECTION AND TERM  The election of directors shall take place at each
annual meeting of shareholders and all the directors then in office shall retire
but, if qualified, shall be eligible for re-election. The number of directors to
be elected at any such meeting shall, if a minimum and maximum number of
directors is authorized, be the number of directors then in office unless the
directors or the shareholders otherwise determine or shall, if a fixed number of
directors is authorized, be such fixed number. The election shall be by
resolution. If an election of directors is not held at the proper time, the
incumbent directors shall continue in office until their successors are elected.
 
4.04   REMOVAL OF DIRECTORS  Subject to the provisions of the Act, the
shareholders may, by resolution passed at a meeting specially called for such
purpose, remove any director from office and the vacancy created by such removal
may be filled at the same meeting failing which it may be filled by the
directors.
 
4.05   VACATION OF OFFICE  A director ceases to hold office: (i) when he dies,
(ii) when he is removed from office by the shareholders, (iii) when he ceases to
be qualified for election as a director, or (iv) when his written resignation is
sent or delivered to the Corporation, or, if a time is specified in such
resignation, at the time so specified, whichever is later.
 
4.06   VACANCIES  Subject to the provisions of the Act,    --   quorum of the
board may fill a vacancy in the board, except    --   vacancy resulting from an
increase in the minimum number of directors to be elected or from a failure of
the shareholders to elect the minimum number of directors. In the absence of a
quorum of the board, or if the vacancy has arisen from a failure of the
shareholders to elect the minimum number of directors to be elected, the
directors then in office shall forthwith call a special meeting of shareholders
to fill the vacancy. If such directors fail to call such meeting or if there are
no such directors then in office, any shareholder may call the meeting.
 
4.07   ACTION BY THE BOARD  The board shall manage the business and affairs of
the Corporation. Subject to sections 4.08 and 4.09, the powers of the board may
be exercised by resolution passed at a meeting at which a quorum is present or
by resolution in writing signed by all the directors entitled to vote on that
resolution at a meeting of the board. Where there is a vacancy in the board, the
remaining directors may exercise all the powers of the board so long as a quorum
remains in office.
 
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<PAGE>   4
 
4.08   CANADIAN MAJORITY  The board shall not transact business at a meeting,
other than filling a vacancy in the board, unless a majority of the directors
present are resident Canadians, except where:
 
      (a)   a resident Canadian director who is unable to be present approves in
           writing or by telephone or other communications facilities the
           business transacted at the meeting; and
 
      (b)   a majority of resident Canadians would have been present had that
           director been present at the meeting.
 
4.09   MEETING BY TELEPHONE  If all the directors of the Corporation consent,
one or more directors may participate in a meeting of the board or of a
committee of the board by means of such telephone or other communications
facilities as permit all persons participating in the meeting to hear each
other, and any director or directors participating in such a meeting by such
means is deemed to be present at the meeting. Any such consent shall be
effective whether given before or after the meeting to which it relates and may
be given with respect to all meetings of the board and of committees of the
board.
 
4.10   PLACE OF MEETINGS  Meetings of the board may be held at any place in or
outside Canada.
 
4.11   CALLING OF MEETINGS  Meetings of the board shall be held from time to
time at such time and at such place as the board, the chairman of the board, the
managing director, the president or any two directors may determine.
 
4.12   NOTICE OF MEETING  Notice of the time and place of each meeting of the
board shall be given in the manner provided in section 12.01 to each director
not less than 48 hours before the time when the meeting is to be held. A notice
of a meeting of directors need not specify the purpose of or the business to be
transacted at the meeting, except where the Act requires such purpose or
business to be specified, including, if required by the Act, any proposal to:
 
      (a)   submit to the shareholders any question or matter requiring approval
           of the shareholders;
 
      (b)   fill a vacancy among the directors or in the office of auditor;
 
      (c)   issue securities;
 
      (d)   declare dividends;
 
      (e)   purchase, redeem or otherwise acquire shares issued by the
           Corporation;
 
      (f)    pay a commission for the sale of shares;
 
      (g)   approve a management proxy circular;
 
      (h)   approve a take-over bid circular or directors' circular;
 
      (i)    approve any annual financial statements; or
 
      (j)    adopt, amend or repeal by-laws.
 
     A director may in any manner waive notice of or otherwise consent to a
meeting of the board.
 
4.13   FIRST MEETING OF NEW BOARD  Provided a quorum of directors is present,
each newly elected board may without notice hold its first meeting immediately
following the meeting of shareholders at which such board is elected.
 
4.14   ADJOURNED MEETING  Notice of an adjourned meeting of the board is not
required if the time and place of the adjourned meeting is announced at the
original meeting.
 
4.15   REGULAR MEETINGS  The board may appoint a day or days in any month or
months for regular meetings of the board at a place and hour to be named. A copy
of any resolution of the board fixing the place and time of such regular
meetings shall be sent to each director forthwith after being passed, but no
other notice shall be required for any such regular meeting except where the Act
requires the purpose thereof or the business to be transacted thereat to be
specified.
 
4.16   CHAIRMAN  The chairman of any meeting of the board shall be the first
mentioned of such of the following officers as have been appointed and who is a
director and is present at the meeting: (i) Chairman of the Board, (ii) the
Managing Director, (iii) the President or (iv) a Vice-President. If no such
officer is present, the directors present shall choose one of their number to be
chairman of such meeting.
 
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<PAGE>   5
 
4.17   VOTES TO GOVERN  At all meetings of the board every question shall be
decided by a majority of the votes cast on the question. In case of an equality
of votes the chairman of the meeting shall be entitled to a second or casting
vote.
 
4.18   CONFLICT OF INTEREST  A director or officer who is a party to, or who is
a director or officer of, or otherwise has a material interest in any person who
is a party to, a material contract or proposed material contract with the
Corporation shall disclose the nature and extent of his interest at the time and
in the manner provided by the Act. Any such contract or proposed contract shall
be referred to the board for approval even if such contract is one that in the
ordinary course of the Corporation's business would not require approval by the
board, and a director interested in a contract so referred to the board shall
not vote on any resolution to approve the same except as provided by the Act.
 
4.19   REMUNERATION AND EXPENSES  The directors shall be paid such remuneration
for their services as the board may from time to time determine. The directors
shall also be entitled to be reimbursed for traveling and other expenses
properly incurred by them in attending meetings of the board or any committee
thereof. Nothing herein contained shall preclude any director from serving the
Corporation in any other capacity and receiving remuneration therefor.
 
                                  SECTION FIVE
 
                                   COMMITTEES
 
5.01   COMMITTEE OF DIRECTORS  Without restriction to Section 5.03, the board
may appoint a committee of directors, however designated, and delegate to such
committee any of the powers of the board except those which pertain to items
which, under the Act, a committee of directors has no authority to exercise. A
majority of the members of such committee shall be resident Canadians.
 
5.02   TRANSACTION OF BUSINESS  Subject to the provisions of section 4.09, the
powers of a committee of directors may be exercised by a meeting at which a
quorum is present or by resolution in writing signed by all members of such
committee who would have been entitled to vote on that resolution at a meeting
of the committee. Meetings of such committee may be held at any place in or
outside of Canada.
 
5.03   AUDIT COMMITTEE  The board shall elect annually from among its number an
audit committee to be composed of not fewer than 3 directors of whom a majority
shall not be officers or employees of the Corporation or its affiliates. The
audit committee shall have the powers and duties provided in the Act.
 
5.04   PROCEDURE  Unless otherwise determined by the board, each committee shall
have power to fix its quorum at not less than a majority of its members, to
elect its chairman and otherwise to regulate its procedure.
 
                                  SECTION SIX
 
                                    OFFICERS
 
6.01   APPOINTMENT  The board may, from time to time appoint a Chief Executive
Officer, a Chief Operating Officer, a President, one or more Vice-Presidents (to
which title may be added words indicating seniority or function), a Secretary, a
Treasurer, a Controller and such other officers as the board may determine,
including one or more assistants to any of the officers so appointed. The board
may specify the duties of and, in accordance with this by-law and subject to the
provisions of the Act, delegate to such officer's powers to manage the business
and affairs of the Corporation. Subject to sections 6.02 and 6.04, an officer
may, but need not be, a director and one person may hold more than one office.
 
6.02   CHAIRMAN OF THE BOARD  The board may from time to time also appoint a
Chairman of the Board who shall be a director. If appointed, the board may
assign to him any of the powers and duties that are by any provisions of this
by-law assigned to the managing director or to the president, and he shall,
subject to the provisions of the Act, have such other powers and duties as the
board may specify. During the absence or disability of the Chairman of the
Board, his duties shall be performed and his powers exercised by the managing
director, if any, or by the president.
 
6.03   CHIEF EXECUTIVE OFFICER  The Board may from time to time appoint a Chief
Executive Officer who shall be, subject to Section 6.04 below, the Chairman of
the Board or the President.
 
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<PAGE>   6
 
6.04   MANAGING DIRECTOR  The board may from time to time also appoint a
Managing Director who shall be a resident Canadian and a director. If appointed,
he shall be the Chief.
 
     Executive Officer and, subject to the authority of the board, shall have
general supervision of the business and affairs of the Corporation. Subject to
the provisions of the Act, the Managing Director shall have such other powers
and duties as the board may specify. During the absence or disability of the
President, or if no President has been appointed, the managing director shall
also have the powers and duties of that office.
 
6.05   PRESIDENT  If appointed, the President shall be the Chief Operating
officer and, subject to the authority of the board, have general supervision of
the business of the Corporation. The President shall have such other powers and
duties as the board may specify. During the absence or disability of the
Managing Director, if a Managing Director has been appointed, the president
shall also have the powers and duties of that office.
 
6.06   VICE-PRESIDENT  Vice-President shall have such powers and duties as the
board or the Chief Executive Officer may specify.
 
6.07   SECRETARY  The Secretary shall attend and be the secretary of all
meetings of the board, shareholders and committees of the board and shall enter
or cause to be entered in records kept for that purpose minutes of all
proceedings thereat. The Secretary shall give or cause to be given, as and when
instructed, all notices to shareholders, directors, officers, auditors and
members of committees of the board. The Secretary shall be the custodian of the
stamp or mechanical device generally used for affixing the corporate seal of the
Corporation and of all books, papers, records, documents and instruments
belonging to the Corporation, except when some other officer or agent has been
appointed for that purpose. The Secretary shall have such other powers and
duties as the board or the Chief Executive officer may specify.
 
6.08   TREASURER  The Treasurer shall keep proper accounting records in
compliance with the provisions of the Act and shall be responsible for the
deposit of money, the safekeeping of securities and the disbursement of the
funds of the Corporation. The Treasurer shall render to the board whenever
required an account of all his transactions as treasurer and of the financial
position of the Corporation. The Treasurer shall have such other powers and
duties as the board or the Chief Executive Officer may specify.
 
6.09   POWERS AND DUTIES OF OTHER OFFICERS  The powers and duties of all other
officers shall be such as the terms of their engagement call for or as the board
or the Chief Executive Officer may specify. Any of the powers and duties of an
officer to whom an assistant has been appointed may be exercised and performed
by such assistant, unless the board or the Chief Executive Officer otherwise
directs.
 
6.10   VARIATION OF POWERS AND DUTIES  The board may from time to time and
subject to the provisions of the Act, vary, add to or limit the powers and
duties of any officer.
 
6.11   TERM OF OFFICE  The board, in its discretion, may remove any officer of
the Corporation, without prejudice to such officer's rights under any employment
contract. Otherwise each officer appointed by the board shall hold office until
his successor is appointed, or until his earlier resignation.
 
6.12   TERMS OF EMPLOYMENT AND REMUNERATION  The terms of employment and the
remuneration of an officer appointed by the board shall be settled by the board
from time to time.
 
6.13   CONFLICT OF INTEREST  An officer shall disclose his interest in any
material contract or proposed material contract with the Corporation in
accordance with section 4.18.
 
6.14   AGENTS AND ATTORNEYS  The board shall have power from time to time to
appoint agents or attorneys for the Corporation in or outside Canada with such
powers of management or otherwise (including the power to sub-delegate) as may
be thought fit.
 
6.15   FIDELITY BONDS  The board may require such officers, employees and agents
of the Corporation as the board deems advisable to furnish bonds for the
faithful discharge of their powers and duties, in such form and with such surety
as the board may from time to time determine.
 
                                 SECTION SEVEN
 
                  PROTECTION OF DIRECTORS, OFFICERS AND OTHERS
 
7.01   LIMITATION OF LIABILITY  Every director and officer of the Corporation in
exercising his powers and discharging his duties shall act honestly and in good
faith with a view to the best interests of the Corporation and
 
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<PAGE>   7
 
exercise the care, diligence and skill that a reasonably prudent person would
exercise in comparable circumstances. Subject to the foregoing, no director or
officer shall be liable for the acts, receipts, neglects or defaults of any
other director or officer or employee, or for joining in any receipt or other
act for conformity, or for any loss, damage or expense happening to the
Corporation through the insufficiency or deficiency of title to any property
acquired for or on behalf of the Corporation, or for the insufficiency or
deficiency of any security in or upon which any of the monies of the Corporation
shall be invested, or for any loss or damage arising from the bankruptcy,
insolvency or tortuous acts of any person with whom any of the monies,
securities or effects of the Corporation shall be deposited, or for any loss
occasioned by any error of judgment or oversight on his part, or for any other
loss, damage or misfortune whatever which shall happen in the execution of the
duties of his office or in relation thereto; provided that nothing herein shall
relieve any director or officer from the duty to act in accordance with the
provisions of the Act and the regulations thereunder or from liability for any
breach thereof.
 
7.02   INDEMNITY  Subject to the limitations contained in the Act, the
Corporation shall indemnify a director or officer, a former director or officer,
or a person who acts or acted at the Corporation's request as a director or
officer of a body corporate of which the Corporation is or was a shareholder or
creditor, and his heirs and legal representatives, against all costs, charges
and expenses, including an amount paid to settle an action or satisfy a
judgment, reasonably incurred by him in respect of any civil, criminal or
administrative action or proceeding to which he is made a party by reason of
being or having been a director or officer of the Corporation or such body
corporate, if
 
      (a)   he acted honestly and in good faith with a view to the best
           interests of the Corporation; and
 
      (b)   in the case of a criminal or administrative action or proceeding
           that is enforced by a monetary penalty, he had reasonable grounds for
           believing that his conduct was lawful.
 
     The Corporation shall also indemnify such person in such other
circumstances as the Act permits or requires.
 
7.03   INSURANCE  The Corporation may purchase and maintain insurance for the
benefit of any person referred to in section 7.02 against such liabilities and
in such amounts as the board may from time to time determine and are permitted
by the Act.
 
                                 SECTION EIGHT
 
                                     SHARES
 
8.01   ALLOTMENT  The board may from time to time allot or grant options to
purchase the whole or any part of the authorized and unissued shares of the
capital stock of the Corporation at such times and to such persons and for such
consideration as the board shall determine, provided that no share shall be
issued until it is fully paid as provided by the provisions of the Act.
 
8.02   COMMISSIONS  The board may from time to time authorize the Corporation to
pay a reasonable commission to any person in consideration of his purchasing or
agreeing to purchase shares of the capital stock of the Corporation, whether
from the Corporation or from any other person, or procuring or agreeing to
procure purchasers for any such shares.
 
8.03   REGISTRATION OF TRANSFERS  Subject to the provisions of the Act, no
transfer of shares shall be registered in a securities register except upon
presentation of the certificate representing such shares with an endorsement,
which complies with the provisions of the Act, made thereon or delivered
therewith, duly executed by an appropriate person as provided by the provisions
of the Act, together with such reasonable assurance that the endorsement is
genuine and effective as the board may from time to time prescribe, upon payment
of all applicable taxes and any fees prescribed by the board, upon compliance
with such restrictions on transfer, if any, as are authorized by the Articles
and upon satisfaction of any lien referred to in section 8.05.
 
8.04   TRANSFER AGENTS AND REGISTRARS  The board may from time to time appoint
one or more agents to maintain, in respect of each class of securities of the
capital stock of the Corporation issued by it in registered form, a central
securities register and one or more branch securities registers. Such a person
may be designated as transfer agent or registrar according to his functions and
one person may be designated both registrar and transfer agent. The board may at
any time terminate such appointment.
 
8.05   LIEN FOR INDEBTEDNESS  If the Articles provide that the Corporation shall
have a lien on shares registered in the name of a shareholder indebted to the
Corporation, such lien may be enforced, subject to any other provision of
 
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<PAGE>   8
 
the Articles and to any unanimous shareholder agreement, if any, by the sale of
the shares thereby affected or by any other action, suit, remedy or proceeding
authorized or permitted by law or by equity and, pending such enforcement, the
Corporation may refuse to register a transfer of the whole or any party of such
shares.
 
8.06   NON-RECOGNITION OF TRUSTS  Subject to the provisions of the Act, the
Corporation may treat as absolute owner of any share of its capital stock the
person in whose name the share is registered in its securities register as if
that person had full legal capacity and authority to exercise all rights of
ownership, irrespective of any indication to the contrary through knowledge or
notice or description in the Corporation's records or on the share certificate.
 
8.07   SHARE CERTIFICATES  Every holder of one or more shares of the capital
stock of the Corporation shall be entitled, as his option, to a share
certificate, or to a non-transferable written acknowledgment of his right to
obtain a share certificate, stating the number and class or series of shares
held by him as shown on the securities register of the Corporation. Share
certificates and acknowledgments of a shareholder's right to a share
certificate, respectively, shall be in such form as the board shall from time to
time approve. Any share certificate shall be signed in accordance with section
2.04 and need not be under the corporate seal; provided that, unless the board
otherwise determines, certificates representing shares in respect of which a
transfer agent and/or registrar has been appointed shall not be valid unless
countersigned by or on behalf of such transfer agent and/or registrar. The
signature of one of the signing officers or, in the case of share certificates
which are not valid unless countersigned by or on behalf of a transfer agent
and/or registrar, the signatures of both signing officers may be printed or
mechanically reproduced in facsimile upon share certificates and every such
facsimile signature shall for all purposes be deemed to be the signature of the
officer whose signature it reproduces and shall be binding upon the Corporation.
A share certificate executed as aforesaid shall be valid notwithstanding that
one or both of the officers whose facsimile signature appears thereon no longer
holds off ice at the date of issue of the certificate.
 
8.08   REPLACEMENT OF SHARE CERTIFICATES  The board or any officer or agent
designated by the board may in its or his discretion direct the issue of a new
share certificate in lieu of and upon cancellation of a share certificate that
has been mutilated or in substitution for a share certificate claimed to have
been lost, destroyed or wrongfully taken on payment of such reasonable fee, and
on such terms as to indemnity, reimbursement of expenses or evidence of loss and
of title as the board may from time to time prescribe, whether generally or in
any particular case.
 
8.09   JOINT SHAREHOLDERS  If two or more persons are registered as joint
holders of any share of the capital stock of the Corporation, the Corporation
shall not be bound to issue more than one certificate in respect thereof, and
delivery of such certificate to one of such persons shall be sufficient delivery
to all of them. Any one of such persons may give effectual receipts for the
certificate issued in respect thereof or for any dividend, bonus, return of
capital or other money payable or warrant issuable in respect of such share.
 
8.10   DECEASED SHAREHOLDERS  In the event of the death of a holder or of one of
the joint holders of any share, the Corporation shall not be required to make
any entry in its securities register in respect thereof or to make payment of
any dividends thereon except upon production of all such documents as may be
required by law and upon compliance with the reasonable requirements of the
Corporation and its transfer agents.
 
                                  SECTION NINE
 
                              DIVIDENDS AND RIGHTS
 
9.01   DIVIDENDS  Subject to the provisions of the Act, the board may from time
to time declare dividends payable to the shareholders according to their
respective rights and interest in the Corporation. Dividends may be paid in
money or property or by issuing fully paid shares of any class or series of the
capital stock of the Corporation.
 
9.02   DIVIDEND CHEQUES  A dividend payable in cash may be paid by cheque drawn
on the Corporation's bankers or one of them to the order of each registered
holder of shares of the class or series in respect of which it has been declared
and mailed by prepaid ordinary mail to such registered holder at his recorded
address, unless such holder otherwise directs. In the case of joint holders the
cheque shall, unless such joint holders otherwise direct, be made payable to the
order of all of such joint holders and mailed to them at their recorded address
or, if more than one address, at the first of such address appearing in the
books of the Corporation. The mailing of such cheque as aforesaid, unless the
same is not paid on due presentation, shall satisfy and discharge the liability
for the dividend to the extent of the sum represented thereby plus the amount of
any tax which the Corporation is required to and does withhold.
 
                                        8
<PAGE>   9
 
9.03   NON-RECEIPT OF CHEQUES  In the event of non-receipt of any dividend
cheque by the person to whom it is sent as aforesaid, the Corporation shall
issue to such person a replacement cheque for a like amount on such terms as to
indemnity, reimbursement of expenses and evidence of non-receipt and of title as
the board may from time to time prescribe, whether generally or in any
particular case.
 
9.04   RECORD DATE FOR DIVIDENDS AND RIGHTS  The board may fix in advance a
date, preceding by not more than 50 days the date for the payment of any
dividend or the date for the issue of any warrant or other evidence of the right
to subscribe for securities of the Corporation, as a record date for the
determination of the persons entitled to receive payment of such dividend or to
exercise the right to subscribe for such securities, and notice of any such
record date shall be given not less than seven days before such record date in
the manner provided by the Act. If no record date is so fixed, the record date
for the determination of the persons entitled to receive payment of any dividend
or to exercise the right to subscribe for securities of the Corporation shall be
at the close of business on the day on which the resolution relating to such
dividend or right to subscribe is passed by the board.
 
9.05   UNCLAIMED DIVIDENDS  Subject to any applicable provision of law of public
order, any dividend unclaimed after a period of five years from the date on
which the same has been declared to be payable shall be forfeited and shall
revert to the Corporation.
 
                                  SECTION TEN
 
                            MEETINGS OF SHAREHOLDERS
 
10.01 ANNUAL MEETINGS  The annual meeting of shareholders shall be held at such
time in each year and, subject to section 10.03, at such place as the board, the
Chairman of the Board, the Managing Director or the President may from time to
time determine, for the purpose of considering the financial statements and
reports required by the Act to be placed before the annual meeting, electing
directors, appointing an auditor and for the transaction of such other business
as may properly be brought before the meeting.
 
10.02 SPECIAL MEETINGS  The board, the Chairman of the Board, the Managing
Director or the President shall have power to call a special meeting of
shareholders at any time.
 
10.03 PLACE OF MEETINGS  Meetings of shareholders shall be held at the
registered office of the Corporation or elsewhere in the municipality or urban
community in which the registered office is situate or, if the board shall so
determine, at some other place in Canada or, if all the shareholders entitled to
vote at the meeting so agree, at some place outside Canada.
 
10.04 NOTICE OF MEETINGS  Notice of the time and place of each meeting of
shareholders shall be given in the manner provided in section 12.01 not less
than 21 days and nor more than 50 days before the date of the meeting, to each
director, to the auditor and to each shareholder of the Corporation whose name
appears on the list of shareholders entitled to receive notice as provided in
section 10.05. Notice of a meeting of shareholders called for any purpose other
than consideration of the financial statements and auditor's report, election of
directors and reappointment of the incumbent auditor shall state the nature of
such business in sufficient detail to permit the shareholder to form a reasoned
judgment thereon and shall state the text of any special resolution to be
submitted to the meeting. A shareholder and any other person entitled to attend
a meeting of shareholders may in any manner waive notice of or otherwise consent
to a meeting of shareholders.
 
10.5 LIST OF SHAREHOLDERS ENTITLED TO NOTICE  For every meeting of shareholders,
the Corporation shall prepare a list of shareholders entitled to receive notice
of the meeting, arranged in alphabetical order and showing the number of shares
held by each shareholder entitled to vote at the meeting. If a record date for
the meeting is fixed pursuant to section 10.06, the shareholders listed shall be
those registered at the close of business on such record date. If no record date
is fixed, the shareholders listed shall be those registered at the close of
business on the day immediately preceding the day on which notice of the meeting
is given or, where no such notice is given, the day on which the meeting is
held. The list shall be available for examination by any shareholder during
usual business hours at the registered office of the Corporation or at the place
where its central securities register is maintained and at the meeting for which
the list was prepared. Where a separate list of shareholders has not been
prepared, the names of persons appearing in the securities register at the
requisite time as the holder of one or more shares carrying the right to vote at
such meeting shall be deemed to be a list of shareholders.
 
                                        9
<PAGE>   10
 
10.06 RECORD DATE FOR NOTICE  The board may fix in advance a date, preceding the
date of any meeting of shareholders by not more than 50 days and not less than
21 days, as a record date for the determination of the shareholders entitled to
receive notice of the meeting, and notice of any such record date shall be given
not less than seven days before such record date, by newspaper advertisement in
the manner provided in the Act. If no record date is so fixed, the record date
for the determination of the shareholders entitled to receive notice of the
meeting shall be at the close of business on the day immediately preceding the
day on which the notice is given or, if no notice is given, the day on which the
meeting is held.
 
10.07 MEETINGS WITHOUT NOTICE  A meeting of shareholders may be held without
notice at any time and place permitted by the Act (i) if all the shareholders
entitled to vote there at are present in person or represented by proxy or if
those not present or represented by proxy waive notice of or otherwise consent
to such meeting being held, and (ii) if the auditors and the directors are
present or waive notice of or otherwise consent to such meeting be held; so
long, in each case, as such shareholders, auditors or directors present are not
attending for the express purpose of objecting to the transaction of any
business on the grounds that the meeting is not lawfully called. At such a
meeting any business may be transacted which the Corporation at a meeting of
shareholders may transact. If the meeting is held at a place outside Canada,
shareholders not present or represented by proxy, but who have waived notice of
or otherwise consented to such meeting, shall also be deemed to have consented
to the meeting being held at such place.
 
10.08 CHAIRMAN, SECRETARY AND SCRUTINEERS  The chairman of any meeting of
shareholders shall be the first mentioned of such of the following officers as
have been appointed and who is present at the meeting: (i) the Chairman of the
Board, (ii) the President, (iii) the Managing Director or (iv) a Vice-President
who is a shareholder. If no such officer is present within 15 minutes from the
time fixed for holding the meeting, the persons present and entitled to vote
shall choose one of their number to be chairman. If the Secretary of the
Corporation is absent, the chairman of the meeting shall appoint some person,
who need not be a shareholder, to act as secretary of the meeting. If desired,
one or more scrutineers, who need not be shareholders, may be appointed by a
resolution or by the chairman of the meeting with the consent of the meeting.
 
10.09 PERSONS ENTITLED TO BE PRESENT  The only persons entitled to be present at
a meeting of shareholders shall be those entitled to vote thereat, the directors
and auditor of the Corporation and others who, although not entitled to vote,
are entitled or required under any provision of the Act or the Articles or
by-laws to be present at the meeting. Any other person may be admitted only on
the invitation of the chairman of the meeting or with the consent of the
meeting.
 
10.10 QUORUM  A quorum for the transaction of business at any meeting of
shareholders shall be 2 persons present in person, each being a shareholder
entitled to vote thereat or a duly appointed proxyholder for an absent
shareholder so entitled, and together holding or representing by proxy more than
25% of the issued and outstanding voting shares of the Corporation entitled to
vote at the meeting. If a quorum is present at the opening of any meeting of
shareholders, the shareholders present or represented by proxy may proceed with
the business of the meeting notwithstanding that a quorum is not present
throughout the meeting. If a quorum is not present within 30 minutes of the
scheduled time opening of any meeting of shareholders, the shareholders present
or represented by proxy may adjourn the meeting to a fixed time, but may not
transact any other business; at such time and place, the shareholders present in
person or represented by proxy at such adjourned meeting.
 
10.11 RIGHT TO VOTE  Subject to the provisions of the Act as to authorized
representatives of any other body corporate or association, at any meeting of
shareholders for which the Corporation has prepared the list referred to in
section 10.05, every person who is named in such list shall be entitled to vote
the shares shown opposite his name except to the extent that, where the
Corporation has fixed a record date in respect of such meeting pursuant to
section 10.06, such person has transferred any of his shares after such record
date and the transferee, having produced properly endorsed certificates
evidencing such shares or having otherwise established that he owns such shares,
has demanded not later than two days before the meeting that his name be
included in such list. In any such case the transferee shall be entitled to vote
the transferred shares at the meeting. At any meeting of shareholders for which
the Corporation has not prepared the list referred to in section 10.05, every
person shall be entitled to vote at the meeting who at the time is entered in
the securities register as the holder of one or more shares carrying the right
to vote at such meeting.
 
10.12 PROXIES  Every shareholder entitled to vote at a meeting of shareholders
may appoint a proxyholder, or one or more alternate proxyholders, who need not
be shareholders, to attend and act at the meeting in the manner and to
                                       10
<PAGE>   11
 
the extent authorized and with the authority conferred by the proxy. A proxy
shall be in writing executed by the shareholder or his attorney and shall
conform with the requirements of the Act.
 
10.13 TIME FOR DEPOSIT OF PROXIES  The board may specify in the notice calling a
meeting of shareholders a time, preceding the time of such meeting by not more
than 48 hours exclusive of Saturdays and holidays, before which time proxies to
be used at such meeting must be deposited. A proxy shall be acted upon only if,
prior to the time so specified, it shall have been deposited with the
Corporation or an agent thereof specified in such notice or, if no such time is
specified in such notice, unless it has been received by the Secretary of the
Corporation or by the chairman of the meeting or any adjournment thereof prior
to the time of voting.
 
10.14 JOINT SHAREHOLDERS  If two or more persons hold shares jointly, any one of
them present in person or represented by proxy at a meeting of shareholders may,
in the absence of the other or others, vote the shares; but if two or more of
those persons are present in person or represented by proxy and vote, they shall
vote as one the shares jointly held by them.
 
10.15 VOTES TO GOVERN  At any meeting of shareholders every question shall,
unless otherwise required by the Articles or by-laws or by law, be determined by
a majority of the votes cast on the question. In case of an equality of votes
either upon a show of hands or upon a poll, the chairman of the meeting shall be
entitled to a second or casting vote.
 
10.16 SHOW OF HANDS  Subject to the provisions of the Act, any question at a
meeting of shareholders shall be decided by a show of hands unless a ballot
thereon is required or demanded as hereinafter provided. Upon a show of hands
every person who is present and entitled to vote shall have one vote. Whenever a
vote by show of hands shall have been taken upon a question, unless a ballot
thereon is so required or demanded, a declaration by the chairman of the meeting
that the vote upon the question has been carried or carried by a particular
majority or not carried and an entry to that effect in the minutes of the
meeting shall be prima facie evidence of the fact without proof of the number or
proportion of the votes recorded in favor of or against any resolution or other
proceeding in respect of the said question, and the result of the vote so taken
shall be the decision of the shareholders upon the said question.
 
10.17 BALLOTS  On any question proposed for consideration at a meeting of
shareholders, and whether or not a show of hands has been taken thereon, any
shareholder or proxyholder entitled to vote at the meeting may require or demand
a ballot. A ballot so required or demanded shall be taken in such manner as the
chairman shall direct. A requirement or demand for a ballot may be withdrawn at
any time prior to the taking of the ballot. If a ballot is taken, each person
present shall be entitled, in respect of the shares which he is entitled to vote
at the meeting upon the question, to that number of votes provided by the Act or
the Articles, and the result of the ballot so taken shall be the decision of the
shareholders upon the said question.
 
10.18 ADJOURNMENT  If a meeting of shareholders is adjourned for less than 30
days, it shall not be necessary to give notice of the adjourned meeting, other
than by announcement at the earliest meeting that is adjourned. If a meeting of
shareholders is adjourned by one or more adjournment for an aggregate of 30 days
or more, notice of the adjourned meeting shall be given as for an original
meeting.
 
10.19   RESOLUTION IN WRITING  A resolution in writing signed by all the
shareholders entitled to vote on that resolution at a meeting of shareholders is
as valid as if it had been passed at a meeting of the shareholders unless a
written statement with respect to the subject matter of the resolution is
submitted by a director or the auditor in accordance with the provisions of the
Act.
 
                                 SECTION ELEVEN
 
                           DIVISIONS AND DEPARTMENTS
 
11.01 CREATION AND CONSOLIDATION OF DIVISIONS  The board may cause the business
and operations of the Corporation or any part thereof to be divided or to be
segregated into one or more divisions upon such basis, including without
limitation, character or type of operation, geographical territory, or service
rendered, as the board may consider appropriate in each case. The board may also
cause the business and operations of any such division to be further divided
into sub-units and the business and operations of any such divisions or
sub-units to be consolidated upon such basis as the board may consider
appropriate in each case.
 
11.02   NAME OF DIVISION  Any division or its sub-units may be designated by
such name as the board may from time to time determine and may transact business
under such name, provided that the Corporation shall set out its
 
                                       11
<PAGE>   12
 
name in legible character in all contracts, invoices, negotiable instruments and
orders for goods or services issued or made by or on behalf of the Corporation.
 
11.03   OFFICERS OF DIVISIONS  From time to time the board or, if authorized by
the board, the Chief Executive Officer may appoint one or more officers for any
division, prescribe their powers and duties and settle their terms of employment
and remuneration. The board or, if authorized by the board, the Chief Executive
Officer may remove at its or his pleasure any officer so appointed, without
prejudice to such officer's rights under any employment contract. Officers of
divisions or their sub-units shall not, as such, be officers of the Corporation.
 
                                 SECTION TWELVE
 
                                    NOTICES
 
12.01 METHOD OF GIVING NOTICES  Any notice (which term includes any
communication or document) to be given (which term includes sent, delivered or
served) pursuant to the provisions of the Act, the regulations thereunder, the
Articles, the by-laws or otherwise to a shareholder, director, officer, auditor
or member of a committee of the board shall be sufficiently given if delivered
personally to the person to whom it is to be given or if delivered to his
recorded address or if mailed to him at his recorded address by prepaid ordinary
or air mail or if sent to him at his recorded address by any means of prepaid
transmitted or recorded communication. A notice so delivered shall be deemed to
have been given when it is delivered personally or to the recorded address as
aforesaid; a notice so mailed shall be deemed to have been given when deposited
in a post office or public letter box; and a notice so sent by any means of
transmitted or recorded communication shall be deemed to have been given when
dispatched or delivered to the appropriate communication company or agency or
its representative for dispatch. The secretary may change or cause to be changed
the recorded address of any shareholder, director, officer, auditor or member of
a committee of the board in accordance with any information believed by him to
be reliable.
 
12.02 NOTICE TO JOINT SHAREHOLDERS  If two or more persons are registered as
joint holders of any share, any notice shall be addressed to all of such joint
holders but notice to one of such persons shall be sufficient notice to all of
them.
 
12.03 COMPUTATION OF TIME  In computing the date when notice must be given under
any provision requiring a specified number of days' notice of any meeting or
other event, the date of giving the notice shall be excluded and the date of the
meeting or other event shall be included.
 
12.04 UNDELIVERED NOTICES  If any notice given to a shareholder pursuant to
section 12.01 is returned on three consecutive occasions because he cannot be
found, the Corporation shall not be required to give any further notices to such
shareholder until he informs the Corporation in writing of his new address.
 
12.05 OMISSIONS AND ERRORS  The accidental omission to give any notice to any
shareholder, director, officer, auditor or member of a committee of the board or
the non-receipt of any notice by any such person or any error in any notice not
affecting the substance thereof shall not invalidate any action taken at any
meeting held pursuant to such notice or otherwise founded thereon.
 
12.06 PERSONS ENTITLED BY DEATH OR OPERATION OF LAW  Every person who, by
operation of law, transfer, death of a shareholder or any other means
whatsoever, shall become entitled to any share, shall be bound by every notice
in respect of such share which shall have been duly given to the shareholder
from whom he derives his title to such share, prior to his name and address
being entered on the securities register (whether such notice was given before
or after the happening of the event upon which he became so entitled) and prior
to his furnishing to the Corporation the proof of authority or evidence of his
entitlement prescribed by the Act.
 
12.07 WAIVER OF NOTICE  Any shareholder (or his duly appointed proxyholder),
director, officer, auditor or member of a committee of the board may at any time
waive any notice, or waive or abridge the time for any notice, required to be
given to him under any provision of the Act, the regulations thereunder, the
Articles, the by-laws or otherwise and such waiver or abridgement, whether given
before or after the meeting or other event of which notice is required to be
given, shall cure any default in the giving or in the time of such notice, as
the case may be. Any such waiver or abridgement shall be in writing except a
waiver of notice of a meeting of shareholders or of the board or of a committee
of the board which may be given in any manner.
                            ------------------------
 
                                       12
<PAGE>   13
 
     The foregoing resolution and By-Law No. 1986-1 are hereby consented to and
adopted by the signature of the sole Director of Repap Enterprises Corporation
Inc., pursuant to Section 112(l) of the Canada Business Corporations Act.
 
ADOPTED this 22nd day of September, 1986.
 
                                George S. Petty
 
                       RESOLUTION OF THE SOLE SHAREHOLDER
 
     The foregoing resolution and the foregoing By-Law No. 1986-1 of Repap
Enterprises Corporation Inc. (the "Corporation"), approved by the sole director
of the Corporation are hereby approved and ratified by the sole shareholder of
the Corporation pursuant to Section 136(l) of the Canada Business Corporations
Act.
 
ADOPTED this 22nd day of September, 1986.
 
REPAP INTERNATIONAL INC.
 
                                       13
<PAGE>   14
 
                       REPAP ENTERPRISES CORPORATION INC.
 
                               BY-LAW NO. 1986-2
 
     A By-law respecting the borrowing of money, the issuing of securities and
the securing of liabilities.
 
     BE IT ENACTED as a by-law of the Corporation as follows:
 
1.     THAT the Directors of the Company may from time to time:
 
      (a)   borrow money upon the credit of the Company by obtaining loans or
           advances or by way of overdraft or otherwise;
 
      (b)   issue, sell or pledge securities of the Company including bonds,
           debentures, debenture stock, for such sums on such terms and at such
           prices as they may deem expedient;
 
      (c)   assign, transfer, convey, hypothecate, mortgage, pledge, charge or
           give security in any manner upon all or any of the real or personal,
           moveable or immoveable property, rights, powers, choses in action, or
           other assets, present or future, of the Company to secure any such
           securities or other securities of the Company or any money borrowed
           or to be borrowed or any obligations or liabilities as aforesaid or
           otherwise of the Company heretofore, now or hereafter made or
           incurred directly or indirectly or otherwise; and
 
      (d)   without in any way limiting the powers herein conferred upon the
           Directors, give security or promises to give security, agreements,
           documents and instruments in any manner or form under the Bank Act or
           otherwise to secure any money borrowed or to be borrowed or any
           obligations or liabilities as aforesaid or otherwise of the Company
           heretofore, now or hereafter made or incurred directly or indirectly
           or otherwise.
 
2.     THAT any or all of the foregoing powers may from time to time be
      delegated by the Directors to any one or more of the directors or officers
      of the Company.
 
3.     THAT this By-law shall remain in force and be binding upon the Company as
      regards any person acting on the faith thereof until such person has
      received written notification from the company that this By-law has been
      repealed or replaced.
 
4.     The Customer expressly requires that this document and all documents
      accessory thereto be drawn up in English and the Bank, because of the
      Customer's requirement and by making such documents available to the
      Customer in the English language, expresses the same requirement.
 
     The foregoing By-Law no. 1986-2 was passed by a resolution of the
directors, at a meeting held on October 14, 1986 and confirmed by the
shareholders at a meeting held on May 28, 1987.
 
REPAP Enterprises Corporation Inc.
 
BY-LAW no. 1986-2
 
                     CORPORATION DES ENTERPRISES REPAP INC.
                       REPAP ENTERPRISES CORPORATION INC.
 
     WHEREAS By-Law No. 1986-1 of Repap Enterprises Corporation Inc. (the
"Corporation") is a by-law relating to the transaction of the business and
affairs of the Corporation and is to the date hereof in full force and effect
and unamended (the "General By-Law");
 
     WHEREAS Section Six of the General By-Law, entitled "Officers" deals
generally with the appointment, powers and duties of the officers of the
Corporation;
 
     WHEREAS the board of directors of the Corporation wish to create the office
of "Vice-Chairman of the Board" and that no such office is presently provided
for at Section Six of the General By-Law;
 
     WHEREAS it is in the interest of the Corporation to amend Section Six of
the General By-Law in order to create the office of Vice-Chairman of the Board
and to proceed with certain other consequential amendments;
 
     and
                                       14
<PAGE>   15
 
     WHEREAS it is in the interest of the Corporation for the General By-Law to
be amended to provide for the restatement of by-laws from time to time.
 
RESOLVED:
 
     THAT By-Law No. 1987-1 amending By-Law 1986-1 relating to the transaction
of the business and affairs of Repap Fnterprises Corporation Inc. ("By-Law No.
1987-1") be and it is hereby enacted as follows;
 
                               BY-LAW NO. 1987-1
 
A By-Law amending By-Law No. 1986-1 relating to the business and affairs of
Repap Enterprises Corporation Inc.
 
                                  SECTION ONE
 
INTERPRETATION
 
1.01   DEFINITIONS  in this By-Law No. 1987-1 of the Corporation, unless the
context otherwise requires, terms and expressions used herein shall have the
same meanings ascribed thereto in Section One of By-Laws No. 1986-1 relating to
the business and affairs of Repap Enterprises Corporation Inc. ("By-Law No.
1986-1)
 
                                  SECTION TWO
 
AMENDMENT OF BY-LAW NO. 1986-1
 
2.01   OFFICE OF VICE-CHAIRMAN OF THE BOARD  Section Six of By-Law No. 1986-1 is
amended by inserting immediately after the existing subsection 6.02 thereof the
following:
 
      "6.03 VICE-CHAIRMAN OF THE BOARD  The board may from time to time appoint
      a Vice-Chairman of the Board who shall be a director. If appointed, the
      board may assign to him any of the powers and duties that are by any
      provisions of this by-law assigned to the managing director or to the
      president, and he shall, subject to the provisions of the Act, have such
      other powers and duties as the board may specify. During the absence or
      disability of the Vice-Chairman of the Board, his duties shall be
      performed and his powers exercised by the managing director, if any, or by
      the president or by any person designated at that time by the board."
 
2.02   CONSEQUENTIAL AMENDMENTS  (a) Subsection 6.01 of By-Law NO. 1986-1 is
amended by inserting immediately after the word "appoint" in the first sentence
thereof by the following: "a Chairman of the Board, a Vice-Chairman of the
Board"; (b) subsection 6.02 of By-Law No. 1986-1 is amended by deleting the word
"also" in the first sentence thereof; and (c) subsection 6.02 of By-Law No.
1986-1 is amended by deleting the last sentence thereof and by Substituting
therefor the following: "During the absence or disability of the Chairman of the
Board, his duties shall be performed and his powers exercised by the
Vice-Chairman of the Board."
 
2.03   ADDITIONAL CONSEQUENTIAL AMENDMENTS  Section Six of ByLaw No. 1986-1 is
amended by substituting:
 
      (a)   "6.02 and 6.04" at subsection 6.01 thereof by "6.02, 6.03 and 6.05";
 
      (b)   "6.03" at subsection 6.03 thereof by "6.04";
 
      (c)   "6.04" at subsection 6.03 thereof by "6.05";
 
      (d)   "6.04" at subsection 6.04 thereof by "6.05";
 
      (e)   "6.05" at subsection 6.05 thereof by "6.06";
 
      (f)    "6.06" at subsection 6.06 thereof by "6.07";
 
      (g)   "6.07" at subsection 6.07 thereof by "6.08";
 
      (h)   "6.08" at subsection 6.08 thereof by "6.09";
 
      (i)    "6.09" at subsection 6.09 thereof by "6.10";
 
      (j)    "6.1 0" at subsection 6.10 thereof by "6.11";
 
      (k)   "6.1 1 "at subsection 6.11 thereof by "6.12";
 
      (l)    "6.1 2" at subsection 6.12 thereof by "6.13";
 
                                       15
<PAGE>   16
 
      (m)  "6.1 3" at subsection 6.13 thereof by "6.14";
 
      (n)   "6.1 4" at subsection 6.14 thereof by "6.15";
 
      (o)   "6.1 5" at subsection 6.15 thereof by "6.16".
 
                                 SECTION THREE
 
RESTATEMENT OF BY-LAWS
 
13.01 RESTATEMENT  By-Law No. 1986-1 is amended by inserting immediately after
the existing Section Twelve thereof the following:
 
                                SECTION THIRTEEN
 
RESTATEMENT OF BY-LAWS
 
13.02 RESTATEMENT OF BY-LAWS  The Secretary of the Corporation may restate
by-laws of the Corporation in order to reflect amendments thereto which may from
time to time be made, and any such restatement shall, upon compliance with
subsection 13.02 hereof, constitute the by-law of the Corporation to which it
relates.
 
13.02 MANNER OF RESTATEMENT  The restatement of by-laws of the Corporation shall
be made in the following manner by the Secretary of the Corporation:
 
      (a)   there shall be inserted at the end of any subsection of restated
           by-laws which have at any time been amended, a statement in respect
           of such amendment in substantially the following form: "(as amended
           by By-Law No. [number of by-law]";
 
      (b)   the Secretary of the Corporation shall sign a certificate at the end
           of any restated by-laws in substantially the following form: "The
           restated by-laws set out above correctly set out, without substantive
           change, the corresponding provisions of By-Law No. [number of
           by-law], as amended by By-Law [number of by-law]"; and
 
      (c)   a copy of any restated by-laws, as signed by the Secretary of the
           Corporation, shall be kept in the books of the Corporation."
 
13.03 CONSEQUENTIAL AMENDMENT  By-Law No. 1986-1 is amended by deleting the
words "EFFECTIVE DATE" under the heading "CONTENTS" at the beginning thereof and
by substituting thereof the following: RESTATEMENT OF BY-LAWS".
 
                                  SECTION FOUR
 
EFFECTIVE DATE AND CONFIRMATION
 
4.01   EFFECTIVE DATE  This By-Law No. 1987-1 is effective from the date of its
adoption by the board, subject to its confirmation as described in subsection
4.02 hereof.
 
4.02   CONFIRMATION  In accordance with and subject to the provisions of section
98 of the Act, By-Law No. 1987-1 shall be in effect until it is confirmed,
continued as amended or rejected by the shareholders of the Corporation at the
next general meeting thereof and if continued or confirmed as amended thereat,
shall continue in the form in which it was so confirmed.
 
     The foregoing By-Law No. 1987-1 was passed by a resolution of the
directors, at a meeting held on December 21, 1987 and confirmed by the
shareholders at a meeting held on May 11, 1988.
 
<TABLE>
<S>                                               <C>
George S. Petty                                   Terry W. McBride
Chairman and Chief Executive                      Vice President and
Officer                                           General Counsel, Secretary
</TABLE>
 
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