<PAGE>

                                                                      EXHIBIT 10

                                                                           FINAL

                        NORSKE SKOG CANADA LIMITED ET AL

                                       AND

                                TD SECURITIES AND
                               RBC CAPITAL MARKETS

                                  AS ARRANGERS

                                       AND

                          THE LENDERS FROM TIME TO TIME
                             PARTY TO THIS AGREEMENT

                                       AND

                            THE TORONTO-DOMINION BANK
                             AS ADMINISTRATION AGENT

                                       AND

                              ROYAL BANK OF CANADA
                              AS SYNDICATION AGENT

                                   ----------

                        CDN. $350,000,000 CREDIT FACILITY
                                CREDIT AGREEMENT
                            DATED AS OF 19 JULY 2002

                                   ----------

                            BORDEN LADNER GERVAIS LLP
                                 LAWSON LUNDELL
<PAGE>
                THIS CREDIT AGREEMENT is made as of 19 July 2002

BETWEEN:

             NORSKE SKOG CANADA LIMITED, NORSKE SKOG CANADA FINANCE
           LIMITED AND THE OTHER RESTRICTED PARTIES FROM TIME TO TIME

                                     - and -

               TD SECURITIES AS LEAD ARRANGER AND BOOK MANAGER AND
                     RBC CAPITAL MARKETS AS CO-LEAD ARRANGER
                         (collectively, the "Arrangers")

                                     - and -

                       THE LENDERS FROM TIME TO TIME PARTY
                                TO THIS AGREEMENT
                                 (the "Lenders")

                                     - and -

                            THE TORONTO-DOMINION BANK
                     in its capacity as Administration Agent
                                  (the "Agent")

                                     - and -

                              ROYAL BANK OF CANADA
                      in its capacity as Syndication Agent
                            (the "Syndication Agent")

RECITALS:

A. Norske Skog Canada Finance Limited (the "Borrower") has requested the
Arrangers to arrange a senior secured credit facility of up to a maximum amount
of Cdn. $350,000,000 to be used to finance the general corporate purposes of the
Restricted Parties.

B. The Lenders have each agreed to provide their respective commitments to the
Borrower, subject to the terms and conditions of this Agreement.

C. The parties are entering into this Agreement to provide for the terms of the
credits.

     THEREFORE, for value received, and intending to be legally bound by this
Agreement, the parties agree as follows:
<PAGE>
                                      -2-


                                    ARTICLE I
                                 INTERPRETATION

1.1  DEFINED TERMS

     In this Agreement, unless something in the subject matter or context is
inconsistent therewith:

1.1.1 "ACCEPTING LENDER" has the meaning defined in Section 2.4.3.

1.1.2 "ADJUSTED BALANCE SHEET" means NSCL's consolidated balance sheet at any
     time, prepared in accordance with GAAP and adjusted to exclude the assets,
     liabilities and shareholders' equity of all persons that are not Restricted
     Parties.

1.1.3 "ADVANCE" means an availment of a Credit by the Borrower by way of Prime
     Rate Advance, Base Rate Advance, acceptance of Bankers' Acceptances, L/C or
     LIBOR Advance, deemed Advances and conversions, renewals and rollovers of
     existing Advances, and any reference relating to the amount of Advances
     shall mean the sum of all outstanding Prime Rate Advances, Base Rate
     Advances and LIBOR Advances, plus the face amount of all outstanding
     Bankers' Acceptances and L/Cs.

1.1.4 "AGENT" means TD in its role as administration agent for the Lenders, and
     any successor administration agent appointed in accordance with this
     Agreement.

1.1.5 "AGREEMENT", "HEREOF", "HEREIN", "HERETO", "HEREUNDER" or similar
     expressions mean this Agreement and any Schedules hereto, as amended,
     supplemented, restated and replaced from time to time.

1.1.6 "APPLICABLE FEE RATE" means, on any day, in respect of any Advance by way
     of Bankers' Acceptance or L/C, as the case may be, the applicable rate
     (expressed as a percentage per annum) set forth below, and "APPLICABLE
     MARGIN" means, on any day, with respect to any Prime Rate Advance, Base
     Rate Advance or LIBOR Advance, the applicable margin (expressed as a
     percentage per annum) set forth below, in each case based upon the
     Reference Debt Ratings on that day.

<TABLE>
<CAPTION>
                             Level 1      Level 2   Level 3   Level 4   Level 5   Level 6
                          -------------   -------   -------   -------   -------   -------
<S>                       <C>             <C>       <C>       <C>       <C>       <C>
Moody's                   Baa1 or above     Baa2     Baa3       Ba1        Ba2     < Ba2
S&P                       BBB+ or above      BBB     BBB-       BB+         BB     < BB
Margin for
   Prime Rate Advances/
   Base Rate Advances           0          0.125%    0.25%     1.25%     1.625%    2.25%
</TABLE>
<PAGE>
                                       -3-


<TABLE>
<CAPTION>
                             Level 1      Level 2   Level 3   Level 4   Level 5   Level 6
                          -------------   -------   -------   -------   -------   -------
<S>                       <C>             <C>       <C>       <C>       <C>       <C>
Margin for
   LIBO Rate Advances         1.00%        1.125%    1.25%     2.25%     2.625%    3.25%

Rate for Bankers'
   Acceptance Fee/
   L/C Fee                    1.00%        1.125%    1.25%     2.25%     2.625%    3.25%
</TABLE>

     At the date of this Agreement, the Applicable Fee Rate and Applicable
     Margin are based on Level 4.

     For purposes hereof, (i) if the ratings established (or deemed to have been
     established, as provided in clause (ii) below) by Moody's and S&P fall
     within different Levels as set out above, the Applicable Fee Rate and
     Applicable Margin will be the higher of the alternative Applicable Fee
     Rates and Applicable Margins, (ii) if at any time there is only one of
     Moody's and S&P which has in effect a Reference Debt Rating (other than (a)
     because such ratings agency is no longer in the business of rating
     corporate debt obligations, (b) as a result of a change in the rating
     system of Moody's or S&P or (c) for any other reason reasonably determined
     by the Agent to be outside of the control of and unrelated to NSCL), then
     the Applicable Fee Rate and Applicable Margin shall be determined as if
     each rating agency had established a Reference Debt Rating in Level 6 and
     (iii) if any rating established (or deemed to have been established, as
     provided in clause (ii) above) by Moody's or S&P is changed (other than as
     a result of a change in the rating system of Moody's or S&P), the change
     shall be effective as of the date on which it is first publicly announced
     by the applicable rating agency. Each change in the Applicable Fee Rate and
     Applicable Margin shall apply during the period commencing on the effective
     date of such change and ending on the date immediately preceding the
     effective date of the next such change. On the effective date of each
     change, the Borrower shall pay any additional amount attributable to a
     higher Applicable Fee Rate with respect to a Bankers' Acceptance or an L/C
     outstanding on that date for the remaining term of the Bankers' Acceptance
     or L/C, or the Lenders shall remit to the Agent, who shall refund to the
     Borrower, any amount attributable to a lower Applicable Fee Rate. If at any
     time only one of Moody's and S&P has in effect a Reference Debt Rating (x)
     because the rating system of Moody's or S&P has changed, (y) because such
     rating agency has ceased to be in the business of rating corporate debt
     obligations, or (z) for any other reason reasonably determined by the Agent
     to be outside of the control of and unrelated to NSCL, NSCL and the Lenders
     (acting through the Agent) shall negotiate in good faith to amend the
     references to specific ratings in this definition to reflect such changed
     rating system or the non-availability of ratings from such rating agency
     and, pending the effectiveness of any such amendment, the Applicable Fee
     Rate and Applicable Margin shall be determined by reference to the Level
     most recently in effect.
<PAGE>
                                      -4-


1.1.7 "ARRANGERS" means, collectively, TD Securities as Lead Arranger and Book
     Manager and RBC Capital Markets as Co-Lead Arranger.

1.1.8 "ASSIGNMENT AGREEMENT" means an agreement in the form of Schedule D to
     this Agreement.

1.1.9 "BA DISCOUNT PROCEEDS" means, in respect of any Bankers' Acceptance, an
     amount calculated on the applicable Drawdown Date which is (rounded to the
     nearest full cent, with one-half of one cent being rounded up) equal to the
     face amount of such Bankers' Acceptance multiplied by the price, where the
     price is calculated by dividing one by the sum of one plus the product of
     (i) the BA Discount Rate applicable thereto expressed as a decimal fraction
     multiplied by (ii) a fraction, the numerator of which is the term of such
     Bankers' Acceptance and the denominator of which is 365, which calculated
     price will be rounded to the nearest multiple of 0.001%.

1.1.10 "BA DISCOUNT RATE" means, (a) with respect to any Bankers' Acceptance
     accepted by a Lender named on Schedule I to the Bank Act (Canada), the
     average rate that appears on the Reuters Screen CDOR Page at or about 10:00
     a.m. (Toronto time) on the applicable Drawdown Date, for bankers'
     acceptances having an identical maturity date to the maturity date of such
     Bankers' Acceptance, and (b) with respect to any Bankers' Acceptance
     accepted by any other Lender, the rate determined established in accordance
     with (a) above plus 0.07% per annum.

1.1.11 "BA EQUIVALENT LOAN" has the meaning defined in Section 5.15.5.

1.1.12 "BANKERS' ACCEPTANCE" means a depository bill as defined in the
     Depository Bills and Notes Act (Canada) in Canadian Dollars that is in the
     form of an order signed by the Borrower and accepted by a Lender pursuant
     to this Agreement or, for Lenders not participating in clearing services
     contemplated in that Act, a draft or bill of exchange in Canadian Dollars
     that is drawn by the Borrower and accepted by a Lender pursuant to this
     Agreement. Orders that become depository bills, drafts and bills of
     exchange are sometimes collectively referred to in this Agreement as
     "orders." Any depository bill may be made payable to "CDS & Co." and
     deposited with the Canadian Depository for Securities Limited.

1.1.13 "BANKERS' ACCEPTANCE FEE" means the amount calculated by multiplying the
     face amount of each Bankers' Acceptance by the rate for the Bankers'
     Acceptance Fee specified in Section 2.5, and then multiplying the result by
     a fraction, the numerator of which is the duration of its term on the basis
     of the actual number of days to elapse from and including the date of
     acceptance of a Bankers Acceptance by the Lender up to but excluding the
     maturity date of the Bankers' Acceptance and the denominator of which is
     365.

1.1.14 "BASE RATE" means, on any day, the greater of:
<PAGE>
                                      -5-


     (a)  the annual rate of interest (expressed as a percentage per annum on
          the basis of a 365 day year) announced by TD on that day as its
          reference rate for commercial loans made in Canada in US Dollars; and

     (b)  the Federal Funds Effective Rate plus 1% per annum.

1.1.15 "BASE RATE ADVANCE" means an Advance in US Dollars bearing interest based
     on the Base Rate and includes deemed Base Rate Advances provided for in
     this Agreement.

1.1.16 "BORROWER" means Norske Skog Canada Finance Limited, a company governed
     by the Company Act (British Columbia).

1.1.17 "BORROWING BASE" means at any time, the aggregate of:

     (a)  75% of the net book value of accounts receivable of NSCL, other than
          accounts receivable owing by employees of any Restricted Party, based
          on the Adjusted Balance Sheet; and

     (b)  an amount equal to the lesser of item (a) above and 50% of the
          aggregate inventory of NSCL, other than work in process, based on the
          Adjusted Balance Sheet.

1.1.18 "BORROWING BASE CERTIFICATE" means a certificate of NSCL in the form of
     Schedule G.

1.1.19 "BRANCH OF ACCOUNT" means the Agency Account, Toronto-Dominion
     International Centre, Toronto, Ontario.

1.1.20 "BUSINESS DAY" means a day of the year, other than Saturday or Sunday, on
     which (a) the Agent is open for business at its executive offices in
     Toronto, Ontario and at its main branch in Vancouver, British Columbia (or
     in other locations specified by any successor to TD as Agent) and (b) in
     respect of notices, determinations, payments or Advances relating to LIBOR
     Advances, the Agent is open for business at its principal offices in
     London, England. Notwithstanding the foregoing, if the Agent will be open
     in some locations referred to above and closed in others on a particular
     day, and the Agent in consultation with NSCL determines that the closing on
     that day will not adversely affect completion of relevant transactions in
     accordance with customary banking market and trading practices, the Agent
     may, on reasonable notice to NSCL and the Lenders, specify the particular
     day to be a Business Day.

1.1.21 "CANADIAN DOLLARS", "CDN. DOLLARS", "CDN. $" and "$" mean lawful money of
     Canada.

1.1.22 "CAPITAL STOCK" means, with respect to any person, any and all present
     and future shares, partnership or other interests, participations or other
     equivalent
<PAGE>
                                      -6-


     rights in the person's capital, however designated and whether voting or
     non-voting.

1.1.23 "CHANGE OF CONTROL DEFAULT" means a change of control of NSCL which
     results in the Reference Debt Rating by Moody's or S&P being lowered by
     three or more levels, a level being, for example, the difference between A
     and A+. For the purpose of this Agreement, a change in control of NSCL
     shall be deemed to have occurred only in the following circumstances:

     (a)  if the Existing Major Shareholder then directly or indirectly holds
          Capital Stock of NSCL to which is attached 30% or more of the votes
          that may be cast to elect directors of NSCL or 30% or more of the
          total shareholders' equity of NSCL, a change of control shall be
          deemed to have occurred if Capital Stock of NSCL is held by or for the
          benefit of any person, or group of persons acting jointly or in
          concert, other than by way of security only, in a quantity to which is
          attached more of the votes or more of the shareholders' equity than
          are attached to the Capital Stock of NSCL then held by the Existing
          Major Shareholder, or

     (b)  if the Existing Major Shareholder does not then directly or indirectly
          hold Capital Stock of NSCL to which is attached 30% or more of the
          votes that may be cast to elect directors of NSCL or 30% or more of
          the total shareholders' equity of NSCL, a change of control shall be
          deemed to have occurred if Capital Stock of NSCL to which is attached
          30% or more of the votes that may be cast to elect directors of NSCL
          or 30% or more of the total shareholders' equity of NSCL is held by or
          for the benefit of any person, or group of persons acting jointly or
          in concert, other than by way of security only.

1.1.24 "COLLATERAL" means cash, a bank draft or a letter of credit, all in a
     form, and in the case of a letter of credit, from an issuer, satisfactory
     to the Lenders, acting reasonably.

1.1.25 "COMMITMENT" means in respect of each Lender from time to time, the
     commitment to make Advances to the Borrower in the Lender's Proportionate
     Share of the maximum amount of any Credit as set out on Schedule E and,
     where the context requires, the maximum amount of Advances which the Lender
     has made or committed to make.

1.1.26 "COMPLIANCE CERTIFICATE" means a certificate in the form of Schedule C.

1.1.27 "CONSOLIDATED NET TANGIBLE ASSETS" means the sum of the net book value of
     the assets of the Restricted Parties less, without duplication, the sum of
     (a) the net book value of the Restricted Parties' goodwill, trademarks,
     copyrights, patents, trade names, organization expense, treasury stock,
     deferred charges, unamortized debt discount expense and other similar
     intangible assets and (b) the
<PAGE>
                                      -7-


     net book value of the Restricted Parties' liabilities (including deferred
     taxes but excluding Funded Debt) and minority interests.

1.1.28 "CONSTATING DOCUMENTS" means, with respect to any Restricted Party, its
     articles or certificate of incorporation, amendment, amalgamation or
     continuance, memorandum of association, by-laws, partnership agreement,
     limited liability company agreement or other similar document, and all
     unanimous shareholder agreements, other shareholder agreements, voting
     trust agreements and similar arrangements applicable to the Restricted
     Party's Capital Stock, all as amended from time to time.

1.1.29 "CONTRACTS" means agreements, franchises, leases, easements, servitudes,
     privileges and other rights, other than Permits.

1.1.30 "CONTRIBUTING LENDER" shall have the meaning defined in Section 9.3.2.

1.1.31 "CREDITS" means collectively the revolving credit of up to $297,500,000
     or the US Dollar equivalent thereof (designated as "CREDIT 1") and the
     revolving credit of up to $52,500,000 or the US Dollar equivalent thereof
     (designated as "CREDIT 2") which are established by this Agreement, and
     "CREDIT" means either of them.

1.1.32 "CREDIT DOCUMENTS" means this Agreement, the Security and all other
     documents relating to the Credits, or any of them.

1.1.33 "DEBT" means, with respect to any person, without duplication and without
     regard to any interest component thereof (whether actual or imputed) that
     is not due and payable, the aggregate of the following amounts, each
     calculated in accordance with GAAP unless the context otherwise requires:

     (a)  all obligations (including, without limitation, by way of overdraft
          and drafts or orders accepted representing extensions of credit) that
          would be considered to be indebtedness for borrowed money, and all
          obligations (whether or not with respect to the borrowing of money)
          that are evidenced by bonds, debentures, notes or other similar
          instruments;

     (b)  the BA Discount Proceeds of all outstanding Bankers' Acceptances, less
          the Bankers' Acceptance Fees in respect thereof, and the equivalent
          amounts in respect of any similar instruments not issued under this
          Agreement;

     (c)  all liabilities upon which interest charges are customarily paid by
          that person;

     (d)  any Capital Stock of that person (or of any Subsidiary of that person
          that is not held by that person or by a Subsidiary of that person that
          is wholly owned, directly or indirectly) which Capital Stock, by its
          terms (or by the terms of any security into which it is convertible or
          for which it is
<PAGE>
                                       -8-


          exchangeable at the option of the holder), or upon the happening of
          any event, matures or is mandatorily redeemable, pursuant to a sinking
          fund obligation or otherwise, or is redeemable at the option of the
          holder thereof, in whole or in part, for cash or securities
          constituting Debt;

     (e)  all capital lease obligations, synthetic lease obligations,
          obligations under sale and leaseback transactions and purchase money
          obligations;

     (f)  all obligations for the deferred purchase price of Property or
          services acquired by such person or any predecessor and all
          obligations of such person under any conditional sale or other title
          retention agreement with respect to any Property;

     (g)  all obligations secured by any Encumbrance upon or in any Property
          owned by such person whether or not such person has assumed or become
          liable for the payment of such obligations;

     (h)  the Market Value of all Derivatives in respect of which the Market
          Value is negative from that person's perspective (that is, the person
          is "out of the money");

     (i)  the amount of all contingent liabilities in respect of L/Cs and other
          letters of credit and letters of guarantee;

     (j)  the amount of all contingent liabilities in respect of performance
          bonds and surety bonds, and any other guarantee or other contingent
          liability of any part or all of an obligation of a person other than a
          Restricted Party, in each case only to the extent that the guarantee
          or other contingent liability is required by GAAP to be treated as a
          liability on a balance sheet of the guarantor or person contingently
          liable; and

     (k)  the amount of the contingent liability under any guarantee (other than
          by endorsement of negotiable instruments for collection or deposit in
          the ordinary course of business) in any manner of any part or all of
          an obligation of another person of the type included in any of the
          other items in this definition;

     provided that trade payables and accrued liabilities that are current
     liabilities incurred in the ordinary course of business do not constitute
     Debt. The amount of a person's Debt as calculated above shall be reduced by
     the Market Value of all Derivatives entered into by that person with a
     counterparty in respect of which the Market Value is positive, but the
     reduction for any counterparty shall not exceed the Market Value of any
     Derivatives entered into with the same counterparty that have a negative
     Market Value, except if the counterparty is a Lender, the reduction shall
     not exceed the aggregate of the principal amount of the Obligations owed to
     the same Lender and the Market Value of all Derivatives entered into by
     that person with the same Lender in respect of which the Market Value is
     negative.
<PAGE>
                                      -9-


1.1.34 "DECLINING LENDER" has the meaning defined in Section 2.4.1.

1.1.35 "DEFAULTING LENDER" has the meaning defined in Section 9.3.2.

1.1.36 "DERIVATIVE" means any transaction of a type commonly considered to be a
     derivative, any combination of such transactions or any agreement relating
     to any such transaction or combination of transactions, in each case
     whether relating to one or more of interest, currencies, commodities,
     securities or other matters, including but not limited to (a) any cap,
     collar, floor or option, (b) any forward contract, and (c) any rate swap,
     basis swap, commodity swap, cross-currency swap or other swap or contract
     for differences.

1.1.37 "DERIVATIVE AGENT" means a Lender which may be appointed as contemplated
     in Schedule L.

1.1.38 "DESIGNATED ACCOUNT" means, in respect of any Advance, the account or
     accounts maintained by the Borrower at a branch of RBC in Vancouver,
     British Columbia that the Borrower designates in its notice requesting an
     Advance.

1.1.39 "DRAWDOWN DATE" means the date, which shall be a Business Day, of any
     Advance.

1.1.40 "EBITDA" means, for any relevant period, an amount equal to NSCL's net
     income or net loss for the period, calculated on a consolidated basis;

     (a)  plus, amounts deducted in calculating net income or net loss in
          respect of depreciation and amortization;

     (b)  plus, Total Interest Expense;

     (c)  plus, upfront fees paid to the Agent, Arrangers or Lenders in
          connection with this Agreement;

     (d)  plus, amounts deducted in calculating net income or net loss in
          respect of income taxes (but not capital taxes except those that are
          considered by GAAP to be income taxes), whether or not deferred;

     (e)  minus, any non-cash items increasing consolidated net income for such
          period;

     (f)  plus, any non-cash items decreasing consolidated net income for such
          period;

     (g)  plus, unusual non-cash charges which require an accrual of, or a
          reserve for, cash charges for any future period;

     (h)  minus, all cash payments during such period relating to non-cash
          charges which were added back in determining EBITDA in any prior
          period;
<PAGE>
                                      -10-


     and excluding:

     (i)  any gain or loss attributable to the sale, conversion, abandonment or
          other disposition of Property, other than sales of inventory in the
          ordinary course of business; and

     (j)  gains resulting from the write-up of Property and losses resulting
          from the write-down of Property (other than allowances for doubtful
          accounts receivable and any inventory adjustments); and

     (k)  any gain or loss on the repurchase or redemption of any securities
          (including in connection with the early retirement or defeasance of
          any Debt); and

     (l)  any foreign exchange gain or loss (other than foreign exchange gains
          or losses in respect of accounts receivable and accounts payable and
          hedges or forward exchange contracts in respect of revenues, in each
          case that are realized in the ordinary course of business); and

     (m)  any income or loss attributable to discontinued operations; and

     (n)  any other extraordinary items; and

     (o)  net income or net loss and other amounts specified in the other items
          of this definition that are attributable to persons other than
          Restricted Parties or to minority interests in Restricted Parties;

     all of which shall be calculated without duplication in accordance with
     GAAP unless otherwise expressly described. If NSCL has established a new
     Restricted Party or has disposed of a Restricted Party or material Property
     out of the ordinary course of business during the relevant period, EBITDA
     shall be calculated in accordance with GAAP (or otherwise on a basis
     satisfactory to the Agent, acting reasonably), as if the new Restricted
     Party had been a Restricted Party during the entire period or the
     disposition had occurred at the beginning of the period. If NSCL has
     acquired material Property out of the ordinary course of business during
     the relevant period for which there are separate historical financial
     statements, EBITDA shall be calculated in accordance with GAAP (or
     otherwise on a basis satisfactory to the Agent, acting reasonably), as if
     the acquisition had occurred at the beginning of the period.

1.1.41 "ENCUMBRANCE" means any mortgage, debenture, pledge, hypothec, deposit,
     lien, charge, assignment by way of security, consignment, capital lease,
     hypothecation, security interest or other security agreement, trust or
     arrangement having the effect of security for the payment of any debt,
     liability or obligation, or any other adverse claim affecting Property, and
     "ENCUMBRANCES", "ENCUMBRANCER", "ENCUMBER" and "ENCUMBERED" shall have
     corresponding meanings.
<PAGE>
                                      -11-


1.1.42 "ENVIRONMENTAL LAWS" means all applicable Requirements of Law, Permits
     and guidelines or requirements of any governmental body (whether or not
     having the force of law, and including consent decrees as to which any
     Restricted Party is a party or otherwise subject, and administrative orders
     which may affect a Restricted Party) relating to public health and safety,
     protection of the environment, the release of Hazardous Materials or
     occupational health and safety.

1.1.43 "EVENT OF DEFAULT" has the meaning defined in Section 8.1.

1.1.44 "EXCHANGE RATE" means, on any day, for the purpose of calculations under
     this Agreement, the amount of Canadian Dollars into which US Dollars may be
     converted, or vice versa, using the Agent's mid rate (i.e. the average of
     the Agent's spot buying and selling rates) for converting the first
     currency to the other currency at the relevant time on that day. If the
     Exchange Rate is being determined at any time in respect of a previous day,
     the noon spot rate of the Bank of Canada on that previous day shall be used
     instead of the Agent's mid rate.

1.1.45 "EXCLUDED TAXES" means any Taxes now or hereafter imposed, levied,
     collected, withheld or assessed on a Lender by Canada or any other
     jurisdiction in which that Lender is subject to Tax as a result of the
     Lender (i) carrying on a trade or business in such jurisdiction or being
     deemed to do so, or having a permanent establishment in such jurisdiction;
     (ii) being organized under the laws of such jurisdiction; (iii) being
     resident or deemed to be resident in such jurisdiction, (iv) not dealing at
     arm's length with the Restricted Parties or any other Lender or (v) being
     connected with the jurisdiction imposing such Taxes otherwise than by the
     mere advancement of credit hereunder, the receipt of payments under the
     Credit Documents or the enforcement of rights under the Credit Documents;
     but does not include any sales, goods or services Tax payable under the
     laws of any such jurisdiction with respect to any goods or services made
     available by a Lender to the Borrower under this Agreement or any
     withholding tax.

1.1.46 "EXISTING MAJOR SHAREHOLDER" means the principal shareholder of NSCL
     referred to on page 10 of NSCL's short form prospectus dated 16 May 2002.

1.1.47 "EXISTING SPECIAL DERIVATIVES" has the meaning defined in Schedule L.

1.1.48 "FEDERAL FUNDS EFFECTIVE RATE" means for any period, a fluctuating
     interest rate per annum equal, for each day during such period, to the
     weighted average of the rates on overnight federal funds transactions with
     members of the Federal Reserve System arranged by Federal Funds brokers as
     published for such day (or, if such day is not a Business Day, for the next
     preceding Business Day) by the Federal Reserve Bank of New York or, for any
     day on which that rate is not published for that day by the Federal Reserve
     Bank of New York, the average of
<PAGE>
                                      -12-


     the quotations for that day for such transactions received by the Agent
     from three Federal Funds brokers of recognized standing.

1.1.49 "FEE AGREEMENT" means the agency fee agreement between the Borrower and
     the Agent dated as of 19 July 2002, as amended, supplemented, restated and
     replaced from time to time.

1.1.50 "FUNDED DEBT" means all Debt of NSCL on a consolidated basis other than
     Debt referred to in item (d) of the definition of Debt and Debt in respect
     of which no interest, fee or other compensation is charged and no
     Encumbrance is held.

1.1.51 "FUNDED DEBT RATIO" means at any time, the ratio calculated by dividing
     NSCL's (a) Funded Debt by (b) the aggregate of its Funded Debt plus its
     shareholders equity determined in accordance with GAAP on a consolidated
     basis.

1.1.52 "GAAP" means Canadian generally accepted accounting principles, including
     such principles recommended by the Canadian Institute of Chartered
     Accountants as contained in the "CICA Handbook" as amended, replaced or
     restated from time to time and, in the absence of a specific recommendation
     contained in the "CICA Handbook," accounting principles generally accepted
     in practice in Canada.

1.1.53 "HAZARDOUS MATERIALS" means:

     (a)  any oil, flammable substances, explosives, radioactive materials,
          hazardous wastes or substances, toxic wastes or substances or any
          other wastes, contaminates, materials or pollutants which:

          (i)  pose a hazard to any real property, or to persons on or about any
               real property; or

          (ii) cause any real property to be in violation of any Requirement of
               Law;

     (b)  asbestos in any form which is or could become friable, urea
          formaldehyde foam insulation, transformers or other equipment which
          contain dielectric fluid containing levels of polychlorinated
          biphenyls in excess of limits prescribed by Requirements of Law, or
          radon gas;

     (c)  any chemical, material or substance defined as or included in the
          definition of "dangerous goods", "deleterious substance", "hazardous
          substances", "hazardous wastes", "hazardous materials", "extremely
          hazardous wastes", "restricted hazardous waste", "toxic substances",
          "waste" or words of similar import under any Law, including the
          Canadian Environmental Protection Act (Canada), Fisheries Act
          (Canada), Transportation of
<PAGE>
                                      -13-


          Dangerous Goods Act (Canada), Canada Water Act (Canada) and any
          applicable provincial legislation; and

     (d)  any other chemical, material or substance, exposure to which is
          prohibited, limited or regulated by any governmental body or which may
          or could pose a hazard to the occupants of any real property or any
          other person coming upon any real property or adjacent or surrounding
          property;

     and references to a "release" of Hazardous Materials include spilling,
     leaking, pumping, pouring, emitting emptying, discharging, injecting,
     escaping, leaching, disposing, dumping or other form of release, or
     permitting any of the foregoing to occur.

1.1.54 "INTELLECTUAL PROPERTY" means patents, trademarks, service marks, trade
     names, copyrights, trade secrets, industrial designs and other similar
     rights.

1.1.55 "INTERBANK REFERENCE RATE" means, in respect of any currency, the
     interest rate expressed as a percentage per annum which is customarily used
     by the Agent when calculating interest due by it or owing to it arising
     from correction of errors in transactions in that currency between it and
     other chartered banks.

1.1.56 "INTERCREDITOR AGREEMENTS" means any intercreditor agreements that may be
     entered into from time to time to provide for the terms of subordination of
     any Debt in favour of the Obligations, or other relationship between the
     Lenders and the holders of other Debt, including, without limitation, any
     intercreditor agreements entered into with the holders of 1999 Notes, 2001
     Notes, Permitted Senior Secured Indebtedness and Permitted Subordinated
     Secured Indebtedness, each as amended, supplemented, restated and replaced
     from time to time.

1.1.57 "INTEREST COVERAGE RATIO" means, at any time, the ratio calculated by
     dividing (a) EBITDA for NSCL's four most recently completed fiscal quarters
     by (b) Total Interest Expense for that period. For the purpose of
     calculating the Interest Coverage Ratio for the four fiscal quarters ending
     30 June 2002, NSCL's EBITDA and Total Interest Expense for the fiscal
     quarter ended 30 September 2001 shall be deemed to be $67,600,000 and
     $19,400,000, respectively, reflecting a pro forma calculation taking into
     account NSCL's acquisition of Pacifica Papers Inc. during that quarter.

1.1.58 "INTEREST PAYMENT DATE" means (in connection with Prime Rate Advances and
     Base Rate Advances) the first day of each calendar month or if that is not
     a Business Day, the Business Day next following.

1.1.59 "ISSUING BANK" means the Lender making Advances under Credit 2, which is
     RBC unless changed in accordance with Section 2.1.1.

1.1.60 "L/C" means a standby letter of credit, letter of guarantee or commercial
     letter of credit in a form satisfactory to the Issuing Bank issued by the
     Issuing Bank at
<PAGE>
                                      -14-


     the request of the Borrower in favour of a third party to secure the
     payment or performance of an obligation of a Restricted Party to the third
     party.

1.1.61 "L/C FEE" means the amount calculated by multiplying the face amount of
     each L/C by the rate for the L/C Fee specified in Section 2.5, and then
     multiplying the result by a fraction, the numerator of which is the
     duration of its term on the basis of the actual number of days to elapse
     from and including the date of issuance of an L/C by the Issuing Bank up to
     but excluding the expiry date of the L/C and the denominator of which is
     365.

1.1.62 "LENDERS" means each of the persons listed on Schedule E and other
     lenders that agree from time to time to become Lenders in accordance with
     Article X of this Agreement, and "LENDER" means any one of the Lenders.

1.1.63 "LIBO RATE" means, for any LIBOR Period and LIBOR Advance, either:

     (a)  the rate of interest (expressed as an annual rate on the basis of a
          360 day year) determined by the Agent to be the arithmetic mean
          (rounded up to the nearest 0.01%) of the offered rates for deposits in
          US Dollars for a period equal to the particular LIBOR Period, which
          rates appear on (A) the Reuters screen LIBO page, or (B) if the
          Reuters screen LIBO page is not readily available to the Agent, Page
          3750 of the Telerate screen, in either case as of 11:00 a.m. (London
          time) on the second Business Day before the first day of that LIBOR
          Period, or,

     (b)  if neither the Reuters screen LIBO page nor Page 3750 of Telerate is
          readily available to the Agent for any reason, the rate of interest
          determined by the Agent which is equal to the simple average of the
          rates of interest (expressed as a rate per annum on the basis of a
          year of 360 days and rounded up to the nearest 0.01%) at which three
          of the five largest (as to total assets) banks listed on Schedule I to
          the Bank Act (Canada) as selected by the Agent would be prepared to
          offer leading banks in the London interbank market a deposit in US
          Dollars for a period equal to the LIBOR Period in an amount
          approximately equal to the relevant LIBOR Advance at or about 10:00
          a.m. (Toronto time) on the second Business Day before the first day of
          such Interest Period.

          The LIBO Rate calculated as above shall be adjusted from day to day
          for any Lender to whom the Eurocurrency Reserve Percentage applies in
          respect of its LIBOR Advances under this Agreement by dividing the
          LIBO Rate by a percentage equal to 100% minus the Eurocurrency Reserve
          Percentage on that day. The Eurocurrency Reserve Percentage is the
          percentage prescribed by the Board of Governors of the Federal Reserve
          System of the United States (or any successor to its functions) for
          determining the maximum reserve requirement (including but not limited
          to any emergency, supplemental or other marginal reserve requirement)
          for a member bank of the Federal Reserve System in New York, New
<PAGE>
                                      -15-


          York with deposits exceeding US $5 billion in respect of Eurocurrency
          Liabilities (as defined in Regulation D of the Board of Governors of
          the Federal Reserve System) or in respect of any other category of
          liabilities which includes deposits by reference to which the interest
          rate on LIBOR Advances is determined or any category of extensions of
          credit or assets which includes loans by a non-United States office of
          any bank to United States residents.

1.1.64 "LIBOR ADVANCE" means an advance in US Dollars bearing interest based on
     the LIBO Rate.

1.1.65 "LIBOR PERIOD" means the period selected by the Borrower for a LIBOR
     Advance or the period applicable to the LIBOR Advance under the terms of
     this Agreement.

1.1.66 "MAJORITY LENDERS" means Lenders holding, in the aggregate, a minimum of
     66 2/3% of the outstanding amount of the Commitments.

1.1.67 "MARKET VALUE" means, on any day, the total amount, if any, expressed in
     Canadian Dollars that a person would be required to pay to its counterparty
     under any Derivative in order to terminate the Derivative. The
     determination shall be made in accordance with current market practice
     using the average of the buy and sell prices of the underlying interest of
     the Derivative as of noon Toronto time on that date. The determination
     shall be made by the Derivative Agent if a Derivative Agent has been
     appointed. Otherwise, the determination may be made initially by NSCL but
     shall be subject to review by the Agent (whose determination, if made in
     good faith, shall be conclusive) if the Agent considers that review is
     appropriate.

1.1.68 "MATERIAL ADVERSE CHANGE" means any one or more transactions, events or
     conditions which, when taken together, have a material adverse effect on
     (a) the ability of the Restricted Parties as a whole to perform and
     discharge their obligations under this Agreement or the Material Contracts
     taken as a whole, (b) the Agent's or the Lenders' ability to enforce their
     rights or remedies under any of the Credit Documents, or (c) the financial
     condition, business or prospects of NSCL and its Subsidiaries, taken as a
     whole. Notwithstanding the foregoing, if the context requires, "Material
     Adverse Change" shall be interpreted having reference only to such persons
     (other than all of the Restricted Parties) as the context requires.

1.1.69 "MATERIAL CONTRACT" means any Contract:

     (a)  to which is attached obligations on the part of the Restricted Parties
          or which has an economic value to the Restricted Parties in excess of
          $25,000,000 per annum; or
<PAGE>
                                      -16-


     (b)  to which a Restricted Party is a party that, if terminated, would
          materially impair the ability of the Restricted Parties as a whole to
          carry on business in the ordinary course or would cause a Material
          Adverse Change.

1.1.70 "MATERIAL PERMIT" means any Permit issued to a Restricted Party that, if
     terminated, would materially impair the ability of the Restricted Parties
     as a whole to carry on business in the ordinary course or would cause a
     Material Adverse Change.

1.1.71 "MOODY'S" means Moody's Investors Service, Inc.

1.1.72 "NON BA LENDER" has the meaning defined in Section 5.15.5.

1.1.73 "NEW LENDER" has the meaning defined in Section 2.4.4.

1.1.74 "1999 INDENTURE" means the trust indenture dated as of 12 March 1999
     between Pacifica Papers Inc., a predecessor by amalgamation of NSCL, as
     issuer, certain of its Subsidiaries as guarantors and Wells Fargo Bank
     Minnesota, National Association (originally Norwest Bank Minnesota,
     National Association), as Trustee, as amended and supplemented by
     agreements dated 12 March 1999, 30 December 1999, 31 January 2001 and 1
     September 2001 and otherwise as permitted by this Agreement.

1.1.75 "1999 NOTES" means the 10% senior notes due 2009 issued under the 1999
     Indenture.

1.1.76 "NOTEHOLDERS" means the holders from time to time of the 1999 Notes and
     the 2001 Notes.

1.1.77 "NSCL" means Norske Skog Canada Limited, a corporation governed by the
     Canada Business Corporations Act.

1.1.78 "OBLIGATIONS" means all obligations of the Borrower to the Lenders under
     or in connection with this Agreement, other than the Other Secured
     Obligations, including but not limited to all debts and liabilities,
     present or future, direct or indirect, absolute or contingent, matured or
     not, at any time owing by the Borrower to the Lenders in any currency or
     remaining unpaid by the Borrower to the Lenders in any currency under or in
     connection with this Agreement, whether arising from dealings between the
     Lenders and the Borrower or from any other dealings or proceedings by which
     the Lenders may be or become in any manner whatever creditors of the
     Borrower under or in connection with this Agreement, and wherever incurred,
     and whether incurred by the Borrower alone or with another or others under
     or in connection with this Agreement, and whether as principal or surety,
     and all interest, fees, legal and other costs, charges and expenses. In
     this definition, "the Lenders" shall be interpreted as "the Lenders, or any
     of them".
<PAGE>
                                      -17-


1.1.79 "OTHER SECURED OBLIGATIONS" means the present and future debts,
     liabilities and obligations of any Restricted Party under or in connection
     with:

     (a)  Derivatives to exchange one of Canadian Dollars, US Dollars, Euros or
          Japanese yen to another of those currencies, provided that in the case
          of such Derivatives that relate to Debt, such Derivatives do not
          increase the principal amount of Debt outstanding other than as a
          result of fluctuations in foreign currency exchange rates or by reason
          of fees, indemnities or compensation payable thereunder;

     (b)  Derivatives to provide for the exchange of floating interest rate
          obligations for fixed interest rate obligations, provided that the
          aggregate notional principal amount (net of offsetting transactions)
          of such Derivatives does not exceed the aggregate principal amount of
          NSCL's consolidated floating rate Debt at the time any such Derivative
          is entered into, and that the notional principal amount of such
          Derivatives, at the time they are incurred, does not exceed the
          principal amount of the Debt to which such Derivatives relate;

     (c)  Derivatives to provide for the exchange of fixed interest rate
          obligations for floating interest rate obligations in an aggregate
          notional principal amount (net of offsetting transactions) that does
          not exceed the aggregate principal amount of NSCL's consolidated fixed
          rate Debt at the time any such Derivative is entered into;

     (d)  Derivatives to manage fluctuations in prices of commodities;

     (e)  any other Derivative that is not entered into for speculative purposes
          provided that the Agent acting reasonably, after consultation with
          counsel but without any requirement to seek approval of the Majority
          Lenders, concludes that the Derivative may be entered into without
          breaching this Agreement, the 1999 Indenture, the 2001 Indenture, any
          Permitted Senior Secured Indebtedness, any Permitted Subordinated
          Secured Indebtedness or any Permitted Unsecured Indebtedness; and

     (f)  guarantees by Restricted Parties of Other Secured Obligations incurred
          by other Restricted Parties;

     provided that:

     (g)  the debts, liabilities and obligations are, in each case, held by
          (i.e. owed to) any person that, at the time the relevant Derivative
          was entered into, was a Lender or an affiliate (as defined in the
          Canada Business Corporations Act) of a Lender;

     (h)  the Derivative Agent (or the Agent, if no Derivative Agent has then
          been appointed) has been notified in writing of any particular Other
          Secured Obligation (other than those listed on Schedule H) being
          entered into,
<PAGE>
                                      -18-


          either within five Business Days of it being entered into or within
          such longer time as is established in accordance with any arrangements
          established as contemplated in Schedule L; and

     (i)  except for the Existing Special Derivatives, if the Derivative is of
          the type described in Sections (c), (d) or (e), it is entered into in
          accordance with the arrangements contemplated in Schedule L.

1.1.80 "PENDING EVENT OF DEFAULT" means an event which, with giving of notice,
     lapse of time, or both, or subject to any other condition subsequent to
     such event, would constitute an Event of Default.

1.1.81 "PENSION PLAN" means (a) a "registered pension plan" (as that term is
     defined in the Income Tax Act (Canada)) which is subject to the funding
     requirements of applicable pension benefits legislation in any jurisdiction
     of Canada and is applicable to employees resident in Canada of any
     Restricted Party, or (b) any pension benefit plan, other post-retirement
     benefit plan or other similar arrangement applicable to employees of any
     Restricted Party.

1.1.82 "PERMITS" means governmental licenses, authorizations, consents,
     registrations, exemptions, permits and other approvals required by law.

1.1.83 "PERMITTED ENCUMBRANCES" means, with respect to any person, the
     following:

     (a)  Encumbrances for taxes, rates, assessments or other governmental
          charges or levies not yet due, or for which instalments have been paid
          based on reasonable estimates pending final assessments, or if due,
          the validity of which is being contested diligently and in good faith
          by appropriate proceedings by that person and the payment of which has
          been secured by such arrangements (including Collateral) as the
          Lenders may require;

     (b)  undetermined or inchoate Encumbrances, rights of distress and charges
          incidental to current operations which have not at such time been
          filed or exercised and of which none of the Lenders has been given
          notice, or which relate to obligations not due or payable or if due,
          the validity of which is being contested diligently and in good faith
          by appropriate proceedings by that person and the payment of which has
          been secured by such arrangements (including Collateral) as the
          Lenders may require;

     (c)  reservations, limitations, provisos and conditions expressed in any
          original grants from the Crown or other grants of real or immovable
          property, or interests therein, which do not materially affect the use
          of the affected land for the purpose for which it is used by that
          person;

     (d)  zoning, land use and building restrictions, by-laws, regulations and
          ordinances of federal, provincial, municipal and other governmental
          authorities, licenses, easements, rights-of-way and rights in the
          nature of easements (including, without limiting the generality of the
          foregoing,
<PAGE>
                                      -19-


          licenses, easements, rights-of-way and rights in the nature of
          easements for sidewalks, public ways, sewers, drains, gas, steam and
          water mains or electric light and power, or telephone and telegraph
          conduits, poles, wires and cables), none of which will materially
          impair the use of the affected land for the purpose for which it is
          used by that person;

     (e)  title defects, encroachments or irregularities which are of a minor
          nature and which in the aggregate will not materially impair the use
          of the affected property for the purpose for which it is used by that
          person;

     (f)  the right reserved to or vested in any municipality or governmental or
          other public authority by the terms of any lease, license, franchise,
          grant or permit acquired by that person or by any statutory provision
          to terminate any such lease, license, franchise, grant or permit, or
          to require annual or other payments as a condition to the continuance
          thereof;

     (g)  the Encumbrance resulting from the deposit of cash or securities in
          connection with contracts (other than for the payment of Debt),
          tenders or expropriation proceedings, or to secure workers'
          compensation, unemployment insurance, surety or appeal bonds, costs of
          litigation when required by law, liens and claims incidental to
          current construction, mechanics', warehousemen's, carriers' and other
          similar liens, and public, statutory and other like obligations
          incurred in the ordinary course of business, up to a maximum at any
          time of $10,000,000 for all Restricted Parties;

     (h)  security given to a public utility or any municipality or governmental
          authority when required by such utility or authority in connection
          with the operations of that person in the ordinary course of its
          business, up to a maximum at any time of $10,000,000 for all
          Restricted Parties;

     (i)  the Trustee Security, to the extent that it secures debentures that
          have been issued under the trust deeds forming part of the Trustee
          Security and pledged to secure the debts, liabilities and obligations
          described in Section 3.2, and the pledges of those debentures;

     (j)  the Security other than the Trustee Security;

     (k)  the Encumbrance created by a judgment of a court of competent
          jurisdiction, as long as the judgment is being contested diligently
          and in good faith by appropriate proceedings and payment has been
          secured by such arrangements (including Collateral) as the Lenders may
          require or the judgment is being satisfied by that person and has not
          caused an Event of Default;

     (l)  Encumbrances on Property and the proceeds thereof created or assumed
          to finance the acquisition or improvement or secure the unpaid
          purchase price thereof (including the principal amount of any capital
          lease or
<PAGE>
                                      -20-


          Purchase Money Mortgage), provided that the aggregate principal amount
          (or fair market value of the Property Encumbered if no principal
          amount is designated) in respect of all such Encumbrances entered into
          by all Restricted Parties does not exceed 5% of Consolidated Net
          Tangible Assets at any time;

     (m)  lease by Pacifica Papers Inc. to Haggard Trucking Ltd. of that part of
          DL 1, Alberni District, Plan 1186-R and that Part of Lot A, DL 2,
          Alberni District Plan 41766, dated 1 November 1999, with term to 31
          October 2003, with rent of $5,100 semi-annually (NSCL File No.
          1701-02, PR No. G-1243);

     (n)  lease by Pacifica Poplars Inc. to Peter Klein of Part of Northwest 1/4
          of the Northeast 1/4 of Section 30, Township 3810, Range 5, EWM,
          containing 1.75 acres more or less at $1.00 per year to 21 October
          2005 (NSCL File No. 4708-05, PR No. G-4000);

     (o)  permit by NSCL to West Isle Resources Renewal Limited to use Part of
          Part of Block 105 Alberni District Plan for a 4-year term at $1500 per
          quarter, for fish composting operations (expires 30 June 2005);

     (p)  lease ED128285 by NSCL registered against one of the properties
          comprising the Crofton Pulp and Paper lands (PID: 009-922-431) to The
          Corporation of the District of North Cowichan over the portion of the
          relevant property shown on Plan VIP51593 for the purposes of a
          community parking lot, boat launch ramp and water access for a term of
          20 years commencing on 1 May 1990 and terminating on 30 April 2010;

     (q)  lease EN73583 by Elk Falls Pulp and Paper Limited registered against
          one of the properties comprising the Elk Falls Mill lands (PID:
          001-233-432) to Calpine Island Cogeneration Project Inc. (Inc. No.
          A44467), for the purposes of a cogeneration plant which provides steam
          to the mill operations and also sells electricity to BC Hydro, and
          being a long-term lease which has a term consistent with the Mill
          Services Agreement dated 29 September 1998 (including a renewal); and

     (r)  other Encumbrances expressly agreed to in writing by the Majority
          Lenders.

1.1.84 "PERMITTED OBLIGATIONS" means the following:

     (a)  the Obligations;

     (b)  the Other Secured Obligations;

     (c)  debts, liabilities and obligations of any Restricted Party to another
          Restricted Party;
<PAGE>
                                      -21-


     (d)  the 1999 Notes and the 2001 Notes;

     (e)  Permitted Senior Secured Indebtedness;

     (f)  Permitted Subordinated Secured Indebtedness;

     (g)  Permitted Unsecured Indebtedness;

     (h)  other debts, liabilities and obligations secured by Permitted
          Encumbrances;

     (i)  other unsecured Debt up to an aggregate amount outstanding of
          $4,000,000 for all Restricted Parties at any time;

     (j)  current accounts payable, accrued expenses and other debts,
          liabilities and obligations incurred in the ordinary course of
          business which are not Debt;

     (k)  deferred taxes;

     (l)  actuarially determined obligations in respect of Pension Plans;

     (m)  obligations arising from guarantees by one Restricted Party of debts,
          liabilities and obligations of another Restricted Party that are
          themselves Permitted Obligations;

     (n)  bankers' acceptances secured by L/Cs as contemplated in Section 5.23;
          and

     (o)  other debts, liabilities and obligations expressly permitted under
          this Agreement or expressly consented to by the Majority Lenders in
          writing.

1.1.85 "PERMITTED SENIOR SECURED INDEBTEDNESS" means Debt of NSCL for borrowed
     money that:

     (a)  is secured by the Trustee Security pari passu with the Obligations and
          the Other Secured Obligations;

     (b)  other than as a result of default, does not require or result in
          payment of principal in excess of an aggregate of $50,000,000 for all
          Permitted Senior Secured Indebtedness and Permitted Unsecured
          Indebtedness during any period of 36 consecutive months in the term of
          this Agreement;

     (c)  is on terms and conditions that, in the reasonable opinion of the
          Majority Lenders, are no more restrictive to the Restricted Parties
          than the terms of the Obligations including, without limitation, the
          scheduled amortization of the Debt;

     (d)  is not incurred at a time that an Event of Default or Pending Event of
          Default has occurred and is continuing or would, in the opinion of the
          Majority Lenders, acting reasonably, based on their review of pro
          forma
<PAGE>
                                      -22-


          budgets and other information that the Lenders may require from NSCL
          (all of which must be in form and substance satisfactory to the
          Lenders, acting reasonably), result from the incurrence of the Debt;

     (e)  if required by the Majority Lenders, is subject to the terms of an
          Intercreditor Agreement entered into with the Agent in form and
          substance satisfactory to the Majority Lenders, acting reasonably; and

     (f)  has an aggregate principal amount outstanding at any time during the
          term of this Agreement that does not exceed $150,000,000.

1.1.86 "PERMITTED SUBORDINATED SECURED INDEBTEDNESS" means Debt of NSCL for
     borrowed money that:

     (a)  is on terms and conditions including, without limitation, financial
          covenants that are satisfactory to the Majority Lenders;

     (b)  if required by the Majority Lenders, is subject to the terms of an
          Intercreditor Agreement entered into with the Agent in form and
          substance satisfactory to the Majority Lenders, acting reasonably;

     (c)  is secured by the Trustee Security but subordinate to the Obligations
          and the Other Secured Obligations.

1.1.87 "PERMITTED UNSECURED INDEBTEDNESS" means Debt of NSCL for borrowed money
     that:

     (a)  other than as a result of default, does not require payment of
          principal in excess of an aggregate of $50,000,000 for all Permitted
          Senior Secured Indebtedness and Permitted Unsecured Indebtedness
          during the term of this Agreement;

     (b)  is on terms and conditions that are no more restrictive to the
          Restricted Parties than the terms of the Obligations including,
          without limitation, the scheduled amortization of the Debt; and

     (c)  is not incurred at a time that an Event of Default or Pending Event of
          Default has occurred and is continuing or would result from the
          incurrence of the Debt.

1.1.88 "PERSON" or "PERSON" means any individual, corporation, company,
     partnership, unincorporated association, trust, joint venture, estate or
     other judicial entity or any governmental body.

1.1.89 "PLEDGED SHARES" means the Capital Stock of the Restricted Parties and
     other persons that is pledged as part of the Trustee Security from time to
     time.

1.1.90 "PRIME RATE" means, on any day, the greater of:
<PAGE>
                                      -23-


     (a)  the annual rate of interest expressed as a percentage per annum in
          effect on that day as TD's reference rate for commercial loans made by
          it in Canada in Canadian Dollars; and

     (b)  the average rate for 30 day Canadian Dollar bankers' acceptances that
          appears on the Reuters Screen CDOR Page at 10:00 a.m. Toronto time on
          that day, plus 1% per annum.

1.1.91 "PRIME RATE ADVANCE" means an Advance in Canadian Dollars bearing
     interest based on the Prime Rate and includes deemed Prime Rate Advances
     provided for in this Agreement.

1.1.92 "PROPERTY" means, with respect to any person, any or all of its
     undertaking, property and assets.

1.1.93 "PROPORTIONATE SHARE" means the percentage of the maximum amount of the
     Credits which a Lender has agreed to advance to the Borrower, as set out on
     Schedule E, which shall be amended by the Agent from time to time as other
     persons become Lenders or the Proportionate Shares of Lenders otherwise
     change.

1.1.94 "PURCHASE MONEY MORTGAGE" means any Encumbrance, including a capital
     lease, created, issued or assumed by any Restricted Party to secure
     indebtedness assumed by that person as part of, or issued or incurred to
     provide funds to pay, and not exceeding 100% of, the unpaid purchase price
     (including installation cost) or construction cost of any Property, if the
     Encumbrance is limited to the Property acquired and is created, issued or
     assumed substantially concurrently with the acquisition of the Property or
     in connection with the refinancing of an existing Purchase Money Mortgage,
     if the principal amount has not increased and the Encumbrance continues to
     be limited to that Property. Purchase Money Mortgage also includes any
     other fixed charge over specific limited Property securing term debt of a
     person existing at the time the person is acquired by a Restricted Party or
     assumed by a Restricted Party in connection with the acquisition of
     Property from the person, but not incurred in connection with or in
     anticipation of the acquisition of the person or Property.

1.1.95 "RBC" means Royal Bank of Canada, a bank to which the Bank Act (Canada)
     applies.

1.1.96 "REFERENCE DEBT RATING" means the public rating of the indebtedness and
     liability of the Borrower to the Lenders under the Credits or if either
     Moody's or S&P has not established a rating for indebtedness and liability
     under the Credits, the corporate credit or issuer ratings of NSCL
     established by Moody's or S&P, as the case may be, shall apply.

1.1.97 "REGISTER" has the meaning defined in Section 10.2.3.
<PAGE>
                                      -24-


1.1.98 "REPLACEMENT CONTRACT" means any one or more Contracts (a) entered into
     by a Restricted Party to replace a Material Contract that has been
     terminated or in respect of which a declaration of non-performance has been
     issued or similar step has been taken, (b) which provide the Restricted
     Party with rights, benefits and value substantially similar to and on terms
     and conditions not materially less favourable than those contained in the
     Material Contract being replaced and (c) which are entered into
     concurrently with or before a termination, declaration or similar step
     arising from a breach by or other event relating to a Restricted Party or
     within 30 days of a termination, declaration or similar step arising from a
     breach by or other event relating to a Person other than a Restricted
     Party. A Replacement Contract shall be deemed to be a Material Contract and
     shall be deemed to be a Special Material Contract if the Material Contract
     that it replaces was a Special Material Contract, and the Material Contract
     that is replaced shall cease to be a Material Contract.

1.1.99 "REQUIREMENT OF LAW" means, as to any person, any law, treaty,
     regulation, ordinance, decree, judgment, order or similar requirement made
     or issued under sovereign or statutory authority and applicable to or
     binding upon that person, or to which that person or any of its Property is
     subject.

1.1.100 "RESTRICTED PARTIES" means NSCL, the Borrower, Elk Falls Pulp and Paper
     Limited, NorskeCanada, Norske Skog Canada (Japan) Ltd, Norske Skog Canada
     Pulp Operations Limited, Norske Skog Canada Pulp Sales Inc, Norske Skog
     Canada Sales Inc., Norske Skog Canada (USA) Inc., Norske Skog Pulp Sales
     (Japan) Ltd., NSCL Holdings Inc., Pacifica Papers Sales Ltd., Pacifica
     Papers Sales Inc., Pacifica Papers Kabushiki Kaisha, Pacifica Poplars Ltd.,
     Pacifica Poplars Inc., and Pacifica Papers US Inc. and such other
     Subsidiaries of NSCL as may become Restricted Parties from time to time.

1.1.101 "S&P" means Standard & Poor's Corporation.

1.1.102 "SCHEDULE" means the designated schedule of this Agreement.

1.1.103 "SECTION" means the designated section of this Agreement.

1.1.104 "SECURED DEBT RATIO" means, at any time, the ratio of (a) the amount of
     Funded Debt that is secured by any Encumbrance to (b) the aggregate of all
     Funded Debt plus NSCL's shareholders' equity determined in accordance with
     GAAP on a consolidated basis.

1.1.105 "SECURITY" means the security held from time to time by or on behalf of
     the Lenders (including but not limited to the Trustee Security), securing
     or intended to secure repayment of the Obligations, including without
     limitation the security described in Section 3.1.

1.1.106 "SPECIAL MATERIAL CONTRACT" has the meaning defined in Section 3.1.8.
<PAGE>
                                      -25-


1.1.107 "SUBSIDIARY" means, with respect to a Restricted Party, a subsidiary as
     defined in the Canada Business Corporations Act as of the date of this
     Agreement, and any partnership or other organization in which the
     Restricted Party or any of its Subsidiaries has the right to make or
     control management decisions.

1.1.108 "SUCCESSOR AGENT" has the meaning defined in Section 9.11.

1.1.109 "SYNDICATION AGENT" means RBC in its role as syndication agent for the
     Lenders.

1.1.110 "TAXES" means all taxes, levies, imposts, stamp taxes, duties,
     deductions, withholdings, rates, assessments, fees, dues and similar
     governmental impositions payable, levied, collected, withheld, imposed or
     assessed as of the date of this Agreement or at any time in the future, and
     "Tax" shall have a corresponding meaning.

1.1.111 "TD" means The Toronto-Dominion Bank, a bank to which the Bank Act
     (Canada) applies.

1.1.112 "THRESHOLD AMOUNT" means, while the 1999 Notes are outstanding, the
     aggregate of:

     (a)  the greater of (i) $430,000,000 and (ii) the sum of 75% of the net
          book value of the accounts receivable of NSCL and its "Restricted
          Subsidiaries" as defined under the 1999 Indenture plus 50% of the net
          book value of inventory of NSCL and its Restricted Subsidiaries plus
          $290,000,000;

     (b)  $40,000,000; and

     (c)  the amount of Advances outstanding under the Credits that are trade
          letters of credit and standby letters of credit incurred in the
          ordinary course of business and the amount of Bankers' Acceptances
          outstanding under the Credits that are incurred in the ordinary course
          of business, up to an aggregate principal amount of $5,000,000
          outstanding at any one time;

     and, if the 1999 Notes are no longer outstanding and the 2001 Notes are
     outstanding, means the aggregate of:

     (d)  the greater of (i) $725,000,000 and (ii) the sum of 75% of the net
          book value of the accounts receivable of NSCL and its "Restricted
          Subsidiaries" as defined under the 2001 Indenture plus 50% of the book
          value of inventory at the lower of cost and net realizable value, net
          of any allowance for obsolescence of NSCL and its Restricted
          Subsidiaries plus $290,000,000;

     (e)  $40,000,000; and
<PAGE>
                                      -26-


     (f)  the amount of Advances outstanding under the Credits that are trade
          letters of credit and standby letters of credit incurred in the
          ordinary course of business and the amount of Bankers' Acceptances
          outstanding under the Credits that are incurred in the ordinary course
          of business, up to an aggregate principal amount of $5,000,000
          outstanding at any one time.

     If neither the 1999 Notes nor the 2001 Notes are outstanding, the Threshold
     Amount shall be considered to be unlimited.

1.1.113 "TOTAL INTEREST EXPENSE" means, for any particular period, without
     duplication, the difference between (a) aggregate expense incurred for
     interest and equivalent costs of borrowing (taking into account the effect
     of any relevant Derivatives), including but not limited to (i) bankers'
     acceptance fees, (ii) discounts on bankers' acceptances, (iii) the interest
     portion of any capital lease, and (iv) all fees and other compensation paid
     to any person that has extended credit to the Restricted Parties, but
     excluding any upfront, extension and similar non-recurring fees paid to the
     Agent or Lenders or paid in connection with the 2001 Notes or 1999 Notes,
     in each case whether or not actually paid (unless paid by the issuance of
     securities constituting Debt), and (b) the aggregate income earned from
     interest, in the case of each of (a) and (b), calculated in accordance with
     GAAP in respect of NSCL on a consolidated basis, omitting amounts that are
     not attributable to Restricted Parties. If the calculation of EBITDA is
     adjusted because of acquisitions, dispositions or other circumstances
     described in the last paragraph of Section 1.1.40, the calculation of Total
     Interest Expense shall be adjusted on the same basis.

1.1.114 "TRUSTEE" means The Canada Trust Company in its capacity as trustee
     under the Trustee Security from time to time, and any successor trustee.

1.1.115 "TRUSTEE SECURITY" means the trust deeds granted by the Restricted
     Parties to the Trustee and the pledges of Pledged Shares, assignments of
     Material Contracts and other collateral security for the trust deeds.

1.1.116 "2001 INDENTURE" means the trust indenture dated as of 14 August 2001
     between NSCL, certain of its Subsidiaries as guarantors and Wells Fargo
     Bank Minnesota, National Association as trustee, as amended and
     supplemented by agreements dated 28 August 2001 and 1 September 2001 and
     otherwise as permitted by this Agreement.

1.1.117 "2001 NOTES" means the 8 5/8% senior notes due 2011 issued by NSCL under
     the 2001 Indenture.

1.1.118 "US DOLLARS" and "US $" mean lawful money of the United States of
     America.
<PAGE>
                                      -27-


                                   ARTICLE II
                                   THE CREDITS

2.1  AMOUNT AND AVAILMENT OPTIONS

2.1.1 Upon and subject to the terms and conditions of this Agreement, the
Lenders agree to provide credits for the use of the Borrower in the amount of up
to Cdn. $350,000,000 or the US Dollar equivalent thereof, which are referred to
collectively as the Credits and are comprised of a tranche of up to
Cdn.$297,500,000 referred to as Credit 1 and a tranche of up to Cdn. $52,500,000
referred to as Credit 2. Subject to Section 5.1, Advances under Credit 1 will be
made by the Lenders and Advances under Credit 2 will be made by RBC. The
Borrower may from time to time with the agreement of the Agent (without any
requirement to seek Majority Lender consent) and the proposed replacement,
designate another Lender to replace RBC in making Advances under Credit 2. In
that case, references in this Agreement to RBC in respect of Credit 2 shall be
interpreted as referring to the replacement.

2.1.2 At the option of the Borrower, Credit 1 may be used by requesting Prime
Rate Advances to be made by the Lenders, by requesting Base Rate Advances to be
made by the Lenders, by presenting orders to the Lenders for acceptance as
Bankers' Acceptances, or by requesting that LIBOR Advances be made by the
Lenders.

2.1.3 At the option of the Borrower, Credit 2 may be used by the Borrower
incurring overdrafts in its accounts with RBC, which shall be deemed to be Prime
Rate Advances in the case of Canadian Dollar overdrafts and Base Rate Advances
in the case of US Dollar overdrafts, by presenting orders to RBC for acceptance
as Bankers' Acceptances, by requesting that LIBOR Advances be made by RBC or by
requesting that L/Cs denominated in Canadian Dollars, US Dollars, Euros or
Japanese yen be issued by RBC.

2.1.4 The aggregate amount of all outstanding Advances to the Borrower under the
Credits shall not at any time exceed the amount of the Borrowing Base at that
time.

2.2  REVOLVING CREDIT

     The Credits are revolving credits and the principal amount of any Advance
under a Credit that is repaid may be reborrowed, if the Borrower is otherwise
entitled to an Advance under that Credit.

2.3  USE OF CREDITS

     The Credits shall be used to assist in financing the general corporate
requirements of the Restricted Parties.

2.4  TERM AND REPAYMENT

     The Credits shall be repaid in full and cancelled on or before 19 July
2005. If no Event of Default or Pending Event of Default has occurred and is
continuing, the
<PAGE>
                                      -28-


Borrower may request that the maturity date of the Credits be extended by
successive one year periods in accordance with the following procedures:

2.4.1 The Borrower shall, if it wishes to extend the maturity date, make such
request to each Lender by written notice given to the Agent not earlier than 1
April nor later than 30 April in each year, after the forecasts contemplated in
Section 7.3.1(e) have been delivered to the Agent. Each Lender shall provide a
written response to such request to the Agent within 30 days after receiving the
request. If any Lender fails to respond, it shall be deemed to have declined to
grant any extension (and shall have no liability for failing to respond).
Promptly thereafter, the Agent will notify the Borrower of the response of the
Lenders, which notice shall include the names of all Lenders who declined or
were deemed to have declined to grant such extension (the "DECLINING LENDERS").

2.4.2 If all of the Lenders agree to extend the maturity date, the maturity date
shall be extended by one year from the then applicable maturity date.

2.4.3 If the aggregate amount of the Commitments in respect of all Lenders who
agree to extend the maturity date (the "ACCEPTING LENDERS") is less than or
equal to two-thirds of the aggregate Commitments in respect of the Credits of
all Lenders then in effect, the maturity date shall not be extended.

2.4.4 If the aggregate amount of the Commitments of the Accepting Lenders
exceeds two-thirds of the aggregate Commitments of all Lenders in respect of the
Credits then in effect, unless the Borrower elects not to extend the maturity
date by giving a further written notice to the Agent to that effect before the
then applicable maturity date, the maturity date shall be extended by one year
from the then applicable maturity date provided that the Borrower has, before
the then applicable maturity date, replaced or cancelled the Commitments in
respect of the Credits of all Declining Lenders in the following manner:

     (a)  the Borrower may negotiate an agreement with:

          (i)  one or more of the Accepting Lenders, or

          (ii) one or more other financial institutions ("NEW LENDERS") which
               have been identified by the Borrower (with the assistance of the
               Agent, if requested) and which are acceptable to the Accepting
               Lenders, acting reasonably,

          to assume the Commitments of the Declining Lenders upon payment to the
          Declining Lenders of all amounts owed to the Declining Lenders under
          or in connection with the Credits, and in that event an assignment by
          the Declining Lenders to the Accepting Lenders or the New Lenders will
          be deemed to have occurred in accordance with the terms of the form of
          Assignment Agreement; and

     (b)  to the extent the Commitments of the Declining Lenders have not been
          fully assumed by the Accepting Lenders and the New Lenders pursuant to
          paragraph (a) above, the Borrower shall cancel the Commitments of the
<PAGE>
                                      -29-


          Declining Lenders and pay to the Declining Lenders on the latest
          maturity date to which the Declining Lenders have previously agreed,
          all amounts owed to the Declining Lenders under or in connection with
          the Credits, without penalty but subject to payment of any losses,
          costs and expenses payable to the Declining Lenders pursuant to this
          Agreement.

2.5  INTEREST RATES AND FEES

     Interest rates on Prime Rate Advances, Base Rate Advances and LIBOR
Advances and the rates for calculation of Bankers' Acceptance Fees and L/C Fees
shall vary according to the Reference Debt Ratings. The rate for calculation of
Bankers' Acceptance Fees and L/C Fees shall be the Applicable Fee Rate per annum
from time to time in effect. Interest shall accrue and be payable on Prime Rate
Advances and Base Rate Advances at the Prime Rate and Base Rate, respectively,
per annum plus the Applicable Margin from time to time in effect. Interest shall
accrue and be payable on LIBOR Advances at the LIBO Rate per annum for the
applicable LIBOR Period plus the Applicable Margin from time to time in effect.
Any change in the Applicable Fee Rate or Applicable Margin shall take effect as
provided in the definitions of those terms.

     Interest and fees for Credit 1 shall be promptly distributed by the Agent
to the Lenders based on their respective Proportionate Shares as adjusted in
accordance with Section 5.2. Subject to Section 5.1, interest for Credit 2 shall
be paid to RBC for its own account.

2.6  COMMITMENT FEE

     The Borrower shall pay commitment fees based on the daily undrawn portion
of Credits 1 and 2, respectively, at the following rates, which shall vary
according to the percentage of the aggregate amount of the Credit which is drawn
and the Applicable Fee Rate from time to time:

<TABLE>
<CAPTION>
                             Applicable Commitment Fee
Percentage which is Drawn   (% of Applicable Fee Rate)
-------------------------   --------------------------
<S>                         <C>
< 33%                                   35%
33% to 66%                              30%
>66%                                    25%
</TABLE>

     The commitment fee shall be calculated daily beginning on 19 July 2002 and
shall be payable quarterly in arrears on the third Business Day after the end of
each calendar quarter, with the first payment to be made on 3 October 2002.
Commitment fees for Credit 1 shall be promptly distributed by the Agent to the
Lenders based on their respective Proportionate Shares as adjusted in accordance
with Section 5.2. Subject to Section 5.1, commitment fees for Credit 2 shall be
paid to RBC for its own account.
<PAGE>
                                      -30-


2.7  OTHER FEES

     The Borrower shall also pay agency and other fees in respect of the Credits
to the Agent in accordance with the Fee Agreement and to TD and RBC in
accordance with the fee letters dated 10 May 2002 from those Lenders to the
Borrower.

2.8  EXISTING L/CS, BANKERS' ACCEPTANCES ETC.

2.8.1 The letters of credit listed on Schedule K, which were issued by RBC
before the date of this Agreement, shall be deemed to have been issued as L/Cs
and to be Advances under Credit 2, without any notice of Advance or payment of
any fee under this Agreement being required. The Borrower hereby confirms its
previous assumption of all debts, liabilities and obligations of NSCL under or
in connection with the letters of credit listed on Schedule K that were
originally issued for the account of NSCL.

2.8.2 The bankers' acceptances listed on Schedule K, which were accepted by
certain Lenders before the date of this Agreement, shall be deemed to have been
accepted as Bankers' Acceptances and to be Advances under Credit 1 (or Credit 2
in the case of those accepted by RBC), without any notice of Advance or payment
of any fee under this Agreement being required. The parties acknowledge that,
until the maturity of those Bankers' Acceptances, the Lenders under Credit 1 may
have Advances outstanding that are not in accordance with their Commitments. No
attempt will be made to make compensating adjustments in respect of future
Advances under Credit 1, but payments in respect of Credit 1 shall be made based
on the actual amounts outstanding rather than Commitments.

2.8.3 All "Advances" (as defined in the credit agreement dated as of 14 August
2001 to which certain of the parties to this Agreement are also party) made by
RBC under "Operating Credit 2" (as defined in this Agreement) that are
outstanding on the date of the initial Advance under this Agreement shall be
deemed to be Advances under Credit 2.

2.9  EXCHANGE RATE AND BORROWING BASE FLUCTUATIONS

     If fluctuations in rates of exchange in effect between US Dollars and Cdn.
Dollars cause the amount of Advances (expressed in Cdn. Dollars) under a Credit
to exceed the maximum amount of that Credit permitted herein by three percent or
more at any time, the Borrower shall immediately pay the Lenders such amount as
is necessary to repay the excess. If the amount of Advances outstanding to the
Borrower under the Credits exceeds the amount of the Borrowing Base at that
time, the Borrower shall immediately pay the Lenders such amount as is necessary
to repay the excess. If the Borrower is unable to immediately pay any amount
under this Section because LIBOR Periods have not ended or Bankers' Acceptances
have not matured, the Borrower shall immediately post Collateral with the Agent
in the amount of the excess, which shall form part of the Security for the
Obligations and be held until the amount of the excess is paid in full or is
less than three percent in the case of a fluctuation in rates of exchange. If,
on the date of any Advance under a Credit (whether by rollover, conversion or
otherwise), the amount of Advances (expressed in Cdn. Dollars) under that Credit
exceeds the maximum amount of that Credit permitted herein because of
fluctuations in rates of exchange, the Borrower shall
<PAGE>
                                      -31-


immediately pay the Lenders the excess and shall not be entitled to any Advance
that would result in the amount of that Credit being exceeded.

                                  ARTICLE III
                                    SECURITY

3.1  SECURITY

3.1.1 The Security includes the following, all in form and substance
satisfactory to the Lenders and subject only to Permitted Encumbrances:

     (a)  a $5,000,000,000 trust deed granted by each Restricted Party in favour
          of the Trustee, secured by a fixed charge over all freehold and
          leasehold real property and all equipment and a security interest and
          floating charge over all other Property, together with such other
          documents as the Lenders may require from time to time to charge
          Property located outside of British Columbia;

     (b)  debentures issued under each trust deed and pledged in favour of the
          Agent for the benefit of the Lenders;

     (c)  pledges in favour of the Trustee of all Capital Stock of the
          Restricted Parties other than NSCL that are owned by the Restricted
          Parties (including NSCL) from time to time;

     (d)  pledges in favour of the Trustee of all Capital Stock of persons other
          than Restricted Parties that are owned by the Restricted Parties from
          time to time;

     (e)  specific assignments by way of security of Material Contracts that
          have been given by the relevant Restricted Parties in favour of the
          Trustee before the date of this Agreement;

     (f)  further specific assignments in favour of the Trustee of those
          Material Contracts that are designated by the Agent from time to time
          after Permitted Senior Secured Indebtedness has been incurred in an
          aggregate principal amount of $100,000,000 or more;

     (g)  a general assignment by way of security of all Material Contracts
          (without any requirement that they be individually listed), to be
          given in favour of the Trustee by each Restricted Party designated by
          the Agent from time to time;

     (h)  unconditional guarantees of the Obligations by each of the Restricted
          Parties, excluding the Borrower, which shall be unlimited except for
          limits imposed by applicable law.
<PAGE>
                                      -32-


3.1.2 Notwithstanding the foregoing, but subject to compliance with Sections
7.5.3(d) and 7.5.3(e), the Restricted Parties shall not be required to deliver
Security documents in a form customarily used in jurisdictions outside Canada
and the United States or arrange registrations of the Security outside Canada
and the United States as a condition precedent to the initial Advance under this
Agreement, but shall cause such documents to be delivered before the thresholds
specified in Sections 7.5.3(d) and 7.5.3(e) are exceeded, together with all
opinions and supporting documents that the Agent reasonably requires. For
greater certainty, all Restricted Parties shall deliver all other documents
contemplated in Section 3.1.1.

3.1.3 Except for the companies listed in Schedule I (other than any Restricted
Parties), if at any time NSCL owns, establishes or acquires a Subsidiary that is
wholly owned by NSCL, directly or indirectly, NSCL shall immediately cause that
Subsidiary to become a Restricted Party, adopt this Agreement by delivering an
agreement in the form of Schedule B so as to be bound by all of the terms
applicable to Restricted Parties as if it had executed this Agreement as a
Restricted Party, and deliver a guarantee and other security documents similar
to those delivered by other Restricted Parties, which shall become part of the
Security. NSCL shall also deliver or cause the delivery of a pledge of all of
the Capital Stock of the new Subsidiary as part of the Trustee Security and
cause the delivery of such legal opinions and other supporting documents as the
Agent may reasonably require.

3.1.4 Notwithstanding the preceding paragraph, a wholly owned Subsidiary not
owned at the date of this Agreement shall not be required to become a Restricted
Party if:

     (a)  it is established, acquired and/or invested in using solely the
          proceeds of Capital Stock issued by NSCL or Permitted Unsecured
          Indebtedness; or

     (b)  it is established, acquired and/or invested in using proceeds of
          Advances and the aggregate amount of proceeds of Advances used to
          establish, acquire and/or invest in all such Subsidiaries during any
          period of 36 consecutive months does not exceed (i) $100,000,000 if
          any Permitted Senior Secured Indebtedness or Permitted Subordinated
          Secured Indebtedness is outstanding or (ii) $250,000,000 if no
          Permitted Senior Secured Indebtedness or Permitted Subordinated
          Secured Indebtedness is outstanding and if no Restricted Party is
          providing any guarantee (or other financial assistance which may
          result in an obligation to make disbursements in an aggregate amount
          exceeding $5,000,000) relating to any obligations of any such
          Subsidiary; the limits of $100,000,000 and $250,000,000 shall be
          increased to the extent that the Restricted Parties actually receive
          cash dividends or other cash returns on their investments in such
          Subsidiaries during the 36 month period and use the cash dividends or
          other cash returns to repay the Credits.

     For greater certainty, if a wholly-owned Subsidiary is established,
acquired and/or invested in using proceeds of Permitted Senior Secured
Indebtedness or Permitted Subordinated Secured Indebtedness, NSCL must
immediately comply with Section 3.1.3.
<PAGE>
                                      -33-


3.1.5 NSCL shall cause a pledge in form satisfactory to the Agent of the Capital
Stock of any wholly owned Subsidiary that does not become a Restricted Party as
permitted by Section 3.1.4 to be delivered as part of the Security if the
aggregate amount used to establish, acquire and/or invest in all such
Subsidiaries during any period of 36 consecutive months exceeds $100,000,000.
The limit of $100,000,000 shall be increased to the extent that the Restricted
Parties actually receive cash dividends or other cash returns on their
investments in such Subsidiaries during the 36 month period and use the cash
dividends or other cash returns to repay the Credits. If the shareholder of any
such Subsidiary is itself not a Restricted Party, the pledge shall be without
recourse to the other Property of the shareholder.

3.1.6 If at any time any Restricted Party owns or obtains an interest in a
person that is not a wholly owned Subsidiary, other than Powell River Energy
Inc. or Powell River Energy LP, NSCL shall cause that interest to immediately be
pledged as part of the Trustee Security and cause the delivery of such legal
opinions and other supporting documents as the Agent may reasonably require.

3.1.7 If at any time all of the Capital Stock of a Restricted Party other than
the Borrower or NSCL is sold in accordance with the terms of this Agreement,
other than to another Restricted Party, then if no Event of Default or Pending
Event of Default has occurred and is continuing, the Restricted Party of which
the Capital Stock has been sold and any wholly-owned Subsidiary thereof that is
a Restricted Party shall, on request by NSCL, cease to be a Restricted Party and
the Agent shall deliver or direct the Trustee to deliver such releases of the
Security, including guarantees, as may reasonably be required to release the
obligations of those Restricted Parties. The Agent shall also discharge any
Security (or direct the Trustee to do so) to the extent necessary to allow any
Restricted Party to complete any sale or other disposition of Property permitted
by this Agreement.

3.1.8 Before incurring Permitted Senior Secured Indebtedness in an aggregate
principal amount of $100,000,000 during the term of this Agreement, NSCL shall
prepare and submit to the Agent for its approval (acting reasonably, after
consultation with counsel, but without any requirement to seek approval of the
Majority Lenders) a list of all of the then-existing Material Contracts. The
list shall be in a form similar to the lists prepared in connection with the
credit agreement dated as of 14 August 2001 to which NSCL, the Agent and others
were parties, it being acknowledged that NSCL has stated it considers certain
Contracts on those lists would not, in fact, qualify as Material Contracts and
that the contents of the existing lists shall not be determinative of the
content of the new list. Without limitation, the list shall be separated into
Part A, being the most important Material Contracts, which are referred to in
this Agreement as "SPECIAL MATERIAL CONTRACTS" and Part B, being the remainder.
The separation shall be done on a basis consistent with the separation of
Material Contracts in the lists prepared in connection with the credit agreement
dated as of 14 August 2001. Before incurring Permitted Senior Secured
Indebtedness in an aggregate principal amount of $100,000,000 during the term of
this Agreement, NSCL shall also (i) deliver specific assignments in favour of
the Trustee of those Material Contracts that are designated by the Agent which
have not already been specifically assigned, (ii) obtain agreements from other
parties to Special Material Contracts that have been specifically assigned if
agreements from those parties have not already been
<PAGE>
                                      -34-


obtained and (iii) diligently and in good faith use all commercially reasonable
efforts (both before and after incurring Permitted Senior Secured Indebtedness)
to obtain agreements from other parties to other Material Contracts that have
been specifically assigned if agreements from those parties have not already
been obtained.

3.2  OBLIGATIONS SECURED BY THE TRUSTEE SECURITY

3.2.1 Debentures shall be issued by the Restricted Parties under their
respective trust deeds and pledged to the Agent to secure:

     (a)  the Obligations that (taking into account other obligations described
          in Section 7.7.2 that must be accounted for in determining whether the
          Threshold Amount has been exceeded) do not exceed the Threshold
          Amount;

     (b)  the Other Secured Obligations that are classified by NSCL as being
          incurred under clauses (v) and (vi) of the definition of "Permitted
          Indebtedness" in the 1999 Indenture and the definition of "Permitted
          Debt" in the 2001 Indenture (including guarantees by Restricted
          Parties of those Other Secured Obligations as incurred by other
          Restricted Parties);

     (c)  the Other Secured Obligations not mentioned in item (b) above that
          (taking into account other obligations described in Section 7.7.2 that
          must be accounted for in determining whether the Threshold Amount has
          been exceeded) do not exceed the Threshold Amount;

equally and ratably with each other and with any Permitted Senior Secured
Indebtedness but in priority to any other debts, liabilities and obligations
secured by the Trustee Security.

     Out of an abundance of caution (recognizing that the Restricted Parties are
not permitted to do anything that would result in the holders of the 1999 Notes
or the 2001 Notes becoming entitled to be secured), further debentures shall be
issued by the Restricted Parties under their respective trust deeds and pledged
to the Agent to secure the Obligations and the Other Secured Obligations not
mentioned in item (b) above that exceed the Threshold Amount, equally and
ratably with the debts, liabilities and obligations of the Restricted Parties
under or in connection with the 1999 Notes and/or the 2001 Notes if the 1999
Notes and/or the 2001 Notes are required to be secured under their terms.

     As between the Lenders, all Obligations shall rank equally and ratably with
each other notwithstanding that different Obligations may be designated as
having been incurred with reference to different provisions of the 1999
Indenture and the 2001 Indenture which might otherwise imply that different
Obligations have different rankings. Each Lender shall (and hereby absolutely,
unconditionally and irrevocably agrees to) do all such things, including
delivery of indemnity agreements and assignments to other Lenders of Advances
made by those Lenders as shall be required to ensure that result. Any such
action on the part of the Lenders shall be binding on the Borrower. If any
Lender fails to take the actions required under this Section, the Agent may,
without prejudice to the other rights of the Lenders, make such adjustments to
the payments to the defaulting Lender under this
<PAGE>
                                      -35-


Agreement as are necessary to compensate the other Lenders for the defaulting
Lender's failure.

     Further debentures may be issued by a Restricted Party under its trust deed
and pledged to another Restricted Party to secure debts, liabilities and other
obligations to the other Restricted Party as long as the debentures are
subordinate to all debentures pledged to secure the Obligations and the Other
Secured Obligations and are assigned to the Agent as additional security for the
Obligations up to the Threshold Amount.

     Subject to the other terms of this Agreement, further debentures may be
issued by a Restricted Party under its trust deed and pledged to secure
Permitted Senior Secured Indebtedness. Any debentures issued and pledged for
that purpose may rank equally and ratably as to proceeds of enforcement of
security with debentures issued and pledged to secure the Obligations and the
Other Secured Obligations, but shall be designated as "Ratable Debentures" under
the respective trust deeds.

     Subject to the other terms of this Agreement, further debentures may be
issued by a Restricted Party under its trust deed and pledged to secure
Permitted Subordinated Secured Indebtedness. Any debentures issued and pledged
for that purpose must rank junior in all respects to debentures issued and
pledged to secure the Obligations and the Other Secured Obligations.

3.2.2 For the purposes of section 4.06 of each of the 1999 Indenture and the
2001 Indenture:

     (a)  Advances by way of L/Cs are hereby classified by NSCL as being
          incurred under clause (xi) of the definition of "Permitted
          Indebtedness" in the 1999 Indenture and the definition of "Permitted
          Debt" in the 2001 Indenture until all amounts permitted to be incurred
          under those clauses from time to time have been incurred, thereafter
          under clause (i) of the respective definitions until all amounts
          permitted to be incurred under those clauses from time to time have
          been incurred, and finally under clause (ix) of the respective
          definitions until all amounts permitted to be incurred under those
          clauses from time to time have been incurred;

     (b)  Advances other than by way of L/Cs are hereby classified by NSCL as
          being incurred under clause (i) of the definition of "Permitted
          Indebtedness" in the 1999 Indenture and the definition of "Permitted
          Debt" in the 2001 Indenture until all amounts permitted to be incurred
          under those clauses from time to time have been incurred, and
          thereafter under clause (ix) of the respective definitions until all
          amounts permitted to be incurred under those clauses from time to time
          have been incurred.

     If NSCL incurs Permitted Senior Secured Indebtedness, Permitted
Subordinated Secured Indebtedness or Permitted Unsecured Indebtedness on terms
that require the classification of Advances, NSCL shall do so on a basis that is
approved by the Agent as being consistent with the classifications provided for
above. All classifications are
<PAGE>
                                      -36-


irrevocable without the consent of the Agent acting reasonably, after
consultation with counsel, but without any requirement to seek approval of the
Majority Lenders.

     If any Advance is within the Threshold Amount at the time it is made and
thereby entitled to be secured in priority to the 1999 Notes and the 2001 Notes,
it shall remain entitled to that priority notwithstanding any subsequent
diminution of the Threshold Amount. If any repayment is made under a Credit, it
shall be deemed to have first been made in respect of any Advance that was not
within the Threshold Amount at the time it was made, and shall only be made in
respect of any Advance that was within the Threshold Amount at the time it was
made if no other Advances are then outstanding under that Credit.

3.2.3 If the Obligations other than outstanding Bankers' Acceptances and/or L/Cs
have been indefeasibly paid in full, the Lenders will release their interest in
the Security upon receiving Collateral to secure the remaining Obligations, in
an amount satisfactory to the respective Lenders, acting reasonably.

3.2.4 As of the date of this Agreement, Lenders have entered into the
Derivatives with Restricted Parties which are listed in Schedule H and are Other
Secured Obligations. Lenders, or affiliates (as defined in the Canada Business
Corporations Act) of Lenders, may during the term of this Agreement enter into
further Derivatives with Restricted Parties, which shall be Other Secured
Obligations if they fall within the definition of Other Secured Obligations.

     For the purposes of section 4.06 of the each of the 1999 Indenture and the
2001 Indenture:

     (a)  the Other Secured Obligations referred to in Section 1.1.79(a) are
          hereby classified by NSCL as being incurred under clause (vi) of the
          definition of "Permitted Indebtedness" in the 1999 Indenture and the
          definition of "Permitted Debt" in the 2001 Indenture;

     (b)  the Other Secured Obligations referred to in Section 1.1.79(b) are
          hereby classified by NSCL as being incurred under clause (v) of the
          definition of "Permitted Indebtedness" in the 1999 Indenture and the
          definition of "Permitted Debt" in the 2001 Indenture;

     (c)  the Other Secured Obligations referred to in Section 1.1.79(c) are
          hereby classified by NSCL as being incurred under clause (i) of the
          respective definitions until all amounts permitted to be incurred
          under those clauses from time to time have been incurred and
          thereafter under clause (ix) of the respective definitions until all
          amounts permitted to be incurred under those clauses from time to time
          have been incurred;

     (d)  the Other Secured Obligations referred to in Sections 1.1.79(d) and
          1.1.79(e) are hereby classified by NSCL as being incurred under clause
          (i) of the definition of "Permitted Indebtedness" in the 1999
          Indenture and the definition of "Permitted Debt" in the 2001 Indenture
          until all amounts permitted to be incurred under those clauses from
          time to time have been
<PAGE>
                                      -37-


          incurred and thereafter under clause (ix) of the respective
          definitions until all amounts permitted to be incurred under those
          clauses from time to time have been incurred.

     If NSCL incurs Permitted Senior Secured Indebtedness, Permitted
Subordinated Secured Indebtedness or Permitted Unsecured Indebtedness on terms
that require the classification of Other Secured Obligations, NSCL shall do so
on a basis that is approved by the Agent as being consistent with the
classifications provided for above. All classifications are irrevocable without
the consent of the Agent acting reasonably, after consultation with counsel, but
without any requirement to seek approval of the Majority Lenders.

     The Agent shall from time to time prepare and provide the Lenders and NSCL
with a revision of Schedule H to reflect changes in the Other Secured
Obligations, but the Agent's failure to do so shall not affect the security for
the Other Secured Obligations if the relevant Derivatives fall within the
definition of Other Secured Obligations. Derivatives that fall within the
definition of Other Secured Obligations shall be conclusively deemed to be
secured by the Trustee Security (in the absence of manifest error) and shall not
cease to be secured without the prior written consent of the respective holders
of the Other Secured Obligations. If the Obligations have been indefeasibly paid
in full, the holders of the Other Secured Obligations will release their
interest in the Security upon receiving Collateral to secure the Other Secured
Obligations, in an amount satisfactory to the respective holders, acting
reasonably.

     Notwithstanding the rights of holders of Other Secured Obligations to
benefit from the Trustee Security in respect of the Other Secured Obligations,
all decisions concerning the Trustee Security and the enforcement thereof shall
be made by the Lenders or the Majority Lenders in accordance with this
Agreement. No holder of Other Secured Obligations from time to time shall have
any additional right to influence the Trustee Security or the enforcement
thereof as a result of holding Other Secured Obligations as long as this
Agreement remains in force and the Agent shall vote any debentures issued under
the Trustee Security and pledged to secure the Other Secured Obligations in the
same manner as the debentures pledged to secure the Obligations. However, the
Other Secured Obligations shall continue to be secured by the Trustee Security
notwithstanding the termination of this Agreement by reason of payment of the
Credits, or for any other reason. After the termination of this Agreement,
decisions concerning the Trustee Security shall be made by the holders of Other
Secured Obligations as they may determine among themselves.

3.3  CONSENT TO ASSIGNMENT OF CONTRACTS

     Each Restricted Party that is a party to any Contract with, or that has
issued any instrument in favour of, any other Restricted Party or Restricted
Parties hereby acknowledges that the rights of the other Restricted Party or
Restricted Parties are charged by the Trustee Security, consents to the granting
of the Trustee Security and agrees that the Trustee shall be entitled to enforce
the Trustee Security in accordance with the terms thereof.
<PAGE>
                                      -38-


                                   ARTICLE IV
                             DISBURSEMENT CONDITIONS

4.1  CONDITIONS PRECEDENT TO INITIAL ADVANCE

     The following conditions precedent must be satisfied at or before the time
of the first Advance under this Agreement, unless waived in accordance with
Section 9.7.2. Where delivery of documents is referred to, the documents shall
be delivered to the Agent, for and on behalf of the Lenders, and shall be in
full force and effect and in form and substance satisfactory to the Lenders.

4.1.1 OTHER DEBT AND ENCUMBRANCES - The Agent shall have received:

     (a)  evidence that NSCL has completed an issuance of Capital Stock for
          gross proceeds of not less than $150,000,000 and has used the net
          proceeds to permanently repay Debt under existing credit facilities;

     (b)  evidence that all existing credit facilities (including but not
          limited to those established under the credit agreement dated as of 14
          August 2001 to which certain of the parties to this Agreement are also
          party) and other Debt of the Restricted Parties not forming part of
          Permitted Obligations have been or will be paid and performed in full
          and cancelled concurrently with the first Advance (except to the
          extent they are secured by L/Cs as contemplated in Section 5.23) and
          that all security held in connection therewith has been or will be
          promptly released;

     (c)  releases, discharges and postponements (in registrable form where
          appropriate) covering all Encumbrances affecting the collateral
          Encumbered by the Security which are not Permitted Encumbrances, and
          all statements and acknowledgments that are reasonably required in
          respect of other security interests affecting the Property of the
          Restricted Parties or other parties delivering Security to confirm
          that the collateral Encumbered by those Encumbrances does not include
          the collateral Encumbered by the Security or is a Permitted
          Encumbrance;

     (d)  a certificate of NSCL with copies of the 1999 Indenture, the 2001
          Indenture and any other documents necessary to fully and fairly
          disclose all material terms of the 1999 Notes and 2001 Notes.

4.1.2 FINANCIAL INFORMATION - The Agent shall have received:

     (a)  a certificate of NSCL containing its audited consolidated financial
          statements for its fiscal period ended 31 December 2001 and its
          unaudited consolidated financial statements for its fiscal period
          ended 31 March 2002;

     (b)  a Compliance Certificate from NSCL for the fiscal period ended 31
          March 2002;
<PAGE>
                                      -39-


     (c)  a current Borrowing Base Certificate.

4.1.3 SECURITY AND OTHER DOCUMENTS - The Agent shall have received:

     (a)  duly executed copies of this Agreement and the Security, duly
          registered as required;

     (b)  certificates representing the Pledged Shares, and executed stock
          powers of attorney relating to those certificates;

     (c)  certificates of insurance or other evidence that the covenants and
          conditions of the Credit Documents concerning insurance coverage are
          being complied with;

     (d)  the Fee Agreement;

     (e)  agreements from other parties to Material Contracts that have then
          been specifically assigned as part of the Trustee Security (it being
          understood that such agreements have previously been delivered and
          that no additional agreements will be delivered as a condition of the
          initial Advance).

4.1.4 CORPORATE AND OTHER INFORMATION - The Agent shall have received:

     (a)  a certificate of each Restricted Party with copies of its Constating
          Documents, a list of its officers and directors with specimens of the
          signatures of those who are executing Credit Documents on its behalf,
          and copies of the corporate proceedings taken to authorize it to
          execute, deliver and perform its obligations under the Credit
          Documents;

     (b)  evidence that the delivery of Credit Documents will not contravene
          laws governing financial assistance or other similar laws which affect
          the Credit Documents;

     (c)  evidence that the delivery of Credit Documents will not contravene any
          material covenants or agreements to which any Restricted Party is a
          party;

     (d)  consents that are required from the directors, shareholders or
          partners of the Restricted Parties, either in connection with the
          pledges of Pledged Shares or in connection with any disposition of the
          Pledged Shares pursuant to the Trustee Security (it being understood
          that consents previously delivered to the Trustee need not be
          delivered again).

4.1.5 OPINIONS - The Agent shall have received:

     (a)  the opinion of Borden Ladner Gervais LLP, counsel to the Lenders,
          addressed to the Agent and the Lenders;
<PAGE>
                                      -40-


     (b)  the opinion of Lawson Lundell, Canadian counsel to the Restricted
          Parties, addressed to the Agent, the Lenders and Borden Ladner Gervais
          LLP;

     (c)  the opinion of Shearman & Sterling, US counsel to the Restricted
          Parties, addressed to the Agent and the Lenders;

     (d)  the opinions of local counsel, addressed to the Agent, the Lenders and
          Borden Ladner Gervais LLP.

4.1.6 OTHER MATTERS - The following conditions must also be satisfied:

     (a)  the Lenders must have received a certificate of NSCL, and otherwise be
          satisfied, that no Material Adverse Change has occurred since 31 March
          2002;

     (b)  the Agent shall have received satisfactory evidence that NSCL has
          obtained a Reference Debt Rating from each of Moody's and S&P that
          expressly contemplates the issuance of Capital Stock on a basis
          consistent with this Agreement and have received satisfactory written
          or verbal confirmation from each of them that they do not intend to
          amend their Reference Debt Ratings;

     (c)  the Agent shall have received payment of all fees owing to the Agent,
          the Lenders, or any of them and reimbursement of all expenses
          incurred, including but not limited to legal fees, in each case up to
          the time of the initial Advance;

     (d)  the Agent shall have received such other documents as the Lenders may
          reasonably require.

4.1.7 DEADLINE FOR ADVANCE

     The initial Advance under the Credits must be made on or before 19 July
2002, failing which the Credits may be terminated at the option of any of the
Lenders unless, before that date, other persons identified by the Borrower and
satisfactory to the remaining Lenders have agreed to become Lenders in place of
those Lenders who are unwilling to continue beyond that date.

4.2  CONDITIONS PRECEDENT TO ALL ADVANCES

     The obligation of the Lenders to make any Advance is subject to the
conditions precedent that:

     (a)  no Event of Default or (except in the case of a conversion of a LIBOR
          Advance into a Base Rate Advance, the conversion of a Bankers'
          Acceptance to a Prime Rate Advance or an Advance for the purpose of
          paying a demand under an L/C) Pending Event of Default has occurred
          and is continuing on the Drawdown Date, or would result from making
          the
<PAGE>
                                      -41-


          Advance, and without limiting the foregoing, all representations and
          warranties of the Restricted Parties contained in this Agreement,
          other than those expressly stated to be made as of a specific date,
          are true on and as of the date of the Advance;

     (b)  the Advance is in compliance with the terms of the 1999 Notes, 2001
          Notes, Permitted Senior Secured Indebtedness, Permitted Subordinated
          Secured Indebtedness and Permitted Unsecured Indebtedness, to the
          extent they are outstanding (including but not limited to any
          limitation on additional indebtedness contained in the documentation
          relating to the 1999 Notes, 2001 Notes, Permitted Senior Secured
          Indebtedness, Permitted Subordinated Secured Indebtedness or Permitted
          Unsecured Indebtedness) and will not contravene or cause a default
          under any of the terms of the 1999 Notes, 2001 Notes, Permitted Senior
          Secured Indebtedness, Permitted Subordinated Secured Indebtedness and
          Permitted Unsecured Indebtedness;

     (c)  the Advance would not result in the holders of the 1999 Notes or the
          2001 Notes becoming entitled to be secured;

     (d)  the Advance would not result in the holders of any other unsecured
          Debt outstanding at any time becoming entitled to be secured unless
          the unsecured Debt, if secured, would constitute Permitted Senior
          Secured Indebtedness or Permitted Subordinated Secured Indebtedness;

     (e)  the Agent has received timely notice as required under Section 5.6;

     (f)  all other terms and conditions of this Agreement upon which an Advance
          may be obtained are fulfilled.

                                   ARTICLE V
                                    ADVANCES

5.1  LENDERS' OBLIGATIONS RELATING TO CREDITS 1 AND 2

     Notwithstanding that Advances under Credit 2 are for the time being made by
RBC and its participation in Advances under Credit 1 is reduced, and the
participation of the other Lenders is increased, in accordance with Section 5.2,
it is the intention of the parties that the ultimate credit risk and exposure of
any Lender in respect of the Credit (including in respect of L/Cs issued under
Credit 2) be in accordance with its Proportionate Share of the entire amount of
the Credit. Accordingly, upon the Obligations becoming due and payable under
Section 8.2, each Lender shall (and hereby absolutely, unconditionally and
irrevocably agrees to) do all such things, including delivery of indemnity
agreements and assignments to other Lenders of Advances made by RBC under Credit
2 or assignments to RBC of Advances made by other Lenders under Credit 1 as
shall be required to ensure that result. Any such action on the part of the
Lenders shall be binding on the Borrower.
<PAGE>
                                      -42-


     If any Lender fails to take the actions required under this Section, the
Agent may, without prejudice to the other rights of the Lenders, make such
adjustments to the payments to the defaulting Lender under this Agreement as are
necessary to compensate the other Lenders for the defaulting Lender's failure.

5.2  ADJUSTMENT OF PROPORTIONATE SHARES FOR SPECIFIC CREDITS

     While RBC is the sole Lender making Advances under Credit 2, its
participation in Advances and payments (including commitment fees) under Credit
1 shall be reduced or eliminated and shall be adjusted by the Agent from time to
time, having regard to the maximum principal amounts of the Credits and the
overall Commitment of RBC to the Credits, so that RBC's separate Proportionate
Shares of Credits 1 and 2 reflect its overall Proportionate Share of the
Credits. The Agent shall amend Schedule E to this Agreement from time to time to
reflect such adjustments and notify NSCL and all affected Lenders of the
amendment.

5.3  EXCEPTIONS REGARDING PARTICULAR CREDITS

     Subject to the provisions of Section 5.1 regarding the assignment of
interests under Credit 2 in the event of acceleration of payment of the
Obligations, the provisions of this Agreement do not apply to Credit 2 to the
extent that the provisions contemplate the participation in Advances and
payments under Credit 2 by any Lender other than RBC. All Advances under Credit
2 shall be made solely by RBC and records concerning Advances shall be
maintained solely by RBC, but RBC shall provide information concerning such
Advances to the Agent from time to time upon request. All payments of principal,
interest, fees and other amounts relating to Credit 2 shall be made solely to
RBC. In addition, any notices by the Borrower in connection with Credit 2 shall
be made to RBC, and notice and minimum amount requirements for Advances shall
not apply to Advances by way of overdraft under Credit 2.

     In connection with Advances by way of overdraft, RBC shall ascertain the
positions or net positions of the Borrower's Canadian Dollar and US Dollar
accounts daily and, if the positions or net positions are debits in favour of
RBC, the debits will (if the Borrower is entitled to an Advance) be deemed to be
a Prime Rate Advance (in the case of Canadian Dollars) or a Base Rate Advance
(in the case of US Dollars) under Credit 2 in the respective amounts of the
debits. If the positions or net positions are credits in favour of the Borrower,
the credits will be deemed to be repayments of Prime Rate Advances (in the case
of Canadian Dollars) or Base Rate Advances (in the case of US Dollars) under
Credit 2 in the respective amounts of the credits.

5.4  EVIDENCE OF INDEBTEDNESS

     The Obligations resulting from Prime Rate Advances, Base Rate Advances and
LIBOR Advances made by the Lenders shall be evidenced by records maintained by
the Agent, and by each Lender concerning those Advances it has made. The Agent
shall also maintain records of the Obligations resulting from Advances by way of
Bankers' Acceptances and L/Cs, and each Lender shall also maintain records
relating to Bankers' Acceptances that it has accepted. The Issuing Bank shall
also maintain records relating to
<PAGE>
                                      -43-


L/Cs that it has issued. The records maintained by the Agent, and by the Issuing
Bank relating to L/Cs, shall constitute, in the absence of manifest error,
conclusive evidence of the Obligations and all details relating thereto. The
failure of the Agent or any Lender to correctly record any such amount or date
shall not, however, adversely affect the obligation of the Borrower to pay the
Obligations in accordance with this Agreement.

5.5  CONVERSIONS

     Subject to the other terms of this Agreement (including notice
requirements), the Borrower may from time to time convert all or any part of the
outstanding amount of any Advance into another form of Advance permitted by this
Agreement. A conversion does not, however, constitute a new advance of funds by
any Lender, but only an adjustment of the basis on which interest payable to the
Lenders will be calculated.

5.6  NOTICE OF ADVANCES AND PAYMENTS

     The Borrower shall give the Agent irrevocable written notice, in the form
attached as Schedule A to this Agreement, of any request for any Advance to it
under the Credits. The Borrower shall also give the Agent irrevocable written
notice in the same form of any payment by it (whether resulting from repayment,
prepayment, rollover or conversion) of any Advance under the Credits.

     Notice shall be given on or before the third Business Day (but not earlier
than the fifth Business Day) prior to the date of any Advance or payment, except
that notice shall be given in respect of an Advance by way of L/C at such
earlier time as the Issuing Bank may reasonably require so that it has
sufficient time to review the proposed form of L/C, and except that notice in
respect of a Prime Rate Advance, Base Rate Advance or payment thereof may be
given on the Business Day before any such Advance or payment. Any cancellation
of part or all of any Credit shall only be effective on three Business Days'
notice as required by Section 5.7.

     Notices shall be given not later than 1:00 p.m. (Toronto time) on the date
for notice. Payments (other than those being made solely from the proceeds of
rollovers and conversions) must be made prior to 1:00 p.m. (Toronto time) on the
date for payment. If a notice or payment is not given or made by those times, it
shall be deemed to have been given or made on the next Business Day, unless all
Lenders affected by the late notice or payment agree, in their sole discretion,
to accept a notice or payment at a later time as being effective on the date it
is given or made.

5.7  PREPAYMENTS AND REDUCTIONS

     Subject to giving notice required by Section 5.6 and to the other
provisions of this Agreement, the Borrower may from time to time repay Advances
outstanding under any Credit without penalty, except that (i) LIBOR Advances may
not be paid prior to the end of the applicable LIBOR Periods unless the Borrower
indemnifies the Lenders for any loss or expense that the Lenders incur as a
result, including any breakage costs and (ii) Bankers' Acceptances may not be
paid prior to their respective maturity dates.
<PAGE>
                                      -44-


     The Borrower may from time to time, by giving not less than three Business
Days' express written notice to the Agent and paying all accrued and unpaid
commitment fees to the effective date of cancellation, irrevocably notify the
Agent of the cancellation in whole or in part of the undrawn amount of any
Credit by an amount which shall be a minimum of $1,000,000 and a whole multiple
of $100,000, or the equivalent thereof in US Dollars. The Borrower shall have no
right to any increase in the committed amount of that Credit thereafter.

5.8  PRIME RATE, BASE RATE AND LIBOR ADVANCES

     Upon timely fulfilment of all applicable conditions as set forth in this
Agreement, the Agent, in accordance with the procedures set forth in Section
5.11, will make the requested amount of a Prime Rate Advance, Base Rate Advance
or LIBOR Advance available to the Borrower on the Drawdown Date requested by the
Borrower by transferring such amount to the Designated Account. Each Prime Rate
Advance shall be in an aggregate minimum amount of $1,000,000 and in a whole
multiple of $100,000. Each Base Rate Advance shall be in an aggregate minimum
amount of US $1,000,000 and in a whole multiple of US $100,000. Each LIBOR
Advance shall be in minimum amount of US $1,000,000 and a whole multiple of US
$100,000. The Borrower shall pay interest to the Agent for the account of the
Lenders at the Branch of Account on any such Advances outstanding to it from
time to time hereunder at the applicable rate of interest specified in Section
2.5.

     Interest on Prime Rate Advances and Base Rate Advances shall be payable
monthly on each Interest Payment Date. Interest on LIBOR Advances shall be
payable on the last day of the applicable LIBOR Period and, if the LIBOR Period
is longer than three months, every three months after the date of the relevant
LIBOR Advance. All interest shall accrue from day to day and shall be payable in
arrears for the actual number of days elapsed from and including the date of
Advance or the previous date on which interest was payable, as the case may be,
to but excluding the date on which interest is payable, both before and after
maturity, default and judgment, with interest on overdue interest at the same
rate payable on demand. Overdue interest with respect to a LIBOR Advance shall,
upon the expiry of the LIBOR Period applicable to such LIBOR Advance, bear
interest, payable on demand, calculated at the rates applicable to Base Rate
Advances.

     Interest calculated with reference to the Prime Rate shall be calculated
monthly on the basis of a calendar year. Interest calculated with reference to
the Base Rate shall be calculated monthly on the basis of a year of 365 days.
Interest calculated with reference to the LIBO Rate shall be calculated on the
basis of a year of 360 days for a term equal to the applicable LIBOR Period or,
if a LIBOR Period is longer than three months, every three months. Each rate of
interest which is calculated with reference to a period (the "DEEMED INTEREST
PERIOD") that is less than the actual number of days in the calendar year of
calculation is, for the purposes of the Interest Act (Canada), equivalent to a
rate based on a calendar year calculated by multiplying such rate of interest by
the actual number of days in the calendar year of calculation and dividing by
the number of days in the deemed interest period.
<PAGE>
                                      -45-


5.9  LIBOR PERIODS

     The Borrower may select, by irrevocable notice to the Agent, LIBOR Periods
of one, two, three or six months to apply to any particular LIBOR Advance,
provided that the Agent, in circumstances of market disruption or illiquidity,
shall have the discretion to restrict the LIBOR Period. LIBOR Periods of other
lengths shall also be available at the discretion of the Lenders from time to
time. No LIBOR Period may end on a date which is not a Business Day or on a date
which is later than the date on which the principal amount of any Credit is
required to be reduced (in whole or in part) if that would adversely affect the
Borrower's ability to cause the reduction of the Credit in question. The
Borrower shall from time to time select and give notice to the Agent of the
LIBOR Period for a LIBOR Advance which shall commence upon the making of the
LIBOR Advance or at the expiry of any outstanding LIBOR Period applicable to a
LIBOR Advance that is being rolled over. If the Borrower fails to select and
give the Agent notice of a LIBOR Period for a LIBOR Advance in accordance with
Section 5.6, the Lenders shall be deemed to have made a Base Rate Advance to the
Borrower to replace the maturing LIBO Rate Advance. A rollover of a LIBOR
Advance does not constitute a new advance of funds by the Lenders, but rather an
adjustment of the basis on which interest is charged.

5.10 TERMINATION OF LIBOR ADVANCES

     If at any time a Lender determines in good faith and on reasonable grounds
(which determination shall be conclusive and binding on the Borrower) that:

     (a)  adequate and reasonable means do not exist for ascertaining the LIBO
          Rate applicable to a LIBOR Advance;

     (b)  the LIBO Rate does not adequately reflect the effective cost to the
          Lender of making or maintaining a LIBOR Advance, except as a result of
          the Lender failing to obtain a deposit in the amount and for the term
          of the LIBOR Advance; or

     (c)  it cannot readily obtain or retain funds in the London interbank
          market in order to fund or maintain any LIBOR Advance or cannot
          otherwise perform its obligations hereunder with respect to any LIBOR
          Advance,

then upon written notice by the Agent to the Borrower,

     (d)  the right of the Borrower to request LIBOR Advances from that Lender
          shall be and remain suspended until the Agent notifies the Borrower
          that any condition causing such determination no longer exists, and

     (e)  if the Lender is prevented from maintaining a LIBOR Advance, the
          Borrower shall, at its option, either repay the LIBOR Advances owing
          by it to that Lender or convert the LIBOR Advances into other forms of
          Advance which are permitted by this Agreement, but the Borrower shall
          be responsible for any loss or expense that the Lender incurs as a
          result,
<PAGE>
                                      -46-


          including breakage costs if the Lender is prevented from maintaining a
          LIBOR Advance for reasons beyond its control.

5.11 CO-ORDINATION OF PRIME RATE, BASE RATE AND LIBOR ADVANCES

     Each Lender shall advance its Proportionate Share of each Prime Rate
Advance, Base Rate Advance and LIBOR Advance in accordance with the following
provisions:

     (a)  the Agent shall advise each Lender of its receipt of a notice from the
          Borrower pursuant to Section 5.6 on the day such notice is received
          and shall, as soon as possible, advise each Lender of such Lender's
          Proportionate Share of any Advance requested by the notice;

     (b)  each Lender shall deliver its Proportionate Share of the Advance to
          the Agent not later than 11:00 a.m. (Toronto time) on the Drawdown
          Date;

     (c)  if the Agent determines that all the conditions precedent to an
          Advance specified in this Agreement have been met, it shall advance to
          the Borrower the amount delivered by each Lender by transferring it to
          the Designated Account prior to 2:00 p.m. (Toronto time) on the
          Drawdown Date, but if the conditions precedent to the Advance are not
          met by 2:00 p.m. (Toronto time) on the Drawdown Date, the Agent shall
          return the funds to the Lenders or invest them in an overnight
          investment as orally instructed by each Lender until such time as the
          Advance is made; and

     (d)  if the Agent determines that a Lender's Proportionate Share of an
          Advance would not be a whole multiple of $100,000 or US $100,000, as
          the case may be, the amount to be advanced by that Lender may be
          increased or reduced by the Agent in its sole discretion to the extent
          necessary to reflect the requirements of this sub-paragraph.

5.12 EXECUTION OF BANKERS' ACCEPTANCES

     To facilitate the acceptance of Bankers' Acceptances hereunder, the
Borrower hereby appoints each Lender as its attorney to sign and endorse on its
behalf, as and when considered necessary by the Lender, an appropriate number of
orders in the form prescribed by that Lender.

     Each Lender may, at its option, execute any order in handwriting or by the
facsimile or mechanical signature of any of its authorized officers, and the
Lenders are hereby authorized to accept or pay, as the case may be, any order of
the Borrower which purports to bear such a signature notwithstanding that any
such individual has ceased to be an authorized officer of the Lender. Any such
order or Bankers' Acceptance shall be as valid as if he or she were an
authorized officer at the date of issue of the order or Bankers' Acceptance.

     Any order or Bankers' Acceptance signed by a Lender as attorney for the
Borrower, whether signed in handwriting or by the facsimile or mechanical
signature of an
<PAGE>
                                      -47-


authorized officer of a Lender may be dealt with by the Agent or any Lender to
all intents and purposes and shall bind the Borrower as if duly signed and
issued by the Borrower.

     The receipt by the Agent of a request for an Advance by way of Bankers'
Acceptances shall be each Lender's sufficient authority to execute, and each
Lender shall, subject to the terms and conditions of this Agreement, execute
orders in accordance with such request and the advice of the Agent given
pursuant to Section 5.15, and the orders so executed shall thereupon be deemed
to have been presented for acceptance.

5.13 SALE OF BANKERS' ACCEPTANCES

     It shall be the responsibility of each Lender to arrange, in accordance
with normal market practice, for the sale on each Drawdown Date of the Bankers'
Acceptances issued by the Borrower and to be accepted by that Lender, failing
which the Lender shall purchase its Bankers' Acceptances.

     In accordance with the procedures set forth in Section 5.15, the Agent will
make the net proceeds of the requested Advance by way of Bankers' Acceptances
received by it from the Lenders available to the Borrower on the Drawdown Date
by transferring such amount to the Designated Account.

     Notwithstanding the foregoing, if in the determination of the Majority
Lenders acting reasonably a market for Bankers' Acceptances does not exist at
any time, or the Lenders cannot for other reasons, after reasonable efforts,
readily sell Bankers' Acceptances or perform their other obligations under this
Agreement with respect to Bankers' Acceptances, then upon written notice by the
Agent to the Borrower, the Borrower's right to request Advances by way of
Bankers' Acceptances shall be and remain suspended until the Agent notifies the
Borrower that any condition causing such determination no longer exists.

5.14 SIZE AND MATURITY OF BANKERS' ACCEPTANCES AND ROLLOVERS

     Each Advance of Bankers' Acceptances shall be in a minimum amount of
$1,000,000 and a whole multiple of $100,000. Each Bankers' Acceptance shall have
a term of one, two, three or six months after the date of acceptance of the
order by a Lender, provided that the Agent, in circumstances of market
disruption or illiquidity, shall have the discretion to restrict the term or
maturity dates of Bankers' Acceptances. Bankers' Acceptances of other lengths
shall also be available at the discretion of the Lenders from time to time. No
Bankers' Acceptance may mature on a date which is not a Business Day or on a
date which is later than the date on which the principal amount of any Credit is
required to be reduced (in whole or in part) if that would adversely affect the
Borrower's ability to cause the reduction of the Credit in question. The face
amount at maturity of a Bankers' Acceptance may be renewed as a Bankers'
Acceptance or converted into another form of Advance permitted by this
Agreement.

5.15 CO-ORDINATION OF BA ADVANCES

     Each Lender shall advance its Proportionate Share of each Advance by way of
Bankers' Acceptances in accordance with the provisions set forth below.
<PAGE>
                                      -48-


5.15.1 The Agent, promptly following receipt of a notice from the Borrower
pursuant to Section 5.6 requesting an Advance by way of Bankers' Acceptances,
shall advise each Lender of the aggregate face amount and term(s) of the
Bankers' Acceptances to be accepted by it, which term(s) shall be identical for
all Lenders. The aggregate face amount of Bankers' Acceptances to be accepted by
a Lender shall be determined by the Agent by reference to the respective
Commitments of the Lenders, except that, if the face amount of a Bankers'
Acceptance would not be Cdn. $100,000 or a whole multiple thereof, the face
amount shall be increased or reduced by the Agent in its sole discretion to the
nearest whole multiple of Cdn. $100,000.

5.15.2 Each Lender shall transfer to the Agent at the Branch of Account for
value on each Drawdown Date immediately available Cdn. Dollars in an aggregate
amount equal to the BA Discount Proceeds of all Bankers' Acceptances accepted
and sold or purchased by the Lender on such Drawdown Date net of the applicable
Bankers' Acceptance Fee and net of the amount required to pay any of its
previously accepted Bankers' Acceptances that are maturing on the Drawdown Date
or any of its other Advances that are being converted to Bankers' Acceptances on
the Drawdown Date.

5.15.3 If the Agent determines that all the conditions precedent to an Advance
specified in this Agreement have been met, it shall advance to the Borrower the
amount delivered by each Lender by transferring it to the Designated Account
prior to 2:00 p.m. (Toronto time) on the Drawdown Date, but if the conditions
precedent to the Advance are not met by 2:00 p.m. (Toronto time) on the Drawdown
Date, the Agent shall return the funds to the Lenders or invest them in an
overnight investment as orally instructed by each Lender until such time as the
Advance is made.

5.15.4 Notwithstanding any other provision hereof, for the purpose of
determining the amount to be transferred by a Lender to the Agent for the
account of the Borrower in respect of the sale of any Bankers' Acceptance issued
by the Borrower and accepted by such Lender, the proceeds of sale thereof shall
be deemed to be an amount equal to the BA Discount Proceeds calculated with
respect thereto. Accordingly, in respect of any particular Bankers' Acceptance
accepted by it, a Lender in addition to its entitlement to retain the applicable
Bankers' Acceptance Fee for its own account (i) shall be entitled to retain for
its own account the amount, if any, by which the actual proceeds of sale thereof
exceed the BA Discount Proceeds calculated with respect thereto, and (ii) shall
be required to pay out of its own funds the amount, if any, by which the actual
proceeds of sale thereof are less than the BA Discount Proceeds calculated with
respect thereto.

5.15.5 Whenever the Borrower requests an Advance that includes Bankers'
Acceptances, each Lender that is not permitted by applicable law or by customary
market practice to accept a Bankers' Acceptance or any other Lender that in any
instance chooses not to accept a Bankers' Acceptance (each, a "NON BA LENDER")
shall, in lieu of accepting its pro rata amount of such Bankers' Acceptances,
make available to the Borrower on the Drawdown Date a loan (a "BA EQUIVALENT
LOAN") in Canadian Dollars and in an amount equal to the BA Discount Proceeds of
the Bankers' Acceptances that the Non BA Lender would have been required to
accept on the Drawdown Date if it were able to accept Bankers' Acceptances. Each
Non BA Lender shall also be entitled to deduct from the BA
<PAGE>
                                      -49-


Equivalent Loan an amount equal to the Bankers Acceptance Fee that would have
been applicable had it been able to accept Bankers' Acceptances. The BA
Equivalent Loan shall have a term equal to the term of the Bankers' Acceptances
that the Non BA Lender would otherwise have accepted and the Borrower shall, at
the end of that term, be obligated to pay the Non BA Lender an amount equal to
the aggregate face amount of the Bankers' Acceptances that it would otherwise
have accepted. All provisions of this Agreement applicable to Bankers'
Acceptances and Lenders that accept Bankers' Acceptances shall apply mutatis
mutandis to BA Equivalent Loans and Non BA Lenders and, without limiting the
foregoing, Advances shall include BA Equivalent Loans.

5.16 PAYMENT OF BANKERS' ACCEPTANCES

     The Borrower shall provide for the payment to the Agent at the Branch of
Account for the account of the applicable Lenders of the full face amount of
each Bankers' Acceptance accepted for its account on the earlier of (i) the date
of maturity of a Bankers' Acceptance and (ii) the date on which any Obligations
become due and payable pursuant to Section 8.2. The Lenders shall be entitled to
recover interest from the Borrower at a rate of interest per annum equal to the
rate applicable to Prime Rate Advances under the Credit under which the Bankers'
Acceptance was issued, compounded monthly, upon any amount payment of which has
not been provided for by the Borrower in accordance with this Section. Interest
shall be calculated from and including the date of maturity of each Bankers'
Acceptance up to but excluding the date such payment, and all interest thereon,
both before and after demand, default and judgment, is provided for by the
Borrower.

     If the Borrower provides cash in response to any Obligations becoming due
and payable under Section 8.2, it shall be entitled to receive interest on the
cash provided in accordance with Section 11.16 as long as the cash is held as
Collateral.

5.17 DEEMED ADVANCE - BANKERS' ACCEPTANCES

     Except for amounts which are paid from the proceeds of a rollover of a
Bankers' Acceptance or for which payment has otherwise been funded by the
Borrower, any amount which a Lender pays to any third party on or after the date
of maturity of a Bankers' Acceptance in satisfaction thereof or which is owing
to the Lender in respect of such a Bankers' Acceptance on or after the date of
maturity of such a Bankers' Acceptance, shall be deemed to be a Prime Rate
Advance to the Borrower under this Agreement. Each Lender shall forthwith give
notice of the making of such a Prime Rate Advance to the Borrower and the Agent
(which shall promptly give similar notice to the other Lenders). Interest shall
be payable on such Prime Rate Advances in accordance with the terms applicable
to Prime Rate Advances.

5.18 WAIVER

     The Borrower shall not claim from a Lender any days of grace for the
payment at maturity of any Bankers' Acceptances presented and accepted by the
Lender pursuant to this Agreement. The Borrower waives any defence to payment
which might otherwise exist if for any reason a Bankers' Acceptance shall be
held by a Lender in its own right at the
<PAGE>
                                      -50-


maturity thereof, and the doctrine of merger shall not apply to any Bankers'
Acceptance that is at any time held by a Lender in its own right.

5.19 DEGREE OF CARE

     Any executed orders to be used as Bankers' Acceptances shall be held in
safekeeping with the same degree of care as if they were the Lender's own
property, and shall be kept at the place at which such orders are ordinarily
held by such Lender.

5.20 INDEMNITY

     The Borrower shall indemnify and hold the Lenders, and each of them,
harmless from any loss, cost, damage or expense with respect to any Bankers'
Acceptance dealt with by the Lenders for the Borrower's account, but shall not
be obliged to indemnify a Lender for any loss, cost, damage or expense caused by
the gross negligence or wilful misconduct of that Lender.

5.21 OBLIGATIONS ABSOLUTE

     The obligations of the Borrower with respect to Bankers' Acceptances under
this Agreement shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including, without limitation, the following circumstances:

          (i)  any lack of validity or enforceability of any order accepted by a
               Lender as a Bankers' Acceptance; or

          (ii) the existence of any claim, set-off, defence or other right which
               the Borrower may have at any time against the holder of a
               Bankers' Acceptance, a Lender or any other person or entity,
               whether in connection with this Agreement or otherwise.

5.22 SHORTFALL ON DRAWDOWNS, ROLLOVERS AND CONVERSIONS

     The Borrower agrees that:

     (a)  the difference between the amount of an Advance requested by the
          Borrower by way of Bankers' Acceptances and the actual proceeds of the
          Bankers' Acceptances;

     (b)  the difference between the actual proceeds of a Bankers' Acceptance
          and the amount required to pay a maturing Bankers' Acceptance, if a
          Bankers' Acceptance is being rolled over; and

     (c)  the difference between the actual proceeds of a Bankers' Acceptance
          and the amount required to repay any Advance which is being converted
          to a Bankers' Acceptance;
<PAGE>
                                      -51-


shall be funded and paid by the Borrower from its own resources, by 11:00 a.m.
on the day of the Advance or may be advanced as a Prime Rate Advance under a
Credit if the Borrower is otherwise entitled to an Advance under the Credit.

5.23 PROHIBITED USE OF L/CS AND BANKERS' ACCEPTANCES

     The Borrower shall not enter into any agreement or arrangement of any kind
with any person to whom Bankers' Acceptances have been delivered whereby the
Borrower undertakes to replace such Bankers' Acceptances on a continuing basis
with other Bankers' Acceptances, nor shall the Borrower directly or indirectly
take, use or provide Bankers' Acceptances or L/Cs as security for loans or
advances from any other person. Notwithstanding the preceding sentence, the
Borrower may use L/Cs as security for industrial development bonds and other
similar types of instruments which may be outstanding in connection with any
Property acquired by any Restricted Party, directly or indirectly. Such use of
an L/C shall be considered to be financial assistance for the purpose of Section
3.1.4(b). The Borrower may also use L/Cs to secure bankers' acceptances maturing
on or before 21 October 2002 that are owing to National Bank of Canada and
Comerica Bank in connection with the credit agreement dated as of 14 August
2001.

5.24 ISSUANCE AND MATURITY OF L/CS

     A request for an Advance by way of L/C shall be made by a Borrower in
accordance with Section 5.6, except that the request shall be sent directly to
the Issuing Bank. A request shall include the details of the L/C to be issued.
The Issuing Bank shall promptly notify the Borrower of any comment concerning
the form of the L/C requested by the Borrower and shall, if the Borrower is
otherwise entitled to an Advance, issue the L/C to the Borrower at the branch
where its account is maintained on the Drawdown Date or as soon thereafter as
the Issuing Bank is satisfied with the form of L/C to be issued.

     Each L/C issued under this Agreement shall have a term which is not more
than one year after its issuance date or renewal date and does not extend beyond
the then-current maturity date of the Credits. Collateral shall be provided for
the benefit of the Lenders promptly upon demand by the Agent. An L/C may be
renewed by the Borrower subject to complying with the terms of this Agreement
applicable to an Advance by way of L/C.

5.25 PAYMENT OF L/C FEES

     Payment of L/C Fees shall be made to the Issuing Bank, shall be made at the
time of issuance or renewal of each L/C and shall be refunded pro rata if the
L/C is drawn, reduced in amount or terminated before its expiry date. Fees shall
be calculated for the period from and including the date of issuance (or the day
following the previous expiry date in the case of a renewal) to and including
the date of expiry of the relevant L/C.

5.26 PAYMENT OF L/CS

     The Borrower shall provide for the payment to the Issuing Bank at the
branch where the L/C was issued of the full face amount of each L/C (or the
amount actually paid in the case of a partial payment) on the earlier of (i) the
date on which the Issuing Bank makes a payment to the beneficiary of an L/C, and
(ii) the date on which any Obligations
<PAGE>
                                      -52-


become due and payable pursuant to Section 8.2. The Issuing Bank shall be
entitled to recover interest from the Borrower at a rate of interest per annum
equal to the rate applicable to Prime Rate Advances (in the case of Canadian
Dollar L/Cs) or Base Rate Advances (in the case of US Dollar L/Cs), compounded
monthly, upon any amount payment of which has not been provided for by the
Borrower in accordance with this Section. Interest shall be calculated from and
including the date on which the Issuing Bank makes a payment to the beneficiary
of an L/C, up to but excluding the date such payment, and all interest thereon,
both before and after demand, default and judgment, is provided for by the
Borrower.

     The obligation of the Borrower to reimburse the Issuing Bank for a payment
to a beneficiary of an L/C shall be absolute and unconditional, without
prejudice to the Borrower's right to subsequently claim damages for matters
arising from the Issuing Bank's wilful misconduct or gross negligence, and shall
not be reduced by any demand or other request for payment of an L/C (a "DEMAND")
paid or acted upon in good faith and in conformity with laws, regulations or
customs applicable thereto being invalid, insufficient, fraudulent or forged,
nor shall the Borrower's obligation be subject to any defence or be affected by
any right of set-off, counter-claim or recoupment which the Borrower may now or
hereafter have against the beneficiary, the Issuing Bank or any other person for
any reason whatsoever, including the fact that the Issuing Bank paid a Demand or
Demands (if applicable) aggregating up to the amount of the L/C notwithstanding
any contrary instructions from the Borrower to the Issuing Bank or the
occurrence of any event including, but not limited to, the commencement of legal
proceedings to prohibit payment by the Issuing Bank of a Demand. Any action,
inaction or omission taken or suffered by the Issuing Bank under or in
connection with an L/C or any Demand, if in good faith and in conformity with
laws, regulations or customs applicable thereto shall be binding on the Borrower
and shall not place any Lender under any resulting liability to the Borrower.
Without limiting the generality of the foregoing, the Issuing Bank may receive,
accept, or pay as complying with the terms of the L/C, any Demand otherwise in
order which may be signed by, or issued to, any administrator, executor, trustee
in bankruptcy, receiver or other person or entity acting as the representative
or in place of, the beneficiary.

     If the Borrower provides cash in response to any Obligations becoming due
and payable under Section 8.2, it shall be entitled to receive interest on the
cash provided in accordance with Section 11.16 as long as the cash is held as
Collateral.

5.27 DEEMED ADVANCE - L/CS

     Except for amounts which have been funded by the Borrower, any amount which
the Issuing Bank pays to any third party in respect of an L/C in satisfaction or
partial satisfaction thereof shall be deemed to be a Prime Rate Advance in the
case of Canadian Dollar L/Cs or a Base Rate Advance in the case of US Dollar
L/Cs, in each case under the Credit under which the L/C was issued. Any amount
which the Issuing Bank pays to any third party in respect of an L/C denominated
in Euros or Japanese yen in satisfaction or partial satisfaction thereof shall
be promptly converted by the Issuing Bank to Canadian Dollars in accordance with
its customary practices for conversion of currencies and the amount of Canadian
Dollars into which the amount paid is converted shall be deemed to be a Prime
Rate Advance under the Credit under which the L/C was issued. The Issuing Bank
<PAGE>
                                      -53-


shall forthwith give notice of the making of such an Advance to the Borrower.
Interest shall be payable on such Advances in accordance with the terms
applicable to such Advances.

5.28 PROHIBITED RATES OF INTEREST

     It is the intention of the parties to comply with applicable usury laws now
or hereafter enacted. Accordingly, notwithstanding any other provisions of this
Agreement or any other Credit Document, in no event shall any Credit Document
require the payment or permit the collection of interest or other amounts in an
amount or at a rate in excess of the amount or rate that is permitted by law or
in an amount or at a rate that would result in the receipt by the Lenders or the
Agent of interest at a criminal rate, as the terms "interest" and "criminal
rate" are defined under the Criminal Code (Canada). Where more than one such law
is applicable to any Restricted Party, that Restricted Party shall not be
obliged to make payment in an amount or at a rate higher than the lowest amount
or rate permitted by such laws. If from any circumstances whatever, fulfilment
of any provision of any Credit Document shall involve transcending the limit of
validity prescribed by applicable law for the collection or charging of
interest, the obligation to be fulfilled shall be reduced to the limit of such
validity, and if from any such circumstances the Agent or the Lenders shall ever
receive anything of value as interest or deemed interest under any Credit
Document in an amount that would exceed the highest lawful rate of interest
permitted by applicable law, such amount that would be excessive interest shall
be applied to the reduction of the principal amount of the relevant Credit, and
not to the payment of interest, or if such excessive interest exceeds the unpaid
principal balance of the relevant Credit, the amount exceeding the unpaid
balance shall be refunded to the Borrower. In determining whether or not the
interest paid or payable under any specified contingency exceeds the highest
lawful rate, the Restricted Parties, the Agent and the Lenders shall, to the
maximum extent permitted by applicable law, (a) characterize any non-principal
payment as an expense, fee or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, (c) amortize, prorate, allocate
and spread the total amount of interest throughout the term of such indebtedness
so that interest thereon does not exceed the maximum amount permitted by
applicable law, and/or (d) allocate interest between portions of such
indebtedness to the end that no such portion shall bear interest at a rate
greater than that permitted by applicable law. For the purposes of the
application of the Criminal Code (Canada), the effective annual rate of interest
shall be determined in accordance with generally accepted actuarial practices
and principles and in the event of any dispute, a certificate of a Fellow of the
Canadian Institute of Actuaries appointed by the Agent shall be conclusive for
the purpose of such determination.

                                   ARTICLE VI
                         REPRESENTATIONS AND WARRANTIES

6.1  REPRESENTATIONS AND WARRANTIES

     Each Restricted Party represents and warrants to the Lenders as specified
below.

6.1.1 CORPORATE MATTERS
<PAGE>
                                      -54-


     (a)  It is a duly incorporated or amalgamated and validly existing
          corporation or a duly organized and validly existing partnership, as
          the case may be, and has the power and authority to enter into and
          perform its obligations under any Credit Documents to which it is or
          will be a party, to own its Property and to carry on the business in
          which it is engaged.

     (b)  It is in compliance with the requirements for carrying on business in
          all jurisdictions in which it carries on business except to the extent
          that the non-compliance would not have a material adverse effect on
          the ability of the Restricted Parties, taken as a whole, to carry on
          business.

     (c)  It has all Permits required as of the date hereof, to enter into and
          perform its obligations under any Credit Documents to which it is or
          will be a party, to own its Property and to carry on the business in
          which it is engaged, except to the extent that the absence of Permits
          would not have a material adverse effect on the ability of the
          Restricted Parties, taken as a whole, to do all things contemplated in
          this paragraph.

     (d)  The entering into and the performance by it of the Credit Documents to
          which it is or will be a party (i) have been duly authorized by all
          necessary corporate action on its part, (ii) do not and will not
          violate its Constating Documents, any Requirement of Law, the 1999
          Indenture, the 2001 Indenture or the terms of any Permitted Senior
          Secured Indebtedness, Permitted Subordinated Secured Indebtedness or
          Permitted Unsecured Indebtedness, (iii) do not and will not violate
          any Permit or any Contract not mentioned in item (ii) to which it is a
          party, except to the extent that any violation would not cause a
          Material Adverse Change, and (iv) will not result in the creation of
          any Encumbrance on any of its Property or require it to create any
          Encumbrance on any of its Property other than, in either case,
          Permitted Encumbrances and will not result in the forfeiture of any of
          its Property.

     (e)  Its Constating Documents do not restrict the power of its directors to
          borrow money, to give financial assistance by way of loan, guarantee
          or otherwise, or to encumber any or all of its present and future
          Property to secure the Obligations, except for restrictions under any
          Constating Document which have been complied with in connection with
          the Credit Documents and the Permitted Obligations.

     (f)  It is not in violation of any term of its Constating Documents and is
          not in violation of any Requirement of Law, Permit or Contract, the
          violation of which would materially and adversely affect its ability
          to own its Property and conduct its business, nor will its execution,
          delivery and performance of any Credit Documents to which it is a
          party result in any such violation.

     (g)  It has good and marketable title to or the right to use or good, valid
          and subsisting leases or licenses in respect of all of the Property
          necessary for
<PAGE>
                                      -55-


          the operation of its business, free and clear of any Encumbrances,
          other than Permitted Encumbrances, and no person has any agreement or
          right to acquire any of its Property out of the ordinary course of
          business.

6.1.2 CREDIT DOCUMENTS

     (a)  The Credit Documents to which it is or will be a party have been or
          will be duly executed and delivered by it and, when executed and
          delivered, will constitute legal, valid and binding obligations
          enforceable against it in accordance with their respective terms,
          subject to the availability of equitable remedies and the effect of
          bankruptcy, insolvency and similar laws affecting the rights of
          creditors generally.

     (b)  As of the date of this Agreement, no Event of Default or Pending Event
          of Default has occurred and is continuing.

     (c)  From and after the date on which the relevant Security is delivered,
          the Lenders will have the benefit of legal, valid and enforceable
          security upon all of its present and future Property subject only to
          Permitted Encumbrances, the availability of equitable remedies, and
          the effect of bankruptcy, insolvency and similar laws affecting the
          rights of creditors generally.

6.1.3 LITIGATION, FINANCIAL STATEMENTS ETC.

     (a)  As of the date of execution of this Agreement, there are no
          litigation, arbitration or administrative proceedings or industrial or
          labour disputes outstanding and, to its knowledge after having made
          reasonable inquiry, there are no proceedings or disputes pending or
          threatened, against it which, in either case, could constitute a
          Material Adverse Change, except as disclosed on Schedule J.

     (b)  All of the historical financial statements which have been furnished
          to the Lenders, or any of them, in connection with this Agreement are
          complete and, to its knowledge after reasonable inquiry, fairly
          present in all material respects the financial position of NSCL on a
          consolidated basis as of the dates referred to therein and have been
          prepared in accordance with GAAP except, in the case of quarterly
          financial statements, notes to the statements and normal year-end
          audit adjustments required by GAAP are not included.

     (c)  All projections, including forecasts, budgets, pro formas and business
          plans provided to the Agent were prepared in good faith based on
          assumptions which were believed to be reasonable and were believed at
          the time of preparation to be reasonable estimates of the prospects of
          the businesses referred to therein, and all material changes in the
          estimates of the prospects of those businesses occurring between the
          time of
<PAGE>
                                      -56-


          preparation and the date of this Agreement have been disclosed to the
          Lenders in writing.

     (d)  As of the date of execution of this Agreement, it has no liabilities
          (contingent or other) or other obligations of the type required to be
          included in the consolidated financial statements of the Restricted
          Parties in accordance with GAAP which are not fully included on NSCL's
          audited financial statements provided to the Lenders for its fiscal
          year ended 31 December 2001 or NSCL's unaudited financial statements
          for the fiscal period ended 31 March 2002, other than liabilities and
          obligations incurred thereafter in the ordinary course of its business
          and the Obligations, none of which constitutes a Material Adverse
          Change.

     (e)  It is not in default under any of the Permitted Encumbrances to an
          extent that would materially and adversely affect the financial
          position of NSCL on a consolidated basis, or the Restricted Party's
          ability to carry on its business or perform its obligations under the
          Credit Documents to which it is or will be a party.

     (f)  There is no fact that it has not disclosed to the Agent in writing
          that materially and adversely affects its ability to perform its
          obligations under the Credit Documents to which it is or will be a
          party.

6.1.4 OTHER DEBT

     (a)  This Agreement is in compliance with the terms of the 1999 Notes, the
          2001 Notes, and any outstanding Permitted Senior Secured Indebtedness,
          Permitted Subordinated Secured Indebtedness and Permitted Unsecured
          Indebtedness (including but not limited to any limitation on
          additional indebtedness contained in the documentation relating to the
          1999 Notes, 2001 Notes, Permitted Senior Secured Indebtedness,
          Permitted Subordinated Secured Indebtedness and Permitted Unsecured
          Indebtedness) and will not contravene or cause a default under any of
          the 1999 Notes, 2001 Notes, Permitted Senior Secured Indebtedness,
          Permitted Subordinated Secured Indebtedness and Permitted Unsecured
          Indebtedness.

     (b)  All Obligations are "Permitted Indebtedness" under the 1999 Indenture,
          "Permitted Debt" under the 2001 Indenture and the equivalent of those
          terms under the terms of any outstanding Permitted Senior Secured
          Indebtedness, Permitted Subordinated Secured Indebtedness and
          Permitted Unsecured Indebtedness.

     (c)  All Obligations are "Senior Indebtedness" and "Designated Senior
          Indebtedness" or the equivalent of those terms under the terms of any
          outstanding Permitted Subordinated Secured Indebtedness and the terms
          of any Permitted Unsecured Indebtedness which is expressed to be
<PAGE>
                                      -57-


          subordinated and are entitled to the benefit of all subordination
          provisions under the terms of any such Debt.

     (d)  The Credits constitute "New Credit Facilities" under the terms of the
          1999 Notes and the 2001 Notes. As of 30 June 2002, the Threshold
          Amount was not less than $600,000,000.

6.1.5 PROPERTY AND CAPITAL STOCK

     (a)  Schedule F fully and fairly describes as of the date of this
          Agreement, the ownership of all of its issued and outstanding Capital
          Stock, the Capital Stock in Restricted Parties and other persons that
          it owns, the nature of the business that it carries on, the locations
          of its head office (and chief executive office, if different) and its
          freehold (or fee as the case may be) and leasehold real property, and
          the jurisdictions in which its other Property (other than accounts
          receivable) are located.

     (b)  The Pledged Shares are validly issued as fully paid and non-assessable
          Capital Stock of the respective Restricted Parties or other issuers.

     (c)  The consents of the shareholders or directors of the respective
          Restricted Parties or other issuers and any other consents that will
          be delivered at or prior to the time that the Pledged Shares become
          part of the Trustee Security are the only consents that are necessary
          or desirable in connection with the pledges of the Pledged Shares as
          part of the Trustee Security (including the enforcement of the
          pledges), and will be kept in full force and effect as long as they
          remain necessary or desirable.

6.1.6 ENVIRONMENTAL MATTERS

     (a)  To its knowledge having made all due inquiry, (i) there are no active
          or abandoned underground storage tanks located on any land which it
          occupies or controls, except those that comply with applicable
          Requirements of Law, (ii) there are no Hazardous Materials located on,
          above or below the surface of any land which it occupies or controls
          or contained in the soil or water constituting such land (except those
          that are in compliance with applicable Requirements of Law), (iii) no
          release of Hazardous Materials has occurred on or from such land
          (except those minor items that are in accordance with Permits or
          otherwise do not violate applicable Requirements of Law) and (iv) no
          land that it occupies or controls has been used as a landfill or waste
          disposal site, except in each case as disclosed on Schedule J or as
          would not reasonably be expected to cause a Material Adverse Change.

     (b)  Its business and Property have been and are being owned, occupied and
          operated in substantial compliance with applicable Requirements of Law
          intended to protect the environment (including, without limitation,
          laws respecting the disposal or emission of Hazardous Materials), to
          the best of
<PAGE>
                                      -58-


          its knowledge after reasonable inquiry there are no breaches thereof
          and no enforcement actions in respect thereof are threatened or
          pending which, in any such case, would reasonably be expected to cause
          a Material Adverse Change.

6.1.7 TAXES AND WITHHOLDINGS

     (a)  It has (i) duly filed on a timely basis all material tax returns,
          elections and reports required to be filed by it and has paid,
          collected and remitted all material Taxes due and payable, collectible
          or remittable by it, except Taxes for which instalments have been paid
          based on reasonable estimates pending final assessments, or the
          validity of which is being contested by it diligently and in good
          faith by appropriate proceedings and the payment of which has been
          secured by such arrangements (including Collateral) as the Lenders may
          require, (ii) made adequate provision for material Taxes payable by it
          for the current period and any previous period for which tax returns
          are not yet required to be filed and, except as disclosed in writing
          to the Agent from time to time, there are no actions, proceedings or
          claims pending or, to its knowledge, threatened, against it in respect
          of material Taxes, and (iii) collected and remitted to the appropriate
          tax authority when required by law to do so all material amounts
          collectible and remittable in respect of goods and services tax and
          similar provincial or state Taxes, and has paid all such material
          amounts payable by it on account of sales Taxes including goods and
          services and value-added taxes, except in each case Taxes for which
          instalments have been paid based on reasonable estimates pending final
          assessments, or the validity of which is being contested by it
          diligently and in good faith by appropriate proceedings and the
          payment of which has been secured by such arrangements (including
          Collateral) as the Lenders may require (it being agreed that, for
          purposes of this paragraph, the amount of a Tax is material if it
          equals or exceeds Cdn. $10,000,000 or the equivalent thereof in
          another currency).

     (b)  It has withheld from each payment made to any of its past or present
          employees, officers or directors, and to any non-resident of the
          country in which it is resident, the amount of all material Taxes and
          other deductions required to be withheld therefrom and has paid the
          same to the appropriate tax authority within the time required under
          any applicable legislation (it being agreed that, for purposes of this
          paragraph, the amount of a Tax is material if it equals or exceeds
          Cdn. $2,000,000 or the equivalent thereof in another currency).

6.1.8 ABORIGINAL CLAIMS

     (a)  Except for matters which would not, in the aggregate, reasonably be
          expected to cause a Material Adverse Change, no Aboriginal group has
          asserted, by virtue of its Aboriginal status:
<PAGE>
                                      -59-


          (i)  any claim against any Property of a Restricted Party;

          (ii) any right, title, benefit or interest in any real property of a
               Restricted Party;

          (iii) any claim of jurisdiction over any real property of a Restricted
               Party; or

          (iv) any right to be consulted with respect to any change in the use,
               development or improvement in any real property of a Restricted
               Party.

     (b)  Except for matters which would not, in the aggregate, reasonably be
          expected to cause a Material Adverse Change, it is not aware of and
          has not received, in relation to any of its real property, any notice
          of:

          (i)  the existence or potential existence of any Aboriginal heritage
               sites;

          (ii) any actual or alleged interference with Aboriginal rights; or

          (iii) any specific or comprehensive claims.

     (c)  Except for matters which would not, in the aggregate, reasonably be
          expected to cause a Material Adverse Change, it has disclosed to the
          Lenders all written correspondence, notices or minutes of meetings
          received from or involving any Aboriginal group relating to any claim,
          conflict or controversy.

6.1.9 OTHER MATTERS

     (a)  Neither it nor any of its Subsidiaries is an "investment company"
          within the meaning of the Investment Company Act of 1940 (United
          States), as amended, or a "holding company", or a "subsidiary company"
          of a "holding company", or an "affiliate" of a "holding company" or of
          a "subsidiary company" of a "holding company," within the meaning of
          the Public Utility Holding Company Act of 1935 (United States), as
          amended.

     (b)  None of the proceeds of any Advance shall be used to purchase or
          carry, or to reduce or retire or refinance any credit incurred to
          purchase or carry, any margin stock (within the meaning of Regulations
          U and X of the Board of Governors of the Federal Reserve System of the
          United States) or to extend credit to others for the purpose of
          purchasing or carrying any margin stock.
<PAGE>
                                      -60-


6.2  SURVIVAL OF REPRESENTATIONS AND WARRANTIES

     Unless expressly stated to be made as of a specific date, the
representations and warranties made in this Agreement shall survive the
execution of this Agreement and all other Credit Documents, and shall be deemed
to be repeated as of the date of each Advance (including any deemed Advance),
subject to modifications made by NSCL to the Lenders in writing and accepted by
the Majority Lenders, acting reasonably. The Lenders shall be deemed to have
relied upon such representations and warranties at each such time as a condition
of making an Advance hereunder or continuing to extend the Credits hereunder.

                                  ARTICLE VII
                            COVENANTS AND CONDITIONS

7.1  FINANCIAL COVENANTS

7.1.1 During the term of this Agreement, the Funded Debt Ratio shall not at any
time exceed 0.60 to 1.

7.1.2 During the term of this Agreement, NSCL shall at all times maintain a
consolidated shareholders' equity of not less than a minimum of $779,300,000.
The minimum shall increase annually as of 31 December in each year, beginning in
2002, by an amount equal to 50% of NSCL's consolidated net income for each year,
excluding any year in which NSCL incurs a consolidated net loss.

7.1.3 During the term of this Agreement, the Secured Debt Ratio shall not at any
time exceed 0.30 to 1.

7.1.4 At all times during the term of this Agreement when Permitted Senior
Secured Indebtedness or Permitted Subordinated Secured Indebtness is outstanding
and the Funded Debt Ratio is greater than 0.40 to 1, NSCL shall maintain an
Interest Coverage Ratio of not less than the following:

<TABLE>
<CAPTION>
Period                                 Interest Coverage Ratio
------                                 -----------------------
<S>                                    <C>
to 31 December 2002                           1.10 to 1
from 1 January 2003 to 31 March 2003          1.75 to 1
on and after 1 April 2003                     2.50 to 1
</TABLE>

7.2 POSITIVE COVENANTS

     During the term of this Agreement, each Restricted Party shall perform the
covenants specified below.

7.2.1 PAYMENT; OPERATION OF BUSINESS

     (a)  It shall duly and punctually pay the Obligations, either as Borrower
          or in accordance with its guarantee of the Obligations, at the times
          and places and in the manner required by the terms thereof.
<PAGE>
                                      -61-


     (b)  It shall keep proper books of account and record, maintain its
          corporate status in all jurisdictions where it carries on business,
          operate its business in accordance with sound business practice and in
          compliance in all material respects with all applicable Requirements
          of Law (including but not limited to those regarding ownership of
          persons carrying on the type of business that it carries on) and
          Material Contracts and Material Permits.

     (c)  It shall maintain in good standing and shall obtain, as and when
          required, all Permits and Contracts which may be material to permit it
          to acquire, own, operate and maintain its business and Property, lease
          any land forming part of its Property, and perform its obligations
          under the Credit Documents to which it is or will be a party.

     (d)  At any time after Permitted Senior Secured Indebtedness in an
          aggregate principal amount of $100,000,000 or more has been incurred
          during the term of this Agreement, it shall not (i) amend any
          provision of any Material Contract to which it is a party or give any
          consent, concession or waiver with respect thereto which, in either
          case, would cause a Material Adverse Change, or (ii) cancel, terminate
          or accept the surrender of any Material Contract if the cancellation,
          termination or surrender would cause a Material Adverse Change, unless
          a Replacement Contract is entered into in respect of the Material
          Contract in question.

7.2.2 INSPECTION

     It shall at all reasonable times and from time to time upon reasonable
notice, permit representatives of the Lenders to inspect any of its Property and
to examine and take extracts from its financial books, accounts and records,
including but not limited to accounts and records stored in computer data banks
and computer software systems, and to discuss its financial condition with its
senior officers and (in the presence of such of its representatives as it may
designate) its auditors, the reasonable expense of all of which shall be paid by
the Borrower provided that:

     (a)  the Lenders' exercise of their rights under this paragraph does not
          unreasonably interfere with the operations of the Restricted Parties;

     (b)  the Lenders maintain the confidentiality of all information they
          receive in accordance with usual requirements of banker/customer
          confidentiality, and do not disclose or use it except for the purposes
          of this Agreement;

     (c)  any representative of a Lender who is not an employee of that Lender
          has executed and delivered an agreement in favour of the Restricted
          Parties and the Lenders to use any information obtained as a result of
          any inspection or examination on behalf of a Lender only for the
          purposes of this Agreement, and has established to the reasonable
          satisfaction of NSCL and the Lenders that there is no inherent
          conflict of interest between the business and clientele of the
          Restricted Parties and the business and clientele (other than the
          Lenders) of that representative.
<PAGE>
                                      -62-


7.2.3 INSURANCE

     (a)  It shall maintain insurance on all its Property with financially sound
          and reputable insurance companies or associations including all-risk
          property insurance, comprehensive general liability insurance and
          business interruption insurance, in amounts, with deductibles or
          retentions, and against risks that would be maintained by a prudent
          owner carrying on similar businesses in similar locations, and shall
          furnish to the Agent, on written request, satisfactory evidence of the
          insurance carried.

     (b)  It shall cause policies of insurance referred to above to contain a
          standard mortgage clause and other customary endorsements for the
          benefit of lenders (including endorsements naming the Trustee as loss
          payee and additional insured as required by the Agent), all in a form
          acceptable to the Lenders acting reasonably, and a provision that such
          policies will not be amended in any manner which is prejudicial to the
          Lenders or be cancelled without 30 days' prior written notice being
          given to the Trustee by the issuers thereof. It shall also, subject to
          Section 7.6, cause all of the proceeds of insurance under such
          policies to be made payable and to be paid to the Trustee.

     (c)  Whenever reasonably requested in writing by the Agent, it shall cause
          certified copies of the policies of insurance carried pursuant to this
          Section to be delivered to the Agent.

     (d)  It shall provide the Agent promptly with such other evidence of the
          insurance as the Lenders may from time to time reasonably require.

7.2.4 TAXES, ENCUMBRANCES AND WITHHOLDINGS

     (a)  It shall pay all Taxes and Encumbrances in respect of itself or its
          Property as they become due and payable unless they are being
          contested in good faith by appropriate proceedings and it has made
          adequate provision for payment of the contested amount.

     (b)  It shall withhold from each payment made to any of its past or present
          employees, officers or directors, and to any non-resident of the
          country in which it is resident, the amount of all Taxes and other
          deductions required to be withheld therefrom and pay the same to the
          appropriate tax authority within the time required under any
          applicable Requirement of Law.

     (c)  It shall collect from all Persons the amount of all Taxes required to
          be collected from them and remit the same to the proper tax or other
          receiving officers within the time required under any applicable
          Requirement of Law.
<PAGE>
                                      -63-


7.2.5 OTHER MATTERS

     (a)  It shall, immediately upon receipt, deliver to the Trustee
          certificates representing all Capital Stock of other Restricted
          Parties or of other persons in which it owns Capital Stock that it
          acquires after the date that Capital Stock of the Restricted Parties
          or other persons is first delivered as part of the Trustee Security,
          together with executed stock powers of attorney relating to those
          certificates (or if certificates in respect of such Capital Stock are
          not available, take such other steps to perfect the Trustee Security
          relating to such Capital Stock as the Agent requires).

     (b)  It shall observe and comply in all material respects at all times with
          the provisions of all Environmental Laws and shall provide such
          evidence of on-going compliance with Environmental Laws as the
          Majority Lenders may reasonably require from time to time including,
          without limitation, if so requested by the Majority Lenders, acting
          reasonably upon reasonable cause, arranging for one or more
          environmental site assessment and/or compliance audits (each
          consisting of a non-intrusive phase I audit and recommendations with
          respect to the findings described therein and such other audits or
          investigations recommended in each such phase I audit, including,
          without limitation, an intrusive phase II audit) and reports thereon
          by an independent consultant engaged by the Restricted Parties and
          acceptable to the Majority Lenders, acting reasonably. It shall also
          remove, clean up or otherwise remedy the matters referred to in
          Section 7.3.2(d).

     (c)  If it is listed on Schedule I, it shall comply with the limits on its
          Property, business activities and other matters described on that
          Schedule and, if it owns Capital Stock of any other person listed on
          Schedule, it shall cause that person to comply with the limits on its
          Property, business activities and other matters described on that
          Schedule I.

     (d)  It shall diligently and in good faith use all commercially reasonable
          efforts to obtain agreements in form and substance satisfactory to the
          Agent from other parties to Material Contracts that are specifically
          assigned as part of the Trustee Security from time to time after the
          agreements contemplated in Section 3.1.8 have been obtained.

     (e)  It shall diligently and in good faith use all commercially reasonable
          efforts to obtain consents in respect of the Security in form and
          substance satisfactory to the Agent from landlords of material
          leasehold real property designated by the Agent from time to time in
          which any Restricted Party carries on business.

     (f)  In the case of NSCL, if it issues Permitted Senior Secured
          Indebtedness, Permitted Subordinated Secured Indebtedness or Permitted
          Unsecured Indebtedness, it shall concurrently deliver a certificate to
          the Agent with copies of the indenture or agreement under which that
          Debt is incurred and
<PAGE>
                                      -64-


          any other documents necessary to fully and fairly disclose all
          material terms thereof.

7.3  REPORTING AND NOTICE REQUIREMENTS

     During the term of this Agreement, NSCL shall deliver or cause the delivery
of the periodic reports specified below and shall give notices in the
circumstances specified below, or cause notices to be given. All financial
statements and other reports shall be in a form satisfactory to the Lenders and
all financial statements shall be prepared in accordance with GAAP. NSCL shall,
as directed by the Agent from time to time, either distribute financial
statements and other reports directly to the Lenders or supply the Agent with
sufficient copies of financial statements and other reports to allow the Agent
to distribute them to the Lenders.

7.3.1 PERIODIC REPORTS

     (a)  NSCL shall, as soon as practicable and in any event within 30 days of
          the end of each calendar month, prepare and deliver a Borrowing Base
          Certificate and a statement of the Restricted Parties' inventory and
          aged accounts receivable (including amounts owing by account debtor
          name for account debtors owing an aggregate of $1,000,000 or more
          each) as at the end of that month. The Borrowing Base Certificate may
          be delivered by e-mail and, if delivered by NSCL by e-mail, it shall
          be considered to be a representation by NSCL even if not manually
          signed by NSCL.

     (b)  NSCL shall, as soon as practicable and in any event within 45 days of
          the end of each of its fiscal quarters (including the fourth quarter),
          prepare and deliver its interim unaudited consolidated financial
          statements, modified to exclude persons that are not Restricted
          Parties, and the interim unaudited financial statements of the
          Borrower, as at the end of such quarter, in each case including,
          without limitation, balance sheet, statement of income and retained
          earnings and statement of changes in financial position.

     (c)  NSCL shall, as soon as practicable and in any event within 90 days
          after the end of each of its fiscal years, prepare and deliver its
          consolidated annual financial statements, including supplemental
          consolidating information identifying Restricted Parties and persons
          that are not Restricted Parties, and the annual financial statements
          of the Borrower, including, without limitation, balance sheet,
          statement of income and retained earnings and statement of changes in
          financial position for such fiscal year, all of which shall be audited
          by an internationally recognized accounting firm.

     (d)  NSCL shall, concurrently with the delivery of each of its quarterly
          financial statements, prepare and deliver a Compliance Certificate.

     (e)  NSCL shall, as soon as practicable and in any event not later than 120
          days after the beginning of each of its fiscal years, prepare and
          deliver its
<PAGE>
                                      -65-


          financial forecast for its current fiscal year and the following two
          fiscal years, which shall cover NSCL on a consolidated basis and shall
          include, without limitation, a projected income statement, a projected
          statement of changes in funds, estimates of capital expenditures and
          tax losses and deferrals.

     (f)  NSCL shall promptly deliver copies of all information concerning its
          financial condition and Property that is provided to the Noteholders
          and the holders of the Permitted Senior Secured Indebtedness,
          Permitted Subordinated Secured Indebtedness and Permitted Unsecured
          Indebtedness and not otherwise provided to the Lenders, copies of all
          notices received from the Noteholders and the holders of the Permitted
          Senior Secured Indebtedness, Permitted Subordinated Secured
          Indebtedness and Permitted Unsecured Indebtedness, and all other
          information reasonably requested by the Lenders from time to time
          concerning the business, financial condition and Property of the
          Restricted Parties.

     If there is any change in a subsequent period from the accounting policies,
practices and calculation methods used by NSCL in preparing its financial
statements for its fiscal year ended 31 December 2001, or components thereof,
NSCL shall provide the Lenders with all information that the Lenders require to
ensure that reports provided to the Lenders after any change are comparable to
previous reports. In addition, all calculations made for the purposes of this
Agreement shall continue to be made based on the accounting policies, practices
and calculation methods that were used in preparing NSCL's financial statements
for its fiscal year ended 31 December 2001 if the changed policies, practices
and methods would materially affect the results of those calculations.

7.3.2 REQUIREMENTS FOR NOTICE

     (a)  NSCL shall promptly notify the Lenders of any Event of Default or
          Pending Event of Default.

     (b)  If an aggregate principal amount of $100,000,000 or more of Permitted
          Senior Secured Indebtedness is then outstanding, NSCL shall promptly
          notify the Lenders of (i) any material default (either by a Restricted
          Party or by any other party) under any Material Contract or Material
          Permit, (ii) any event which, with or without the giving of notice,
          lapse of time or any other condition subsequent, would be a material
          default or would otherwise allow the termination of any Material
          Contract or Material Permit or the imposition of any material sanction
          on any party to a Material Contract or Material Permit, (iii) the
          occurrence of any "force majeure" event as described in any Material
          Contract, (iv) any litigation or arbitration proceedings concerning
          any Material Contract, and (v) any matters requiring the consent of
          any other party to a Material Contract, and shall from time to time
          provide the Lenders with all information reasonably requested by any
          of the Lenders concerning the status thereof.
<PAGE>
                                      -66-


     (c)  NSCL shall promptly notify the Lenders on becoming aware of the
          occurrence of any litigation, dispute, arbitration, proceeding, labour
          or industrial dispute or any other circumstance affecting it, the
          result of which if determined adversely would cause a Material Adverse
          Change, and shall from time to time provide the Lenders with all
          reasonable information requested by any of the Lenders concerning the
          status thereof.

     (d)  NSCL shall promptly notify the Agent of (i) any release of Hazardous
          Materials on or from any land which any Restricted Party occupies or
          controls that is reportable under applicable Requirements of Law and
          that has resulted in any material personal injury or illness or is
          reasonably expected to result in a cost of remediation of $1,000,000
          or more, and (ii) any enforcement actions, special investigations,
          control orders, stop orders, injunctions, prosecutions or civil
          proceedings under any Environmental Law or based on any allegation of
          environmental damage or release of Hazardous Materials, and shall
          provide the Agent with details, including cost, of the work required
          to remove, clean up or otherwise remedy the matters referred to in the
          notice.

     (e)  NSCL shall promptly notify the Agent if any change occurs in the
          ratings used to determine the Applicable Fee Rate and the Applicable
          Margin or (except as prohibited by confidentiality agreements with
          relevant ratings agencies) if it learns that any change will be made
          by the relevant ratings agencies.

     (f)  NSCL shall promptly notify the Agent if it is within $10,000,000 of
          any of the thresholds that would require it to take action specified
          in Section 7.7 or item 3 of Schedule L, and promptly provide such
          further reports as the Agent may require while it remains within
          $10,000,000 of either threshold.

7.4  OWNERSHIP OF THE RESTRICTED PARTIES

     During the term of this Agreement, there shall not be any change in the
ownership or control of the Restricted Parties other than NSCL from that
described on Schedule F, except if:

     (a)  the change is otherwise expressly permitted in this Agreement and NSCL
          gives the Agent reasonable advance notice of the change and
          immediately takes whatever steps and delivers whatever documents
          (including opinions of counsel satisfactory to the Lenders) are
          reasonably required to ensure that the Security is not adversely
          affected as a result;

     (b)  the Restricted Party was owned or controlled, as the case may be, by
          another Restricted Party incorporated in Canada and the change will
          result in the first Restricted Party being owned or controlled by a
          Restricted Party or Restricted Parties incorporated in Canada, and
          NSCL gives the Agent reasonable advance notice of the change and
          immediately takes
<PAGE>
                                      -67-


          whatever steps and delivers whatever documents (including opinions of
          counsel satisfactory to the Lenders) are reasonably required to ensure
          that the Security is not adversely affected as a result; or

     (c)  the Agent (acting reasonably, after consultation with counsel)
          determines that the Lenders' ability to recover under the Security
          would not be adversely affected by the change.

7.5  NEGATIVE COVENANTS

     During the term of this Agreement, the Restricted Parties shall not do any
of the things specified in this Section without the prior written consent of the
Majority Lenders, which shall not be unreasonably withheld.

7.5.1 FINANCIAL TRANSACTIONS AND ENCUMBRANCES

     No Restricted Party shall:

     (a)  create, incur or assume or suffer to exist or cause or permit any
          Encumbrance upon or in respect of any of its Property, except for
          Permitted Encumbrances;

     (b)  do or permit anything to adversely affect the ranking or validity of
          the Security except by incurring a Permitted Encumbrance;

     (c)  create, incur, assume or permit any debts, liabilities or obligations
          of any kind (including contingent liabilities) to remain outstanding,
          other than Permitted Obligations;

     (d)  prepay, redeem, defease, repurchase or make other payments in respect
          of any of its Debt for borrowed money, other than:

          (i)  the Obligations;

          (ii) scheduled interest and principal payments under the 1999 Notes,
               the 2001 Notes, any Permitted Senior Secured Indebtedness and any
               Permitted Unsecured Indebtedness that is not expressed to be
               subordinated;

          (iii) scheduled interest payments under any Permitted Subordinated
               Secured Indebtedness and any Permitted Unsecured Indebtedness
               that is expressed to be subordinated, as long as no Event of
               Default or Pending Event of Default has occurred and is
               continuing or would result from payment being made;

          (iv) the purchase money and other obligations contemplated in Section
               1.1.83(l);

          (v)  Debts owing by any Restricted Party to another Restricted Party;
<PAGE>
                                      -68-


          (vi) payments made with the proceeds of any issuance of Capital Stock,
               any right to acquire Capital Stock or any equity-equivalent
               security, to the extent not required by this Agreement to be paid
               on account of the Obligations;

     (e)  make loans to any other person, guarantee, endorse or otherwise become
          liable for any debts, liabilities or obligations of any other person,
          or give other financial assistance of any kind to any other person,
          except for:

          (i)  the guarantees given as part of the Security or in connection
               with other debentures permitted to be issued under the Trustee
               Security;

          (ii) loans and advances to other Restricted Parties that are
               incorporated in Canada;

          (iii) loans and advances to other Restricted Parties that are not
               incorporated in Canada if the Agent (acting reasonably, after
               consultation with counsel, but without any requirement to seek
               approval of the Majority Lenders) determines that the Lenders'
               ability to recover under the Security would not be adversely
               affected by the loans and advances;

          (iv) loans and advances to Powell River Energy Inc. or Powell River
               Energy LP;

          (v)  loans to persons other than Restricted Parties of which the
               lender is a shareholder that would comply with Section 7.5.2(b)
               if the amount of the loan was instead used to acquire Capital
               Stock or other securities of, or make investments in, the person;

          (vi) guarantees of debts, liabilities and obligations of other
               Restricted Parties that are Permitted Obligations;

          (vii) financial assistance not permitted by the other items in this
               Section 7.5.1(e) in an aggregate amount outstanding at any time
               of not greater than $5,000,000, or $20,000,000 while no Permitted
               Senior Secured Indebtedness is outstanding;

     (f)  (i) enter into any Derivative for speculative purposes, (ii) enter
          into any Derivative except for Derivatives secured by the Trustee
          Security as Other Secured Obligations or other Derivatives of the type
          described in Sections 1.1.79(a) to 1.1.79(e) inclusive that are
          unsecured, or (iii) enter into any Derivative if (A) the notional
          amount or the term of the proposed transaction would adversely affect
          the Borrower's ability to make principal payments required under the
          terms of this Agreement or, (B) in the case of interest rate
          Derivatives, the aggregate notional amount swapped by all Restricted
          Parties at any time (net of offsetting transactions) exceeds the
<PAGE>
                                      -69-


          outstanding amount of the Credits, the 1999 Notes and the 2001 Notes
          at that time;

     (g)  do anything that would result in the holders of the 1999 Notes or the
          2001 Notes becoming entitled to be secured;

     (h)  do anything that would result in the holders of any other unsecured
          Debt outstanding at any time becoming entitled to be secured unless
          the unsecured Debt, if secured, would constitute Permitted Senior
          Secured Indebtedness or Permitted Subordinated Secured Indebtedness.

7.5.2 BUSINESS AND PROPERTY

     No Restricted Party shall:

     (a)  effect any material change in the nature of its business, being the
          manufacture and sale of paper, pulp and containerboard, except that
          the Restricted Parties generally may discontinue their containerboard
          business and any Restricted Party may discontinue any aspect of its
          business that is transferred to and continued by another Restricted
          Party;

     (b)  acquire Capital Stock or other securities of, or make investments in,
          any other person, unless (i) the acquisition or investment is in, or
          is incidental to, the manufacture and/or sale of paper, pulp and/or
          containerboard, (ii) the acquisition or investment is made at a time
          that no Event of Default or Pending Event of Default has occurred and
          is continuing or would result from the acquisition or investment,
          (iii) NSCL submits pro forma financial statements and calculations of
          financial covenant compliance, prepared in accordance with GAAP and
          reflecting the acquisition or investment, to the Agent a reasonable
          time in advance of completion of the acquisition or investment, and
          (iv) Sections 3.1.3, 3.1.4, 3.1.5 and 3.1.6 are complied with in
          connection with the acquisition or investment; for greater certainty,
          the terms "securities" and "investment" as used in this paragraph do
          not include matters referred to in Section 7.5.1(e);

     (c)  permit any sale, lease, sale and lease-back or other disposition of
          any part of its Property (including Capital Stock it holds) except for
          (i) sales of inventory and obsolete or redundant equipment in the
          ordinary course of business, (ii) dispositions to another Restricted
          Party, provided that Property owned by a Restricted Party incorporated
          in Canada is not transferred to a Restricted Party not incorporated in
          Canada and Property located in Canada is not transferred outside
          Canada, (iii) dispositions in connection with transactions permitted
          by Section 7.5.3(a), (iv) other dispositions of Property (including
          Capital Stock of any other person) having a fair market value for all
          Restricted Parties up to an aggregate for all Restricted Parties
          during any period of 36 consecutive months of 12.5% (20% if no
          Permitted Senior Secured Indebtedness is outstanding at the
<PAGE>
                                      -70-


          time of the disposition) of the Consolidated Net Tangible Assets
          valued immediately before any disposition;

     (d)  except for transactions between two or more Restricted Parties each of
          which is incorporated in the same jurisdiction, enter into any
          transaction of any kind with any affiliate or associate (as those
          terms are defined in the Canada Business Corporations Act), or person
          of which it is an associate except on terms that are no more onerous
          to a Restricted Party than if it were dealing with such person on an
          arm's length basis.

7.5.3 CORPORATE MATTERS

     No Restricted Party shall:

     (a)  consolidate, amalgamate or merge with any other person, enter into any
          corporate reorganization or other transaction intended to effect or
          otherwise permit a change in its existing Constating Documents,
          liquidate, wind-up or dissolve itself, or permit any liquidation,
          winding-up or dissolution, except for transactions involving only one
          or more Restricted Parties if NSCL gives the Agent reasonable advance
          notice of the transactions and immediately takes whatever steps and
          delivers whatever documents (including opinions of counsel
          satisfactory to the Lenders) are reasonably required to ensure that
          the Lenders' rights are not adversely affected as a result;

     (b)  change its name without providing the Lenders with prior written
          notice thereof and promptly taking other steps, if any, as the Lenders
          reasonably request to permit the Trustee and/or Agent to perfect the
          Security with respect to the change in name;

     (c)  change the location of its Property (except for goods in transit) or
          the location of its chief executive office from the respective
          jurisdictions specified on Schedule F without providing the Agent with
          prior written notice thereof and promptly taking other steps, if any,
          as the Lenders reasonably request to permit the Trustee and/or Agent
          to perfect the Security with respect to the change in location;

     (d)  allow inventory to be located in any jurisdiction where the Trustee
          Security over inventory has not been registered in accordance with
          local requirements unless (i) the amount of all such inventory for all
          Restricted Parties in each such jurisdiction is less than 50,000
          tonnes and (ii) the net book value of all such inventory for all
          Restricted Parties in all such jurisdictions, measured on 30 June of
          each year with an adjustment for any unusual movements of inventory on
          or before that date, is less than 30% of then-existing consolidated
          net book value of NSCL's inventory;

     (e)  allow Property other than inventory to be located in any jurisdiction
          where the Trustee Security over that Property has not been registered
          in
<PAGE>
                                      -71-


          accordance with local requirements unless the net book value of all
          such Property for all Restricted Parties in all such jurisdictions is
          less than 4% of then-existing consolidated net book value of NSCL's
          fixed assets; for greater certainty, accounts receivable of a
          Restricted Party shall be considered for the purpose of this item to
          be located where the chief executive office of the Restricted Party is
          located;

     (f)  in the case of NSCL and the Borrower, change its fiscal year end,
          being 31 December;

     (g)  change its auditors, unless an internationally recognized accounting
          firm is appointed;

     (h)  be a party to any amendment or waiver of the terms of any Permitted
          Senior Secured Indebtedness, Permitted Subordinated Secured
          Indebtedness or Permitted Unsecured Indebtedness unless expressly
          permitted by any applicable Intercreditor Agreement;

     (i)  be a party to any amendment or waiver to the terms of the 1999 Notes
          or 2001 Notes or any documents relating to any of them if the
          amendment would adversely affect the rights of any Lender or make the
          terms thereof more onerous to any Restricted Party (including but not
          limited to any amendment that would shorten the maturity, require any
          additional prepayment, increase the interest rate or other
          compensation payable to Noteholders, impose additional requirements
          for securing the Noteholders or further limit the rights of the
          Restricted Parties to incur Debt or grant Encumbrances), or be a party
          to any amendment of any kind without immediately providing the Agent
          with copies of all documents and other information relating to the
          amendment.

7.6  USE OF INSURANCE PROCEEDS

7.6.1 Unless otherwise specified in this Section 7.6, all proceeds of insurance
required to be maintained by the Restricted Parties under the terms of this
Agreement shall be paid to the Trustee.

7.6.2 Proceeds of liability insurance shall be paid to the person to whom the
affected Restricted Party is liable. Proceeds of insurance covering loss of or
damage to property in an amount of less than $25,000,000 per claim, or in any
amount if no Permitted Senior Secured Indebtedness is outstanding, may be paid
by the insurer directly to the affected Restricted Party unless, if an Event of
Default or Pending Event of Default has occurred and is continuing, the Agent
requires that payment be made to the Trustee.

7.6.3 Subject to the rights of any holder of a Permitted Encumbrance that has
priority over the Security, proceeds of insurance covering loss of or damage to
property not covered by Section 7.6.2 shall be paid to the Trustee and the Agent
shall direct the Trustee to disburse the proceeds to the affected Restricted
Party on conditions customary for construction or equipment financing, to fund
the repair or replacement of the property in
<PAGE>
                                      -72-


respect of which the insurance proceeds are payable, or to acquire revenue
producing Property within the core business of the Restricted Parties, provided
that:

     (a)  no Event of Default (including but not limited to one relating to
          Material Adverse Change) or Pending Event of Default has occurred and
          is continuing;

     (b)  the Majority Lenders are satisfied, acting reasonably, that, if repair
          or replacement is contemplated, the proceeds of such insurance
          together with other resources available to the affected Restricted
          Party (the use of which would not contravene this Agreement) are
          sufficient to fully repair or replace the property in respect of which
          the insurance proceeds are payable within the remaining term of the
          then-outstanding Credits or within 365 days, whichever is less.

7.6.4 The proceeds of business interruption insurance shall be used to repay the
Credits, without prejudice to the Borrower's rights to further Advances under
the Credits. If the Credits are repaid in full at any time, the proceeds may be
used to carry on the business of the Restricted Parties as long as the Majority
Lenders are satisfied, acting reasonably, that adequate provision has been made
for payment of the Obligations and any other obligations secured by the Security
(payment of which is permitted in accordance with this Agreement).

7.7  ADJUSTMENTS TO AMOUNT OF DEBT

7.7.1 If the aggregate of the Market Values of all Derivatives that are Other
Secured Obligations (whether in respect of interest rates, currencies,
commodities or other matters permitted by this Agreement) is at any time
negative from the Restricted Parties' perspective (that is, the Restricted
Parties on an aggregate basis are "out of the money") to the extent of
$150,000,000 or more, the Restricted Parties shall, within five Business Days of
receiving notice from the Agent, terminate or re-price one or more Derivatives
or take other action acceptable to the Agent acting reasonably so that the
Market Value of those Derivatives is immediately reduced to a negative Market
Value of not more than $135,000,000.

7.7.2 If the aggregate of:

     (a)  the outstanding principal amount of the Credits;

     (b)  the outstanding principal amount of any Permitted Senior Secured
          Indebtedness and Permitted Subordinated Secured Indebtedness;

     (c)  the absolute value of the Market Value, if negative, of the Existing
          Special Derivatives;

     (d)  the absolute value of the Market Value, if negative, of all
          Derivatives not mentioned in item (c) that are Other Secured
          Obligations and have been classified as being incurred under clauses
          (i) or (ix) of the definition of
<PAGE>
                                      -73-


          "Permitted Indebtedness" in the 1999 Indenture and the definition of
          "Permitted Debt" in the 2001 Indenture;

     (e)  the amount, as determined under the 1999 Indenture and the 2001
          Indenture, respectively, of any other obligations that have been
          classified as being incurred under clauses (i) or (ix) of the
          definition of "Permitted Indebtedness" in the 1999 Indenture and the
          definition of "Permitted Debt" in the 2001 Indenture

exceeds an amount equal to the Threshold Amount less $20,000,000, the Restricted
Parties shall within five Business Days of receiving notice from the Agent repay
Advances, repay Permitted Senior Secured Indebtedness, repay Permitted
Subordinated Secured Indebtedness, terminate or re-price one or more Derivatives
and/or take other action acceptable to the Agent acting reasonably so that the
aggregate of those amounts is reduced to not greater than an amount equal to the
Threshold Amount less $35,000,000.

7.7.3 The definition of Market Value in this Agreement shall not, however, be
binding on the Restricted Parties or any other person for the purpose of
determining the price or other basis on which any such action is taken.

                                  ARTICLE VIII
                                     DEFAULT

8.1  EVENTS OF DEFAULT

     Each of the following events shall constitute an Event of Default under
this Agreement:

     (a)  the Borrower fails to pay any amount of principal, interest, fees or
          other Obligations (including any amount relating to a Bankers'
          Acceptance or an L/C) within five Business Days of when due; or

     (b)  a Restricted Party makes any representation or warranty under any of
          the Credit Documents which is incorrect or incomplete in any material
          respect when made or deemed to be made, it being agreed that an
          incorrect representation that there is no Pending Event of Default
          shall not result in the Restricted Parties being disentitled to any
          cure period otherwise associated with the Pending Event of Default; or

     (c)  a Restricted Party ceases or threatens to cease to carry on its
          business, except as expressly permitted in this Agreement, or admits
          its inability or fails to pay its debts generally; or

     (d)  a Restricted Party permits any default under one or more agreements or
          instruments relating to its Debt other than the Obligations (including
          but not limited to the Debt under the 1999 Notes, 2001 Notes,
          Permitted Senior Secured Indebtedness, Permitted Subordinated Secured
          Indebtedness and Permitted Unsecured Indebtedness to the extent they
          are
<PAGE>
                                      -74-


          outstanding) or permits any other event to occur and to continue
          without being waived or cured after any applicable grace period
          specified in such agreements or instruments, if the effect of one or
          more of such events is to accelerate, or to permit (in accordance with
          any applicable inter-creditor and subordination arrangements) the
          acceleration of, the date on which Debt in an aggregate amount of
          $25,000,000 or more becomes due (whether or not acceleration actually
          occurs), or if any such Debt in an aggregate amount of $25,000,000 or
          more is not paid when due, taking into account any applicable grace
          periods; or

     (e)  a Restricted Party becomes a bankrupt (voluntarily or involuntarily);
          or becomes subject to any proceeding seeking liquidation, arrangement,
          relief of creditors or the appointment of a receiver or trustee over,
          or any judgment or order which has or might have a material and
          adverse effect on, any material part of its Property, and such
          proceeding, if instituted against the Restricted Party, or such
          judgment or order, is not contested diligently, in good faith and on a
          timely basis and dismissed or stayed within 30 days of its
          commencement or issuance; or

     (f)  a Restricted Party denies, to any material extent, its obligations
          under the Credit Documents or claims any of the Credit Documents to be
          invalid, withdrawn or terminated in whole or in part; or any of the
          Credit Documents is invalidated in any material respect by any act,
          regulation or governmental action or is determined to be invalid in
          any material respect by a court or other judicial entity and such
          determination has not been stayed pending appeal; or

     (g)  one or more final judgments, writs of execution, garnishments or
          attachments or similar processes representing claims in an aggregate
          of $25,000,000 or more for all Restricted Parties at any time are
          issued or levied against any of their Property and are not released,
          bonded, satisfied, discharged, vacated, stayed or accepted for payment
          by an insurer within 30 days after their entry, commencement or levy,
          unless such process is contested diligently, in good faith and on a
          timely basis and the applicable Restricted Party has made sufficient
          cash offset or other arrangements satisfactory to the Lenders with
          respect thereto; or

     (h)  an Encumbrancer takes possession of all or a substantial portion of
          the Property of a Restricted Party by appointment of a receiver,
          receiver and manager, or otherwise; or

     (i)  one or more transactions, events or conditions occur or exist which,
          when taken together, have a material adverse effect on the Agent's or
          the Lenders' ability to enforce their rights or remedies under any of
          the Credit Documents, or the financial condition, business or
          prospects of NSCL and its Subsidiaries, taken as a whole, in each case
          as determined by the
<PAGE>
                                      -75-


          Majority Lenders, acting in good faith and on commercially reasonable
          grounds; or

     (j)  there is a breach of Section 7.1 and NSCL does not, within 30 days
          after it first identifies the breach, receive proceeds of an equity
          investment in a form and an amount sufficient to satisfy the Agent
          that the breach would not have occurred had the equity investment been
          made at the beginning of the relevant period for measurement of the
          provision of Section 7.1 that has been breached; or

     (k)  there is a breach of Section 7.7 or the Restricted Parties do not
          comply with the requirements of Schedule L or any arrangements that
          may be entered into as contemplated in Schedule L; or

     (l)  there is a breach of any other provision of any of the Credit
          Documents and such breach is not corrected or otherwise satisfied
          within 30 days after the Agent, for and on behalf of the Lenders,
          gives written notice thereof; or

     (m)  there is a Change of Control Default or another change in the
          ownership or control of a Restricted Party which is not permitted by
          this Agreement; or

     (n)  at a time when Permitted Senior Secured Indebtedness in an aggregate
          principal amount of $100,000,000 or more is outstanding, any Material
          Permit expires or is withdrawn, cancelled, terminated, or modified so
          as to cause a Material Adverse Change, and is not reinstated or
          replaced within 30 days thereafter so as to reverse the Material
          Adverse Change; or

     (o)  at a time when Permitted Senior Secured Indebtedness in an aggregate
          principal amount of $100,000,000 or more is outstanding, a default
          under any Material Contract by a Restricted Party or any other party
          to a Material Contract occurs, or any other event occurs under any
          Material Contract, and continues without being waived after any
          applicable grace period specified in the Material Contract, if the
          effect of the default or other event (if not waived) is to terminate
          the Material Contract or if the default or other event results in a
          declaration of non-performance being issued or similar step being
          taken with respect to a Restricted Party, and the termination,
          declaration or similar step, if it arose from a breach by or other
          event relating to a Restricted Party, would cause a Material Adverse
          Change or, if it relates to a Special Material Contract and arose from
          a breach by or other event relating to a Person other than a
          Restricted Party, would cause an Event of Default under clause (i)
          above or would have a material adverse effect on the ability of the
          Restricted Parties as a whole to perform and discharge their
          obligations under this Agreement or the Material Contracts taken as a
          whole, in each case unless a Replacement Contract is entered into in
          respect of the Material Contract in question.
<PAGE>
                                      -76-


8.2  ACCELERATION AND TERMINATION OF RIGHTS

     If any Event of Default occurs, no Lender shall be under any further
obligation to make Advances and the Majority Lenders may instruct the Agent to
give notice to the Borrower (i) declaring the Lenders' obligations to make
Advances to be terminated, whereupon the same shall forthwith terminate, (ii)
declaring the Obligations or any of them to be forthwith due and payable,
whereupon they shall become and be forthwith due and payable without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower, and/or (iii) demanding that the
Borrower deposit forthwith with the Agent for the Lenders' benefit Collateral
equal to the full principal amount at maturity of all L/Cs and Bankers'
Acceptances then outstanding for its account.

     Notwithstanding the preceding paragraph, if a Restricted Party becomes a
bankrupt (voluntarily or involuntarily), or institutes any proceeding seeking
liquidation, rearrangement, relief of debtors or creditor or the appointment of
a receiver or trustee over any material part of its Property, then without
prejudice to the other rights of the Lenders as a result of any such event,
without any notice or action of any kind by the Agent or the Lenders, and
without presentment, demand or protest, the Lenders' obligation to make Advances
shall immediately terminate, the Obligations shall immediately become due and
payable and the Borrower shall be obligated to deposit forthwith with the Agent
for the Lenders' benefit Collateral equal to the full principal amount at
maturity of all L/Cs and Bankers' Acceptances then outstanding for its account.

8.3  PAYMENT OF L/CS

     Immediately upon any Obligations becoming due and payable under Section
8.2, the Borrower shall, without necessity of further act or evidence, be and
become thereby unconditionally obligated to deposit forthwith with the Agent for
the Lenders' benefit Collateral equal to the full principal amount at maturity
of all L/Cs and Bankers' Acceptances then outstanding for its account and the
Borrower hereby unconditionally promises and agrees to deposit with the Agent
immediately upon such demand Collateral in the amount so demanded. The Borrower
authorizes the Lenders, or any of them, to debit its accounts with the amount
required to pay such L/Cs and to pay such Bankers' Acceptances, notwithstanding
that such Bankers' Acceptances may be held by the Lenders, or any of them, in
their own right at maturity. Amounts paid to the Agent pursuant to such a demand
in respect of Bankers' Acceptances and L/Cs shall be applied against, and shall
reduce, pro rata among the Lenders, to the extent of the amounts paid to the
Agent in respect of Bankers' Acceptances and L/Cs, respectively, the obligations
of the Borrower to pay amounts then or thereafter payable under Bankers'
Acceptances and L/Cs, respectively, at the times amounts become payable
thereunder.

     The Borrower shall be entitled to receive interest on cash held as
Collateral in accordance with Section 11.16.

8.4  REMEDIES

     Upon the occurrence of any event by which any of the Obligations become due
and payable under Section 8.2, the Security shall become immediately enforceable
and the
<PAGE>
                                      -77-


Majority Lenders may instruct the Agent to take such action or proceedings on
behalf of the Lenders and in compliance with applicable Requirements of Law as
the Majority Lenders in their sole discretion deem expedient to enforce the
same, all without any additional notice, presentment, demand, protest or other
formality, all of which are hereby expressly waived by the Restricted Parties.

8.5  SAVING

     The Lenders shall not be under any obligation to the Restricted Parties or
any other person to realize any collateral or enforce the Security or any part
thereof or to allow any of the collateral to be sold, dealt with or otherwise
disposed of. The Lenders shall not be responsible or liable to the Restricted
Parties or any other person for any loss or damage upon the realization or
enforcement of, the failure to realize or enforce the collateral or any part
thereof or the failure to allow any of the collateral to be sold, dealt with or
otherwise disposed of or for any act or omission on their respective parts or on
the part of any director, officer, agent, servant or adviser in connection with
any of the foregoing, except that a Lender may be responsible or liable for any
loss or damage arising from the wilful misconduct or gross negligence of that
Lender.

8.6  PERFORM OBLIGATIONS

     If an Event of Default has occurred and is continuing and if any Restricted
Party has failed to perform any of its covenants or agreements in the Credit
Documents, the Majority Lenders, may, but shall be under no obligation to,
instruct the Agent on behalf of the Lenders to perform any such covenants or
agreements in any manner deemed fit by the Majority Lenders without thereby
waiving any rights to enforce the Credit Documents. The reasonable expenses
(including any legal costs) paid by the Agent and/or the Lenders in respect of
the foregoing shall be secured by the Security.

8.7  THIRD PARTIES

     No person dealing with the Lenders or any agent of the Lenders shall be
concerned to inquire whether the Security has become enforceable, or whether the
powers which the Lenders are purporting to exercise have become exercisable, or
whether any Obligations remain outstanding upon the security thereof, or as to
the necessity or expediency of the stipulations and conditions subject to which
any sale shall be made, or otherwise as to the propriety or regularity of any
sale or other disposition or any other dealing with the collateral charged by
such Security or any part thereof.

8.8  POWER OF ATTORNEY

     Effective upon occurrence and during the continuance of an Event of
Default, each Restricted Party hereby irrevocably constitutes and appoints any
Vice-President, Managing Director or more senior officer of the Agent its due
and lawful attorney with full power of substitution in its name and on its
behalf, during the continuance of an Event of Default, to enforce any right,
title or interest of the Lenders in, to or under the Security or any part
thereof or any obligation to that Restricted Party or remedy available to that
<PAGE>
                                      -78-


Restricted Party. This appointment is irrevocable to the maximum extent
permitted by applicable law.

8.9  REMEDIES CUMULATIVE

     The rights and remedies of the Lenders under the Credit Documents are
cumulative and are in addition to and not in substitution for any rights or
remedies provided by law. Any single or partial exercise by the Lenders of any
right or remedy for a default or breach of any term, covenant, condition or
agreement herein contained shall not be deemed to be a waiver of or to alter,
affect, or prejudice any other right or remedy or other rights or remedies to
which the Lenders may be lawfully entitled for the same default or breach. Any
waiver by the Lenders of the strict observance, performance or compliance with
any term, covenant, condition or agreement herein contained, and any indulgence
granted by the Lenders shall be deemed not to be a waiver of any subsequent
default.

8.10 SET-OFF OR COMPENSATION

     In addition to and not in limitation of any rights now or hereafter granted
under applicable law, if the Obligations become due and payable pursuant to
Section 8.2, the Lenders, or any of them, may at any time and from time to time
without notice to the Restricted Parties or any other person, any notice being
expressly waived by the Restricted Parties, set-off and compensate and apply any
and all deposits, general or special, time or demand, provisional or final,
matured or unmatured, the Market Value of Derivatives that is positive from any
Restricted Party's perspective, and any other indebtedness at any time owing by
the Lenders, or any of them, to or for the credit of or the account of any
Restricted Party against and on account of the Obligations notwithstanding that
any of them are contingent or unmatured.

                                   ARTICLE IX
                            THE AGENT AND THE LENDERS

9.1  AUTHORIZATION OF AGENT AND RELATIONSHIP

     Each Lender hereby appoints TD as Agent and TD hereby accepts such
appointment. The appointment may only be terminated as expressly provided in
this Agreement. Each Lender hereby authorizes the Agent to take all action on
its behalf and to exercise such powers and perform such duties under this
Agreement as are expressly delegated to the Agent by its terms, together with
all powers reasonably incidental thereto. The Agent shall have only those duties
and responsibilities which are of a solely mechanical and administrative nature
and which are expressly specified in this Agreement, and it may perform such
duties by or through its agents or employees, but shall not by reason of this
Agreement have a fiduciary duty in respect of any Lender. As to any matters not
expressly provided for by this Agreement, the Agent is not required to exercise
any discretion or to take any action, but is required to act or to refrain from
acting (and is fully protected in so acting or refraining from acting) upon the
instructions of the Lenders or the Majority Lenders, as the case may be. Those
instructions shall be binding upon all Lenders, but the Agent is not required to
take any action which exposes the Agent to personal liability or which is
contrary to this Agreement or applicable law.
<PAGE>
                                      -79-


     Without limiting the foregoing, each of the Lenders hereby grants to the
Agent a power of attorney, for the purposes of laws applicable to the Security
from time to time, to sign documents comprising the Security from time to time
(as the party accepting the grant of the security), and also grants to the Agent
the right to delegate its authority as attorney to any other person, whether or
not an officer or employee of the Agent. Each of the Lenders also hereby grants
to the Agent, while it is acting as collateral agent or trustee in connection
with the Security, a power of attorney, for the purposes of Article 2692 of the
Civil Code of Quebec and for the purposes of other laws applicable to the
Security from time to time, to sign documents comprising the Security from time
to time (as the party accepting the grant of the security), and also grants to
the Agent in that capacity the right to delegate its authority as attorney to
any other person, whether or not an officer or employee of the Agent.

     Without limiting the foregoing, the Agent may perform its duties through
one or more of its offices, may designate different offices for the performance
of different duties from time to time and may delegate its duties to one or more
of its affiliates from time to time. The provisions of this Agreement regarding
the Agent shall apply mutatis mutandis to the affiliates of the Agent to whom
duties may be delegated from time to time.

     Neither the Arrangers nor the Syndication Agents have any responsibility to
the Borrower or the Lenders in that capacity.

9.2  DISCLAIMER OF AGENT

     The Agent makes no representation or warranty, and assumes no
responsibility with respect to the due execution, legality, validity,
sufficiency, enforceability or collectability of this Agreement or any other
Credit Document. The Agent assumes no responsibility for the financial condition
of the Restricted Parties, or for the performance of the obligations of the
Restricted Parties under this Agreement or any other Credit Document. The Agent
assumes no responsibility with respect to the accuracy, authenticity, legality,
validity, sufficiency or enforceability of any documents, papers, materials or
other information furnished by the Restricted Parties to the Agent on behalf of
the Lenders. The Agent shall not be required to ascertain or inquire as to the
performance or observance of any of the terms, conditions, provisions, covenants
or agreements contained herein or as to the use of the proceeds of the Credits
or (unless the officers or employees of the Lender acting as Agent active in
their capacity as officers or employees on the Restricted Parties' accounts have
actual knowledge thereof, or have been notified thereof in writing by a
Restricted Party or a Lender) of the existence or possible existence of any
Event of Default or Pending Event of Default. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them as Agent under or in connection with the
Agreement except for its or their own gross negligence or wilful misconduct.
With respect to its Commitment, the Lender acting as Agent shall have the same
rights and powers hereunder as any other Lender, and may exercise the same as
though it were not performing the duties and functions delegated to it as Agent
hereunder.
<PAGE>
                                      -80-


9.3  FAILURE OF LENDER TO FUND

9.3.1 Unless the Agent has actual knowledge that a Lender has not made or will
not make available to the Agent for value on a Drawdown Date the applicable
amount required from such Lender pursuant to Sections 5.11 or 5.15, the Agent
shall be entitled to assume that such amount has been or will be received from
such Lender when so due and the Agent may (but shall not be obliged to), in
reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not in fact received by the Agent from such Lender on
such Drawdown Date and the Agent has made available a corresponding amount to
the Borrower on such Drawdown Date as aforesaid, such Lender shall pay to the
Agent on demand an amount equal to the product of (i) the Interbank Reference
Rate per annum multiplied by (ii) the amount that should have been paid to the
Agent by such Lender on such Drawdown Date and was not, multiplied by (iii) a
fraction, the numerator of which is the number of days that have elapsed from
and including such Drawdown Date to but excluding the date on which the amount
is received by the Agent from such Lender and the denominator of which is 365. A
certificate of the Agent containing details of the amount owing by a Lender
under this Section shall be binding and conclusive in the absence of manifest
error. If any such amount is not in fact received by the Agent from such Lender
on such Drawdown Date, the Agent shall be entitled to recover from the Borrower,
on demand, the related amount made available by the Agent to the Borrower as
aforesaid together with interest thereon at the applicable rate per annum
payable by the Borrower hereunder.

9.3.2 Notwithstanding the provisions of Section 9.3.1, if any Lender fails to
make available to the Agent its Proportionate Share of any Advance (such Lender
being herein called the "DEFAULTING LENDER"), the Agent shall forthwith give
notice of such failure by the Defaulting Lender to the Borrower and the other
Lenders. The Agent shall then forthwith give notice to the other Lenders that
any Lender may make available to the Agent all or any portion of the Defaulting
Lender's Proportionate Share of such Advance (but in no way shall any other
Lender or the Agent be obliged to do so) in the place of the Defaulting Lender.
If more than one Lender gives notice that it is prepared to make funds available
in the place of a Defaulting Lender in such circumstances and the aggregate of
the funds which such Lenders (herein collectively called the "CONTRIBUTING
LENDERS" and individually called the "CONTRIBUTING LENDER") are prepared to make
available exceeds the amount of the Advance which the Defaulting Lender failed
to make, then each Contributing Lender shall be deemed to have given notice that
it is prepared to make available its Proportionate Share of such Advance based
on the Contributing Lenders' relative commitments to advance in such
circumstances. If any Contributing Lender makes funds available in the place of
a Defaulting Lender in such circumstances, then the Defaulting Lender shall pay
to any Contributing Lender making the funds available in its place, forthwith on
demand, any amount advanced on its behalf together with interest thereon at the
rate applicable to such Advance from the date of advance to the date of payment,
against payment by the Contributing Lender making the funds available of all
interest received in respect of the Advance from the Borrower. The failure of
any Lender to make available to the Agent its Proportionate Share of any Advance
as required herein shall not relieve any other Lender of its obligations to make
available to the Agent its Proportionate Share of any Advance as required
herein.
<PAGE>
                                      -81-


9.4  PAYMENTS BY THE BORROWER

     All payments made by or on behalf of the Borrower pursuant to this
Agreement shall be made to and received by the Agent and shall be distributed by
the Agent to the Lenders as soon as possible upon receipt by the Agent. Except
as required to make payments in respect of the Other Secured Obligations or as
otherwise provided in this Agreement (including but not limited to Section 9.5),
the Agent shall distribute:

     (a)  payments of interest in accordance with each Lender's Proportionate
          Share of the relevant Credit;

     (b)  repayments of principal in accordance with each Lender's Proportionate
          Share of the relevant Credit; or

     (c)  all other payments received by the Agent including, without
          limitation, amounts received upon the realization of Security, in
          accordance with each Lender's Proportionate Share of the relevant
          Credit provided, however, that with respect to proceeds of
          realization, no Lender shall receive an amount in excess of the
          amounts owing to it in respect of the Obligations.

     If the Agent does not distribute a Lender's share of a payment made by the
Borrower to that Lender for value on the day that payment is made or deemed to
have been made to the Agent, the Agent shall pay to the Lender on demand an
amount equal to the product of (i) the Interbank Reference Rate per annum
multiplied by (ii) the Lender's share of the amount received by the Agent from
the Borrower and not so distributed, multiplied by (iii) a fraction, the
numerator of which is the number of days that have elapsed from and including
the date of receipt of the payment by the Agent to but excluding the date on
which the payment is made by the Agent to such Lender and the denominator of
which is 365.

9.5  PAYMENTS BY AGENT

9.5.1 For greater certainty, the following provisions shall apply to any and all
payments made by the Agent to the Lenders hereunder:

     (a)  the Agent shall be under no obligation to make any payment (whether in
          respect of principal, interest, fees or otherwise) to any Lender until
          an amount in respect of such payment has been received by the Agent
          from the Borrower;

     (b)  if the Agent receives less than the full amount of any payment of
          principal, interest, fees or other amount owing by the Borrower under
          this Agreement, the Agent shall have no obligation to remit to each
          Lender any amount other than such Lender's Proportionate Share of that
          amount which is the amount actually received by the Agent;

     (c)  if any Lender advances more or less than its Proportionate Share of a
          Credit, such Lender's entitlement to such payment shall be increased
          or
<PAGE>
                                      -82-


          reduced, as the case may be, in proportion to the amount actually
          advanced by such Lender;

     (d)  if a Lender's Proportionate Share of an Advance has been advanced, or
          a Lender's Commitment has been outstanding, for less than the full
          period to which any payment (other than a payment of principal) by the
          Borrower relates, such Lender's entitlement to such payment shall be
          reduced in proportion to the length of time such Lender's
          Proportionate Share of the relevant Credit or such Lender's
          Commitment, as the case may be, has actually been outstanding;

     (e)  the Agent acting reasonably and in good faith shall, after
          consultation with the Lenders in the case of any dispute, determine in
          all cases the amount of all payments to which each Lender is entitled
          and such determination shall, in the absence of manifest error, be
          binding and conclusive; and

     (f)  upon request, the Agent shall deliver a statement detailing any of the
          payments to the Lenders referred to herein.

9.5.2 Unless the Agent has actual knowledge that the Borrower has not made or
will not make a payment to the Agent for value on the date in respect of which
the Borrower has notified the Agent that the payment will be made, the Agent
shall be entitled to assume that such payment has been or will be received from
the Borrower when due and the Agent may (but shall not be obliged to), in
reliance upon such assumption, pay the Lenders corresponding amounts. If the
payment by such Borrower is in fact not received by the Agent on the required
date and the Agent has made available corresponding amounts to the Lenders, the
Borrower shall, without limiting its other obligations under this Agreement,
indemnify the Agent against any and all liabilities, obligations, losses,
damages, penalties, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on or incurred by the Agent as a result, except
for those arising from the Agent's gross negligence or wilful misconduct. A
certificate of the Agent with respect to any amount owing by the Borrower under
this Section shall be conclusive evidence of the amount owing in the absence of
manifest error. If the payment is not received by the Agent from the Borrower
within a reasonable time following the disbursement to the Lenders by the Agent,
the Lenders shall return the amounts received by them to the Agent with interest
at the Interbank Reference Rate.

9.6  DIRECT PAYMENTS

     The Lenders agree among themselves that, except as otherwise provided for
in this Agreement (including but not limited to Sections 11.14 and 11.15),
except as necessary to adjust for Advances that are not in each Lender's
Proportionate Share under the Credits, and except for receipts relating to the
Other Secured Obligations, all sums received by a Lender relating to this
Agreement or by virtue of the Security, whether received by voluntary payment,
by the exercise of the right of set-off or compensation or by counterclaim,
cross-action or as proceeds of realization of any Security or otherwise, shall
be shared by each Lender in its Proportionate Share under the Credits and each
Lender
<PAGE>
                                      -83-


undertakes to do all such things as may be reasonably required to give full
effect to this Section, including without limitation, the purchase from other
Lenders of such notes or a portion thereof by the Lender who has received an
amount in excess of its Proportionate Share under the Credits as shall be
necessary to cause such purchasing Lender to share the excess amount rateably in
its Proportionate Share under the Credits with the other Lenders. If any sum
which is so shared is later recovered from the Lenders who originally received
it, the Lender shall restore its Proportionate Share under the Credits of such
sum to such Lenders, without interest. If any Lender shall obtain any payment of
moneys due under this Agreement as referred to above, it shall forthwith remit
such payment to the Agent and, upon receipt, the Agent shall distribute such
payment in accordance with the provisions of Section 9.5.

9.7  ADMINISTRATION OF THE CREDITS

9.7.1 Unless otherwise specified herein, the Agent shall perform the following
duties under this Agreement:

     (a)  prior to an Advance, ensure that all conditions precedent have been
          fulfilled in accordance with the terms of this Agreement, subject to
          Section 9.8.2 and any other applicable terms of this Agreement;

     (b)  take delivery of each Lender's Proportionate Share of an Advance and
          make all Advances hereunder in accordance with the procedures set
          forth in Sections 5.11 and 5.15;

     (c)  use reasonable efforts to collect promptly all sums due and payable by
          the Borrower pursuant to this Agreement;

     (d)  make all payments to the Lenders in accordance with the provisions
          hereof;

     (e)  hold the Security other than the Trustee Security on behalf of the
          Lenders and take all necessary steps to comply with registration
          requirements so that the Security remains perfected under applicable
          laws, but each Lender shall notify the Agent of any circumstance that
          might affect the perfection of the Security of which the Lender
          becomes aware;

     (f)  hold all legal documents relating to the Credits, maintain complete
          and accurate records showing all Advances made by the Lenders, all
          remittances and payments made by the Borrower to the Agent, all
          remittances and payments made by the Agent to the Lenders and all fees
          or any other sums received by the Agent and, except for accounts,
          records and documents relating to the fees payable under the Fee
          Agreement, allow each Lender and their respective advisors to examine
          such accounts, records and documents at their own expense, and provide
          any Lender, upon reasonable notice, with such copies thereof as such
          Lender may reasonably require from time to time at the Lender's
          expense;
<PAGE>
                                      -84-


     (g)  except as otherwise specifically provided for in this Agreement,
          promptly advise each Lender upon receipt of each notice and deliver to
          each Lender, promptly upon receipt, all other written communications
          furnished by the Restricted Parties to the Agent on behalf of the
          Lenders pursuant to this Agreement, including without limitation
          copies of financial reports and certificates which are to be furnished
          to the Agent;

     (h)  forward to each of the Lenders, upon request and at the expense of the
          Lender so requesting (other than customary record books which shall be
          provided at the expense of the Borrower), copies of this Agreement,
          the Security and other Credit Documents (other than the Fee
          Agreement);

     (i)  promptly forward to each Lender, upon request, an up-to-date loan
          status report; and

     (j)  upon learning of same, promptly advise each Lender in writing of the
          occurrence of an Event of Default or Pending Event of Default or the
          occurrence of any event, condition or circumstance which would cause a
          Material Adverse Change or of any material adverse information coming
          to the attention of the Agent (using reasonable efforts) relative to
          the Security, provided that, except as aforesaid, the Agent shall be
          under no duty or obligation whatsoever to provide any notice to the
          Lenders and further provided that each Lender hereby agrees to notify
          the Agent of any Event of Default or Pending Event of Default of which
          it may reasonably become aware.

9.7.2 The Agent may take the following actions only with the prior consent of
the Majority Lenders, unless otherwise specified in this Agreement:

     (a)  subject to Section 9.7.3, exercise any and all rights of approval
          conferred upon the Lenders by this Agreement;

     (b)  give written notice to the Restricted Parties in respect of any matter
          in respect of which notice may be required, permitted, necessary or
          desirable in accordance with or pursuant to this Agreement, promptly
          after receiving the consent of the Majority Lenders, except that the
          Agent shall, without direction from the Lenders, immediately give the
          Borrower notice of any payment that is due or overdue under the terms
          of this Agreement unless the Agent considers that it should request
          the direction of the Majority Lenders, in which case the Agent shall
          promptly request that direction;

     (c)  amend, modify or waive any of the terms of this Agreement, including
          waiver of an Event of Default or Pending Event of Default, if such
          action is not otherwise provided for in Section 9.7.3;

     (d)  declare an Event of Default or take action to enforce performance of
          the Obligations and to realize upon the Security including the
          appointment of a receiver, the exercise of powers of distress, lease
          or sale given by the
<PAGE>
                                      -85-


          Security or by law and take foreclosure proceedings and/or pursue any
          other legal remedy necessary;

     (e)  decide to accelerate the amounts outstanding under the Credits;

     (f)  pay insurance premiums, taxes and any other sums as may be reasonably
          required to protect the interests of the Lenders; and

     (g)  enter into or amend, modify or waive any term of any Intercreditor
          Agreement.

9.7.3 The Agent may take the following actions only if the prior unanimous
consent of the Lenders is obtained, unless otherwise specified herein:

     (a)  amend, modify, discharge, terminate or waive any of the terms of the
          Security;

     (b)  amend, modify, discharge, terminate or waive any of the terms of this
          Agreement if such amendment, modification, discharge, termination or
          waiver would increase the amount of any Credit, amend the purpose of
          any Credit, reduce the interest rates and similar charges applicable
          to any Credit, reduce the fees payable with respect to any Credit,
          extend any date fixed for payment of principal, interest or any other
          amount relating to any Credit or extend the term of any Credit (for
          greater certainty, any extension of the Credits shall be made in
          accordance with Section 2.4); and

     (c)  amend the definition of "Majority Lenders" or this Section 9.7.3.

     For greater certainty, no Lender's Commitment or Proportionate Share may be
amended without the consent of that Lender.

9.7.4 Notwithstanding Sections 9.7.2 and 9.7.3, the Agent may, without the
consent of the Lenders, make amendments to the Credit Documents that are for the
sole purpose of curing any immaterial or administrative ambiguity, defect or
inconsistency, but shall immediately notify the Lenders of any such action. The
Agent may also consent from time to time to any change to the list of Material
Contracts provided by NSCL in accordance with Section 3.1.8 and may discharge
any Security (or direct the Trustee to do so) to the extent necessary to allow
any Restricted Party to complete any sale or other disposition of Property
permitted by this Agreement.

9.7.5 As between the Restricted Parties, on the one hand, and the Agent and the
Lenders, on the other hand:

     (a)  all statements, certificates, consents and other documents which the
          Agent purports to deliver on behalf of the Lenders or the Majority
          Lenders shall be binding on each of the Lenders, and the Restricted
          Parties shall not be
<PAGE>
                                      -86-


          required to ascertain or confirm the authority of the Agent in
          delivering such documents;

     (b)  all certificates, statements, notices and other documents which are
          delivered by the Restricted Parties to the Agent in accordance with
          this Agreement shall be deemed to have been duly delivered to each of
          the Lenders;

     (c)  all payments which are delivered by the Borrower to the Agent in
          accordance with this Agreement shall be deemed to have been duly
          delivered to each of the Lenders;

     (d)  unless an Event of Default or Pending Event of Default has occurred
          and is continuing, NSCL's consent to the appointment of any Successor
          Agent must be obtained, but NSCL's consent shall not be unreasonably
          withheld.

9.8  RIGHTS OF AGENT

9.8.1 In administering the Credits, the Agent may retain, at the expense of the
Lenders if such expenses are not recoverable from the Borrower, such solicitors,
counsel, auditors and other experts and agents as the Agent may select, in its
sole discretion, acting reasonably and in good faith after consultation with the
Lenders.

9.8.2 The Agent shall be entitled to rely on any communication, instrument or
document believed by it to be genuine and correct and to have been signed by the
proper individual or individuals, and shall be entitled to rely and shall be
protected in relying as to legal matters upon opinions of independent legal
advisors selected by it. The Agent may also assume that any representation made
by a Restricted Party is true and that no Event of Default or Pending Event of
Default has occurred unless the officers or employees of the Lender acting as
Agent, active in their capacity as officers or employees responsible for the
Restricted Parties' account have actual knowledge to the contrary or have
received notice to the contrary from any other party to this Agreement.

9.8.3 The Agent may, without any liability to account, accept deposits from and
lend money to and generally engage in any kind of banking, or other business
with the Restricted Parties, as if it were not the Agent.

9.8.4 Except in its own right as a Lender, the Agent shall not be required to
advance its own funds for any purpose, and in particular, shall not be required
to pay with its own funds insurance premiums, taxes or public utility charges or
the cost of repairs or maintenance with respect to the assets which are the
subject matter of the Security, nor shall it be required to pay with its own
funds the fees of solicitors, counsel, auditors, experts or agents engaged by it
as permitted hereby.

9.8.5 The Agent shall be entitled to receive a fee for acting as Agent as agreed
in the Fee Agreement or as otherwise agreed between the Agent and NSCL from time
to time.
<PAGE>
                                      -87-


9.9  ACKNOWLEDGEMENTS, REPRESENTATIONS AND COVENANTS OF LENDERS

9.9.1 It is acknowledged and agreed by each Lender that it has itself been, and
will continue to be, solely responsible for making its own independent appraisal
of and investigations into the financial condition, creditworthiness, property,
affairs, status and nature of the Restricted Parties. Accordingly, each Lender
confirms to the Agent that it has not relied, and will not hereafter rely, on
the Agent (a) to check or inquire on its behalf into the adequacy or
completeness of any information provided by the Restricted Parties under or in
connection with this Agreement or the transactions herein contemplated (whether
or not such information has been or is hereafter distributed to such Lender by
the Agent) or (b) to assess or keep under review on its behalf the financial
condition, creditworthiness, property, affairs, status or nature of the
Restricted Parties.

9.9.2 Each Lender represents and warrants that it has the legal capacity to
enter into this Agreement pursuant to its charter and any applicable legislation
and has not violated its charter, constating documents or any applicable
legislation by so doing.

9.9.3 Each Lender agrees to indemnify the Agent (to the extent not reimbursed by
the Borrower), rateably according to its Proportionate Share from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against the Agent
in any way relating to or arising out of the Credit Documents or the
transactions therein contemplated, provided that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Agent's gross negligence or wilful misconduct. Without limiting the generality
of the foregoing, each Lender agrees to reimburse the Agent for its
Proportionate Share of any out-of-pocket expenses (including counsel fees)
incurred by the Agent in connection with the preservation of any rights of the
Agent or the Lenders under, or the enforcement of, or legal advice in respect of
rights or responsibilities under this Agreement, to the extent that the Agent is
not reimbursed for such expenses by the Borrower. The obligation of the Lenders
to indemnify the Agent shall survive the termination of this Agreement and shall
be performed by the Lenders promptly upon demand by the Agent.

9.9.4 Each of the Lenders acknowledges and confirms that in the event that the
Agent does not receive payment in accordance with this Agreement, it shall not
be the obligation of the Agent to maintain the Credits in good standing nor
shall any Lender have recourse to the Agent in respect of any amounts owing to
such Lender under this Agreement.

9.9.5 Each Lender acknowledges and agrees that its obligation to advance its
Proportionate Share of Advances in accordance with the terms of this Agreement
is independent and in no way related to the obligation of any other Lender
hereunder.

9.9.6 Each Lender hereby acknowledges receipt of a copy of this Agreement and
the Security (to the extent that the Security has been delivered) and
acknowledges that it is satisfied with the form and content of such documents.
<PAGE>
                                      -88-


9.10 COLLECTIVE ACTION OF THE LENDERS

     Each of the Lenders hereby acknowledges that to the extent permitted by
applicable law, the Security and the remedies provided under the Credit
Documents to the Lenders are for the benefit of the Lenders collectively and
acting together and not severally and further acknowledges that its rights
hereunder and under the Security are to be exercised not severally, but by the
Agent upon the decision of the Majority Lenders or Lenders as required by this
Agreement. Accordingly, notwithstanding any of the provisions contained herein
or in the Security each of the Lenders hereby covenants and agrees that it shall
not be entitled to take any action hereunder or thereunder including, without
limitation, any declaration of default hereunder or thereunder but that any such
action shall be taken only by the Agent with the prior written agreement of the
Majority Lenders. Each of the Lenders hereby further covenants and agrees that
upon any such written agreement being given by the Majority Lenders, it shall
co-operate fully with the Agent to the extent requested by the Agent.
Notwithstanding the foregoing, in the absence of instructions from the Lenders
and where in the sole opinion of the Agent, acting reasonably and in good faith,
the exigencies of the situation warrant such action, the Agent may without
notice to or consent of the Lenders take such action on behalf of the Lenders as
it deems appropriate or desirable in the interest of the Lenders.

9.11 SUCCESSOR AGENT

     Subject to the appointment and acceptance of a Successor Agent as provided
in this Section, and subject to Section 9.7.5(d), the Agent may resign at any
time by giving 30 days' written notice thereof to the Lenders and NSCL, and may
be removed at any time by the Majority Lenders upon 30 days' written notice.
Upon receipt of notice by the Lenders of the resignation of the Agent, or upon
giving notice of termination to the Agent, the Majority Lenders may, within 21
days, appoint a successor from among the Lenders or, if no Lender is willing to
accept such an appointment, from among other banks to which the Bank Act
(Canada) applies, which each have combined capital and reserves in excess of
$250,000,000, and which have offices in Vancouver, Toronto and New York (the
"SUCCESSOR AGENT"). If no Successor Agent has been so appointed and has accepted
such appointment within 21 days after the retiring Agent's giving of notice of
resignation or receiving of notice of termination, then the retiring Agent may,
on behalf of the Lenders, appoint a Successor Agent. Upon the acceptance of any
appointment as Agent hereunder by a Successor Agent, the retiring Agent shall
pay the Successor Agent any unearned portion of any fee paid to the Agent for
acting as such, and the Successor Agent shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its further duties and obligations as
Agent under this Agreement and the other Credit Documents. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Article shall
continue to enure to its benefit and be binding upon it as to any actions taken
or omitted to be taken by it while it was Agent hereunder.

9.12 PROVISIONS OPERATIVE BETWEEN LENDERS AND AGENT ONLY

     Except for the provisions of Sections 9.7.5, 9.9.2, 9.9.5, 9.10, 9.11 and
9.12, the provisions of this Article relating to the rights and obligations of
the Lenders and the Agent
<PAGE>
                                      -89-


inter se shall be operative as between the Lenders and the Agent only, and the
Restricted Parties shall not have any rights or obligations under or be entitled
to rely for any purpose upon such provisions.

                                   ARTICLE X
                               ADDITIONAL LENDERS,
                             SUCCESSORS AND ASSIGNS

10.1 SUCCESSORS AND ASSIGNS

10.1.1 The Credit Documents shall be binding upon and enure to the benefit of
the Agent, the Arrangers, each Lender, the Restricted Parties and their
respective successors and permitted assigns, except that the Restricted Parties
shall not assign any rights or obligations with respect to this Agreement or any
of the other Credit Documents without the prior written consent of each Lender.

     The collective rights and obligations of the Lenders under this Agreement
are assignable in whole or in part (pro rata) and any Lender shall be entitled
to assign in whole or in part its individual rights and obligations hereunder or
to permit other financial institutions to participate in the Credits, all in
accordance with the provisions of Section 10.2 and the other terms of this
Agreement. The Restricted Parties hereby consent to the disclosure of any
information relating to the Restricted Parties to any potential Lender or
participant provided that the potential Lender or participant agrees in writing
to keep the information confidential.

     No assignment shall be made in respect of an aggregate Commitment of less
than $5,000,000 in respect of the Credits. No assignment may result in the
Commitment of any Lender, determined as of the effective date of the Assignment
Agreement with respect to such assignment, being less than $5,000,000.

     Notwithstanding any other provisions of this Agreement, each Lender agrees
that it shall not offer to assign or assign any portion of its rights and
obligations under this Agreement including, without limitation, any portion of
its Commitment, without the prior written consent of the Agent and NSCL, which
consent shall not be unreasonably withheld, except that (i) the consent of the
Agent and NSCL shall not be required for an assignment of a Lender's interest in
the Credits to another Lender and (ii) the consent of NSCL shall not be required
if an Event of Default has occurred and is continuing. The Lenders agree that
NSCL's consent shall not be considered to be unreasonably withheld if the
proposed assignment would result in any material additional cost being incurred
by the Borrower, including but not limited to any gross-up for withholding tax
under Section 11.14. Notwithstanding the foregoing, the Borrower may not
withhold its consent because of any increase in the discount rate applicable to
Bankers' Acceptances of the proposed assignee compared to the assignor.

10.1.2 A participation by a Lender of its interest (or a part thereof) hereunder
or a payment by a participant to a Lender as a result of the participation will
not constitute a payment hereunder to the Lender or an Advance to the Borrower.
A payment (excluding the effect of any premium or discount) made by an assignee
to an assigning Lender in order
<PAGE>
                                      -90-


for the assignee to assume its Proportionate Share of Advances made by the
assigning Lender will reduce the Advances owing by the Borrower to the assigning
Lender by the amount of the payment and will be result in Advances in the amount
of the payment becoming owed to the assignee by the Borrowers as of the date
that the payment is made. However, no such payment shall, as between the
Borrowers and the Lenders, be or be deemed to be a repayment by the Borrowers or
a new Advance by the Lenders.

10.2 ASSIGNMENTS

10.2.1 Subject to Section 10.1 and the other terms of this Agreement, the
Lenders collectively or individually may assign to one or more assignees all or
a portion of their respective rights and obligations under this Agreement
(including, without limitation, all or a portion of their respective
Commitments). The parties to each such assignment shall execute and deliver an
Assignment Agreement to the Agent, for its consent (if necessary) and recording
in the Register and shall pay a processing and recording fee to the Agent in the
amount of $3500. After such execution, delivery, consent and recording (i) the
assignee thereunder shall be a party to this Agreement and, to the extent that
rights and obligations hereunder have been assigned to it, have the rights and
obligations of a Lender hereunder and (ii) the assigning Lender thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment Agreement, relinquish its rights, other than
rights to expense reimbursement and indemnification to which it is then entitled
hereunder, and be released from its obligations under this Agreement, other than
obligations in respect of which it is then in default and liabilities arising
from its actions prior to the assignment. In the case of an Assignment Agreement
covering all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party hereto.

10.2.2 The agreements of an assignee contained in an Assignment Agreement shall
benefit the assigning Lender thereunder, the other Lenders and the Agent in
accordance with the terms of the Assignment Agreement.

10.2.3 The Agent shall maintain at its address referred to herein a copy of each
Assignment Agreement delivered to and acknowledged by it and a register for
recording the names and addresses of the Lenders and the Commitment under the
Credits of each Lender from time to time (the "REGISTER"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error. The Borrower, the Agent and each of the Lenders may treat each person
whose name is recorded in the Register as a Lender hereunder for all purposes of
this Agreement, and need not recognize any person as a Lender unless it is
recorded in the Register as a Lender. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.

10.2.4 Upon its receipt of an Assignment Agreement executed by an assigning
Lender and an assignee and approved by the Agent (as evidenced by its execution
thereof), the Agent shall, if the Assignment Agreement has been completed and is
in the required form with such immaterial changes as are acceptable to the
Agent, record the information
<PAGE>
                                      -91-


contained therein in the Register and update Schedule E. The Agent shall provide
NSCL with an updated version of Schedule E following any change to Schedule E.

10.3 PARTICIPATIONS

     Each Lender may (subject to the provisions of Section 10.1) sell
participations to one or more financial institutions or other persons in or to
all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment), but the participant
shall not become a Lender and:

     (a)  the Lender's obligations under this Agreement (including, without
          limitation, its Commitment) shall remain unchanged;

     (b)  the Lender shall remain solely responsible to the other parties hereto
          for the performance of such obligations;

     (c)  the Borrower, the Agent and the other Lenders shall continue to deal
          solely and directly with the Lender in connection with the Lender's
          rights and obligations under this Agreement;

     (d)  no participant shall have any right to approve any amendment or waiver
          of any provision of this Agreement, or any consent to any departure by
          any person therefrom.

     Notwithstanding the foregoing, each participant shall have the same
benefit, as if it was a Lender, with respect to the rights provided to the
Lenders in Section 11.15. Each participant shall also have the right to be
provided by the Lender from whom it has obtained its participation with all
information relating to the Restricted Parties which is provided to any Lender.
Without limiting the foregoing, no participant shall have the benefit of Section
11.14 except to the extent that the Lender from whom it has obtained its
participation is itself entitled to compensation under that Section.

                                   ARTICLE XI
                            MISCELLANEOUS PROVISIONS

11.1 HEADINGS AND TABLE OF CONTENTS

     The headings of the Articles and Sections and the Table of Contents are
inserted for convenience of reference only and shall not affect the construction
or interpretation of this Agreement.

11.2 ACCOUNTING TERMS

     Each accounting term used in this Agreement, unless otherwise defined
herein, has the meaning assigned to it under GAAP.
<PAGE>
                                      -92-


11.3 CAPITALIZED TERMS

     All capitalized terms used in any of the Credit Documents (other than this
Agreement) which are defined in this Agreement shall have the meaning defined
herein unless otherwise defined in the other document.

11.4 SEVERABILITY

     Any provision of this Agreement which is or becomes prohibited or
unenforceable in any relevant jurisdiction shall not invalidate or impair the
remaining provisions hereof which shall be deemed severable from such prohibited
or unenforceable provision and any such prohibition or unenforceability in any
such jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. Should this Agreement fail to provide for any relevant
matter, the validity, legality or enforceability of this Agreement shall not
thereby be affected.

11.5 NUMBER AND GENDER

     Unless the context otherwise requires, words importing the singular number
shall include the plural and vice versa, words importing any gender include all
genders and references to agreements and other contractual instruments shall be
deemed to include all present or future amendments, supplements, restatements or
replacements thereof or thereto.

11.6 AMENDMENT, SUPPLEMENT OR WAIVER

     No amendment, supplement or waiver of any provision of the Credit
Documents, nor any consent to any departure by a Restricted Party therefrom,
shall in any event be effective unless it is in writing, makes express reference
to the provision affected thereby and is signed by the Agent for and on behalf
of the Lenders or the Majority Lenders, as the case may be, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given. In addition, any amendment or supplement shall require
the written consent of the other parties to the Credit Document in question. No
waiver or act or omission of the Agent, the Lenders, or any of them, shall
extend to or be taken in any manner whatsoever to affect any subsequent Event of
Default or breach by a Restricted Party of any provision of the Credit Documents
or the rights resulting therefrom.

11.7 GOVERNING LAW

     Each of the Credit Documents, except for those which expressly provide
otherwise, shall be conclusively deemed to be a contract made under, and shall
for all purposes be exclusively governed by and construed in accordance with,
the laws of the Province of British Columbia and the laws of Canada applicable
in British Columbia. Each party to this Agreement hereby irrevocably and
unconditionally attorns to the non-exclusive jurisdiction of the courts of
British Columbia and all courts competent to hear appeals therefrom.
<PAGE>
                                      -93-


11.8 THIS AGREEMENT TO GOVERN

     In the event of any conflict between the terms of this Agreement and the
terms of any other Credit Document (other than the Fee Agreement and any
Intercreditor Agreement, which shall prevail as against this Agreement), the
provisions of this Agreement shall govern to the extent necessary to remove the
conflict.

11.9 PERMITTED ENCUMBRANCES

     The designation of an Encumbrance as a Permitted Encumbrance is not, and
shall not be deemed to be, an acknowledgment by the Lenders that the Encumbrance
shall have priority over the Security.

11.10 CURRENCY

     All payments made hereunder shall be made in the currency in respect of
which the obligation requiring such payment arose. Unless the context otherwise
requires, all amounts expressed in this Agreement in terms of money shall refer
to Canadian Dollars.

     Except as otherwise expressly provided in this Agreement, wherever this
Agreement contemplates or requires the calculation of the equivalent in one
currency of an amount expressed in another currency, the calculation shall be
made on the basis of the Exchange Rate at the effective date of the calculation.

11.11 LIABILITY OF LENDERS

     The liability of the Lenders in respect of all matters relating to this
Agreement and the other Credit Documents is several and not joint or joint and
several. Without limiting that statement, the obligations of the Lenders to make
Advances is limited to their respective Proportionate Shares of any Advance that
is requested, and, in the aggregate, to their respective Proportionate Shares of
the total amounts of the Credits.

11.12 EXPENSES AND INDEMNITY

     All statements, reports, certificates, opinions, appraisals and other
documents or information required to be furnished to the Lenders, the Agent, or
any of them, by the Restricted Parties under this Agreement shall be supplied
without cost to the Lenders, the Agent, or any of them. The Borrower shall pay
on demand all reasonable third party costs and expenses of the Lenders, or any
of them (including, without limitation, the reasonable fees and expenses of
counsel for the Lenders and the Agent collectively, but not separately for
individual Lenders and the Agent, on a solicitor and own client basis), incurred
in connection with (i) the preparation, execution, delivery, administration,
periodic review and enforcement of the Credit Documents; (ii) obtaining advice
as to their rights and responsibilities in connection with the Credits and the
Credit Documents; (iii) reviewing, inspecting and appraising the collateral that
is the subject of the Security at reasonable intervals; (iv) the syndication of
the Credits; (v) due diligence; and (vi) other matters relating to the Credits.
Such costs and expenses shall be payable whether or not an Advance is made under
this Agreement.
<PAGE>
                                      -94-


     The Borrower shall indemnify the Lenders, the Agent, the Arrangers, the
Syndication Agents, and each of them, and their respective officers, directors,
trustees, employees and agents against any liability, obligation, loss or
expense which any of them may sustain or incur as a consequence of (i) any
representation or warranty made herein by a Restricted Party which was incorrect
at the time it was made or deemed to have been made, (ii) a default by the
Borrower in the payment of any sum due from it under or in connection with the
Credit Documents (irrespective of whether an Advance is deemed to be made to pay
the amount that has not been paid), including, but not limited to, all sums
(whether in respect of principal, interest or any other amount) paid or payable
to lenders of funds borrowed by the Lenders, the Agent, or any of them, in order
to fund the amount of any such unpaid amount to the extent the Lenders, the
Agent, or any of them, are not reimbursed pursuant to any other provisions of
this Agreement, (iii) the failure of the Borrower to complete any Advance or
make any payment after notice therefor has been given under this Agreement, (iv)
the failure of a purchaser of Bankers' Acceptances (other than one of the
Lenders) to pay for and take delivery of them in any arrangement for sale made
by the Borrower and communicated to the Agent, (v) any other default by a
Restricted Party hereunder, and (vi) generally, the Lenders and the Agent having
entered into this Agreement and the other Credit Documents and made Advances to
the Borrower. A certificate of a Lender or the Agent as to the amount of any
such loss or expense shall be conclusive evidence as to the amount thereof, in
the absence of manifest error provided that the Lender determines the amount
owing to it in good faith using any reasonable method and provides a detailed
description of its calculation of the amount owing to it.

     In no event shall any party to this Agreement be liable for consequential
damages suffered by any other party.

     The agreements in this Section shall survive the termination of this
Agreement and repayment of the Obligations.

11.13 ENVIRONMENTAL INDEMNITY

     The Borrower shall protect, indemnify and hold the Agent and the Lenders
and all directors, officers, employees and agents of the Agent or the Lenders
harmless from and against any and all actual or potential claims, liabilities,
damages, losses, fines, penalties, sanctions, judgments, awards, costs and
expenses whatsoever (including, without limitation, costs and expenses of
investigating, denying or defending any of the foregoing and costs and expenses
for preparing any necessary environmental assessment report or other such
reports) which arise out of or relate in any way to:

     (a)  the presence, use, handling, production, transportation, storage,
          release, deposit, discharge or disposal of any Hazardous Materials in,
          on or about any Property owned, operated or occupied by the Restricted
          Parties and their Subsidiaries, whether by the Restricted Parties or
          any other person;

     (b)  any remedial action taken by the Agent or any Lender in connection
          with any matter referred to in paragraph (a), including without
          limitation any repair, clean-up, remediation or detoxification of any
          of such Property and the preparation of any closure or other required
          plans; and
<PAGE>
                                      -95-


     (c)  any breach by any Restricted Party of any Environmental Law.

     Notwithstanding anything to the contrary contained in this Agreement, (i)
the indemnity provisions set forth above shall not apply with respect to
Hazardous Materials, contaminants, wastes or other substances which the Borrower
establishes were first placed on, in, under or about the property in question
after the Agent or a Lender or other indemnified party took actual and exclusive
possession of the property (either through foreclosure or otherwise), and (ii)
the indemnity provisions set forth above are not intended to indemnify any
indemnified party for its own gross negligence or wilful misconduct.

     If any Hazardous Materials are caused to be removed by any Restricted
Party, the Agent, a Lender or any other indemnified party, then such Hazardous
Materials will be and remain the property of the Restricted Party to which they
belonged before removal, and such Restricted Party will assume any and all
liability for such removed Hazardous Materials. The Borrower understands that
its liability to the indemnified parties under this Section will survive the
termination of this Agreement and repayment of the Obligations.

11.14 MANNER OF PAYMENT AND TAXES

     All payments to be made by or on behalf of the Restricted Parties (or in
the case of upfront fees and indemnity fees, by the Agent or any Lender to
another Lender or to an assignee of an interest in the Credits) in connection
with the Credit Documents are to be made without set-off, compensation or
counterclaim, free and clear of and without deduction for or on account of any
Tax, including but not limited to withholding taxes, other than Excluded Taxes,
except if such deduction is required by law or the administration thereof. If
any Tax, other than Excluded Taxes, is deducted or withheld from any payments
under the Credit Documents (including the remittance provided for in this
Section), the Restricted Party making payment shall promptly remit to the Agent
for the Lenders' benefit in the currency in which such payment was made, the
equivalent of the amount of Tax so deducted or withheld together with the
relevant receipt issued by the taxing or other receiving authority. Subject to
Section 5.28, if the Borrower is prevented by operation of law or otherwise from
paying, causing to be paid or remitting such Tax, the interest or other amount
payable under the Credit Documents will be increased to such rates as are
necessary to yield and remit to the Lenders the principal sum advanced or made
available together with interest at the rates specified in the Credit Documents
after provision for payment of such Tax.

     If any Lender or the Agent becomes liable for any Tax in the jurisdiction
in which the person making a payment:

     (a)  under the Credit Documents, or

     (b)  to Restricted Parties or Subsidiaries,

is located, as a result of a payment being made without the required Tax in that
jurisdiction having been deducted or withheld, NSCL shall indemnify the Lender
or the Agent, as the case may be, for such Tax and any interest and penalties
thereon, and the indemnity payment shall be increased as necessary so that after
the imposition of any Tax in that
<PAGE>
                                      -96-


jurisdiction on the indemnity payment (including Tax in respect of any such
increase in the indemnity payment), the Lender or the Agent shall receive the
full amount of Taxes, interest and penalties for which it is liable in that
jurisdiction as a result of the failure to deduct or withhold Tax.

11.15 INCREASED COSTS ETC.

     If the introduction of or any change in or in the interpretation of, or any
change in the application to any Restricted Party or any Lender of, any law or
any regulation or guideline from any central bank or other governmental
authority that is binding on any Restricted Party or any Lender (whether or not
having the force of law), including but not limited to any reserve or special
deposit requirement or any Tax (other than Excluded Taxes) or any capital
requirement, has due to the Lenders' compliance therewith the effect, directly
or indirectly, of (i) increasing the cost to the Lenders, or any of them, of
performing their respective obligations hereunder; (ii) reducing any amount
received or receivable by the Lenders, or any of them, hereunder or its
effective return hereunder or on its capital; or (iii) causing the Lenders, or
any of them, to make any payment or to forego any return based on any amount
received or receivable by the Lenders, or any of them, hereunder, then upon
demand from time to time the affected Restricted Party shall pay such amount as
shall compensate the Lenders for any such cost, reduction, payment or foregone
return that is not fully offset by an increase in the applicable interest rate
or rates or fees hereunder. Any certificate of a Lender in respect of the
foregoing will be conclusive evidence of the foregoing, except for manifest
error, provided that the Lender determines the amounts owing to it in good faith
using any reasonable averaging and attribution methods and provides a detailed
description of its calculation of the amounts owing to it.

11.16 INTEREST ON MISCELLANEOUS AMOUNTS

     If a Restricted Party fails to pay any amount payable hereunder (other than
principal, interest thereon or interest upon interest which is payable as
otherwise provided in this Agreement) on the due date, that Restricted Party
shall, on demand, pay interest on such overdue amount to the Agent from and
including such due date up to but excluding the date of actual payment, both
before and after demand, default or judgment, at a rate of interest per annum
equal to the sum of the Prime Rate plus 3.0% per annum, compounded monthly.

     If the Borrower deposits cash as Collateral pursuant to a requirement under
this Agreement, the Lender or Lenders holding the cash shall pay the Borrower
interest on the cash while it continues to be held as Collateral at the rate
offered by the relevant Lenders from time to time for deposits in the relevant
currency of comparable size and term.

11.17 CURRENCY INDEMNITY

     In the event of a judgment or order being rendered by any court or tribunal
for the payment of any amounts owing to the Lenders or any of them under this
Agreement or for the payment of damages in respect of any breach of this
Agreement or under or in respect of a judgment or order of another court or
tribunal for the payment of such amounts or damages, such judgment or order
being expressed in a currency (the "JUDGMENT CURRENCY") other than the currency
payable hereunder or thereunder ("the AGREED
<PAGE>
                                      -97-


CURRENCY"), the party against whom the judgment or order is made shall indemnify
and hold the Lenders harmless against any deficiency in terms of the Agreed
Currency in the amounts received by the Lenders arising or resulting from any
variation as between (i) the exchange rate at which the Agreed Currency is
converted into the Judgment Currency for the purposes of such judgment or order,
and (ii) the exchange rate at which each Lender is able to purchase the Agreed
Currency with the amount of the Judgment Currency actually received by the
Lender on the date of such receipt. The indemnity in this Section shall
constitute a separate and independent obligation from the other obligations of
the Restricted Parties hereunder, shall apply irrespective of any indulgence
granted by the Lenders, and shall be secured by the Security.

11.18 ADDRESS FOR NOTICE

     Notice to be given under the Credit Documents shall, except as otherwise
specifically provided, be in writing addressed to the party for whom it is
intended and, unless the law or a specific provision in another Credit Document
deems a particular notice to be received earlier, a notice shall not be deemed
received until actual receipt thereof by the other party. The addresses of the
parties hereto for the purposes hereof shall be the addresses specified beside
their respective signatures to this Agreement or on any Assignment Agreement, or
such other mailing or telecopier addresses as each party from time to time may
notify the other as aforesaid. Notice to the other Restricted Parties shall be
sent in care of NSCL.

11.19 TIME OF THE ESSENCE

     Time shall be of the essence in this Agreement.

11.20 FURTHER ASSURANCES

     The Restricted Parties shall, at the request of the Agent acting on the
instructions of the Majority Lenders, do all such further acts and execute and
deliver all such further documents as may, in the reasonable opinion of the
Majority Lenders, be necessary or desirable in order to fully perform and carry
out the purpose and intent of the Credit Documents.

11.21 TERM OF AGREEMENT

     Except as otherwise provided herein, this Agreement shall remain in full
force and effect until the payment and performance in full of all of the
Obligations.

11.22 PAYMENTS ON BUSINESS DAY

     Whenever any payment or performance under the Credit Documents would
otherwise be due on a day other than a Business Day, such payment shall be made
on the following Business Day, unless the following Business Day is in a
different calendar month, in which case the payment shall be made on the
preceding Business Day.
<PAGE>
                                      -98-


11.23 COUNTERPARTS AND FACSIMILE

     This Agreement may be executed in any number of counterparts, each of which
when executed and delivered shall be deemed to be an original, and such
counterparts together shall constitute one and the same agreement. For the
purposes of this Section, the delivery of a facsimile copy of an executed
counterpart of this Agreement shall be deemed to be valid execution and delivery
of this Agreement, but the party delivering a facsimile copy shall deliver an
original copy of this Agreement as soon as possible after delivering the
facsimile copy.

11.24 WAIVER OF JURY TRIAL, CONSEQUENTIAL DAMAGES ETC.

     Each party hereto hereby waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in any legal proceeding
directly or indirectly arising out of or relating to this the Credit Documents,
the transactions contemplated thereby or any course of conduct, course of
dealing, statements (whether oral or written) or actions of any party (whether
based on contract, tort or any other theory).

     No party shall assert, and each party hereby waives (to the fullest extent
permitted by applicable law), any claim against any other party on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, the Credit Documents, the transactions contemplated thereby or any course of
conduct, course of dealing, statements (whether oral or written) or actions of
any party (whether based on contract, tort or any other theory).

     The Restricted Parties acknowledge and agree that none of the Agent or the
Lenders shall have any liability to them in relation to any due diligence
investigations conducted by any of them in connection with the transactions
contemplated hereby or be under any obligation whatsoever to disclose to them
any information received or facts disclosed by any such investigations. The
Restricted Parties further acknowledge and agree that they are not relying, will
not rely, and will not be deemed, in any respect whatsoever, to have relied upon
the facts received by and information disclosed to any of the Agent or the
Lenders under or in connection with such due diligence investigations.

     Each party hereto (a) certifies that no representative, agent or attorney
of any other party has represented, expressly or otherwise, that such other
party would not, in the event of litigation, seek to enforce the foregoing
provisions and (b) acknowledges that it and the other parties hereto have been
induced to enter into this Agreement by, among other things, the waivers,
acknowledgments and certifications in this Section.

11.25 ENTIRE AGREEMENT

     Except as expressly provided in the commitment letter, summary of terms and
conditions and fee letters dated 10 May 2002 issued by TD and RBC as
underwriters to the Borrower, this Agreement, the Fee Agreement and the
Intercreditor Agreements constitute the entire agreement between the parties
hereto concerning the matters addressed in this Agreement, and cancel and
supersede any prior agreements, undertakings, declarations or representations,
written or verbal, in respect thereof. Without limiting the foregoing, the
<PAGE>
                                      -99-


commitment letter, summary of terms and conditions and fee letter referred to
above are cancelled and superseded except as expressly provided therein.

11.26 DATE OF AGREEMENT

     This Agreement may be referred to as being dated 19 July 2002 or as of 19
July 2002, notwithstanding the actual date of execution.

      [Note: the remainder of this page has been intentionally left blank]
<PAGE>
                                       S-1


IN WITNESS OF WHICH, the parties have executed this Agreement.

Address For Notice                      THE TORONTO-DOMINION
                                        BANK, as Administration Agent

The Toronto-Dominion Bank
Corporate and Investment Banking
66 Wellington Street West, 38th Floor   By:
Toronto-Dominion Bank Tower                 ------------------------------------
Toronto, Ontario                            Name:
M5K 1A2                                     Title:

Attention: Vice President, Loan
           Syndications - Agency
Facsimile: 416-982-5535                 By:
                                            ------------------------------------
                                            Name:
                                            Title:

[signature page for Credit Agreement dated as of 19 July 2002 relating to Norske
Skog Canada Limited et al]
<PAGE>
                                       S-2


Address For Notice                      THE TORONTO-DOMINION BANK, as Lender

The Toronto-Dominion Bank
TD Tower - Suite 660                    By:
700 West Georgia Street                     ------------------------------------
Vancouver, BC                               Name:
V7Y 1A2                                     Title:

Attention: Vice President, Corporate
           & Investment Banking         By:
Facsimile: 604-654-3166                     ------------------------------------
                                            Name:
                                            Title:

[signature page for Credit Agreement dated as of 19 July 2002 relating to Norske
Skog Canada Limited et al]
<PAGE>
                                       S-3


Address For Notice                      ROYAL BANK OF CANADA

Royal Bank of Canada
Corporate Credit
Suite 2100, Park Place,                 By:
666 Burrard Street                          ------------------------------------
Vancouver, B.C.                             Gerald W. Derbyshire
V6C 3B1                                     Managing Director, Global Banking

Attention: Managing Director
Facsimile: 604-665-6465                 By:
                                            ------------------------------------
                                            Baljit Mann
                                            Associate

[signature page for Credit Agreement dated as of 19 July 2002 relating to Norske
Skog Canada Limited et al]
<PAGE>
                                       S-4


Address For Notice                      MERRILL LYNCH CAPITAL CANADA INC.

Merrill Lynch Capital Canada Inc.
181 Bay Street                          By:
5th Floor                                   ------------------------------------
Toronto, Ontario                            Name:
M5J 2V8                                     Title:

Attention: Marcelo Cosma
Facsimile: 416-369-4551                 By:
                                            ------------------------------------
                                            Name:
                                            Title:

[signature page for Credit Agreement dated as of 19 July 2002 relating to Norske
Skog Canada Limited et al]
<PAGE>
                                       S-5


Address For Notice                      THE BANK OF NOVA SCOTIA

The Bank of Nova Scotia
650 West Georgia Street, 18th Floor     By:
Vancouver, BC                               ------------------------------------
V6B 4N7                                     Name:
                                            Title:

Attention: Kurt Foellmer
Facsimile: 604-661-1474                 By:
                                            ------------------------------------
                                            Name:
                                            Title:

[signature page for Credit Agreement dated as of 19 July 2002 relating to Norske
Skog Canada Limited et al]
<PAGE>
                                       S-6


Address For Notice                      BANK OF MONTREAL

Bank of Montreal
1400, 421-7th Avenue S.W.               By:
Calgary, Alberta                            ------------------------------------
T2P 4K9                                     Name:
                                            Title:

Attention: Dana Fleury
Facsimile: 403-515-3650                 By:
                                            ------------------------------------
                                            Name:
                                            Title:

[signature page for Credit Agreement dated as of 19 July 2002 relating to Norske
Skog Canada Limited et al]
<PAGE>
                                       S-7


Address For Notice                      HSBC BANK CANADA

HSBC Bank Canada
885 West Georgia Street                 By:
Suite 200                                   ------------------------------------
Vancouver, B.C.                             Name:
V6C 3E9                                     Title:

Attention: Ralph Hilton
Facsimile: 604-641-3095                 By:
                                            ------------------------------------
                                            Name:
                                            Title:

[signature page for Credit Agreement dated as of 19 July 2002 relating to Norske
Skog Canada Limited et al]
<PAGE>
                                       S-8


Address For Notice                      LAURENTIAN BANK OF CANADA

Laurentian Bank of Canada
130 Adelaide Street West                By:
Toronto, Ontario                            ------------------------------------
M5H 3P5                                     Name:
                                            Title:

Attention: William Galbraith
Facsimile: 416-865-5717                 By:
                                            ------------------------------------
                                            Name:
                                            Title:

[signature page for Credit Agreement dated as of 19 July 2002 relating to Norske
Skog Canada Limited et al]
<PAGE>
                                       S-9


Address For Notice                      CANADIAN WESTERN BANK

Canadian Western Bank
Park Place Branch                       By:
666 Burrard Street, Suite 100               ------------------------------------
Vancouver, B.C.                             Name:
V6C 2X8                                     Title:

Attention: Bob Duffield
Facsimile: 604-688-7117                 By:
                                            ------------------------------------
                                            Name:
                                            Title:

[signature page for Credit Agreement dated as of 19 July 2002 relating to Norske
Skog Canada Limited et al]
<PAGE>
                                      S-10


Address For Notice                      BANK OF AMERICA, N.A.
                                        CANADA BRANCH

Bank of America, N.A., Canada Branch
200 Front Street West                   By:
Suite 2700                                  ------------------------------------
Toronto, Ontario                            Name:
M5V 3L2                                     Title:

Attention: Clara McGibbon
Facsimile: 416-349-4282                 By:
                                            ------------------------------------
                                            Name:
                                            Title:

[signature page for Credit Agreement dated as of 19 July 2002 relating to Norske
Skog Canada Limited et al]
<PAGE>
                                      S-11


Address For Notice                      CANADIAN IMPERIAL BANK OF COMMERCE

Canadian Imperial Bank of Commerce
BCE Place                               By:
161 Bay Street, 8th Floor                   ------------------------------------
Toronto, Ontario                            Name:
M5J 2S8                                     Title:

Attention: Mark Chandler
Facsimile: 416-956-6680                 By:
                                            ------------------------------------
                                            Name:
                                            Title:

[signature page for Credit Agreement dated as of 19 July 2002 relating to Norske
Skog Canada Limited et al]
<PAGE>
                                      S-12


Address For Notice                      NORSKE SKOG CANADA LIMITED

Norske Skog Canada Limited
9th Floor
700 West Georgia Street                 By:
Vancouver, British Columbia                 ------------------------------------
V7Y 1J7                                     Peter Staiger
                                            Treasurer

Attention: Chief Financial Officer
Facsimile: 604-654-4070
                                        By:
                                            ------------------------------------
                                             Ralph Leverton
                                             Vice President Finance and
                                             Chief Financial Officer


with a copy to:

Lawson Lundell                          NORSKE SKOG CANADA FINANCE LIMITED
Barristers and Solicitors
Suite 1600 Cathedral Place
925 West Georgia Street                 By:
Vancouver, British Columbia                 ------------------------------------
V6C 3L2                                     Peter Staiger
                                            Treasurer
Attention: David J. Smith
Facsimile: 604-669-1620


                                        ELK FALLS PULP AND PAPER LIMITED


                                        By:
                                            ------------------------------------
                                            Peter Staiger
                                            President

[signature page for Credit Agreement dated as of 19 July 2002 relating to Norske
Skog Canada Limited et al]
<PAGE>
                                      S-13


                                        NORSKE SKOG CANADA
                                        LIMITED AS MANAGING PARTNER FOR
                                        AND ON BEHALF OF NORSKECANADA


                                        By:
                                            ------------------------------------
                                            Peter Staiger
                                            Treasurer


                                        By:
                                            ------------------------------------
                                            Ralph Leverton
                                            Vice President Finance and
                                            Chief Financial Officer


                                        NORSKE SKOG CANADA PULP
                                        OPERATIONS LIMITED


                                        By:
                                            ------------------------------------
                                            Peter Staiger
                                            Treasurer


                                        NORSKE SKOG CANADA SALES INC.


                                        By:
                                            ------------------------------------
                                            Peter Staiger
                                            Treasurer


                                        NSCL HOLDINGS INC.


                                        By:
                                            ------------------------------------
                                            Peter Staiger
                                            Treasurer


                                        NORSKE SKOG CANADA (USA) INC.


                                        By:
                                            ------------------------------------
                                            Peter Staiger
                                            Treasurer
<PAGE>
                                      S-14


[signature page for Credit Agreement dated as of 19 July 2002 relating to Norske
Skog Canada Limited et al]

                                        NORSKE SKOG CANADA (JAPAN) LTD.


                                        By:
                                            ------------------------------------
                                            James E. Armitage
                                            Director


                                        NORSKE SKOG CANADA SALES INC.


                                        By:
                                            ------------------------------------
                                            Peter Staiger
                                            Treasurer


                                        NORSKE SKOG PULP SALES (JAPAN) LTD.


                                        By:
                                            ------------------------------------
                                            Paul D. Simkin
                                            Director


                                        NORSKE SKOG CANADA PULP SALES INC.


                                        By:
                                            ------------------------------------
                                            Peter Staiger
                                            Treasurer


                                        PACIFICA PAPERS SALES LTD.


                                        By:
                                            ------------------------------------
                                            Peter Staiger
                                            President


                                        PACIFICA PAPERS SALES INC.


                                        By:
                                            ------------------------------------
                                            Peter Staiger
                                            Treasurer

[signature page for Credit Agreement dated as of 19 July 2002 relating to Norske
Skog Canada Limited et al]
<PAGE>
                                      S-15


                                        PACIFICA PAPERS KABUSHIKI KAISHA


                                        By:
                                            ------------------------------------
                                            Peter Staiger
                                            Director


                                        PACIFICA POPLARS LTD.


                                        By:
                                            ------------------------------------
                                            Peter Staiger
                                            President


                                        PACIFICA POPLARS INC..


                                        By:
                                            ------------------------------------
                                            Peter Staiger
                                            Treasurer


                                        PACIFICA PAPERS US INC.


                                        By:
                                            ------------------------------------
                                            Peter Staiger
                                            Treasurer

[signature page for Credit Agreement dated as of 19 July 2002 relating to Norske
Skog Canada Limited et al]
<PAGE>
                                   SCHEDULE A
                          NOTICE OF ADVANCE OR PAYMENT

                         [see reference in Section 5.6]

TO: THE TORONTO-DOMINION BANK
    Corporate and Investment Banking
    66 Wellington Street West, 38th Floor
    Toronto-Dominion Bank Tower
    Toronto, Ontario
    M5K 1A2

    Attention: Vice President, Loan Syndications - Agency
    Facsimile: 416-982-5535

[Note: Notice to be sent to RBC in connection with Credit 2]

     We refer to the credit agreement dated as of 19 July 2002 between Norske
Skog Canada Limited and others as Restricted Parties, The Toronto-Dominion Bank
as Administration Agent and the Lenders, Arrangers and Syndication Agents named
therein, as amended, supplemented, restated or replaced from time to time (the
"Credit Agreement"). All capitalized terms used in this certificate and defined
in the Credit Agreement have the meanings defined in the Credit Agreement.

     Request for Advance

     Notice is hereby given pursuant to Section 5.6 of the Credit Agreement that
the undersigned hereby irrevocably requests as follows:

<TABLE>
<S>                                                                        <C>
(A)  that an Advance be made under the following Credit [check one]:

        Credit 1                                                           (  )
        Credit 2                                                           (  )

(B)  the requested Advance represents the following [check one or more]:

        initial Advance under the Credit                                   (  )
        Increase in Advances under the Credit                              (  )
        Rollover of existing Advances under the Credit                     (  )
        conversion of existing Advances to another type of Advance         (  )

(C)  the Drawdown Date shall be
                                ----------------------------------------

(D)  the Advance shall be in the form of [check one or more and complete
     details]:

        Prime Rate Advance                                                 (  )
              Amount                   $
                                        ----------
</TABLE>
<PAGE>
                                      -2-


<TABLE>
<S>                                                                        <C>
        Bankers' Acceptances                                               (  )
              Face Amount:
                                        ----------
              Term:
                                        ----------

        Base Rate Advance                                                  (  )
              Amount            US$
                                        ----------

        LIBOR Advance                                                      (  )
              Currency:
                                        ----------
              Amount:
                                        ----------
              End of LIBOR Period:
                                        ----------

        L/C                                                                (  )
              Nominal amount:
                                        ----------
              Expiry date:
                                        ----------
</TABLE>

                     [Note: attach proposed form or details]

(E)  the proceeds of the Advance shall be deposited in [specify Designated
     Account]

The undersigned hereby confirms as follows:

(a)  the representations and warranties made in Section 6.1 of the Credit
     Agreement, other than those expressly stated to be made as of a specific
     date, are true on and as of the date hereof with the same effect as if such
     representations and warranties had been made on and as of the date hereof,
     subject to modifications made by NSCL to the Lenders in writing and
     accepted by the Majority Lenders;

(b)  no Pending Event of Default or Event of Default has occurred and is
     continuing on the date hereof or will result from the Advance(s) requested
     herein [except __________];

(c)  after reasonable inquiry, there is no reason to believe that NSCL will not
     be in compliance with all covenants contained in Section 7.1 of the Credit
     Agreement at the end of its current fiscal quarter and was not in
     compliance with those covenants at the end of its immediately preceding
     fiscal quarter if it has not yet delivered its Compliance Certificate for
     that quarter [except __________];

(d)  the undersigned will immediately notify you if it becomes aware of the
     occurrence of any event which would mean that the statements in the
     immediately preceding paragraphs (a), (b) and (c) would not be true if made
     on the Drawdown Date;

(e)  all other conditions precedent set out in Section 4.2 [and Section 4.1] of
     the Credit Agreement have been fulfilled.
<PAGE>
                                      -3-


          Notice of Payment

          Pursuant to Section 5.6 of the Credit Agreement, the undersigned
hereby irrevocably notifies you of the following:

<TABLE>
<S>                                                                         <C>
(a)  that a payment will be made under the following Credit [check one]:

     Credit 1                                                               (  )
     Credit 2                                                               (  )

(b)  the payment represents the following [check one or more]:

     reduction in Advances under the Credit                                 (  )

     payment of existing Advances which will be rolled over as the
     same type of Advance under the Credit                                  (  )

     payment of existing Advances which will be converted to
     another type of Advance under the Credit                               (  )

(c)  the payment date shall be
                               ---------------

(d)  the Advance to be paid shall be in the form of [check one or more
     and complete details]:

          Prime Rate Advance                                                (  )
               Amount                  $
                                        ----------

          Bankers' Acceptances                                              (  )
               Face Amount
                                        ----------
               Maturity Date
                                        ----------

          Base Rate Advance                                                 (  )
               Amount                US$
                                        ----------

          LIBOR Advance                                                     (  )
               Currency:
                                        ----------
               Amount:
                                        ----------
               Start of LIBOR Period:
                                        ----------
</TABLE>
<PAGE>
                                      -4-


DATED:
       ---------------

                                        NORSKE SKOG CANADA
                                        FINANCE LIMITED


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:
<PAGE>
                                   SCHEDULE B
                     AGREEMENT OF NEW RESTRICTED SUBSIDIARY
                         SUPPLEMENT TO CREDIT AGREEMENT

                         [see reference in Section 3.1]

          THIS AGREEMENT supplements the credit agreement dated as of 19 July
2002 between Norske Skog Canada Limited and others as Restricted Parties, The
Toronto-Dominion Bank as Administration Agent and the Lenders, Arrangers and
Syndication Agents named therein, as amended, supplemented, restated or replaced
from time to time (the "Credit Agreement").

RECITALS

A. Capitalized terms used and not defined in this Agreement have the meanings
defined in the Credit Agreement.

B. The Credit Agreement contemplates that further Subsidiaries of NSCL shall
become Restricted Parties in certain circumstances.

C. __________ (the "New Subsidiary") is required by the Credit Agreement to
become a Restricted Party.

D. The New Subsidiary has delivered the documents listed on Appendix A to this
Agreement, which form part of the Security, an opinion of its counsel and other
resolutions and ancillary documents required by the Agent, and a pledge of all
shares of the New Subsidiary owned by the other Restricted Parties has also been
delivered as part of the Security.

          THEREFORE, for value received, and intending to be legally bound by
this Agreement, the parties agree as follows:

1. The New Subsidiary hereby acknowledges and agrees to the terms of the Credit
Agreement and agrees to be bound by all obligations of a Restricted Party under
the Credit Agreement as if it had been an original signatory thereto.

2. The Agent, on behalf of the Lenders, acknowledges that the New Subsidiary
shall be a Restricted Party as of the date of this Agreement.
<PAGE>
                                      -2-


              IN WITNESS OF WHICH, the undersigned have executed this Agreement
as of __________.

                                        THE TORONTO-DOMINION BANK as Agent


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:


                                        [New Subsidiary]


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

               [Note: Appendix A to be attached to list Security]
<PAGE>
                                   SCHEDULE C
                             COMPLIANCE CERTIFICATE

                        [see reference in Section 1.1.26]

TO:       THE LENDERS (as defined in the Credit Agreement referred to below)
AND TO:   THE TORONTO-DOMINION BANK, as Agent

          We refer to Section 7.3.1(d) of the credit agreement dated as of 19
July 2002 between Norske Skog Canada Limited and others as Restricted Parties,
The Toronto-Dominion Bank as Administration Agent and the Lenders, Arrangers and
Syndication Agents named therein, as amended, supplemented, restated or replaced
from time to time (the "Credit Agreement"). All capitalized terms used in this
certificate and defined in the Credit Agreement have the meanings defined in the
Credit Agreement.

1.   The undersigned hereby certifies that:

     (a)  the representations and warranties made in Section 6.1 of the Credit
          Agreement, other than those expressly stated to be made as of a
          specific date, are true on and as of the date hereof with the same
          effect as if such representations and warranties had been made on and
          as of the date hereof, subject to modifications made by the
          undersigned to the Lenders in writing and accepted by the Majority
          Lenders;

     (b)  no Pending Event of Default or Event of Default has occurred and is
          continuing on the date hereof [or as the case may be].

2.   The undersigned hereby certifies that, as of the end of its most-recently
     completed fiscal quarter, which ended on ______,

     (a)  [include only if Permitted Senior Secured Indebtedness or Permitted
          Subordinated Secured Indebtedness is outstanding and the Funded Debt
          Ratio is greater than 0.40 to 1] the Interest Coverage Ratio is
          _____: 1.

     (b)  the Funded Debt Ratio is ____: 1.

     (c)  the Secured Debt Ratio is ____: 1.

     (d)  the value of its Consolidated Net Tangible Assets is $______________.

     (e)  its "Consolidated Fixed Charge Coverage Ratio" as defined under the
          1999 Indenture and the 2001 Indenture is ____: 1 and ____: 1,
          respectively.

     (f)  the Threshold Amount is $______.

     (g)  [include for year end only] its shareholders equity is $_________.
<PAGE>
                                      -2-


3.   Appendix A attached sets out the calculations of the amounts referred to in
     paragraph 2 above.

4.   Appendix B attached contains a list of all sales or other dispositions of
     any Property of Restricted Parties (including Capital Stock of any other
     person) during the term of this Agreement, other than dispositions to
     another Restricted Party and sales of inventory in the ordinary course of
     its business, and a list of all material Property of a Restricted Party
     which has been expropriated, condemned, destroyed, damaged or otherwise
     lost, with a description of the use of the proceeds of disposition,
     insurance or other compensation.

5.   Appendix C attached contains details of (i) all Other Secured Obligations
     as of the end of the undersigned's most-recently completed fiscal quarter,
     the classification under which they were incurred for the purposes of
     section 4.06 of the each of the 1999 Indenture and the 2001 Indenture and
     the Market Value thereof, (ii) all outstanding Permitted Senior Secured
     Indebtedness and Permitted Subordinated Secured Indebtedness as of the end
     of the undersigned's most-recently completed fiscal quarter and the
     classification under which it was incurred for the purposes of section 4.06
     of the each of the 1999 Indenture and the 2001 Indenture and (iii) the
     amount, as determined under the 1999 Indenture and the 2001 Indenture,
     respectively, of any other obligations that have been classified as being
     incurred under clauses (i) or (ix) of the definition of "Permitted
     Indebtedness" in the 1999 Indenture and the definition of "Permitted Debt"
     in the 2001 Indenture.

6.   The undersigned hereby certifies that the current Reference Debt Ratings
     established by Moody's and S&P are _____ and _____, respectively.
     Accordingly, the Applicable Fee Rate is ___% per annum and the Applicable
     Margins are as follows:

     Margin for Prime Rate Advances/ Base Rate Advances - ___%
     Margin for LIBO Rate Advances - ___%

7.   [Include with report for quarter in which 30 June falls] The undersigned
     hereby certifies that the consolidated net book value of its inventory as
     at 30 June [year] is $_____ and the net book value of all inventory located
     in any jurisdiction where the Security has not been registered over
     inventory in accordance with local requirements is $_____ as at that date.

8.   The undersigned hereby certifies that there is no jurisdiction where the
     Security has not been registered over inventory in accordance with local
     requirements in which the amount of inventory for all Restricted Parties is
     greater than 50,000 tonnes.

9.   The undersigned hereby certifies that the current consolidated net book
     value of its fixed assets is $_____ and the net book value of all Property
     other than inventory located in any jurisdiction where the Security over
     such Property has not been registered in accordance with local requirements
     is $_____.
<PAGE>
                                      -3-


10.  [Required only if Permitted Senior Secured Debt in an aggregate principal
     amount of $100,000,000 or more has been incurred during the term of this
     Agreement] Appendix D attached is an up to date list of all Material
     Contracts. [or There has been no change to the list of Material Contracts
     dated __________]

11.  Appendix E attached contains details of all releases of Hazardous Materials
     on or from any land which any Restricted Party occupies or controls during
     its most-recently completed fiscal quarter that were reportable under
     applicable Requirements of Law, that have not previously been reported to
     the Agent and in respect of which any Restricted Party is or remains in
     non-compliance with any Environmental Law as of the date of this
     certificate.

DATED
      ---------------

                                        NORSKE SKOG CANADA LIMITED


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:
<PAGE>
                                   SCHEDULE D
                              ASSIGNMENT AGREEMENT

                        [see reference in Section 1.1.8]

          The undersigned refer to the credit agreement dated as of 19 July 2002
between Norske Skog Canada Limited and others as Restricted Parties, The
Toronto-Dominion Bank as Administration Agent and the Lenders, Arrangers and
Syndication Agents named therein as amended, supplemented, restated or replaced
from time to time (the "Credit Agreement"). All capitalized terms used in this
Assignment Agreement and defined in the Credit Agreement have the meanings
defined in the Credit Agreement.

          For value received, the "Assignor" and the "Assignee" named below
hereby agree as follows:

1. The Assignor hereby sells and assigns, without recourse, to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, the Proportionate
Share specified on Appendix 1 in and to the Assignor's rights and obligations
under the Credit Agreement, the Security and all other Credit Documents.

2. The Assignor (a) represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder, that such interest is free
and clear of any lien or security interest and that it is entitled to enter into
this Assignment Agreement; (b) makes no representation or warranty, other than
as provided in this Assignment Agreement and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or any
other Credit Document; and (c) makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Restricted
Parties or any other guarantor or the performance or observance by the
Restricted Parties or any other guarantor of any of the obligations under the
Credit Agreement or any other Credit Document.

3. The Assignee, for the benefit of the Restricted Parties, the Agent and all
Lenders from time to time, including the Assignor, (a) acknowledges receipt of
any upfront fee payable by the Assignor, (b) confirms that it has received a
copy of the Credit Agreement, together with such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into this Assignment Agreement; (c) agrees that it will, independently and
without reliance upon the Agent, the Assignor or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (d) appoints and authorizes the Agent to take such action
on its behalf and to exercise such powers and discretion under the Credit
Agreement as are delegated to the Agent by the terms thereof, together with such
powers and discretion as are reasonably incidental thereto; (e) ratifies and
adopts the powers of attorney and related powers given to the Agent under the
Credit Agreement; (f) agrees that it will perform in accordance with their terms
all of the obligations that by the terms of the Credit Agreement are required to
be performed by it as a Lender, (g) agrees to be bound by the terms of all
Intercreditor
<PAGE>
                                      -2-


Agreements, and (h) specifies as its address for notice and payments its office
at the address set forth on Appendix 1 hereto.

4. Following the execution of this Assignment Agreement, it shall immediately be
delivered to the Agent, together with the processing and recording fee specified
in Section 10.2.1 of the Credit Agreement if applicable, for approval and
recording by the Agent, and NSCL, if applicable. The Assignee's agreement to
become a Lender, as constituted by this Assignment Agreement, is irrevocable,
unless the Assignee is not approved by the Agent, and NSCL if applicable. The
Assignee shall become a Lender, and shall be bound by the obligations and
entitled to the benefits in the Credit Agreement, immediately upon this
Assignment Agreement being approved and recorded by the Agent and NSCL, if
applicable (the "Effective Date"). On the Effective Date, the Assignee (a) shall
pay the Assignor an amount equal to the Assignee's Proportionate Share of Prime
Rate Advances and Base Rate Advances made by the Assignor as of the Effective
Date and (b) shall become entitled to receive standby fees in accordance with
the Credit Agreement in respect of its Proportionate Share of the aggregate
amount of the Credit that has not been advanced by the Lenders. The Assignee
shall make further Advances to the Borrower beginning on the first Drawdown Date
that is at least three Business Days following the Effective Date, as LIBOR
Advances and Advances by way of Bankers' Acceptances made by the Assignor
mature, until the Assignee has made Advances in an amount equal to its
Proportionate Share of the aggregate Advances made by all Lenders under the
Credit Agreement.

5. If Advances made by the Assignee to the Borrower are for any reason less than
the Assignee's Proportionate Share of the aggregate Advances made by all Lenders
under the Credit Agreement, the Assignee shall, on demand, indemnify the
Assignor in respect of the principal amount of the corresponding Advances made
by the Assignor in excess of the Assignor's Proportionate Share. The Advances by
the Assignor in respect of which the Assignee is bound to indemnify the Assignor
are set out on Appendix 2 to this Assignment Agreement. The Assignor shall pay
the Assignee indemnity fees during the period in which the Assignee is obliged
to indemnify the Assignor. The fee shall be in the amount specified on Appendix
2 and shall be payable on the Effective Date in respect of Advances by way of
Bankers' Acceptances, and on each date on which the Borrower pays interest on
LIBOR Advances, in respect of LIBOR Advances.

6. This Assignment Agreement shall be exclusively governed by, and construed in
accordance with the laws of the Province of British Columbia, Canada.

7. This Assignment Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of
this Assignment Agreement by telecopier shall be effective as delivery of a
manually executed counterpart of this Assignment Agreement.
<PAGE>
                                      -3-


          IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment Agreement to be executed by their duly authorized officers as of the
dates specified below.

                                        Assignor:
                                                  ------------------------------


                                        By:
                                            ------------------------------------
                                        Name:
                                        Title:

                                        Dated:
                                               ---------------------------------


                                        Assignee:
                                                  ------------------------------


                                        By:
                                            ------------------------------------
                                        Name:
                                        Title:

                                        Dated:
                                               ---------------------------------

                                        [If applicable]
Approved on                             Approved on
            -------------------------               ----------------------------


THE TORONTO-DOMINION BANK, as Agent     NORSKE SKOG CANADA LIMITED


By:                                     By:
    ---------------------------------       ------------------------------------
Name:                                   Name:
Title:                                  Title:

Effective Date:                         Date:
               ----------------------         ----------------------------------
<PAGE>
                                   APPENDIX 1
                                       TO
                              ASSIGNMENT AGREEMENT

Proportionate Share assigned by Assignor:
                                          --------------------------------------

Proportionate Share retained by Assignor:
                                          --------------------------------------

Payment Details, including address of Assignee for notices:

                                   APPENDIX 2
                                       TO
                              ASSIGNMENT AGREEMENT

Advances in respect of which the Assignee is to indemnify the Assignor, as of
the Effective Date:

<TABLE>
<CAPTION>
Type of Advance   Maturity Date of Advance   Principal Amount of Advance
---------------   ------------------------   ---------------------------
<S>               <C>                        <C>

</TABLE>

Indemnity fee:
<PAGE>
                                   SCHEDULE E
                         PROPORTIONATE SHARES OF LENDERS

        [see references in Sections 1.1.25, 1.1.62, 1.1.93, 5.2, 10.2.4]

      [Proportionate Shares in Credits are nil unless otherwise specified.
                  Dollar figures represent initial Commitment]

TD

Credit 1 (adjusted in accordance with Section 5.2) - 17.647% ($52,500,000)
Credits (overall) - 15.000% ($52,500,000)

RBC

Credit 2 (adjusted in accordance with Section 5.2) -100% ($52,500,000)
Credits (overall) - 15.000% ($52,500,000)

CANADIAN IMPERIAL BANK OF COMMERCE

Credit 1 (adjusted in accordance with Section 5.2) - 14.286 % ($42,500,000)
Credits (overall) - 12.143% ($42,500,000)

BANK OF MONTREAL

Credit 1 (adjusted in accordance with Section 5.2) - 14.286 % ($42,500,000)
Credits (overall) - 12.143% ($42,500,000)

THE BANK OF NOVA SCOTIA

Credit 1 (adjusted in accordance with Section 5.2) - 14.286 % ($42,500,000)
Credits (overall) - 12.143% ($42,500,000)

HSBC BANK CANADA

Credit 1 (adjusted in accordance with Section 5.2) - 10.084% ($30,000,000)
Credits (overall) - 8.571% ($30,000,000)

BANK OF AMERICA, N.A. CANADA BRANCH

Credit 1 (adjusted in accordance with Section 5.2) - 10.084% ($30,000,000)
Credits (overall) - 8.571% ($30,000,000)

MERRILL LYNCH CAPITAL CANADA INC.

Credit 1 (adjusted in accordance with Section 5.2) - 8.403% ($25,000,000)
Credits (overall) - 7.143% ($25,000,000)
<PAGE>
                                       2


CANADIAN WESTERN BANK

Credit 1 (adjusted in accordance with Section 5.2) - 5.882% ($17,500,000)
Credits (overall) - 5.000% ($17,500,000)

LAURENTIAN BANK OF CANADA

Credit 1 (adjusted in accordance with Section 5.2) - 5.042% ($15,000,000)
Credits (overall) - 4.286% ($15,000,000)
<PAGE>
                                   SCHEDULE F
                     DETAILS OF CAPITAL STOCK, PROPERTY ETC.

              [see references in Sections 6.1.5(a), 7.4, 7.5.3(c)]

1.   NORSKE SKOG CANADA LIMITED

<TABLE>
<S>              <C>
Capital Stock:   Public Company

Head Office:     9th Floor, 700 West Georgia Street
                 P.O. Box 10058 Pacific Centre
                 Vancouver, British Columbia
                 V7Y 1J7

Real Property:
</TABLE>

Owned:

<TABLE>
<S>              <C>
PID:             Legal Description:
----             ------------------
005 932 092      Those parts of Lot 2 Section 5 Range 9 Chemainus District Plan
                 5803 shown outlined in red on Plan 925 RW

007 388 004      Lot 1 Section 3 Range 10 Chemainus District Plan 1471 except
                 parts in Plans 11613, 13731 and 16471

009 024 212      That part of Parcel C (DD 36578I) of Section 2 Range 7
                 Chemainus District outlined in red on Plan 920 RW

005 419 239      That part of Lot 1 Section 2 Range 7 Chemainus District Plan
                 8697 in Plan 920 RW

009 024 174      That part of Parcel B (DD 99604I) of Section 5 Range 10
                 Chemainus District outlined in red on Plan 925 RW

005 932 190      That part of Lot 2 Section 5 Range 9 Chemainus District Plan
                 5803 lying to the south east of the south easterly boundary of
                 Plan 925 RW

009 024 336      That part of Section 3 Range 8 Chemainus District outlined in
                 red on Plan 920 RW

009 024 310      That part of Section 4 Range 9 Chemainus District outlined in
                 red on Plan 925 RW

009 024 379      That part of Parcel E (DD 141335I) of Section 4 Range 8
                 Chemainus District outlined in red on Plan 920 RW

009 024 417      That part of Parcel D (DD 65699I) of Section 4 Range 9
                 Chemainus District outlined in red on Plan 920 RW

009 044 132      That part of Parcel D (DD 118337I) of Section 4 and 5 Range 8
                 Chemainus District outlined in red on Plan 920 RW and lying
                 wholly within Section 4

005 968 585      That portion of that part of Lot 3 Section 1 Range 7 Chemainus
                 District Plan 5467 lying to the West of the Westerly boundary
                 of Plan 645 RW shown outlined in red on Plan 911 RW and
                 containing 1.27 acres more or less

009 739 637      Section 8 Range 9 Chemainus District

009 739 611      Section 7 Range 9 Chemainus District

009 739 718      Those parts of Section 9 Range 8 Chemainus District lying East
                 of the Chemainus River, including all that part of a strip of
                 land 33 feet wide as shown coloured purple and green on Plan 16
                 BL known as Mainguy Road

009 739 688      Those parts of Section 8 Range 8 Chemainus District lying East
                 of the Chemainus River, including all that part of a strip of
                 land 33 feet wide as shown coloured purple and green on Plan 16
                 BL, known as Mainguy Road

009 739 653      Those parts of Section 7 Range 8 Chemainus District, lying East
                 of the Chemainus River including all that part of a strip of
                 land 33 feet wide as shown coloured purple and green on Plan 16
                 BL, known as Mainguy Road

009 739 785      Lot 2A Chemainus District
</TABLE>
<PAGE>
                                      -2-


<TABLE>
<S>              <C>
009 739 777      Lot 2 Chemainus District

003 982 840      Lot 1 Section 3 Range 10 Chemainus District Plan 16471

004 798 619      Lot 1 Section 1 Range 7 Chemainus District Plan 12696

004 979 087      Lot 1 Sections 3 and 4 Ranges 9 and 10 Chemainus District Plan
                 12168

006 244 637      Lot 2 Section 4 Range 10 Chemainus District Plan 3198

009 956 069      Section 3 Range 9 Chemainus District except parts in Plans 920
                 RW and 921 RW

009 573 488      That part of Section 5 Renfrew District (situate in Cowichan
                 Lake District) as shown outlined in red on Plan 457 BL

006 912 524      Lot 3 Bl 3 Section 5 Renfrew District (situate in Cowichan Lake
                 District) Plan 1750

006 912 516      Lot 2 Bl 3 Section 5 Renfrew District (situate in Cowichan Lake
                 District) Plan 1750

008 768 820      District Lot 101 Cowichan Lake District

006 912 567      Lot 4 Bl 3 Section 5 Renfrew District (situate in Cowichan Lake
                 District) Plan 1750

006 912 494      Lot 1 Bl 3 Section 5 Renfrew District (situate in Cowichan Lake
                 District) Plan 1750

006 912 451      Lot 1 Bl 2 Section 5 Renfrew District (situate in Cowichan Lake
                 District) Plan 1750

007 655 517      Block 3 DL 12 Cowichan Lake District Plan 1231 except part in
                 Plan 31221

005 145 473      Lot 1 DL 12 Cowichan Lake District Plan 11206

007 663 544      That part of District Lot 12 Cowichan Lake District being that
                 portion of Fern Road dedicated by Plan 1231 and closed by
                 Order-In-Council No. 1754 dated 16th day of July, 1956 as shown
                 outlined in red on Plan 458 BL

018 195 326      Lot 2 Section 20 Range 4 Quamichan District Plan VIP56262

005 338 859      That part of Lot 1 Section 17 Range 4 Quamichan District Plan
                 9537 shown in red on Plan 903 RW

009 662 481      That part of Parcel G (DD 36290I) of Sections 18 and 19 Range 4
                 Quamichan District shown outlined in red on Plan 903 RW and
                 containing 0.08 acres and 0.30 acres more or less

009 662 278      That part of Parcel P (DD 76080I) of Sections 17, 18 and 19
                 Range 4 Quamichan District shown outlined in red on Plan 903 RW
                 and lying entirely in Section 18

006 360 564      That part of Lot 10 Sections 17 and 18 Range 4 Quamichan
                 District Plan 2785 shown in red on Plan 903 RW

006 738 567      That part of Lot 4 Bl 1 Section 20 Range 4 Quamichan District
                 Plan 1908 shown outlined in red on Plan 903 RW

006 738 524      That part of Lot 3 Bl 1 Section 20 Range 4 Quamichan District
                 Plan 1908 shown outlined in red on Plan 903 RW

006 738 354      That part of Lot 2 Bl 1 Section 20 Range 4 Quamichan District
                 Plan 1908 shown outlined in red on Plan 903 RW

006 360 742      That part of Lot 11 Section 17 Range 4 Quamichan District Plan
                 2785 shown in red on Plan 903 RW

006 157 971      That part of Lot 1 Section 19 Range 4 Quamichan District Plan
                 3853 outlined red on Plan 903 RW

009 668 314      That part of Parcel D (DD 106367I) of Section 19 Range 4
                 Quamichan District shown outlined in red on Plan 903 RW

006 068 065      That part of Lot 1 Section 19 Range 4 Quamichan District Plan
                 4134 shown in red on Plan 903 RW

004 680 499      Lot A Section 19 Range 4 Quamichan District Plan 12945

005 586 445      Lot 6 Section 17 Range 5 Quamichan District Plan 8636

005 586 437      Lot 5 Section 17 Range 5 Quamichan District Plan 8636

005 586 429      Lot 4 Section 17 Range 5 Quamichan District Plan 8636

006 442 382      That part of Lot 9 Section 10 Range 4 Somenos District Plan
                 2196 shown outlined in red on Plan 910 RW

008 162 794      That part of Lot 4 Bl 1 Section 1 Range 4 Somenos District Plan
                 972 shown outlined in red on Plan 903 RW

009 797 807      That part of Section 20 Range 7 Somenos District outlined in
                 red on Plan 911 RW and containing 0.66 acres more or less

009 797 939      That part of Section 19 Range 7 Somenos District lying West of
                 Parcel A (DD 43540I) outlined in red on Plan 911 RW and
                 containing 0.67 acres more or less

009 744 495      That part of the East 70 acres of Section 17 Range 6 Somenos
                 District shown outlined in red on Plan 911 RW
</TABLE>
<PAGE>
                                      -3-


<TABLE>
<S>              <C>
006 406 891      That part of Lot 2 Section 2 Range 4 Somenos District Plan 2825
                 shown outlined in red on Plan 902 RW

006 405 754      That part of Lot 1 Section 2 Range 4 Somenos District Plan 2825
                 shown outlined in red on Plan 902 RW

005 557 755      Lot 5 Section 1 Range 4 Somenos District Plan 9162

007 104 057      That part of Lot 1 Bl 1 Section 6 Range 4 Somenos District Plan
                 1599 shown outlined in red on Plan 902 RW

008 162 760      That part of Lot 3 Bl 1 Section 1 Range 4 Somenos District Plan
                 972 shown outlined in red on Plan 903 RW

005 934 389      That part of Lot 3 Section 16 Range 6 Somenos District Plan
                 5814 shown outlined in red on Plan 911 RW

009 796 649      That part of Parcel A (DD 43540I) of Sections 19 and 20 Range 7
                 Somenos District lying within Section 19 included in Plan 911
                 RW

009 772 995      That part of Parcel A (DD 42185I) of Section 12 Range 5 Somenos
                 District shown outlined in red on Plan 910 RW

009 773 398      That part of Section 13 Range 5 Somenos District outlined in
                 red on Plan 910 RW

005 934 354      That part of Lot 2 Section 16 Range 6 Somenos District Plan
                 5814 shown outlined in red on Plan 911 RW

008 162 824      That part of Lot 5 Bl 1 Section 1 Range 4 Somenos District Plan
                 972 shown outlined in red on Plan 903 RW

007 105 045      That part of Lot 4 Bl 1 Section 6 Range 4 Somenos District Plan
                 1599 shown outlined in red on Plan 902 RW

009 773 185      That part of Section 12 Range 5 Somenos District lying to the
                 south of Parcel A (DD 42185I) shown outlined in red on Plan 910
                 RW

009 774 483      Those parts of Parcel A (DD 89348I) of Sections 14 and 15 Range
                 5 Somenos District outlined in red on Plans 910 RW and 911 RW
                 except part in Plan 15076

006 248 110      That part of Lot 3 Sections 15 and 16 Range 5 Somenos District
                 Plan 3313 shown outlined in red on Plan 827R included within
                 Plan 911 RW

006 441 980      That part of Lot 8 Sections 9 and 10 Range 4 Somenos District
                 Plan 2196 shown outlined in red on Plan 910 RW

006 246 541      That part of Lot 1 Sections 15 and 16 Range 5 Somenos District
                 Plan 3313 shown outlined in red on Plan 911 RW except that part
                 in Plan 15076

009 744 517      That part of the west 50 acres of Section 18 Range 7 Somenos
                 District shown outlined in red on Plan 911 RW

009 744 444      That part of Parcel B (DD 77714I) of Lot 82 Somenos District
                 shown outlined in red on Plan 911 RW

009 744 509      That part of the West 50 acres of Section 17 Range 7 Somenos
                 District shown outlined in red on plan deposited under DD 23410
                 included in Plan 911 RW

009 744 487      Those parts of Parcel A (DD 77714I) of Section 16 Range 6
                 Somenos District shown outlined in red on Plan 911 RW

006 582 311      That part of Lot B Section 7 Range 4 Somenos District Plan 2457
                 shown outlined in red on Plan 902 RW

006 568 556      That part of Lot 7 Section 2 Range 3 Somenos District Plan 2461
                 shown in red on Plan 902 RW

009 872 906      That part of the south 1/2 of Section 8 Range 4 Somenos
                 District shown outlined in red on Plan 902 RW

006 441 505      That part of Lot 5 Sections 8 and 9 Somenos District Plan 2196
                 shown outlined in red on Plan 902 RW

006 563 643      That part of Lot 1 Section 4 Range 4 Somenos District Plan 2458
                 shown outlined in red on Plan 902 RW

006 609 007      That part of Lot D Section 7 Range 4 Somenos District Plan 2457
                 shown outlined in red on Plan 902 RW

006 246 851      That part of Lot 2 Section 15 Range 5 Somenos District Plan
                 3313 shown outlined in red on Plan 911 RW except that part in
                 Plan 15076

006 442 641      That part of Lot 16 Section 11 Range 5 Somenos District Plan
                 2196 shown outlined in red on Plan 910 RW
</TABLE>
<PAGE>
                                       -4-


<TABLE>
<S>              <C>
006 442 561      That part of Lot 10 Section 10 Range 4 Somenos District Plan
                 2196 shown outlined in red on Plan 910 RW

005 576 695      That part of Section 11 Range 4 Somenos District shown outlined
                 in red on Plan 910 RW

009 759 492      That part of Section 4 Range 3 Somenos District shown outlined
                 in red on Plan 902 RW

006 407 234      That part of Lot 4 Section 2 Range 4 Somenos District Plan 2825
                 shown outlined in red on Plan 902 RW

009 774 939      That part of Parcel C (DD 174586I) of Section 14 Range 5
                 Somenos District outlined in red on Plan 910 RW

006 581 684      That part of Lot A Section 7 Range 4 Somenos District Plan 2457
                 shown outlined in red on Plan 902 RW

006 608 787      That part of Lot C Section 7 Range 4 Somenos District Plan 2457
                 shown outlined in red on Plan 902 RW

009 764 151      That part of Section 5 Range 4 Somenos District shown outlined
                 in red on Plan 902 RW

005 576 571      That part of Lot 2 Section 1 Range 4 Somenos District Plan 8611
                 shown in red on Plan 903 RW

006 440 347      That part of Lot 3 Section 9 Range 4 Somenos District Plan 2196
                 shown outlined in red on Plan 910 RW

007 104 375      That part of Lot 2 Bl 1 Section 6 Range 4 Somenos District Plan
                 1599 shown outlined in red on Plan 902 RW

006 406 939      That part of Lot 3 Section 2 Range 4 Somenos District Plan 2825
                 shown outlined in red on Plan 902 RW

007 104 936      That part of Lot 3 Bl 1 Section 6 Range 4 Somenos District Plan
                 1599 shown outlined in red on Plan 902 RW

006 373 968      That part of Lot 2 Section 3 Ranges 3 and 4 Somenos District
                 Plan 2794 shown in red on Plan 902 RW

006 383 025      That part of Lot 1 Section 3 Range 3 Somenos District Plan 2776
                 shown outlined in red on Plan 902 RW

005 576 539      Lot 1 Section 1 Range 4 Somenos District Plan 8611

003 733 998      Lot 1 Section 9 Range 4 Somenos District Plan 19355

007 388 209      Lot 15 Section 3 Range 10 Chemainus District Plan 1471 Except
                 part in Plan 11574

013 194 976      That part of Section 5 Ranges 8, 9 and 10 and Section 4 Range 8
                 Chemainus District shown outlined in red in DD 27614

013 194 470      That part of Sections 4 and 5 Range 8 Chemainus District shown
                 outlined in red on plan attached to DD 24931

013 194 381      That part of Section 4 Range 8 Chemainus District shown
                 outlined in red on plan attached to DD 23242

013 143 123      That part of Sections 5 and 6 Range 10 and that part of the
                 foreshore of District Lot 172 Chemainus District shown coloured
                 red on plan deposited under DD 14529I

009 922 431      That part of Section 1 Range 11 Chemainus District lying to the
                 North of the Northerly boundary of Chaplin Street as said
                 street is shown on Plan 739 and the production easterly of the
                 said northerly boundary, except parts in Plans 4257 and 23431

009 920 145      That part of Section 5 Range 9 Chemainus District lying
                 Northerly and Westerly of Plan 5803, except parts in Plans 4302
                 and 9775

009 925 431      District Lot 4 Chemainus District

009 921 168      That part of Section 2 Ranges 10 and 11 Chemainus District in
                 Plan DD 8239I containing 31.7 acres more or less except part in
                 Plan 856 BL

009 862 021      District Lot 8 Chemainus District

005 852 293      Lot 1 District Lot 7 Chemainus District Plan 6538

009 034 595      District Lot 7 Chemainus District except part in Plan 6538

009 861 998      District Lot 6 Chemainus District

004 627 938      Lot 3 Chemainus District

009 926 887      District Lot 172 Chemainus District except that part included
                 in the right of way of the Esquimalt and Nanaimo Railway
                 Company

006 116 981      That part of Lot 1 Section 1 Range 10 Chemainus District Plan
                 4357 shown outlined in red on Plan 815 R

000 167 886      Lot A Section 4 Range 9 Chemainus District Plan 32612
</TABLE>
<PAGE>
                                       -5-


<TABLE>
<S>              <C>
004 169 948      Lot 1 Section 4 Range 10 Chemainus District Plan 15020

000 573 736      Lot 1 Section 4 Range 10 Chemainus District Plan 5180 except
                 part in Plan 15020 and 41332

006 116 965      That part of Lot 1 Section 1 Range 10 Chemainus District Plan
                 4357 lying to the north of a boundary parallel to the northerly
                 boundary of said lot and extending from a point on the easterly
                 boundary of said lot distant 1.515 chs. from the north east
                 corner of said lot

006 116 973      That part of Lot 1 Section 1 Range 10 Chemainus District Plan
                 4357 lying south of a boundary parallel to the northern
                 boundary of said lot and extending from a point on the easterly
                 boundary thereof distant 1.515 chs. from the north east corner
                 of said lot, except that part thereof shown outlined in red on
                 Plan 815R

006 066 551      Lot 1 Section 1 Range 11 Chemainus District Plan 4257

009 921 958      That part of Section 6 Range 10 Chemainus District lying to the
                 north of the right of way of the Esquimalt and Nanaimo Railway
                 Company

009 920 196      Section 6 Range 9 Chemainus District except parts in Plans 4302
                 and 5803

009 920 803      Section 4 Range 9 Chemainus District except the west 30 chains
                 and except parts in Plans 925 RW, 13072, 22398 and 32612

009 920 064      That part of Section 5 Range 8 Chemainus District lying
                 easterly of the centre line of Tsussie Creek (which is the
                 easterly boundary of Plan 4302) and to the north of the
                 northerly boundary of the right of way of the Esquimalt and
                 Nanaimo Railway Company shown on Plan DD 27614, except parts in
                 Plans 5803 and 9775

024 662 666      Lot 1 of Sections 4, 5 & 6 Range 10 Chemainus District Plan
                 VIP69811

024 662 674      Lot 2 of Sections 2, 3 & 4 Ranges 10 & 11 Chemainus District
                 and of Sections 5 & 6 Range 10 Chemainus District and of
                 District Lots 141 and 475 Cowichan District Plan VIP69811

024 663 018      Lot 3 of Sections 2, 3, & 4 Ranges 10 & 11 and District Lot 107
                 Chemainus District and of District Lots 141 and 145 Cowichan
                 District Plan VIP69811

024 663 034      Lot 4 of Sections 2, 3 & 4 Range 10 Plan VIP69811

024 663 115      Lot 5 Section 2 Ranges 10 and 11 Chemainus District Plan
                 VIP69811
</TABLE>

(formerly PACIFICA)
Vancouver Land Title Office

<TABLE>
<S>              <C>
015-890-317      District Lot 3091 Group 1 New Westminster District Except Lot
                 A2 (Reference Plan 490)

002-560-194      Block 46, Except those portions included in Plans 8519, 10829,
                 Reference Plan 3573 and Explanatory Plan 6151 and Plans 12506
                 and 14689 District Lot 450 Plan 8096

010-264-469      Block 44 District Lot 450 Plan 8096

004-781-856      District Lot 7213 Group 1 New Westminster District

004-781-821      District Lot 7212 Group 1 New Westminster District

015-863-310      District Lot 4070, Group 1 New Westminster District Except Part
                 in Reference Plan 2267

015-890-333      District Lot 3088 Group 1 New Westminster District

015-890-309      Lot A2 (Reference Plan 490) District Lot 3091 Group 1 New
                 Westminster District

010-863-141      Lot 1 Block 10 District Lot 450 Plan 6606

015-890-325      District Lot 3090 Group 1 New Westminster District

002-554-682      Block 43, Except those portions in Plans 12273 and 14778
                 Explanatory Plans 5457 and 7624, District Lot 450 Plan 8096

010-267-760      Block 57 District Lot 450 Plan 8096

015-875-121      District Lot 3437 Group 1 New Westminster District

011-528-443      Lot 4 Block 2 District Lot 450 Plan 4533

010-865-349      Lot 21 Block 10 District Lot 450 Plan 4533

010-267-727      Block 58 District Lot 450 Plan 8096

010-267-361      Block 55 Except Portions in Plans 13475, 14965 and 16963,
                 District Lot 450, Plan 8096

010-237-321      Block 48 District Lot 1901A Plan 8096

010-237-283      Block 47 District Lot 1901A Plan 8096

010-862-757      Lot 8, Except Part in Reference Plan 5142 and Except Part in
                 Explanatory Plan 3085 Block 13 District Lot 450 Plan 6606

010-863-231      Lot 20 Block 10 District Lot 450 Plan 6606

010-863-222      Lot 19 Block 10 District Lot 450 Plan 6606
</TABLE>
<PAGE>
                                       -6-


<TABLE>
<S>              <C>
011-528-401      Lot 3 Block 2 District Lot 450 Plan 4533

010-863-176      Lot 2 Block 10 District Lot 450 Plan 6606

010-263-501      Block 37 (Explanatory Plan 4343) Except Part in Plan 13855,
                 District Lot 450, Plan 8096

010-863-206      Lot 3 Block 10 District Lot 450 Plan 6606
</TABLE>

(formerly PACIFICA)
Victoria Land Title Office

<TABLE>
<S>              <C>
004-172-981      Lot 1, District Lot 1, Alberni District, Plan 15070, Except
                 Part in Plans 31593, 51178 and VIP67137

016-926-099      Lot A, District Lots 159 and 196 and Block 105, Alberni
                 District, Plan VIP51573, Except Part in Plan VIP68610

008-569-258      That Part of District Lot 61, Alberni District, Outlined in Red
                 on Plan 462 RW

024-623-628      Lot A District Lot 1 Alberni District and Part of the Bed of
                 the Public Harbour of Alberni Plan VIP69746

008-676-607      District Lot 308, Alberni District

008-418-004      District Lot 310, Alberni District, Containing 0.42 Acres more
                 or less

008-569-070      District Lot 303, Alberni District

008-569-134      That Part of District Lot 141, Alberni District, Outlined in
                 Red on Plan 487 RW

004-548-906      That Part of Lot 2, District Lots 61 and 141, Alberni District,
                 Plan 15961 Lying to the East of Plan 487 RW

008-569-789      That Part of Parcel A (DD 3333N) of District Lot 81, Alberni
                 District, Shown Outlined in Red on Plan 890 RW

000-987-417      Lot C, District Lot 1, Alberni District, Plan 41766

008-371-342      That Part of District Lot 1, Alberni District, Shown Outlined
                 in Red on Plan 1186R

008-569-185      That Part of District Lot 105, Alberni District, Outlined in
                 Red on Plan 471 RW, Except Part in Plan 33608

008-569-924      That Part of District Lot 105, Alberni District, Outlined in
                 Red on Plan 890 RW, Except Part in Plan 33608

008-569-827      That Part of District Lot 81, Alberni District, Outlined in Red
                 on Plan 479 RW

008-569-886      That Part of District Lot 61, Alberni District, Outlined in Red
                 on Plan 889 RW

008-569-771      That Part of District Lot 81, Alberni District, Shown Outlined
                 in Red on Plan 890 RW, Except Part in Parcel A (DD 3333N), and
                 Except Part in Plan 2192

008-569-240      That Part of District Lot 81, Alberni District, Outlined in Red
                 on Plan 492 RW

008-569-142      That Part of District Lot 127, Alberni District, Outlined in
                 Red on Plan 472 RW

000-818-429      That Part of Parcel C (DD 64557I), District Lot 85, Alberni
                 District, Shown Outlined in Red on Plan 889 RW, Except that
                 Part in Plan VIP56579

008-569-851      That Part of Parcel A (DD 3333N) of District Lot 81, Alberni
                 District, Outlined in Red on Plan 478 RW

000-820-474      Those Parts of Parcel C (DD 64557I), District Lot 85, Alberni
                 District, Shown Outlined in Red on Plan 486 RW, Except that
                 Part in Plan VIP56579

008-593-906      That Part of Parcel C (DD 20890N) of District Lot 86, Alberni
                 District, Outlined in Red on Plan 464 RW

008-593-922      That Part of Parcel D (DD 526N) of District Lot 86, Alberni
                 District, Outlined in Red on Plan 464 RW

025-030-396      Lot 5 District Lot 5 Alberni District Plan VIP72153 See Plan
                 for Limited Access - Access by Water Only

008-569-720      That Part of District Lot 127, Alberni District, Shown Outlined
                 in Red on Plan 890 RW

024-379-603      Lot A District Lot 1 and Part of the Bed of Public Harbour of
                 Alberni Alberni District Plan VIP68454

008-608-326      That Part of Parcel D (DD 526N) of District Lot 86, Alberni
                 District, Included in Plan 889 RW

008-608-300      That Part of Parcel C (DD 20890N) of District Lot 86, Alberni
                 District, Included in Plan 889 RW
</TABLE>
<PAGE>
                                       -7-


Port Alberni Waterlots

<TABLE>
<S>              <C>
(H2565)          That Portion of the bed of Port Alberni Harbour adjacent to
                 Hoik Island, Alberni District, Vancouver Island, Province of
                 British Columbia, as shown outlined in red on an Explanatory
                 Plan of Lease #152 prepared by Messrs. Acres & Pollock B.C.L.S.
                 file # 9624 and certified correct on April 13, 1988, containing
                 in the aggregate 15.549 hectares (38.42 Acres) more or less

(H1305, Lease    Part of the bed of Port Alberni Harbour, commencing at the most
1305)            southerly corner of Lease number One Hundred Forty-Nine (149)
                 in Port Alberni Harbour; thence south seven hundred fifty (750)
                 feet; thence west nine hundred (900) feet; thence north nine
                 hundred (900) feet; thence east eight hundred fifteen and nine
                 tenths (815.9) feet more or less to an intersection with the
                 southwesterly boundary of the said Lease number One Hundred
                 Forty-Nine (149); thence southeasterly and following the said
                 southwesterly boundary one hundred seventy-one and ninety-seven
                 hundredths (171.97) feet more or less to the point of
                 commencement. The whole of the hereinbefore described parcel
                 contains eighteen and forty-five hundredths (18.45) acres, be
                 the same more or less, and is shown outlined in red colour on a
                 plan prepared by Kenneth Douglas Mawle, British Columbia Land
                 Surveyor, sworn on the twenty-ninth (29th) day of December 1965

(H1140, H1301,   Lot 280-G, 27.00 acres in size; Lot 292-G, 33.54 acres in size;
H1302, H1139,    Lot 293-G, 14.75 in size; Lot 278-G, 45.40 acres in size and
H1764)           Lot 279-G, 18.00 acres in size; all of Alberni District

N/A              That strip of land lying between two lines commencing at a
                 point on the easterly boundary of Lot 5, Alberni District,
                 distant nineteen hundred and forty-five and four tenths feet
                 (1945.4 ft.) south and three hundred and twenty-one and five
                 tenths feet (321.5 ft.) east from the northwest corner thereof,
                 thence south sixty-seven degrees, twenty minutes east (S67
                 degrees20'E) a distance of eight hundred and seventy and eight
                 tenths feet (870.8 ft.) more or less, to the easterly bank of
                 the Somass River

(H1151)          Lot 126, Alberni District, and more particularly described by a
                 British Columbia Land Survey completed on December 10, 1963

(H1152)          Lot 128, Alberni District, and more particularly described by a
                 British Columbia Land Survey completed on January 20, 1964

(H1374, Lease    A portion of the foreshore and bed of Port Alberni Harbour
137)             shown outlined in red colour on a plan entitled "Plan
                 accompanying application to the Port Alberni Harbour
                 Commissioners by MacMillan Bloedel Limited for effluent pipe
                 and power cable easement through tidal lands and the bed of the
                 Somass River in Port Alberni Harbour" which said plan was sworn
                 to by Kenneth Douglas Mawle, British Columbia Land Surveyor, on
                 the 10th day of July in the year of 1970, containing in the
                 aggregate Seventy Four/One Hundredths (.74) acres (.2995 ha.)
                 more or less
</TABLE>
<PAGE>
                                       -8-


<TABLE>
<S>              <C>
(H1375, Lease    That portion covered by the waters of the Alberni Inlet
135 and 135A)    commencing at a point South Twelve degrees fifty-four minutes
                 forty seconds East (12 degrees 54' 40" E) two hundred
                 thirty-six and four tenths (236.40) feet from the most westerly
                 corner of the fourteen and six hundredths (14.06) acre parcel
                 outlined in red on Land Registry Office Plan one thousand six
                 hundred and eighty-four (1684) R; thence South eighty-three
                 degrees thirty-eight minutes twenty seconds East (S 83 degrees
                 38' 20" E) two hundred sixty-six and two tenths (266.20) feet;
                 thence South forty-eight degrees fifty-nine minutes thirty
                 seconds East (S 48 degrees 59' 30" E) seven hundred fifty (750)
                 feet; thence South thirty-nine degrees thirty-two minutes
                 twenty seconds East (S 39 degrees 32" 20" E) one hundred
                 eighty-two and twenty-seven hundredths (182.27) feet; thence on
                 a tangential circular curve to the right having a radius of one
                 hundred thirty-nine and two tenths (139.20) feet, a distance of
                 one hundred ninety-one and four hundredths (191.04) feet;
                 thence South thirty-nine degrees five minutes forty seconds
                 West (S 39 degrees 05' 40" W) one thousand eighty-one and
                 fifty-three hundredths (1081.53) feet; thence on a tangential
                 circular curve to the right having a radius of two hundred
                 twenty-four and thirty-two hundredths (224.32) feet, a distance
                 of three hundred fifty-two and forty-two hundredths (352.42)
                 feet; thence North fifty degrees four minutes thirty seconds
                 West (N 50 degrees 04' 30" W) nine hundred twenty-five and
                 seventy-four hundredths (925.74) feet; thence on a tangential
                 circular curve to the right having a radius of one hundred
                 twenty-four and forty-four hundredths (124.44) feet, a distance
                 of one hundred seventy-two and two hundredths (172.02) feet;
                 thence North twenty-nine degrees seven minutes forty seconds
                 East (N 29 degrees 07' 40" E) one hundred sixty-six and three
                 hundredths (166.03) feet; thence North forty-five degrees
                 twenty minutes East (N 45 degrees 20' E) four hundred seventy
                 and forty-five hundredths (470.45) feet; thence north
                 thirty-seven degrees fifty-three minutes, forty seconds East (N
                 37 degrees 53' 40" E) six hundred twelve and nine hundredths
                 (612.09) feet, more or less to the point of commencement,
                 containing in the aggregate 35.8 acres (14.50 ha.) more or less

(Rockfill)       Portion of the bed of the Port Alberni Harbour formerly covered
                 by water, now filled, shown outlined in red on a plan entitled
                 "Plan to Accompany Application" by MacMillan Bloedel Limited
                 for lease of part of the bed of Port Alberni Harbour, which
                 said plan was sworn to by Kenneth Douglas Mawle, British
                 Columbia Land Surveyor, on the 16th day of December, 1970

(H1671, Lease    Those certain parcels or tracts of land situate lying and being
109)             in the bed of Alberni Harbour and consisting of strips of said
                 bed lying between two lines drawn parallel to, and
                 perpendicularly distant 25 feet from and on opposite sides of,
                 a centre line and terminated by high water mark, said centre
                 line being more particularly described as follows:

                 A. Commencing at a point 290.45 feet north of the southerly
                 boundary of Parcel A of Lots 2 and 6 (D.D. 13188N), Alberni
                 District, and 1614.88 feet on bearing N 85 degrees 34' E from
                 the southwest corner of said Parcel A; thence S 73 degrees 38'
                 E 419.3 feet, said strip of land containing 0.481 acres more or
                 less

                 B. Commencing at a point 101.3 feet south of the southerly
                 boundary of Parcel A of Lots 2 and 6 (D.D. 13188N), Alberni
                 District, and 2673.74 feet on bearing N 85 degrees 34' E from
                 the southwest corner of said Parcel A; thence S 73 degrees 38'
                 E 231.8 feet, said strip of land containing 0.276 acres more or
                 less

                 C. Commencing at a point 251.5 feet south of the southerly
                 boundary of Parcel A of Lots 2 and 6 (D.D. 13188N), Alberni
                 District, and 3059.0 feet on bearing N 85 degrees 34 'E from
                 the southwest corner of said Parcel A; thence S 67 degrees 20'
                 E 168.4 feet, said strip of land containing 0.193 acres more or
                 less
</TABLE>
<PAGE>
                                      -9-


<TABLE>
<S>              <C>
(H4234)          That portion of the bed of Port Alberni Harbour adjacent to
                 Hoik Island, Alberni District, Vancouver Island, Province of
                 British Columbia, as shown outlined in red on Plan of Survey of
                 Lease #144-1 (being a subdivision of Lease Lot 144) Bed of Port
                 Alberni Harbour, British Columbia prepared by Richard Derek
                 Wright and certified correct on April 8, 1998, containing in
                 the aggregate 53.627 acres (21.7 hectares) more or less

(H1304)          That portion of the bed of Port Alberni Harbour covered by
                 water, which said portion is shown as "Lease 132, Amended Area,
                 containing 2.58 Acres 1.045 ha.), and outlined in red colour on
                 a plan entitled "Plan of Amendments to Leases 118, 119 and 132,
                 within Port Alberni Federal Harbour, Alberni District, B.C."
                 which said plan was certified correct by K.D. Mawle, British
                 Columbia Land Surveyor, on December 16, 1970
</TABLE>

Powell River Waterlots

<TABLE>
<S>              <C>
(H1276)          District Lots 4071, 4072, 5922, 5923, 6071, 6174 and 6237A,
                 Group 1 New Westminster District containing a total of 69.70
                 hectares

(H1288)          District Lot 7079 and 7240 Group 1 New Westminster District
                 containing 22.95 hectares

(H1367)          District Lot 1203 Group 1 New Westminster District, containing
                 50.59 hectares

(H1287)          District Lot 7078 Group 1 New Westminster District, containing
                 18.7 hectares
</TABLE>

Leased:

Real Property Leases

<TABLE>
<CAPTION>
PID              Legal Description
---              -----------------
<S>              <C>
005-003-580      District Lot 541, Block 52 (EP9962), Plan 210 and Parcels A, B,
                 C et al, Toronto Dominion Tower, 700 West Georgia, Vancouver
                 (Originally 81760 Sq. Ft. Floors 7-11 amended numerous times)
                 Head Lease Bos HQ FCCL

007-388-411      Sections 2 and 3, Chemainus Lot 6, Range 10, Plan 1471, Gas
                 Monitoring Trailer Site, Cecil Street, Crofton P&P (Fletcher
                 Challenge Canada Limited)

023 512 512      Lot 1 District Lot 12 and 13 Group 2 and of the Bed of the
                 Fraser River New Westminster District Plan LMP29318

009 523 197      Lot 1 of the Bed of the Fraser River New Westminster District
                 Plan 76570

004 501 110      Lot 14 District Lots 9, 10 and 11 Group 2 New Westminster
                 District Plan 41612

007-913-362      Lot 24, Block 33, District Lot 541, Plan 210, 580 Granville
                 Street (sublease of 5860 sq. ft. on the second floor)

007-913-397      Lot 25, Block 33, District Lot 541, Plan 210 (see Lot 24 above)

007-913-435      Lot 26, Block 33, District Lot 541, Plan 210 (see Lot 24 above)

010-240-004      Block 42, District Lot 541, Plan 210, except Plan 18901 and
                 EP13277 (month to month lease of offices 46 & 47 at 1500-701
                 West Georgia Street, note that the legal description includes
                 all of Pacific Centre not just offices 46 &47)
</TABLE>

Nature of Business: Paper Manufacturing

Jurisdictions in which its property other than accounts receivable is located:
British Columbia
<PAGE>
                                      -10-


Capital Stock Holdings:

<TABLE>
<CAPTION>
Corporation                                  Certificate No.   Number and Class Of Securities
-----------                                  ---------------   ---------------------------------
<S>                                          <C>               <C>
Elk Falls Pulp and Paper Limited                     3         1 common share
Elk Falls Forest Industries Limited                  4         1,000 common shares
                                                     5         1,699,200 common shares
                                                     6         4,500,000 common shares
Norske Skog Canada (Japan) Ltd.                  C No.003      1,000 shares
Norske Skog Canada Pulp Operations Limited           6         53,683,253 common shares
                                                     7         46,026,332 common shares
                                                     8         24,474,668 common shares
                                                     9         1 common share
Norske Skog Canada Sales Inc.                        7         1,000 common shares
3264904 Canada Limited                               3         1 common share
468327 B.C. Ltd.                                    2-C        2,000 common shares
British Columbia Forest Products Limited             3         1 common share
Catalyst Paper Corporation (B.C.)                    2         1 common share
Catalyst Paper Corporation (Canada)                  2         1 common share
Crofton Pulp and Paper Limited                       9         2 common shares
Echelon Paper Corporation (B.C.)                     2         1 common share
Echelon Paper Corporation (Canada)                   2         1 common share
Export Sales Company Limited (formerly               8         10 common shares
Mackenzie Forest Products Limited n/c
Dec.11/01)
NSC Holdings (Barbados) Limited                                100% of capital stock
                                                               (details unknown)
NSC Holdings (Philippines) Inc.                  (unknown)     79,475 common shares
NSCL Holdings Inc.                                   4         1,000 common stock
Pacifica Poplars Ltd.                                8         90,001 common shares
Pacifica Papers Sales Ltd.                           4         1 common share
Pacifica Papers Kabushiki Kaisha                   X0001       1,000 shares
NorskeCanada                                        A1         124,070 Class A Units
                                                    A3         118,224 Class A Units
                                                    A5         84,455 Class A Units
                                                    B1         8,317 Class B Units
                                                    B3         5,913 Class B Units
Powell River Energy Inc.                             4         50,001 common shares
Powell River Energy Limited Partnership       Not applicable   49.95% interest (no units issued)
Norske Skog Canada Finance Limited                   3         10 common shares
</TABLE>

2.   NORSKE SKOG CANADA FINANCE LIMITED

<TABLE>
<S>                   <C>
Capital Stock:        Authorized Capital: 10,000 Common Shares without par value

                      Issued and outstanding Shares: 10 Common Shares

                      Members: Norske Skog Canada Limited

Head Office:          9th Floor, 700 West Georgia Street P.O. Box 10058 Pacific
                      Centre Vancouver, British Columbia V7Y 1J7

Real Property:

Owned:                Nil

Leased:               Nil

Nature of Business:   To borrow funds and lend them on to the Norske Group of
                      Companies
</TABLE>
<PAGE>
                                      -11-


Jurisdictions in which its property other than accounts receivable is located:
British Columbia

Capital Stock Holdings: Nil

3.   NORSKE SKOG CANADA PULP OPERATIONS LIMITED

<TABLE>
<S>                       <C>
Capital Stock:            Authorized capital: 500,000,000 common shares without
                          par value

                          Issued and outstanding shares: 124,189,254 common
                          shares

                          Members: Norske Skog Canada Limited

Head Office:              9th Floor, 700 West Georgia Street
                          P.O. Box 10058 Pacific Centre
                          Vancouver, British Columbia
                          V7Y 1J7

Real Property:

Owned:                    Nil

Leased:                   Nil

Nature of Business:       Pulp Manufacturing
</TABLE>

Jurisdictions in which its property other than accounts receivable is located:
British Columbia

Capital Stock Holdings:

<TABLE>
<CAPTION>
Corporation                           Certificate No.   Number and Class Of Securities
----------                            ---------------   ------------------------------
<S>                                   <C>               <C>
Norske Skog Canada Pulp Sales Inc.           3          1 common share
Norske Skog Pulp Sales (Japan) Ltd.      B No.001       600 shares
Allwin Technical Services Inc.               2          1 common share
                                             4          1,349,999 common shares
                                             5          1,350,000 common shares
NorskeCanada                                A2          15,444 Class A Units
                                            A4          111,697 Class A Units
                                            A6          25,304 Class A Units
                                            B2          1,683 Class B Units
                                            B4          4,087 Class B Units
</TABLE>

4.   ELK FALLS PULP AND PAPER LIMITED

<TABLE>
<S>              <C>
Capital Stock:   Authorized capital: 10,000,000 common shares without par value

                 Issued and outstanding shares: 1 common share

                 Members: Norske Skog Canada Limited

Head Office:     9th Floor, 700 West Georgia Street P.O. Box 10058 Pacific
                 Centre Vancouver, British Columbia V7Y 1J7

Real Property:

Owned:
</TABLE>
<PAGE>
                                      -12-


<TABLE>
<CAPTION>
PID:          Legal Description:
----          ------------------
<S>           <C>
000 849 731   District Lot 120 (DD 2157781) Sayward District Except Part in
              Plans 14946 and VIP57724
000 849 821   That part of District Lot 67 Sayward District shown outlined in
              red on Plan 1374 RW
000 848 905   Lot A DL 68 Sayward District Plan 20538
000 849 561   That part of DL 151 Sayward District shown outlined in red on Plan
              1433R
000 849 502   That Part of DL 163 Sayward District shown outlined in red on Plan
              1431R
001 233 475   Block B of Lot 1504 Sayward District
001 233 467   Block C of Lot 1504 Sayward District
001 233 459   Block D of Lot 1504, Sayward District
000 848 913   Lot 1 DL 68 Sayward District Plan 16712
000 849 855   That part of DL 52 Sayward District shown outlined in red on Plan
              659 RW
000 849 847   That part of DL 67 Sayward District shown outlined in red on Plan
              659 RW
000 849 910   District Lot 26 Sayward District except part in Plans 34604 and
              42540
000 848 921   Lot 1 DL 109 Sayward District Plan 16956
000 849 430   District Lot 164 Sayward District shown outlined in red on Plan
              1431R
001 233 432   District Lot 109 Sayward District except Parcel A (DD 285472-I)
              and those parts in Plans 1373-R, 16956, 19371, 50636 and VIP54479
              and VIP64521
001 233 441   Lot 1599 Sayward District except that portion in Plan VIP 64521
000 846 287   District Lot 2 Sayward District except those parts in Plans 19371,
              42540, 50636, VIP 64521 and VIP 64522
015 101 231   Amended Bl 24 (See 235568L) DL 313 Plan 827
015 101 240   Lot A (See M51221L) Bl 23 DL 313 Plan 827
</TABLE>

Note: Elk Falls Pulp and Paper Limited holds legal title only to the above
properties. Norske Skog Canada Limited holds beneficial title.

Leased:

<TABLE>
<CAPTION>
PID:                  Legal Description:
----                  ------------------
<S>                   <C>
N/A                   Site Lease CNR #10763, NWD PT FR Sections 1 and 2, B5NR2W
                      TP38, Port Mann Chip Loading Site, 14021 Port Mann Shore
                      District of Surrey, Fibre Supply EFFIL (Elk Falls Pulp and
                      Paper Limited)

Nature of Business:   Bare Trustee
</TABLE>

Jurisdictions in which its property other than accounts receivable is located:
British Columbia

Capital Stock Holdings: Nil

5.   NORSKE SKOG CANADA SALES INC.

<TABLE>
<S>              <C>
Capital Stock:   Authorized capital: 10,000 common shares without par value

                 Issued and outstanding shares: 1,000 common shares

                 Members: Norske Skog Canada Limited

Head Office:     9th Floor, 700 West Georgia Street P.O. Box 10058 Pacific
                 Centre Vancouver, British Columbia V7Y 1J7

Real Property:

Owned:           Nil

Leased:          Nil
</TABLE>
<PAGE>
                                      -13-


Nature of Business: Pulp and Paper Sales

Jurisdictions in which its property other than accounts receivable is located:
British Columbia, Alberta

Capital Stock Holdings: Nil

6.   NORSKE SKOG CANADA PULP SALES INC.

<TABLE>
<S>                       <C>
Capital Stock:            Authorized capital: 100,000,000 common shares without
                          par value

                          Issued and outstanding shares: 1 common share

                          Members: Norske Skog Canada Pulp Operations Limited

Head Office:              9th Floor, 700 West Georgia Street
                          P.O. Box 10058 Pacific Centre
                          Vancouver, British Columbia
                          V7Y 1J7

Real Property:

Owned:                    Nil

Leased:                   Nil

Nature of Business:       Fibre Sales
</TABLE>

Jurisdictions in which its property other than accounts receivable is located:
British Columbia

Capital Stock Holdings: Nil

7.   NORSKE SKOG PULP SALES (JAPAN) LTD.

<TABLE>
<S>                       <C>
Capital Stock:            Authorized capital: 800 shares with a par value of
                          Y50,000 each

                          Issued and outstanding shares: 600 shares

                          Members: Norske Skog Canada Pulp Operations Limited

Head Office:              Ginza Fujiya Building 6F
                          3-1 Ginza 1-chome, Chuo-ku
                          Tokyo 104-0061, Japan
</TABLE>
<PAGE>
                                      -14-


<TABLE>
<S>                       <C>
Real Property:

Owned:                    Nil

Leased:                   Nil

Nature of Business:       Pulp Sales
</TABLE>

Jurisdictions in which its property other than accounts receivable is located:
Japan

Capital Stock Holdings: Nil

8.   NORSKE SKOG CANADA (JAPAN) LTD.

(known as Fletcher Challenge Paper Sales (Japan) Ltd. until 1 August 2001)

<TABLE>
<S>                       <C>
Capital Stock:            Authorized capital: 4,000 shares with a par value of Y
                          50,000 each

                          Issued and outstanding shares: 1,000 shares

                          Members: Norske Skog Canada Limited

Head Office:              Ginza Fujiya Building 6F 3-1 Ginza 1-chome, Chuo-ku
                          Tokyo 104-0061, Japan

Real Property:

Owned:                    Nil

Leased:                   Nil

Nature of Business:       Pulp and Paper Sales.
</TABLE>

Jurisdictions in which its property other than accounts receivable is located:
Japan

Capital Stock Holdings: Nil

9.   NSCL HOLDINGS INC.

<TABLE>
<S>                       <C>
Capital Stock:            Authorized capital: 1,000,000 common stock with a par
                          value of US$1 each

                          Issued and outstanding shares: 1,000 common stock

                          Members: Norske Skog Canada Limited

Head Office:              Suite 700, Waterfront Place Building 1101 Western
                          Avenue Seattle, Washington 98101

Real Property:

Owned:                    Nil

Leased:                   Nil

Nature of Business:       Holding Company
</TABLE>

Jurisdictions in which its property other than accounts receivable is located:
not applicable (holding company)
<PAGE>
                                      -15-


Capital Stock Holdings:

<TABLE>
<CAPTION>
Corporation                                Certificate No.   Number and Class Of Securities
-----------                                ---------------   ------------------------------
<S>                                        <C>               <C>
Norske Skog Canada (USA) Inc.                     4          1,000 common stock
Arizona Newsprint Industries Corporation          4          1,000 common stock
NSC Fibre Inc.                                    2          1,000 common stock
Pacifica Papers US Inc.                           7          100 common shares
</TABLE>

10.  NORSKE SKOG CANADA (USA) INC.

(Known as Norske Skog Paper Company until 13 September 2001)

<TABLE>
<S>                       <C>
Capital Stock:            Authorized capital: 1,000,000 common shares

                          Issued and outstanding shares: 1,000 common shares

                          Member: NSCL Holdings Inc.

Head Office:              Suite 700, Waterfront Place Building 1101 Western
                          Avenue Seattle, Washington 98101

Real Property:

Owned:                    Nil

Leased:                   Nil

Nature of Business:       Pulp and Paper Sales
</TABLE>

Jurisdictions in which its property other than accounts receivable is located:
California, Colorado, Illinois, Washington, Oregon, Alabama, Michigan

Capital Stock Holdings:

<TABLE>
<CAPTION>
Corporation                     Certificate No.   Number and Class Of Securities
-----------                     ---------------   ------------------------------
<S>                             <C>               <C>
Norske Skog North America LLC   Not applicable    50% equity interest
</TABLE>

11.  NORSKECANADA

<TABLE>
<S>                  <C>
Partnership Units:   Authorized units: Unlimited number of Class A Units and
                     Class B Units

                     Issued and outstanding units: 479,194 Class A Units and
                     20,000 Class B Units

                     Partners: Norske Skog Canada Limited and Norske Skog Canada
                     Pulp Operations Limited

Head Office:         9th Floor, 700 West Georgia Street P.O. Box 10058 Pacific
                     Centre Vancouver, B.C. V7Y 1J7

Real Property:

Owned:               Nil
</TABLE>
<PAGE>
                                      -16-


Leased:

<TABLE>
<CAPTION>
PID:          Legal Description:
----          ------------------
<S>           <C>
009-021-558   Section 2, Chemainus Lot A Range 6 and 7, Plan 45436, Gas
              Monitoring Trailer Site, Nimmo Road, Crofton P&P

000-222-437   Sections 12 and 13, Lot 4, Range 2, Plan 32988, Comaiken, Gas
              Monitoring Trailer Site Located at 7338 Walton Mountain Road,
              Crofton P&P

N/A           District Lot 196, PT Lots 25, 26, 27, 28, Block 43, District Plan
              198, 625 Powell Street, Vancouver (basement storage space) Bos
              FCCL (also contains TWFL historical records)
</TABLE>

Provincial Water Lot Leases

Crofton Facility:

<TABLE>
<S>           <C>
N/A           W/Lot Lease #102130 - District Lot 107G; Blk D Chemainus (Prev.
              #13180) Log Booming & Wharfage (Sublet 15 Dec 1993 Stuart Channel
              Wharves)

N/A           W/Lot Lease #102653 - District Lot 107G; Blk A & B Chemainus
              (Prev. #13181) Warehouse & Dock #1 & #2 & Part Stuart Channel
              Wharves Dock #3 (.2274 AC. SCW)

N/A           W/Lot Lease #101412 - Lot 161; Blk B Cowichan Log Storage,
              Shipping & Industrial PT

N/A           W/Lot Lease #106051 - DL 565, 676, 2008; Blk E Cowichan (Prev.
              #101709 & PT 103929) Log Dumping, Booming, Storage, Scow & Chip
              Barge Moorage, Industrial Purposes
</TABLE>

Elk Falls Facility:

<TABLE>
<S>           <C>
N/A           W/Lot Lease #101447 - Blk A Lot 1504; Sayward (Prev. #29554)
              Duncan Bay Fronting Pulp Mill Complex

N/A           W/Lot Lease #100785 - Lot 411 and Lot 1516; Blk B Sayward Duncan
              Bay next to Middle Point Barge Tie Up & Log Storage (Upland DL
              2,26)
</TABLE>

Federal Water Lot Leases

<TABLE>
<S>           <C>
N/A           W/Lot Lease #05020, between the North Fraser Port Authority
              (landlord) and Norske Skog Canada Limited (tenant), for a Chip
              Loading Site Fronting Kent Avenue (0.806 ha.)

N/A           W/Lot Lease #E-04-06, between the Fraser River Port Authority
              (landlord) and 3264912 Canada Limited (now Norske Skog Canada Pulp
              Operations Limited), for a Barge Tie-up & Fiber Supply Loading
              Area near Port Mann (2.248 ha.)
</TABLE>

Nature of Business: Operation of pulp and paper manufacturing facilities

Jurisdiction in which its property other than accounts receivable is located:
British Columbia

Capital Stock Holdings: Nil

12.  PACIFICA PAPERS SALES LTD.

<TABLE>
<S>              <C>
Capital Stock:   Authorized capital: 500,000,000 common shares
                 Issued and outstanding: 1
                 Member: Norske Skog Canada Limited

Head Office:     9th Floor, 700 West Georgia Street
                 P.O. Box 10058 Pacific Centre
                 Vancouver, B.C. V7Y 1J7
</TABLE>
<PAGE>
                               -17-


Real Property:

Owned: Nil

Leased: Nil

Nature of Business: Canadian marketing agent

Jurisdiction in which its property other than accounts receivable is located:
British Columbia

Capital Stock Holdings: Nil

13.  PACIFICA POPLARS LTD.

<TABLE>
<S>              <C>
Capital Stock:   Authorized capital: 100,000 common shares
                 Issued and outstanding: 90,001
                 Member: Norske Skog Canada Limited

Head Office:     9th Floor, 700 West Georgia Street
                 P.O. Box 10058 Pacific Centre
                 Vancouver, B.C. V7Y 1J7

Real Property:
</TABLE>

Owned:

<TABLE>
<CAPTION>
PID:          Legal Description:
----          ------------------
<S>           <C>
023-636-271   Lot 2, District Lots 60 and 130, Alberni District,
              Plan VIP64541

007-622-317   Lot 22, Loop Farms, Alberni District, Plan 1297 Except
              that Part in Plan VIP65075

007-622-376   Lot 25, Loop Farms, Alberni District, Plan 1297

007-622-392   Lot 26, Loop Farms, Alberni District, Plan 1297

009-531-238   District Lot 101, Comox District

003-838-935   Lot A, Block 29, Comox District, Plan 3433, Except
              that Part thereof Lying to the South of the Southerly
              Boundary of Dove Creek Road as said Road is Described
              in B.C. Gazette Dated 31.08.1933, Page 1273, and
              Except that Part thereof included within the
              Boundaries of Plan 1551R

008-921-253   The Fractional South West 1/4 of Section 23, Township
              9, Comox District, Plan 552G

008-921-326   The Fractional South East 1/4 of Section 23, Township
              9, Comox District, Plan 552G

000-101-745   The West 1/2 of the North East 1/4, Section 8,
              Township 3, Sayward District, Except the South West
              1/4 of the North East 1/4 of said Section 8, Township
              3, Sayward District, Except Part in Plan 40329

000-101-826   The East 1/2 of the North West 1/4, Section 8,
              Township 3, Sayward District, Except Parts Shown
              Coloured Red and Yellow on Plan 280 RW
</TABLE>
<PAGE>
                                      -18-


<TABLE>
<CAPTION>
PID:          Legal Description:
----          ------------------
<S>           <C>
023-964-146   Lot A, Section 18, Township 7 and Lot 280, Sayward District, Plan
              VIP66279

025-030-264   Lot 2 of District Lots 2 2A 6 and 66 Alberni District Plan
              VIP72153

025-030-213   Lot 1 of District Lots 2A and 6 Alberni District Plan VIP72153

000-174-246   Lot A, District Lot 81, Alberni District, Plan 32673

010-276-556   Block 36, Except 9(A) Those Portions in Plans 8230, 8368, 8765,
              9240, 10196, 12203, 12273, 13678, 13855, 13904, 14438, 14728,
              14857, 15509 and 15920 (B) Part outlined green on Explanatory Plan
              3126 (C) Parcel 7 (Reference Plan 5651) and Part subdivided by
              Plan LMP25234 District Lot 450 Group 1 New Westminster District
              Plan 8096

023-209-119   Lot B District Lot 450 Group 1 New Westminster District Plan
              LMP25234

010-274-847   The Closed Part of the Powell River-Westview Road Shown Outlined
              in Green on Reference Plan 3470 Block 36 District Lot 450 Plan
              8096

010-267-409   Block 56, Except Part in Plan 12767, District Lot 450 Plan 8096
</TABLE>

Leased:

Real Property Leases

     Lease from Bruce & Diane Beacham of Lot A, Block 29, Comox District, Plan
     VIP65659

     Lease from Raymond E. Hockey & Wanda L. Hockey of Lot 53, District Lot 8,
     Cameron District, Plan 1981

     Lease from Robert H. Hanyes of Part of Lot 1, District Lot 107, Plan 18030
     Alberni Land District

     Lease from Ed & Leslie Gee of Part of Lot 1, Section 27, Township 9, Comox
     District, Plan 41139

     Lease from John & Margrith Shaughnessy of Part of Lot 40, Block 29, Comox
     District, Plan 2262,

     Except Part in Plan 38715 as shown in red on the attached plan and
     comprising of 29.8 acres (2.06 HA), more or less

     Lease from Irene Wenngatz of that Part of District Lot 19, Nanoose
     District, except that part included within the boundaries of Plan 13475,
     containing approximately 13.32 HA (Northern Portion)

     Lease from Irene Wenngatz of that Part of District Lot 19, Nanoose
     District, except that part included within the boundaries of Plan 13475,
     containing approximately 16.6 HA (Southern Portion)

     Lease from HIPP Enterprises Ltd. of that Part of the South 1/2 of District
     Lot 83, Nanoose District,

     Except Amended Parcel B (DD14401N) and Except the R/W of the E&N Railway
     Company shown colored red on plan deposited DD9088F and except that Part in
     Plan 13475, containing approximately 6.38HA

     Lease from Inder Singh Gill & Hachhatter Sing Gill of Part of Section 7,
     Township 14, New Westminster District Plan LMP 1570 (H4018)

     Lease from Morrison Gardens Ltd. of that Part of Lot 1 Except: Part
     Dedicated Road on Plan 69971, Section 14, Township 11, New Westminster
     District Plan 4534 as outlined in red on the attached plan and comprising
     an area of 35 acres (22.5 HA), more or less

     Lease from Gurdarshen Singh of Part of the West Half of the North East
     Quarter Section 29, Township 26, New Westminster District

     Lease from Alphonse Joseph Knapp and Bernadette Knapp of Part of the North
     Half of DL 8, Group 1 Except 1 PCL C (Plan B427) 2. Pt of Plan 6465, 3. PCL
     "B" (Ref Plan 11261), 4. PT PCL "14" Plan 8809, 5. PT of Plan 27426A, 6 PT
     Subdiv by Pl 11421, 7. PT in Expl Plan 11824, 8.PT Subd by Plan 36609, 9.
     Part on Hwy Pl 47424, 10. Part Subd by Plan 52465, Yale Div, Yale Dist,
     Containing 45 Acres more or less

     Lease from Lester & Sheila Gentry of Part of Lot 1, Section 32 and Section
     33, Township 4, Range 27, West of the 6th Meridian, New Westminster
     District Plan 27690, and Part of Lot 1, District Lot 55
<PAGE>
                                      -19-


     "A", Group 1, Yale Division of Yale District, Plan 15730 as shown in red on
     the attached print and comprising 35 acres (14.16 HA) more or less

     Lease from Fran Rudolph Krimmel of Lot 9 Section 11 Township 18 Westminster
     District Plan 3529

     Lease from Emil H. Clancy of Part of Lot 1 District Lot 4169 Group 1 New
     Westminster District in

     West Half of District Lot 4168 Except Plan 7623 Group 1 New Westminster
     District

     Lease from Mrs. Pluck of Lot 52, District Lot. 8, Cameron District, Plan
     1981

     Lease from Ms. Thomas of part of Lot 25, District Lot 8, Cameron District,
     Plan 1981

Nature of Business: Canadian poplar tree plantation business

Jurisdiction in which its property other than accounts receivable is located:
British Columbia

Capital Stock Holdings: Nil

14.  PACIFICA PAPERS KABUSHIKI KAISHA

<TABLE>
<S>                   <C>
Capital Stock:        Authorized capital: 2,000 shares with par value of Y50,000
                      per share Issued and outstanding: 1,000 Member: Norske
                      Skog Canada Limited

Head Office:          Ginza Fujiya Building 6F 3-1 Ginza 1-chome, Chuo-ku Tokyo
                      104-0061, Japan

Real Property:

Owned:                Nil

Leased:               Nil

Nature of Business:   Selling agent in Japan
</TABLE>

Jurisdiction in which its property other than accounts receivable is located:
Japan

Capital Stock Holdings: Nil

15.  PACIFICA PAPERS US INC.

<TABLE>
<S>                       <C>
Capital Stock:            Authorized capital: 1,000 common shares Issued and
                          outstanding: 100 Member: NSCL Holdings Inc.

Head Office:              The Corporation Trust Company Corporation Trust Center
                          1209 Orange Street Wilmington, DE 19801 USA

Chief Executive Office:   Suite 700, Waterfront Place Building 1101 Western
                          Avenue Seattle, Washington 98101
</TABLE>
<PAGE>
                                      -20-


Real Property:

<TABLE>
<S>                   <C>
Owned:                Nil

Leased:               Nil

Nature of Business:   U.S. holding company
</TABLE>

Jurisdiction in which its property other than accounts receivable is located:
Washington

Capital Stock Holdings:

<TABLE>
<CAPTION>
Corporation                  Certificate No.   Number and Class Of Securities
-----------                  ---------------   ------------------------------
<S>                          <C>               <C>
Pacifica Papers Sales Inc.           8         100 common shares
Pacifica Poplars Inc.               11         850 shares of common stock
</TABLE>

16.  PACIFICA PAPERS SALES INC.

<TABLE>
<S>                       <C>
Capital Stock:            Authorized capital: 1,000 common shares Issued and
                          outstanding: 100 Member: Pacifica Papers US Inc.

Head Office:              The Corporation Trust Company Corporation Trust Center
                          1209 Orange Street Wilmington, DE 19801 USA

Chief Executive Office:   Suite 700, Waterfront Place Building 1101 Western
                          Avenue Seattle, Washington 98101

Real Property:

Owned:                    Nil

Leased:                   Nil

Nature of Business:       U.S. marketing agent
</TABLE>

Jurisdiction in which its property other than accounts receivable is located:
Washington

Capital Stock Holdings: Nil

17.  PACIFICA POPLARS INC.

<TABLE>
<S>                       <C>
Capital Stock:            Authorized capital: 1,000 shares of common stock
                          Issued and outstanding: 850 Member: Pacifica Papers US
                          Inc.

Head Office:              The Corporation Trust Company Corporation Trust Center
                          1209 Orange Street Wilmington, DE 19801 USA
</TABLE>
<PAGE>
                                      -21-


<TABLE>
<S>                       <C>
Chief Executive Office:   Suite 700, Waterfront Place Building
                          1101 Western Avenue
                          Seattle, Washington  98101
</TABLE>

Real Property:

Owned:

<TABLE>
<CAPTION>
Property Record
  & File Nos.      Title No.   Legal Description
---------------   ----------   -----------------
<S>               <C>          <C>
F-4098            9610110803   N/E 1/4 & portion of the E 1/2 of the NW 1/4 of
4101-01                        Section 11, Township 26N, Range 6 E.W.M., King
                               County, except a portion of the NE 1/4 Section 11,
                               Township 26N, Range 6 East W.M.

F-4118            9701140877   The S 1/2 of the SE 1/4 and that portion of the
4102-01                        SE 1/4 of the SW 1/4, Section 11, Township 26N,
                               Range 6 East, W.M., King County.

F-4114            9701100908   That portion of the N 1/2 of the NW 1/4 and
4103-01                        portion of the NW 1/4 of the NE 1/4 of Section 14,
                               Township 26N, Range 6 East, W.M., King County.

F-4051            9601030073   Parcel A, part of the east 6 acres of the SW 1/4
4301-01                        of the SE 1/4 of Section 6, lying south & west of
                               Conner Slough, and part of Gov't Lot 2, lying
                               south & west of Conner Slough, Section 7, all
                               within TWP 35N, Range 3 East of W.M., (See deed
                               for full legal).

F-4080            9604100060   Part of the SW 1/4 of the NE 1/4 and the W 1/2 of
4302-01                        the SE 1/4 of the NE 1/4, all in Section 2,
                               Township 34N, Range 4 E.W.M., except County Road
                               R/W's. Also, part of the N 1/2 of the SE 1/4 of
                               Section 2, TWP 34N, Range 4 E.W.M., Skagit
                               County.

F-4145            9703140056   That portion of Lot 3, of Short Plat No. 51-81,
4302-06                        lying north of the County Road known as Mud Lake
                               Road previously known as Noah Stevens Road,
                               Township 34N, Range 4 East, W.M. (See deed for
                               full legal description).

F-4084            9606040120   The S 1/2 of the NW 1/4 and the N 1/2 of the SW
4304-01                        1/4 in Sec. 4, Township 35N, Range 3 E, W.M.,
                               except roads and drainage ditch rights-of-way,
                               and except that portion, in any, lying south of
                               the north line of the south 80 acres of said SW
                               1/4, Section 4, Plan 9.

F-4088            9608120155   Parcel "A" the E 1/2 of the SE 1/4 of the NE 1/4
4305-01                        of Section 2, Township 34N, Range 4 E.W.M.,
                               except County Road & Parcel "B" the portion of
                               the W 1/2 of the SW 1/4 of the NW 1/4 & that
                               portion of the SW 1/4 of Section 1, Township 34N,
                               Range 4E.

F-4117            9709090008   Portions of Government Lots 1 & 2 of Section 7,
4306-01                        Township 34N, Range 3 East, W.M., Government Lot
                               2 and portion of Government Lot 3, of Section 1,
                               Township 34N, Range 2 East, W.M., and portion of
                               the North 1/2, Section 12, Township 34N, Range.

F-4127            9710100109   Tract 2 of Skagit County Short Plat No. 97-0056
4307-01                        approved September 8, 1997, recorded September
                               17, 1997, in Volume 13, page 36-38 of Short
                               Plats, under auditor's file No. 9709170034, being
                               a portion of Northeast 1/4 of Section 12,
                               Township 34N, Range 2 East; except that portion
                               described by quit claim deed dated the 1st of
                               June, 1999.

F-4040            9508290366   Parcel A - Sec 19, TWP 28N, Range 6 E,W.M. and
4501-01                        Parcel B - Sec 20, TWP 28N, Range 6 E, W.M. (see
                               deed for full legal).

F-4041            9508020290   Those portions of Government Lots 6 & 7 of Sec
4502-01                        13; the NW 1/4 of Government Lots 3 & 4 and the N
                               1/2 of the S 1/2 of Sec 14; the E 1/2 of Sec 15;
                               and Government Lot 7 of Section 10; all in
                               Township 28N, Range 5 East, W.M., Snohomish
                               County (see deed for details).

F-4034            9506290020   The NW 1/4 of the SW 1/4, Section 26, lying west
4503-01                        of SR 530 (Parcel A); Government Lot 1, Section
                               35 (Parcel B); Government Lot 1, Section 36
                               (Parcel C), all within Township 32N, Range 4
                               East, W.M., all situate in the County of
                               Snohomish. (see deed for full legal).

F-4052            9512280191   Parcel A being part of Section 16, Township 28N,
4504-01                        Range 5 East, W.M.; Parcel B being part of the NW
                               1/4 of the SW 1/4 of Section 15, Township 28N,
                               Range 5 East, W.M.; and Parcel C being Lot 5,
                               Stetcher acre tracts, all situate within
                               Snohomish County.
</TABLE>
<PAGE>
                                      -22-


<TABLE>
<CAPTION>
Property Record
  & File Nos.      Title No.   Legal Description
---------------   ----------   -----------------
<S>               <C>          <C>
F-4055            9512050402   Parcel A, being the E 3/4ths of the NE 1/4 of
4505-01                        the SW 1/4; & the E 1/2 of the E 1/2 of the SE
                               1/4 of the SW 1/4 of Sec 15 Parcel B, being, the
                               SW 1/4 of the SE 1/4 of Sec 15, Parcel C, being a
                               20' wide road easement; Parcel D, being part of
                               the NE 1/4 of Section 22, TWP 28

F-4081            9602160309   That portion of Government Lots 8 & 14 and SE
4506-01                        1/4 of the SW 1/4, Sec 6; and portions of the NE
                               1/4 and the NW 1/4, N 1/2 of the NE 1/4, Sec 1/4
                               of the NW 1/4, and SW 1/4 of the NE 1/4, Sec 7;
                               all in TWP 27N, Rng 6 E.W.M. Snohomish County.

F-4083            9604300349   Part of the NE 1/4 of the NW 1/4 of Sec 16 and
4507-01                        part of the SW 1/4 of the NW 1/4 of Sec 16, TWP
                               28N, Rng 5 E. W.M.; also Lot 1, Stetcher acre
                               tracts know as Lot 2 of BLA 95233, situated in
                               Snohomish County.

F-4086            9602290717   SW 1/4 of the SW 1/4, W 3/4 of the SE 1/4 of the
4508-01                        SW 1/4, W 1/2 of the W 1/2 of the NE 1/4 of the
                               SW 1/4, all in Section 15, the S 1/2 of the SE
                               1/4 of Sec 16, the N 1/2 of the N 1/2 of the NE
                               1/4 of the NE 1/4 of Section 21; Township 2.

F-4087            9606120171   All that portion of the north half of the NE 1/4
4509-01                        of Section 27, Township 28N, Range 6 East, W.M.,
                               lying westerly of State Road No. 2, except the NW
                               corner of the NE 1/4 of the NW 1/4; thence east
                               40 feet; thence south 81 feet; thence west 540
                               feet.

F-4093            9607150122   Beginning at the NW corner of the NE 1/4 of the
4510-01                        SE 1/4 of Sec 19, TWP 28N, Rng 6 E. W.M.; thence
                               north along the West line of the SE 1/4 of the NE
                               1/4 of said Sec 19 to the intersection with the
                               southerly right of way line of the Puget Sound
                               Traction Ligh.

F-4091            9607150124   The SE 1/4 of the SW 1/4 of the NE 1/4 of Section
4511-01                        27, Township 28N, Range 6 E., W.M., less State
                               Highway 2. Together with that portion of the S
                               1/2 of the SE 1/4 of the NW 1/4 of said Section
                               27, lying easterly of State Highway 2 (see
                               attached F).

F-4090            9607150179   Parcels A, B & C, Snohomish County, described as
4512-01                        the N 1/2 of the SE 1/4 of the NW 1/4; all that
                               portion of the N 1/2 of the S 1/2 of the NE 1/4;
                               all in Section 27, Township 28N, Range 6 E.W.M.,
                               (see title for full legal).

F-4092            9609130400   Parcel "A" in Gov't Lot 5; Parcel "B-1" in the
4513-01                        SE 1/4 of the SE 1/4; Parcel "B-2" the south 25'
                               of SE 1/4 of the SE 1/4 plus the south 25' of the
                               east 165 feet of the SW 1/4 of the SE 1/4 all
                               located in Sec 36, TWP 27 N, Rng 6 E.W.M.; Parcel
                               "B-3" part of Gov't Lot.

F-4094            9609130263   That portion of the SE 1/4 of the SW 1/4 of Sec
4514-01                        8, and that portion of the NE 1/4 of the NW 1/4
                               of Sec 17, TWP 27 N, Rng 6 E.W.M., in Snohomish
                               County (see title for full legal).

F-4101            9610220418   Parcel A: portion of the W 1/2 of Sec 8, TWP 27N,
4515-01                        Rng 6E, W.M.; Parcel B: portion of the SW 1/4 of
                               Sec 8, TWP 27N, Rng 6E, W.M. & Parcel C: portion
                               of Gov't Lot 2, Sec 8 and N 1/2 of NE 1/4 of Sec
                               7, TWP 27N, Rng 6E, W.M. with exceptions

F-4097            9611150060   The NE 1/4 of the SW 1/4 of Sec 22, TWP 29N, Rng
4516-01                        5 E.W.M., except the south 30 feet, the north 20
                               feet and the west 10 feet and hereof; also except
                               that portion lying within Cherry Avenue.

F-4134            9711180246   Parcel A: the W 1/2 of the SW 1/4 of Sec 22;
4518-01                        Parcel B: the SE 1/4 of the SE 1/4 and the E 1/2
                               of the NE 1/4 of the SE 1/4 of Sec 21; Parcel C:
                               the NE 1/4 of the NE 1/4 of Sec 28; all in TWP
                               28N, Rng 6 E, W.M., with the exceptions (see
                               title for full legal).

F-4047            951011032    A tract of land in Section 7, Township 38N, Range
4701-01                        2E of W.M. described as follows: bounded on north
                               and the west by the Old Nooksack River as
                               meandered in 1859; on the east by Ferndale Road,
                               and on the south by Marine Drive, less roads,
                               situate in Whatc.

F-4026            950505035    The north half of the south half of the NW
4702-01                        quarter and the SE quarter of the SE quarter of
                               the NW quarter of Section 32, Township 38N, Range
                               5 East of the W.M. except railroad right of way
                               and except State Route No. 9.

F-4032            950512020    The E 1/2 of the SW 1/4; the NW 1/4 of the SW 1/4
4703-01                        and the N 1/2 of the SW 1/4 of Section 8,
                               Township 37N, Range 5 East of the W.M. (see title
                               for full legal).

F-4033            950615017    The SW 1/4 of the SW 1/4 of Section 20, Township
4704-01                        38N, Range 5 East of the W.M. Whatcom County (for
                               exceptions see full legal on deed).

F-4035            950609089    The NW 1/4 of the SE 1/4 of Section 19, less the
                               west 25' thereof; the south 417' of the
</TABLE>
<PAGE>
                                      -23-


<TABLE>
<CAPTION>
Property Record
  & File Nos.      Title No.   Legal Description
---------------   ----------   -----------------
<S>               <C>          <C>
4705-01                        east 417' of the NE 1/4 of the SE 1/4 of Section
                               19, less road; the SE 1/4 of the SE 1/4 of
                               Section 19 less roads; the SW 1/4 of the SE 1/4
                               of Section 19

F-4042            951019081    Lot 6, within the NW 1/4 of Section 31, Township
4706-01                        39N, Range 2 East of the W.M. (see Deed for full
                               legal).

F-4044            951031158    Beginning at a point 561' south of the NE corner
4707-01                        of the SE 1/4 of the NW 1/4, Section 1, Township
                               38N, Range 1 East, W.M., Washington thence south
                               561', thence west 1320', thence north 561',
                               thence east 1320', to point of beginning

F-4045            960327151    The NW 1/4 of the NE 1/4 of Section 30, TWP 38N,
4708-01                        Rng 5E, W.M., except the north 417' of the east
                               417' thereof; except the north 355' of the west
                               612' thereof; and except Strand Road (see deed
                               for full legal description).

F-4046            951004092    The S 1/2 of the N 2/3rds of Government Lot 4 of
4709-01                        Section 5, Township 38N, Range 2 East of W.M.,
                               less the road, situate in Whatcom County, State
                               of Washington.

F-4050            951212038    Government Lot 4, Section 30, Township 39N, Range
4710-01                        2 East of W.M., except roads.

F-4053            951215105    Parcel A being part of the W 1/2 of the SW 1/4 of
4711-01                        the SW 1/4 of Section 16; also the SE 1/4 of the
                               SE 1/4 of Section 17; Parcel B being part of the
                               NE 1/4 of the NE 1/4, Section 20, all within
                               Township 37N, Range 5 East W.M., Whatcom County
                               (see deed).

F-4124            1970800864   Parcel A, a strip of land 30' in width across the
4711-06                        south end of the SE 1/4 of the SE 1/4 of Section
                               17; and Parcel B, a strip of land 30' in width
                               across the south end of the W 1/2 of the SW 1/4
                               of the SW 1/4 of Section 16; all in Township 37N.

F-4054            960105050    The S 1/3 of Government Lot 4, Section 5,
4712-01                        Township 38N, Range 2 East, of W.M. in Whatcom
                               County, Washington.

F-4057            960313031    The south 60 acres of the west half of the
4713-01                        southeast quarter of Section 36, Township 39N,
                               Range 1 East of W.M., less roads, situate in the
                               County of Whatcom, State of Washington.

F-4082            960415012    Parcel 'A'; Government Lot 3 of Sec 31 and Parcel
4714-01                        'B'; the north 20 acres of the SE 1/4 of the SW
                               1/4 of Sec 31; TWP 39N, Rng 2 E.W.M., except
                               Imhof Road and Slough, situate in Whatcom County.

F-4095            1980102713   All of Lots 6, 7 and 11 and the SE 1/4 of the SW
4715-01                        1/4 of Sec 32, TWP 39N, Rng 2E, W.M. also a strip
                               of land 15' in width along the westerly bank of
                               the Nooksack River in Lot 6 and along the 1/4 sec
                               line running east and west in said Sec 32, which
                               forms the North.

F-4096            961015018    All that part of Gov't Lot 8 and the SW 1/4 of
4716-01                        the SE 1/4, Sec 8, and the NW 1/4 of the NE 1/4,
                               Sec 17, TWP 37N, Rng 5 E.W.M., Whatcom County
                               (see Exhibit "A" for full legal).

F-4125            1970704143   The east 20 acres of the N 1/2 of the SW 1/4 and
4717-01                        the S 1/2 of the SW 1/4 of Section 32, Township
                               38N, Range 5 East, W.M. except the R/W for State
                               Route No. 9; and that portion of said South 1/2
                               of the SW 1/4 lying west of State Route No. 9

F-4143            1980401482   Parcel A: the SW 1/4 of Sec 5; Parcel B: part of
4719-01                        Sec 5; Parcel C: Lots 19, 20 and 21 in the NE 1/4
                               of the NE 1/4 of Sec 7; Parcel D: the NW 1/4 of
                               the SW 1/4 and the NW 1/4 of Sec 8; all in
                               Township 38N, Range 2 E. W.M. with exceptions.

F-4144            1980700595   Parcel A: Blocks 9, 10, 19, 20, 21, 28, 29 and 30
4720-01                        "Plat of the Marietta Garden Farms Whatcom
                               County" and Parcel B: that portion of Sec 5, TWP
                               38N, Range 2 East of the W.M.
</TABLE>

Leased: Nil

Nature of Business: U.S. poplar tree plantation business
<PAGE>
                                      -24-


Jurisdiction in which its property other than accounts receivable is located:
United States

Capital Stock Holdings: Nil
<PAGE>
                                   SCHEDULE G
                           BORROWING BASE CERTIFICATE

                        [see reference in Section 1.1.18]

TO:       THE LENDERS (as defined in the Credit Agreement referred to below)
AND TO:   THE TORONTO-DOMINION BANK, as Agent

          We refer to Section 7.3.1(a) of the credit agreement dated as of 19
July 2002 between Norske Skog Canada Limited and others as Restricted Parties,
The Toronto-Dominion Bank as Administration Agent and the Lenders, Arrangers and
Syndication Agents named therein, as amended, supplemented, restated or replaced
from time to time (the "Credit Agreement"). All capitalized terms used in this
certificate and defined in the Credit Agreement have the meanings defined in the
Credit Agreement.

          We hereby certify that the following is a true and correct calculation
of our Borrowing Base as of [date] and that the attached documents accurately
set out the details from which the Borrowing Base is calculated.

<TABLE>
<CAPTION>
                                                         ($'000S)
                                                         --------
<S>                                                      <C>
A   ACCOUNTS RECEIVABLE

    Trade AR
       Paper                                               _____
       Pulp                                                _____
       Fibre                                               _____
       Allowance for doubtful accounts                    (_____)
       Accrued rebates, discounts and price adjustment    (_____)
       Foreign Exchange & other                            _____
                                                          ------
       Net Total                                           _____

    Other AR
       Employee AR                                         _____
       Taxes                                               _____
       Other                                               _____
                                                          ------
                                                           _____
                                                          ------
    Consolidated AR per Financial Statements               _____

    Less: Employee AR                                     (_____)
    Less: AR of Unrestricted Parties                      (_____)

                                                          ------
    Adjusted AR                                            _____
                                                          ------
</TABLE>
<PAGE>
                                       -2-


<TABLE>
<S>                                                       <C>
                                                          ------
    75% OF ADJUSTED AR                                     _____
                                                          ------

B   INVENTORY

    Finished Goods
       Paper                                               _____
       Pulp                                                _____
                                                          ------
       Sub total                                           _____

    WIP                                                    _____

    Raw Materials
       Chips                                               _____
       Logs                                                _____
       Sawdust                                             _____
       DIP/Other purchased pulp                            _____
       Other                                               _____
                                                          ------
       Sub total                                           _____

    Supplies
       Crofton                                             _____
       Elk Falls                                           _____
       Powell River                                        _____
       Port Alberni                                        _____
       Other                                               _____
                                                          ------
       Sub total                                           _____

    Consolidated Inventory per FS                          _____

    Less: WIP                                             (_____)
    Less: Inventory of Unrestricted Parties               (_____)

                                                          ------
    Adjusted Inventory                                     _____
                                                          ------

                                                          ------
    50% OF ADJUSTED INVENTORY                              _____
                                                          ------

                                                          ------
BORROWING BASE
(A + the lesser of A and B)                                _____
                                                          ======

</TABLE>
<PAGE>
                                       -3-


DATED
      ----------

                                        NORSKE SKOG CANADA LIMITED


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:


                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:
<PAGE>
                                   SCHEDULE H
                            OTHER SECURED OBLIGATIONS

                         [see reference in Section 3.2]

U.S. dollar to Canadian dollar foreign exchange contracts between Norske Skog
Canada Finance Limited and the following Lenders existing as of the close of
business on 18 July 2002:

<TABLE>
<CAPTION>
          LENDER            TOTAL AMOUNT - US$
-------------------------   ------------------
<S>                         <C>
Royal Bank of Canada          $88,000,000.00
The Toronto-Dominion Bank     $52,500,000.00
The Bank of Nova Scotia       $75,500,000.00
Bank of Montreal              $ 8,000,000.00
HSBC Bank Canada              $ 3,000,000.00
Laurentian Bank of Canada     $ 2,000,000.00
</TABLE>

Japanese yen to U.S. dollar foreign exchange contracts between Norske Skog
Canada Finance Limited and the following Lenders existing as of the close of
business on 18 July 2002:

<TABLE>
<CAPTION>
          LENDER            TOTAL AMOUNT - JPY
-------------------------   ------------------
<S>                         <C>
Royal Bank of Canada          Y 50,000,000.00
The Toronto-Dominion Bank     Y300,000,000.00
The Bank of Nova Scotia       Y150,000,000.00
HSBC Bank Canada              Y225,000,000.00
</TABLE>

U.S. dollar to Canadian dollar call option agreements between Norske Skog Canada
Finance Limited and the following Lenders existing as at the close of business
on 18 July 2002:

<TABLE>
<CAPTION>
          LENDER            TOTAL AMOUNT - US$
-------------------------   ------------------
<S>                         <C>
The Toronto-Dominion Bank     $34,000,000.00
</TABLE>

U.S. dollar to Canadian dollar put and call option agreements with down and in
barrier price on USD call/Canada put currency pair between Norske Skog Canada
Finance Limited and the following Lenders existing as at the close of business
on 18 July 2002:

<TABLE>
<CAPTION>
     LENDER        TOTAL AMOUNT - US$
----------------   ------------------
<S>                <C>
Bank of Montreal      $6,000,000.00
</TABLE>
<PAGE>
                                      -2-


U.S. dollar to Canadian dollar collar option agreements between Norske Skog
Canada Finance Limited and the following Lenders existing as of the close of
business on 18 July 2002:

<TABLE>
<CAPTION>
          LENDER            TOTAL AMOUNT - US$
-------------------------   ------------------
<S>                         <C>
Royal Bank of Canada          $144,000,000.00
The Toronto-Dominion Bank     $ 31,000,000.00
The Bank of Nova Scotia       $  9,000,000.00
HSBC Bank Canada              $ 60,000,000.00
Bank of Montreal              $ 78,000,000.00
Laurentian Bank of Canada     $ 12,000,000.00
</TABLE>

Canadian dollar to U.S. dollar foreign exchange contracts between Norske Skog
Canada Finance Limited and the following Lenders existing as of the close of
business on 18 July 2002:

<TABLE>
<CAPTION>
          LENDER            TOTAL AMOUNT - US$
-------------------------   ------------------
<S>                         <C>
Royal Bank of Canada          $131,000,000.00
The Toronto-Dominion Bank     $108,000,000.00
The Bank of Nova Scotia       $ 69,800,000.00
HSBC Bank Canada              $ 38,200,000.00
Bank of Montreal              $ 10,000,000.00
</TABLE>

Canadian dollar to U.S. dollar call option agreements between Norske Skog Canada
Finance Limited and the following lenders existing as at the close of business
on 18 July 2002:

<TABLE>
<CAPTION>
       LENDER          TOTAL AMOUNT - US$
--------------------   ------------------
<S>                    <C>
Royal Bank of Canada     $10,000,000.00
</TABLE>

U.S. dollar interest rate swap contracts to exchange fixed for floating interest
rates between Norske Skog Canada Finance Limited and the following Lenders
existing as of the close of business on 18 July 2002:

<TABLE>
<CAPTION>
                                TOTAL NOTIONAL
          LENDER            PRINCIPAL AMOUNT - US$
-------------------------   ----------------------
<S>                         <C>
Royal Bank of Canada            $75,000,000.00
The Toronto-Dominion Bank       $20,000,000.00
HSBC Bank Canada                $30,000,000.00
</TABLE>
<PAGE>
                                   SCHEDULE I
            LIMITATIONS ON CERTAIN SUBSIDIARIES OF RESTRICTED PARTIES

                   [see references in Sections 3.1, 7.2.5(c)]

None of 3264904 Canada Limited, Catalyst Paper Corporation (a British Columbia
company), Catalyst Paper Corporation (a Canada Business Corporations Act
company), Echelon Paper Corporation (a British Columbia company), Echelon Paper
Corporation (a Canada Business Corporations Act company), Export Sales Company
Limited (formerly Mackenzie Forest Products Limited), Crofton Pulp & Paper
Limited, 468327 B.C. Ltd., British Columbia Forest Products Limited, FCC
Holdings (Philippines) Inc., NSC Holdings (Barbados) Limited, NSC Fibre Inc.,
Arizona Newsprint Industries Corporation, Elk Falls Forest Industries Limited,
Norske Skog North America LLC and Allwin Technical Services Inc. shall at any
time carry on any business or have any material Property unless it first becomes
a Restricted Party in accordance with this Agreement.
<PAGE>
                                   SCHEDULE J
                      LITIGATION AND ENVIRONMENTAL MATTERS

                 [see references in Sections 6.1.3(a), 6.1.6(a)]

A. LITIGATION

<TABLE>
<CAPTION>
        PLAINTIFF          DEFENDANT               NATURE                 STATUS
      -------------   -------------------   --------------------   --------------------
<S>   <C>             <C>                   <C>                    <C>
1.    Avenor Inc.     Norske Skog           Claim for              Unknown (claimant
                      Canada Limited        contribution or        has not provided any
                                            indemnity in respect   detail)
                                            of any judgment
                                            International Forest
                                            Products Limited
                                            may obtain against
                                            Avenor Inc. in
                                            respect of
                                            contaminants and
                                            other hazardous or
                                            toxic substances

2.    International   Crown Forest          Contamination of       Writ of Summons
      Forest          Industries Limited,   Crown Forest           issued and
      Products        Fletcher Challenge    Industries Limited     Appearance entered.
      Limited         Canada Limited,       former Fraser Mill     International Forest
                      Elk Falls Forest      site                   Products Limited
                      Industries Limited                           has agreed to
                      and Elk Falls Pulp                           discontinue its
                      and Paper Limited                            action against Elk
                                                                   Falls Forest
                                                                   Industries Limited.
</TABLE>
<PAGE>
                                       -2-


B. GRIEVANCES

Nothing which meets the materiality threshold.

C. ENVIRONMENTAL

Nothing which meets the materiality threshold.
<PAGE>
                                   SCHEDULE K
                     EXISTING L/CS AND BANKERS' ACCEPTANCES

                         [see reference in Section 2.8]

EXISTING L/CS

<TABLE>
<CAPTION>
                                REFERENCE                     EXPIRY
BENEFICIARY                      NUMBER       ISSUE DATE       DATE          AMOUNT
---------------------------   ------------   -----------   -----------   --------------
<S>                           <C>            <C>           <C>           <C>
CIBC Mellon Trust Co.         G21522V00010   27 Nov '91    31 Mar. '03   $25,987,000.00
(re executive pension)

Her Majesty the Queen in      G24914V0010    13 Apr. '92   12 Apr. '03   $   100,000.00
Right of the Province of
BC (Minister of Lands &
Parks) (re waterlot leases)
</TABLE>

EXISTING BANKERS' ACCEPTANCES
[Note: maturity dates are all in 2002. Amounts are in thousands of dollars]

<TABLE>
<CAPTION>
                                    22 Jul   30 Jul   6 Aug   26 Aug   21 Oct   Total
                                    ------   ------   -----   ------   ------   -----
<S>                                 <C>      <C>      <C>     <C>      <C>      <C>
The Toronto-Dominion Bank             300      100     200      300      200     1100
Royal Bank of Canada                  300      300     200      200      200     1200
Bank of Montreal                      800      800     600      500      500     3200
The Bank of Nova Scotia               800      800     600      500      500     3200
HSBC Bank Canada                      800      800     600      500      500     3200
Merrill Lynch Capital Canada Inc.     300      300     200      200      200     1200
Canadian Western Bank                 200      300     200      200      200     1100
Laurentian Bank of Canada             400      400     300      100      300     1500
                                                                                -----
                                                                                15700
                                                                                =====
</TABLE>
<PAGE>
                                   SCHEDULE L
                          SPECIAL DERIVATIVE PROVISIONS

     [See references in Sections 1.1.37, 1.1.47, 1.1.79(i), 7.7 and 8.1(k)]

NSCL has indicated that it is desirable, having regard to certain provisions of
the 1999 Indenture and the 2001 Indenture, to establish further arrangements on
which Derivatives described in Sections 1.1.79(c), 1.1.79(d) and 1.1.79(e) would
be entered into. These arrangements may include the appointment of a Lender to
act as an agent in connection with the administration of Derivatives (the
"DERIVATIVE AGENT"). NSCL has asked that the establishment of these arrangements
be deferred until after the initial Advance under this Agreement. Accordingly,
until otherwise agreed by amendment to this Agreement consented to by all
Lenders, the following provisions shall apply notwithstanding any other
provision of this Agreement:

1. No Restricted Party shall be a party to any Derivative of the type described
in Sections 1.1.79(c), 1.1.79(d) and 1.1.79(e), whether secured or unsecured and
whether entered into with a Lender or not, except for those that are outstanding
at the date of this Agreement and described on Schedule H (the "EXISTING SPECIAL
DERIVATIVES") and except that, if the amendment to this Agreement contemplated
in the preceding paragraph has not been entered into on or before 9 August 2002,
the Restricted Parties may enter into unsecured Derivatives of the type
described in Sections 1.1.79(c), 1.1.79(d) and 1.1.79(e) with persons other than
Lenders.

2. If the aggregate of the Market Values of all Existing Special Derivatives is
at any time negative from the Restricted Parties' perspective (that is, the
Restricted Parties on an aggregate basis are "out of the money") by more than
$10,000,000, the Restricted Parties shall, within five Business Days of
receiving notice from the Agent, terminate or re-price one or more Existing
Special Derivatives or take other action acceptable to the Agent acting
reasonably so that the negative Market Value of those Derivatives is immediately
reduced to less than $10,000,000.

3. NSCL shall report the current Market Value of the Existing Special
Derivatives to the Agent not less frequently than weekly.
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<S>        <C>                                                               <C>
ARTICLE I INTERPRETATION..................................................    2
   1.1     Defined Terms..................................................    2

ARTICLE II THE CREDITS....................................................   27
   2.1     Amount and Availment Options...................................   27
   2.2     Revolving Credit...............................................   27
   2.3     Use of Credits.................................................   27
   2.4     Term and Repayment.............................................   27
   2.5     Interest Rates and Fees........................................   29
   2.6     Commitment Fee.................................................   29
   2.7     Other Fees.....................................................   30
   2.8     Existing L/Cs, Bankers' Acceptances Etc........................   30
   2.9     Exchange Rate and Borrowing Base Fluctuations..................   30

ARTICLE III SECURITY......................................................   31
   3.1     Security.......................................................   31
   3.2     Obligations Secured by the Trustee Security....................   34
   3.3     Consent to Assignment of Contracts.............................   37

ARTICLE IV DISBURSEMENT CONDITIONS........................................   38
   4.1     Conditions Precedent to Initial Advance........................   38
   4.1.1   Other Debt and Encumbrances....................................   38
   4.1.2   Financial Information..........................................   38
   4.1.3   Security and Other Documents...................................   39
   4.1.4   Corporate and Other Information................................   39
   4.1.5   Opinions.......................................................   39
   4.1.6   Other Matters..................................................   40
   4.1.7   Deadline for Advance...........................................   40
   4.2     Conditions Precedent to all Advances...........................   40

ARTICLE V ADVANCES........................................................   41
</TABLE>
<PAGE>
                                      -2-


<TABLE>
<S>        <C>                                                               <C>
   5.1     Lenders' Obligations Relating to Credits 1 and 2...............   41
   5.2     Adjustment of Proportionate Shares for Specific Credits........   42
   5.3     Exceptions Regarding Particular Credits........................   42
   5.4     Evidence of Indebtedness.......................................   42
   5.5     Conversions....................................................   43
   5.6     Notice of Advances and Payments................................   43
   5.7     Prepayments and Reductions.....................................   43
   5.8     Prime Rate, Base Rate and LIBOR Advances.......................   44
   5.9     LIBOR Periods..................................................   45
   5.10    Termination of LIBOR Advances..................................   45
   5.11    Co-ordination of Prime Rate, Base Rate and LIBOR Advances......   46
   5.12    Execution of Bankers' Acceptances..............................   46
   5.13    Sale of Bankers' Acceptances...................................   47
   5.14    Size and Maturity of Bankers' Acceptances and Rollovers........   47
   5.15    Co-ordination of BA Advances...................................   47
   5.16    Payment of Bankers' Acceptances................................   49
   5.17    Deemed Advance - Bankers' Acceptances..........................   49
   5.18    Waiver.........................................................   49
   5.19    Degree of Care.................................................   50
   5.20    Indemnity......................................................   50
   5.21    Obligations Absolute...........................................   50
   5.22    Shortfall on Drawdowns, Rollovers and Conversions..............   50
   5.23    Prohibited Use of L/Cs and Bankers' Acceptances................   51
   5.24    Issuance and Maturity of L/Cs..................................   51
   5.25    Payment of L/C Fees............................................   51
   5.26    Payment of L/Cs................................................   51
   5.27    Deemed Advance - L/Cs..........................................   52
   5.28    Prohibited Rates of Interest...................................   53
</TABLE>
<PAGE>
                                      -3-


<TABLE>
<S>        <C>                                                               <C>
ARTICLE VI REPRESENTATIONS AND WARRANTIES.................................   53
   6.1     Representations and Warranties.................................   53
   6.1.1   Corporate Matters..............................................   53
   6.1.2   Credit Documents...............................................   55
   6.1.3   Litigation, Financial Statements Etc...........................   55
   6.1.4   Other Debt.....................................................   56
   6.1.5   Property and Capital Stock.....................................   57
   6.1.6   Environmental Matters..........................................   57
   6.1.7   Taxes and Withholdings.........................................   58
   6.1.8   Aboriginal Claims..............................................   58
   6.1.9   Other Matters..................................................   59
   6.2     Survival of Representations and Warranties.....................   60

ARTICLE VII COVENANTS AND CONDITIONS......................................   60
   7.1     Financial Covenants............................................   60
   7.2     Positive Covenants.............................................   60
   7.2.1   Payment; Operation of Business.................................   60
   7.2.2   Inspection.....................................................   61
   7.2.3   Insurance......................................................   62
   7.2.4   Taxes, Encumbrances and Withholdings...........................   62
   7.2.5   Other Matters..................................................   62
   7.3     Reporting and Notice Requirements..............................   64
   7.3.1   Periodic Reports...............................................   64
   7.3.2   Requirements for Notice........................................   65
   7.4     Ownership of the Restricted Parties............................   66
   7.5     Negative Covenants.............................................   67
   7.5.1   Financial Transactions and Encumbrances........................   67
   7.5.2   Business and Property..........................................   69
   7.5.3   Corporate Matters..............................................   70
</TABLE>
<PAGE>
                                      -4-


<TABLE>
<S>        <C>                                                               <C>
   7.6     Use of Insurance Proceeds......................................   71
   7.7     Adjustments to Amount of Debt..................................   72

ARTICLE VIII DEFAULT......................................................   73
   8.1     Events of Default..............................................   73
   8.2     Acceleration and Termination of Rights.........................   76
   8.3     Payment of L/Cs................................................   76
   8.4     Remedies.......................................................   76
   8.5     Saving.........................................................   77
   8.6     Perform Obligations............................................   77
   8.7     Third Parties..................................................   77
   8.8     Power of Attorney..............................................   77
   8.9     Remedies Cumulative............................................   78
   8.10    Set-Off or Compensation........................................   78

ARTICLE IX THE AGENT AND THE LENDERS......................................   78
   9.1     Authorization of Agent and Relationship........................   78
   9.2     Disclaimer of Agent............................................   79
   9.3     Failure of Lender to Fund......................................   80
   9.4     Payments by the Borrower.......................................   81
   9.5     Payments by Agent..............................................   81
   9.6     Direct Payments................................................   82
   9.7     Administration of the Credits..................................   83
   9.8     Rights of Agent................................................   86
   9.9     Acknowledgements, Representations and Covenants of Lenders.....   87
   9.10    Collective Action of the Lenders...............................   88
   9.11    Successor Agent................................................   88
   9.12    Provisions Operative Between Lenders and Agent Only............   88

ARTICLE X ADDITIONAL LENDERS, SUCCESSORS AND ASSIGNS......................   89
   10.1    Successors and Assigns.........................................   89
</TABLE>
<PAGE>
                                      -5-


<TABLE>
<S>        <C>                                                               <C>
   10.2    Assignments....................................................   90
   10.3    Participations.................................................   91

ARTICLE XI MISCELLANEOUS PROVISIONS.......................................   91

   11.1    Headings and Table of Contents.................................   91
   11.2    Accounting Terms...............................................   91
   11.3    Capitalized Terms..............................................   92
   11.4    Severability...................................................   92
   11.5    Number and Gender..............................................   92
   11.6    Amendment, Supplement or Waiver................................   92
   11.7    Governing Law..................................................   92
   11.8    This Agreement to Govern.......................................   93
   11.9    Permitted Encumbrances.........................................   93
   11.10   Currency.......................................................   93
   11.11   Liability of Lenders...........................................   93
   11.12   Expenses and Indemnity.........................................   93
   11.13   Environmental Indemnity........................................   94
   11.14   Manner of Payment and Taxes....................................   95
   11.15   Increased Costs etc............................................   96
   11.16   Interest on Miscellaneous Amounts..............................   96
   11.17   Currency Indemnity.............................................   96
   11.18   Address for Notice.............................................   97
   11.19   Time of the Essence............................................   97
   11.20   Further Assurances.............................................   97
   11.21   Term of Agreement..............................................   97
   11.22   Payments on Business Day.......................................   97
   11.23   Counterparts and Facsimile.....................................   98
   11.24   Waiver of Jury Trial, Consequential Damages Etc................   98
   11.25   Entire Agreement...............................................   98
</TABLE>
<PAGE>
                                      -6-


<TABLE>
<S>        <C>                                                               <C>
   11.26   Date of Agreement..............................................   99

SCHEDULE A NOTICE OF ADVANCE OR PAYMENT...................................    1
SCHEDULE B AGREEMENT OF NEW RESTRICTED SUBSIDIARY SUPPLEMENT TO CREDIT
   AGREEMENT..............................................................    1
SCHEDULE C COMPLIANCE CERTIFICATE.........................................    1
SCHEDULE D ASSIGNMENT AGREEMENT...........................................    1
SCHEDULE E PROPORTIONATE SHARES OF LENDERS................................    1
SCHEDULE F DETAILS OF CAPITAL STOCK, PROPERTY ETC.........................    1
SCHEDULE G BORROWING BASE CERTIFICATE.....................................    1
SCHEDULE H OTHER SECURED OBLIGATIONS......................................    1
SCHEDULE I LIMITATIONS ON CERTAIN SUBSIDIARIES OF RESTRICTED PARTIES......    1
SCHEDULE J LITIGATION AND ENVIRONMENTAL MATTERS...........................    1
SCHEDULE K EXISTING L/CS AND BANKERS' ACCEPTANCES.........................    1
SCHEDULE L SPECIAL DERIVATIVE PROVISIONS..................................    1
</TABLE>