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                       MILLAR WESTERN FOREST PRODUCTS LTD.

                           7.75% SENIOR NOTES DUE 2013

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                   EXCHANGE AND REGISTRATION RIGHTS AGREEMENT

                                                               November 25, 2003
Goldman, Sachs & Co.,
   As representatives of the several Purchasers
   named in Schedule I to the Purchase Agreement
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004

Ladies and Gentlemen:

         Millar Western Forest Products Ltd., a corporation established under
the laws of the Province of Alberta (the "Company"), proposes to issue and sell
to the Purchasers (as defined herein) upon the terms set forth in the Purchase
Agreement (as defined herein) US$190,000,000 aggregate principal amount of its
7.75% Senior Notes Due 2013. As an inducement to the Purchasers to enter into
the Purchase Agreement and in satisfaction of a condition to the obligations of
the Purchasers thereunder, the Company agrees with the Purchasers for the
benefit of holders (as defined herein) from time to time of the Transfer
Restricted Securities (as defined herein) as follows:

         1. Certain Definitions. For purposes of this Exchange and Registration
Rights Agreement, the following terms shall have the following respective
meanings:

                  "Base Interest" shall mean the interest that would otherwise
         accrue on the Securities under the terms thereof and the Indenture,
         without giving effect to the provisions of this Agreement.

                  The term "broker-dealer" shall mean any broker or dealer
         registered with the Commission under the Exchange Act.

                  "Canadian Securities Laws" shall mean securities legislation
         promulgated by any province of Canada and the rules and regulations
         thereunder.

                  "Closing Date" shall mean the date on which the Securities are
         initially issued.

                  "Commission" shall mean the United States Securities and
         Exchange Commission, or any other federal agency at the time
         administering the Exchange Act or the Securities Act, whichever is the
         relevant statute for the particular purpose.

                  "Effective Time," in the case of (i) an Exchange Registration,
         shall mean the time and date as of which the Commission declares the
         Exchange Offer Registration Statement effective or as of which the
         Exchange Offer Registration Statement otherwise becomes effective and
         (ii) a Shelf Registration,

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         shall mean the time and date as of which the Commission declares the
         Shelf Registration Statement effective or as of which the Shelf
         Registration Statement otherwise becomes effective.

                  "Effectiveness Target Date" shall have the meaning assigned
         thereto in Section 2(c) hereof.

                  "Electing Holder" shall mean any holder of Transfer Restricted
         Securities that has returned a completed and signed Notice and
         Questionnaire to the Company in accordance with Section 3(d)(ii) or
         3(d)(iii) hereof.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
         or any successor thereto, and the rules and regulations promulgated
         thereunder as the same shall be amended from time to time.

                  "Exchange Notes" shall have the meaning assigned thereto in
         Section 2(a) hereof.

                  "Exchange Offer" shall have the meaning assigned thereto in
         Section 2(a) hereof.

                  "Exchange Offer Registration Statement" shall have the meaning
         assigned thereto in Section 2(a) hereof.

                  "Exchange Registration" shall have the meaning assigned
         thereto in Section 3(c) hereof.

                  "Guarantor" shall have the meaning assigned thereto in the
         Indenture.

                  The term "holder" shall mean the registered holders of the
         Transfer Restricted Securities on the Closing Date and other persons
         who subsequently acquire Transfer Restricted Securities from time to
         time (including any successors or assigns), in each case for so long as
         such person owns any Transfer Restricted Securities; provided that for
         purposes of any obligation of the Company to give notice to any
         holders, "holder" shall mean the record owner of Transfer Restricted
         Securities.

                  "Indenture" shall mean the Indenture, dated as of November 25,
         2003, between the Company and The Bank of New York, as Trustee, as the
         same shall be amended from time to time.

                  "Notice and Questionnaire" means a Notice of Registration
         Statement and Selling Securityholder Questionnaire substantially in the
         form of Exhibit A hereto.

                  The term "person" shall mean a corporation, association,
         partnership, organization, business, individual, government or
         political subdivision thereof or governmental agency.

                  "Purchase Agreement" shall mean the Purchase Agreement, dated
         as of November 20, 2003, between the Purchasers and the Company
         relating to the Securities.

                  "Purchasers" shall mean the Purchasers named in Schedule I to
         the Purchase Agreement.

                  "Registration Default" shall have the meaning assigned thereto
         in Section 2(c) hereof.

                  "Registration Expenses" shall have the meaning assigned
         thereto in Section 4 hereof.

                  "Resale Period" shall have the meaning assigned thereto in
         Section 2(a) hereof.

                  "Restricted Holder" shall mean (i) a holder that is an
         affiliate of the Company within the meaning of Rule 405, (ii) a holder
         who acquires Exchange Notes outside the ordinary course of such
         holder's business, (iii) a holder who has arrangements or
         understandings with any person to participate in the Exchange Offer for
         the purpose of distributing Exchange Notes and (iv) a holder that is a
         broker-

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         dealer, but only with respect to Exchange Notes received by such
         broker-dealer pursuant to an Exchange Offer in exchange for Transfer
         Restricted Securities acquired by the broker-dealer directly from the
         Company.

                  "Rule 144," "Rule 405" and "Rule 415" shall mean, in each
         case, such rule promulgated under the Securities Act (or any successor
         provision), as the same shall be amended from time to time.

                  "Securities" shall mean, collectively, the US$190,000,000
         7.75% Senior Notes Due 2013 of the Company to be issued and sold to the
         Purchasers on the Closing Date, and securities issued in exchange
         therefor or in lieu thereof pursuant to the Indenture.

                  "Securities Act" shall mean the Securities Act of 1933, or any
         successor thereto, and the rules and regulations promulgated thereunder
         as the same shall be amended from time to time.

                  "Shelf Registration" shall have the meaning assigned thereto
         in Section 2(b) hereof.

                  "Shelf Registration Statement" shall have the meaning assigned
         thereto in Section 2(b) hereof.

                  "Special Interest" shall have the meaning assigned thereto in
         Section 2(c) hereof.

                  "Transfer Restricted Securities" shall mean the Securities;
         until:

                  (1)      the date on which such Security has been exchanged by
                           a Person other than a broker-dealer for an Exchange
                           Note in the Exchange Offer;

                  (2)      following the exchange by a broker-dealer in the
                           Exchange Offer of a Security for an Exchange Note,
                           the date on which such Exchange Note is sold to a
                           purchaser who receives from such broker-dealer on or
                           prior to the date of such sale a copy of the
                           prospectus contained in the Exchange Offer
                           Registration Statement;

                  (3)      the date on which such Security has been effectively
                           registered under the Securities Act and disposed of
                           in accordance with the Shelf Registration Statement;

                  (4)      the date on which such Security is distributed to the
                           public pursuant to Rule 144 under circumstances in
                           which any legend borne by such Security relating to
                           the restrictions on transferability thereof, under
                           the Securities Act or otherwise, is removed by the
                           Company or pursuant to the Indenture; or

                  (5)      such Security shall cease to be outstanding.

                  "Trust Indenture Act" shall mean the Trust Indenture Act of
         1939, or any successor thereto, and the rules, regulations and forms
         promulgated thereunder, all as the same shall be amended from time to
         time.

        Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be, of this
Exchange and Registration Rights Agreement, and the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Exchange and
Registration Rights Agreement as a whole and not to any particular Section or
other subdivision.



         2. Registration Under the Securities Act.

                  (a) Except as set forth in Section 2(b) below, the Company
         agrees to file under the Securities Act, on or prior to 90 days after
         the Closing Date, a registration statement relating to an offer to
         exchange

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         (such registration statement, the "Exchange Offer Registration
         Statement", and such offer, the "Exchange Offer") any and all of the
         Securities for a like aggregate principal amount of debt securities
         issued by the Company, which debt securities are substantially
         identical to the Transfer Restricted Securities (and are entitled to
         the benefits of a trust indenture which is substantially identical to
         the Indenture or is the Indenture and which has been qualified under
         the Trust Indenture Act), except that they have been registered
         pursuant to an effective registration statement under the Securities
         Act and do not contain provisions for the additional interest
         contemplated in Section 2(c) below (such new debt securities
         hereinafter called "Exchange Notes"). The Exchange Notes will be issued
         as evidence of the same continuing indebtedness of the Company and will
         not constitute the creation of new indebtedness. The Company agrees to
         use its reasonable best efforts to cause the Exchange Offer
         Registration Statement to become effective under the Securities Act on
         or prior to 180 days after the Closing Date. The Exchange Offer will be
         registered under the Securities Act on the appropriate form and will
         comply with all applicable tender offer rules and regulations under the
         Exchange Act. The Company further agrees to use its reasonable best
         efforts to commence and complete the Exchange Offer, on or prior to 45
         business days (or longer to the extent required by United States
         federal securities laws) after such registration statement has become
         effective and exchange Exchange Notes for all Transfer Restricted
         Securities that have been properly tendered and not withdrawn on or
         prior to the expiration of the Exchange Offer. The Exchange Offer will
         be deemed to have been "completed" only if the debt securities received
         by holders other than Restricted Holders in the Exchange Offer for
         Transfer Restricted Securities are, upon receipt, transferable by each
         such holder without restriction under the Securities Act and the
         Exchange Act and without material restrictions under the blue sky or
         securities laws of a substantial majority of the States of the United
         States. The Exchange Offer shall be deemed to have been completed upon
         the earlier to occur of (i) the Company having exchanged the Exchange
         Notes for all outstanding Transfer Restricted Securities pursuant to
         the Exchange Offer and (ii) the Company having exchanged, pursuant to
         the Exchange Offer, Exchange Notes for all Transfer Restricted
         Securities that have been properly tendered and not withdrawn before
         the expiration of the Exchange Offer. The Company agrees to include in
         the Exchange Offer Registration Statement a prospectus for use in any
         resales by any holder of Exchange Notes that is a broker-dealer, which
         has acquired such Transfer Restricted Securities for its own account as
         a result of market-making activities or other trading activities and
         not directly from the Company, and to keep such Exchange Offer
         Registration Statement effective for a period (the "Resale Period")
         beginning when Exchange Notes are first issued in the Exchange Offer
         and ending upon the earlier of the expiration of the 180th day after
         the Exchange Offer has been completed or such time as the Company
         reasonably believes that such broker-dealers no longer own any Transfer
         Restricted Securities, other than Transfer Restricted Securities
         acquired from the Company. With respect to such Exchange Offer
         Registration Statement, such holders shall have the benefit of the
         rights of indemnification and contribution set forth in Sections 6(a),
         (c), (d) and (e) hereof.

                  (b) If (i) the Company is not (A) required to file the
         Exchange Offer Registration Statement; or (B) permitted to consummate
         the Exchange Offer because the Exchange Offer is not permitted by
         applicable law or Commission policy, or (ii) any holder of Transfer
         Restricted Securities notifies the Company in writing prior to the 20th
         day following the consummation of the Exchange Offer that (X) it is
         prohibited by applicable law or Commission policy from participating in
         the Exchange Offer; or (Y) that it may not resell the Exchange Notes
         acquired by it in the Exchange Offer to the public in the United States
         without delivering a prospectus and the prospectus contained in the
         Exchange Offer Registration Statement is not appropriate or available
         for such resales; or (Z) it is a broker-dealer and owns Securities
         acquired directly from the Company or an affiliate of the Company, the
         Company will file under the Securities Act, on or prior to 60 days
         after such obligation arises, a "shelf" registration statement
         providing for the registration of, and the sale on a continuous or
         delayed basis by the holders of, all of the Transfer Restricted
         Securities affected thereby, pursuant to Rule 415 or

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         any similar rule that may be adopted by the Commission (such filing,
         the "Shelf Registration" and such registration statement, the "Shelf
         Registration Statement"). The Company agrees to use its reasonable best
         efforts (x) to cause the Shelf Registration Statement to become or be
         declared effective on or prior to 150 days after such obligation arises
         and to keep such Shelf Registration Statement continuously effective
         for a period ending on the earlier of the second anniversary of the
         Effective Time or such time as there are no longer any Transfer
         Restricted Securities outstanding, provided, however, that no holder
         shall be entitled to be named as a selling securityholder in the Shelf
         Registration Statement or to use the prospectus forming a part thereof
         for resales of Transfer Restricted Securities unless such holder is an
         Electing Holder, and (y) after the Effective Time of the Shelf
         Registration Statement, promptly upon the request of any holder of
         Transfer Restricted Securities that is not then an Electing Holder, to
         take any action reasonably necessary to enable such holder to use the
         prospectus forming a part thereof for resales of Transfer Restricted
         Securities, including, without limitation, any action necessary to
         identify such holder as a selling securityholder in the Shelf
         Registration Statement, provided, however, that nothing in this clause
         (y) shall relieve any such holder of the obligation to return a
         completed and signed Notice and Questionnaire to the Company in
         accordance with Section 3(d)(iii) hereof. The Company further agrees to
         supplement or make amendments to the Shelf Registration Statement, as
         and when required by the rules, regulations or instructions applicable
         to the registration form used by the Company for such Shelf
         Registration Statement or by the Securities Act or rules and
         regulations thereunder for shelf registration, and the Company agrees
         to furnish to each Electing Holder copies of any such supplement or
         amendment prior to its being used or promptly following its filing with
         the Commission.

                  (c) In the event that (i) the Company has not filed the
         Exchange Offer Registration Statement or Shelf Registration Statement
         on or prior to the date on which such registration statement is
         required to be filed pursuant to Section 2(a) or 2(b), respectively, or
         (ii) such Exchange Offer Registration Statement or Shelf Registration
         Statement has not become effective or been declared effective by the
         Commission on or prior to the date on which such registration statement
         is required to become or be declared effective pursuant to Section 2(a)
         or 2(b), respectively (the "Effectiveness Target Date") or (iii) the
         Exchange Offer has not been completed within 45 business days after the
         initial effective date of the Exchange Offer Registration Statement
         relating to the Exchange Offer (if the Exchange Offer is then required
         to be made), or (iv) any Exchange Offer Registration Statement or Shelf
         Registration Statement required by Section 2(a) or 2(b) hereof is filed
         and declared effective but thereafter ceases to be effective or usable
         in connection with resales of Transfer Restricted Securities during the
         time periods specified herein (each such event referred to in clauses
         (i) through (iv), a "Registration Default" and each period during which
         a Registration Default has occurred and is continuing, a "Registration
         Default Period"), then, as liquidated damages for such Registration
         Default, subject to the provisions of Section 9(b), special interest
         ("Special Interest"), in addition to the Base Interest, shall accrue to
         each holder of Transfer Restricted Securities, with respect to the
         first 90-day period immediately following the occurrence of the first
         Registration Default, in an amount equal to US$0.05 per week per
         US$1,000 principal amount of Transfer Restricted Securities held by the
         Holders. The amount of Special Interest will increase by an additional
         US$0.05 per week per US$1,000 principal amount of Transfer Restricted
         Securities with respect to each subsequent 90-day period until all
         Registration Defaults have been cured, up to a maximum amount of
         Special Interest for all Registration Defaults of US$0.50 per week per
         US$1,000 principal amount of Transfer Restricted Securities. The
         Company shall not be required to pay Special Interest for more than one
         Registration Default at any given time. Following the cure of all
         Registration Defaults, the accrual of Special Interest will cease. All
         accrued Special Interest through each record date with respect to the
         succeeding Interest Payment Date will be paid by the Company on each
         Interest Payment Date (as defined in the Indenture) to the Global Note
         Holder (as defined in the Indenture) by wire transfer of immediately
         available funds or by federal funds check and to Holders of
         Certificated Notes (as

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         defined in the Indenture) by wire transfer to the accounts specified by
         them or by mailing checks to their registered addresses if no such
         accounts have been specified.

                  (d) The Company shall use its reasonable best efforts to take
         all actions necessary or advisable to be taken by it to ensure that the
         transactions contemplated herein are effected as so contemplated.

                  (e) Any reference herein to a registration statement as of any
         time shall be deemed to include any document incorporated, or deemed to
         be incorporated, therein by reference as of such time and any reference
         herein to any post-effective amendment to a registration statement as
         of any time shall be deemed to include any document incorporated, or
         deemed to be incorporated, therein by reference as of such time.

         3. Registration Procedures.

         If the Company files a registration statement pursuant to Section 2(a)
or Section 2(b), the following provisions shall apply:

                  (a) At or before the Effective Time of the Exchange Offer or
         the Shelf Registration, as the case may be, the Company shall qualify
         the Indenture under the Trust Indenture Act.

                  (b) In the event that such qualification would require the
         appointment of a new trustee under the Indenture, the Company shall
         appoint a new trustee thereunder pursuant to the applicable provisions
         of the Indenture.

                  (c) In connection with the Company's obligations with respect
         to the registration of Exchange Notes as contemplated by Section 2(a)
         (the "Exchange Registration"), if applicable, the Company shall, as
         soon as practicable (or as otherwise specified):

                           (i) prepare and file with the Commission, on or prior
                  to 90 days after the Closing Date, an Exchange Offer
                  Registration Statement on any form which may be utilized by
                  the Company and which shall permit the Exchange Offer and
                  resales of Exchange Notes by broker-dealers that have not
                  acquired Transfer Restricted Securities directly from the
                  Company during the Resale Period to be effected as
                  contemplated by Section 2(a), and use its reasonable best
                  efforts to cause such Exchange Offer Registration Statement to
                  become effective on or prior to 180 days after the Closing
                  Date;

                           (ii) as soon as practicable prepare and file with the
                  Commission such amendments and supplements to such Exchange
                  Offer Registration Statement and the prospectus included
                  therein as may be necessary to effect and maintain the
                  effectiveness of such Exchange Offer Registration Statement
                  for the periods and purposes contemplated in Section 2(a)
                  hereof and as may be required by the applicable rules and
                  regulations of the Commission and the instructions applicable
                  to the form of such Exchange Offer Registration Statement, and
                  promptly provide each broker-dealer holding Exchange Notes not
                  acquired directly from the Company with such number of copies
                  of the prospectus included therein (as then amended or
                  supplemented), in conformity in all material respects with the
                  requirements of the Securities Act and the Trust Indenture
                  Act, as such broker-dealer reasonably may request prior to the
                  expiration of the Resale Period, for use in connection with
                  resales of Exchange Notes;

                           (iii) promptly notify each broker-dealer that has
                  requested and received copies of the prospectus included in
                  such registration statement, and confirm such advice in
                  writing, (A) in cases where a broker-dealer has specifically
                  requested information on when such Exchange Offer Registration
                  Statement or the prospectus included therein or any prospectus
                  amendment

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                  or supplement or post-effective amendment has been filed, or,
                  information with respect to any comments by the Commission and
                  by the blue sky or securities commissioner or regulator of any
                  state or province with respect thereto or on any request by
                  the Commission for amendments or supplements to such Exchange
                  Registration Statement or prospectus or for additional
                  information, (B) with respect to the Exchange Offer
                  Registration Statement or any post-effective amendment, when
                  the same has become effective, (C) of the issuance by the
                  Commission of any stop order suspending the effectiveness of
                  such Exchange Offer Registration Statement or the initiation
                  or threatening of any proceedings for that purpose, (D) if at
                  any time the representations and warranties of the Company
                  contemplated by Section 5 cease to be true and correct in all
                  material respects, (E) of the receipt by the Company of any
                  notification with respect to the suspension of the
                  qualification of the Exchange Notes for sale in any
                  jurisdiction or the initiation or threatening of any
                  proceeding for such purpose, or (F) at any time during the
                  Resale Period when a prospectus is required to be delivered
                  under the Securities Act, that such Exchange Offer
                  Registration Statement, prospectus, prospectus amendment or
                  supplement or post-effective amendment does not conform in all
                  material respects to the applicable requirements of the
                  Securities Act and the Trust Indenture Act and any applicable
                  Canadian Securities Laws or contains an untrue statement of a
                  material fact or omits to state any material fact required to
                  be stated therein or necessary to make the statements therein
                  not misleading in light of the circumstances then existing;

                           (iv) in the event that the Company would be required,
                  pursuant to Section 3(e)(iii)(F) above, to notify any
                  broker-dealers holding Exchange Notes, without delay prepare
                  and furnish to each such holder a reasonable number of copies
                  of a prospectus supplemented or amended so that, as thereafter
                  delivered to purchasers of such Exchange Notes during the
                  Resale Period, such prospectus shall conform in all material
                  respects to the applicable requirements of the Securities Act
                  and the Trust Indenture Act and shall not contain an untrue
                  statement of a material fact or omit to state a material fact
                  required to be stated therein or necessary to make the
                  statements therein not misleading in light of the
                  circumstances then existing;

                           (v) use its reasonable best efforts to obtain the
                  withdrawal of any order suspending the effectiveness of such
                  Exchange Offer Registration Statement or any post-effective
                  amendment thereto at the earliest practicable date;

                           (vi) use its reasonable best efforts to (A) register
                  or qualify the Exchange Notes under the securities laws or
                  blue sky laws of such jurisdictions as are contemplated by
                  Section 2(a) and ensure that the Exchange Securities can be
                  offered in a private placement in each of the provinces of
                  Canada where holders are resident on or prior to the
                  commencement of the Exchange Offer, (B) keep such
                  registrations or qualifications in effect and comply with such
                  laws so as to permit the continuance of offers, sales and
                  dealings therein in such jurisdictions until the expiration of
                  the Resale Period and (C) take any and all other actions as
                  may be reasonably necessary or advisable to enable each
                  broker-dealer holding Exchange Notes not acquired directly
                  from the Company to consummate the disposition thereof in such
                  jurisdictions; provided, however, that the Company shall not
                  be required for any such purpose to (1) qualify as a foreign
                  corporation in any jurisdiction wherein it would not otherwise
                  be required to qualify but for the requirements of this
                  Section 3(c)(vi), (2) consent to general service of process or
                  taxation in any such jurisdiction, (3) make any changes to its
                  articles of incorporation or by-laws or any agreement between
                  it and its shareholders, or (4) file a prospectus in any
                  province or territory of Canada to make the Transfer
                  Restricted Securities or Exchange Securities freely tradable
                  in Canada;

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                           (vii) use its reasonable best efforts to obtain the
                  consent or approval of each governmental agency or authority,
                  whether federal, state or local, which may be required to
                  effect the Exchange Registration, the Exchange Offer and the
                  offering and sale of Exchange Notes by broker-dealers during
                  the Resale Period;

                           (viii) provide a CUSIP number for all Exchange Notes,
                  not later than the applicable Effective Time; and

                           (ix) comply with all applicable rules and regulations
                  of the Commission, and make generally available to its
                  securityholders as soon as practicable but no later than
                  eighteen months after the effective date of such Exchange
                  Offer Registration Statement, an earning statement of the
                  Company and its subsidiaries complying with Section 11(a) of
                  the Securities Act (including, at the option of the Company,
                  Rule 158 thereunder).

                  (d) In connection with the Company's obligations with respect
         to the Shelf Registration, if applicable, the Company shall, as soon as
         practicable (or as otherwise specified):

                           (i) prepare and file with the Commission within the
                  time periods specified in Section 2(b), a Shelf Registration
                  Statement on any form which may be utilized by the Company and
                  which shall register all of the Transfer Restricted Securities
                  for resale by the holders thereof in accordance with such
                  method or methods of disposition as may be specified by such
                  of the holders as, from time to time, may be Electing Holders
                  and use its best efforts to cause such Shelf Registration
                  Statement to become effective within the time periods
                  specified in Section 2(b);

                           (ii) not less than 30 calendar days prior to the
                  Effective Time of the Shelf Registration Statement, mail the
                  Notice and Questionnaire to the holders of Transfer Restricted
                  Securities; provided that no holder shall be entitled to be
                  named as a selling securityholder in the Shelf Registration
                  Statement as of the Effective Time, and no holder shall be
                  entitled to use the prospectus forming a part thereof for
                  resales of Transfer Restricted Securities at any time, unless
                  such holder has returned a completed and signed Notice and
                  Questionnaire to the Company by the deadline for response set
                  forth therein; and provided, further, holders of Transfer
                  Restricted Securities shall have at least 28 calendar days
                  from the date on which the Notice and Questionnaire is first
                  mailed to such holders to return a completed and signed Notice
                  and Questionnaire to the Company;

                           (iii) after the Effective Time of the Shelf
                  Registration Statement, upon the request of any holder of
                  Transfer Restricted Securities that is not then an Electing
                  Holder, promptly send a Notice and Questionnaire to such
                  holder; provided that the Company shall not be required to
                  take any action to name such holder as a selling
                  securityholder in the Shelf Registration Statement or to
                  enable such holder to use the prospectus forming a part
                  thereof for resales of Transfer Restricted Securities until 30
                  business days after such holder has returned a completed and
                  signed Notice and Questionnaire to the Company;

                           (iv) as soon as practicable prepare and file with the
                  Commission such amendments and supplements to such Shelf
                  Registration Statement and the prospectus included therein as
                  may be necessary to effect and maintain the effectiveness of
                  such Shelf Registration Statement for the period specified in
                  Section 2(b) hereof and as may be required by the applicable
                  rules and regulations of the Commission and the instructions
                  applicable to the form of such Shelf Registration Statement,
                  and furnish to the Electing Holders copies of any such
                  supplement or amendment simultaneously with or prior to its
                  being used or filed with the Commission;

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                           (v) comply with the provisions of the Securities Act
                  and any applicable Canadian Securities Laws with respect to
                  the disposition of all of the Transfer Restricted Securities
                  covered by such Shelf Registration Statement in accordance
                  with the intended methods of disposition by the Electing
                  Holders provided for in such Shelf Registration Statement;

                           (vi) provide (A) the Electing Holders, (B) the
                  underwriters (which term, for purposes of this Exchange and
                  Registration Rights Agreement, shall include a person deemed
                  to be an underwriter within the meaning of Section 2(a)(11) of
                  the Securities Act), if any, thereof, (C) any sales or
                  placement agent therefor, (D) counsel for any such underwriter
                  or agent and (E) not more than one counsel for all the
                  Electing Holders the opportunity to review and provide
                  comments with respect to such Shelf Registration Statement,
                  each prospectus included therein or filed with the Commission
                  and each amendment or supplement thereto;

                           (vii) for a reasonable period prior to the filing of
                  such Shelf Registration Statement, and throughout the period
                  specified in Section 2(b), make available during reasonable
                  business hours at the Company's principal place of business or
                  such other reasonable place for inspection by the persons
                  referred to in Section 3(d)(vi) who shall certify to the
                  Company that they have a current intention to sell the
                  Transfer Restricted Securities pursuant to the Shelf
                  Registration such financial and other information and books
                  and records of the Company, and cause the officers, employees,
                  counsel and independent chartered accountants of the Company
                  to respond to such inquiries, as shall be reasonably
                  necessary, in the judgment of the respective counsel referred
                  to in such Section, to conduct a reasonable investigation
                  within the meaning of Section 11 of the Securities Act;
                  provided, however, that each such party shall be required to
                  agree in writing to maintain in confidence and not to disclose
                  to any other person any information or records reasonably
                  designated by the Company as being confidential, until such
                  time as (A) such information becomes a matter of public record
                  (whether by virtue of its inclusion in such registration
                  statement or otherwise), or (B) such person shall be required
                  so to disclose such information pursuant to a subpoena or
                  order of any court or other governmental agency or body having
                  jurisdiction over the matter (subject to the requirements of
                  such order, and only after such person shall have given the
                  Company prompt prior written notice of such requirement), or
                  (C) such information is required to be set forth in such Shelf
                  Registration Statement or the prospectus included therein or
                  in an amendment to such Shelf Registration Statement or an
                  amendment or supplement to such prospectus in order that such
                  Shelf Registration Statement, prospectus, amendment or
                  supplement, as the case may be, complies with applicable
                  requirements of the United States federal securities laws and
                  the rules and regulations of the Commission and does not
                  contain an untrue statement of a material fact or omit to
                  state therein a material fact required to be stated therein or
                  necessary to make the statements therein not misleading in
                  light of the circumstances then existing;

                           (viii) promptly notify each of the Electing Holders,
                  any sales or placement agent therefor and any underwriter
                  thereof (which notification may be made through any managing
                  underwriter that is a representative of such underwriter for
                  such purpose) and confirm such advice in writing, (A) in cases
                  where a broker-dealer has specifically requested information
                  on when such Shelf Registration Statement or the prospectus
                  included therein or any prospectus amendment or supplement or
                  post-effective amendment has been filed, or, with respect to
                  any comments by the Commission and by the blue sky or
                  securities commissioner or regulator of any state or province
                  with respect thereto (which comments need only be provided to
                  any underwriter in the event of an underwritten offering
                  pursuant to Section 7 hereof or any sales or placement agent
                  in an offering of such Electing Holders' Transfer Restricted
                  Securities and in the event there is no such underwriter or
                  sales or placement agent

                                       9
<PAGE>

                  the Company will not be under an obligation to provide such
                  comments to any Electing Holder) or on any request by the
                  Commission for amendments or supplements to such Shelf
                  Registration Statement or prospectus or for additional
                  information, (B) with respect to such Shelf Registration
                  Statement or any post-effective amendment, when the same has
                  become effective, (C) of the issuance by the Commission of any
                  stop order suspending the effectiveness of such Shelf
                  Registration Statement or the initiation or threatening of any
                  proceedings for that purpose, (D) if at any time the
                  representations and warranties of the Company contemplated by
                  Section 3(d)(xvii) or Section 5 cease to be true and correct
                  in all material respects, (E) of the receipt by the Company of
                  any notification with respect to the suspension of the
                  qualification of the Transfer Restricted Securities for sale
                  in any jurisdiction or the initiation or threatening of any
                  proceeding for such purpose, or (F) if at any time when a
                  prospectus is required to be delivered under the Securities
                  Act, that such Shelf Registration Statement, prospectus,
                  prospectus amendment or supplement or post-effective amendment
                  does not conform in all material respects to the applicable
                  requirements of the Securities Act and the Trust Indenture Act
                  and any applicable Canadian Securities Laws or contains an
                  untrue statement of a material fact or omits to state any
                  material fact required to be stated therein or necessary to
                  make the statements therein not misleading in light of the
                  circumstances then existing;

                           (ix) use its reasonable best efforts to obtain the
                  withdrawal of (A) any order suspending the effectiveness of
                  such registration statement or any post-effective amendment
                  thereto at the earliest practicable date, (B) the suspension
                  of the qualification of the Transfer Restricted Securities for
                  sale in any jurisdiction or (C) the initiation or threatening
                  of any proceeding for such purpose;

                           (x) if requested by any managing underwriter or
                  underwriters, any placement or sales agent or any Electing
                  Holder, promptly incorporate in a prospectus supplement or
                  post-effective amendment such information as is required by
                  the applicable rules and regulations of the Commission and as
                  such managing underwriter or underwriters, such agent or such
                  Electing Holder specifies should be included therein relating
                  to the terms of the sale of such Transfer Restricted
                  Securities, including information with respect to the
                  principal amount of Transfer Restricted Securities being sold
                  by such Electing Holder or agent or to any underwriters, the
                  name and description of such Electing Holder, agent or
                  underwriter, the offering price of such Transfer Restricted
                  Securities and any discount, commission or other compensation
                  payable in respect thereof, the purchase price being paid
                  therefor by such underwriters and with respect to any other
                  terms of the offering of the Transfer Restricted Securities to
                  be sold by such Electing Holder or agent or to such
                  underwriters; and make all required filings of such prospectus
                  supplement or post-effective amendment promptly after
                  notification of the matters to be incorporated in such
                  prospectus supplement or post-effective amendment;

                           (xi) furnish to each Electing Holder, each placement
                  or sales agent, if any, therefor, each underwriter, if any,
                  thereof and the respective counsel referred to in Section
                  3(d)(vi) an executed copy (or, in the case of an Electing
                  Holder, a conformed copy) of such Shelf Registration
                  Statement, each such amendment and supplement thereto (in each
                  case including all exhibits thereto (in the case of an
                  Electing Holder of Transfer Restricted Securities, upon
                  request) and documents incorporated by reference therein) and
                  such number of copies of such Shelf Registration Statement
                  (excluding exhibits thereto and documents incorporated by
                  reference therein unless specifically so requested by such
                  Electing Holder, agent or underwriter, as the case may be) and
                  of the prospectus included in such Shelf Registration
                  Statement (including each preliminary prospectus and any
                  summary prospectus), in

                                       10
<PAGE>

                  conformity in all material respects with the applicable
                  requirements of the Securities Act and the Trust Indenture Act
                  and any applicable Canadian Securities Laws, and such other
                  documents, as such Electing Holder, agent, if any, and
                  underwriter, if any, may reasonably request in order to
                  facilitate the offering and disposition of the Transfer
                  Restricted Securities owned by such Electing Holder, offered
                  or sold by such agent or underwritten by such underwriter and
                  to permit such Electing Holder, agent and underwriter to
                  satisfy the prospectus delivery requirements of the Securities
                  Act and any applicable Canadian Securities Laws; and the
                  Company hereby consents to the use of such prospectus
                  (including such preliminary and summary prospectus) and any
                  amendment or supplement thereto by each such Electing Holder
                  and by any such agent and underwriter, in each case in the
                  form most recently provided to such person by the Company, in
                  connection with the offering and sale of the Transfer
                  Restricted Securities covered by the prospectus (including
                  such preliminary and summary prospectus) or any supplement or
                  amendment thereto provided, however, that the Company shall
                  not be required for any such purpose to file a prospectus in
                  any province or territory of Canada to make the Transfer
                  Restricted Securities or Exchange Securities freely tradable
                  in Canada;

                           (xii) use its reasonable best efforts to (A) register
                  or qualify the Transfer Restricted Securities to be included
                  in such Shelf Registration Statement under such securities
                  laws or blue sky laws of such jurisdictions as any Electing
                  Holder and each placement or sales agent, if any, therefor and
                  underwriter, if any, thereof shall reasonably request and
                  ensure that any Transfer Restricted Securities can be offered
                  in a private placement in all the provinces of Canada where
                  the holders are resident, (B) keep such registrations or
                  qualifications in effect and comply with such laws so as to
                  permit the continuance of offers, sales and dealings therein
                  in such jurisdictions during the period the Shelf Registration
                  is required to remain effective under Section 2(b) above and
                  for so long as may be necessary to enable any such Electing
                  Holder, agent or underwriter to complete its distribution of
                  Securities pursuant to such Shelf Registration Statement and
                  (C) take any and all other actions as may be reasonably
                  necessary or advisable to enable each such Electing Holder,
                  agent, if any, and underwriter, if any, to consummate the
                  disposition in such jurisdictions of such Transfer Restricted
                  Securities; provided, however, that the Company shall not be
                  required for any such purpose to (1) qualify as a foreign
                  corporation in any jurisdiction wherein it would not otherwise
                  be required to qualify but for the requirements of this
                  Section 3(d)(xii), (2) consent to general service of process
                  or taxation in any such jurisdiction, (3) make any changes to
                  its certificate of incorporation or by-laws or any agreement
                  between it and its shareholders or, as applicable, (4) file a
                  prospectus in any province or territory of Canada to make the
                  Transfer Restricted Securities or Exchange Securities freely
                  tradable in Canada;

                           (xiii) use its reasonable best efforts to obtain the
                  consent or approval of each governmental agency or authority,
                  whether federal, state, provincial or local, which may be
                  required to effect the Shelf Registration or the offering or
                  sale in connection therewith or to enable the selling holder
                  or holders to offer, or to consummate the disposition of,
                  their Transfer Restricted Securities in the United States;

                           (xiv) unless any Transfer Restricted Securities shall
                  be in book-entry only form, cooperate with the Electing
                  Holders and the managing underwriters, if any, to facilitate
                  the timely preparation and delivery of certificates
                  representing Transfer Restricted Securities to be sold, which
                  certificates, if so required by any securities exchange upon
                  which any Transfer Restricted Securities are listed, shall be
                  penned, lithographed or engraved, or produced by any
                  combination of such methods, on steel engraved borders, and
                  which certificates shall not bear any restrictive legends;
                  and, in the case of an underwritten offering, enable such
                  Transfer

                                       11
<PAGE>

                  Restricted Securities to be in such denominations and
                  registered in such names as the managing underwriters may
                  request at least two business days prior to any sale of the
                  Transfer Restricted Securities;

                           (xv) provide a CUSIP number for all Transfer
                  Restricted Securities, not later than the applicable Effective
                  Time;

                           (xvi) enter into one or more underwriting agreements,
                  engagement letters, agency agreements, "best efforts"
                  underwriting agreements or similar agreements, as appropriate,
                  including customary provisions relating to indemnification and
                  contribution, and take such other actions in connection
                  therewith as any Electing Holders aggregating at least 33% in
                  aggregate principal amount of the Transfer Restricted
                  Securities at the time outstanding shall request in order to
                  expedite or facilitate the disposition of such Transfer
                  Restricted Securities in the United States;

                           (xvii) whether or not an agreement of the type
                  referred to in Section 3(d)(xvi) hereof is entered into and
                  whether or not any portion of the offering contemplated by the
                  Shelf Registration is an underwritten offering or is made
                  through a placement or sales agent or any other entity, (A)
                  make such representations and warranties to the Electing
                  Holders and the placement or sales agent, if any, therefor and
                  the underwriters, if any, thereof in form, substance and scope
                  as are customarily made in connection with an offering of debt
                  securities pursuant to any appropriate agreement or to a
                  registration statement filed on the form applicable to the
                  Shelf Registration; (B) obtain an opinion of counsel to the
                  Company in customary form and covering such matters, of the
                  type customarily covered by such an opinion, as the managing
                  underwriters, if any, or as any Electing Holders of at least
                  33% in aggregate principal amount of the Transfer Restricted
                  Securities at the time outstanding may reasonably request,
                  addressed to such Electing Holder or Electing Holders and the
                  placement or sales agent, if any, therefor and the
                  underwriters, if any, thereof and dated the effective date of
                  such Shelf Registration Statement (and if such Shelf
                  Registration Statement contemplates an underwritten offering
                  of a part or all of the Transfer Restricted Securities, dated
                  the date of the closing under the underwriting agreement
                  relating thereto) it being agreed that the matters to be
                  covered by such opinion shall include the due incorporation
                  and good standing of the Company; the qualification of the
                  Company to transact business as a foreign corporation or extra
                  provincial corporation; the due authorization, execution and
                  delivery of the relevant agreement of the type referred to in
                  Section 3(d)(xvi) hereof; the due authorization, execution,
                  authentication and issuance, and the validity and
                  enforceability, of the Securities; the absence of material
                  legal or governmental proceedings involving the Company; the
                  absence of a conflict of the offering with material agreements
                  binding upon the Company; the absence of governmental
                  approvals required to be obtained in connection with the Shelf
                  Registration, the offering and sale of the Transfer Restricted
                  Securities, this Exchange and Registration Rights Agreement or
                  any agreement of the type referred to in Section 3(d)(xvi)
                  hereof, except such approvals as may be required under state
                  securities or blue sky laws; the material compliance as to
                  form of such Shelf Registration Statement and any documents
                  incorporated by reference therein and of the Indenture with
                  the requirements of the Securities Act and the Trust Indenture
                  Act, respectively; and, as of the date of the opinion and of
                  the Shelf Registration Statement or most recent post-effective
                  amendment thereto, as the case may be, the absence from such
                  Shelf Registration Statement and the prospectus included
                  therein, as then amended or supplemented, and from the
                  documents incorporated by reference therein (in each case
                  other than the financial statements and other financial
                  information contained therein) of an untrue statement of a
                  material fact or the omission to state therein a material fact
                  necessary to make the statements therein not misleading (in
                  the case of such

                                       12
<PAGE>

                  documents, in the light of the circumstances existing at the
                  time that such documents were filed with the Commission under
                  the Exchange Act)); (C) obtain a "cold comfort" letter or
                  letters from the independent chartered accountants of the
                  Company addressed to the selling Electing Holders, the
                  placement or sales agent, if any, therefor or the
                  underwriters, if any, thereof, dated (i) the effective date of
                  such Shelf Registration Statement and (ii) the effective date
                  of any prospectus supplement to the prospectus included in
                  such Shelf Registration Statement or post-effective amendment
                  to such Shelf Registration Statement which includes unaudited
                  or audited financial statements as of a date or for a period
                  subsequent to that of the latest such statements included in
                  such prospectus (and, if such Shelf Registration Statement
                  contemplates an underwritten offering pursuant to any
                  prospectus supplement to the prospectus included in such Shelf
                  Registration Statement or post-effective amendment to such
                  Shelf Registration Statement which includes unaudited or
                  audited financial statements as of a date or for a period
                  subsequent to that of the latest such statements included in
                  such prospectus, dated the date of the closing under the
                  underwriting agreement relating thereto), such letter or
                  letters to be in customary form and covering such matters of
                  the type customarily covered by letters of such type; (D)
                  deliver such documents and certificates, including officers'
                  certificates, as may be reasonably requested by any Electing
                  Holders of at least 33% in aggregate principal amount of the
                  Transfer Restricted Securities at the time outstanding or the
                  placement or sales agent, if any, therefor and the managing
                  underwriters, if any, thereof to evidence the accuracy of the
                  representations and warranties made pursuant to clause (A)
                  above or those contained in Section 5(a) hereof and the
                  compliance with or satisfaction of any agreements or
                  conditions contained in the underwriting agreement or other
                  agreement entered into by the Company; and (E) undertake such
                  obligations relating to expense reimbursement, indemnification
                  and contribution as are provided in Section 6 hereof;

                           (xviii) notify in writing each holder of Transfer
                  Restricted Securities of any proposal by the Company to amend
                  or waive any provision of this Exchange and Registration
                  Rights Agreement pursuant to Section 9(h) hereof and of any
                  amendment or waiver effected pursuant thereto, each of which
                  notices shall contain the text of the amendment or waiver
                  proposed or effected, as the case may be;

                           (xix) in the event that any broker-dealer registered
                  under the Exchange Act shall underwrite any Transfer
                  Restricted Securities or participate as a member of an
                  underwriting syndicate or selling group or "assist in the
                  distribution" (within the meaning of the Conduct Rules (the
                  "Conduct Rules") of the National Association of Securities
                  Dealers, Inc. ("NASD") or any successor thereto, as amended
                  from time to time) thereof, whether as a holder of such
                  Transfer Restricted Securities or as an underwriter, a
                  placement or sales agent or a broker or dealer in respect
                  thereof, or otherwise, assist such broker-dealer in complying
                  with the requirements of such Conduct Rules, including by (A)
                  if such Conduct Rules shall so require, engaging a "qualified
                  independent underwriter" (as defined in such Conduct Rules) to
                  participate in the preparation of the Shelf Registration
                  Statement relating to such Transfer Restricted Securities, to
                  exercise usual standards of due diligence in respect thereto
                  and, if any portion of the offering contemplated by such Shelf
                  Registration Statement is an underwritten offering or is made
                  through a placement or sales agent, to recommend the yield of
                  such Transfer Restricted Securities, (B) indemnifying any such
                  qualified independent underwriter to the extent of the
                  indemnification of underwriters provided in Section 6 hereof
                  (or to such other customary extent as may be requested by such
                  underwriter), and (C) providing such information to such
                  broker-dealer as may be required in order for such
                  broker-dealer to comply with the requirements of the Conduct
                  Rules; and

                                       13
<PAGE>

                           (xx) comply with all applicable rules and regulations
                  of the Commission, and make generally available to its
                  securityholders as soon as practicable but in any event not
                  later than eighteen months after the effective date of such
                  Shelf Registration Statement, an earning statement of the
                  Company and its subsidiaries complying with Section 11(a) of
                  the Securities Act (including, at the option of the Company,
                  Rule 158 thereunder).

                  (e) In the event that the Company would be required, pursuant
         to Section 3(c)(iii)(F) or Section 3(d)(viii)(F) above, to notify each
         broker-dealer, the Electing Holders, the placement or sales agent, if
         any, therefor and the managing underwriters, if any, thereof, the
         Company shall without delay prepare and furnish to each of the Electing
         Holders, to each placement or sales agent, if any, and to each such
         underwriter, if any, a reasonable number of copies of a prospectus
         supplemented or amended so that, as thereafter delivered to purchasers
         of Transfer Restricted Securities, such prospectus shall conform in all
         material respects to the applicable requirements of the Securities Act
         and the Trust Indenture Act and any applicable Canadian Securities
         Laws, and shall not contain an untrue statement of a material fact or
         omit to state a material fact required to be stated therein or
         necessary to make the statements therein not misleading in light of the
         circumstances then existing. Each Electing Holder agrees that upon
         receipt of any notice from the Company pursuant to Section 3(c)(iii)(F)
         or Section 3(d)(viii)(F) hereof, such broker-dealer, Electing Holder,
         underwriter or placement or sales agent shall forthwith discontinue the
         disposition of Transfer Restricted Securities pursuant to the Shelf
         Registration Statement applicable to such Transfer Restricted
         Securities until such broker-dealer, Electing Holder, underwriter or
         placement or sales agent shall have received copies of such amended or
         supplemented prospectus, and if so directed by the Company, such
         broker-dealer, Electing Holder, underwriter or placement or sales agent
         shall destroy or deliver to the Company (at the Company's expense) all
         copies, other than permanent file copies, then in such Electing
         Holder's possession of the prospectus covering such Transfer Restricted
         Securities at the time of receipt of such notice.

                  (f) In the event of a Shelf Registration, in addition to the
         information required to be provided by each Electing Holder in its
         Notice Questionnaire, the Company may require such Electing Holder to
         furnish to the Company such additional information regarding such
         Electing Holder and such Electing Holder's intended method of
         distribution of Transfer Restricted Securities as may be required in
         the reasonable judgment of counsel for the Company in order to comply
         with the Securities Act. Each such Electing Holder agrees to notify the
         Company as promptly as practicable of any inaccuracy or change in
         information previously furnished by such Electing Holder to the Company
         or of the occurrence of any event in either case as a result of which
         any prospectus relating to such Shelf Registration contains or would
         contain an untrue statement of a material fact regarding such Electing
         Holder or such Electing Holder's intended method of disposition of such
         Transfer Restricted Securities or omits to state any material fact
         regarding such Electing Holder or such Electing Holder's intended
         method of disposition of such Transfer Restricted Securities required
         to be stated therein or necessary to make the statements therein not
         misleading in light of the circumstances then existing, and promptly to
         furnish to the Company any additional information required to correct
         and update any previously furnished information or required so that
         such prospectus shall not contain, with respect to such Electing Holder
         or the disposition of such Transfer Restricted Securities, an untrue
         statement of a material fact or omit to state a material fact required
         to be stated therein or necessary to make the statements therein not
         misleading in light of the circumstances then existing.

                  (g) As a condition to its participation in the Exchange Offer
         pursuant to the terms of this Agreement, each holder of Transfer
         Restricted Securities shall furnish, upon the request of the Company,
         prior to the completion of the Exchange Offer, a written representation
         to the Company (which may be contained in the letter of transmittal
         contemplated by the Exchange Registration Statement) to the effect that
         (A) it is not an affiliate of the Company, (B) it is not engaged in,
         and does not intend to engage in, and has no arrangement or
         understanding with any person to participate in, a

                                       14
<PAGE>

         distribution of the Exchange Securities to be issued in the Exchange
         Offer and (C) it is acquiring the Exchange Securities in its ordinary
         course of business, and such holder shall make such other written
         representations as the Company may reasonably request in order to
         comply with applicable Canadian securities laws. As a condition to its
         participation in the Exchange Offer pursuant to the terms of this
         Agreement, each holder shall acknowledge and agree that any
         broker-dealer and any such holder using the Exchange Offer to
         participate in a distribution of the securities to be acquired in the
         Exchange Offer (1) could not under Commission policy as in effect on
         the date of this Agreement rely on the position of the Commission
         enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and
         Exxon Capital Holdings Corporation (available May 13, 1988), as
         interpreted in the Commission's letter to Shearman & Sterling dated
         July 2, 1993, and similar no-action letters and (2) must comply with
         the registration and prospectus delivery requirements of the Securities
         Act in connection with a secondary resale transaction and that such a
         secondary resale transaction must be covered by an effective
         registration statement containing the selling security holder
         information required by Item 507 or 508, as applicable, of Regulation
         S-K if the resales are of Exchange Securities obtained by such holder
         in exchange for Securities acquired by such holder directly from the
         Company.

                  (h) Until the expiration of two years after the Closing Date,
         the Company will not, and will not permit any of its "affiliates" (as
         defined in Rule 144) to, resell any of the Securities that have been
         reacquired by any of them except pursuant to an effective registration
         statement under the Securities Act.

         4. Registration Expenses.

         The Company agrees to bear and to pay or cause to be paid promptly all
expenses incident to the Company's performance of or compliance with this
Exchange and Registration Rights Agreement, including (a) all Commission and any
NASD registration, filing and review fees and expenses including reasonable fees
and disbursements of counsel for the placement or sales agent or underwriters in
connection with such registration, filing and review, (b) all fees and expenses
in connection with the qualification of the Securities for offering and sale
under the State securities and blue sky laws referred to in Section 3(d)(xii)
hereof and determination of their eligibility for investment under the laws of
such jurisdictions as any managing underwriters or the Electing Holders may
designate, including any fees and disbursements of counsel for the Electing
Holders or underwriters in connection with such qualification and determination,
(c) all expenses relating to the preparation, printing, production, distribution
and reproduction of each registration statement required to be filed hereunder,
each prospectus included therein or prepared for distribution pursuant hereto,
each amendment or supplement to the foregoing, the expenses of preparing the
Securities for delivery and the expenses of printing or producing any
underwriting agreements, agreements among underwriters, selling agreements and
blue sky or legal investment memoranda and all other documents in connection
with the offering, sale or delivery of Securities to be disposed of (including
certificates representing the Securities), (d) messenger, telephone and delivery
expenses relating to the offering, sale or delivery of Securities and the
preparation of documents referred in clause (c) above, (e) fees and expenses of
the Trustee under the Indenture, any agent of the Trustee and any counsel for
the Trustee and of any collateral agent or custodian, (f) internal expenses
(including all salaries and expenses of the Company's officers and employees
performing legal or accounting duties), (g) fees, disbursements and expenses of
counsel and independent chartered accountants of the Company (including the
expenses of any opinions or "cold comfort" letters required by or incident to
such performance and compliance), (h) fees, disbursements and expenses of any
"qualified independent underwriter" engaged pursuant to Section 3(d)(xix)
hereof, (i) reasonable fees, disbursements and expenses of one counsel for the
Electing Holders retained in connection with a Shelf Registration, as selected
by the Electing Holders of at least a majority in aggregate principal amount of
the Transfer Restricted Securities held by Electing Holders (which counsel shall
be reasonably satisfactory to the

                                       15
<PAGE>

Company), (j) any fees charged by securities rating services for rating the
Securities, and (k) fees, expenses and disbursements of any other persons,
including special experts, retained by the Company in connection with such
registration (collectively, the "Registration Expenses"). To the extent that any
Registration Expenses are incurred, assumed or paid by any holder of Transfer
Restricted Securities or any placement or sales agent therefor or underwriter
thereof, the Company shall reimburse such person for the full amount of the
Registration Expenses so incurred, assumed or paid promptly after receipt of a
request therefor. Notwithstanding the foregoing, the holders of the Transfer
Restricted Securities being registered shall pay all agency fees and commissions
and underwriting discounts and commissions attributable to the sale of such
Transfer Restricted Securities and the fees and disbursements of any counsel or
other advisors or experts retained by such holders (severally or jointly), other
than the counsel and experts specifically referred to above.

         5. Representations and Warranties.

         The Company represents and warrants to, and agrees with, each Purchaser
and each of the holders from time to time of Transfer Restricted Securities
that:

                  (a) Each registration statement covering Transfer Restricted
         Securities and each prospectus (including any preliminary or summary
         prospectus) contained therein or furnished pursuant to Section 3(d) or
         Section 3(c) hereof and any further amendments or supplements to any
         such registration statement or prospectus, when it becomes effective or
         is filed with the Commission, as the case may be, and, in the case of
         an underwritten offering of Transfer Restricted Securities, at the time
         of the closing under the underwriting agreement relating thereto, will
         conform in all material respects to the requirements of the Securities
         Act and the Trust Indenture Act and any applicable Canadian Securities
         Laws, and will not contain an untrue statement of a material fact or
         omit to state a material fact required to be stated therein or
         necessary to make the statements therein, in the case of a registration
         statement, not misleading and, in the case of a prospectus not
         misleading in light of the circumstances under which they were made;
         and at all times subsequent to the Effective Time when a prospectus
         would be required to be delivered under the Securities Act, other than
         from (i) such time as a notice has been given to holders of Transfer
         Restricted Securities pursuant to Section 3(d)(viii)(F) or Section
         3(c)(iii)(F) hereof until (ii) such time as the Company furnishes an
         amended or supplemented prospectus pursuant to Section 3(e) or Section
         3(c)(iv) hereof, each such registration statement, and each prospectus
         (including any summary prospectus) contained therein or furnished
         pursuant to Section 3(d) or Section 3(c) hereof, as then amended or
         supplemented, will conform in all material respects to the requirements
         of the Securities Act and the Trust Indenture Act and any applicable
         Canadian Securities Laws, and will not contain an untrue statement of a
         material fact or omit to state a material fact required to be stated
         therein or necessary to make the statements therein not misleading in
         the light of the circumstances then existing; provided, however, that
         this representation and warranty shall not apply to any statements or
         omissions made in reliance upon and in conformity with information
         furnished in writing to the Company by a holder of Transfer Restricted
         Securities or any underwriter or placement agent of any offering
         described therein expressly for use therein.

                  (b) Any documents incorporated by reference in any prospectus
         referred to in Section 5(a) hereof, when they become or became
         effective or are or were filed with the Commission, as the case may be,
         will conform or conformed in all material respects to the requirements
         of the Securities Act or the Exchange Act or any applicable Canadian
         Securities Law, as applicable, and none of such documents will contain
         or contained an untrue statement of a material fact or will omit or
         omitted to state a material fact required to be stated therein or
         necessary to make the statements therein not misleading; provided,
         however, that this representation and warranty shall not apply to any
         statements or omissions made in reliance upon and in conformity with
         information furnished in writing to the

                                       16
<PAGE>

         Company by a holder of Transfer Restricted Securities or any
         underwriter or placement agent of any offering described therein
         expressly for use therein.

                  (c) The compliance by the Company with all of the provisions
         of this Exchange and Registration Rights Agreement and the consummation
         of the transactions herein contemplated will not conflict with or
         result in a breach of any of the terms or provisions of, or constitute
         a default under, any indenture, mortgage, deed of trust, loan agreement
         or other agreement or instrument to which the Company or any subsidiary
         of the Company is a party or by which the Company or any subsidiary of
         the Company is bound or to which any of the property or assets of the
         Company or any subsidiary of the Company is subject, nor will such
         action result in any violation of the provisions of the certificate of
         incorporation or by-laws or other organizational documents, as
         applicable, of the Company or any statute or any order, rule or
         regulation of any court or governmental agency or body having
         jurisdiction over the Company or any subsidiary of the Company or any
         of their properties; and no consent, approval, authorization, order,
         registration or qualification of or with any such court or governmental
         agency or body is required for the consummation by the Company of the
         transactions contemplated by this Exchange and Registration Rights
         Agreement, except the registration under the Securities Act of the
         Securities, qualification of the Indenture under the Trust Indenture
         Act and such consents, approvals, authorizations, registrations or
         qualifications as may be required under any applicable Canadian
         Securities Laws, Canadian federal or provincial corporate law or State
         securities or blue sky laws in connection with the offering and
         distribution of the Securities.

                  (d) This Exchange and Registration Rights Agreement has been
         duly authorized, executed and delivered by the Company.

         6. Indemnification.

                  (a) Indemnification by the Company. The Company will indemnify
         and hold harmless each of the holders of Transfer Restricted Securities
         included in an Exchange Offer Registration Statement, each of the
         Electing Holders of Transfer Restricted Securities included in a Shelf
         Registration Statement and each person who participates as a placement
         or sales agent or as an underwriter in any offering or sale of such
         Transfer Restricted Securities against any losses, claims, damages or
         liabilities, joint or several, to which such holder, agent or
         underwriter may become subject under the Securities Act or otherwise,
         insofar as such losses, claims, damages or liabilities (or actions in
         respect thereof) arise out of or are based upon an untrue statement or
         alleged untrue statement of a material fact contained in any Exchange
         Offer Registration Statement or Shelf Registration Statement, as the
         case may be, under which such Transfer Restricted Securities were
         registered under the Securities Act, or any preliminary, final or
         summary prospectus contained therein or furnished by the Company to any
         such holder, Electing Holder, agent or underwriter, or any amendment or
         supplement thereto, or arise out of or are based upon the omission or
         alleged omission to state therein a material fact required to be stated
         therein or necessary to make the statements therein not misleading, and
         will reimburse such holder, such Electing Holder, such agent and such
         underwriter for any legal or other expenses reasonably incurred by them
         in connection with investigating or defending any such action or claim
         as such expenses are incurred; provided, however, that the Company
         shall not be liable to any such person in any such case to the extent
         that any such loss, claim, damage or liability arises out of or is
         based upon an untrue statement or alleged untrue statement or omission
         or alleged omission made in such registration statement, or
         preliminary, final or summary prospectus, or amendment or supplement
         thereto, in reliance upon and in conformity with written information
         furnished to the Company by such person expressly for use therein
         provided, further, that in a disposition of Transfer Restricted
         Securities that does not involve (in whole or in part) an underwritten
         offering conducted pursuant to Section 7 hereof or a "best efforts"
         offering on an agency basis, the Company shall not be liable to any
         Electing Holder pursuant to the foregoing with respect to any
         prospectus contained in a

                                       17
<PAGE>

         Shelf Registration Statement (a "Prior Prospectus") to the extent the
         Company shall sustain the burden of proving that any such loss, claim,
         damage or liability resulted from the fact that such Electing Holder
         sold Transfer Restricted Securities to a person to whom such Electing
         Holder failed to send or give, at or prior to the, settlement date (the
         "Settlement Date") of such sale, a copy of an amended or supplemented
         prospectus (the "Amended Prospectus"), if: (i) the notice required by
         Section 3(d)(viii) hereof in respect of the Amended Prospectus has been
         given to such Electing Holder prior to the Settlement Date, (ii) the
         Company has previously delivered copies of the Amended Prospectus to
         the Electing Holder (in sufficient quantities and sufficiently in
         advance of the Settlement Date to allow for delivery of the Amended
         Prospectus by the Electing Holder to the transferee of such Transfer
         Restricted Securities by the Settlement Date) and the loss, claim,
         damage or liability of such Electing Holder resulted from an untrue
         statement or omission of a material fact contained in or omitted from a
         Prior Prospectus which was identified in writing at such time to such
         Electing Holder and corrected in the Amended Prospectus prior to the
         Settlement Date and the Amended Prospectus was required by law to be
         delivered at or prior to the Settlement Date to such person and (iii)
         and delivery of the Amended Prospectus by the Settlement Date would
         have cured the defect giving rise to such loss, claim, damage or
         liability.

                  (b) Indemnification by the Holders and any Agents and
         Underwriters. The Company may require, as a condition to including any
         Transfer Restricted Securities in any registration statement filed
         pursuant to Section 2(b) hereof and to entering into any underwriting
         agreement with respect thereto, that the Company shall have received an
         undertaking reasonably satisfactory to it from the Electing Holder of
         such Transfer Restricted Securities and from each underwriter named in
         any such underwriting agreement, severally and not jointly, to (i)
         indemnify and hold harmless the Company and all other holders of
         Transfer Restricted Securities, against any losses, claims, damages or
         liabilities to which the Company or such other holders of Transfer
         Restricted Securities may become subject, under the Securities Act or
         otherwise, insofar as such losses, claims, damages or liabilities (or
         actions in respect thereof) arise out of or are based upon an untrue
         statement or alleged untrue statement of a material fact contained in
         such registration statement, or any preliminary, final or summary
         prospectus contained therein or furnished by the Company to any such
         Electing Holder, agent or underwriter, or any amendment or supplement
         thereto, or arise out of or are based upon the omission or alleged
         omission to state therein a material fact required to be stated therein
         or necessary to make the statements therein not misleading, in each
         case to the extent, but only to the extent, that such untrue statement
         or alleged untrue statement or omission or alleged omission was made in
         reliance upon and in conformity with written information furnished to
         the Company by such Electing Holder or underwriter expressly for use
         therein, and (ii) reimburse the Company for any legal or other expenses
         reasonably incurred by the Company in connection with investigating or
         defending any such action or claim as such expenses are incurred;
         provided, however, that no such Electing Holder shall be required to
         undertake liability to any person under this Section 6(b) for any
         amounts in excess of the dollar amount of the proceeds to be received
         by such Electing Holder from the sale of such Electing Holder's
         Transfer Restricted Securities pursuant to such registration.

                  (c) Notices of Claims, Etc. Promptly after receipt by an
         indemnified party under subsection (a) or (b) above of written notice
         of the commencement of any action, such indemnified party shall, if a
         claim in respect thereof is to be made against an indemnifying party
         pursuant to the indemnification provisions of or contemplated by this
         Section 6, notify such indemnifying party in writing of the
         commencement of such action; but the omission so to notify the
         indemnifying party shall not relieve it from any liability which it may
         have to any indemnified party otherwise than under the indemnification
         provisions of or contemplated by Section 6(a) or 6(b) hereof. In case
         any such action shall be brought against any indemnified party and it
         shall notify an indemnifying party of the commencement thereof, such
         indemnifying party shall be entitled to participate therein and, to the
         extent that it shall wish, jointly with any other indemnifying party
         similarly notified, to assume the

                                       18
<PAGE>

         defense thereof, with counsel reasonably satisfactory to such
         indemnified party (who shall not, except with the consent of the
         indemnified party, be counsel to the indemnifying party), and, after
         notice from the indemnifying party to such indemnified party of its
         election so to assume the defense thereof, such indemnifying party
         shall not be liable to such indemnified party for any legal expenses of
         other counsel or any other expenses, in each case subsequently incurred
         by such indemnified party, in connection with the defense thereof other
         than reasonable costs of investigation. No indemnifying party shall,
         without the written consent of the indemnified party, effect the
         settlement or compromise of, or consent to the entry of any judgment
         with respect to, any pending or threatened action or claim in respect
         of which indemnification or contribution may be sought hereunder
         (whether or not the indemnified party is an actual or potential party
         to such action or claim) unless such settlement, compromise or judgment
         (i) includes an unconditional release of the indemnified party from all
         liability arising out of such action or claim and (ii) does not include
         a statement as to or an admission of fault, culpability or a failure to
         act by or on behalf of any indemnified party, and, no indemnified party
         shall effect the settlement or compromise of, or consent to the entry
         of any judgment with respect to any pending or threatened action or
         claim in respect of which indemnification or contribution may be sought
         hereunder without the consent of the indemnifying party from which
         indemnification or contribution may be sought, which consent shall not
         be unreasonably withheld.

                  (d) Contribution. If for any reason the indemnification
         provisions contemplated by Section 6(a) or Section 6(b) are unavailable
         to or insufficient to hold harmless an indemnified party in respect of
         any losses, claims, damages or liabilities (or actions in respect
         thereof) referred to therein, then each indemnifying party shall
         contribute to the amount paid or payable by such indemnified party as a
         result of such losses, claims, damages or liabilities (or actions in
         respect thereof) in such proportion as is appropriate to reflect the
         relative fault of the indemnifying party and the indemnified party in
         connection with the statements or omissions which resulted in such
         losses, claims, damages or liabilities (or actions in respect thereof),
         as well as any other relevant equitable considerations. The relative
         fault of such indemnifying party and indemnified party shall be
         determined by reference to, among other things, whether the untrue or
         alleged untrue statement of a material fact or omission or alleged
         omission to state a material fact relates to information supplied by
         such indemnifying party or by such indemnified party, and the parties'
         relative intent, knowledge, access to information and opportunity to
         correct or prevent such statement or omission. The parties hereto agree
         that it would not be just and equitable if contributions pursuant to
         this Section 6(d) were determined by pro rata allocation (even if the
         holders or any agents or underwriters or all of them were treated as
         one entity for such purpose) or by any other method of allocation which
         does not take account of the equitable considerations referred to in
         this Section 6(d). The amount paid or payable by an indemnified party
         as a result of the losses, claims, damages, or liabilities (or actions
         in respect thereof) referred to above shall be deemed to include any
         legal or other fees or expenses reasonably incurred by such indemnified
         party in connection with investigating or defending any such action or
         claim. Notwithstanding the provisions of this Section 6(d), no holder
         shall be required to contribute any amount in excess of the amount by
         which the dollar amount of the proceeds received by such holder from
         the sale of any Transfer Restricted Securities (after deducting any
         fees, discounts and commissions applicable thereto) exceeds the amount
         of any damages which such holder has otherwise been required to pay by
         reason of such untrue or alleged untrue statement or omission or
         alleged omission, and no underwriter shall be required to contribute
         any amount in excess of the amount by which the total price at which
         the Transfer Restricted Securities underwritten by it and distributed
         to the public were offered to the public exceeds the amount of any
         damages which such underwriter has otherwise been required to pay by
         reason of such untrue or alleged untrue statement or omission or
         alleged omission. No person guilty of fraudulent misrepresentation
         (within the meaning of Section 11(f) of the Securities Act) shall be
         entitled to contribution from any person who was not guilty of such
         fraudulent misrepresentation. The holders' and any underwriters'
         obligations in this Section 6(d) to

                                       19
<PAGE>

         contribute shall be several in proportion to the principal amount of
         Transfer Restricted Securities registered or underwritten, as the case
         may be, by them and not joint.

                  (e) The obligations of the Company under this Section 6 shall
         be in addition to any liability which the Company may otherwise have
         and shall extend, upon the same terms and conditions, to each officer,
         director and partner of each holder, agent and underwriter and each
         person, if any, who controls any holder, agent or underwriter within
         the meaning of the Securities Act; and the obligations of the holders
         and any agents or underwriters contemplated by this Section 6 shall be
         in addition to any liability which the respective holder, agent or
         underwriter may otherwise have and shall extend, upon the same terms
         and conditions, to each officer and director of the Company (including
         any person who, with his consent, is named in any registration
         statement as about to become a director of the Company) and to each
         person, if any, who controls the Company within the meaning of the
         Securities Act.

         7. Underwritten Offerings.

                  (a) Selection of Underwriters. If any of the Transfer
         Restricted Securities covered by the Shelf Registration are to be sold
         pursuant to an underwritten offering, the managing underwriter or
         underwriters thereof shall be designated by Electing Holders holding at
         least a majority in aggregate principal amount of the Transfer
         Restricted Securities to be included in such offering, provided that
         such designated managing underwriter or underwriters is or are
         reasonably acceptable to the Company.

                  (b) Participation by Holders. Each holder of Transfer
         Restricted Securities hereby agrees with each other such holder that no
         such holder may participate in any underwritten offering hereunder
         unless such holder (i) agrees to sell such holder's Transfer Restricted
         Securities on the basis provided in any underwriting arrangements
         approved by the persons entitled hereunder to approve such arrangements
         and (ii) completes and executes all questionnaires, powers of attorney,
         indemnities, underwriting agreements and other documents reasonably
         required under the terms of such underwriting arrangements.

         8. Rule 144.

         The Company covenants to the holders of Transfer Restricted Securities
that to the extent it shall be required to do so under the Exchange Act, the
Company shall timely file the reports required to be filed by it under the
Exchange Act or the Securities Act (including the reports under Section 13 and
15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted
by the Commission under the Securities Act) and the rules and regulations
adopted by the Commission thereunder, and shall take such further action as any
holder of Transfer Restricted Securities may reasonably request, all to the
extent required from time to time to enable such holder to sell Transfer
Restricted Securities without registration under the Securities Act within the
limitations of the exemption provided by Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or any similar or successor rule or
regulation hereafter adopted by the Commission. Upon the request of any holder
of Transfer Restricted Securities in connection with that holder's sale pursuant
to Rule 144, the Company shall deliver to such holder a written statement as to
whether it has complied with such requirements.

         9. Miscellaneous.

                  (a) No Inconsistent Agreements. The Company represents,
         warrants, covenants and agrees that it has not granted, and shall not
         grant, registration rights with respect to Transfer Restricted
         Securities or any other securities which would be inconsistent with the
         terms contained in this Exchange and Registration Rights Agreement.

                                       20
<PAGE>

                  (b) Specific Performance. The parties hereto acknowledge that
         there would be no adequate remedy at law if the Company fails to
         perform any of its obligations hereunder and that the Purchasers and
         the holders from time to time of the Transfer Restricted Securities may
         be irreparably harmed by any such failure, and accordingly agree that
         the Purchasers and such holders, in addition to any other remedy to
         which they may be entitled at law or in equity, shall be entitled to
         compel specific performance of the obligations of the Company under
         this Exchange and Registration Rights Agreement in accordance with the
         terms and conditions of this Exchange and Registration Rights
         Agreement, in any court of the United States or any State thereof
         having jurisdiction.

                  (c) Notices. All notices, requests, claims, demands, waivers
         and other communications hereunder shall be in writing and shall be
         deemed to have been duly given when delivered by hand, if delivered
         personally or by courier, or three days after being deposited in the
         mail (registered or certified mail, postage prepaid, return receipt
         requested) as follows: If to the Company, to it at Millar Western
         Forest Products Ltd. at 16640 - 111 Avenue, Edmonton, Alberta, T5M 2S5,
         and if to a holder, to the address of such holder set forth in the
         security register or other records of the Company, or to such other
         address as the Company or any such holder may have furnished to the
         other in writing in accordance herewith, except that notices of change
         of address shall be effective only upon receipt.

                  (d) Parties in Interest. All the terms and provisions of this
         Exchange and Registration Rights Agreement shall be binding upon, shall
         inure to the benefit of and shall be enforceable by the parties hereto
         and the holders from time to time of the Transfer Restricted Securities
         and the respective successors and assigns of the parties hereto and
         such holders. In the event that any transferee of any holder of
         Transfer Restricted Securities shall acquire Transfer Restricted
         Securities, in any manner, whether by gift, bequest, purchase,
         operation of law or otherwise, such transferee shall, without any
         further writing or action of any kind, be deemed a beneficiary hereof
         for all purposes and such Transfer Restricted Securities shall be held
         subject to all of the terms of this Exchange and Registration Rights
         Agreement, and by taking and holding such Transfer Restricted
         Securities such transferee shall be entitled to receive the benefits
         of, and be conclusively deemed to have agreed to be bound by all of the
         applicable terms and provisions of this Exchange and Registration
         Rights Agreement. If the Company shall so request, any such successor,
         assign or transferee shall agree in writing to acquire and hold the
         Transfer Restricted Securities subject to all of the applicable terms
         hereof.

                  (e) Additional Guarantors. The Company hereby covenants that
         in the event that prior to (i) the consummation of the Exchange Offer,
         if the Exchange Offer is consummated or (ii) the termination of the
         period referred to in Section 2(b) of this agreement, if the Shelf
         Registration is effected, any subsidiary of the Company becomes a
         Subsidiary Guarantor under Section o of the Indenture, the Company
         shall, as soon as practicable, cause such subsidiary to become a party
         hereto and by becoming a party hereto such subsidiary shall make the
         warranties, agreements, representations and covenants to the holders of
         the Transfer Restricted Securities as those of the Company.

                  (f) Survival. The respective indemnities, agreements,
         representations, warranties and each other provision set forth in this
         Exchange and Registration Rights Agreement or made pursuant hereto
         shall remain in full force and effect regardless of any investigation
         (or statement as to the results thereof) made by or on behalf of any
         holder of Transfer Restricted Securities, any director, officer or
         partner of such holder, any agent or underwriter or any director,
         officer or partner thereof, or any controlling person of any of the
         foregoing, and shall survive delivery of and payment for the Transfer
         Restricted Securities pursuant to the Purchase Agreement and the
         transfer and registration of Transfer Restricted Securities by such
         holder and the consummation of an Exchange Offer.


                                       21
<PAGE>

                  (g) Governing Law. This Exchange and Registration Rights
         Agreement shall be governed by and construed in accordance with the
         laws of the State of New York.

                  (h) Headings. The descriptive headings of the several Sections
         and paragraphs of this Exchange and Registration Rights Agreement are
         inserted for convenience only, do not constitute a part of this
         Exchange and Registration Rights Agreement and shall not affect in any
         way the meaning or interpretation of this Exchange and Registration
         Rights Agreement.

                  (i) Entire Agreement; Amendments. This Exchange and
         Registration Rights Agreement and the other writings referred to herein
         (including the Indenture and the form of Securities) or delivered
         pursuant hereto which form a part hereof contain the entire
         understanding of the parties with respect to its subject matter. This
         Exchange and Registration Rights Agreement supersedes all prior
         agreements and understandings between the parties with respect to its
         subject matter. This Exchange and Registration Rights Agreement may be
         amended and the observance of any term of this Exchange and
         Registration Rights Agreement may be waived (either generally or in a
         particular instance and either retroactively or prospectively) only by
         a written instrument duly executed by the Company and the holders of at
         least a majority in aggregate principal amount of the Transfer
         Restricted Securities at the time outstanding. Each holder of any
         Transfer Restricted Securities at the time or thereafter outstanding
         shall be bound by any amendment or waiver effected pursuant to this
         Section 9(h), whether or not any notice, writing or marking indicating
         such amendment or waiver appears on such Transfer Restricted Securities
         or is delivered to such holder.

                  (j) Inspection. For so long as this Exchange and Registration
         Rights Agreement shall be in effect, this Exchange and Registration
         Rights Agreement and a complete list of the names and addresses of all
         the holders of Transfer Restricted Securities shall be made available
         for inspection and copying on any business day by any holder of
         Transfer Restricted Securities for proper purposes only (which shall
         include any purpose related to the rights of the holders of Transfer
         Restricted Securities under the Securities, the Indenture and this
         Agreement) at the offices of the Company at the address thereof set
         forth in Section 9(c) above and at the office of the Trustee under the
         Indenture.

                  (k) Counterparts. This agreement may be executed by the
         parties in counterparts, each of which shall be deemed to be an
         original, but all such respective counterparts shall together
         constitute one and the same instrument.

                  (l) Service of Process. The Company irrevocably (i) agrees
         that any legal suit, action or proceeding against the Company brought
         by any holder, Purchaser, agent or underwriter or by any person who
         controls any holder, agent or underwriter arising out of or based upon
         this Exchange and Registration Rights Agreement or the transactions
         contemplated hereby may be instituted in any Federal or state courts
         located in the Borough of Manhattan in The City of New York in the
         State of New York ("New York Court"), (ii) waives, to the fullest
         extent each party may effectively do so, any objection which such party
         may now or hereafter have to the laying of venue of any such proceeding
         and (iii) submits to the non-exclusive jurisdiction of such courts in
         any such suit, action or proceeding. The Company has appointed CT
         Corporation Systems, 111 Eighth Avenue, New York, New York, 10011, as
         its authorized agent (the "Authorized Agent") upon whom process may be
         served in any such action arising out of or based on this Exchange and
         Registration Rights Agreement or the transactions contemplated hereby
         which may be instituted in any New York Court by any holder, agent or
         underwriter or by any person who controls any holder, agent or
         underwriter, expressly consents to the jurisdiction of any such court
         in respect of any such action, and waives any other requirements of or
         objections to personal jurisdiction with respect thereto. Such
         appointments shall be irrevocable. The Company represents and warrants
         that the Authorized Agent has agreed to act as such agent for service
         of process and agrees to take any and all action, including the filing
         of any and all documents and instruments, that may be necessary to
         continue such appointment in full

                                       22
<PAGE>

         force and effect as aforesaid. Service of process upon the Authorized
         Agent and written notice of such service to the Company shall be
         deemed, in every respect, effective service of process upon the
         Company.

                  (m) Judgment Currency. In respect of any judgment or order
         given or made for any amount due hereunder that is expressed and paid
         in a currency (the "judgment currency") other than United States
         dollars, the Company shall indemnify each holder, agent or underwriter
         against any loss incurred by such holder, agent or underwriter as a
         result of any variation as between (i) the rate of exchange at which
         the United States dollar amount is converted into the judgment currency
         for the purpose of such judgment or order and (ii) the rate of exchange
         at which a holder, agent or underwriter is able to purchase United
         States dollars with the amount of judgment currency actually received
         by such holder, agent or underwriter. The foregoing indemnity shall
         constitute a separate and independent obligation of the Company and
         shall continue in full force and effect notwithstanding any such
         judgment or order as aforesaid. The term "rate of exchange" shall
         include any premiums and costs of exchange payable in connection with
         the purchase of or conversion into United States dollars.

                                       23
<PAGE>

         If the foregoing is in accordance with your understanding, please sign
and return to us nine counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Purchasers, this letter and such acceptance hereof
shall constitute a binding agreement between each of the Purchasers the Company.
It is understood that your acceptance of this letter on behalf of each of the
Purchasers is pursuant to the authority set forth in a form of Agreement among
Purchasers, the form of which shall be submitted to the Company for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.

                                   Very truly yours,


                                   MILLAR WESTERN FOREST PRODUCTS LTD.


                                   By: /s/ H. MacKenzie Millar
                                       -----------------------------------------
                                       Name:  H. MacKenzie Millar
                                       Title: President, Chief Executive Officer


                                   By: /s/ Joseph R. Concini
                                       -----------------------------------------
                                       Name:  Joseph R. Concini
                                       Title: Chief Financial Officer


Millar Western Forest Products Ltd.
Exchange and Registration Rights Agreement

Accepted as of the date hereof:

Goldman, Sachs & Co.
CIBC World Markets Corp.
Harris Nesbitt Corp.
HSBC Securities (USA) Inc.


By: /s/ Goldman, Sachs & Co.
    -----------------------------------------
            (Goldman, Sachs & Co.)

On behalf of each of the Purchasers


                                       24
<PAGE>

                                                                       EXHIBIT A

                       MILLAR WESTERN FOREST PRODUCTS LTD.

                         INSTRUCTION TO DTC PARTICIPANTS

                                (Date of Mailing)

                     URGENT - IMMEDIATE ATTENTION REQUESTED

                       DEADLINE FOR RESPONSE: [ ], 2003 *

The Depository Trust Company ("DTC") has identified you as a DTC Participant
through which beneficial interests in the Millar Western Forest Products Ltd.
(the "Company") 7.75% Senior Notes Due 2013 (the "Securities") are held.

The Company is in the process of registering the Securities under the Securities
Act of 1933 for resale by the beneficial owners thereof. In order to have their
Securities included in the registration statement, beneficial owners must
complete and return the enclosed Notice of Registration Statement and Selling
Securityholder Questionnaire.

It is important that beneficial owners of the Securities receive a copy of the
enclosed materials as soon as possible as their rights to have the Securities
included in the registration statement depend upon their returning the Notice
and Questionnaire by [DEADLINE FOR RESPONSE]. Please forward a copy of the
enclosed documents to each beneficial owner that holds interests in the
Securities through you. If you require more copies of the enclosed materials or
have any questions pertaining to this matter, please contact Millar Western
Forest Products Ltd. at 16640 - 111 Avenue, Edmonton, Alberta, T5M 2S5
(Telephone: (780) 486-8200)).





------------------

* Not less than 28 calendar days from date of mailing.



                                      A-1
<PAGE>


                       Millar Western Forest Products Ltd.

                        Notice of Registration Statement

                                       and

                      Selling Securityholder Questionnaire

                                     [DATE]

Reference is hereby made to the Exchange and Registration Rights Agreement (the
"Exchange and Registration Rights Agreement") between Millar Western Forest
Products Ltd. (the "Company") and the Purchasers named therein. Pursuant to the
Exchange and Registration Rights Agreement, the Company has filed with the
United States Securities and Exchange Commission (the "Commission") a
registration statement on Form F-4 (the "Shelf Registration Statement") for the
registration and resale under Rule 415 of the Securities Act of 1933, as amended
(the "Securities Act"), of the Company's 7.75% Senior Notes Due 2013 (the
"Securities"). A copy of the Exchange and Registration Rights Agreement is
attached hereto. All capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Exchange and Registration Rights Agreement.

Each beneficial owner of Transfer Restricted Securities (as defined below) is
entitled to have the Transfer Restricted Securities beneficially owned by it
included in the Shelf Registration Statement. In order to have Transfer
Restricted Securities included in the Shelf Registration Statement, this Notice
of Registration Statement and Selling Securityholder Questionnaire ("Notice and
Questionnaire") must be completed, executed and delivered to the Company's
counsel at the address set forth herein for receipt ON OR BEFORE [DEADLINE FOR
RESPONSE]. Beneficial owners of Transfer Restricted Securities who do not
complete, execute and return this Notice and Questionnaire by such date (i) will
not be named as selling securityholders in the Shelf Registration Statement and
(ii) may not use the Prospectus forming a part thereof for resales of Transfer
Restricted Securities.

Certain legal consequences arise from being named as a selling securityholder in
the Shelf Registration Statement and related Prospectus. Accordingly, holders
and beneficial owners of Transfer Restricted Securities are advised to consult
their own securities law counsel regarding the consequences of being named or
not being named as a selling securityholder in the Shelf Registration Statement
and related Prospectus.

The term "Transfer Restricted Securities" is defined in the Exchange and
Registration Rights Agreement.



                                      A-2
<PAGE>

                                    ELECTION

The undersigned holder (the "Selling Securityholder") of Transfer Restricted
Securities hereby elects to include in the Shelf Registration Statement the
Transfer Restricted Securities beneficially owned by it and listed below in Item
(3). The undersigned, by signing and returning this Notice and Questionnaire,
agrees to be bound with respect to such Transfer Restricted Securities by the
terms and conditions of this Notice and Questionnaire and the Exchange and
Registration Rights Agreement, including, without limitation, Section 6 of the
Exchange and Registration Rights Agreement, as if the undersigned Selling
Securityholder were an original party thereto.

Upon any sale of Transfer Restricted Securities pursuant to the Shelf
Registration Statement, the Selling Securityholder will be required to deliver
to the Company and Trustee the Notice of Transfer set forth in Appendix A to the
Prospectus and as Exhibit B to the Exchange and Registration Rights Agreement.

The Selling Securityholder hereby provides the following information to the
Company and represents and warrants that such information is accurate and
complete:

                                  QUESTIONNAIRE

(1)  (a)  Full Legal Name of Selling Securityholder:

          ______________________________________________________________________

     (b)  Full Legal Name of Registered Holder (if not the same as in (a) above)
          of Transfer Restricted Securities Listed in Item (3) below:

          ______________________________________________________________________

     (c)  Full Legal Name of DTC Participant (if applicable and if not the same
          as (b) above) Through Which Transfer Restricted Securities Listed in
          Item (3) below are Held:

          ______________________________________________________________________

(2)       Address for Notices to Selling Securityholder:

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________

          Telephone:       ____________________________________________

          Fax:             ____________________________________________

          Contact Person:  ____________________________________________



(3)       Beneficial Ownership of Securities:

          Except as set forth below in this Item (3), the undersigned does not
          beneficially own any Securities.

     (a)  Principal amount of Transfer Restricted Securities beneficially owned:

          ____________________________________________

          CUSIP No(s). of such Transfer Restricted Securities:

          ____________________________________________

                                      A-3
<PAGE>

     (b)  Principal amount of Securities other than Transfer Restricted
          Securities beneficially owned:

          ____________________________________________


          CUSIP No(s). of such other Securities:

          ____________________________________________

     (c)  Principal amount of Transfer Restricted Securities which the
          undersigned wishes to be included in the Shelf Registration Statement:

          ____________________________________________


          CUSIP No(s). of such Transfer Restricted Securities to be included in
          the Shelf Registration Statement:

          ____________________________________________


     (4)  Beneficial Ownership of Other Securities of the Company:

          Except as set forth below in this Item (4), the undersigned Selling
          Securityholder is not the beneficial or registered owner of any other
          securities of the Company, other than the Securities listed above in
          Item (3).

          State any exceptions here:



     (5)  Relationships with the Company:

          Except as set forth below, neither the Selling Securityholder nor any
          of its affiliates, officers, directors or principal equity holders (5%
          or more) has held any position or office or has had any other material
          relationship with the Company (or its predecessors or affiliates)
          during the past three years.

          State any exceptions here:



     (6)  Plan of Distribution:

          Except as set forth below, the undersigned Selling Securityholder
          intends to distribute the Transfer Restricted Securities listed above
          in Item (3) only as follows (if at all): Such Transfer Restricted
          Securities may be sold from time to time directly by the undersigned
          Selling Securityholder or, alternatively, through underwriters,
          broker-dealers or agents. Such Transfer Restricted Securities may be
          sold in one or more transactions at fixed prices, at prevailing market
          prices at the time of sale, at varying prices determined at the time
          of sale, or at negotiated prices. Such sales may be effected in
          transactions (which may involve crosses or block transactions) (i) on
          any national securities exchange or quotation service on which the
          Registered Securities may be listed or quoted at the time of sale,
          (ii) in the over-the-counter market, (iii) in transactions otherwise
          than on such exchanges or services or in the over-the-counter market,
          or (iv) through the writing of options. In connection with sales of
          the Transfer Restricted Securities or otherwise, the Selling
          Securityholder may enter into hedging transactions with
          broker-dealers, which may in turn engage in short sales of the
          Transfer Restricted Securities in the course of hedging the positions
          they assume. The Selling Securityholder may also sell Transfer
          Restricted Securities short and deliver Transfer Restricted Securities
          to close out such short positions, or loan or pledge Transfer
          Restricted Securities to broker-dealers that in turn may sell such
          securities.

                                      A-4
<PAGE>

          State any exceptions here:



By signing below, the Selling Securityholder acknowledges that it understands
its obligation to comply, and agrees that it will comply, with the provisions of
the Exchange Act and the rules and regulations thereunder, particularly
Regulation M.

In the event that the Selling Securityholder transfers all or any portion of the
Transfer Restricted Securities listed in Item (3) above after the date on which
such information is provided to the Company, the Selling Securityholder agrees
to notify the transferee(s) at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the Exchange and
Registration Rights Agreement.

By signing below, the Selling Securityholder consents to the disclosure of the
information contained herein in its answers to Items (1) through (6) above and
the inclusion of such information in the Shelf Registration Statement and
related Prospectus. The Selling Securityholder understands that such information
will be relied upon by the Company in connection with the preparation of the
Shelf Registration Statement and related Prospectus.

In accordance with the Selling Securityholder's obligation under Section 3(d) of
the Exchange and Registration Rights Agreement to provide such information as
may be required by law for inclusion in the Shelf Registration Statement, the
Selling Securityholder agrees to promptly notify the Company of any inaccuracies
or changes in the information provided herein which may occur subsequent to the
date hereof at any time while the Shelf Registration Statement remains in
effect. All notices hereunder and pursuant to the Exchange and Registration
Rights Agreement shall be made in writing, by hand-delivery, first-class mail,
or air courier guaranteeing overnight delivery as follows:

          (i) To the Company:

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________


          (ii) With a copy to:

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________


Once this Notice and Questionnaire is executed by the Selling Securityholder and
received by the Company's counsel, the terms of this Notice and Questionnaire,
and the representations and warranties contained herein, shall be binding on,
shall inure to the benefit of and shall be enforceable by the

                                      A-5
<PAGE>

respective successors, heirs, personal representatives, and assigns of the
Company and the Selling Securityholder (with respect to the Transfer Restricted
Securities beneficially owned by such Selling Securityholder and listed in Item
(3) above. This Agreement shall be governed in all respects by the laws of the
State of New York.

                                      A-6
<PAGE>

IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.

Dated: ________________________________________



          ______________________________________________________________________
          Selling Securityholder

          ______________________________________________________________________
          (Print/type full legal name of beneficial owner of Transfer Restricted
          Securities)



          By: __________________________________________________________________
              Name:
              Title:



PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT:


                           ____________________________________________

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________

                           ____________________________________________




                                      A-7
<PAGE>

                                                                       EXHIBIT B

              NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT

Bank of New York
Millar Western Forest Products Ltd.
c/o Bank of New York
101 Barclay Street, Floor 21W

New York, NY 10286

Attention:  Trust Officer

         Re:  Millar Western Forest Products Ltd. (the "Company")
              7.75% Senior Notes Due 2013



Dear Sirs:

Please be advised that ________________________________________ has transferred
US$__________________ aggregate principal amount of the above-referenced Notes
pursuant to an effective Registration Statement on Form [____] (File No.
333-__________) filed by the Company.

We hereby certify that the prospectus delivery requirements, if any, of the
Securities Act of 1933, as amended, have been satisfied and that the above-named
beneficial owner of the Notes is named as a "Selling Holder" in the Prospectus
dated [ ], 2003 or in supplements thereto, and that the aggregate principal
amount of the Notes transferred are the Notes listed in such Prospectus opposite
such owner's name.

Dated:

                                       Very truly yours,


                                           ____________________________
                                           (Name)


                                       By: ____________________________
                                           (Authorized Signature)



                                      B-1