(d) **“Elk Falls Sawmill”**means the Elk Falls sawmill facility located at CampbellRiver, British Columbia adjacent to Catalyst’s Elk Falls pulp and paper mill; (e) **“Log Supply Option Agreement”**means the agreement between the parties dated thedate of this Agreement and entitled “Log Supply Option Agreement” as amended, replacedor restated from time to time; (f) **“TFL 46 Supply Agreement”**means the agreement made as of the 5th dayof May, 2004 entitled “Chip and Residual Fibre Delivery Agreement” now betweenTimberWest Forest Corp. (as successor to TFL Forest Ltd.) and Teal-Jones Group, asamended, replaced or restated from time to time; and (g) **“Timber Harvesting Management Agreement Amendment”**means the agreement betweenthe parties dated the date of this Agreement amending the Amended and Restated TimberHarvesting Management Agreement dated the 1st day of January, 1998 nowbetween Catalyst (as successor to Fletcher Challenge Canada Limited and TimberWest (assuccessor to TimberWest Forest Limited).2. **Modifications to Chip Commitment**2.1. **Change to Chip Commitment.**Effective upon the Closure Date: (a) TimberWest’s obligation under Section 2.1 of the Existing Agreement to supplyCatalyst with Chips produced from TimberWest Facilities shall cease and be replacedwith the obligations of TimberWest under the Log Supply Option Agreement and Section2.2 of this Agreement; (b) the term “TimberWest Facilities” in the Chip and Pulplog Supply shall bereplaced with the following:“TimberWest Facilities” means all facilities in the Coastal Area in whichany of TimberWest or any of its Affiliates acquires an interest subsequentto January 1, 2008 and which produces Chips; (c) Sections 2.3, 2.4 and 2.5 below shall apply in lieu of Section 2.2 of theExisting Agreement; and  (d) the Existing Agreement will be amended as set out in Article 3.
 
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2.2. **TFL 46 Supply Agreement.**TimberWest will direct Teal Jones Group to deliver to Catalyst themaximum volume of Chips available for sale and delivery to Catalyst under the TFL 46 SupplyAgreement in accordance with the terms and conditions of the TFL 46 Supply Agreement (the“Teal-Jones Direction”) and will, if so requested by Catalyst, assign TimberWest’s rightsunder the TFL 46 Supply Agreement to Catalyst. TimberWest hereby represents and warrants toCatalyst that, to the knowledge of TimberWest as of the date hereof, the TFL 46 SupplyAgreement is in full force and effect, unamended and there is no default by TimberWest or TealJones Group thereunder and hereby agrees that: (a) until TimberWest has assigned its rights under the TFL 46 Supply Agreement toCatalyst, TimberWest will perform its obligations and, at the request of Catalyst, usecommercially reasonable efforts to enforce performance of Teal Jones Group’sobligations under the TFL 46 Supply Agreement;  (b) TimberWest will not revoke or withdraw the Teal-Jones Direction; and (c) TimberWest will not amend or agree to amend the TFL 46 Supply Agreement withoutthe consent of Catalyst, such consent not to be unreasonably withheld.2.3. **Priority Rights.**TimberWest will not sell, transfer or otherwise dispose of any Chipsproduced from TimberWest Facilities unless: (a) TimberWest provides Catalyst with the following: (i) a first opportunity to negotiate an agreement for the purchaseand sale of such Chips; and  (ii) if TimberWest receives a third party offer to purchase any suchChips which it intends to accept or negotiates an agreement with a third partyin respect of the purchase and sale of such Chips, the right to purchase suchChips on terms and conditions no less favourable to Catalyst than the proposedoffer or agreement; and (b) any agreement it enters into in respect of such Chips after complying withSubsection 2.3(a) has a term of no more than five years (taking into account anypotential renewal or evergreen replacement provisions).For greater certainty, any Chips delivered to Catalyst after July 1, 2010 pursuant to anagreement with Catalyst under this Section 2.3 will mitigate the reduction in the TimberHarvesting Management Fee (as defined in the Timber Harvesting Management AgreementAmendment) in accordance with the Timber Harvesting Management Agreement Amendment as longas such agreement and the Chips delivered thereunder meet all of the requirements of Section2.4 of the Timber Harvesting Management Agreement Amendment applicable to commitments for analternative supply of Chips.2.4. **Exclusions.**The commitment by TimberWest in Section 2.3 shall exclude the volume of Chipswhich is subject to commitments in respect of the sale of Chips which: (a) are in effect at the date the facility or operation becomes a TimberWestFacility or part of its operations and are assumed, and are required to be assumed, aspart of the acquisition; or (b) are granted to the vendor thereof as a requirement of the acquisition.
 
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TimberWest will use all commercially reasonable efforts to minimize the term and extent ofthe commitments described in Subsections (a) and (b) (for greater certainty, foregoing amaterial reduction in purchase price or other material benefit under the acquisitionagreement as a condition to minimizing the term and extent of such commitments would not becommercially reasonable) and will not agree to extend their term by way of amendment,renewal, replacement or otherwise unless to not agree to such extension could reasonably beexpected to have unreasonable and materially adverse consequences for TimberWest.2.5. **Elk Falls Sawmill.** (a) If TimberWest recommences operation of the Elk Falls Sawmill after the ClosureDate, the Elk Falls Sawmill will be a TimberWest Facility for the purposes of Section2.3 of this Agreement. (b) If TimberWest sells the Elk Falls Sawmill to a third party purchaser whichacquires both the land and the fixtures and equipment comprising the Elk Falls Sawmill,TimberWest will ensure that as part of such a sale that the third party purchaserenters into an agreement with Catalyst in a form acceptable to Catalyst, actingreasonably, granting priority rights to Catalyst to the Chips produced from the ElkFalls Sawmill on terms and conditions corresponding to Section 2.3 of this Agreement. (c) If Catalyst enters into an agreement with TimberWest or other operator of theElk Falls Sawmill to purchase Chips produced from the Elk Falls Sawmill (which for thepurposes of this subsection, includes any new facility at the site of the current ElkFalls Sawmill) pursuant to the priority rights referred to in this Section, then Chipsdelivered after July 1, 2010 under such an agreement will mitigate the reduction in theTimber Harvesting Management Fee (as defined in the Timber Harvesting ManagementAgreement Amendment) in accordance with the Timber Harvesting Management AgreementAmendment as long as such agreement and the Chips delivered thereunder meet all of therequirements of Section 2.4 of the Timber Harvesting Management Agreement Amendmentapplicable to commitments for an alternative supply of Chips.3. **Other Changes to Existing Agreement**3.1. **Deletion of Inapplicable Provisions.**From and after the Closure Date, Articles 3, 4, 5, 6, 7and 10 of the Existing Agreement shall cease to apply.3.2. **Modification to Existing Provisions.**From and after the Closure Date: (a) Sections 11.1 and 12.3 of the Existing Agreement shall apply only to Pulplogs; (b) Section 14.1 and Section 14.2 of the Existing Agreement shall be deleted andreplaced with the following as Sections 14.1 and 14.2:
 
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 14.1 **Dispositions by TimberWest**TimberWest will not, without the prior written consent of Catalyst: (a) sell, transfer or otherwise dispose of amaterial part of the Timber Tenures except to a purchaser, transfereeor assignee (an “Assignee”) that has agreed, as a condition of suchpurchase, to be bound by the terms of this Agreement, such agreement tobe evidenced by the Assignee entering into such formal agreements asCatalyst may reasonably require and which will give effect to anassignment by TimberWest to the Assignee of an interest in thisAgreement to the extent required by such assignment; or  (b) grant any harvest rights in respect of theTimber Tenures to any person other than Catalyst unless the holder ofsuch harvest rights enters into an agreement in such form as Catalystmay reasonably require to ensure that the Pulplogs included in suchharvest or timber sales, or an equivalent volume, will be available toCatalyst on the terms and conditions of this Agreement; or  (c) mortgage, charge, grant a security interest inor otherwise encumber a material part of the Timber Tenures except incompliance with Section 14.4;and TimberWest will not otherwise assign any part of its interest in thisAgreement except by way of an assignment of amounts payable to TimberWestunder this Agreement from time to time. 14.2 **Material Part**For the purposes of this Article a “material part of the Timber Tenures”means any portion of the Timber Tenures the disposition of which wouldmaterially affect the ability of TimberWest to fulfil the terms of thisAgreement or could reasonably be expected to result in a material reductionin the volume of Pulplogs available to Catalyst under this Agreement and,for the purposes of determining the application of Section 14.1 to adisposition of any part of the Timber Tenures: (a) a series of transactions that could reasonablybe viewed as related will be considered as a single disposition; and  (b) any exchange of assets in which any part of theTimber Tenures are disposed of but are replaced concurrently with otherassets that become part of the Timber Tenures will not constitute adisposition of a material part of the Timber Tenures if, as a result ofsuch exchange, the ability of TimberWest to fulfil the terms of thisAgreement and the volume of Pulplogs available to Catalyst under thisAgreement is not materially affected.
 
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TimberWest may, at its option, notify Catalyst of any transaction TimberWestproposes to enter into that involves the acquisition or disposition of anytenure or right to harvest timber that is or could be used in connectionwith TimberWest’s logging operations and any notice given by TimberWest toCatalyst under this Section may include a request that Catalyst adviseTimberWest of Catalyst’s position regarding the application of this Articleto the proposed transaction, including whether or not an asset is a materialpart of the Timber Tenures and whether or not any draft agreement proposedby TimberWest under Section 14.1 meets Catalyst’s reasonable requirements.Catalyst agrees to respond promptly (and in any event not more than 15Business Days after receipt of such notice) to any such request made byTimberWest and failure of Catalyst to respond during such period will bedeemed to be confirmation that Catalyst does not consider this Article toapply to such transaction.(c) Articles 15 and 16 of the Existing Agreement shall apply only to Pulplogs.4. **General**4.1. **Existing Agreement.**This Agreement forms part of and is to be read together with theExisting Agreement. The Existing Agreement as amended by this Agreement remains in full forceand effect.4.2. **Binding Effect.**This Agreement will enure to the benefit of and be binding upon the partieshereto and their respective successors and assigns.IN WITNESS WHEREOF the parties have executed this Agreement.**CATALYST PAPER CORPORATION**