Document:

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                                                                 EXHIBIT 10.35

                                    EXECUTIVE
                               SEVERANCE AGREEMENT

This Agreement is made as of the 15th day of October, 2002

BETWEEN:

              NORSKE SKOG CANADA LIMITED, a corporation continued and
              amalgamated under the laws of Canada

              (the "Corporation")

                                                              OF THE FIRST PART,

AND:

              W. RON BUCHHORN

              (the "Executive")

                                                             OF THE SECOND PART.

WHEREAS:

A.       The Executive is a senior executive of the Corporation and has made and
         is expected to continue to make significant contributions to the
         Corporation and its shareholders, including in particular, in
         connection with any proposed sale or disposition of the shares or
         assets of the Corporation which may be undertaken by the Corporation or
         its principal shareholder, Norske Skogindustrier ASA ("NSI"); and

B.       The Corporation desires to assure itself of both the present and future
         continuity of management, to induce the Executive to remain with the
         Corporation in connection with any Proposed Transaction (as defined
         below) and to provide severance benefits for the Executive to be
         available only on and after completion of a Proposed Transaction.

NOW THEREFORE in consideration of the mutual covenants and agreements contained
in this Agreement and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged by each of the parties), the
Corporation and the Executive agree as follows:

1.       INTERPRETATION

1.1.     DEFINITIONS.  In this Agreement, the following terms will have the
         following meanings unless the context otherwise requires:

         (a)      "Base Salary" means the annualized monthly base salary of the
                  Executive at the date of completion of a Proposed Transaction;

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         (b)      "Business Day" means any day other than a Saturday, Sunday or
                  a day observed as a holiday in Vancouver, British Columbia;

         (c)      "Board" means the board of directors of the Corporation;

         (d)      "Cause" means the occurrence of any of the following:

                  (i)      continued failure by the Executive to substantially
                           perform his duties with the Corporation (other than
                           any such failure resulting from his Disability) after
                           a demand for substantial performance improvement has
                           been delivered in writing to the Executive by the
                           Corporation which specifically identifies the manner
                           in which it is believed that the Executive has not
                           substantially performed his duties and after allowing
                           the Executive an opportunity to improve his
                           performance; or

                  (ii)     engaging by the Executive in misconduct which is
                           materially injurious (financially or otherwise) to
                           the reputation or business of the Corporation;

         (e)      "Common shares" means the Common shares without par value in
                  the capital of the Corporation;

         (f)      "Constructive Dismissal" means a unilateral change by the
                  Corporation, without the Executive's consent, of a fundamental
                  term or condition of the Executive's employment including:

                  (i)      a significant reduction in the Executive's
                           responsibilities and duties;

                  (ii)     a decrease of more than 5% in the total compensation
                           package provided to the Executive; and

                  (iii)    a transfer on a permanent basis of the Executive to
                           an office or location other than within the Greater
                           Vancouver Regional District;

         (g)      "Disability" means the physical or mental illness of the
                  Executive resulting in the Executive's absence from his full
                  time duties with the Corporation;

         (h)      "Dispute" has the meaning ascribed thereto in section 7;

         (i)      "Effective Date" means the date of termination of employment
                  of the Executive specified in a notice given by the
                  Corporation or the date of Constructive Dismissal;

         (j)      "Executive Benefits" has the meaning ascribed thereto in
                  subsection 4.1(b) or subsection 5.1(b) as applicable;

         (k)      "Normal Retirement Date" means the date, if any, as of which
                  the Executive would be required to retire, determined in
                  accordance with the Corporation's practices and policies
                  relating to retirement generally, which practices and
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                  policies apply to its senior executives and are in effect
                  immediately prior to the completion of a Proposed Transaction
                  or at the Effective Date, whichever is more favourable to the
                  Executive and, in absence of any such practices and policies,
                  means the date as of which the Executive attains the age of
                  65;

         (l)      "Person" means any individual, partnership, joint venture,
                  company, corporation, unincorporated association or any other
                  entity;

         (m)      "Proposed Transaction" shall mean any of the following:

                  (i)      any change in ownership, direct or indirect, of
                           shares of the Corporation and/or securities
                           ("Convertible Securities") convertible into,
                           exchangeable for or representing the right to acquire
                           shares of the Corporation, as a result of or
                           following which NSI beneficially owns, directly or
                           indirectly, or exercises control or direction over,
                           shares of the Corporation and/or Convertible
                           Securities such that, assuming only the conversion,
                           exchange or exercise of Convertible Securities
                           beneficially owned by NSI, NSI would beneficially
                           own, directly or indirectly, or exercise control or
                           direction over, shares of the Corporation that would
                           entitle the holders thereof to cast more than 50% of
                           the votes attaching to all shares of the Corporation
                           that may be cast to elect directors of the
                           Corporation;

                  (ii)     any change in ownership, direct or indirect, of
                           shares of the Corporation and/or Convertible
                           Securities, as a result of or following which an
                           Acquiror (as defined in paragraph (vi) below)
                           beneficially owns, directly or indirectly, or
                           exercises control or direction over, shares of the
                           Corporation and/or Convertible Securities such that,
                           assuming only the conversion, exchange or exercise of
                           Convertible Securities beneficially owned by the
                           Acquiror,

                           A.       the Acquiror would beneficially own,
                                    directly or indirectly, or exercise control
                                    or direction over, shares of the Corporation
                                    that would entitle the holders thereof to
                                    cast more than 35% of the votes attaching to
                                    all shares of the Corporation that may be
                                    cast to elect directors of the Corporation,
                                    and

                           B.       if NSI then beneficially owns, directly or
                                    indirectly, or exercises control or
                                    direction over, shares of the Corporation
                                    that would entitle holders thereof to cast
                                    more than 35% of the votes attaching to all
                                    shares of the Corporation that may be cast
                                    to elect directors of the Corporation, the
                                    Acquiror would beneficially own, directly or
                                    indirectly, or exercise control or direction
                                    over, shares of the Corporation that would
                                    entitle the holders thereof to cast more of
                                    the votes attaching to all shares of the
                                    Corporation that may be cast to elect
                                    directors of the Corporation than may be
                                    cast by holders of shares of the Corporation
                                    beneficially owned, directly or indirectly,
                                    or over which control or direction is
                                    exercised, by NSI;

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                                       4

                  (iii)    the acquisition by NSI or an Acquiror of all or
                           substantially all of the assets of the Corporation;
                           or

                  (iv)     a merger of the Corporation with or into one or more
                           other companies, corporations, trusts or other
                           entities (other than subsidiaries of, or trusts or
                           other entities controlled by, the Corporation):

                           A.       where the members of the Board of Directors
                                    of the Corporation immediately prior to the
                                    consummation of the merger do not constitute
                                    a majority of the directors, trustees or
                                    other governing body of the company,
                                    corporation, trust or other entity surviving
                                    or continuing from the merger; or

                           B.       that results in the securityholders of the
                                    parties to the merger other than the
                                    Corporation owning, directly or indirectly,
                                    securities of the company, corporation,
                                    trust or other entity surviving or
                                    continuing from the merger that entitle the
                                    holders thereof to cast more than 35% of the
                                    votes attaching to all securities of the
                                    surviving or continuing company,
                                    corporation, trust or other entity that may
                                    be cast to elect its directors, trustees or
                                    other governing body; or

                           C.       that has been designated by resolution of
                                    the directors of the Corporation as a
                                    Proposed Transaction prior to the
                                    consummation of the merger;

                  and for the purposes of this clause 1.1(m)

                  (v)      the expression "NSI" shall include any group of
                           persons which includes NSI, any persons acting
                           jointly or in concert with NSI and any persons
                           associated or affiliated within the meaning of the
                           SECURITIES ACT (British Columbia) with NSI, or any
                           such group of persons or persons acting jointly or in
                           concert;

                  (vi)     the expression "Acquiror" shall mean a person, group
                           of persons or persons acting jointly or in concert,
                           or persons associated or affiliated within the
                           meaning of the SECURITIES ACT (British Columbia) with
                           any such person, group of persons or persons acting
                           jointly or in concert, but shall not include an
                           Acquiror as so defined which consists of or includes
                           NSI; and

                  (vii)    the expressions "change in ownership", "acquisition"
                           and "merger" include, as the context may require, a
                           transaction or series of transactions by way of
                           takeover bid, purchase, exchange, lease, statutory
                           amalgamation, statutory merger, reorganization,
                           consolidation, statutory arrangement,
                           recapitalization, liquidation or other business
                           combination;
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                                       5

         (n)      "Protection Period" means the period commencing on the date of
                  the completion of a Proposed Transaction and ending on the
                  second anniversary of that date;

         (o)      "Related Person" means in relation to any Person participating
                  in a Proposed Transaction, any Affiliate (as defined in the
                  Canada Business Corporations Act)) of that Person and any
                  other Person which, pursuant to any agreement, commitment or
                  understanding, acts jointly or in concert with that Person in
                  connection with the completion of a Proposed Transaction;

         (p)      "Retirement" means the retirement of the Executive from
                  employment by the Corporation on or after the Normal
                  Retirement Date;

         (q)      "SAR" means any right granted pursuant to and in accordance
                  with the terms of any of the SAR Plan;

         (r)      "SAR Plan" means any share appreciation right plan or similar
                  plan of the Corporation in respect of Common shares, in each
                  case as constituted and administered at the Effective Date;

         (s)      "Selling Price Per Share" means the purchase price or value of
                  the consideration paid for each Common share of the
                  Corporation purchased or otherwise acquired pursuant to a
                  Proposed Transaction and which, in the case of a Proposed
                  Transaction involving the sale of all or substantially all of
                  the assets of the Corporation, will be equal to the aggregate
                  purchase price (after deduction of debt retired by the
                  Corporation or assumed by the purchaser in connection with the
                  Proposed Transaction and transaction costs) for all of such
                  assets in the Proposed Transaction divided by the number of
                  outstanding Common shares of the Corporation on the date of
                  completion of the Proposed Transaction;

         (t)      "Short Term Incentive Plan" means the Corporation's Short Term
                  Incentive Plan and any other executive cash bonus or incentive
                  plan of the Corporation, in each case as constituted and
                  administered at the Effective Date;

         (u)      "Stock Option" means any right to subscribe for Common shares
                  issued pursuant to any Stock Option Plan;

         (v)      "Stock Option Plan" means the Corporation's 1995 Stock Option
                  Plan and any other employee stock option plan of the
                  Corporation, in each case as constituted and administered at
                  the Effective Date;

         (w)      "Term" means the period commencing as of the date hereof and
                  ending on September 30, 2004 or such date later than September
                  30, 2004 as the Corporation may from time to time by notice to
                  the Executive specify;

         (x)      "Termination Date" means the earliest of:

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                  (i)      the date immediately following the expiry of 24
                           months from the Effective Date;

                  (ii)     the date of commencement of alternate employment by
                           the Executive as contemplated by section 4.2;

                  (iii)    the date of the termination of the Executive's
                           employment with the Corporation by reason of his
                           death or for Cause;

         (y)      "Termination Leave" means the period commencing on the
                  Effective Date and ending on the Termination Date.

1.2.     DATE OF COMPLETION.  For the purposes of this Agreement, the term "date
         of completion" where used in connection with a Proposed Transaction
         means the date on which the actual transfer of the Common shares or
         assets of the Corporation or corporate transaction comprising the
         Proposed Transaction takes effect.

1.3.     GENDER AND NUMBER.  Unless otherwise expressly provided for in this
         Agreement or unless the context otherwise requires, words importing the
         singular include the plural and VICE VERSA and words importing gender
         include all genders.

2.       OPERATION OF AGREEMENT

2.1.     Subject to subsection 2.2, this Agreement will be effective and binding
         on the parties hereto immediately upon its execution but, anything in
         this Agreement to the contrary notwithstanding, this Agreement will not
         be operative unless and until the completion of a Proposed Transaction
         occurs. Upon and concurrently with the completion of a Proposed
         Transaction at any time during the Term, without further action on the
         part of any party, this Agreement shall become immediately operative.
         For the avoidance of doubt, this Agreement will not be applicable in
         respect of the termination of the Executive's employment with the
         Corporation for any reason whatsoever at any time prior to the
         commencement of the Protection Period, in which case the Executive's
         then existing terms of employment and legal rights in connection with
         any such termination will apply.

2.2.     Section 3 of this Agreement will not apply to any termination by the
         Corporation of the Executive's employment in connection with the
         completion of any Proposed Transaction if:

         (a)      the Executive has entered into a new employment arrangement
                  with the purchaser of all or substantially all of the assets
                  of the Corporation as contemplated in paragraph 1.1(m)(iii)
                  (the "Purchaser"); and

         (b)      the Purchaser has agreed to be bound by and has assumed all of
                  the obligations of the Corporation under this Agreement.
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                                       7

         For greater certainty, if the Executive remains employed by the
         Purchaser for the duration of the Protection Period, all rights of the
         Executive under this Agreement as against the Purchaser will cease
         immediately following the last day of that Period.

3.       TERMINATION AFTER COMPLETION OF A PROPOSED TRANSACTION

3.1.     In the event during the Protection Period of either (i) the receipt by
         the Executive of notice of termination of his employment by the
         Corporation (other than by reason of his Disability or Retirement or
         for Cause) or (ii) the Executive's Constructive Dismissal, the
         Executive may, within seven days after receipt of notice of termination
         or the Executive's Constructive Dismissal, whichever is applicable,
         elect by written notice to the Corporation to accept Termination Leave
         in accordance with section 4 of this Agreement or receive a Lump Sum
         Settlement in accordance with section 5 of this Agreement.

3.2.     If no election is made by the Executive within the period specified in
         section 3.1, the Executive shall be deemed to have elected to accept
         Termination Leave in accordance with section 4.

4.       TERMINATION LEAVE ELECTION

4.1.     Subject to subsection 4.2, during the Termination Leave the Executive
         will remain an employee of the Corporation and will be entitled to a
         leave of absence from work on the following terms:

         (a)      the Corporation will on the last Business Day of each month
                  during the Termination Leave pay to the Executive an amount
                  equal to one-twelfth (1/12) of the Base Salary, less all
                  deductions provided for in Schedule A or as required of the
                  Corporation by law;

         (b)      all benefits and perquisites to which the Executive was
                  entitled immediately prior to the Effective Date will
                  terminate on that Date, except that the Corporation will
                  provide to, continue or maintain for the Executive, as
                  applicable, the benefits and perquisites described in Schedule
                  A (the "Executive Benefits");

         (c)      the Executive will continue to participate in the Short Term
                  Incentive Plan on the following terms:

                  (i)      subject to paragraph (ii) of this subsection,
                           payments to the Executive of any bonus awards under
                           the Short Term Incentive Plan will continue to be
                           made to the Executive in accordance with the Plan's
                           terms;

                  (ii)     bonus awards payable to the Executive under the Short
                           Term Incentive Plan will be based solely on the
                           corporate financial performance portion of the awards
                           payable under the Plan and the Executive will not be
                           entitled to receive any awards which may be payable
                           under the Plan based on achievement of individual
                           objectives;
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                                       8

                  (iii)    in the event that at any time during the Termination
                           Leave a determination of bonus awards cannot be made
                           under the Short Term Incentive Plan as a result of a
                           material change in the Corporation's business, any
                           merger or other corporate reorganization involving
                           the Corporation or the disposition of all or some of
                           its assets, the Corporation will pay a bonus award to
                           the Executive based on an amount equal to 75% of the
                           Executive's target bonus amount for the fiscal year
                           of the Corporation in which the Effective Date
                           occurred, which amount will be paid to the Executive
                           in accordance with the terms of the Plan and this
                           Agreement; and

                  (iv)     any payment to the Executive under the Short Term
                           Incentive Plan for the fiscal year in which the
                           Termination Date occurs will be pro-rated to the
                           Termination Date; and

         (d)      all obligations, if any, of the Corporation to the Executive
                  in respect of the granting of any SAR or Stock Option shall
                  terminate on the Effective Date.

4.2.     If, after the Effective Date, the Executive commences alternate
         employment (of which the Executive shall promptly notify the
         Corporation) which is comparable as to aggregate annual compensation
         and authority, duties and responsibilities to the position held by the
         Executive immediately prior to the Effective Date, the obligations of
         the Corporation pursuant to section 4.1 will upon the commencement of
         such alternate employment immediately be altered as follows:

         (a)      all rights of the Executive to receive monthly payments
                  pursuant to subsection 4.1(a) will cease and the Corporation
                  will forthwith pay to the Executive a cash lump sum comprised
                  of an amount equal to one half of the amount which the
                  Executive would have been entitled to receive pursuant to
                  subsection 4.1(a) for each month (or portion thereof)
                  remaining in the Termination Leave had it continued for a
                  period of 24 months from the Effective Date;

         (b)      the Executive's entitlement to participate in any of the
                  Executive Benefits will cease effective from the date of
                  commencement of that employment (unless otherwise expressly
                  stated in Schedule A); and

         (c)      the Executive's entitlement to participate in the Short Term
                  Incentive Plan will cease, subject to any payment to which the
                  Executive would have been entitled if the Termination Date
                  were the date of termination of his employment by the
                  Corporation (without Cause) as contemplated by the Plan.

4.3.     The employment of the Executive with the Corporation will terminate on
         the Termination Date.

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                                       9

5.       LUMP SUM SETTLEMENT ELECTION

5.1.     On the Effective Date, the Executive will cease to be an employee of
         the Corporation on the following terms:

         (a)      within fourteen days after the Effective Date, the Corporation
                  will pay to the Executive, in addition to salary due to the
                  Executive for the period ending on the Effective Date, the sum
                  of:

                  (i)      an amount representing all of the Executive's accrued
                           regular and extended vacation entitlement, if
                           applicable, to the Effective Date; and

                  (ii)     an amount equal to 80% of the amount calculated by
                           multiplying two times the sum of the Base Salary and
                           the Executive's target bonus amount for the fiscal
                           year of the Corporation in which the Effective Date
                           occurred;

         (b)      all benefits and perquisites to which the Executive was
                  entitled immediately prior to the Effective Date will
                  terminate on the Effective Date, except that the Corporation
                  will provide to, continue or maintain for the Executive, as
                  applicable, the benefits and perquisites described in Schedule
                  B (the "Executive Benefits"); and

         (c)      the Executive's entitlement to participate in the Short Term
                  Incentive Plan will cease on the Effective Date, and in lieu
                  of any cash award for the fiscal year in which the Effective
                  Date occurs, the Corporation will pay a bonus award to the
                  Executive based on an amount equal to 75% of the Executive's
                  target bonus amount for the fiscal year of the Corporation in
                  which the Effective Date occurred, which amount will be
                  pro-rated to the Effective Date and paid to the Executive in
                  accordance with the terms of the Short Term Incentive Plan;
                  and

         (d)      all obligations, if any, of the Corporation to the Executive
                  in respect of the granting of any SAR or Stock Option shall
                  terminate on the Effective Date.

5.2.     For greater certainty, the employment of the Executive with the
         Corporation will terminate on the Effective Date.

6.       DUTY TO MITIGATE

6.1.     The Executive will not be subject to any duty or obligation to seek
         alternate employment or other sources of income or benefits, or to
         mitigate his damages, or to any similar duty or obligation, following
         or as a result of any termination of his employment by the Corporation
         either expressly by notice without Cause or by Constructive Dismissal
         and, except as specifically provided in section 4.2, no payments or
         other obligations of the Corporation under this Agreement will be
         subject to any rights of set-off, duty to mitigate or other reduction,
         and all such payments and obligations will be paid and performed in
         full notwithstanding any alternate employment or other sources of
         income or benefits obtained or received or receivable by the Executive.

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                                       10

7.       DISPUTE RESOLUTION REGARDING CONSTRUCTIVE DISMISSAL AND OTHER BENEFITS

7.1.     If any dispute or question (a "Dispute") arises between the Corporation
         and the Executive concerning the determination as to whether a
         Constructive Dismissal of the Executive has occurred (including with
         respect to the date of such dismissal), the entitlement of the
         Executive to any Executive Benefits under this Agreement or whether the
         Executive has been terminated for Cause, the Corporation and the
         Executive will attempt in good faith to resolve the Dispute. If the
         Corporation and the Executive have not agreed to a settlement of the
         Dispute within 30 days from the date on which the Dispute first became
         known to both parties, then the Corporation and the Executive agree
         that the Dispute will be submitted to arbitration in Vancouver, British
         Columbia, before a sole arbitrator agreed to by both parties. The
         parties agree that the Rules of the British Columbia International
         Commercial Arbitration Centre for the conduct of domestic commercial
         arbitrations do not apply. However, the arbitrator may be guided by
         Rules 1, 3, 6, 8, 9, 13, 15, 16, 19-36, and 39-45, in establishing the
         rules for the arbitration. In the event that the parties are unable to
         agree on the appointment of a sole arbitrator in accordance with this
         section 7 within 45 days from the date on which the Dispute first
         became known to both parties, a sole arbitrator for this purpose will
         be determined for the parties in accordance with section 17 of the
         Commercial Arbitration Act, R.S.B.C. 1996, c.55.

7.2.     The Corporation and the Executive agree that a Dispute will not be made
         the subject matter of an action in any court by either the Corporation
         or the Executive unless the Dispute has first been submitted to
         arbitration and finally determined by a sole arbitrator in accordance
         with this section 7, and that any such action will only be for the
         purposes of enforcing the decision of the arbitrator and the costs
         incidental to the action. In any such action the decision of the sole
         arbitrator will be conclusively deemed to determine the rights and
         liabilities between the Corporation and the Executive in respect of the
         matter which is the subject of the Dispute.

7.3.     In the event that the Executive receives an award in any Dispute which
         exceeds the offer for settlement of such Dispute by the Corporation
         immediately preceding an arbitration pursuant to this section 7, the
         Corporation agrees to pay to the Executive any and all costs and
         expenses (including reasonable legal fees) incurred by the Executive in
         connection with the Dispute concurrently with the payment of any award
         made pursuant to such arbitration.

8.       SARS AND STOCK OPTIONS

8.1.     If the Executive holds any SARs or Stock Options at the date of
         completion of a Proposed Transaction which results in a payment to
         holders of Common shares of cash or securities, the Corporation and the
         Executive agree that:

         (a)      this Agreement will constitute a notice pursuant to the
                  applicable provision of each of the SAR Plans such that, on
                  the date of completion of the Proposed Transaction, the
                  Corporation will pay to the Executive an amount equal to the
                  result obtained by multiplying the excess, if any, of the
                  Selling Price Per Share over the Exercise Price (as defined in
                  the respective SAR) by the number of the

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                                       11

                  Common shares in respect of which each SAR remains unexercised
                  (whether or not such SAR would then be exercisable);

         (b)      upon payment of all amounts pursuant to subsection 8.1(a), all
                  rights of the Executive pursuant to the SARs, any share
                  appreciation rights agreement entered into between the
                  Corporation and the Executive and the SAR Plans will
                  terminate; and

         (c)      the provisions of sections 7.5, 7.6 and 7.7 of the
                  Corporation's 1995 Stock Option Plan shall apply to every
                  Stock Option with respect to a Proposed Transaction; provided
                  that for purposes of subsection 7.5.2 thereof the Market Price
                  (as defined in the 1995 Stock Option Plan) on the date of
                  completion of the Proposed Transaction shall be deemed to be
                  equal to the Selling Price Per Share.

9.       ACCEPTANCE OF TERMS

         The terms set out in this Agreement are in lieu of (and not in addition
         to) and in full satisfaction of any and all other claims or
         entitlements which the Executive has or may have upon the termination
         of his employment by the Corporation (other than by reason of his
         Disability or Retirement or for Cause) including by Constructive
         Dismissal. The entering into of this Agreement by the Corporation will
         effect a full and complete release of the Corporation from any and all
         claims which the Executive may then have for whatever reason or cause
         in connection with the Executive's employment and in respect of such
         termination (except for any claims arising in connection with the
         performance by the Corporation of its obligations under this Agreement)
         and, as a pre-condition to receiving any payments or benefits pursuant
         to this Agreement, the Executive specifically agrees to execute and
         deliver to the Corporation a release document to that effect in the
         form set out in Schedule C and resignation as an officer of the
         Corporation and as an officer or director of any affiliate of the
         Corporation in which the Executive is an officer or director.

10.      WITHHOLDING OF TAXES

         The Corporation may withhold from any amounts payable to the Executive
         under this Agreement all federal, provincial, state, city or other
         taxes as the Corporation is required to withhold pursuant to any law or
         government regulation or ruling, and such other amounts as the
         Executive has authorized or may authorize the Corporation to deduct or
         withhold.

11.      NOTICES

         Any notice required or permitted to be given under this Agreement will
         be in writing and will be properly given if delivered by hand or mailed
         by prepaid registered mail addressed as follows:

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                                       12

         (a)      in the case of the Corporation, to:

                  Norske Skog Canada Limited
                  9th Floor, 700 West Georgia Street
                  Vancouver, B.C.
                  V7Y 1J7
                  Attention:  President

         (b)      in the case of the Executive, to:

                  821 Braeside Street
                  West Vancouver, BC  V7T 2K7

         or to such other address as the parties may from time to time specify
         by notice given in accordance with the Agreement. Any notice given will
         be conclusively deemed to have been given or made on the day of
         delivery, if delivered, or if mailed by registered mail, on the date
         shown on the postal return receipt as the date upon which the envelope
         containing such notice was actually received by the addressee.

12.      ENTIRE AGREEMENT

         This Agreement constitutes the entire agreement between the parties
         with respect to the payment to the Executive of severance benefits in
         connection with any Proposed Transaction and supersedes all prior
         agreements, understandings, negotiations and discussions, whether
         written or oral. There are no covenants, conditions, agreements,
         representations, warranties or other terms or provisions, express or
         implied, collateral, statutory or otherwise, relating to the payment to
         the Executive of severance benefits in connection with any Proposed
         Transaction except as provided in this Agreement.

13.      SEVERABILITY

         If any term or other provision contained in this Agreement is
         determined to be invalid, illegal or incapable of being enforced by any
         rule of law or public policy, all other conditions and provisions of
         this Agreement shall nevertheless remain in full force and effect so
         long as the economic and legal substance of the transactions
         contemplated hereby is not affected in any manner materially adverse to
         any party hereto. Upon such determination that any term or other
         provision is invalid, illegal or incapable of being enforced, the
         parties hereto shall negotiate in good faith to modify this Agreement
         so as to effect the original intent of the parties hereto as closely as
         possible in an acceptable manner to the end that transactions
         contemplated by this Agreement are fulfilled.

14.      EXECUTION OF DOCUMENTS

         Each of the Corporation and the Executive agrees to execute all such
         documents and to do all such acts and things as the other party may
         reasonably request and as may be lawful and within its powers to do or
         to cause to be done in order to carry out and/or implement the
         provisions or intent of this Agreement.
<PAGE>
                                       13

15.      APPLICABLE LAW

         This Agreement shall be governed by and construed in accordance with
         the laws of the Province of British Columbia and the laws of Canada
         applicable therein.

16.      AMENDMENT AND WAIVERS

         No amendment or waiver of any provision of this Agreement will be
         binding on any party unless consented to in writing by that party. No
         waiver of any provision of this Agreement will constitute a waiver of
         any other provision nor will any waiver constitute a continuing waiver
         unless otherwise provided.

17.      SUCCESSORS AND ASSIGNS

         This Agreement will enure to th e benefit of and be binding upon the
         Executive and his heirs, executors, administrators and other legal
         personal representatives and upon the Corporation and its successors
         and assigns. This Agreement is personal to the Executive and may not be
         assigned by him.

18.      ACKNOWLEDGEMENT

         The Executive hereby acknowledges that he has been afforded a
         reasonable opportunity to obtain independent legal advice regarding the
         matters contained in and contemplated by this Agreement prior to the
         Executive executing this Agreement.

IN WITNESS WHEREOF this Agreement has been executed by the parties hereto.

                                                NORSKE SKOG CANADA LIMITED

                                                By: /s/ R. Horner
                                                    ---------------------------
                                                    President

                                                /s/ Ron Buchhorn
                                                -------------------------------
                                                W. RON BUCHHORN

<PAGE>

                                   SCHEDULE A

                    TREATMENT OF BENEFITS AND PERQUISITES ON
                          ELECTION OF TERMINATION LEAVE

1.       The following benefits will be provided, continued or maintained until
         the Termination Date:

         (a)      Provincial Medical Services Plan (MSP): coverage for Executive
                  and dependants

         (b)      Extended Health Benefits (EHB): coverage for Executive and
                  dependants

         (c)      Dental Benefits: coverage for Executive and dependants

         (d)      Life Insurance: the current level of coverage (up to 3x of
                  annual salary) will continue until the Termination Date. The
                  Executive will have 31 days from the Termination Date to
                  convert this coverage to an individual life insurance policy,
                  to a maximum of $200,000.

         (e)      Employee Share Purchase Plan: monthly contributions by way of
                  payroll deduction by the Executive and matching Corporation
                  contributions will continue to the earlier of the Termination
                  Date, the Executive's election to cease contributions, or the
                  termination of the Plan. The provisions of the Plan relating
                  to termination of employment shall apply at the Termination
                  Date, but the Executive shall be entitled to exercise his
                  rights under the share withdrawal provision of the Plan prior
                  to that time.

         (f)      Group RRSP: participation (outside of the SELECTIONS program)
                  by way of payroll deduction by the Executive will continue
                  until the Termination Date.

         (g)      Other Payroll Deductions: payroll deductions, such as:

                  o     auto plan

                  o     computer loan

                  o     personal lines insurance

                  o     leased vehicle driver option

                  o     Canada Savings Bonds

         will continue to be deducted from the Executive's payments during the
         Termination Leave, with the full amount due and payable on the
         Termination Date. Eligibility to

<PAGE>
                                       2

         renew any of the above deductions will terminate as of the commencement
         of the Termination Leave.

2.       The following benefits will cease at the commencement of the
         Termination Leave as shown below:

         (a)      Life Insurance: any optional coverage for the Executive, his
                  spouse or his children, will cease at the commencement of the
                  Termination Leave. The Executive will have 31 days from the
                  last day worked to convert all or part of his Executive and/or
                  spousal coverages to individual life insurance policies, to a
                  maximum of $200,000 each.

         (b)      Accidental Death and Dismemberment Benefits:

                  (i)      All 24 hour company paid accidental death and
                           dismemberment insurance benefits, will cease at the
                           commencement of the Termination Leave.

                  (ii)     All Executive, spousal and child optional accidental
                           death and dismemberment benefits will cease at the
                           commencement of the Termination Leave; the Executive
                           may elect to convert all or part of his Executive
                           and/or spousal coverages to individual coverage,
                           within 31 days after the commencement of the
                           Termination Leave.

         (c)      Disability Benefits: short term and long term disability
                  coverage will cease at the commencement of the Termination
                  Leave.

         (d)      Charitable donations and social club fees will cease to be
                  deducted at the commencement of the Termination Leave.

         (e)      Vacation: the accrual of regular and, if applicable, extended
                  vacation entitlement will cease on the commencement of the
                  Termination Leave. All accrued regular and extended vacation
                  entitlement, including pro-rated regular and, if applicable,
                  extended entitlement to the Termination Date, will be paid to
                  the Executive at the commencement of the Termination Leave.

3.       Perquisites will continue during the Termination Leave, in accordance
         with the following:

         (a)      Leased Automobile: the Corporation will continue to lease the
                  automobile, presently leased by the Corporation and designated
                  for the Executive's use, until the Termination Date and bear
                  all reasonable costs associated with its maintenance,
                  including insurance, but excluding fuel.

         The Executive is entitled to elect to purchase the automobile at any
         time during the Termination Leave, for the then current residual option
         price of the automobile. The Executive will bear all sales and other
         tax costs and any other costs and taxes which may be associated with
         such transfer.
<PAGE>
                                       3

         (b)      Financial Counselling: to the extent the Executive is eligible
                  for this perquisite at the time of commencement of the
                  Termination Leave, the current level of financial counselling
                  will continue until the Termination Date.

         (c)      Corporation Loans (Housing): the Executive must continue to
                  repay any loans at the rate not less than what is currently
                  being deducted from his salary payments, but in any event
                  shall repay the loan in full by the Termination Date.

         (d)      Club Memberships: to the extent the Executive has been granted
                  a club membership at the time of commencement of the
                  Termination Leave, the Corporation will continue to pay for
                  the employee's membership until the Termination Date. Upon the
                  Termination Date corporate (as opposed to personal) club
                  memberships will remain with the Corporation.

4.       Post-Retirement Medical and Dental Benefits will apply as follows:

         If the Executive is age 51 or older as of the Effective Date, he will
         be eligible on the latter of the first of the month following the
         Termination Date or the first of the month following his 55th birth
         date, to apply for medical, extended health and dental benefits on the
         basis of treatment equivalent to that being received by an employee of
         the Corporation who retired on the Effective Date.

5.       Pension Benefits:

         (a)      The Executive will continue to participate in the registered
                  pension plan and unfunded supplemental plan in which the
                  Executive is enrolled on the date of commencement of the
                  Termination Leave (the "Pension Plans") on the following
                  terms:

                  (i)      for the purposes of any contribution (notional or
                           actual) provision of the Pension Plans, the amounts
                           paid to the Executive pursuant to section 4.1(a) of
                           the Agreement shall be treated in the same manner
                           that payments of salary to the Executive were
                           recognized prior to the date of commencement of the
                           Executive's Termination Leave, and the amounts paid
                           to the Executive pursuant to section 4.1(c) of the
                           Agreement shall be treated in the same manner that
                           payments under the Corporation's incentive
                           compensation programs were recognized prior to the
                           date of commencement of the Executive's Termination
                           Leave;

                  (ii)     if on the Termination Date the Executive has not
                           satisfied a vesting condition under the Pension
                           Plans, the Executive will be deemed to have satisfied
                           this condition;

                  (iii)    upon the completion of the Executive's Termination
                           Leave, the Executive shall become entitled to
                           benefits under the Pension Plans on the basis that
                           the Executive terminated employment with the
                           Corporation on that date.

<PAGE>
                                       4

         (b)      If the circumstances described in section 4.2 of the Agreement
                  arise, the Executive shall immediately stop accumulating
                  further benefits under the Pension Plans, and, without
                  limitation, any payment the Executive becomes entitled to
                  pursuant to section 4.2(a) of the Agreement shall not be
                  recognized under any contribution (actual or notional)
                  provision of the Pension Plans.

<PAGE>

                                   SCHEDULE B

                    TREATMENT OF BENEFITS AND PERQUISITES ON
                         ELECTION OF LUMP SUM SETTLEMENT

All benefits, privileges and perquisites the Executive might formerly have
received as a result of employment with the Corporation will cease as of the
Effective Date except as expressly set out below:

1.       Provincial Medical Services Plan (MSP): coverage for Executive and
         dependants will cease at the end of the month in which the Effective
         Date occurs.

2.       Life Insurance: the current level of coverage (up to 3 times annual
         salary) will continue until the Effective Date, and the Executive will
         have 31 days from the Effective Date to convert this coverage to an
         individual life insurance policy, to a maximum of $200,000.

3.       Optional Life Insurance: any executive, spousal, or child optional life
         insurance coverage the Executive had by reason of employment with the
         Corporation will cease on the Effective Date. The Executive may convert
         all or part of any optional executive and/or spousal insurance, up to a
         maximum of $200,000 each, within 31 days of this date, to individual
         life insurance policies at prevailing individual, as opposed to group
         insurance rates and without medical examination.

4.       Accidental Death and Dismemberment Insurance ("AD&D"):

         (a)      coverage under AD&D will cease on the Effective Date; and

         (b)      any executive, spousal, or child optional AD&D coverage the
                  Executive had by reason of employment will cease on the
                  Effective Date; the Executive may elect to convert all or part
                  of any optional executive and/or spousal insurance, up to a
                  maximum of $200,000 each, within 31 days after the Effective
                  Date.

5.       Health Spending Account: contributions by the Executive will cease on
         the Effective Date. The Executive may submit claims against the balance
         accrued to the Effective Date, until the end of the calendar year in
         which the Effective Date occurs.

6.       Disability Benefits: short term and long term disability coverage will
         cease at the Effective Date.

7.       Vacation: all accrued regular and extended vacation entitlement,
         including pro-rated regular and, if applicable, extended entitlement to
         the Effective Date, will be paid to the Executive at the Effective
         Date.

8.       Share Purchase Plan: participation and/or contributions through payroll
         deduction will cease on the Effective Date. All amounts in the
         Executive's account must be withdrawn within 30 days of the Effective
         Date.
<PAGE>
                                       2

9.       Group RRSP: participation and/or contributions by way of payroll
         deduction by the Executive will cease at the Effective Date. Treatment
         of the Executive's fund balances will be as per the terms of the Plan.

10.      Leased Automobile: the Executive is entitled to elect to purchase the
         automobile leased by the Corporation, and designated for his use, at
         the Effective Date for the then current residual option price of the
         automobile. The Executive will bear all sales and other tax costs and
         any other costs and taxes which may be associated with any such
         transfer.

11.      Club Memberships:

         (a)      the payment by the Corporation of any personal club
                  memberships held by the Executive will cease on the Effective
                  Date; and

         (b)      the payment of any corporate club membership dues in respect
                  of the Executive will cease on the Effective Date, and the
                  membership will remain with the Corporation.

12.      Corporation Loans, i.e. housing, auto insurance, leased vehicle driver
         option, computer purchase, etc.: the balance outstanding on any and all
         company loans granted to the Executive will become due and payable in
         full on the Effective Date.

13.      Canada Savings Bonds: if the Executive was purchasing Canada Savings
         Bonds through payroll deductions, he may elect to receive a refund for
         the amount already paid, or purchase the bond in full within 5 days
         after the Effective Date.

14.      Charitable donations and social club fees: deductions will cease at the
         Effective Date.

15.      Pension: the Executive shall at the Effective Date immediately stop
         accumulating further benefits under the registered pension plan and
         unfunded supplemental plan in which the Executive is enrolled at the
         Effective Date (the "Pension Plans") and, without limitation, all
         payments the Executive becomes entitled to pursuant to section 5.1 of
         the Agreement shall not be recognized under any contribution (actual or
         notional) provision of the Pension Plans. If on the Effective Date the
         Executive has not satisfied a vesting condition under the Pension
         Plans, the Executive will be deemed to have satisfied that condition.

16.      Post Retirement Medical and Dental Benefits: if the Executive is age 51
         or older as of the Effective Date, he will become eligible on the later
         of the first of the month following the Effective Date or the first of
         the month following his 55th birth date, to apply for medical, extended
         health and dental benefits on the basis of treatment equivalent to that
         being received by an employee of the Corporation who retired on the
         Effective Date.

<PAGE>

                                   SCHEDULE C

                                     RELEASE

IN CONSIDERATION for the payment to me of $1.00 by NORSKE SKOG CANADA LIMITED
(the "Corporation") and for the entry by the Corporation into the Executive
Severance Agreement (the "Agreement") dated as of the day of October 2002
between the Corporation and me (the receipt and sufficiency of which are hereby
acknowledged), I, Ron Buchhorn, HEREBY RELEASE AND FOREVER DISCHARGE the
Corporation, its related and affiliated companies and subsidiaries (collectively
"Norske Skog"), and its officers, directors, and employees, from any and all
actions, causes of action, claims and demands, which in any way relate to my
employment and the termination of my employment with Norske Skog, including any
claim arising from the provisions of the EMPLOYMENT STANDARDS ACT, HUMAN RIGHTS
ACT or other applicable legislation. I FURTHER AGREE that the consideration I
have received includes full payment for any claim I may have under such
legislation.

The terms of this release set out the entire agreement between myself and Norske
Skog and are intended to be contractual and are not a mere recital.

I declare that I fully understand the terms of this settlement, I have been
advised to seek independent professional advice before executing this document
and that I voluntarily accept the consideration, for the purpose of making a
full and final compromise and settlement of all claims.

I further understand and agree that the terms of this settlement will remain
confidential and will not be disclosed by me to third parties, except to my
professional advisors and to my family, and as may be required by law.

Dated this ______ day of __________, 2002, at ________________, in the Province
of British Columbia.

WITNESSED BY:

----------------------------                         --------------------------
Witness - Signature                                  W. Ron Buchhorn

---------------------------
Witness - Address

---------------------------
Witness - Occupation<PAGE>

                                                                   EXHIBIT 10.36

                                    EXECUTIVE

                               SEVERANCE AGREEMENT

This Agreement is made as of the 15th day of October, 2002

BETWEEN:

                  NORSKE SKOG CANADA LIMITED, a corporation continued and
                  amalgamated under the laws of Canada

                  (the "Corporation")

                                                             OF THE FIRST PART,

AND:

                  STUART H. CLUGSTON

                  (the "Executive")

                                                            OF THE SECOND PART.

WHEREAS:

A.       The Executive is a senior executive of the Corporation and has made and
         is expected to continue to make significant contributions to the
         Corporation and its shareholders, including in particular, in
         connection with any proposed sale or disposition of the shares or
         assets of the Corporation which may be undertaken by the Corporation or
         its principal shareholder, Norske Skogindustrier ASA ("NSI"); and

B.       The Corporation desires to assure itself of both the present and future
         continuity of management, to induce the Executive to remain with the
         Corporation in connection with any Proposed Transaction (as defined
         below) and to provide severance benefits for the Executive to be
         available only on and after completion of a Proposed Transaction.

NOW THEREFORE in consideration of the mutual covenants and agreements contained
in this Agreement and for other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged by each of the parties), the
Corporation and the Executive agree as follows:

1.       INTERPRETATION

1.1.     DEFINITIONS.  In this Agreement, the following terms will have the
         following meanings unless the context otherwise requires:

         (a)      "Base Salary" means the annualized monthly base salary of the
                  Executive at the date of completion of a Proposed Transaction;
<Page>

                                      2

         (b)      "Business Day" means any day other than a Saturday, Sunday or
                  a day observed as a holiday in Vancouver, British Columbia;

         (c)      "Board" means the board of directors of the Corporation;

         (d)      "Cause" means the occurrence of any of the following:

                  (i)      continued failure by the Executive to substantially
                           perform his duties with the Corporation (other than
                           any such failure resulting from his Disability) after
                           a demand for substantial performance improvement has
                           been delivered in writing to the Executive by the
                           Corporation which specifically identifies the manner
                           in which it is believed that the Executive has not
                           substantially performed his duties and after allowing
                           the Executive an opportunity to improve his
                           performance; or

                  (ii)     engaging by the Executive in misconduct which is
                           materially injurious (financially or otherwise) to
                           the reputation or business of the Corporation;

         (e)      "Common shares" means the Common shares without par value in
                  the capital of the Corporation;

         (f)      "Constructive Dismissal" means a unilateral change by the
                  Corporation, without the Executive's consent, of a fundamental
                  term or condition of the Executive's employment including:

                  (i)      a significant reduction in the Executive's
                           responsibilities and duties;

                  (ii)     a decrease of more than 5% in the total compensation
                           package provided to the Executive; and

                  (iii)    a transfer on a permanent basis of the Executive to
                           an office or location other than within the Greater
                           Vancouver Regional District;

         (g)      "Disability" means the physical or mental illness of the
                  Executive resulting in the Executive's absence from his full
                  time duties with the Corporation;

         (h)      "Dispute" has the meaning ascribed thereto in section 7;

         (i)      "Effective Date" means the date of termination of employment
                  of the Executive specified in a notice given by the
                  Corporation or the date of Constructive Dismissal;

         (j)      "Executive Benefits" has the meaning ascribed thereto in
                  subsection 4.1(b) or subsection 5.1(b) as applicable;

         (k)      "Normal Retirement Date" means the date, if any, as of which
                  the Executive would be required to retire, determined in
                  accordance with the Corporation's practices and policies
                  relating to retirement generally, which practices and
<Page>

                                      3

                  policies apply to its senior executives and are in effect
                  immediately prior to the completion of a Proposed
                  Transaction or at the Effective Date, whichever is more
                  favourable to the Executive and, in absence of any such
                  practices and policies, means the date as of which the
                  Executive attains the age of 65;

         (l)      "Person" means any individual, partnership, joint venture,
                  company, corporation, unincorporated association or any other
                  entity;

         (m)      "Proposed Transaction" shall mean any of the following:

                  (i)      any change in ownership, direct or indirect, of
                           shares of the Corporation and/or securities
                           ("Convertible Securities") convertible into,
                           exchangeable for or representing the right to acquire
                           shares of the Corporation, as a result of or
                           following which NSI beneficially owns, directly or
                           indirectly, or exercises control or direction over,
                           shares of the Corporation and/or Convertible
                           Securities such that, assuming only the conversion,
                           exchange or exercise of Convertible Securities
                           beneficially owned by NSI, NSI would beneficially
                           own, directly or indirectly, or exercise control or
                           direction over, shares of the Corporation that would
                           entitle the holders thereof to cast more than 50% of
                           the votes attaching to all shares of the Corporation
                           that may be cast to elect directors of the
                           Corporation;

                  (ii)     any change in ownership, direct or indirect, of
                           shares of the Corporation and/or Convertible
                           Securities, as a result of or following which an
                           Acquiror (as defined in paragraph (vi) below)
                           beneficially owns, directly or indirectly, or
                           exercises control or direction over, shares of the
                           Corporation and/or Convertible Securities such that,
                           assuming only the conversion, exchange or exercise of
                           Convertible Securities beneficially owned by the
                           Acquiror,

                           A.       the Acquiror would beneficially own,
                                    directly or indirectly, or exercise control
                                    or direction over, shares of the Corporation
                                    that would entitle the holders thereof to
                                    cast more than 35% of the votes attaching to
                                    all shares of the Corporation that may be
                                    cast to elect directors of the Corporation,
                                    and

                           B.       if NSI then beneficially owns, directly or
                                    indirectly, or exercises control or
                                    direction over, shares of the Corporation
                                    that would entitle holders thereof to cast
                                    more than 35% of the votes attaching to all
                                    shares of the Corporation that may be cast
                                    to elect directors of the Corporation, the
                                    Acquiror would beneficially own, directly or
                                    indirectly, or exercise control or direction
                                    over, shares of the Corporation that would
                                    entitle the holders thereof to cast more of
                                    the votes attaching to all shares of the
                                    Corporation that may be cast to elect
                                    directors of the Corporation than may be
                                    cast by holders of shares of the Corporation
                                    beneficially owned, directly or indirectly,
                                    or over which control or direction is
                                    exercised, by NSI;
<Page>

                                      4

                  (iii)    the acquisition by NSI or an Acquiror of all or
                           substantially all of the assets of the Corporation;
                           or

                  (iv)     a merger of the Corporation with or into one or more
                           other companies, corporations, trusts or other
                           entities (other than subsidiaries of, or trusts or
                           other entities controlled by, the Corporation):

                           A.       where the members of the Board of Directors
                                    of the Corporation immediately prior to the
                                    consummation of the merger do not constitute
                                    a majority of the directors, trustees or
                                    other governing body of the company,
                                    corporation, trust or other entity surviving
                                    or continuing from the merger; or

                           B.       that results in the securityholders of the
                                    parties to the merger other than the
                                    Corporation owning, directly or indirectly,
                                    securities of the company, corporation,
                                    trust or other entity surviving or
                                    continuing from the merger that entitle the
                                    holders thereof to cast more than 35% of the
                                    votes attaching to all securities of the
                                    surviving or continuing company,
                                    corporation, trust or other entity that may
                                    be cast to elect its directors, trustees or
                                    other governing body; or

                           C.       that has been designated by resolution of
                                    the directors of the Corporation as a
                                    Proposed Transaction prior to the
                                    consummation of the merger;

                  and for the purposes of this clause 1.1(m)

                  (v)      the expression "NSI" shall include any group of
                           persons which includes NSI, any persons acting
                           jointly or in concert with NSI and any persons
                           associated or affiliated within the meaning of the
                           SECURITIES ACT (British Columbia) with NSI, or any
                           such group of persons or persons acting jointly or in
                           concert;

                  (vi)     the expression "Acquiror" shall mean a person, group
                           of persons or persons acting jointly or in concert,
                           or persons associated or affiliated within the
                           meaning of the SECURITIES ACT (British Columbia) with
                           any such person, group of persons or persons acting
                           jointly or in concert, but shall not include an
                           Acquiror as so defined which consists of or includes
                           NSI; and

                  (vii)    the expressions "change in ownership", "acquisition"
                           and "merger" include, as the context may require, a
                           transaction or series of transactions by way of
                           takeover bid, purchase, exchange, lease, statutory
                           amalgamation, statutory merger, reorganization,
                           consolidation, statutory arrangement,
                           recapitalization, liquidation or other business
                           combination;
<Page>

                                      5

         (n)      "Protection Period" means the period commencing on the date of
                  the completion of a Proposed Transaction and ending on the
                  second anniversary of that date;

         (o)      "Related Person" means in relation to any Person participating
                  in a Proposed Transaction, any Affiliate (as defined in the
                  Canada Business Corporations Act)) of that Person and any
                  other Person which, pursuant to any agreement, commitment or
                  understanding, acts jointly or in concert with that Person in
                  connection with the completion of a Proposed Transaction;

         (p)      "Retirement" means the retirement of the Executive from
                  employment by the Corporation on or after the Normal
                  Retirement Date;

         (q)      "SAR" means any right granted pursuant to and in accordance
                  with the terms of any of the SAR Plan;

         (r)      "SAR Plan" means any share appreciation right plan or similar
                  plan of the Corporation in respect of Common shares, in each
                  case as constituted and administered at the Effective Date;

         (s)      "Selling Price Per Share" means the purchase price or value of
                  the consideration paid for each Common share of the
                  Corporation purchased or otherwise acquired pursuant to a
                  Proposed Transaction and which, in the case of a Proposed
                  Transaction involving the sale of all or substantially all of
                  the assets of the Corporation, will be equal to the aggregate
                  purchase price (after deduction of debt retired by the
                  Corporation or assumed by the purchaser in connection with the
                  Proposed Transaction and transaction costs) for all of such
                  assets in the Proposed Transaction divided by the number of
                  outstanding Common shares of the Corporation on the date of
                  completion of the Proposed Transaction;

         (t)      "Short Term Incentive Plan" means the Corporation's Short Term
                  Incentive Plan and any other executive cash bonus or incentive
                  plan of the Corporation, in each case as constituted and
                  administered at the Effective Date;

         (u)      "Stock Option" means any right to subscribe for Common shares
                  issued pursuant to any Stock Option Plan;

         (v)      "Stock Option Plan" means the Corporation's 1995 Stock Option
                  Plan and any other employee stock option plan of the
                  Corporation, in each case as constituted and administered at
                  the Effective Date;

         (w)      "Term" means the period commencing as of the date hereof and
                  ending on September 30, 2004 or such date later than September
                  30, 2004 as the Corporation may from time to time by notice to
                  the Executive specify;

         (x)      "Termination Date" means the earliest of:
<Page>

                                      6

                  (i)      the date immediately following the expiry of 24
                           months from the Effective Date;

                  (ii)     the date of commencement of alternate employment by
                           the Executive as contemplated by section 4.2;

                  (iii)    the date of the termination of the Executive's
                           employment with the Corporation by reason of his
                           death or for Cause;

         (y)      "Termination Leave" means the period commencing on the
                  Effective Date and ending on the Termination Date.

1.2.     DATE OF COMPLETION.  For the purposes of this Agreement, the term "date
         of completion" where used in connection with a Proposed Transaction
         means the date on which the actual transfer of the Common shares or
         assets of the Corporation or corporate transaction comprising the
         Proposed Transaction takes effect.

1.3.     GENDER AND NUMBER.  Unless otherwise expressly provided for in this
         Agreement or unless the context otherwise requires, words importing the
         singular include the plural and VICE VERSA and words importing gender
         include all genders.

2.       OPERATION OF AGREEMENT

2.1.     Subject to subsection 2.2, this Agreement will be effective and binding
         on the parties hereto immediately upon its execution but, anything in
         this Agreement to the contrary notwithstanding, this Agreement will not
         be operative unless and until the completion of a Proposed Transaction
         occurs. Upon and concurrently with the completion of a Proposed
         Transaction at any time during the Term, without further action on the
         part of any party, this Agreement shall become immediately operative.
         For the avoidance of doubt, this Agreement will not be applicable in
         respect of the termination of the Executive's employment with the
         Corporation for any reason whatsoever at any time prior to the
         commencement of the Protection Period, in which case the Executive's
         then existing terms of employment and legal rights in connection with
         any such termination will apply.

2.2.     Section 3 of this Agreement will not apply to any termination by the
         Corporation of the Executive's employment in connection with the
         completion of any Proposed Transaction if:

         (a)      the Executive has entered into a new employment arrangement
                  with the purchaser of all or substantially all of the assets
                  of the Corporation as contemplated in paragraph 1.1(m)(iii)
                  (the "Purchaser"); and

         (b)      the Purchaser has agreed to be bound by and has assumed all of
                  the obligations of the Corporation under this Agreement.
<Page>

                                      7

         For greater certainty, if the Executive remains employed by the
         Purchaser for the duration of the Protection Period, all rights of the
         Executive under this Agreement as against the Purchaser will cease
         immediately following the last day of that Period.

3.       TERMINATION AFTER COMPLETION OF A PROPOSED TRANSACTION

3.1.     In the event during the Protection Period of either (i) the receipt by
         the Executive of notice of termination of his employment by the
         Corporation (other than by reason of his Disability or Retirement or
         for Cause) or (ii) the Executive's Constructive Dismissal, the
         Executive may, within seven days after receipt of notice of termination
         or the Executive's Constructive Dismissal, whichever is applicable,
         elect by written notice to the Corporation to accept Termination Leave
         in accordance with section 4 of this Agreement or receive a Lump Sum
         Settlement in accordance with section 5 of this Agreement.

3.2.     If no election is made by the Executive within the period specified in
         section 3.1, the Executive shall be deemed to have elected to accept
         Termination Leave in accordance with section 4.

4.       TERMINATION LEAVE ELECTION

4.1.     Subject to subsection 4.2, during the Termination Leave the Executive
         will remain an employee of the Corporation and will be entitled to a
         leave of absence from work on the following terms:

         (a)      the Corporation will on the last Business Day of each month
                  during the Termination Leave pay to the Executive an amount
                  equal to one-twelfth (1/12) of the Base Salary, less all
                  deductions provided for in Schedule A or as required of the
                  Corporation by law;

         (b)      all benefits and perquisites to which the Executive was
                  entitled immediately prior to the Effective Date will
                  terminate on that Date, except that the Corporation will
                  provide to, continue or maintain for the Executive, as
                  applicable, the benefits and perquisites described in Schedule
                  A (the "Executive Benefits");

         (c)      the Executive will continue to participate in the Short Term
                  Incentive Plan on the following terms:

                  (i)      subject to paragraph (ii) of this subsection,
                           payments to the Executive of any bonus awards under
                           the Short Term Incentive Plan will continue to be
                           made to the Executive in accordance with the Plan's
                           terms;

                  (ii)     bonus awards payable to the Executive under the Short
                           Term Incentive Plan will be based solely on the
                           corporate financial performance portion of the awards
                           payable under the Plan and the Executive will not be
                           entitled to receive any awards which may be payable
                           under the Plan based on achievement of individual
                           objectives;
<Page>

                                      8

                  (iii)    in the event that at any time during the Termination
                           Leave a determination of bonus awards cannot be made
                           under the Short Term Incentive Plan as a result of a
                           material change in the Corporation's business, any
                           merger or other corporate reorganization involving
                           the Corporation or the disposition of all or some of
                           its assets, the Corporation will pay a bonus award to
                           the Executive based on an amount equal to 75% of the
                           Executive's target bonus amount for the fiscal year
                           of the Corporation in which the Effective Date
                           occurred, which amount will be paid to the Executive
                           in accordance with the terms of the Plan and this
                           Agreement; and

                  (iv)     any payment to the Executive under the Short Term
                           Incentive Plan for the fiscal year in which the
                           Termination Date occurs will be pro-rated to the
                           Termination Date; and

         (d)      all obligations, if any, of the Corporation to the Executive
                  in respect of the granting of any SAR or Stock Option shall
                  terminate on the Effective Date.

4.2.     If, after the Effective Date, the Executive commences alternate
         employment (of which the Executive shall promptly notify the
         Corporation) which is comparable as to aggregate annual compensation
         and authority, duties and responsibilities to the position held by the
         Executive immediately prior to the Effective Date, the obligations of
         the Corporation pursuant to section 4.1 will upon the commencement of
         such alternate employment immediately be altered as follows:

         (a)      all rights of the Executive to receive monthly payments
                  pursuant to subsection 4.1(a) will cease and the Corporation
                  will forthwith pay to the Executive a cash lump sum comprised
                  of an amount equal to one half of the amount which the
                  Executive would have been entitled to receive pursuant to
                  subsection 4.1(a) for each month (or portion thereof)
                  remaining in the Termination Leave had it continued for a
                  period of 24 months from the Effective Date;

         (b)      the Executive's entitlement to participate in any of the
                  Executive Benefits will cease effective from the date of
                  commencement of that employment (unless otherwise expressly
                  stated in Schedule A); and

         (c)      the Executive's entitlement to participate in the Short Term
                  Incentive Plan will cease, subject to any payment to which the
                  Executive would have been entitled if the Termination Date
                  were the date of termination of his employment by the
                  Corporation (without Cause) as contemplated by the Plan.

4.3.     The employment of the Executive with the Corporation will terminate on
         the Termination Date.
<Page>

                                      9

5.       LUMP SUM SETTLEMENT ELECTION

5.1.     On the Effective Date, the Executive will cease to be an employee of
         the Corporation on the following terms:

         (a)      within fourteen days after the Effective Date, the Corporation
                  will pay to the Executive, in addition to salary due to the
                  Executive for the period ending on the Effective Date, the sum
                  of:

                  (i)      an amount representing all of the Executive's accrued
                           regular and extended vacation entitlement, if
                           applicable, to the Effective Date; and

                  (ii)     an amount equal to 80% of the amount calculated by
                           multiplying two times the sum of the Base Salary and
                           the Executive's target bonus amount for the fiscal
                           year of the Corporation in which the Effective Date
                           occurred;

         (b)      all benefits and perquisites to which the Executive was
                  entitled immediately prior to the Effective Date will
                  terminate on the Effective Date, except that the Corporation
                  will provide to, continue or maintain for the Executive, as
                  applicable, the benefits and perquisites described in Schedule
                  B (the "Executive Benefits"); and

         (c)      the Executive's entitlement to participate in the Short Term
                  Incentive Plan will cease on the Effective Date, and in lieu
                  of any cash award for the fiscal year in which the Effective
                  Date occurs, the Corporation will pay a bonus award to the
                  Executive based on an amount equal to 75% of the Executive's
                  target bonus amount for the fiscal year of the Corporation in
                  which the Effective Date occurred, which amount will be
                  pro-rated to the Effective Date and paid to the Executive in
                  accordance with the terms of the Short Term Incentive Plan;
                  and

         (d)      all obligations, if any, of the Corporation to the Executive
                  in respect of the granting of any SAR or Stock Option shall
                  terminate on the Effective Date.

5.2.     For greater certainty, the employment of the Executive with the
         Corporation will terminate on the Effective Date.

6.       DUTY TO MITIGATE

6.1.     The Executive will not be subject to any duty or obligation to seek
         alternate employment or other sources of income or benefits, or to
         mitigate his damages, or to any similar duty or obligation, following
         or as a result of any termination of his employment by the Corporation
         either expressly by notice without Cause or by Constructive Dismissal
         and, except as specifically provided in section 4.2, no payments or
         other obligations of the Corporation under this Agreement will be
         subject to any rights of set-off, duty to mitigate or other reduction,
         and all such payments and obligations will be paid and performed in
         full notwithstanding any alternate employment or other sources of
         income or benefits obtained or received or receivable by the Executive.
<Page>

                                      10

7.       DISPUTE RESOLUTION REGARDING CONSTRUCTIVE DISMISSAL AND OTHER BENEFITS

7.1.     If any dispute or question (a "Dispute") arises between the Corporation
         and the Executive concerning the determination as to whether a
         Constructive Dismissal of the Executive has occurred (including with
         respect to the date of such dismissal), the entitlement of the
         Executive to any Executive Benefits under this Agreement or whether the
         Executive has been terminated for Cause, the Corporation and the
         Executive will attempt in good faith to resolve the Dispute. If the
         Corporation and the Executive have not agreed to a settlement of the
         Dispute within 30 days from the date on which the Dispute first became
         known to both parties, then the Corporation and the Executive agree
         that the Dispute will be submitted to arbitration in Vancouver, British
         Columbia, before a sole arbitrator agreed to by both parties. The
         parties agree that the Rules of the British Columbia International
         Commercial Arbitration Centre for the conduct of domestic commercial
         arbitrations do not apply. However, the arbitrator may be guided by
         Rules 1, 3, 6, 8, 9, 13, 15, 16, 19-36, and 39-45, in establishing the
         rules for the arbitration. In the event that the parties are unable to
         agree on the appointment of a sole arbitrator in accordance with this
         section 7 within 45 days from the date on which the Dispute first
         became known to both parties, a sole arbitrator for this purpose will
         be determined for the parties in accordance with section 17 of the
         Commercial Arbitration Act, R.S.B.C. 1996, c.55.

7.2.     The Corporation and the Executive agree that a Dispute will not be made
         the subject matter of an action in any court by either the Corporation
         or the Executive unless the Dispute has first been submitted to
         arbitration and finally determined by a sole arbitrator in accordance
         with this section 7, and that any such action will only be for the
         purposes of enforcing the decision of the arbitrator and the costs
         incidental to the action. In any such action the decision of the sole
         arbitrator will be conclusively deemed to determine the rights and
         liabilities between the Corporation and the Executive in respect of the
         matter which is the subject of the Dispute.

7.3.     In the event that the Executive receives an award in any Dispute which
         exceeds the offer for settlement of such Dispute by the Corporation
         immediately preceding an arbitration pursuant to this section 7, the
         Corporation agrees to pay to the Executive any and all costs and
         expenses (including reasonable legal fees) incurred by the Executive in
         connection with the Dispute concurrently with the payment of any award
         made pursuant to such arbitration.

8.       SARS AND STOCK OPTIONS

8.1.     If the Executive holds any SARs or Stock Options at the date of
         completion of a Proposed Transaction which results in a payment to
         holders of Common shares of cash or securities, the Corporation and the
         Executive agree that:

         (a)      this Agreement will constitute a notice pursuant to the
                  applicable provision of each of the SAR Plans such that, on
                  the date of completion of the Proposed Transaction, the
                  Corporation will pay to the Executive an amount equal to the
                  result obtained by multiplying the excess, if any, of the
                  Selling Price Per Share over the Exercise Price (as defined in
                  the respective SAR) by the number of the
<Page>

                                      11

                  Common shares in respect of which each SAR remains
                  unexercised (whether or not such SAR would then be
                  exercisable);

         (b)      upon payment of all amounts pursuant to subsection 8.1(a), all
                  rights of the Executive pursuant to the SARs, any share
                  appreciation rights agreement entered into between the
                  Corporation and the Executive and the SAR Plans will
                  terminate; and

         (c)      the provisions of sections 7.5, 7.6 and 7.7 of the
                  Corporation's 1995 Stock Option Plan shall apply to every
                  Stock Option with respect to a Proposed Transaction; provided
                  that for purposes of subsection 7.5.2 thereof the Market Price
                  (as defined in the 1995 Stock Option Plan) on the date of
                  completion of the Proposed Transaction shall be deemed to be
                  equal to the Selling Price Per Share.

9.       ACCEPTANCE OF TERMS

         The terms set out in this Agreement are in lieu of (and not in addition
         to) and in full satisfaction of any and all other claims or
         entitlements which the Executive has or may have upon the termination
         of his employment by the Corporation (other than by reason of his
         Disability or Retirement or for Cause) including by Constructive
         Dismissal. The entering into of this Agreement by the Corporation will
         effect a full and complete release of the Corporation from any and all
         claims which the Executive may then have for whatever reason or cause
         in connection with the Executive's employment and in respect of such
         termination (except for any claims arising in connection with the
         performance by the Corporation of its obligations under this Agreement)
         and, as a pre-condition to receiving any payments or benefits pursuant
         to this Agreement, the Executive specifically agrees to execute and
         deliver to the Corporation a release document to that effect in the
         form set out in Schedule C and resignation as an officer of the
         Corporation and as an officer or director of any affiliate of the
         Corporation in which the Executive is an officer or director.

10.      WITHHOLDING OF TAXES

         The Corporation may withhold from any amounts payable to the Executive
         under this Agreement all federal, provincial, state, city or other
         taxes as the Corporation is required to withhold pursuant to any law or
         government regulation or ruling, and such other amounts as the
         Executive has authorized or may authorize the Corporation to deduct or
         withhold.

11.      NOTICES

         Any notice required or permitted to be given under this Agreement will
         be in writing and will be properly given if delivered by hand or mailed
         by prepaid registered mail addressed as follows:
<Page>

                                      12

         (a)      in the case of the Corporation, to:

                  Norske Skog Canada Limited
                  9th Floor, 700 West Georgia Street
                  Vancouver, B.C.
                  V7Y 1J7
                  Attention:  President

         (b)      in the case of the Executive, to:

                  3553 West 27th Avenue
                  Vancouver, BC V6S 1P9

         or to such other address as the parties may from time to time specify
         by notice given in accordance with the Agreement. Any notice given will
         be conclusively deemed to have been given or made on the day of
         delivery, if delivered, or if mailed by registered mail, on the date
         shown on the postal return receipt as the date upon which the envelope
         containing such notice was actually received by the addressee.

12.      ENTIRE AGREEMENT

         This Agreement constitutes the entire agreement between the parties
         with respect to the payment to the Executive of severance benefits in
         connection with any Proposed Transaction and supersedes all prior
         agreements, understandings, negotiations and discussions, whether
         written or oral. There are no covenants, conditions, agreements,
         representations, warranties or other terms or provisions, express or
         implied, collateral, statutory or otherwise, relating to the payment to
         the Executive of severance benefits in connection with any Proposed
         Transaction except as provided in this Agreement.

13.      SEVERABILITY

         If any term or other provision contained in this Agreement is
         determined to be invalid, illegal or incapable of being enforced by any
         rule of law or public policy, all other conditions and provisions of
         this Agreement shall nevertheless remain in full force and effect so
         long as the economic and legal substance of the transactions
         contemplated hereby is not affected in any manner materially adverse to
         any party hereto. Upon such determination that any term or other
         provision is invalid, illegal or incapable of being enforced, the
         parties hereto shall negotiate in good faith to modify this Agreement
         so as to effect the original intent of the parties hereto as closely as
         possible in an acceptable manner to the end that transactions
         contemplated by this Agreement are fulfilled.

14.      EXECUTION OF DOCUMENTS

         Each of the Corporation and the Executive agrees to execute all such
         documents and to do all such acts and things as the other party may
         reasonably request and as may be lawful and within its powers to do or
         to cause to be done in order to carry out and/or implement the
         provisions or intent of this Agreement.
<Page>

                                      13

15.      APPLICABLE LAW

         This Agreement shall be governed by and construed in accordance with
         the laws of the Province of British Columbia and the laws of Canada
         applicable therein.

16.      AMENDMENT AND WAIVERS

         No amendment or waiver of any provision of this Agreement will be
         binding on any party unless consented to in writing by that party. No
         waiver of any provision of this Agreement will constitute a waiver of
         any other provision nor will any waiver constitute a continuing waiver
         unless otherwise provided.

17.      SUCCESSORS AND ASSIGNS

         This Agreement will enure to th e benefit of and be binding upon the
         Executive and his heirs, executors, administrators and other legal
         personal representatives and upon the Corporation and its successors
         and assigns. This Agreement is personal to the Executive and may not be
         assigned by him.

18.      ACKNOWLEDGEMENT

         The Executive hereby acknowledges that he has been afforded a
         reasonable opportunity to obtain independent legal advice regarding the
         matters contained in and contemplated by this Agreement prior to the
         Executive executing this Agreement.

IN WITNESS WHEREOF this Agreement has been executed by the parties hereto.

                               NORSKE SKOG CANADA LIMITED

                               By:  /s/ R. Horner
                                    -------------------------------------------
                                    President

                               /s/ Stuart H. Clugston
                               ------------------------------------------------
                               STUART H. CLUGSTON
<Page>

                                   SCHEDULE A

                    TREATMENT OF BENEFITS AND PERQUISITES ON
                          ELECTION OF TERMINATION LEAVE

1.       The following benefits will be provided, continued or maintained until
         the Termination Date:

         (a)      Provincial Medical Services Plan (MSP): coverage for Executive
                  and dependants

         (b)      Extended Health Benefits (EHB): coverage for Executive and
                  dependants

         (c)      Dental Benefits: coverage for Executive and dependants

         (d)      Life Insurance: the current level of coverage (up to 3x of
                  annual salary) will continue until the Termination Date. The
                  Executive will have 31 days from the Termination Date to
                  convert this coverage to an individual life insurance policy,
                  to a maximum of $200,000.

         (e)      Employee Share Purchase Plan: monthly contributions by way of
                  payroll deduction by the Executive and matching Corporation
                  contributions will continue to the earlier of the Termination
                  Date, the Executive's election to cease contributions, or the
                  termination of the Plan. The provisions of the Plan relating
                  to termination of employment shall apply at the Termination
                  Date, but the Executive shall be entitled to exercise his
                  rights under the share withdrawal provision of the Plan prior
                  to that time.

         (f)      Group RRSP: participation (outside of the SELECTIONS program)
                  by way of payroll deduction by the Executive will continue
                  until the Termination Date.

         (g)      Other Payroll Deductions: payroll deductions, such as:

                  o        auto plan

                  o        computer loan

                  o        personal lines insurance

                  o        leased vehicle driver option

                  o        Canada Savings Bonds

         will continue to be deducted from the Executive's payments during the
         Termination Leave, with the full amount due and payable on the
         Termination Date. Eligibility to
<Page>

                                      2

         renew any of the above deductions will terminate as of the commencement
         of the Termination Leave.

2.       The following benefits will cease at the commencement of the
         Termination Leave as shown below:

         (a)      Life Insurance: any optional coverage for the Executive, his
                  spouse or his children, will cease at the commencement of the
                  Termination Leave. The Executive will have 31 days from the
                  last day worked to convert all or part of his Executive and/or
                  spousal coverages to individual life insurance policies, to a
                  maximum of $200,000 each.

         (b)      Accidental Death and Dismemberment Benefits:

                  (i)      All 24 hour company paid accidental death and
                           dismemberment insurance benefits, will cease at the
                           commencement of the Termination Leave.

                  (ii)     All Executive, spousal and child optional accidental
                           death and dismemberment benefits will cease at the
                           commencement of the Termination Leave; the Executive
                           may elect to convert all or part of his Executive
                           and/or spousal coverages to individual coverage,
                           within 31 days after the commencement of the
                           Termination Leave.

         (c)      Disability Benefits: short term and long term disability
                  coverage will cease at the commencement of the Termination
                  Leave.

         (d)      Charitable donations and social club fees will cease to be
                  deducted at the commencement of the Termination Leave.

         (e)      Vacation: the accrual of regular and, if applicable, extended
                  vacation entitlement will cease on the commencement of the
                  Termination Leave. All accrued regular and extended vacation
                  entitlement, including pro-rated regular and, if applicable,
                  extended entitlement to the Termination Date, will be paid to
                  the Executive at the commencement of the Termination Leave.

3.       Perquisites will continue during the Termination Leave, in accordance
         with the following:

         (a)      Leased Automobile: the Corporation will continue to lease the
                  automobile, presently leased by the Corporation and designated
                  for the Executive's use, until the Termination Date and bear
                  all reasonable costs associated with its maintenance,
                  including insurance, but excluding fuel.

         The Executive is entitled to elect to purchase the automobile at any
         time during the Termination Leave, for the then current residual option
         price of the automobile. The Executive will bear all sales and other
         tax costs and any other costs and taxes which may be associated with
         such transfer.
<Page>

                                      3

         (b)      Financial Counselling: to the extent the Executive is eligible
                  for this perquisite at the time of commencement of the
                  Termination Leave, the current level of financial counselling
                  will continue until the Termination Date.

         (c)      Corporation Loans (Housing): the Executive must continue to
                  repay any loans at the rate not less than what is currently
                  being deducted from his salary payments, but in any event
                  shall repay the loan in full by the Termination Date.

         (d)      Club Memberships: to the extent the Executive has been granted
                  a club membership at the time of commencement of the
                  Termination Leave, the Corporation will continue to pay for
                  the employee's membership until the Termination Date. Upon the
                  Termination Date corporate (as opposed to personal) club
                  memberships will remain with the Corporation.

4.       Post-Retirement Medical and Dental Benefits will apply as follows:

         If the Executive is age 51 or older as of the Effective Date, he will
         be eligible on the latter of the first of the month following the
         Termination Date or the first of the month following his 55th birth
         date, to apply for medical, extended health and dental benefits on the
         basis of treatment equivalent to that being received by an employee of
         the Corporation who retired on the Effective Date.

5.       Pension Benefits:

         (a)      The Executive will continue to participate in the registered
                  pension plan and unfunded supplemental plan in which the
                  Executive is enrolled on the date of commencement of the
                  Termination Leave (the "Pension Plans") on the following
                  terms:

                  (i)      for the purposes of any contribution (notional or
                           actual) provision of the Pension Plans, the amounts
                           paid to the Executive pursuant to section 4.1(a) of
                           the Agreement shall be treated in the same manner
                           that payments of salary to the Executive were
                           recognized prior to the date of commencement of the
                           Executive's Termination Leave, and the amounts paid
                           to the Executive pursuant to section 4.1(c) of the
                           Agreement shall be treated in the same manner that
                           payments under the Corporation's incentive
                           compensation programs were recognized prior to the
                           date of commencement of the Executive's Termination
                           Leave;

                  (ii)     if on the Termination Date the Executive has not
                           satisfied a vesting condition under the Pension
                           Plans, the Executive will be deemed to have satisfied
                           this condition;

                  (iii)    upon the completion of the Executive's Termination
                           Leave, the Executive shall become entitled to
                           benefits under the Pension Plans on the basis that
                           the Executive terminated employment with the
                           Corporation on that date.
<Page>

                                      4

         (b)      If the circumstances described in section 4.2 of the Agreement
                  arise, the Executive shall immediately stop accumulating
                  further benefits under the Pension Plans, and, without
                  limitation, any payment the Executive becomes entitled to
                  pursuant to section 4.2(a) of the Agreement shall not be
                  recognized under any contribution (actual or notional)
                  provision of the Pension Plans.

<Page>

                                   SCHEDULE B

                    TREATMENT OF BENEFITS AND PERQUISITES ON
                         ELECTION OF LUMP SUM SETTLEMENT

All benefits, privileges and perquisites the Executive might formerly have
received as a result of employment with the Corporation will cease as of the
Effective Date except as expressly set out below:

1.       Provincial Medical Services Plan (MSP): coverage for Executive and
         dependants will cease at the end of the month in which the Effective
         Date occurs.

2.       Life Insurance: the current level of coverage (up to 3 times annual
         salary) will continue until the Effective Date, and the Executive will
         have 31 days from the Effective Date to convert this coverage to an
         individual life insurance policy, to a maximum of $200,000.

3.       Optional Life Insurance: any executive, spousal, or child optional life
         insurance coverage the Executive had by reason of employment with the
         Corporation will cease on the Effective Date. The Executive may convert
         all or part of any optional executive and/or spousal insurance, up to a
         maximum of $200,000 each, within 31 days of this date, to individual
         life insurance policies at prevailing individual, as opposed to group
         insurance rates and without medical examination.

4.       Accidental Death and Dismemberment Insurance ("AD&D"):

         (a)      coverage under AD&D will cease on the Effective Date; and

         (b)      any executive, spousal, or child optional AD&D coverage the
                  Executive had by reason of employment will cease on the
                  Effective Date; the Executive may elect to convert all or part
                  of any optional executive and/or spousal insurance, up to a
                  maximum of $200,000 each, within 31 days after the Effective
                  Date.

5.       Health Spending Account: contributions by the Executive will cease on
         the Effective Date. The Executive may submit claims against the balance
         accrued to the Effective Date, until the end of the calendar year in
         which the Effective Date occurs.

6.       Disability Benefits: short term and long term disability coverage will
         cease at the Effective Date.

7.       Vacation: all accrued regular and extended vacation entitlement,
         including pro-rated regular and, if applicable, extended entitlement to
         the Effective Date, will be paid to the Executive at the Effective
         Date.

8.       Share Purchase Plan: participation and/or contributions through payroll
         deduction will cease on the Effective Date. All amounts in the
         Executive's account must be withdrawn within 30 days of the Effective
         Date.
<Page>

                                      2

9.       Group RRSP: participation and/or contributions by way of payroll
         deduction by the Executive will cease at the Effective Date. Treatment
         of the Executive's fund balances will be as per the terms of the Plan.

10.      Leased Automobile: the Executive is entitled to elect to purchase the
         automobile leased by the Corporation, and designated for his use, at
         the Effective Date for the then current residual option price of the
         automobile. The Executive will bear all sales and other tax costs and
         any other costs and taxes which may be associated with any such
         transfer.

11.      Club Memberships:

         (a)      the payment by the Corporation of any personal club
                  memberships held by the Executive will cease on the Effective
                  Date; and

         (b)      the payment of any corporate club membership dues in respect
                  of the Executive will cease on the Effective Date, and the
                  membership will remain with the Corporation.

12.      Corporation Loans, i.e. housing, auto insurance, leased vehicle driver
         option, computer purchase, etc.: the balance outstanding on any and all
         company loans granted to the Executive will become due and payable in
         full on the Effective Date.

13.      Canada Savings Bonds: if the Executive was purchasing Canada Savings
         Bonds through payroll deductions, he may elect to receive a refund for
         the amount already paid, or purchase the bond in full within 5 days
         after the Effective Date.

14.      Charitable donations and social club fees: deductions will cease at the
         Effective Date.

15.      Pension: the Executive shall at the Effective Date immediately stop
         accumulating further benefits under the registered pension plan and
         unfunded supplemental plan in which the Executive is enrolled at the
         Effective Date (the "Pension Plans") and, without limitation, all
         payments the Executive becomes entitled to pursuant to section 5.1 of
         the Agreement shall not be recognized under any contribution (actual or
         notional) provision of the Pension Plans. If on the Effective Date the
         Executive has not satisfied a vesting condition under the Pension
         Plans, the Executive will be deemed to have satisfied that condition.

16.      Post Retirement Medical and Dental Benefits: if the Executive is age 51
         or older as of the Effective Date, he will become eligible on the later
         of the first of the month following the Effective Date or the first of
         the month following his 55th birth date, to apply for medical, extended
         health and dental benefits on the basis of treatment equivalent to that
         being received by an employee of the Corporation who retired on the
         Effective Date.

<Page>

                                   SCHEDULE C

                                     RELEASE

IN CONSIDERATION for the payment to me of $1.00 by NORSKE SKOG CANADA LIMITED
(the "Corporation") and for the entry by the Corporation into the Executive
Severance Agreement (the "Agreement") dated as of the day of October, 2002
between the Corporation and me (the receipt and sufficiency of which are hereby
acknowledged), I, Stu Clugston, HEREBY RELEASE AND FOREVER DISCHARGE the
Corporation, its related and affiliated companies and subsidiaries (collectively
"Norske Skog"), and its officers, directors, and employees, from any and all
actions, causes of action, claims and demands, which in any way relate to my
employment and the termination of my employment with Norske Skog, including any
claim arising from the provisions of the EMPLOYMENT STANDARDS ACT, HUMAN RIGHTS
ACT or other applicable legislation. I FURTHER AGREE that the consideration I
have received includes full payment for any claim I may have under such
legislation.

The terms of this release set out the entire agreement between myself and Norske
Skog and are intended to be contractual and are not a mere recital.

I declare that I fully understand the terms of this settlement, I have been
advised to seek independent professional advice before executing this document
and that I voluntarily accept the consideration, for the purpose of making a
full and final compromise and settlement of all claims.

I further understand and agree that the terms of this settlement will remain
confidential and will not be disclosed by me to third parties, except to my
professional advisors and to my family, and as may be required by law.

Dated this ______ day of __________, 2002, at ________________, in the Province
of British Columbia.

WITNESSED BY:

----------------------------                         --------------------------
Witness - Signature                                  Stuart H. Clugston

---------------------------
Witness - Address

---------------------------
Witness - Occupation

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}]]