<PAGE>   1
 
                                  EXHIBIT 10.7
 
                           THE REPAP ENTERPRISES INC.
                      HEAD OFFICE REGISTERED PENSION PLAN
                             AS AT JANUARY 1, 1996
 
                                         Certified a True Copy
August 1996
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                               TABLE OF CONTENTS
 
<TABLE>
       <S>              <C>                                                           <C>
                                                                                      Page
       SECTION 1        DEFINITIONS.................................................     1
       SECTION 2        ELIGIBILITY AND MEMBERSHIP..................................     6
                        2.1    Eligibility and Membership...........................     6
                        2.2    Enrollment Documents.................................     6
                        2.3    Participation........................................     7
                        2.4    Information..........................................     7
       SECTION 3        CONTRIBUTIONS...............................................     8
                        3.1    Employees' Contributions.............................     8
                        3.2    Employer Contributions...............................     8
                        3.3    Remittance of Contributions..........................     8
                        3.4    Expenses.............................................     8
                        3.5    Surplus Utilization..................................     8
                        3.6    Return of Contributions..............................     9
       SECTION 4        AMOUNT OF PENSION...........................................    10
                        4.1    Normal Pension.......................................    10
                        4.2    Early Retirement.....................................    10
                        4.3    Postponed Retirement.................................    10
                        4.4    Additional Amounts...................................    11
                        4.5    Maximum Pension......................................    11
                        4.6    Reduction of Benefits................................    12
       SECTION 5        FORMS OF PENSION PAYMENT....................................    13
                        5.1    Normal Form for Member without a Spouse                  13
                        5.2    Normal Form for Member with a Spouse.................    13
                        5.3    Level Income Option..................................    14
                        5.4    Rules for Level Income Option Election...............    14
                        5.5    Other Optional Forms                                     15
       SECTION 6        TERMINATION OF SERVICE......................................    16
                        6.1    Vesting..............................................    16
                        6.2    Immediate Pension....................................    16
                        6.3    Portability..........................................    16
                        6.4    Time Limits..........................................    17
                        6.5    Small Value..........................................    17
       SECTION 7        DEATH BENEFITS..............................................    18
                        7.1    Death in Service before Normal Retirement Date.......    18
                        7.2    Minimum Value........................................    18
                        7.3    Death in Service after Normal Retirement Date........    19
                        7.4    Death after Retirement...............................    19
                        7.5    Lump Sum Payment.....................................    19
                        7.6    Method of Payment....................................    20
                        7.7    Portability..........................................    20
       SECTION 8        DISABILITY..................................................    21
                        8.1    Disability...........................................    21
       SECTION 9        MANAGEMENT OF FUNDS.........................................    22
                        9.1    The Fund.............................................    22
                        9.2    Purchase of Annuities................................    22
</TABLE>
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<TABLE>
       <S>              <C>                                                           <C>
       SECTION 10       PENSION COMMITTEE...........................................    23
                        10.1   Pension Committee....................................    23
                        10.2   Term of Office.......................................    24
                        10.3   Expenses of Pension Committee........................    24
                        10.4   Annual Meeting.......................................    24
                        10.5   Conflict of Interest.................................    25
                        10.6   Powers and Duties....................................    25
                        10.7   Delegation...........................................    26
                        10.8   Actuarial Functions..................................    27
       SECTION 11       TRANSFER PROVISIONS.........................................    28
                        11.1   Transfers to the Service.............................    28
                        11.2   Transfers from the Service...........................    28
                        11.3   Transfer of Assets to this Plan......................    28
       SECTION 12       AMENDMENT OR DISCONTINUANCE OF THE PLAN.....................    29
                        12.1   Right to Amend or Discontinue the Plan...............    29
                        12.2   Total or Partial Termination of the Plan.............    29
       SECTION 13       GENERAL PROVISIONS..........................................    30
                        13.1   Benefits Not Capable of Assignment or Seizure........    30
                        13.2   Assets in the Fund...................................    30
                        13.3   Small Pensions.......................................    30
                        13.4   Marriage Breakdown...................................    30
                        13.5   Pensioner Becomes an Employee........................    31
                        13.6   Surplus Ownership....................................    31
                        13.7   Construed and Interpreted............................    31
</TABLE>
<PAGE>   4
 
                                   SECTION 1
 
                                  DEFINITIONS
 
     The following words and phrases as used herein shall, for the purposes of
this Plan and any subsequent amendment thereof, have the following meanings,
unless a different meaning is plainly indicated by the context:
 
1.1    "ACTUARY" means a Fellow of the Canadian Institute of Actuaries,
appointed by the Committee for the purpose of performing such duties as may be
requested by the Committee.
 
1.2    "BENEFICIARY" means such person or persons as the Member shall have
designated in writing to receive a lump sum payment under Section 7 where the
Member is not survived by his Spouse, or his Spouse has waived her entitlement
in accordance with Section 5.2. Such designation may be changed, subject to any
applicable laws governing the designation of beneficiaries. If the Member has
not designated any person to receive the benefits aforesaid, or the person
designated has died, such benefits shall be paid to his estate.
 
1.3    "BEST AVERAGE EARNINGS" means one-third of the total of the best 36
consecutive months of Earnings. If a Member becomes entitled to a pension under
the Plan after less than 36 months of Service, his Best Average Earnings shall
be 12 times his average basic monthly Earnings over the entire period of his
Service.
 
1.4    "BOARD OF DIRECTORS" means the Board of Directors of the Company.
 
1.5    "COMMITTEE" means the Pension Committee appointed to administer the Plan
as provided in Section 10.
 
1.6    "COMPANY" means Repap Enterprises Inc. and any company which is a
predecessor or which is a successor to Repap Enterprises Inc. and which by
consolidation, merger, amalgamation, reorganization, or otherwise assumes charge
of all or substantially all of the business and assets of Repap Enterprises Inc.
The address of the Company is 1250 Rene-Levesque Blvd. West, Suite 3800,
Montreal, Quebec H3B 4W8.
 
1.7    "EARLY RETIREMENT DATE" means the first day of any month within 10 years
prior to Normal Retirement Date.
 
1.8    "EARNINGS" means the basic salary of an Employee, excluding overtime,
bonuses or any other emoluments.
 
1.9    "EFFECTIVE DATE" means January 1, 1996.
 
1.10   "EMPLOYEE" means an employee normally residing in Canada of an Employer
who is not a member of any other registered pension plan of the Company or an
affiliate of the Company.
 
1.11   "EMPLOYER" means Repap Enterprises Inc., Repap International (1987)
Inc.and Alcell Technologies Inc. All these employers agree that the Plan not be
considered a multi-employer pension plan.
 
1.12   "EQUIVALENT ACTUARIAL VALUE" means having equivalent value when computed
on the basis of interest and mortality assumptions recommended by the Actuary
and adopted by the Committee.
 
1.13   "EXECUTIVE" means an Employee who is designated as an Executive by the
Employer.
 
1.14   "FINAL AVERAGE YMPE" means the annualized average of the YMPE in the
calendar year of retirement, termination from the Plan or death, as applicable,
and in the preceding two calendar years.
 
1.15   "FUND" means the fund established in order to provide for the payment of
the benefits described in this Plan.
 
1.16   "INCOME TAX ACT" means the Income Tax Act Statutes of Canada and its
Regulations, as amended from time to time.
 
1.17   "MEMBER" means an Employee, retired Employee or former Employee who has
been included in this Plan in accordance with its provisions, and who continues
to have rights or contingent rights to benefits payable hereunder.
 
1.18   "NORMAL RETIREMENT DATE" means the first day of the month following
attainment of age 65.
 
1.19   "PENSIONABLE SERVICE" means Service while participating as an active
Member in this Plan and Service prior to the Effective Date but excluding:
 
      (1)   Service before January 1, 1976;
 
      (2)   Service after December 31, 1989 but before the Effective Date which
           the Employee chooses not to include;
 
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      (3)   Service after December 31, 1989 but before the date the Executive
           becomes a Member of this Plan which the Executive chooses not to
           include;
 
      (4)   Service after the Normal Retirement Date; and
 
      (5)   Service prior to the Effective Date for an Employee who is a
           connected person as defined in the regulations of the Income Tax Act.
 
1.20   "PLAN" means this Repap Enterprises Inc. Head Office Registered Pension
Plan, as amended from time to time.
 
1.21   "PLAN YEAR" means the period from and including the Effective Date to and
including December 31, 1996, and thereafter the calendar year.
 
1.22   "POSTPONED RETIREMENT DATE" means the first day of the month next
following the date subsequent to the Member's Normal Retirement Date on which
the Member retires, but in no event shall his Postponed Retirement Date be later
than the end of the Plan Year in which he attains his 71st birthday, even though
he continues to be employed by the Employer.
 
1.23   "SERVICE" means employment of an Employee by the Employer (including
successive employment, if any, by two or more Employers), as determined by the
Employer of the Employee and includes:
 
      (1)   service with a predecessor of the Employer;
 
      (2)   periods of authorized absence without pay up to 2 years;
 
      (3)   periods of authorized absence with pay.
 
      Service shall include:
 
      (4)   subject to Section 8, any period up to age 65 including periods
           while a Member (who was accruing benefits under the Plan upon his
           disablement) is entitled to benefits under the long term disability
           insurance plan of the Employer;
 
      (5)   any period while a Member is on maternity or parental leave;
 
      (6)   any period while a Member is entitled to receive benefits from the
           Commission de sante et securite au travail (CSST) or similar Workers'
           Compensation plans, subject to a maximum service accrual on and after
           January 1, 1992 as permitted by the Income Tax Act.
 
      Service is severed by resignation or voluntary cessation of employment by
      the Employee, discharge by the Employer, failure to return to work,
      cessation of the employment relationship which does not coincide with
      reemployment by another Employer, death or retirement.
 
1.24   "SIMILAR ACT" means legislation in force in a province of Canada, other
than Quebec, which is substantially similar to the Supplemental Pension Plans
Act.
 
1.25   "SPOUSE" means the person of the opposite sex who, at the date the Member
commences to receive his pension or as of the day preceding the Member's death,
whichever occurs first:
 
      (1)   is married to the Member; or
 
      (2)   has been living in a conjugal relationship with an unmarried Member
           for a period of not less than 3 years or for a period of not less
           than one year if --
 
           (1)  at least one child is born, or to be born, of their union;
 
           (2)  they have adopted, jointly, at least one child while living
               together in a conjugal relationship; or
 
           (3)  one of them has adopted at least one child who is the child of
               the other, while living together in a conjugal relationship.
 
1.26   "SUPPLEMENTAL PENSION PLANS ACT" means the Supplemental Pension Plans Act
of Quebec and Regulations thereunder, as amended from time to time.
 
1.27   "VALUE" means the value calculated by the Actuary in the manner
prescribed under the Supplemental Pension Plans Act or a Similar Act, if
applicable, as of a fixed date of a pension, a deferred pension or an ancillary
pension which shall not be less than the value determined in accordance with the
"Recommendations of the Minimum Transfer Values of Pensions" issued by the
Canadian Institute of Actuaries.
 
                                        2
<PAGE>   6
 
1.28   "YEAR'S MAXIMUM PENSIONABLE EARNINGS" ("YMPE") means the Year's Maximum
Pensionable Earnings for the year as defined in the provisions of the Canada
Pension Plan or the Quebec Pension Plan, whichever may be applicable in any
particular instance.
 
      The masculine gender shall include the feminine and the singular number
shall include the plural unless the context clearly indicates otherwise.
 
      The descriptive headings of the several Sections and paragraphs of this
Plan are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions of the Plan.
 
                                   SECTION 2
 
                           ELIGIBILITY AND MEMBERSHIP
 
2.1    ELIGIBILITY AND MEMBERSHIP
 
      (1)   Each Employee other than an Executive in the Service on October 1,
           1996 shall automatically become a Member of this Plan as of the later
           of the Effective Date or the first of the month following their date
           of employment.
 
      (2)   Each other Employee other than an Executive shall become a Member of
           this Plan as a condition of employment on the first day of the month
           following the date on which he has completed 3 months of employment
           or, if earlier, the date on which he has earned at least 35% of the
           YMPE for the year in which he was employed.
 
      (3)   Each Executive in the Service on January 1, 1996 may become a Member
           of this Plan on the first day of the month following his filing with
           the Committee of the completed enrollment documents. In any case, he
           shall become a Member of this Plan on the first day of the month
           following or coinciding with his attainment of age 60. If he has
           already reached age 60 on July 1, 1996, he shall become a Member of
           this Plan on the first day of the month following or coinciding with
           his next birthday.
 
      (4)   Each other Executive shall become a Member of this Plan as a
           condition of employment on the first day of the month following the
           date on which he has completed 3 months of employment or, if earlier,
           the date on which he has earned at least 35% of the YMPE for the year
           in which he was employed.
 
2.2    ENROLLMENT DOCUMENTS
 
      An Employee shall complete and file with the Committee the necessary
enrollment documents as determined by the Committee, and shall furnish such
further information as shall be required, including proof of age of the Employee
and, where applicable, of his Spouse and of any contingent annuitant designated
by the Employee.
 
2.3    PARTICIPATION
 
      While remaining in the employ of an Employer, a Member cannot cease to
participate in the Plan. Plan membership ceases at the Member's death or
termination of employment if his benefits under this Plan are totally settled
through a lump sum transfer or a transfer described in Section 6.3.
 
2.4    INFORMATION
 
      The Committee shall provide the following information to each Employer,
Member, Spouse or Beneficiary, as the case may be, in accordance with the
Supplemental Pension Plans Act:
 
      (1)   a written explanation of the terms and conditions of the Plan and
           amendments thereto applicable to the Member, together with a brief
           description of the Member's rights and obligations under the Plan and
           the Supplemental Pension Plans Act, within 90 days of the date the
           Employee becomes eligible for membership or the registration date of
           the amendment;
 
      (2)   a written statement in the prescribed form annually within 6 months
           after the end of the Plan Year or within 60 days after termination of
           membership, retirement or death.
 
      Upon receipt of a written request from the Member, Spouse, Beneficiary or
authorized agent of such person, the Committee shall make available within 30
days all documents and information in respect of the Plan and the
 
                                        3
<PAGE>   7
 
Fund as is prescribed under the Supplemental Pension Plans Act for examination
at a location approved under the Supplemental Pension Plans Act.
 
      The Committee shall conform with the prescribed periods for providing such
information as specified in a Similar Act, if applicable, for each Member
employed outside Quebec.
 
                                   SECTION 3
 
                                 CONTRIBUTIONS
 
3.1    EMPLOYEES' CONTRIBUTIONS
 
      The Employees are not required nor permitted to contribute to the Plan.
 
3.2    EMPLOYER CONTRIBUTIONS
 
      While this Plan remains in force, the Employer shall contribute to the
Fund in each Plan Year in monthly instalments in accordance with the provisions
of the Supplemental Pension Plans Act, amounts which in the aggregate are
certified by the Actuary to be necessary to provide for the pensions and other
benefits accruing to the Members for such year under Section 4.1 and shall also
contribute in each Plan Year, by equal monthly instalments throughout the Plan
Year, such additional amounts as are certified by the Actuary to be sufficient
to fund over a period of years any unfunded liabilities created by the terms of
this Plan or amendments thereto, or any solvency deficiencies revealed by
actuarial valuation. The period of years over which such additional amounts are
contributed shall not be longer than the time allowed under the provisions of
any applicable federal or provincial legislation or regulation, including
specifically the Supplemental Pension Plans Act.
 
3.3    REMITTANCE OF CONTRIBUTIONS
 
      Employer contributions shall be paid into the Fund in equal monthly
payments on or before the last day of the month following the month for which a
payment is made. The Employer shall, on remitting the contributions, inform the
Committee of the reason for any significant variation in the contributions
payable into the Fund.
 
3.4    EXPENSES
 
      All expenses for the operation and administration of this Plan shall be
paid out of the Fund unless paid by the Employer.
 
3.5    SURPLUS UTILIZATION
 
      If the assets of the Fund are certified by the Actuary at any time to be
more than sufficient to fully cover the actuarial liability for all benefits
accrued to the Members, any excess assets may be applied to cover part or all of
the Employer's contributions in any Plan Year.
 
3.6    RETURN OF CONTRIBUTIONS
 
      Amounts contributed by the Employer may be refunded at any time to the
Employer, where such action is required to avoid the revocation of registration
under the Income Tax Act, subject to all necessary regulatory approvals.
 
                                   SECTION 4
 
                               AMOUNT OF PENSION
 
4.1    NORMAL PENSION
 
      Each Member shall receive upon retirement on his Normal Retirement Date an
annual pension equal to 1.25% of his Best Average Earnings up to his Final
Average YMPE plus 2% of his Best Average Earnings in excess of his Final Average
YMPE multiplied by his years of Pensionable Service, with a proportionate
adjustment for a fraction of a year in completed months.
 
      In no event will the benefit accrued in the Plan Year under this Section
4.1 result in an amount such as a pension adjustment (as defined in the Income
Tax Act), or any other adjustment determined under the Income
 
                                        4
<PAGE>   8
 
Tax Act, being inappropriate having regard to the provisions of the Income Tax
Act and the purposes for which the amount is determined. A benefit may not
accrue after pension payments have commenced to be paid to the Member.
 
4.2    EARLY RETIREMENT
 
      A Member may retire on an Early Retirement Date and receive, commencing on
an Early Retirement Date, an annual pension. The amount of such annual pension
shall be his annual pension calculated in accordance with Section 4.1 reduced by
 1/3 of 1% for each full month, if any, his Early Retirement Date precedes his
60th birthday.
 
4.3    POSTPONED RETIREMENT
 
      (1)   A Member, who retires on his Postponed Retirement Date, shall
           receive an annual pension which shall be the Equivalent Actuarial
           Value of the annual pension determined in accordance with Section 4.1
           and which has not commenced to be paid under subsection (b) of this
           Section 4.3; such Equivalent Actuarial Value shall be determined by
           the Actuary in the manner prescribed under the Supplemental Pension
           Plans Act.
 
      (2)   A Member who has deferred his retirement to a date subsequent to his
           Normal Retirement Date may, not more frequently than once in each
           Plan Year, by notice in writing filed with the Committee, direct that
           payment of all or part of his annual pension shall commence on a date
           specified by him in such notice, but only to the extent required to
           compensate for any reduction in Earnings from the level in effect
           immediately preceding his Normal Retirement Date.
 
4.4    ADDITIONAL AMOUNTS
 
      The Company may provide from time to time for the payment of additional
amounts of pension in excess of those set forth in the Plan, including
adjustments to normal pension which have commenced to be paid to retired Members
in recognition of changes in the cost of living, within such applicable federal
or provincial laws, regulations, rules and limits as may be established from
time to time.
 
4.5    MAXIMUM PENSION
 
      Notwithstanding anything contained in this Section 4 to the contrary:
 
      (1)   PRE-1990 SERVICE WHEN THE MEMBER WAS NOT PARTICIPATING IN A
           REGISTERED PENSION PLAN:  the aggregate annual pension payable to a
           Member, in respect of Service before January 1, 1990, under this Plan
           and any other registered pension plan of the Employer when the Member
           was not participating in a registered pension plan, on retirement,
           termination of Service or discontinuance of the Plan shall not exceed
           an annual amount equal to $1,150, or such higher amount as may be
           permitted from time to time by the Income Tax Act, multiplied by his
           years of pensionable service.
 
      (2)   POST-1989 SERVICE, AND, SERVICE PRIOR TO 1990 WHEN A MEMBER WAS
           PARTICIPATING IN A REGISTERED PENSION PLAN:  the aggregate annual
           pension payable to a Member under this Plan and any other registered
           pension plan of the Employer in respect of Service after December 31,
           1989 and in respect of Service prior to 1990 when the Member was
           participating in a registered pension plan, and payable in the year
           in which the pension commences to be paid to the Member shall be the
           lesser of:
 
           (1)  2% of the Member's highest average indexed compensation times
               the number of years of his pensionable service with the Employer;
               and
 
           (2)  $1,722, or such higher amount as may be permitted from time to
               time by the Income Tax Act, times the number of years of his
               pensionable service with the Employer.
 
      For the purpose of this Section 4.5, the highest average indexed
compensation of a Member is equal to 1/3 of the Member's total indexed
compensation for the 3 (not necessarily consecutive) 12-month periods of highest
indexed compensation. The total indexed compensation of a Member for any month
is the total compensation received by the Member from the Employer, adjusted to
reflect increases in the average wage as defined in the Income Tax Act.
 
                                        5
<PAGE>   9
 
      The percentage reduction referred to in Section 4.2 will be applied to the
Member's pension:
 
      (a)   before the application of the above maximum pension rule, if the
           Member has attained his 60th birthday; and
 
      (b)   after application of the above maximum pension rule, if the member
           has not attained his 60th birthday.
 
      Any additional annual pension resulting from an actuarial increase in
accordance with the provisions of subsection (a) of Section 4.3 shall be
excluded from the maximum pension rule.
 
      The above maximum pension rule applies to all pension benefits payable
under this Plan, including any distribution of surplus to Members, any amount
paid out to the Member's Spouse as a result of marriage breakdown, any amount
paid upon retirement and termination of employment or termination of the Plan.
 
4.6    REDUCTION OF BENEFITS
 
      The Plan may, at any time, be amended by the Company to reduce the
benefits provided under this Section 4 where such action is required to avoid
the revocation of registration of the Plan under the Income Tax Act, subject to
the prior consent of the Regie des rentes du Quebec.
 
                                   SECTION 5
 
                            FORMS OF PENSION PAYMENT
 
5.1    NORMAL FORM FOR MEMBER WITHOUT A SPOUSE
 
      Subject to Section 5.2, the normal form of pension payable under this Plan
shall be monthly income payable on the first of each month, commencing on the
Member's Normal Retirement Date, Early Retirement Date or Postponed Retirement
Date, as the case may be, and continuing thereafter during the lifetime of the
Member, in an amount equal to 1/12 of the annual pension as provided in Section
4, and subject to the provisions and conditions of the Plan.
 
5.2 NORMAL FORM FOR MEMBER WITH A SPOUSE
 
      (1)   Any Member who has a Spouse living at the time his benefits commence
           will receive a joint and survivor pension as hereinafter described. A
           Spouse may, before the date on which the Member's pension begins,
           waive her entitlement under this automatic form of pension or revoke
           such waiver, by filing with the Committee the necessary document, as
           determined by the Committee, before that date. If the Member's Spouse
           waives such entitlement and has not revoked her waiver, the Member
           will then be permitted to elect an alternative form of pension in
           accordance with the provisions of the Plan.
 
           Under the terms of this automatic provision, after the death of the
           Member, there shall be payable under this Plan to the surviving
           Spouse during the Spouse's lifetime an annual pension equal to 60% of
           such annual pension payable to the Member under this Plan.
 
      (2)   The normal form of pension payable to a Member with a Spouse shall
           be a monthly income payable on the first of each month, commencing on
           the Member's Normal Retirement Date, Early Retirement Date or
           Postponed Retirement Date, as the case may be, and continuing
           thereafter during the lifetime of the Member, in an amount equal to
           1/12 of the annual pension described in subsection (a) of this
           Section 5.2. After the death of the Member, 1/12 of the annual
           pension payable to the Member's surviving Spouse under the terms of
           subsection (a) of this Section 5.2 shall be payable in monthly
           instalments on the first of each month during the lifetime of the
           Spouse.
 
      (3)   Upon the death of a Member and his surviving Spouse, to whom a
           pension was paid or payable under (a) above, no further payments
           shall be made under this Plan.
 
5.3    LEVEL INCOME OPTION
 
      A Member, who elects to retire on an Early Retirement Date, may elect to
receive an increased normal form of pension payable until the Member qualifies
for a benefit from the federal government and/or a provincial government under
the terms of one or more comprehensive programs of old age pensions, and a
reduced normal pension thereafter; the difference between the two amounts being
not more than the total benefit payable by the
 
                                        6
<PAGE>   10
 
federal and/or the provincial governments. The amount of this difference shall
be requested by the Member and must be agreed to by the Committee. The Member
shall provide the Committee with the information required to verify the amount
of the government benefit which he should receive. In the event of the death of
a Member on or after the due date of the first pension payment to the Member the
following shall apply:
 
      (1)   in respect of a Member whose pension was payable under Section 5.1,
           no further payments are made; or
 
      (2)   in respect of a Member whose pension was payable under Section 5.2,
           there shall be payable to his surviving Spouse the monthly pension
           which would have been payable to the surviving Spouse under the terms
           of Section 5.2 if the level income option had not been elected.
 
5.4    RULES FOR LEVEL INCOME OPTION ELECTION
 
      The election of the level income option shall be subject to such rules as
the Committee may from time to time adopt for the safeguarding of the Fund and
the proper administration of the Plan, and shall be subject to the following
additional conditions:
 
      (1)   the election shall be made in writing deposited with the Committee
           prior to the due date of the first pension payment to the Member;
 
      (2)   the option shall become operative on the due date of the first
           pension payment to the Member; and
 
      (3)   the election may be revoked or changed provided that written notice
           of such revocation or change is received by the Committee prior to
           the due date of the first pension payment to the Member.
 
5.5    OTHER OPTIONAL FORMS
 
      Each Member may, subject to the waiver described in subsection 5.2(a),
elect such other optional forms of pension of Equivalent Actuarial Value that
are not contrary to the provisions of any applicable federal or provincial laws,
rules, guidelines or regulations that may be or are hereafter enacted or
promulgated. However, the initial amount of pension payable to a Member with a
living Spouse at the time his pension commences may not be higher than the
amount as provided in Section 4. Election by a Member of some other optional
form of benefit shall be subject to such conditions as may be prescribed by the
Committee.
 
      For example, a Member may elect a joint and survivor pension providing for
a reduced pension payable to the Member during his lifetime with an amount equal
to 75% or 100% of such reduced pension, as elected by the Member, continuing
after his death to his surviving Spouse or former Spouse during her lifetime.
 
                                   SECTION 6
 
                             TERMINATION OF SERVICE
 
6.1    VESTING
 
      If the Member terminates his Service or the Member's Service is terminated
for any reason other than retirement or death, he shall receive, commencing on
his Normal Retirement Date a deferred annuity in an amount equal to the benefit
accrued to him under Section 4.
 
6.2    IMMEDIATE PENSION
 
      A former Member may elect to receive an immediate annuity in lieu of a
deferred annuity to which he is entitled under this Section 6 equal to:
 
      (1)   if the Member terminates his employment prior to his Early
           Retirement Date, the Equivalent Actuarial Value of his deferred
           annuity commencing on the first day of any month after he has
           attained age 55; or
 
      (2)   if the Member terminates his employment on or after his Early
           Retirement Date his deferred annuity reduced in accordance with
           Section 4.2.
 
      The date of commencement of such immediate annuity shall not be prior to
the first day of the month following receipt by the Committee of written
application therefor.
 
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<PAGE>   11
 
6.3    PORTABILITY
 
      (1)   Subject to the provisions of the Supplemental Pension Plans Act,
           where a Member terminates his employment with the Employer before age
           55, he shall be entitled to transfer the Value of his benefits under
           Section 6.1 to:
 
           (1)  a locked-in retirement account prescribed under the Supplemental
               Pension Plans Act or, where applicable, a locked-in registered
               retirement savings plan prescribed under a Similar Act;
 
           (2)  another registered pension plan, if that plan so permits;
 
           (3)  an insurance company to purchase a deferred life annuity that
               will not commence before the earliest date on which the Member
               would have been entitled to receive payment of pension benefits
               under this Plan.
 
      (2)   The transfers set out in this Section 6.3 are subject to the
           solvency requirements set out in the Supplemental Pension Plans Act.
 
      (3)   If the Value of a Member's pension exceeds such maximum amount as
           may be prescribed under the Income Tax Act, the amount transferred in
           accordance with subsection (a) of this Section 6.3 will not exceed
           the prescribed maximum amount.
 
6.4    TIME LIMITS
 
      The Member may only make an election under Section 6.3, within one of the
following time limits:
 
      (1)   within 180 days from the date he terminated his Service;
 
      (2)   subsequently, but not later than the date referred to in (c) below,
           every 5 years, within 180 days from the date of expiry of every 5th
           year;
 
      (3)   within 180 days from the date the Member attains an age which is 10
           years before his Normal Retirement Date.
 
      A Member employed in a province other than Quebec will be subject to the
time limits prescribed in the Similar Act applicable to him.
 
6.5    SMALL VALUE
 
      The Value of any deferred annuity that a Member is entitled to transfer in
accordance with the provisions of Section 6.3 may, if the Value is less than 10%
of the YMPE for the Plan Year in which he becomes entitled thereto, be
transferred by the Committee to a prescribed plan described in Section 6.3 and
chosen by the Member or, if not, by the Committee.
 
      The Committee shall not, however, transfer any such amount if it has been
used to purchase a pension the payment of which has begun.
 
                                   SECTION 7
 
                                 DEATH BENEFITS
 
7.1    DEATH IN SERVICE BEFORE NORMAL RETIREMENT DATE
 
      If a Member dies in the Service before his Normal Retirement Date, the
following shall apply:
 
      (1)   Death before Early Retirement Date
 
           If the Member would not have been entitled to receive an immediate
           pension under the provisions of Section 4.2 had he ceased membership
           on the date of his death, his surviving Spouse or, if the Member is
           not survived by his Spouse, his Beneficiary shall receive a lump sum
           payment equal to the minimum Value described in Section 7.2.
 
                                        8
<PAGE>   12
 
      (2)   Death on or after Early Retirement Date
 
           If the Member would have been entitled to receive an immediate
           pension under the provisions of Section 4.2 had he retired on the
           date of his death:
 
           (1)  his surviving Spouse shall receive an annual pension equal to
               the greater of:
 
               -  the annual pension the Spouse would have been entitled to
                  receive under the provisions of Section 5.1 had the payment of
                  the Member's pension commenced on the day preceding the death
                  of the Member; and
 
               -  the annual pension which can be purchased with the minimum
                  Value described in Section 7.2, or
 
           (2)  if the Member is not survived by his Spouse, his Beneficiary
               shall receive a lump sum payment equal to the minimum Value
               described in Section 7.2.
 
7.2    MINIMUM VALUE
 
      The minimum Value referred to in Section 7.1 shall be equal to the Value
of:
 
      (1)   the pension which the Member would have been entitled to receive
           under Section 4.2 had he retired immediately before his death;
 
      (2)   if the Member was not entitled to receive an immediate pension had
           he retired before his death, his deferred pension to which he would
           have been entitled under Section 6.1 had he ceased to be a Member on
           the day of his death for a reason other than his death.
 
7.3    DEATH IN SERVICE AFTER NORMAL RETIREMENT DATE
 
      If a Member dies while in the Service after his Normal Retirement Date and
before his Postponed Retirement Date, he shall be deemed to have retired on the
day before the date of his death and there shall be payable to his surviving
Spouse or his Beneficiary, as the case may be, the death benefit under (a) or
(b) below:
 
      (1)   Surviving Spouse
 
           Such Member's surviving Spouse shall, unless she has waived her
           entitlement in accordance with Section 5.2, receive an annual pension
           during her lifetime the Value of which shall not be less than the
           higher of:
 
           (1)  the Value of the annual pension the Spouse would have been
               entitled to receive under Section 5.2 if payment of the postponed
               pension had commenced on the day preceding the death of the
               Member; and
 
           (2)  the minimum Value of the death benefit the Spouse would have
               been entitled to receive under subsection (a) of Section 7.2,
               taking into account that the pension is postponed.
 
      (2)   Beneficiary
 
           If the Member is not survived by his Spouse, or she waives her
           entitlement, his Beneficiary shall receive the death benefit payable
           under Section 7.4, the Value of which shall not be less than the
           Value described in subsection (a)(ii) of this Section 7.3.
 
7.4    DEATH AFTER RETIREMENT
 
      If a Member dies after his pension has commenced, the death benefit, if
payable to such Member's Spouse or Beneficiary shall be governed by the type of
normal or optional form of benefit which the Member was receiving pursuant to
Section 5.
 
7.5    LUMP SUM PAYMENT
 
      If monthly instalments of pension are to be continued, according to this
Section 7, to a deceased Member's Beneficiary, at the request of the Member
prior to his death, or following his death at the request of his Beneficiary,
the Committee may direct that the Value of all such outstanding instalments be
paid to the Beneficiary in one lump sum. If the Beneficiary is the Member's
estate, the Committee shall cause the present Value of all such outstanding
payments to be paid in one lump sum.
 
                                        9
<PAGE>   13
 
      Any lump sum amount payable after the death of a Member is paid as soon as
practicable after the Member's death.
 
7.6    METHOD OF PAYMENT
 
      Any pension payable under this Section 7 shall be a monthly income payable
on the first day of each month commencing on the first of the month next
following the Member's death or, where applicable, his Spouse's death, and
continuing in an amount equal to 1/12 of the annual pension payable in
accordance with the provisions of this Section 7. In the case where a Member
elects an optional spousal pension, the last monthly instalment shall be due on
the first day of the month in which the surviving Spouse dies.
 
7.7    PORTABILITY
 
      If a Member dies in the Service before his Normal Retirement Date, his
surviving Spouse may transfer the Value of any death benefits to which he is
entitled to a prescribed plan described in Section 6.3, subject to the
prescribed time limits set out in Section 6.4 on the basis that the Spouse makes
the election and that the time limit commences on the Member's date of death.
 
                                   SECTION 8
 
                                   DISABILITY
 
8.1    DISABILITY
 
      A Member who is disabled, as defined hereunder, and eligible to receive
benefits under the Employer's long term disability insurance plan shall, for all
purposes of the Plan, continue to be considered a Member. Any such period of
disability, during which he is eligible to receive such benefits, up to age 65,
shall be included as Service for purposes of the Plan and his annual pension to
be credited during such period shall be determined under Section 4 on the
assumption that his Earnings in effect immediately prior to his becoming
disabled continue unchanged. If the Member shall recover, or shall be deemed to
have recovered, from his disability, and if he is not thereupon reinstated in
employment as an Employee, he shall be considered as having terminated
employment at that time and shall be entitled to the benefits provided under
Section 6.
 
      For the purpose of this Section 8.1, disability means:
 
      (1)   a Member suffering from a physical or mental impairment so as to
           prevent the performance of employment duties in which the Member was
           engaged before the impairment occurred;
 
      (2)   which is certified, in writing, by a medical doctor licensed in
           Canada or where the Member resides; and
 
      (3)   in respect of which the Member is eligible to receive benefits under
           the Employer's long term disability program.
 
                                   SECTION 9
 
                              MANAGEMENT OF FUNDS
 
9.1    THE FUND
 
      The Committee shall determine the method of managing the funds of the Plan
either by investing the assets of the Fund, at its discretion, or by delegating
such responsibility to one or more persons or to an investment firm deemed
suitable by the Committee for that purpose. The Fund shall be held in the name
of the Plan and shall be invested in accordance with any applicable federal or
provincial legislation including specifically the Supplemental Pension Plans
Act.
 
9.2    PURCHASE OF ANNUITIES
 
      The Committee may provide for the payment of any pension under this Plan
from the Fund or may purchase an annuity contract from an insurance company
licensed to do business in Canada with funds derived from the Fund.
 
                                       10
<PAGE>   14
 
                                   SECTION 10
 
                               PENSION COMMITTEE
 
10.1   PENSION COMMITTEE
 
      The Plan shall be administered by a Pension Committee which shall consist
of 7 members resident in Canada, 2 of whom shall be Members of the Plan and one
of whom shall be independent to the extent described in subsection (b) of this
Section 10.1.
 
      (1)   Plan Members
 
           The two Plan Members who shall be members of the Pension Committee
           shall be nominated by the Company and each such Plan Member shall
           serve as member of the Pension Committee for his term of office
           unless at the next annual meeting, described in Section 10.4, each
           group of active Members and non-active Members shall decide whether
           or not it will nominate one or two Plan Members to the Pension
           Committee in the manner set out in Section 10.4.
 
      (2)   Independent
 
           The Company shall nominate a person as an independent member of the
           Pension Committee. Such person may, if the Company so decide, serve
           with remuneration. The amount of remuneration, if any, shall be
           determined by the Company. Such person must be neither a party to the
           Plan nor a person to whom a prohibition as to the granting of loans
           applies pursuant to the investment rules set out in the Supplemental
           Pension Plans Act. For the purposes of this subsection (b), a person
           who is a party to the Plan is an Employer or a Plan Member, or a
           person who:
 
      (1)   acts on behalf of an Employer, such as a member of the Board of
           Directors, a manager or an executive, or
 
      (2)   acts on behalf of Plan Members, such as an officer or representative
           of the union or of the employees' association.
 
      (3)   Other Members
 
           The Company shall nominate 4 members to the Pension Committee in
           addition to those mentioned in subsections (a) and (b) of this
           Section 10.1.
 
10.2   TERM OF OFFICE
 
      Each individual nominated as a member of the Pension Committee shall take
office upon his acceptance thereof in writing and filed with the Company and the
Pension Committee. Subject to subsection (a) of Section 10.1, the term of office
of a member of a Pension Committee shall be 3 years. A member of the Pension
Committee whose term of office has expired shall remain in office until he is
reappointed or replaced. If a member of the Pension Committee nominated by the
Plan Members pursuant to subsection (a) of Section 10.1 becomes unable to act or
if the seat of such Plan Member on the Pension Committee becomes vacant, the
Pension Committee shall nominate a Plan Member to replace the member until the
next annual meeting is held pursuant to Section 10.4. If a member of the Pension
Committee nominated under subsection of Section 10.1 or subsection (c) of
Section 10.1 becomes unable to act, or if the seat of such member becomes
vacant, the Company shall immediately nominate a replacement.
 
10.3   EXPENSES OF PENSION COMMITTEE
 
      The members of the Pension Committee shall serve as such, subject to the
provisions of subsection (b) of Section 10.1, without remuneration, but shall be
reimbursed for any necessary expenditures incurred in service on the Pension
Committee. Any such necessary expenditures and any expenses incurred by the
Pension Committee in administering the Plan shall be paid from the Fund, unless
any Employer, in its sole discretion, pays or reimburses the Committee or any
member thereof for such expenditures or expenses.
 
                                       11
<PAGE>   15
 
10.4   ANNUAL MEETING
 
      Within 6 months after December 31, 1996 and the end of each subsequent
Plan Year, or within any additional period which may be granted by the Regie des
rentes du Quebec, the Pension Committee shall, by a written notice, call each
Member and each Employer to a meeting held to:
 
      (1)   inform them of the amendments made to the Plan, of the entries in
           the conflict of interest register and the financial position of the
           Plan;
 
      (2)   enable each group of active Members and non-active Members to decide
           whether or not it will nominate a member to the Pension Committee
           and, if it so decides, to proceed with the nomination either in the
           manner proposed by the Committee, or, if none is proposed or if the
           group refuses the manner proposed, in the manner, decided by the
           group, which allows the meeting to proceed with the nomination. Any
           decision relating to a matter mentioned above shall be made by a
           majority of the votes cast by the Members of each group which will
           include votes by proxy.
 
      The Pension Committee shall, in addition, render an account of its
administration at that annual meeting.
 
10.5   CONFLICT OF INTEREST
 
      No member of the Pension Committee may exercise his powers in his own
interest or that of a third person. A member of the Pension Committee may not
place himself in a situation of conflict between his personal interest and the
duties of his office. A Plan Member who is a member of the Pension Committee
must act in the common interest, considering his own interest to be the same as
that of the other Members or beneficiaries of the Plan.
 
      Every member of a Pension Committee must, without delay, notify the
Committee in writing of any interest he has in an enterprise that may cause his
personal interest to conflict with the duties of his office. He must also notify
the Committee in writing of any rights he may have in or may invoke against the
Fund, specifying their nature and value. However, a Plan Member who is also a
Pension Committee member does not have to give notice of his rights arising from
the Plan.
 
      The Pension Committee shall keep a register at its office, in which every
interest or right of which it has been notified shall be recorded.
 
10.6   POWERS AND DUTIES
 
      The Pension Committee shall perform such duties as are imposed upon it by
the terms of the Plan and by the provisions of the Supplemental Pension Plans
Act, and shall have such power and authority as may be necessary to administer
the Plan and to discharge its duties hereunder, including, but not limited to,
the power and authority:
 
       (1)  to interpret and construe the Plan within the limits of any
           applicable legislation;
 
       (2)  to apply the eligibility and membership rules;
 
       (3)  to inform Members of an application for registration of an
           amendment;
 
       (4)  to make determinations as to the rights of any person applying for
           pension benefits;
 
       (5)  to determine the amount of benefits payable to any person in
           accordance with the provisions of the Plan;
 
       (6)  to authorize and to make payments out of the Fund to persons
           entitled to benefits under the Plan;
 
       (7)  to keep a register of conflicts of interest;
 
       (8)  to appoint an Actuary to perform such actuarial functions as may be
           requested by the Pension Committee;
 
       (9)  to appoint a custodian or insurance company with which the Pension
           Committee shall sign a custodian agreement or contract, as the case
           may be;
 
      (10)  to adopt a written investment policy;
 
      (11)  to supply information to Members, including annual statements and
           the membership termination statements;
 
      (12)  to authorize examination of documents and to make them available;
 
                                       12
<PAGE>   16
 
      (13)  to call each Member and each Employer to an annual meeting;
 
      (14)  to notify the Regie des rentes of any unpaid contributions within 60
           days after they become due;
 
      (15)  to take or cause to be taken such action as in its judgment it shall
           deem advisable or necessary to carry out the provisions of the Plan;
           and
 
      (16)  to adopt such by-laws as it deems desirable for the conduct of its
           affairs and for the administration of the Plan.
 
10.7   DELEGATION
 
      (1)   The Pension Committee may delegate all or part of its powers to any
           person including the Company or be represented by a third party for a
           specific act, each to perform such services and duties and have such
           authority as is permitted by the instrument of delegation. When the
           Pension Committee has delegated any or part of its powers to another
           person, such person may delegate all or part of such powers to the
           extent that he is permitted by the instrument of delegation.
 
      (2)   The Pension Committee shall, within 30 days after the date on which
           a member appointed by the Plan Members takes office, re-examine the
           delegation of powers to determine those that are to be maintained and
           those that are to be revoked. The revocation carries with it the
           revocation of each delegation made by the delegatee, if any.
 
10.8   ACTUARIAL FUNCTIONS
 
      The Pension Committee shall, in consultation with the Actuary, adopt from
time to time mortality and other tables and interest rates upon which the
Equivalent Actuarial Values under the Plan will be based. The Pension Committee
shall furnish to the Actuary whom it employs all information required for the
preparation of regular actuarial valuations of the Plan, and shall receive from
the Actuary reports on such valuations and any other reports and recommendations
which may be necessary for the orderly administration of the Plan and to comply
with the Supplemental Pension Plans Act.
 
                                   SECTION 11
 
                              TRANSFER PROVISIONS
 
11.1   TRANSFERS TO THE SERVICE
 
      In the event that an Employee is transferred to the Service of an Employer
directly from service with an affiliate of an Employer, or from a predecessor of
an Employer, the Company shall determine on the basis of uniform rules in each
case, what portion, if any, of service prior to transfer shall be included in
Service.
 
11.2   TRANSFERS FROM THE SERVICE
 
      In the event that a Member is transferred from the Service of an Employer
to the service of an affiliated company which is not participating in this Plan,
no further contributions shall be made on his behalf and no further benefits
shall accrue during his employment with such affiliated company unless the
Company specifically designates that such Employee shall continue to be a Member
of this Plan. However, the employment of such an Employee shall not be
considered as having terminated until his employment with the affiliated company
is terminated other than by transfer to another affiliated company, and for the
purposes of Section 6 his Service shall include the period of his employment by
such affiliated company.
 
11.3   TRANSFER OF ASSETS TO THIS PLAN
 
      In the event that an Employee immediately prior to becoming a Member of
this Plan was a member of another pension plan of his employer, assets equal to
the Value of the pension accrued by the Member under that plan shall be
transferred to and accepted by this Plan for the purposes of providing pension
benefits under this Plan for Pensionable Service while a member of the other
pension plan. The Value of the annual pension payable under the provisions of
this Plan in respect of the Member's Pensionable Service while a member of the
other pension plan shall in no event be less than the Value so transferred.
 
                                       13
<PAGE>   17
 
                                   SECTION 12
 
                    AMENDMENT OR DISCONTINUANCE OF THE PLAN
 
12.1   RIGHT TO AMEND OR DISCONTINUE THE PLAN
 
      The Company expects and intends to maintain this Plan in force
indefinitely, but the Company necessarily reserves the right to change or
discontinue the Plan at any time. In addition, the Employer may cease to
participate in this Plan at any time. However, no amendment for any reason shall
adversely affect the pension or other benefits to which a Member had become
entitled in respect of Service prior to the date of such amendment, except in
the circumstances referred to in Section 4.6.
 
12.2   TOTAL OR PARTIAL TERMINATION OF THE PLAN
 
      The Company may terminate the Plan in whole or part in accordance with the
provisions of the Supplemental Pension Plans Act for any reason at any time by
means of a written notice to the affected Members and the Regie des rentes du
Quebec. The Committee shall, within the time limits prescribed under the
Supplemental Pension Plans Act, submit a draft termination report to the Regie
des rentes and transmit to each Member, Spouse or Beneficiary affected a
statement setting out his benefits and their value as established in the
termination report, together with all prescribed information set out in the
Supplemental Pension Plans Act.
 
                                   SECTION 13
 
                               GENERAL PROVISIONS
 
13.1   BENEFITS NOT CAPABLE OF ASSIGNMENT OR SEIZURE
 
      Except as expressly provided herein or permitted or required by law,
pension or other benefits payable from the Fund shall not be capable of being
assigned, charged, attached, anticipated or given as securities or surrendered
and for the purposes of this provision:
 
      (1)   assignment does not include --
 
           (1)  assignment pursuant to a decree, order or judgment of a
               competent tribunal or a written agreement in settlement of rights
               arising as a consequence of the breakdown of a marriage or other
               conjugal relationship between a Member and the Member's Spouse or
               former spouse, or
 
           (2)  assignment by the legal representative of a deceased Member on
               the distribution of the Member's estate, and
 
      (2)   surrender does not include a reduction in benefits to avoid the
           revocation of the registration of the Plan pursuant to Section 4.6.
 
13.2   ASSETS IN THE FUND
 
      Benefits under this Plan shall be payable only from the Fund and only to
the extent that there are assets in the Fund. No payment shall be made under the
Plan unless it shall have been authorized by the Committee.
 
13.3   SMALL PENSIONS
 
      Where the Value of the annual pension or deferred pension payable to a
Member under this Plan is less than 4% of the YMPE for the Plan Year in which
the Member terminates his employment, retires or dies, as the case may be, the
Value of such pension or deferred pension may be paid to the Member or his
surviving Spouse.
 
13.4   MARRIAGE BREAKDOWN
 
      In the event of marriage breakdown of a Member and his Spouse to the
extent that the Spouse is no longer a spouse within the meaning of Section 1.25,
the entitlement of the Spouse to any portion of the pension benefit of a Member
shall be subject to the provision of a court order or written agreement. Such an
agreement cannot, however, confer on the Spouse more than 50% of the Value of
such benefits. For that purpose, the Member and the Spouse shall be entitled to
obtain from the Committee a statement of the benefits accumulated by the Member
 
                                       14
<PAGE>   18
 
under the Plan and the Value thereof, and any other prescribed information. The
benefits shall be transferred to the Spouse upon application in writing to the
Committee to the extent provided by the court order or written agreement.
 
13.5   PENSIONER BECOMES AN EMPLOYEE
 
      Where a former Employee, who has commenced to receive a pension under this
Plan, recommences employment with an Employer, the payment of his monthly
pension shall continue and he shall not be eligible to recommence accruing
pension under Section 4.
 
13.6   SURPLUS OWNERSHIP
 
      After provision has been made for the satisfaction of all liabilities of
the Plan, after its total or partial termination, any surplus assets as remain
in the Fund shall, subject to the provisions of the Supplemental Pension Plans
Act, revert to the Company. The Company shall be the exclusive owner of any
assets remaining after all liabilities of the Plan have been satisfied.
 
13.7   Construed and Interpreted
 
      This Plan shall be construed and interpreted in accordance with the
provisions of the laws of the Province of Quebec.
 
                                       15
<PAGE>   19
 
                               AMENDMENT NO. 1 TO
                           THE REPAP ENTERPRISES INC.
                      HEAD OFFICE REGISTERED PENSION PLAN
 
The following changes are effective January 1, 1996.
 
1.     Section 1.8 is amended by adding the following sentence:
 
      "Earnings include compensation as prescribed, from time to time, by the
      Income Tax Act."
 
2.     Section 1.19 is deleted and replaced by the following:
 
      "1.19 "PENSIONABLE SERVICE" means Service in Canada while participating as
           an active Member in this Plan and Service prior to the Effective Date
           but excluding:
 
           (a)  Service before January 1, 1976;
 
           (b)  Service after December 31, 1989 but before the Effective Date
               which the Employee chooses not to include;
 
           (c)  Service after December 31, 1989 but before the date the
               Executive becomes a Member of this Plan which the Executive
               chooses not to include;
 
           (d)  Service after the Normal Retirement Date; and
 
           (e)  for an Employee who is a connected person as defined in the
               regulations of the Income Tax Act --
 
               (i)   Service prior to the Effective Date which the connected
                   person chooses not to include,
 
               (ii)  Service on or after the Effective Date which is an unpaid
                   leave of absence.
 
           The first 3 years of Service outside of Canada with a
           non-participating employer as defined by the Income Tax Act is
           included in Pensionable Service."
 
3.     Section 1.22 is amended by deleting the end of the sentence after the
      words "he attains" and replacing it by the words "his 69th birthday, or
      such other age as is designated from time to time by the Income Tax Act,
      even though he continues to be employed by the Employer."
 
4.     Section 1.23(d) is amended by replacing the word "Employer;" by the words
      "Employer and is not a connected person as defined in the regulations of
      the Income Tax Act."
 
5.     Section 4.5 is amended by adding Section 4.5(c) as follows:
 
      "(c)  POST-1989 SERVICE FOR A CONNECTED PERSON:
 
           The aggregate annual pension payable to a Member, who is a connected
           person as defined in the regulations of the Income Tax Act, under
           this Plan and any other registered pension plan of the Employer in
           respect of Service after December 31, 1989, and payable in the year
           in which the pension commences to be paid to the Member shall be the
           lesser of:
 
           (i)   2% of the sum of the Member's indexed compensation for each
               year of pensionable service with the Employer, and
 
           (ii)  $1,722, or such higher amount as may be permitted from time to
               time by the Income Tax Act, times the number of years of his
               pensionable service with the Employer."
 
6.     Section 8.1 is amended by adding the words "and is not a connected person
      as defined in the regulations of the Income Tax Act" after the words
      "during which he is eligible to receive such benefits".
 
CERTIFIED AS A TRUE AND COMPLETE COPY
 
------------------------------------------------------------
Date
 
------------------------------------------------------------
Secretary
 
                                       16
<PAGE>   20
 
            NOTICE TO ALL THE MEMBERS OF THE REPAP ENTERPRISES INC.
                      HEAD OFFICE REGISTERED PENSION PLAN
 
      A plan amendment has been submitted to the Regie des rentes du Quebec for
registration. The amendment, effective on January 1, 1996, was required by
Revenue Canada to clarify certain plan provisions in conformity with the current
provisions of the Income Tax Act. The amendment has no impact on the benefits
you may expect to receive.
 
      A copy of the amendment is available in my office, at Head Office.
 
Montreal,
---------------------------------------1997
 
---------------------------------------
Administrator of the Pension Committee
 
                              CERTIFIED COPY OF A
                      RESOLUTION OF THE BOARD OF DIRECTORS
                           OF REPAP ENTERPRISES INC.
 
WHEREAS  Repap Enterprises Inc. (the "Company") wishes to maintain the
registration of "The Repap Enterprises Inc. Head Office Registered Pension Plan"
(The "Plan");
 
WHEREAS  pursuant to Section 12, the Company has the right to change the Plan at
any time;
 
WHEREAS  the amendments are specifically requested by Revenue Canada for
compliance with the Income Tax Act and Regulations;
 
NOW THEREFORE,  it is hereby resolved that:
 
1)     The attached Amendment No. 1 to the Repap Enterprises Inc. Head Office
      Registered Pension Plan is hereby approved and adopted.
 
      I, Terry W. McBride, Secretary of Repap Enterprises Inc. (the "Company")
hereby certify under the corporate seal of the Company that the foregoing is a
true copy of a resolution consented to in writing by all of the Directors of the
Company as of the ____ day of __________________ 1997 and that the said
resolution continues to be in full force and effect as of the date hereof.
 
      Dated this ____ day of __________________ 1997
 
                                         ---------------------------------------
                                         Secretary
 
                                       17