Document:

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                                                                   Exhibit 10.27

                                  VERITY, INC.

                       1996 NONSTATUTORY STOCK OPTION PLAN

                       (AS AMENDED THROUGH JUNE 15, 2000)

        1.      ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

               1.1 ESTABLISHMENT. The Verity, Inc. 1996 Nonstatutory Stock
Option Plan (the "PLAN") is hereby established effective as of February 6, 1996
(the "EFFECTIVE DATE").

               1.2 PURPOSE. The purpose of the Plan is to advance the interests
of the Participating Company Group and its stockholders by providing an
incentive to attract, retain and reward persons performing services for the
Participating Company Group and by motivating such persons to contribute to the
growth and profitability of the Participating Company Group.

               1.3 TERM OF PLAN. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing Options granted under the Plan have lapsed.

        2.      DEFINITIONS AND CONSTRUCTION.

               2.1 DEFINITIONS. Whenever used herein, the following terms shall
have their respective meanings set forth below:

                      (a) "BOARD" means the Board of Directors of the Company.
If one or more Committees have been appointed by the Board to administer the
Plan, "Board" also means such Committee(s).

                      (b) "CODE" means the Internal Revenue Code of 1986, as
amended, and any applicable regulations promulgated thereunder.

                      (c) "COMMITTEE" means the Compensation Committee or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the powers of
the Board granted herein, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.

                      (d) "COMPANY" means Verity, Inc., a Delaware corporation,
or any successor corporation thereto.

                      (e) "CONSULTANT" means any person, including an advisor,
engaged by a Participating Company to render services other than as an Employee
or a Director.

                      (f) "DIRECTOR" means a member of the Board or of the board
of directors of any other Participating Company.

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                      (g) "EMPLOYEE" means any person treated as an employee
(including an officer or a Director who is also treated as an employee) in the
records of a Participating Company; provided, however, that neither service as a
Director nor payment of a director's fee shall be sufficient to constitute
employment for purposes of the Plan.

                      (h) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.

                      (i) "FAIR MARKET VALUE" means, as of any date, the value
of a share of stock or other property as determined by the Board, in its sole
discretion, or by the Company, in its sole discretion, if such determination is
expressly allocated to the Company herein.

                      (j) "INSIDER" means an officer or a Director of the
Company or any other person whose transactions in Stock are subject to Section
16 of the Exchange Act.

                      (k) "OPTION" means a right to purchase Stock (subject to
adjustment as provided in Section 4.2) pursuant to the terms and conditions of
the Plan. Options are intended to be nonstatutory stock options and shall not be
treated as incentive stock options within the meaning of Section 422(b) of the
Code.

                      (l) "OPTION AGREEMENT" means a written agreement between
the Company and an Optionee setting forth the terms, conditions and restrictions
of the Option granted to the Optionee and any shares acquired upon the exercise
thereof.

                      (m) "OPTIONEE" means a person who has been granted one or
more Options.

                      (n) "PARENT CORPORATION" means any present or future
"parent corporation" of the Company, as defined in Section 424(e) of the Code.

                      (o) "PARTICIPATING COMPANY" means the Company or any
Parent Corporation or Subsidiary Corporation.

                      (p) "PARTICIPATING COMPANY GROUP" means, at any point in
time, all corporations collectively which are then Participating Companies.

                      (q) "STOCK" means the common stock, $0.001 par value, of
the Company, as adjusted from time to time in accordance with Section 4.2.

                      (r) "SUBSIDIARY CORPORATION" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.

               2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural, the plural shall include the singular, and
the term "or" shall include the conjunctive as well as the disjunctive.

                                       2.
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        3.      ADMINISTRATION.

               3.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered
by the Board, including any duly appointed Committee of the Board. All questions
of interpretation of the Plan or of any Option shall be determined by the Board,
and such determinations shall be final and binding upon all persons having an
interest in the Plan or such Option. Any officer of a Participating Company
shall have the authority to act on behalf of the Company with respect to any
matter, right, obligation, determination or election which is the responsibility
of or which is allocated to the Company herein, provided the officer has
apparent authority with respect to such matter, right, obligation, determination
or election.

               3.2 POWERS OF THE BOARD. In addition to any other powers set
forth in the Plan and subject to the provisions of the Plan, the Board shall
have the full and final power and authority, in its sole discretion:

                      (a) to determine the persons to whom, and the time or
times at which, Options shall be granted and the number of shares of Stock to be
subject to each Option;

                      (b) to determine the Fair Market Value of shares of Stock
or other property;

                      (c) to determine the terms, conditions and restrictions
applicable to each Option (which need not be identical) and any shares acquired
upon the exercise thereof, including, without limitation, (i) the exercise price
of the Option, (ii) the method of payment for shares purchased upon the exercise
of the Option, (iii) the method for satisfaction of any tax withholding
obligation arising in connection with the Option or such shares, including by
the withholding or delivery of shares of stock, (iv) the timing, terms and
conditions of the exercisability of the Option or the vesting of any shares
acquired upon the exercise thereof, (v) the time of the expiration of the
Option, (vi) the effect of the Optionee's termination of employment or service
with the Participating Company Group on any of the foregoing, and (vii) all
other terms, conditions and restrictions applicable to the Option or such shares
not inconsistent with the terms of the Plan;

                      (d) to approve one or more forms of Option Agreement;

                      (e) to amend, modify, extend, or renew, or grant a new
Option in substitution for, any Option or to waive any restrictions or
conditions applicable to any Option or any shares acquired upon the exercise
thereof;

                      (f) to accelerate, continue, extend or defer the
exercisability of any Option or the vesting of any shares acquired upon the
exercise thereof, including with respect to the period following an Optionee's
termination of employment or service with the Participating Company Group;

                      (g) to prescribe, amend or rescind rules, guidelines and
policies relating to the Plan, or to adopt supplements to, or alternative
versions of, the Plan, including, without limitation, as the Board deems
necessary or desirable to comply with the laws of, or to

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accommodate the tax policy or custom of, foreign jurisdictions whose citizens
may be granted Options; and

                      (h) to correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Option Agreement and to make all
other determinations and take such other actions with respect to the Plan or any
Option as the Board may deem advisable to the extent consistent with the Plan
and applicable law.

        4.      SHARES SUBJECT TO PLAN.

               4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be ten million four hundred twenty thousand
(10,420,000) (after giving effect to the Company's 2:1 stock split of December
3, 1999) and shall consist of authorized but unissued or reacquired shares of
Stock or any combination thereof. If an outstanding Option for any reason
expires or is terminated or canceled or shares of Stock acquired, subject to
repurchase, upon the exercise of an Option are repurchased by the Company, the
shares of Stock allocable to the unexercised portion of such Option, or such
repurchased shares of Stock, shall again be available for issuance under the
Plan.

               4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of
any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number and class of shares
subject to the Plan and to any outstanding Options, and in the exercise price
per share of any outstanding Options. If a majority of the shares which are of
the same class as the shares that are subject to outstanding Options are
exchanged for, converted into, or otherwise become (whether or not pursuant to
an Ownership Change Event, as defined in Section 8.1) shares of another
corporation (the "New Shares"), the Board may unilaterally amend the outstanding
Options to provide that such Options are exercisable for New Shares. In the
event of any such amendment, the number of shares subject to, and the exercise
price per share of, the outstanding Options shall be adjusted in a fair and
equitable manner as determined by the Board, in its sole discretion.
Notwithstanding the foregoing, any fractional share resulting from an adjustment
pursuant to this Section 4.2 shall be rounded up or down to the nearest whole
number, as determined by the Board, and in no event may the exercise price of
any Option be decreased to an amount less than the par value, if any, of the
stock subject to the Option. The adjustments determined by the Board pursuant to
this Section 4.2 shall be final, binding and conclusive.

        5. ELIGIBILITY. Options may be granted only to Employees and
Consultants; provided, however, that no Insider may be granted an Option
pursuant to the Plan. For purposes of the foregoing sentence: (A) "Employees"
shall include prospective Employees to whom Options are granted in connection
with written offers of employment with the Participating Company Group; (B)
"Consultants" shall include prospective Consultants to whom Options are granted
in connection with written offers of engagement with the Participating Company
Group; and (C) an Employee or prospective Employee shall not be considered an
"Insider" with respect to an Option granted as an essential inducement for such
person to become an Employee. Eligible persons may, be granted more than one (1)
Option.

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        6. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by Option
Agreements specifying the number of shares of Stock covered thereby, in such
form as the Board shall from time to time establish. Option Agreements may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:

               6.1 EXERCISE PRICE. The exercise price for each Option shall be
established in the sole discretion of the Board; provided, however, that the
exercise price per share for an Option shall be not less than eighty-five
percent (85%) of the Fair Market Value of a share of Stock on the effective date
of grant of the Option. Notwithstanding the foregoing, an Option may be granted
with an exercise price lower than the minimum exercise price set forth above if
such Option is granted pursuant to an assumption or substitution for another
option in a manner qualifying under the provisions of Section 424(a) of the
Code.

               6.2 EXERCISE PERIOD. Options shall be exercisable at such time or
times, or upon such event or events, and subject to such terms, conditions,
performance criteria, and restrictions as shall be determined by the Board and
set forth in the Option Agreement evidencing such Option; provided, however,
that no Option granted to a prospective Employee or prospective Consultant may
become exercisable prior to the date on which such person commences service with
a Participating Company.

               6.3 PAYMENT OF EXERCISE PRICE.

                      (a) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by check, or
cash equivalent, (ii) by tender to the Company of shares of Stock owned by the
Optionee having a Fair Market Value (as determined by the Company without regard
to any restrictions on transferability applicable to such stock by reason of
federal or state securities laws or agreements with an underwriter for the
Company) not less than the exercise price, (iii) by the assignment of the
proceeds of a sale or loan with respect to some or all of the shares being
acquired upon the exercise of the Option (including, without limitation, through
an exercise complying with the provisions of Regulation T as promulgated from
time to time by the Board of Governors of the Federal Reserve System) (a
"CASHLESS EXERCISE"), (iv) by the Optionee's promissory note in a form approved
by the Company, (v) by such other consideration as may be approved by the Board
from time to time to the extent permitted by applicable law, or (vi) by any
combination thereof. The Board may at any time or from time to time, by adoption
of or by amendment to the standard form of Option Agreement described in Section
7, or by other means, grant Options which do not permit all of the foregoing
forms of consideration to be used in payment of the exercise price or which
otherwise restrict one or more forms of consideration.

                      (b) TENDER OF STOCK. Notwithstanding the foregoing, an
Option may not be exercised by tender to the Company of shares of Stock to the
extent such tender of Stock would constitute a violation of the provisions of
any law, regulation or agreement restricting the redemption of the Company's
stock. Unless otherwise provided by the Board, an Option may not be exercised by
tender to the Company of shares of Stock unless such shares either have been

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owned by the Optionee for more than six (6) months or were not acquired,
directly or indirectly, from the Company.

                      (c) CASHLESS EXERCISE. The Company reserves, at any and
all times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve or terminate any program or procedures for the
exercise of Options by means of a Cashless Exercise.

                      (d) PAYMENT BY PROMISSORY NOTE. No promissory note shall
be permitted if the exercise of an Option using a promissory note would be a
violation of any law. Any permitted promissory note shall be on such terms as
the Board shall determine at the time the Option is granted. The Board shall
have the authority to permit or require the Optionee to secure any promissory
note used to exercise an Option with the shares of Stock acquired upon the
exercise of the Option or with other collateral acceptable to the Company.
Unless otherwise provided by the Board, if the Company at any time is subject to
the regulations promulgated by the Board of Governors of the Federal Reserve
System or any other governmental entity affecting the extension of credit in
connection with the Company's securities, any promissory note shall comply with
such applicable regulations, and the Optionee shall pay the unpaid principal and
accrued interest, if any, to the extent necessary to comply with such applicable
regulations.

               6.4 TAX WITHHOLDING. The Company shall have the right, but not
the obligation, to deduct from the shares of Stock issuable upon the exercise of
an Option, or to accept from the Optionee the tender of, a number of whole
shares of Stock having a Fair Market Value, as determined by the Company, equal
to all or any part of the federal, state, local and foreign taxes, if any,
required by law to be withheld by the Participating Company Group with respect
to such Option or the shares acquired upon the exercise thereof. Alternatively
or in addition, in its sole discretion, the Company shall have the right to
require the Optionee, through payroll with-holding, cash payment or otherwise,
including by means of a Cashless Exercise, to make adequate provision for any
such tax withholding obligations of the Participating Company Group arising in
connection with the Option or the shares acquired upon the exercise thereof. The
Company shall have no obligation to deliver shares of Stock or to release shares
of Stock from an escrow established pursuant to the Option Agreement until the
Participating Company Group's tax withholding obligations have been satisfied by
the Optionee.

               6.5 REPURCHASE RIGHTS. Shares issued under the Plan may be
subject to a right of first refusal, one or more repurchase options, or other
conditions and restrictions as determined by the Board in its sole discretion at
the time the Option is granted. The Company shall have the right to assign at
any time any repurchase right it may have, whether or not such right is then
exercisable, to one or more persons as may be selected by the Company. Upon
request by the Company, each Optionee shall execute any agreement evidencing
such transfer restrictions prior to the receipt of shares of Stock hereunder and
shall promptly present to the Company any and all certificates representing
shares of Stock acquired hereunder for the placement on such certificates of
appropriate legends evidencing any such transfer restrictions.

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        7.      STANDARD FORM OF OPTION AGREEMENT.

               7.1 GENERAL. Unless otherwise provided by the Board at the time
the Option is granted, an Option shall comply with and be subject to the terms
and conditions set forth in the form of Immediately Exercisable Nonstatutory
Stock Option Agreement adopted by the Board concurrently with its adoption of
the Plan and as amended from time to time.

               7.2 STANDARD TERM OF OPTIONS. Except as otherwise provided by the
Board in the grant of an Option, any Option granted hereunder shall have a term
of ten (10) years from the effective date of grant of the Option.

               7.3 AUTHORITY TO VARY TERMS. The Board shall have the authority
from time to time to vary the terms of the standard form of Option Agreement
described in this Section 7 either in connection with the grant or amendment of
an individual Option or in connection with the authorization of a new standard
form or forms; provided, however, that the terms and conditions of any such new,
revised or amended standard form or forms of Option Agreement shall be in
accordance with the terms of the Plan. Such authority shall include, but not by
way of limitation, the authority to grant Options which are not immediately
exercisable.

        8.      TRANSFER OF CONTROL.

               8.1 DEFINITIONS.

                      (a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have
occurred if any of the following occurs with respect to the Company:

                             (i) the direct or indirect sale or exchange in a
single or series of related transactions by the stockholders of the Company of
more than fifty percent (50%) of the voting stock of the Company;

                             (ii) a merger or consolidation in which the Company
is a party;

                             (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or

                             (iv) a liquidation or dissolution of the Company.

                      (b) A "TRANSFER OF CONTROL" shall mean an Ownership Change
Event or a series of related Ownership Change Events (collectively, the
"TRANSACTION") wherein the stockholders of the Company immediately before the
Transaction do not retain immediately after the Transaction, in substantially
the same proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "TRANSFEREE
CORPORATION(s)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the

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case may be, either directly or through one or more subsidiary corporations. The
Board shall have the right to determine whether multiple sales or exchanges of
the voting stock of the Company or multiple Ownership Change Events are related,
and its determination shall be final, binding and conclusive.

               8.2 EFFECT OF TRANSFER OF CONTROL ON OPTIONS. In the event of a
Transfer of Control, the surviving, continuing, successor, or purchasing
corporation or parent corporation thereof, as the case may be (the "ACQUIRING
CORPORATION"), may either assume the Company's rights and obligations under
outstanding Options or substitute for outstanding Options substantially
equivalent options for the Acquiring Corporation's stock. Any Options which are
neither assumed or substituted for by the Acquiring Corporation in connection
with the Transfer of Control nor exercised as of the date of the Transfer of
Control shall terminate and cease to be outstanding effective as of the date of
the Transfer of Control. Notwithstanding the foregoing, shares acquired upon
exercise of an Option prior to the Transfer of Control and any consideration
received pursuant to the Transfer of Control with respect to such shares shall
continue to be subject to all applicable provisions of the Option Agreement
evidencing such Option except as otherwise provided in such Option Agreement.
Furthermore, notwithstanding the foregoing, if the corporation the stock of
which is subject to the outstanding Options immediately prior to an Ownership
Change Event described in Section 8.1(a)(i) constituting a Transfer of Control
is the surviving or continuing corporation and immediately after such Ownership
Change Event less than fifty percent (50%) of the total combined voting power of
its voting stock is held by another corporation or by other corporations that
are members of an affiliated group within the meaning of Section 1504(a) of the
Code without regard to the provisions of Section 1504(b) of the Code, the
outstanding Options shall not terminate unless the Board otherwise provides in
its sole discretion.

        9. PROVISION OF INFORMATION. Each Optionee shall be given access to
information concerning the Company equivalent to that information generally made
available to the Company's common stockholders.

        10. NONTRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee,
an Option shall be exercisable only by the Optionee or the Optionee's guardian
or legal representative. No Option shall be assignable or transferable by the
Optionee, except by will or by the laws of descent and distribution.

        11. INDEMNIFICATION. In addition to such other rights of indemnification
as they may have as members of the Board or officers or employees of the
Participating Company Group, members of the Board and any officers or employees
of the Participating Company Group to whom authority to act for the Board is
delegated shall be indemnified by the Company against all reasonable expenses,
including attorneys' fees, actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any right
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such person is liable for gross
negligence, bad faith or intentional misconduct in

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duties; provided, however, that within sixty (60) days after the institution of
such action, suit or proceeding, such person shall offer to the Company, in
writing, the opportunity at its own expense to handle and defend the same.

        12. TERMINATION OR AMENDMENT OF PLAN. The Board may terminate or amend
the Plan at any time. However, no termination or amendment of the Plan may
adversely affect any then outstanding Option or any unexercised portion thereof,
without the consent of the Optionee, unless such termination or amendment is
necessary to comply with any applicable law or government regulation.

        IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies
that the foregoing Verity, Inc. 1996 Nonstatutory Stock Option Plan was duly
adopted by the Board on February 6, 1996 and last amended by the Board on June
15, 2000.

                                              /s/
                                             -----------------------------------

                                       9.
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                                  PLAN HISTORY

02/06/96       Board adopts Plan, with an initial reserve of 300,000 shares.

04/24/97       Board increases share reserve to 600,000 shares.

10/31/97       Board increases share reserve to 1,060,000 shares.

03/02/98       Board increases share reserve to 1,860,000 shares

05/25/99       Board increases share reserve to 2,860,00 shares.

10/15/99       Board increases share reserve to 4,210,000 shares.

12/3/99        2:1 stock split increases share reserve to 8,420,000 shares

6/15/2000      Board increases share reserve to 10,420,000 shares.

                                      10.Amended Stock Option Plan

                             REPAP ENTERPRISES INC.

                     1987 DIRECTORS, OFFICERS AND EMPLOYEES
                            AMENDED STOCK OPTION PLAN
                      (THIRD AMENDMENT - 25 SEPTEMBER 1997)

PART 1 - PURPOSE AND PARTICIPANTS

1.01 Purpose. The purpose of the Repap Enterprises Inc. 1987 Directors, Officers
and Employees  Stock Option Plan (the "Plan") is to provide an incentive to, and
serve to supplement the income of, certain  Designated  Participants,  as herein
defined,  of Repap  Enterprises Inc. (the  "Corporation")  and its affiliates by
providing  them with the  opportunity  to acquire a proprietary  interest in the
Corporation  through the grant of options  ("Options") to purchase common shares
("Common  Shares") of the Corporation,  on the terms and conditions set forth in
the Plan.

1.02 Designated Participants. Designated Participants entitled to participate in
the Plan shall be those  directors,  officers or employees of the Corporation or
any of its  affiliates  (as  defined  in  section  2(2) of the  Canada  Business
Corporations Act, as the same may be amended or replaced from time to time), who
are  designated  solely by a committee of two or more directors (the "1987 Stock
Option Committee"), in its absolute discretion, each of whom is appointed by the
board of directors of the Corporation (the "board of directors") and, during the
one year period prior to the  appointment,  who  qualifies  as a  "disinterested
person"  within the  meaning of Rule 16b-3  under the United  States  Securities
Exchange  Act  of  1934  or any  successor  rule  or  regulation.  A  Designated
Participant  shall also  include a person  who  becomes a  director,  officer or
employee of the Corporation or of one of its affiliates within 30 days after his
designation as such by the 1987 Stock Option Committee.

Notwithstanding  the  foregoing,  the 1987  Stock  Option  Committee  shall  not
designate  an  insider  as a  Designated  Participant  if  the  effect  of  that
designation  could  result,  together with all of the  Corporation's  previously
established share compensation  arrangements,  at any time, in (i) the number of
Common Shares reserved for issuance to insiders exceeding 10% of the outstanding
issue;  (ii) the issuance to insiders,  within a one-year

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period,  of a number of shares exceeding 10% of the outstanding  issue; or (iii)
the issuance to any one insider and such insider's associates, within a one-year
period, of a number of Common Shares exceeding 5% of the outstanding  issue. For
the purposes of the Plan, the terms  "insider",  "outstanding  issue" and "share
compensation   arrangements"   shall  have  the  meaning   attributed   to  them
respectively   by  the  Revised  Policy  on  listed   Company  Share   Incentive
Arrangements of The Toronto Stock Exchange dated March 22, 1994, as amended from
time to time.

PART 2 - TERMS RELATING TO THE PLAN

2.01 Shares. Subject to Section 2.08 of the Plan, the aggregate number of Common
Shares that may be purchased  pursuant to Options  granted  under the Plan shall
not exceed in the aggregate  73,246,000 Common Shares. In the event that Options
granted  under  the Plan are  surrendered,  terminate  or expire  without  being
exercised,  in whole or in part, new Options may be subsequently  granted by the
1987 Stock Option Committee,  covering the Common Shares not purchased under the
such lapsed Options.

2.02 Participants. The participants in the Plan will be Designated Participants.

2.03 Number and Price of Optioned Common Shares. (a) The number of Common Shares
subject  to an Option  granted  to a  Designated  Participant  and,  subject  to
subsection  2.03(c) of the Plan,  the price at which the Option may be exercised
(the "Option  Price") shall be determined by resolution of the 1987 Stock Option
Committee, in its absolute discretion.

     (b) The total number of Common Shares  reserved for issuance  under Options
and under any other  employee  stock  option  plans,  options for  services  and
employee stock purchase plans of the  Corporation,  for any one person shall not
exceed five per cent (5%) of the outstanding  Common Shares,  from time to time;
but this limitation shall not affect any outstanding options or the right of any
person to exercise any such options  granted  pursuant to the terms of this Plan
or any other plan of the Corporation.

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     (c) In no event shall the Option Price be less than the market price of the
Common  Shares at the time of the grant of the Option.  The market  price at the
time of grant of an Option  shall be the closing  price of the Common  Shares on
The Toronto  Stock  Exchange on the  trading day on The Toronto  Stock  Exchange
preceding the day of the grant of that Option.

     (d) If, as and when any Common Shares have been duly purchased and paid for
in cash under the terms of an Option  granted  under this Plan and in accordance
with the terms of the Option,  those Common Shares shall be conclusively  deemed
allotted  and  issued,  at that time,  as fully paid and  non-assessable  Common
Shares at the price paid therefor.

2.04  Consideration,  Option Period and Payment.  The term of the Option granted
hereunder (the "Option Period") shall be the period  commencing on the day which
is the  first  business  day  immediately  following  the date of the  grant and
terminating at 5 p.m.  (Montreal  time) on the tenth  anniversary of the date of
the  grant,  except as the same may be  reduced  with  respect  to any Option as
provided in Sections 2.06 or 2.07 of the Plan covering  cessation as a director,
officer or employee of the Corporation or any affiliates, as the case may be, or
death of the Designated Participant.

     Unless  otherwise  determined  by the board of  directors,  options  may be
exercised  (in each case to the nearest full share) at any time and from time to
time during the Option  Period,  in whole or in part,  only after the end of the
first year from the date the Option is granted, as follows:

     (a) After the end of the first year of the Option  Period,  the  Designated
Participant  may  purchase  up to 20% of the total  number of Common  Shares set
forth in his Option.

     (b) After the end of the second year of the Option  Period,  the Designated
Participant  may purchase an additional 20% of the total number of Common Shares
set forth in his Option plus any Common Shares not purchased in accordance  with
Subsection 2.04 (a) of the Plan.

                                                                               4

     (c) After the end of the third year of the Option  Period,  the  Designated
Participant  may purchase an additional 20% of the total number of Common Shares
set forth in his Option plus any Common Shares not purchased in accordance  with
Subsections 2.04 (a) and 2.04 (b) of the Plan.

     (d) After the end of the fourth year of the Option  Period,  the Designated
Participant  may purchase an additional 20% of the total number of Common Shares
set forth in his Option plus any Common Shares not purchased in accordance  with
Subsections 2.04 (a), 2.04 (b) and 2.04 (c) of the Plan.

     (e) After the end of the fifth year of the Option  Period,  the  Designated
Participant  may purchase  any Common  Shares set forth in his Option which have
not previously been purchased in accordance with Subsections 2.04 (a), 2.04 (b),
2.04 (c) and 2.04 (d) of the Plan.

     The board of directors  may  prescribe the date or dates upon which Options
may become exercisable and may establish any criteria which must be met in order
for all or any Options to become exercisable.

     Except as set forth in Sections  2.06 and 2.07 of this Plan,  no Option may
be exercised unless the Designated Participant is at the time of such exercise a
director, officer or employee of the Corporation or of one of its affiliates and
shall have been a director,  officer or employee continuously since the grant of
his Option, subject to Section 1.02 of the Plan.

     The  exercise  of  any  Option  will  be  contingent  upon  receipt  by the
Corporation (i) of a duly signed written notice of exercise substantially in the
form attached as Schedule A, specifying the number of Common Shares with respect
to which the Option is being exercised and (ii) a certified cheque or bank draft
for the full purchase price of Common Shares with respect to which the Option is
exercised.  No Designated  Participant or his legal  representatives will be, or
will be deemed to be, a holder of any Common  Shares  subject to an Option under
this Plan,  unless and until  certificates  for such Common Shares are issued to
him or them under the terms of the Plan.

                                                                               5

     A Designated Participant shall have no right whatsoever as a shareholder of
the  Corporation  in respect of any of the Common  Shares  covered by his Option
(including any right to receive  dividends or other  distributions  therefrom or
thereunder)  other than in respect of optioned Common Shares in respect of which
the  Designated  Participant  shall have  exercised his Option to purchase under
this Plan and which the optionee  shall have  actually  taken up and paid for in
full.

     (f) Each Option shall be subject to the requirement that if at any time the
1987 Stock Option  Committee shall  determine that the listing,  registration or
qualification of the Common Shares subject thereto upon any securities  exchange
or under  any  applicable  securities  law or the  consent  or  approval  of any
governmental or regulatory body is necessary or desirable in connection with the
issue or purchase of the Common Shares subject thereto,  then no such Option may
be   exercised  in  whole  or  in  part  unless  such   listing,   registration,
qualification,  consent or approval shall have been effected or obtained free of
any conditions not acceptable to the 1987 Stock Option Committee.

2.05  Transferability.  The  Option  granted  pursuant  to the Plan shall not be
transferable  otherwise than by will or by the laws of descent and  distribution
and during the  lifetime of a holder of an Option shall be  exercisable  only by
him.

2.06 Ceasing to be a Director,  Officer or Employee. If a Designated Participant
shall cease to be a director,  officer or  employee of the  Corporation  and its
affiliates for any reason other than death,  retirement at normal retirement age
or any other reason  acceptable to the  Corporation  (as  determined by the 1987
Stock Option Committee), he may, but only during the Option Period or until 5:00
p.m. (Montreal time) on the 90th day following the date on which he ceased to be
a director, officer or employee,  whichever first occurs, exercise his Option to
the extent that he was  entitled  to exercise it at the date of such  cessation.
Upon the  expiration of such period,  the Option  previously  granted under this
Plan to said Designated  Participant shall ipso facto cease and terminate and be
of no  further  force or effect  whatsoever,  except  only to the  extent of the
number of Common Shares then duly purchased and paid for.

                                                                               6

     Nothing  contained in the Plan, nor in any Option  granted  pursuant to the
Plan, shall as such confer upon a Designated  Participant any right with respect
to continuance as a director,  officer or employee of the  Corporation or one of
its affiliates.

2.07 Death of Designated Participant.  In the event of the death of a Designated
Participant,  the Option  previously  granted to him shall be  exercisable  only
during the Option  Period or until  5:00 p.m.  (Montreal  time) on the 180th day
following the date of death of said  Designated  Participant,  whichever  occurs
first, and then only:

     (a) by the person or persons to whom the  Designated  Participant's  rights
under the Option shall pass by the Designated  Participant's will or the laws of
descent and distribution; and

     (b) if and to the extent that he was entitled to exercise the Option at the
date of his death.

     Upon the  expiration of such period,  the Option  previously  granted under
this  Plan to the  said  Designated  Participant  shall  ipso  facto  cease  and
terminate  and be of no further force or effect  whatsoever,  except only to the
extent of the number of Common Shares then duly purchased and paid for.

2.08  Adjustment in Common Shares  Subject to the Plan.  (a) In the event of any
subdivision or redivision of the Common Shares of the Corporation into a greater
number of Common Shares at any time after the date of this Plan and prior to the
expiry time of the Option held by any Designated  Participant,  the  Corporation
shall  deliver  to such  Designated  Participant  at the time of any  subsequent
exercise  of his  Option in  accordance  with the terms  hereof,  in lieu of the
number of Common Shares to which he was theretofore entitled upon such exercise,
but for the same aggregate consideration payable therefor, such number of Common
Shares  as such  Designated  Participant  would  have  held as a result  of such
subdivision  or  redivision  if  on  the  record  date  thereof  the  Designated
Participant  had been the  registered  holder of the number of Common  Shares to
which he was theretofore entitled upon such exercise.

     (b)  In the  event  of  any  consolidation  of  the  Common  Shares  of the
Corporation  into a lesser number of Common Shares at any time after the date of
this

                                                                               7

Plan  and  prior  to the  expiry  time  of an  Option  held  by  any  Designated
Participant, the Corporation shall deliver to such Designated Participant at the
time of any  subsequent  exercise  of his  Option in  accordance  with the terms
hereof,  in lieu of the  number  of  Common  Shares  to which  he was  therefore
entitled upon such exercise,  but for the same aggregate  consideration  payable
theretofor,  such number of Common Shares as such Designated  Participant  would
have held as a result of such  consolidation  if on the record date  thereof the
Designated  Participant  had been the registered  holder of the number of Common
Shares to which he was theretofore entitled upon such exercise.

     (c) If at any  time  prior  to the  expiry  time  of the  Option  held by a
Designated   Participant  the  Common  Shares  of  the   Corporation   shall  be
reclassified,  reorganized or otherwise changed,  otherwise than as specified in
Subsections  2.08  (a)  and  (b)  of  the  Plan  or,  subject  to  amendment  or
discontinuance  of  this  Plan  pursuant  to  its  terms  and  conditions,   the
Corporation  shall  consolidate,  merge  or  amalgamate  with  or  into  another
corporation  (the corporation  resulting or continuing from such  consolidation,
merger or  amalgamation  being herein called the "Successor  Corporation"),  the
Designated Participant shall be entitled to receive upon the subsequent exercise
of his Option in  accordance  with the terms  hereof and shall accept in lieu of
the number of Common  Shares then  subscribed  for,  but for the same  aggregate
consideration   payable  therefor,   the  aggregate  number  of  shares  of  the
appropriate  class and other  securities  of the  Corporation  or the  Successor
Corporation (as the case may be) and other consideration from the Corporation or
the Successor  Corporation (as the case may be) that the Designated  Participant
would  have been  entitled  to  receive  as a result  of such  reclassification,
reorganization or other change of shares or, as a result of such  consolidation,
merger  or  amalgamation,  if on  the  record  date  of  such  reclassification,
reorganization  or  other  change  of  shares  or the  effective  date  of  such
consolidation,  merger  or  amalgamation,  as the case  may be,  he had been the
registered  holder of the  number of Common  Shares to which he was  immediately
theretofore entitled upon such exercise.

     (d) Any  fractional  Common  Shares  or  other  shares  resulting  from any
adjustment under Section 2.08 (a), (b) or (c) of the Plan shall be eliminated.

                                                                               8

PART 3 - GENERAL

3.01  Exercise of Options.  No  benefits  or rights  accruing to any  Designated
Participant  in  accordance  with the terms and  conditions of the Plan shall be
transferrable  unless  specifically  provided  herein.  During the lifetime of a
Designated  Participant  any  benefits  or rights may only be  exercised  by the
Designated Participant.

3.02 Record Keeping. The Corporation shall maintain a register in which shall be
recorded:  (i) the name and  address of each  Designated  Participant,  (ii) the
number of  Options  granted  to a  Designated  Participant,  (iii) the number of
Common Shares under Options and (iv) the number of Common Shares  subscribed and
paid for pursuant to said Options.

3.03 Necessary Approvals. The obligation of the Corporation to issue and deliver
Common Shares in accordance  with the Plan is subject to any approvals which may
be required from any regulatory  authority or stock exchange having jurisdiction
over the securities of the Corporation. If any Common Shares cannot be issued to
any  Designated   Participant  for  whatever  reason,   the  obligation  of  the
Corporation to issue such Common Shares shall  terminate and any Option exercise
price paid to the Corporation will be returned to the Designated Participant.

3.04 Common Shares. As used in this Plan, "Common Shares" means Common Shares in
the capital of the Corporation, subject to Section 2.08 of the Plan.

3.05 Administration and Amendment of the Plan. (a) The Plan will be administered
by the 1987 Stock Option  Committee.  The board of directors  may,  from time to
time,  remove  members  from the 1987  Stock  Option  Committee  or add  members
thereto, and vacancies in the 1987 Stock Option Committee, however caused, shall
be filled by action of the board of directors.  Subject to the provisions of the
Plan, the 1987 Stock Option Committee shall have sole authority, in its absolute
discretion,  to determine the time and frequency  when Options shall be granted,
the terms of such  Options  and the number of Common  Shares  for which  Options
shall be  granted.  The grant of  Options  under the Plan shall be  effected  by
execution of a stock option agreement in the form

                                                                               9

approved by the 1987 Stock Option  Committee.  The 1987 Stock  Option  Committee
shall  have  the  authority  to  do  everything  necessary  and  appropriate  to
administer the Plan,  including,  without limitation,  interpreting the Plan and
executing all instruments,  undertakings,  applications and writings as they, in
their absolute  discretion,  consider  necessary for the implementation of rules
and regulations by the 1987 Stock Option  Committee for  administering  the Plan
and from time to time  amending or  rescinding  such rules or  regulations.  Any
interpretation  or construction of any provision of the Plan and any decision or
determination by the 1987 Stock Option Committee shall be final,  conclusive and
binding  on all  optionees  and their  successors,  and upon all  other  persons
claiming  under or through  any of them.  All  administration  costs of the Plan
shall be paid by the Corporation.

     (b) Subject to the prior  approval of The Toronto  Stock  Exchange  and any
other stock  exchange  on which the Common  Shares are listed for  trading,  the
board of directors reserves the right to amend,  modify or terminate the Plan at
any time if and when it is advisable in the absolute  discretion of the board of
directors,  except with respect to any Options then outstanding  under the Plan;
provided, however, that, without the approval of a majority of the Corporation's
shareholders,  no  amendment  or  modification  may  be  made  which  would  (i)
materially  increase the benefits accruing to Designated  Participants under the
Plan, (ii)  materially  increase the number of Common Shares which may be issued
under  the Plan  (except  by  operation  of  Section  2.08 of the Plan) or (iii)
materially  modify the  requirements as to eligibility for  participation in the
Plan.

     (c) Should changes be required in this Plan by any  securities  commission,
stock exchange or other  governmental or regulatory body of any  jurisdiction to
which this Plan or the Corporation  now is or hereafter  becomes  subject,  such
changes  shall  be made in this  Plan as are  necessary  to  conform  with  such
requirements  and, if such changes are approved by the board of directors,  this
Plan, as amended,  shall be filed with the records of the  Corporation and shall
remain in full force and effect in its amended form.

3.06  Escrow.  Common  Shares to be issued upon  exercise of an Option  shall be
escrowed if required by any applicable law, regulation, regulatory body or stock
exchange, and the Designated Participant shall, upon request by the Corporation,

                                                                              10

execute an escrow  agreement in form  required or  requested by such  regulatory
body,  stock exchange or the Corporation and no Common Shares shall be issued on
exercise  of an Option  if such  escrow  agreement  is not  entered  into by the
Designated Participant.

3.07 Legal  Opinion.  Common Shares to be issued upon exercise of an Option to a
Designated  Participant  who is not  residing in Canada  shall be subject to the
receipt,  by the  Corporation,  of a favourable  legal opinion  addressed to the
Corporation by a legal counsel designated by the Corporation,  establishing that
all formalities,  registration,  consent, approval and filing required under any
applicable  laws,  if any,  have been done or obtained in order to issue  Common
Shares to such Designated Participant.

3.08 No Representation  or Warranty.  The Corporation makes no representation or
warranty as to the future market value of any Common Shares issued in accordance
with the provisions of the Plan.

3.09  Interpretation.  The Plan will be governed by and  construed in accordance
with the laws of Canada and of the Province of Quebec.

3.10 Language.  The Corporation and the Designated Participant who is a party to
a Stock Option  Agreement to which this Plan is annexed state their express wish
that this Plan and all  documents  related  thereto be  drafted  in the  English
language only; la societe le participant désigné qui est partie à une convention
d'option à laquelle  est annexé ce régime ont, par les  présentes,  exprimé leur
volonté  expresse  que ce régime,  de même que tous les  documents y  afférents,
soient rédigés en anglais seulement.

                                                                              11

                                   SCHEDULE A

                             REPAP ENTERPRISES INC.
            1987 Directors, Officers and Employees Stock Option Plan

                               Exercise of Option

                  The  undersigned  hereby  exercises  the  option  to  purchase
___________________  Common Shares in the capital of Repap Enterprises Inc. at a
price per share of  $_____________________  granted  to him by  agreement  dated
_____________________________  and tenders a cheque  therefore  in the amount of
$_____________________.

                  Dated  this  _____________day  of   __________________________
19_______.

                                            ____________________________________
                                             Signature of Designated Participant

                                            ____________________________________

                                            ____________________________________

                                            ____________________________________

                                            ____________________________________
                                                     Name and Address of
                                                   Designated Participant

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