Document:

<PAGE>

                                                                    EXHIBIT 10.3

[COMERICA LOGO]    ADVANCE FORMULA AGREEMENT

As of February 18, 2005, this Agreement is made by TRINITY HEALTHCARE OF
WINSTON-SALEM, INC., a Georgia corporation ("Debtor"), unto COMERICA BANK, a
Michigan banking corporation ("Bank").

For and in consideration of the loans and other credit which Debtor may now or
hereafter obtain or request from Bank which are secured pursuant to a Security
Agreement dated February __, 2005, executed and delivered by Debtor unto Bank
(the "Security Agreement"), and for other good and valuable consideration,
Debtor agrees as follows:

1.    FORMULA LOANS. The credit which Bank may now or hereafter extend to Debtor
      subject to the limitations of this Agreement and to the conditions and
      limitations of any other agreement between Debtor and Bank is identified
      as follows:

                        $2,000,000 demand line of credit

      and any extensions, renewals or substitutions thereof, whether in a
      greater or lesser amount, including any letters of credit issued
      thereunder ("Formula Loans").

2.    ADVANCE FORMULA. Debtor warrants and agrees that Debtor's indebtedness to
      Bank for the Formula Loans shall never exceed the sum of:

      (a)   the Applicable Percentage of its Eligible Accounts, as hereinafter
            defined; plus

      (b)   thirty percent (30%) of its Eligible Inventory, as hereinafter
            defined.

3.    FORMULA COMPLIANCE. If the limitations in paragraph 2, above, are exceeded
      at any time, Debtor shall immediately pay Bank sums sufficient to reduce
      the Formula Loans by the amount of such excess.

4.    ELIGIBLE ACCOUNT. "Eligible Account" shall mean an Account (as hereinafter
      defined) arising in the ordinary course of Debtor's business which meets
      each of the following requirements:

      (a)   it is not owing more than one hundred twenty (120) days after the
            date of the original invoice or other writing evidencing such
            Account;

      (b)   it is not owing by an Account Debtor (as hereinafter defined) who
            has failed to pay fifty percent (50%) or more of the aggregate
            amount of its Accounts owing to Debtor within one hundred twenty
            (120) days after the date of the respective invoices or other
            writings evidencing such Accounts;

      (c)   it is not owing by an Account Debtor who is the patient to whom the
            goods or services were provided that gave rise to such Account, or
            portion of such Account;

      (d)   it arises from the sale or lease of goods and such goods have been
            shipped or delivered to the Account Debtor under such Account; or it
            arises from services rendered and such services have been performed;

      (e)   it is evidenced by an invoice, dated not later than the date of
            shipment or performance, rendered to such Account Debtor or some
            other evidence of billing acceptable to Bank;

      (f)   it is not evidenced by any note, trade acceptance, draft or other
            negotiable instrument or by any chattel paper, unless such note or
            other document or instrument previously has been endorsed and
            delivered by Debtor to Bank;

      (g)   it is a valid, legally enforceable obligation of the Account Debtor
            thereunder, and is not subject to any offset, counterclaim or other
            defense on the part of such Account Debtor or to any claim on the
            part of such Account Debtor denying liability thereunder in whole or
            in part;

      (h)   it is subject to a first priority, properly perfected security
            interest in favor of Bank, and it is not subject to any sale of
            accounts, any rights of offset, assignment, lien or security
            interest whatsoever other than to Bank;

<PAGE>

      (i)   it is not owing by a subsidiary or affiliate of Debtor;

      (j)   it is not owing by an Account Debtor which (i) does not maintain its
            chief executive office in the United States of America or Canada,
            (ii) is not organized under the laws of the United States of America
            or Canada, or any state or province thereof, as applicable, or (iii)
            is the government of any foreign country or sovereign state, or of
            any state, province, municipality or other instrumentality thereof;

      (k)   unless it is an Account owing from Medicare, Medicaid or any other
            federal or state department or agency approved in writing by Bank,
            it is not an Account owing by the United States of America or any
            state or political subdivision thereof, or by any department,
            agency, public body corporate or other instrumentality of any of the
            foregoing, unless all necessary steps are taken to comply with the
            Federal Assignment of Claims Act of 1940, as amended, or with any
            comparable state law, if applicable, and all other necessary steps
            are taken to perfect Bank's security interest in such Account;

      (l)   it is not owing by an Account Debtor for which Debtor has received a
            notice of (i) the death of the Account Debtor or any partner of the
            Account Debtor, (ii) the dissolution, liquidation, termination of
            existence, insolvency or business failure of the Account Debtor,
            (iii) the appointment of a receiver for any part of the property of
            the Account Debtor, or (iv) an assignment for the benefit of
            creditors, the filing of a petition in bankruptcy, or the
            commencement of any proceeding under any bankruptcy or insolvency
            laws by or against the Account Debtor;

      (m)   it is not an Account billed in advance, payable on delivery, for
            consigned goods, for guaranteed sales, for unbilled sales, for
            progress billings, payable at a future date in accordance with its
            terms, subject to a retainage or holdback by the Account Debtor or
            insured by a surety company; and

      (n)   it is not owing by any Account Debtor whose obligations Bank, acting
            in its sole discretion, shall have notified Debtor are not deemed to
            constitute Eligible Accounts.

      An Account which is at any time an Eligible Account, but which
      subsequently fails to meet any of the foregoing requirements, shall
      forthwith cease to be an Eligible Account.

      For purposes of this Agreement, an "Account" shall mean any right of
      Debtor to payment for goods sold or leased or for services rendered, but
      shall not include interest or service charges; and "Account Debtor" shall
      mean the person who is obligated on or under an Account.

5.    ELIGIBLE INVENTORY. Unless stated otherwise in paragraph 13 below,
      "Eligible Inventory" (a) shall be valued at the lesser of (i) the lesser
      of the cost or present market value of Debtor's Inventory (as defined in
      the Michigan Uniform Commercial Code, as amended and in effect from time
      to time) determined in accordance with generally accepted accounting
      principles, consistently applied ("GAAP"), or (ii) n/a percent (___%) of
      the net orderly liquidation value of Debtor's Inventory, as determined by
      Bank; and (b) shall mean all of Debtor's Inventory which is in good and
      merchantable condition, which is not obsolete or discontinued, which would
      be properly classified as "raw materials" or as "finished goods inventory"
      under and in accordance with GAAP, which is subject to a first priority,
      properly perfected security interest in favor of Bank and which is located
      at one of the facilities identified on Schedule 1 annexed hereto (provided
      that if Debtor is not the fee owner of such facility, Bank has received a
      satisfactory landlord waiver or bailment and lien waiver executed by the
      fee owner of such facility), but excluding (1) Debtor's work-in-process
      inventory, consigned goods, inventory located outside the United States of
      America or Canada, (2) Inventory covered by or subject to a seller's right
      to repurchase, or any consensual or nonconsensual lien or security
      interest (including, without limitation, purchase money security
      interests) other than in favor of Bank, whether senior or junior to Bank's
      security interest, and (3) Inventory that Bank, acting in its sole
      discretion, after having notified Debtor, excludes. Inventory which is at
      any time Eligible Inventory, but which subsequently fails to meet any of
      the foregoing requirements, shall forthwith cease to be Eligible
      Inventory.

6.    CERTIFICATES, SCHEDULES AND REPORTS. Debtor will, within ten (10) days
      after and as of the end of each month, deliver to Bank agings of the
      Accounts and a schedule identifying each Eligible Account (not previously
      so identified) and reports as to the amount of Eligible Inventory. Debtor
      will from time to time deliver to Bank such additional schedules,
      certificates and reports respecting all or any of the Collateral (as
      defined in the Security Agreement), the items or amounts received by
      Debtor in full or partial payment of any of the Collateral, and any goods
      (the sale or lease of which by Debtor shall have given rise to any of the
      Collateral) possession of which has

                                       2
<PAGE>

      been obtained by Debtor, all and as to such extent as Bank may request.
      Any such schedule, certificate or report shall be executed by a duly
      authorized officer of Debtor and shall be in such form and detail as Bank
      may specify. Any such schedule identifying any Eligible Account shall be
      accompanied (if Bank so requests) by a true and correct copy of the
      invoice evidencing such Eligible Account and by evidence of shipment or
      performance.

7.    INSPECTIONS; COMPLIANCE. Debtor shall permit Bank and its designees from
      time to time to make such inspections and audits, and to obtain such
      confirmations or other information, with respect to any of the Collateral
      or any Account Debtor as Bank is entitled to make or obtain under the
      Security Agreement, and shall reimburse Bank on demand for all costs and
      expenses incurred by Bank in connection with such inspections and audits.
      Debtor shall further comply with all of the other terms and conditions of
      the Security Agreement.

8.    DEFAULT. Any failure by Debtor to comply with this Agreement shall
      constitute a default under the Formula Loans and under the Security
      Agreement and the Indebtedness, as defined therein.

9.    AMENDMENTS; WAIVERS. This Agreement may be amended, modified or terminated
      only in writing duly executed by Debtor and Bank. No delay by Bank in
      requiring Debtor's compliance herewith shall constitute a waiver of such
      right. The rights granted to Bank hereunder are cumulative, and in
      addition to any other rights Bank may have by agreement or under
      applicable law. This Agreement shall supersede and replace in their
      entirety any prior advance formula agreements in effect between Bank and
      Debtor. This Agreement shall be governed by and construed in accordance
      with the internal laws of the State of Michigan, without regard to
      conflict of laws principles.

10.   DEMAND BASIS FORMULA LOANS. Notwithstanding anything to the contrary set
      forth in this Agreement, in the event that the Formula Loans are at any
      time on a demand basis, Debtor hereby acknowledges and agrees that the
      formula set forth in paragraph 2 hereof is merely for advisory and
      guidance purposes and Bank shall not be obligated to make any loans or
      advances under the Formula Loans, and, notwithstanding the terms of
      paragraph 3 above, Bank may at any time, at its option, demand payment of
      any or all of the Formula Loans, whereupon the same shall become due and
      payable.

11.   DILUTION OF ACCOUNTS. In the event that Bank, at any time in its sole
      discretion, determines that the dollar amount of Eligible Accounts
      collectable by Debtor is reduced or diluted as a result of discounts or
      rebates granted by Debtor to the respective Account Debtor(s), returned or
      rejected Inventory or services, or such other reasons or factors as Bank
      deems applicable, Bank may, in its sole discretion, upon five (5) business
      days' prior written notice to Debtor, reduce or otherwise modify the
      percentage of Eligible Accounts included within the Advance Formula under
      paragraph 2(a) above and/or reduce the dollar amount of Debtor's Eligible
      Accounts by an amount determined by Bank in its sole discretion.

12.   JURY WAIVER. DEBTOR AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY
      IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
      CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF
      THEIR CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT
      WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE
      PERFORMANCE OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR
      THE INDEBTEDNESS.

13.   SPECIAL PROVISIONS:

      "Applicable Percentage" shall mean eighty percent (80%) less the Dilution
      Reserve.

      "Dilution Reserve" means a number of percentage points determined in good
      faith by Bank to reflect from time to time the number of percentage points
      by which Dilution exceeds ten percent (10%). The Dilution Reserve shall be
      determined on a rolling 12-month basis, adjusted upon receipt by Bank of
      any collateral audit.

      "Dilution" means a percentage derived by dividing (i) the aggregate amount
      of credits, returned goods, adjustments, deductions, setoffs and
      recoupments granted by Debtor or taken by all of Debtor's Account Debtors
      in any calendar month by (ii) the aggregate amount of Debtor's sales
      during the calendar month.

IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year
first above written.

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<PAGE>

                                            DEBTOR:

Debtor's Chief Executive Office Address:    TRINITY HEALTHCARE OF WINSTON-SALEM,
                                            INC.
3918 West Point Boulevard
Winston-Salem, North Carolina 27103         By: _______________________________
                                                  SIGNATURE OF LAKSHU SUNDARAM
Accepted and Approved:
                                            Its:  Vice President of Finance
COMERICA BANK

By: ____________________________________
         SIGNATURE OF

Its: ____________________________________
         TITLE

                                       4
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                                   SCHEDULE 1

1.    3918 West Point Boulevard, Winston-Salem, North Carolina 27103

2.    310 East 41st Street, Savannah, Georgia 31401

3.    541 Historic Highway 411, Demorest, Georgia

4.    Suite 170, the Bostick Building, 9801 West Kincey Avenue, Huntersville
      Business Park, Huntersville, North Carolina 28078

5.    _________________________________________________--<PAGE>
                                                                    Exhibit 10.1

================================================================================

                            ASSET PURCHASE AGREEMENT

                    Entered into on February 17, 2005 between

                            COASTAL ACQUISITION LTD.

                                    as Buyer

                                     - and -

                          WEYERHAEUSER COMPANY LIMITED

                                    as Seller

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                 PAGES
<S>                                                                                                              <C>
1.       INTERPRETATION........................................................................................     1
         1.1      Defined Terms................................................................................     1
         1.2      Knowledge of the Seller......................................................................    25
         1.3      Currency.....................................................................................    26
         1.4      Articles, Sections and Headings..............................................................    26
         1.5      Number, Gender and Persons...................................................................    26
         1.6      Accounting Terms and Definitions.............................................................    26
         1.7      Entire Agreement.............................................................................    27
         1.8      Time of Essence..............................................................................    27
         1.9      Applicable Law...............................................................................    27
         1.10     Successors and Assigns.......................................................................    27
         1.11     Assignment...................................................................................    27
         1.12     Severability.................................................................................    29
         1.13     Conflict.....................................................................................    29
         1.14     Amendments and Waivers.......................................................................    29
         1.15     Schedules....................................................................................    29
         1.16     Statutory References.........................................................................    29
         1.17     Performance on Holidays......................................................................    29
         1.18     Interest.....................................................................................    30

2.       PURCHASE AND SALE OF PURCHASED ASSETS.................................................................    30
         2.1      Purchased Assets.............................................................................    30
         2.2      Excluded Assets..............................................................................    30
         2.3      Grant of Licences............................................................................    30
         2.4      Third Party Consents.........................................................................    30
         2.5      Timber Reallocation Agreement................................................................    31
         2.6      Quota........................................................................................    31

3.       PURCHASE PRICE........................................................................................    32
         3.1      Purchase Price...............................................................................    32
         3.2      Payment of Purchase Price....................................................................    32
         3.3      Reforestation Payments.......................................................................    32
         3.4      Working Capital Statement....................................................................    33
         3.5      Forestry Liabilities Adjustment..............................................................    34
         3.6      Capital Expenditure Adjustment...............................................................    35
         3.7      Roads and Loss of Timber.....................................................................    36
         3.8      Allocation of Purchase Price.................................................................    36
         3.9      Adjustments..................................................................................    37
         3.10     Deposit......................................................................................    37
         3.11     Redeemable Shares............................................................................    37
         3.12     Pre-Closing Transactions.....................................................................    38
         3.13     Real Estate Sales Adjustment.................................................................    38
         3.14     Acquired Entities Adjustment.................................................................    38
         3.15     RFR Lands....................................................................................    38
</TABLE>

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<TABLE>
<S>                                                                                                                <C>
4.       TAX MATTERS...........................................................................................    39
         4.1      Sales Tax....................................................................................    39
         4.2      Transfer Taxes...............................................................................    39
         4.3      Elections....................................................................................    40

5.       ASSUMPTION OF LIABILITIES.............................................................................    40
         5.1      Assumption of Certain Liabilities by the Buyer...............................................    40
         5.2      Excluded Liabilities.........................................................................    40
         5.3      Insurance....................................................................................    40

6.       REPRESENTATIONS AND WARRANTIES OF THE SELLER..........................................................    41
         6.1      Organization.................................................................................    41
         6.2      Acquired Entities............................................................................    42
         6.3      Authorization................................................................................    42
         6.4      No Other Agreements to Purchase..............................................................    42
         6.5      No Violation.................................................................................    43
         6.6      Sufficiency of Purchased Assets..............................................................    43
         6.7      Title to Personal Property...................................................................    43
         6.8      Location of Real Property....................................................................    44
         6.9      Title to Real Property.......................................................................    44
         6.10     Aboriginal Claims............................................................................    45
         6.11     Leased Real Property.........................................................................    45
         6.12     Intellectual Property........................................................................    46
         6.13     Licence Agreements...........................................................................    46
         6.14     No Expropriation.............................................................................    46
         6.15     Agreements and Commitments...................................................................    46
         6.16     Compliance with Laws; Governmental Authorization.............................................    47
         6.17     Consents and Approvals.......................................................................    47
         6.18     Financial Statements.........................................................................    48
         6.19     Books and Records............................................................................    48
         6.20     Absence of Changes...........................................................................    48
         6.21     Taxes........................................................................................    48
         6.22     Legal Proceedings............................................................................    49
         6.23     Residency....................................................................................    49
         6.24     Guarantees, Warranties and Discounts.........................................................    49
         6.25     Employee Plans...............................................................................    50
         6.26     Collective Agreements........................................................................    51
         6.27     Employees....................................................................................    51
         6.28     Employee Accruals............................................................................    52
         6.29     Contractual Restrictions on Doing Business...................................................    52
         6.30     Bankruptcy...................................................................................    52
         6.31     Forestlands..................................................................................    52
         6.32     Timber Inventory Data........................................................................    53
         6.33     Inventories..................................................................................    54

7.       REPRESENTATIONS AND WARRANTIES OF THE BUYER...........................................................    54
         7.1      Organization.................................................................................    54
         7.2      Authorization................................................................................    54
         7.3      No Violation.................................................................................    54
</TABLE>

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<PAGE>

<TABLE>
<S>                                                                                                                <C>
         7.4      Investment Canada............................................................................    55
         7.5      Consents and Approvals.......................................................................    55
         7.6      Litigation...................................................................................    55

8.       SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.................................................    55
         8.1      Survival of Representations and Warranties of the Seller.....................................    55
         8.2      Survival of Representations and Warranties of the Buyer......................................    55
         8.3      Survival of Covenants........................................................................    55
9.       COVENANTS.............................................................................................    56
         9.1      Access to Purchased Business and Purchased Assets............................................    56
         9.2      Conduct of Purchased Business Before Closing.................................................    57
         9.3      Risk of Loss.................................................................................    59
         9.4      Exclusivity..................................................................................    59
         9.5      Commercially Reasonable Effort to Obtain Consents............................................    59
         9.6      Post Closing Receipts........................................................................    59
         9.7      Co-operation Regarding Tax Returns and Audits................................................    60
         9.8      Compliance with Agreement....................................................................    60
         9.9      Compliance with the Forest Act...............................................................    61
         9.10     Fees.........................................................................................    61
         9.11     Combined Contracts...........................................................................    61
         9.12     Personal Information.........................................................................    62
         9.13     Off-Site Books and Records...................................................................    62
         9.14     Updating Financial Statements................................................................    62
         9.15     Approval of the Transfer of Forestry Liabilities.............................................    62
         9.16     Information for Competition Bureau...........................................................    63
         9.17     Consents Not Obtained Before Closing.........................................................    63
         9.18     Leases/Subleases of Premises.................................................................    64
         9.19     Poplar Interests.............................................................................    64
         9.20     Sproat Lot 98 Interests......................................................................    66
         9.21     Litigation Management Agreement..............................................................    67
         9.22     New Encumbrances.............................................................................    67
         9.23     Boot Lagoon Access...........................................................................    68
         9.24     Beach Camp Access............................................................................    68
         9.25     Distribution Services........................................................................    69
10.      ENVIRONMENTAL MATTERS.................................................................................    69
         10.1     Environmental Representations and Warranties.................................................    69
         10.2     Covenant and Limitations on Liability........................................................    71
         10.3     Process......................................................................................    73
         10.4     Notice.......................................................................................    73
         10.5     Sole Recourse and Release....................................................................    73
         10.6     Subrogation..................................................................................    74
         10.7     Control of Remediation.......................................................................    74
         10.8     Dispute Resolution for Environmental Work....................................................    75
         10.9     Waiver of Site Profile.......................................................................    75
11.      EMPLOYEES.............................................................................................    76
         11.1     Salaried Employees...........................................................................    76
</TABLE>

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<PAGE>

<TABLE>
<S>                                                                                                                <C>
         11.2     Union Employees..............................................................................    77
         11.3     Remittances..................................................................................    77
         11.4     Benefit Plans................................................................................    77
12.      CONDITIONS OF CLOSING.................................................................................    78
         12.1     Conditions of Closing in Favour of the Buyer.................................................    78
         12.2     Conditions of Closing in Favour of the Seller................................................    80
13.      CLOSING DATE AND TRANSFER OF POSSESSION...............................................................    81
         13.1     Transfer.....................................................................................    81
         13.2     Place of Closing.............................................................................    81
         13.3     Delivery of Closing Documents................................................................    81
         13.4     Further Assurances...........................................................................    83
         13.5     Registration of Transfer of Real Property....................................................    83
         13.6     Post-Closing Notification....................................................................    84
14.      INDEMNIFICATION.......................................................................................    84
         14.1     Indemnification by the Seller................................................................    84
         14.2     Indemnification by the Buyer.................................................................    85
         14.3     Notice of Claim..............................................................................    86
         14.4     Direct Claims................................................................................    87
         14.5     Third Party Claims...........................................................................    87
         14.6     Settlement of Third Party Claims.............................................................    87
         14.7     Co-operation.................................................................................    88
         14.8     Thresholds...................................................................................    88
         14.9     Reduction....................................................................................    88
         14.10    Limitations..................................................................................    89
         14.11    Cap..........................................................................................    89
         14.12    As Is, Where Is..............................................................................    89
         14.13    Assumed Liabilities..........................................................................    89
         14.14    Subrogation..................................................................................    90
         14.15    Exclusive Remedy.............................................................................    90
15.      TERMINATION...........................................................................................    90
         15.1     Termination..................................................................................    90
16.      MISCELLANEOUS.........................................................................................    91
         16.1     Notices......................................................................................    91
         16.2     Commissions, etc.............................................................................    92
         16.3     Consultation.................................................................................    92
         16.4     Disclosure...................................................................................    92
         16.5     Retention of Books and Records...............................................................    92
         16.6     Confidentiality..............................................................................    93
         16.7     Non-Solicitation.............................................................................    93
         16.8     Disclosure Letter............................................................................    94
         16.9     Costs and Expenses...........................................................................    94
         16.10    Third Parties................................................................................    94
         16.11    Counterparts.................................................................................    95
</TABLE>

                                      -iv-
<PAGE>

         THIS AGREEMENT made as of the 17th day of February, 2005,

BETWEEN: COASTAL ACQUISITION LTD., a corporation existing under the laws of
         British Columbia

                                                                   (the "BUYER")

AND:     WEYERHAEUSER COMPANY LIMITED, a corporation existing under the laws of
         Canada

                                                                  (the "SELLER")

         WITNESSES THAT WHEREAS the Seller has agreed to sell and the Buyer has
agreed to purchase certain assets and properties of the Seller relating to the
Purchased Business (as defined herein) upon and subject to the terms and
conditions contained in this Agreement;

         THEREFORE in consideration of the respective covenants, agreements,
representations, warranties and indemnities of the parties herein contained and
for other good and valuable consideration (the receipt and sufficiency of which
are acknowledged by each party) the parties agree as follows:

1.       INTERPRETATION

1.1      DEFINED TERMS

For the purposes of this Agreement, unless the context otherwise requires, the
following terms shall have the respective meanings set out below and grammatical
variations of such terms shall have corresponding meanings:

(a)      "AAC" means allowable annual cut;

(b)      "ABORIGINAL CLAIMS" means, in respect of the Purchased Business and
         Purchased Assets, any and all claims to aboriginal rights or title or
         interest or treaty rights, and any and all Legal Proceedings and
         Liabilities, arising or incurred as a result of, or in relation to: (i)
         Claims of aboriginal rights or title or interest or treaty rights, made
         by or on behalf of any Aboriginal Group whether or not they are: (A)
         made before or after the Closing Date; (B) proven in a court of law; or
         (C) made in Legal Proceedings; and (ii) any duty or obligation to share
         information with, consult or accommodate or receive consent from any
         Aboriginal Group;

(c)      "ABORIGINAL GROUP" means any Indian band, first nation or aboriginal
         group, house, tribal council or other aboriginal organization;

(d)      "ACCOUNTS RECEIVABLE" means, in respect of third parties other than
         Affiliates of Seller, all accounts receivable, trade accounts
         receivable, advances, notes receivable, insurance claims and any other
         debts due or accruing to the Seller

                                       -1-
<PAGE>

         including any refunds and rebates, and the benefit of all security
         (including cash deposits), guarantees and other collateral and security
         for those accounts, advances, notes and debts to the extent that they
         relate primarily to or arise primarily from the Purchased Business and
         they arise or exist as at the Time of Closing, and any claim, remedy or
         other right related to any of the foregoing and, for greater certainty,
         excluding Tax refunds and rebates and CVD/AD refunds;

(e)      "ACQUIRED ENTITIES" means the following entities in which the Seller
         holds an Ownership Interest: Boom Chain Transportation Company Limited,
         Marine Leasing Ltd., Iisaak Forest Resources Ltd., Mid-Island Reman
         Inc., MacMillan Bloedel Kabushaki Kaisha Ltd., Weyerhaeuser (Imports)
         Pty. Limited, 486286 British Columbia Ltd., and Gulf Log Salvage
         Co-operative Association provided that the parties acknowledge that the
         Seller's interest in Boom Chain Transportation Company Limited may be
         dissolved or sold before the Closing and in that event, the term
         "Acquired Entities" shall mean all of the listed entities as above
         other than Boom Chain Transportation Company Limited;

(f)      "ADDITIONAL INTERESTS" means the Poplar Interests and the Sproat Lot 98
         Interests;

(g)      "AFFILIATE" in respect of a Person means any other Person that directly
         or indirectly, through one or more intermediaries, controls, is
         controlled by, or is under common control with, such first Person where
         "control" means, with respect to the relationship between or among two
         or more Persons, the possession, directly or indirectly or as trustee,
         personal representative or executor of the power to direct or cause the
         direction of the affairs or management of the Person, whether through
         the ownership of Voting Securities, as trustee, personal representative
         or executor, by contract, credit arrangement or otherwise, including
         without limitation, the ownership, directly or indirectly, of
         securities having the power to elect a majority of the board of
         directors or similar body governing the affairs of such Person;

(h)      "AGREEMENT" means this asset purchase agreement including the recitals
         and schedules hereto, as amended, supplemented or restated from time to
         time;

(i)      "APPLICABLE LAW" with respect to any Person, property, transaction or
         event, means all present laws, statutes, regulations, treaties,
         judgments and decrees applicable to that Person, property, transaction
         or event, Environmental Laws, Forestry Laws and all applicable
         requirements, directives, rules, consents, approvals, authorizations,
         orders and policies of any Governmental Authority having the force of
         law over that Person, property, transaction or event;

(j)      "APPROVALS" means approvals, certificates, authorizations, consents,
         permits, grants, licences, notifications, privileges, rights, orders,
         judgments, rulings, directives, ordinances, decrees, registrations and
         filings, including, without limitation, the Approvals set out in
         Schedule 1.1(j);

                                      -2-
<PAGE>

(k)      "ASSUMED LIABILITIES" means the following Liabilities of the Seller to
         the extent relating to or arising with respect to the Purchased
         Business or the Purchased Assets whether arising before or after the
         Time of Closing:

         (i)      under all Contracts including, without limitation:

                  (A)      foreign exchange losses in respect of sales
                           agreements denominated in foreign currencies; and

                  (B)      those Contracts listed in Schedule 1.1(k)(i),

                  but excluding:

                  (C)      the Timber Reallocation Agreement (except to the
                           extent such agreement is partially assigned to the
                           Buyer);

                  (D)      those Liabilities, other than Environmental
                           Liabilities, arising from the breach of a Contract
                           that occurred prior to the Time of Closing;

                  (E)      Liabilities for retroactive rate or payment
                           adjustments arising in respect of matters that
                           occurred prior to the Time of Closing and based on
                           the terms of such Contracts as they existed prior to
                           the Time of Closing, provided always that the Buyer
                           has first consulted with the Seller in respect of any
                           adjustment that requires or is based upon the Buyer's
                           involvement in or approval of such adjustment; and

                  (F)      Liabilities of the Seller to banks, financial
                           institutions or other Persons for borrowed money;

         (ii)     with respect to the Union Employees and the Salaried Employees
                  as set forth in Article 11 including, without limitation, the
                  severance obligations referenced in Section 14.2(b);

         (iii)    under all Licences and Permits other than Environmental
                  Permits, including without limitation those listed in Schedule
                  1.1(k)(iii), but excluding those Liabilities, other than
                  Environmental Liabilities, arising from the breach of a
                  Licence or Permit (other than Environmental Permits) that
                  occurred before the Time of Closing;

         (iv)     Liabilities disclosed on the Working Capital Statement;

         (v)      with respect to Permitted Encumbrances, other than Taxes
                  payable by the Seller (unless covered by Section 3.9),
                  Liabilities of the Seller to banks, financial institutions or
                  other Persons for borrowed money and under Contracts, to the
                  extent excluded under (i)(C), (D) or (E) above;

                                       -3-
<PAGE>

         (vi)     with respect to all Forestry Liabilities, notwithstanding the
                  amount paid for the assumption thereof by the Seller to the
                  Buyer;

         (vii)    under the Timber Tenures, other than in respect of stumpage
                  and waste billings arising in respect of harvesting or failure
                  to harvest before the Time of Closing and not included in the
                  Working Capital Statement;

         (viii)   with respect to roads, bridges, dumps, culverts and other
                  improvements associated with the Real Property and the Timber
                  Tenures, regardless of when or how constructed or used, but
                  excluding any Liabilities resulting from breaches of Forestry
                  Laws by the Seller before the Time of Closing to the extent
                  that such breach results in any prosecution, charge, ticket or
                  administrative or other monetary penalty under the Forestry
                  Laws;

         (ix)     under the Forestry Laws but excluding: (A) any Liabilities
                  resulting from breaches of Forestry Law by the Seller before
                  the Time of Closing to the extent that such breach results in
                  any prosecution, charge, ticket or administrative or other
                  monetary penalty under the Forestry Laws, and (B) stumpage and
                  waste billings arising in respect of harvesting or failure to
                  harvest before the Time of Closing and not included in the
                  Working Capital Statement;

         (x)      Environmental Liabilities and Environmental Permits;

         (xi)     Liabilities to anyone formerly employed in the Purchased
                  Business as contemplated in Section 11.2(c);

         (xii)    with respect to Aboriginal Claims; and

         (xiii)   with respect to the Legal Proceedings listed in Part 1 or
                  Part 2 (except as set forth therein) of Schedule 1.1(k)(xiii);

(l)      "BEACH CAMP LANDS" means the lands and premises legally described as
         Parcel Identifier: 025-571-281, Lot B, Section 17, Township 1, Rupert
         District, Plan VIP74604, see plan as to limited access;

(m)      "BENEFIT PLANS" means all plans, agreements, programs, policies,
         practices or undertakings (whether oral or written, formal or informal,
         funded or unfunded, insured or uninsured, registered or unregistered)
         that the Seller is a party to or bound by or in which the Employees of
         the Purchased Business participate, or under which the Seller has or
         will have any liability or contingent liability, for compensation or
         benefits additional to base pay or salary including without limitation
         surplus entitlement, with respect to any of the Employees of the
         Purchased Business (or their spouses, dependants, survivors or
         beneficiaries), whether or not subject to any Applicable Law, relating
         to pension, superannuation, retirement or retirement savings benefits
         (including any defined benefit pension plan, defined contribution
         pension plan, registered retirement

                                      -4-
<PAGE>

         savings plan, retirement compensation arrangement, and supplemental
         pension plan) or any bonus, deferred compensation, incentive
         compensation, share based compensation (including any share purchase,
         share appreciation, share option or phantom stock plans) severance or
         termination pay, hospitalization or other medical benefits, life or
         other insurance, dental, disability, salary continuation, vacation,
         paid time off and overtime, supplemental unemployment benefits,
         profit-sharing, mortgage and relocation assistance, car allowances,
         professional dues, club dues, employee loan, employee assistance, post
         retirement benefits and each other employee benefit plan or agreement,
         except that the term "BENEFIT Plans" will not include any statutory
         plans of general application with which the Seller is required to
         comply by reason of being an employer, including by way of example the
         Canada Pension Plan and plans administered pursuant to applicable
         provincial health tax, workers' compensation, workplace safety and
         insurance and employment insurance legislation and except that, for the
         purposes of Section 11.4(b), the term Benefit Plan will be deemed not
         to include any entitlement to notice of termination or any severance
         payment in lieu thereof;

(n)      "BOOKS AND RECORDS" means the On-Site Books and Records and Off-Site
         Books and Records;

(o)      "BOOT LAGOON LANDS" means the lands and premises legally described as
         Parcel Identifier: 008-572-763, District Lot 284, Alberni District;

(p)      "BUSINESS DAY" means any day, other than a Saturday, Sunday or a
         statutory holiday in British Columbia and which Business Day is deemed
         to end at 5:00 p.m. (local time) on that day;

(q)      "BUYER INDEMNIFIED PARTY" means the Buyer and its shareholders,
         directors, officers, employees, agents, representatives, successors and
         assigns;

(r)      "CLAIM" means any notice (including a notice of defect or
         non-compliance), assessment, reassessment, order, summons, citation,
         directive, no-action letter, ticket, charge, fine, penalty, judgment,
         order, liability, expense, cost, damage, loss, investigation, letter or
         other written communication, claim, remediation cost recovery action,
         demand, suit, action, complaint, grievance, legal assertion,
         prosecution, petition or proceeding from any Person or any Governmental
         Authority;

(s)      "CLOSING" means the completion of the Purchase at the Time of Closing;

(t)      "CLOSING CONSENTS" means those consents set forth in Schedule 1.1(t);

(u)      "CLOSING DATE" means the first Monday after the date that is the later
         of the first Business Day after the expiry of the notice period set out
         in Section 11.2(b) and twelve Business Days after the day on which the
         last of the conditions set out in Sections 12.1(c), (d), (i), (j) and
         (k) and Sections 12.2(f), (g) and (h) have been satisfied or waived as
         contemplated herein by the Buyer or the Seller, as the case

                                      -5-
<PAGE>

         may be, or such other date as may be agreed to in writing between the
         Seller and the Buyer;

(v)      "CLOSING GUARANTEE" means the guarantee executed by Brascan Corporation
         on the date hereof, guaranteeing the performance of the obligations of
         the Buyer hereunder during the Interim Period;

(w)      "COASTAL AMOUNT" of any Quota means the amount of any Quota that may be
         received by the Seller or to which the Seller may be entitled based on
         the criteria for the determination of Quota (the "CRITERIA") applied to
         the Purchased Business for the time before Closing, and, if the Seller
         receives or is entitled to any Quota based on such Criteria for the
         time before Closing but the actual amount of the Quota received by the
         Seller or to which the Seller is entitled based on the application of
         the Criteria to the Purchased Business for the time before Closing can
         not be separately determined from any of the other Quota that the
         Seller may receive or be entitled to, then the Coastal Amount of any
         Quota will be determined on the basis of:

         (i)      the annual average of the volume of softwood lumber reported
                  by the Seller to the Department of Foreign Affairs and
                  International Trade as having been sold by the Purchased
                  Business into the United States during the relevant period of
                  time before Closing used to allocate the Quota, and in the
                  absence of any such period of time, during the twenty-four
                  months immediately before the date of this Agreement (as the
                  numerator);

         relative to:

         (ii)     the annual average of the volume of softwood lumber reported
                  by the Seller to the Department of Foreign Affairs and
                  International Trade as having been sold by all of the Seller's
                  businesses in Canada into the United States during that time
                  (as the denominator);

(x)      "COLLECTIVE AGREEMENTS" means the collective agreements described in
         Schedule 1.1(x);

(y)      "COMPETITION ACT" means the Competition Act (Canada), as amended;

(z)      "COMPETITION ACT APPROVAL" means:

         (i)      the issuance of an advance ruling certificate by the
                  Commissioner under Subsection 102(1) of the Competition Act to
                  the effect that the Commissioner is satisfied that the
                  Commissioner would not have sufficient grounds upon which to
                  apply to the Competition Tribunal for an order under section
                  92 of the Competition Act with respect to the transactions
                  contemplated by this Agreement or otherwise in connection with
                  the transfer of the Purchased Assets to the Buyer; or

                                       -6-
<PAGE>

         (ii)     the applicable waiting period under section 123 of the
                  Competition Act will have expired or the Commissioner will, in
                  accordance with paragraph 113(c) of the Competition Act, have
                  waived the obligation to provide a pre-merger notification in
                  accordance with Part IX of the Competition Act because
                  substantially similar information was previously supplied in
                  relation to a request for an advance ruling certificate
                  pursuant to subsection 102(1) of the Competition Act, and the
                  Buyer will have received a "no-action" letter from the
                  Commissioner, which letter confirms that the Commissioner is
                  of the view that there are not sufficient grounds to initiate
                  proceedings before the Competition Tribunal under the merger
                  provisions of the Competition Act with respect to the
                  transactions contemplated herein or otherwise in connection
                  with the transfer of the Purchased Assets to the Buyer; or

         (iii)    where, in lieu of the requirements in (i) and (ii) above, at
                  the Buyer's election, the waiting period under section 123 of
                  the Competition Act will have expired or the Commissioner
                  will, in accordance with paragraph 113(c) of the Competition
                  Act, have waived the obligation to provide a pre-merger
                  notification in accordance with Part IX of the Competition Act
                  because substantially similar information was previously
                  supplied in relation to a request for an advance ruling
                  certificate pursuant to subsection 102(1) of the Competition
                  Act, and neither the Seller nor the Buyer will have been
                  advised in writing by the Commissioner that:

                  (A)      the Commissioner has determined to make an
                           application for an order under section 92, 100 or 104
                           of the Competition Act with respect to the
                           transactions contemplated by this Agreement or
                           otherwise in connection with the transfer of the
                           Purchased Assets to the Buyer, or to commence an
                           inquiry with respect to such transactions or transfer
                           under section 10 of the Competition Act; or

                  (B)      an application under section 9 of the Competition Act
                           has been made to the Commissioner with respect to the
                           transactions contemplated by this Agreement or
                           otherwise in connection with the transfer of the
                           Purchased Assets to the Buyer;

(aa)     "CONTAMINANTS" means any radioactive materials, asbestos,
         asbestos-containing materials, urea formaldehyde, hydrocarbons,
         polychlorinated biphenyls ("PCBs"), PCB-containing equipment or
         materials, pollutants, contaminants, mould, deleterious substances,
         dangerous substances or goods, hazardous, corrosive or toxic
         substances, hazardous waste, waste, wood waste leachate, pesticides,
         defoliants or any other substance, solid, liquid, gas, vapour, odour,
         radiation or any combination thereof, the storage, manufacture,
         handling, disposal, treatment, generation, use, transport, remediation
         or Release into, or presence in, the

                                       -7-
<PAGE>

         environment of which is prohibited, controlled, regulated or defined
         under Environmental Laws whether such Environmental Laws come into
         force before or after the Time of Closing;

(bb)     "CONTAMINATED SITE" has the meaning given to it at the Time of Closing
         in the British Columbia Environmental Management Act and the
         regulations pursuant thereto;

(cc)     "CONTRACT" means any agreement, indenture, contract, lease, deed of
         trust, licence, option, instrument or other commitment, whether written
         or oral, relating primarily to the Purchased Business, including the
         Personal Property Leases, the Real Property Leases, the Real Property
         Interests, quotations, orders, tenders for any contract that remain
         open for acceptance, warranties or guarantees (express or implied) but
         not including any national purchase contracts between the Seller and
         the various suppliers of goods and/or services to the Seller's other
         operations and business in common with the Purchased Business as listed
         in Schedule 1.1(cc);

(dd)     "CVD/AD" means all countervailing and anti-dumping duties, and similar
         duties, taxes and levies;

(ee)     "DEPOSIT" means the sum of $75,000,000 held by the Escrow Agent from
         time to time;

(ff)     "DIRECT CLAIM" means a Claim that is not a Third Party Claim;

(gg)     "DISCLOSURE LETTER" means the letter delivered by the Seller to the
         Buyer concurrently with the execution and delivery of this Agreement
         setting out certain exceptions to the representations and warranties of
         the Seller and signed on behalf of the Seller, by the Seller's
         President;

(hh)     "DRAFT WORKING CAPITAL STATEMENT" has the meaning set forth in Section
         3.4;

(ii)     "EMPLOYEES" means Salaried Employees and Union Employees who are
         employed in the Purchased Business including the employees on long term
         disability, leave of absence, maternity leave or other absence and who
         have a contractual, legal, Collective Agreement or other right to
         return to employment with the Seller, all of whom are set out in
         Schedule 1.1(ii);

(jj)     "ENCUMBRANCE" means any charge, mortgage, lien, pledge, claim, legal
         notation, hypothec, legal or conventional, personal or real, or
         security interest, whether created or arising by agreement, statute or
         otherwise at law, attaching to property, interests or rights and shall
         be construed in the widest possible terms and principles known under
         the law applicable to such property, interests or rights and whether or
         not they constitute specific or floating charges;

                                      -8-
<PAGE>

(kk)     "ENVIRONMENTAL CONDITION" means:

         (i)      the presence or Release, whether before or after the Time of
                  Closing, of any Contaminants in, on, at, under, to or from:
                  (A) any Real Property, or (B) the lands underlying the Timber
                  Tenures and lands and waters subject to the Licences and
                  Permits (including Environmental Permits) to the extent not
                  included in Real Property, (C) lands and waters adjacent to
                  or, in the vicinity of, the lands and waters described in
                  subparagraphs (A) and (B) upon which the Purchased Business
                  has encroached; or (D) any building or other structure on the
                  Real Property or any other property described in the
                  immediately preceding subparagraphs (B) and (C); and

         (ii)     any other circumstance, condition, matter, occurrence, issue,
                  event or requirement relating to the environment (which
                  includes, without limitation, any building or structure on, or
                  forming part of, the Purchased Assets), environmental
                  assessment, health, occupational health and safety or
                  transportation of dangerous goods that arises from, is caused
                  (directly or indirectly) by, or relates to, the operation of
                  the Purchased Business or the Purchased Assets whether before
                  or after the Time of Closing other than breaches of Forestry
                  Laws that occurred before the time of Closing to the extent
                  that such breach results in any prosecution, charge, ticket or
                  administrative or other monetary penalty under the Forestry
                  Laws;

(ll)     "ENVIRONMENTAL COVENANT" means the covenants of the Seller set out in
         Section 10;

(mm)     "ENVIRONMENTAL EXPERT" means an individual who is qualified as a
         professional with a recognized geotechnical, engineering, or
         environmental consulting firm;

(nn)     "ENVIRONMENTAL LAWS" means all statutes, laws, regulations, orders,
         by-laws, standards, directions, protocols (provided that such
         standards, directions and protocols have the force of law but
         including, with respect to any real property subject to federal
         jurisdiction, the CCME Standards), and other lawful requirements of any
         Governmental Authority having jurisdiction over the Purchased Assets or
         the Purchased Business relating to the environment, environmental
         assessment, health, occupational health and safety, or transportation
         of dangerous goods and that are applicable to the Purchased Assets,
         including the principles of common law and equity and that are in force
         at the Time of Closing but excluding Forestry Laws; provided that, for
         the purposes of the representations and warranties in Section 6.16(b)
         and Article 10: (A) Environmental Laws includes all provisions of
         Forestry Laws that relate to Environmental Conditions; and (B) Forestry
         Laws excludes all provisions of Forestry Laws that relate to
         Environmental Conditions;

(oo)     "ENVIRONMENTAL LIABILITY" means any Claim or Legal Proceedings and any
         Liability or Loss, whether or not arising as a result of a Claim or
         Legal Proceeding, arising out of, related to, or resulting from any
         Environmental

                                       -9-
<PAGE>

         Condition, whether such Environmental Condition occurred or came into
         existence before or after the Time of Closing, but excluding:

         (i)      those Environmental Conditions for which the Seller is or
                  becomes responsible pursuant to Article 10 of this Agreement
                  to the extent set out in, and subject to the limitations in,
                  Article 10; and

         (ii)     any Formal Legal Proceedings issued before the Time of Closing
                  with respect to Environmental Conditions that occurred before
                  the Time of Closing where such Formal Legal Proceedings are
                  not listed in Part 1 or Part 2 (except as set forth therein)
                  of Schedule 1.1(k)(xiii);

(pp)     "ENVIRONMENTAL PERMITS" means all Licences and Permits required under
         Environmental Laws, including, without limitation, those set out in
         Schedule 1.1(pp);

(qq)     "ESCROW AGENT" means Computershare Trust Company of Canada, who shall
         serve as escrow agent for the Deposit;

(rr)     "ETA" means Part IX of the Excise Tax Act (Canada), as amended from
         time to time;

(ss)     "EXCLUDED ASSETS" means the following assets, properties, rights and
         interests of the Seller:

         (i)      Contracts relating primarily to the Excluded Assets;

         (ii)     the Combined Contracts;

         (iii)    the Excluded IP;

         (iv)     insurance policies held by the Seller and any proceeds of such
                  policies;

         (v)      Taxes and instalments of Taxes paid by the Seller and the
                  right to receive any refund of Taxes paid by the Seller and
                  investment tax credits refundable to the Seller, scientific
                  research and experimental development tax credit refunds,
                  workers' compensation premiums refundable and similar premiums
                  refundable and rebates and credits and all interest thereon
                  and any amounts recorded by the Seller as Taxes in accordance
                  with GAAP;

         (vi)     the Seller's corporate charters, minute and share record
                  books, documents and records and corporate seals of the
                  Seller, Tax records and other financial records to the extent
                  not reasonably required by the Buyer as successor to the
                  Purchased Business and the Purchased Assets;

         (vii)    the Benefit Plans of the Seller;

                                      -10-
<PAGE>

         (viii)   rebates and refunds of monies paid or payable to the Seller in
                  connection with the Purchased Business or Purchased Assets
                  before the Closing Date, including without limitation with
                  respect to performance bonds, remediation order bonds and
                  reforestation programs;

         (ix)     cash and other security deposits made by the Seller including
                  those made under the Timber Tenures, Real Property or
                  Environmental Permits unless included in the calculation of
                  the Net Working Capital and which are listed in Schedule
                  1.1(ss)(ix);

         (x)      any guarantees, letters of credit or similar security
                  arrangements made by the Seller in connection with the
                  Purchased Assets and which are listed in Schedule 1.1(ss)(x)
                  (replacements for which, the Buyer will be responsible for as
                  of the Time of Closing except where the Purchased Asset to
                  which such matter relates is not acquired by the Buyer at the
                  Time of Closing);

         (xi)     any funds, deposits, accruals or reserves relating to any
                  deferred profit-sharing plan, salary deferral arrangement,
                  employee trust, retirement benefits or retirement compensation
                  arrangements;

         (xii)    cash and cash equivalent in bank accounts;

         (xiii)   certain information systems and technology as set out in
                  Schedule 1.1(ss)(xiii);

         (xiv)    the business and assets of Northwest Hardwoods (including two
                  foreshore leases and a lot at or near the facility) and
                  certain related Licences of alder timber tenure set out in
                  Schedule 1.1(ss)(xiv);

         (xv)     the box plant lot near the New Westminster sawmill, as legally
                  described in Schedule 1.1(ss)(xv);

         (xvi)    certain lots on Flores Island that the Seller has agreed to
                  donate to the Province of British Columbia, as legally
                  described in Schedule 1.1(ss)(xvi);

         (xvii)   the business and assets of all distribution facilities
                  anywhere in the world and all agreements relating to the
                  distribution by such facilities of products produced by the
                  Purchased Business other than the business and assets
                  associated with the distribution facilities in China, Japan
                  and Australia as set out in Schedule 1.1(ss)(xvii);

         (xviii)  refunds, bonds and deposits relating to CVD/AD up to the Time
                  of Closing;

                                      -11-

<PAGE>

         (xix)    the Real Property that is the subject of Permitted Sales that
                  have closed prior to the Closing Date or that are subject to
                  an executed purchase and sale agreement with a Third Party
                  prior to the Time of Closing and are still in effect as at the
                  Closing Date and any proceeds therefrom payable to the Seller
                  in accordance with Section 3.13;

         (xx)     the mortgages held by the Seller with respect to sales of
                  interests in real property before the date of this Agreement
                  as described in Schedule 1.1(ss)(xx) and retained mineral
                  rights in respect of the sale of real property before the date
                  of this Agreement;

         (xxi)    Trus Joist property, assets, rights and interests of whatever
                  nature or kind;

         (xxii)   the Canadian White Pine and K3 sites, as legally described in
                  Schedule 1.1(ss)(xxii); and all associated property, assets,
                  rights and interests of whatever nature or kind, including two
                  foreshore leases that are the subject of ongoing remediation
                  and two foreshore leases which relate to land created by fill
                  at the Canadian White Pine and K3 site;

         (xxiii)  the Off-Site Books and Records;

         (xxiv)   compensation under the Timber Reallocation Agreement as
                  described in Section 2.5;

         (xxv)    the lease agreement dated August 24, 1990, as amended, between
                  the Seller and Shon Georgia Investments Ltd., in respect of
                  the office space at 925 West Georgia Street;

         (xxvi)   except as set forth in the Transitional Services Agreement,
                  certain rights in respect of the Seller's non- arms' length
                  supply arrangements including, without limitation:

                  (A)   log sales to Weyerhaeuser Company;

                  (B)   log sales to Seller's Kamloops sawmill; and

                  (C)   lumber sales to Weyerhaeuser Building and Materials
                        Distribution;

         (xxvii)  all assets, rights and interests relating to "Spacekraft"
                  currently owned by MacMillan Bloedel Kabushiki Kaisha Ltd.;

         (xxviii) the issued and outstanding shares of MacMillan Guardiana, S.A.
                  de C.V.;

                                      -12-

<PAGE>

         (xxix)   all intercompany amounts owing to the Seller from its
                  Affiliates (other than the Acquired Entities) and all
                  intracompany amounts owing to the Purchased Business as
                  disclosed on the Financial Statements;

         (xxx)    subject to Section 3.15, the real property described in
                  Schedule 1.1(ss)(xxx);

         (xxxi)   the sum of $371,000 owed to the Seller by the Province of
                  British Columbia in respect of legal fees relating to the
                  settlement of a confidential lawsuit and a right of related
                  set-off in the approximate amount of $1,229,000 by way of
                  credit against amounts asserted to be payable by the Seller
                  arising out of the timber licence transfer associated with the
                  transfer of MacMillan Bloedel Limited timber licences to
                  Weyerhaeuser Company Limited on or about November 1, 1999;

         (xxxii)  any asset of the Seller not held for use and not used
                  primarily in the Purchased Business, which for greater
                  certainty excludes those assets described in sub- paragraphs
                  (i) to (xxi) of the definition of Purchased Assets;

(tt)     "EXCLUDED IP" means all Intellectual Property owned by the Seller, and
         all of the Seller's Intellectual Property Rights therein, that are not
         Transferred IP;

(uu)     "FEE SIMPLE REAL PROPERTY" means the real property set out in Schedule
         1.1(uu);

(vv)     "FINANCIAL EXPERT" means PricewaterhouseCoopers LLP;

(ww)     "FINANCIAL STATEMENTS" means the unaudited financial statements of the
         Seller relating to the Purchased Business for the financial years
         ending on December 28, 2003 and December 26, 2004;

(xx)     "FORESTRY LAWS" means the Forest Act (British Columbia), the Forest
         Practices Code of British Columbia Act, the Private Managed Forest Land
         Act (British Columbia), the Forest and Range Practices Act (British
         Columbia) and any Applicable Law relating to wildfires, if any, and all
         regulations and rules under those statutes, and the Fisheries Act
         (Canada) and all regulations and rules thereunder but solely as the
         Fisheries Act (Canada) and all regulations and rules thereunder apply
         to timber harvesting, roads, silviculture and other forestry management
         activities;

(yy)     "FORESTRY LIABILITIES" means all silviculture, reforestation, road
         deactivation and road reclamation Liabilities associated with the
         Timber Tenures and under any Contract that relate to attaining the
         reforestation or road deactivation standards under the Forestry Laws or
         that Contract for any harvested tracts or roads, including but not
         limited to any reforestation needed to ensure the reforestation will be
         met, conducting surveys of harvested blocks, re-surveying blocks that
         meet conditionally satisfactory reforested levels, deactivation and
         site reclamation

                                      -13-

<PAGE>

         of road rights of way and re-treating harvested blocks that had been
         deemed not to meet the reforestation standards, determined in the
         manner set out in the calculations and principles set out in
         Schedule 1.1(yy);

(zz)     "FORESTRY LIABILITIES ADJUSTMENT" means the difference between the
         Forestry Liabilities at the Time of Closing and the Forestry
         Liabilities Statement determined as contemplated by Section 3.5;

(aaa)    "FORESTRY LIABILITIES STATEMENT" means a statement of the Forestry
         Liabilities as at the Time of Closing determined by the Seller using
         the principles and procedures set forth in Schedule 1.1(yy);

(bbb)    "FORMAL LEGAL PROCEEDINGS" means any litigation, action, prosecution,
         charge, ticket, summons or other legal proceeding or judgment;

(ccc)    "GAAP" means generally accepted accounting principles in effect in
         Canada, including the accounting recommendations published in the
         handbook of the Canadian Institute of Chartered Accountants;

(ddd)    "GOVERNMENT" means any federal, provincial, state, territorial, local
         or municipal government of Canada or a foreign country and
         "GOVERNMENTAL" has a corresponding meaning;

(eee)    "GOVERNMENTAL APPROVALS" means Approvals issued or granted under any
         Applicable Law or by any Governmental Authority;

(fff)    "GOVERNMENTAL AUTHORITY" means any Government agency or Government
         department, tribunal, board, commission, court or other authority
         exercising or purporting to exercise executive, legislative, judicial,
         regulatory or administrative functions of, or pertaining to,
         Government, as well as any arbitrator, arbitration tribunal or other
         tribunal or any quasi-governmental or private body exercising any
         regulatory, expropriation or taxing authority under or for the account
         of any of the foregoing;

(ggg)    "GST" means all Taxes payable under the ETA and any reference to a
         specific provision of the ETA shall refer to any successor provision
         thereto of like or similar effect;

(hhh)    "HSR COMPLIANCE" means that the parties have completed the filing of
         all forms required by the Hart-Scott-Rodino Anti-Trust Improvements Act
         of 1976, as amended, in respect of the transactions contemplated by
         this Agreement, and the waiting periods (or any extensions thereof)
         applicable under that Act have terminated or expired;

(iii)    "INDEMNIFIED PARTY" means a Buyer Indemnified Party or Seller
         Indemnified Party, as applicable;

                                      -14-

<PAGE>

(jjj)    "INDEMNIFYING PARTY" means a party from whom indemnification is sought
         by an Indemnified Party under Article 14;

(kkk)    "INTELLECTUAL PROPERTY" means intellectual, industrial and intangible
         property of whatever nature and kind in any jurisdiction, including
         trademarks, official marks, brand names, business names, trade names,
         domain names, trading styles, logos, trade secrets, innovations,
         discoveries, developments, product formulations, software (including
         object code, source code and related documentation), proprietary
         manufacturing information, and know how, equipment and parts list and
         descriptions, inventions, inventor's notes and research data,
         unpatented blue prints, drawings and designs, industrial property,
         formulae, processes, technology, databases, works of authorship, works
         subject to copyright, guides, manuals and designs, in all cases whether
         patented or patentable, whether registered or unregistered, and in any
         medium whatsoever;

(lll)    "INTELLECTUAL PROPERTY RIGHTS" means any and all rights in respect of
         Intellectual Property, whether pursuant to statute, common law or other
         laws, including any and all:

      (i)   rights in respect of trademarks and trade names;

      (ii)  copyrights and the benefit of any waivers of moral rights;

      (iii) database rights;

      (iv)  rights in respect of industrial designs, integrated circuit
            topographies, and mask works;

      (v)   patents and patent applications;

      (vi)  rights and obligations in respect of trade secrets; and

      (vii) all applications, registrations, renewals, extensions,
            continuations, divisions, reissues, and restorations relating to any
            such rights (where applicable), now or hereafter in force and effect
            throughout the world (including any rights in any of the foregoing).

(mmm)    "INTERIM PERIOD" means the period commencing on the date of execution
         of this Agreement and ending at the Time of Closing;

(nnn)    "INVENTORY" means all inventories of the Purchased Business including
         logs and other raw materials, work in process, supplies and spare
         parts, except for any wraps or other supplies bearing the Seller's name
         or marks;

(ooo)    "LEASED REAL PROPERTY" means the real property set out in Schedule
         1.1(ooo);

(ppp)    "LEGAL PROCEEDING" means any litigation, action, suit, prosecution,
         investigation, hearing, claim, demand, complaint, grievance, notice of
         non-compliance or

                                      -15-

<PAGE>

         defect, citation, directive, legal charge, arbitration proceeding or
         other legal notice or legal proceeding, judgment, order or decree and
         includes any appeal or review and any application for appeal or review;

(qqq)    "LIABILITIES" means obligations, liabilities, settlement payments,
         awards, judgments, fines, penalties, damages, losses, all Taxes,
         including Taxes arising as a result of an assessment or reassessment,
         costs (including remediation costs) and expenses (including reasonable
         fees and disbursements of legal counsel, consultants, expert witnesses
         and other professionals and including any other costs incurred in
         investigating, defending or pursuing any Legal Proceeding),
         deficiencies and other charges;

(rrr)    "LICENCE AGREEMENTS" means all right, title and interest in and to all
         licence agreements, service agreements, supply agreements, franchise
         agreements, computer hardware and software agreements and technical
         services agreement relating primarily to the Purchased Business;

(sss)    "LICENCES AND PERMITS" means all permits, licences, consents,
         authorizations, approvals, privileges, waivers, exemptions, orders,
         certificates, rulings, agreements and other concessions required from
         or issued by any Governmental Authority in connection with the
         Purchased Business;

(ttt)    "LICENSED IP" means the Intellectual Property owned by the Seller and
         required for the Purchased Business as of the Closing Date, and all of
         the Seller's Intellectual Property Rights therein, but excluding: (i)
         the Transferred IP; (ii) the Seller's domain names, trademarks and
         trade-names and goodwill associated with such names, and (iii) all
         copyrightable subject matter and trade dress in advertising,
         promotional materials, marketing brochures, pamphlets, store display,
         product wraps and website content owned by the Seller;

(uuu)    "LOSSES" means, with respect to any matter, all losses, claims,
         damages, liabilities, deficiencies, costs, expenses (including, without
         limitation, all costs of investigation, legal and other professional
         fees and disbursements, interest, penalties and amounts paid in
         settlement) or diminution of value, whether or not involving a Third
         Party Claim arising directly as a consequence of such matter, however
         specifically excluding consequential, special and indirect losses, loss
         of profit and loss of opportunity;

(vvv)    "LOT 98" means the lands and premises legally described as Parcel
         Identifier: 008-408-106, District Lot 98, Alberni District, Except Part
         in Plans 4087, 4786 and 14235;

(www)    "MATERIAL CONTRACTS" means any Contract (other than the Timber Tenures)
         with respect to the Purchased Business: (i) involving remaining
         payments to or by the Seller in excess of $2,000,000 in any one year;
         (ii) that is outside the ordinary course of the Purchased Business;
         (iii) that restricts in any material way the Purchased Business or the
         use of the Purchased Assets or activities of Seller or

                                      -16-

<PAGE>

         Buyer (upon the acquisition of the Purchased Assets by the Buyer); or
         (iv) that would, in the event of a termination, default, acceleration
         or loss of rights thereunder, have a Materially Adverse effect on the
         Purchased Assets or the Purchased Business;

(xxx)    "MATERIALLY ADVERSE" means, with respect to the Purchased Business or
         the Purchased Assets, a fact, circumstance, event, occurrence or term
         that individually or together with other facts, circumstances, changes,
         events, occurrences or terms, does or could reasonably be expected to
         materially and adversely affect (i) the financial condition, business,
         assets, operations, results, Liabilities, obligations (whether
         absolute, accrued, conditional or otherwise) or prospects of the
         Purchased Business, (ii) the value of the Purchased Assets or the
         Purchased Business, or (iii) the ability of a party to perform any
         material obligations under this Agreement, other than, in the case of
         clauses (i) and (ii), any such affect arising out of or resulting from
         (x) changes in economic, regulatory or political developments
         applicable to the forestry industry generally in British Columbia that
         do not have a disproportionate effect on such Person, (y) changes in
         financial markets generally, or (z) the identity, nature or conduct of
         the Buyer as the buyer of the Purchased Business;

(yyy)    "MILL PROPERTY" means the lands listed on Schedule 1.1(yyy) and any
         improvements thereon;

(zzz)    "MODIFICATIONS" means all corrections, modifications, enhancements,
         improvements, supplements or derivative works;

(aaaa)   "NET WORKING CAPITAL" means the amount by which the aggregate of
         current assets included in the Purchased Assets, including the
         percentage of the current assets of each Acquired Entity that is
         proportionate to the extent of the Seller's Ownership Interest therein,
         exceeds the aggregate of the current liabilities being assumed by the
         Buyer, including the percentage of the current liabilities of each
         Acquired Entity that is proportionate to the extent of the Seller's
         Ownership Interest therein, all in accordance with GAAP (consistently
         applied with those applicable to the Financial Statements) except for
         those items set out in Schedule 1.1(aaaa) which will be accounted for
         in accordance with the principles set out therein (even if such
         principles are inconsistent with GAAP) and an amount receivable or
         payable between a Person, including the Seller, having an interest in
         an Acquired Entity that would be an Ownership Interest if owned by the
         Seller and an Acquired Entity shall be considered a current asset or a
         current liability, as the case may be;

(bbbb)   "NET WORKING CAPITAL ADJUSTMENT" means the difference between the Net
         Working Capital at the Time of Closing and the Net Working Capital
         Estimate determined as contemplated in Section 3.4;

                                      -17-

<PAGE>

(cccc)   "NET WORKING CAPITAL ESTIMATE" means the estimate of Net Working
         Capital as at the Time of Closing provided in writing by the Seller to
         the Buyer no later than five Business Days before the Closing Date;

(dddd)   "OFF-SITE BOOKS AND RECORDS" means all books, records, books of
         account, sales and purchase records, employee records, lists of
         suppliers and customers, credit and pricing information, files,
         ledgers, correspondence, lists, manuals, reports, texts, notes,
         engineering, environmental or feasibility studies, memoranda, invoices,
         receipts, accounts, financial statements, financial working papers,
         computer disks, tapes or other means of electronic storage, and all
         other records or documents of any nature or kind whatsoever of or
         relating to the Purchased Business (and each business unit within the
         Purchased Business) and not located at the locations of the Purchased
         Assets at the Time of Closing, other than all such documents related
         primarily to the Purchased Business and located on the 4th floor of 925
         West Georgia Street, and which, having used commercially reasonable
         efforts, the Seller is unable to segregate from records of the Seller
         unrelated to the Purchased Business, and all emergency backup,
         electronic tapes and data that contain historical information, data and
         records pertaining to the business affairs generally of the Seller,
         including the Purchased Business;

(eeee)   "ON-SITE BOOKS AND RECORDS" means all books, records, books of account,
         sales and purchase records, employee records, lists of suppliers and
         customers, credit and pricing information, files, ledgers,
         correspondence, lists, manuals, reports, texts, notes, engineering,
         environmental or feasibility studies, memoranda, invoices, receipts,
         accounts, financial statements, financial working papers, computer
         discs, tapes or other means of electronic storage, and all other
         records or documents of any nature or kind whatsoever of or relating to
         the Purchased Business (and each business unit within the Purchased
         Business) other than the Off- Site Books and Records;

(ffff)   "OWNERSHIP INTERESTS" means shares, partnership or joint venture
         interests or other ownership interest of the Seller in an Acquired
         Entity and includes any amount owing to the Seller by an Acquired
         Entity that is not otherwise a Purchased Asset but, for greater
         certainty, excludes any amount owing by an Acquired Entity to the
         Seller that is included in the computations of Net Working Capital;

(gggg)   "PERMITTED ENCUMBRANCES" means:

         (i)      liens for Taxes and governmental charges, if such Taxes or
                  Governmental charges are not due and payable;

         (ii)     servitudes, easements, restrictions, rights-of-way and other
                  similar rights in the Real Property or any interest therein,
                  provided they are not of such a nature as to materially
                  adversely impair or affect the use of the Real Property in the
                  operation of the Purchased Business as currently conducted;

                                      -18-

<PAGE>

         (iii)    inchoate liens for Taxes not due and payable;

         (iv)     undetermined or inchoate liens, charges and privileges
                  incidental to current construction or current operations of
                  the Purchased Business and that have not at the Time of
                  Closing been filed pursuant to Applicable Law and that relate
                  to obligations not due or delinquent (provided that the Seller
                  shall at all times remain responsible for all liabilities
                  other than Assumed Liabilities);

         (v)      the reservations, exceptions, limitations, provisos and
                  conditions in any original grants from the Crown, or contained
                  in any other grant or disposition from the Crown, of any of
                  the Real Property or interest therein and statutory exceptions
                  to title;

         (vi)     the reservations, exceptions, limitations, provisos and
                  conditions to which any of the Timber Tenures are subject;

         (vii)    encroachments over any of the Real Property used in the
                  operation of the Purchased Business by any buildings,
                  structures, improvements or appurtenances situate on lands
                  adjacent to that Real Property and permitted under agreements
                  with the Seller disclosed to the Buyer or that do not
                  materially impair the use of the Real Property in the
                  operation of the Purchased Business as currently conducted;

         (viii)   Aboriginal Claims that may be made or established (provided
                  that nothing in this Agreement is to be construed or taken by
                  either party or any other Person to be an acknowledgement or
                  admission of the validity of any such Aboriginal Claim) and
                  all Encumbrances arising as a result of an Aboriginal Claim;

         (ix)     all Encumbrances that secure the Assumed Liabilities;

         (x)      those Encumbrances against the Real Property disclosed in
                  Schedule 1.1(gggg)(x);

         (xi)     Encumbrances registered in the Land Title Office in respect of
                  the Real Property as of November 2, 2004;

         (xii)    Encumbrances on Real Property that is not Mill Property that
                  are registered in the Land Title Office or granted after
                  November 2, 2004 that arise in the ordinary course of the
                  Purchased Business and that do not materially affect the
                  continued use or operation of that asset for the intended
                  purpose, or are not financial Encumbrances securing monetary
                  obligations, or do not prevent the transfer or assignment of
                  the Real Property to which the Encumbrance attaches;

         (xiii)   Encumbrances approved by the Buyer, such approval not to be
                  unreasonably withheld;

                                      -19-

<PAGE>

         (xiv)    a statutory right of way or easement for emergency vehicles'
                  access over a portion of the Island Phoenix Mill Site required
                  for the subdivision of the Dodd Narrows lands;

         (xv)     the limitations, prohibitions, provisos and conditions under
                  the Land Act (British Columbia), the Private Managed Forest
                  Land Act (British Columbia) and the Agricultural Land
                  Commission Act (British Columbia);

         (xvi)    the limitations, prohibitions, provisos and conditions
                  associated with the Tenure Take-Back and the Timber
                  Reallocation Agreement;

(hhhh)   "PERMITTED SALES" means sales of Real Property by the Seller that are
         permitted to occur during the Interim Period in accordance with the
         terms of this Agreement, which Real Property is more particularly set
         out in Schedule 1.1(ss)(hhhh) hereto;

(iiii)   "PERSON" means an individual, legal person or representative,
         corporation, body corporate, firm, partnership, trust, trustee,
         syndicate, joint venture, limited liability company, association,
         unincorporated organization, union, Aboriginal Group or Governmental
         Authority;

(jjjj)   "PERSONAL INFORMATION" means any personal information protected by any
         Applicable Laws governing privacy matters and the protection of
         personal information;

(kkkk)   "PERSONAL PROPERTY LEASES" means all rights, titles and interests in
         and to the leases of personal or chattel property relating exclusively
         to the Purchased Business, including all purchase options, pre-paid
         rents, security deposits and, to the extent transferable, Licences and
         Permits relating thereto and all leasehold improvements thereon, as
         described in Schedule 1.1(kkkk);

(llll)   "POPLAR INTERESTS" has the meaning set out in Section 9.19;

(mmmm)   "POPLAR LANDS" means the lands and premises legally described in
         Schedule 1.1(mmmm);

(nnnn)   "POPLAR LICENCES" means the licences in respect of portions of the
         Poplar Lands described in Schedule 1.1(nnnn);

(oooo)   "POST CLOSING GUARANTEE" means a guarantee of the indemnities of the
         Purchaser substantially as set out in Schedule 1.1(oooo) hereto;

(pppp)   "PRIME RATE" for any day means the rate of interest expressed as a rate
         per annum that the Canadian Imperial Bank of Commerce establishes at
         its primary branch in Vancouver as a reference rate of interest that it
         will charge on that day for Canadian dollar demand loans to its
         corporate customers in Canada and that it refers to as its prime rate;

                                      -20-

<PAGE>

(qqqq)   "PST" means the social services tax under the Social Service Tax Act
         (British Columbia);

(rrrr)   "PURCHASE" means the transaction of purchase and sale contemplated by
         this Agreement;

(ssss)   "PURCHASE PRICE" has the meaning set out in Section 3.1;

(tttt)   "PURCHASE PRICE ADJUSTMENT" means any Net Working Capital Adjustment
         and any adjustment pursuant to Section 3.6, 3.7, 3.12(b), 3.13, 3.14,
         3.15 and 9.3;

(uuuu)   "PURCHASED ASSETS" means all of the Seller's rights, title and
         interests in and to the following property, assets, rights and
         interests that are held for use or used primarily in the Purchased
         Business:

         (i)      the Fee Simple Real Property (including all mineral,
                  undersurface and other interests associated therewith),
                  together with the buildings, structures, roads, bridges,
                  culverts and other improvements and appurtenances situated on
                  the Real Property;

         (ii)     rights, titles and interests (whether as lessee or lessor)
                  under the Real Property Leases, including all purchase
                  options, prepaid rents and security deposits relating thereto
                  together with all leasehold improvements thereon (except those
                  owned by lessees other than the Seller);

         (iii)    rights, titles and interest in and to the Real Property
                  Interests;

         (iv)     rights, titles and interest in and to the Personal Property
                  Leases;

         (v)      rights, titles and interest in and to all other Contracts to
                  which the Seller is a party or has the benefit of, relating to
                  the Purchased Business (other than those Contracts relating
                  primarily to the Excluded Assets and the unassigned portion of
                  the Timber Reallocation Agreement), including orders for the
                  provision of goods and services (whether as buyer or seller)
                  and including, without limitation, the Material Contracts
                  described in Schedule 1.1(k)(i);

         (vi)     all machinery, equipment, underground and above ground tanks
                  and the contents thereof, office furniture, fixed or used,
                  furniture, furnishings, parts, tools, supplies and accessories
                  and fixed assets immobilized by nature or by destination and
                  situate at the Real Property or at the lands underlying the
                  Timber Tenures;

         (vii)    any interest of the Seller in any active, inactive and closed
                  roads, bridges, dumps, camps, quarries or other facilities
                  located on the Real Property and lands subject to the Timber
                  Tenures and the other Licenses and Permits;

                                      -21-

<PAGE>

         (viii)   all trucks, cars and other vehicles, rolling stock and vessels
                  used or held for use primarily in the Purchased Business,
                  whether owned or leased, including those described in Schedule
                  1.1(uuuu)(viii);

         (ix)     assets, property, rights and interests of whatever nature or
                  kind in respect of the aviation operations relating to the
                  Purchased Business including those assets described in
                  Schedule 1.1(uuuu)(ix);

         (x)      Accounts Receivable, Inventory and all other assets of the
                  Purchased Business disclosed in the Working Capital Statement;

         (xi)     the Timber Tenures and the Environmental Permits;

         (xii)    other Licences and Permits, including those described in
                  Schedule 1.1(k)(iii);

         (xiii)   subject to Applicable Laws, the Coastal Amount of any Quota;

         (xiv)    the business and assets associated with the distribution
                  facilities in China, Japan and Australia described in Schedule
                  1.1(ss)(xvii);

         (xv)     Transferred IP;

         (xvi)    the On-Site Books and Records;

         (xvii)   computer and telephone hardware that are used primarily in and
                  required for the Purchased Business, including the computer
                  and telephone hardware described in Schedule 1.1(uuuu)(xvii);

         (xviii)  the goodwill, customer lists and supplier relationships of the
                  Purchased Business and the exclusive right for the Buyer to
                  represent itself as carrying on the Purchased Business in
                  succession to the Seller, other than all national purchase
                  contracts between the Seller and the various suppliers of
                  goods and/or services as listed in Schedule 1.1(cc);

         (xix)    the Ownership Interests in each of the Acquired Entities;

         (xx)     warranty rights relating to the Purchased Assets against
                  manufacturers or suppliers supplying the Purchased Business;
                  and

         (xxi)    all Claims of the Seller against Third Parties relating to the
                  Purchased Assets, whether choate or inchoate, known or
                  unknown, contingent or non-contingent, except those associated
                  with the Excluded Assets and except those associated with
                  Liabilities other than the Assumed Liabilities;

         but excluding the Excluded Assets;

                                      -22-

<PAGE>

(vvvv)   "PURCHASED BUSINESS" means the Seller's coastal British Columbia
         business and operations as currently conducted (except as this
         definition applies to the definitions of "ABORIGINAL CLAIMS" and
         "ENVIRONMENTAL LIABILITIES", where this definition shall mean as
         conducted at any time), consisting of the harvesting of timber and the
         manufacture and sale of logs, lumber, wood chips, and other wood
         products produced by those operations, including, without limitation,
         the Real Property, the Timber Tenures, the Personal Property Leases,
         three remanufacturing facilities and five sawmills, and any business
         ancillary to any of the foregoing, all (other than the Personal
         Property Leases) as more particularly set out on the map in Schedule
         1.1(vvvv); but for greater certainty, shall not include any business or
         operations (i) related to an Excluded Asset, (ii) conducted on real
         property other than the Real Property or on the lands underlying the
         Timber Tenures, or (iii) which has been sold or otherwise disposed of
         by the Seller to a Third Party prior to the Time of Closing;

(wwww)   "QUOTA" means any quota, export rights, sales rights or similar rights
         or exemptions from duty or constraint imposed or granted by a
         Governmental Authority on participants in the Canadian lumber industry
         in connection with the ongoing softwood lumber dispute between Canada
         and the United States or otherwise;

(xxxx)   "REAL PROPERTY" means the Fee Simple Real Property, the Leased Real
         Property, the Real Property Interests and the Additional Interests;

(yyyy)   "REAL PROPERTY INTERESTS" means all easements, rights of way, licences
         of occupation, permits and other interests in real property that are
         used primarily in the Purchased Business and held by the Seller, other
         than the Leased Real Property;

(zzzz)   "REAL PROPERTY LEASES" has the meaning set out in Section 6.11;

(aaaaa)  "RELEASE" means releasing, spilling, leaking, pumping, pouring,
         emitting, emptying, discharging, injecting, migrating, escaping,
         leaching, disposing, pumping, injecting, dumping, depositing, spraying
         burying, abandoning, incinerating, seeping, placing, or any other
         similar action;

(bbbbb)  "REMEDIATION" means the work, plans, and investigations, including but
         not limited to removal, treatment, isolation, risk assessment and
         management or decontamination of Contaminants, substances, wastes,
         equipment, buildings, structures, appurtenances, land or water,
         necessary to achieve applicable Remediation Standards;

(ccccc)  "REMEDIATION STANDARDS" means the risk-based or numerical remediation
         standards, as elected by the Seller, established pursuant to
         Environmental Laws for the use of the relevant property at the Time of
         Closing, provided that "Remediation Standards" is limited to the
         numerical remediation standards described above if such numerical
         standards are required by a Governmental

                                      -23-

<PAGE>

         Authority for the continued use or operation of the Purchased Assets as
         they are being used at the Time of Closing or to meet the requirements
         of a Government Order or a final court order;

(ddddd)  "SALARIED EMPLOYEES" means the salaried employees identified as such in
         Schedule 1.1(ii);

(eeeee)  "SELLER INDEMNIFIED PARTY" means the Seller and its shareholders,
         directors, officers, employees, agents, representatives, successors and
         assigns;

(fffff)  "SILVICULTURE EXPERT" means KPMG LLP;

(ggggg)  "SPROAT LOT 98 INTERESTS" has the meaning set out in Section 9.20;

(hhhhh)  "TAXES" means all present and future taxes, surtaxes, duties, levies,
         imposts, rates, fees, premiums, assessments, withholdings, dues and
         other charges of any nature imposed by any Governmental Authority,
         including income, profits, capital (including large corporations),
         stumpage, withholding, consumption, sales, use, transfer, goods and
         services or other value-added, excise, customs, anti-dumping,
         countervail, net worth, stamp, registration, franchise, payroll,
         employment, health, education, business, school, property, local
         improvement, development, education development and occupation taxes,
         surtaxes, duties, levies, imposts, rates, fees, assessments,
         withholdings, dues and charges, together with all fines, interest,
         penalties on or with respect to, or in lieu of or for non-collection
         of, those taxes, surtaxes, duties, levies, imposts, rates, fees,
         assessments, withholdings, dues and other charges;

(iiiii)  "TENURE TAKE-BACK" means, with respect to the Timber Tenures, the
         reduction in AAC and area of Crown land under the British Columbia
         Forestry Revitalization Act (as amended);

(jjjjj)  "THIRD PARTY" means a Person that is not a party to this Agreement;

(kkkkk)  "THIRD PARTY CLAIM" means a Claim by a Third Party but excluding any
         Claim by a Person that is not dealing at arm's length with a party to
         this Agreement;

(lllll)  "TIMBER REALLOCATION AGREEMENT" means the agreement dated September 14,
         2004 between the Seller and the Province of British Columbia which sets
         out, amongst other things, the compensation for the Tenure Take-Back
         and the principles under which the Province of British Columbia will
         acquire roads and improvements from the Seller;

(mmmmm)"TIMBER TENURES" means, in respect of the Purchased Business, the rights
         of the Seller or any Affiliate to harvest timber from certain lands
         owned by the Province of British Columbia, all as more particularly set
         out in Schedule 1.1(mmmmm);

                                      -24-

<PAGE>

(nnnnn)  "TIMBERWEST LICENCE" means licence G-4705 dated July 19, 2001 between
         the Seller and Timberwest Forest Company, a partnership (as successor
         to TFL Forest Ltd.) in respect of the portion of Lot 98 more
         particularly described in the licence;

(ooooo)  "TIME OF CLOSING" means 9:00 a.m. (Vancouver time) on the Closing Date
         or such other time as the parties agree;

(ppppp)  "TRANSFER ARRANGEMENT" means an arrangement with the Ministry of
         Forests for the payment to the Province of British Columbia of all
         money required to be paid to the government in relation to the Timber
         Tenures under the circumstances set out in subsection 130 (1.1) of the
         Forest Act (British Columbia) arising on or before the Closing Date;

(qqqqq)  "TRANSFERRED EMPLOYEES" means Employees who accept an offer of
         employment from the Buyer;

(rrrrr)  "TRANSFERRED IP" means the Intellectual Property owned by the Seller
         and used exclusively in the Purchased Business as of the Closing Date,
         and all of the Seller's Intellectual Property therein, but excluding:
         (i) all domain names, trademarks and trade- names owned by Seller, and
         all goodwill associated with such names; and (ii) all copyrightable
         subject matter and trade dress in advertising, promotional materials,
         marketing brochures, pamphlets, store display, product wraps and
         website content owned by the Seller;

(sssss)  "TRANSITIONAL SERVICES AGREEMENT" means the Transitional Services
         Agreement to be entered into between the Seller and the Buyer on the
         Closing Date, substantially in the form set forth in Schedule
         1.1(sssss); will provide for the provision, on commercially reasonable
         terms, of administrative (including accounting and IT) services on an
         18 month, interim basis;

(ttttt)  "UNION EMPLOYEES" means the Employees that are subject to the
         Collective Agreements;

(uuuuu)  "VOTING SECURITIES" means securities with capital stock of any class of
         any corporation, partnership units in the case of a partnership,
         membership interests in the case of a limited liability company, trust
         units in the case of a trust, interest in a joint venture or other
         evidence of ownership serving similar purposes, in each case, carrying
         voting rights under all circumstances; and

(vvvvv)  "WORKING CAPITAL STATEMENT" means a statement of the Net Working
         Capital as at the Time of Closing, calculated using the principles and
         procedures set forth in this Agreement, together with a report provided
         by KPMG LLP on specified procedures carried out by them in the form set
         out in Schedule 1.1(vvvvv).

1.2      KNOWLEDGE OF THE SELLER

Any statement in this Agreement expressed to be made to "the Seller's knowledge"
and any other references to the knowledge of the Seller shall be understood to
be made on the basis of the

                                      -25-

<PAGE>

Seller's actual knowledge, which means the actual knowledge, after conducting
reasonably diligent investigation considering the existence of the relevant fact
or other matter, of any of:

            Brian Corrall
            Anne Giardini
            Tom Holmes
            Scott Marshall
            Sandy McDade
            Craig Neeser
            Alex Shorten
            Charles Smith
            Ken Young
            Richard Young

For greater clarity, reasonably diligent investigation shall not be deemed to
include any requirement to conduct any new environmental site assessment, audit
or study or to make enquiries of Third Parties. Each party hereto acknowledges
that no personal liability will attach to any of the individuals described above
as a result of a breach of any representation or warranty in this Agreement, and
in particular, as a result of such representation or warranty having been
qualified by the phrase "the Seller's knowledge" or any phrase or expression
having a similar effect or as otherwise contemplated in this Section 1.2.

1.3      CURRENCY

Unless otherwise indicated, all dollar amounts in this Agreement are expressed
in Canadian dollars and all payments shall be made in Canadian dollars.

1.4      ARTICLES, SECTIONS AND HEADINGS

The division of this Agreement into articles, sections and subsections and the
insertion of headings are for convenience of reference only and shall not affect
the interpretation of this Agreement. Unless otherwise indicated, any reference
in this Agreement to an article, section, subsection or Schedule refers to the
specified article, section or subsection of or Schedule to this Agreement.

1.5      NUMBER, GENDER AND PERSONS

In this Agreement, words importing the singular number only shall include the
plural and vice versa, words importing gender shall include all genders and
words importing persons shall include individuals, corporations, partnerships,
associations, trusts, unincorporated organizations, governmental bodies and
other legal or business entities of any kind whatsoever.

1.6      ACCOUNTING TERMS AND DEFINITIONS

Unless otherwise specified herein or in a Schedule hereto, all accounting terms
used herein shall be interpreted and all accounting determinations hereunder
shall be made in accordance with GAAP, consistently applied with prior periods.
For greater certainty, the determination of whether a particular financial
disclosure, presentation or result is in accordance with GAAP shall

                                      -26-

<PAGE>

be determined as a whole, and not as to whether any specific item or number has
been prepared in accordance with GAAP.

1.7      ENTIRE AGREEMENT

Other than the confidentiality agreement entered into by the parties on October
28, 2004, which shall continue in full force and effect, this Agreement
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements, understandings, negotiations
and discussions, whether written or oral.

1.8      TIME OF ESSENCE

Time shall be of the essence of this Agreement. Unless otherwise specified,
references to time of day or date mean local time or date in the City of
Vancouver, British Columbia.

1.9      APPLICABLE LAW

This Agreement shall be construed, interpreted and enforced in accordance with,
and the respective rights and obligations of the parties shall be governed by,
the laws of the Province of British Columbia and the federal laws of Canada
applicable therein and the parties hereby attorn to the jurisdiction of the
courts of the Province of British Columbia.

1.10     SUCCESSORS AND ASSIGNS

This Agreement shall enure to the benefit of and shall be binding on and
enforceable by the parties and, where the context so permits, their respective
successors (including any successor by reason of the amalgamation of any party)
and permitted assigns.

1.11     ASSIGNMENT

   (a)   The Seller may not assign any of its rights or obligations under this
         Agreement without the prior written consent of the Buyer. Except as set
         out below, the Buyer may not assign any of its rights or obligations
         under this Agreement without the prior written consent of the Seller.
         The Buyer may assign all or a portion of its rights and obligations
         hereunder to a corporation, partnership (including a limited
         partnership) or trust that is, directly or indirectly, wholly owned by
         the Buyer or Brascan Corporation, provided that:

         (i)   the assignee has delivered to the Seller a duly executed notice
               that it has become an assignee as permitted by this Section 1.11,
               and acknowledging that it is bound by the terms of this Agreement
               to the extent of such assignment;

         (ii)  the Buyer or Brascan Corporation, as the case may be, has entered
               into an agreement with the Seller pursuant to which the Buyer or
               Brascan Corporation, as the case may be, covenants that it will
               not sell or otherwise dispose of its interest in the assignee, or
               sell, dispose of, or otherwise cease to wholly own the assignee
               prior to Closing or permit the

                                      -27-

<PAGE>

               assignee to assign any of its rights under this Agreement, or
               agree to do any of the foregoing or grant any option or right to
               any Person with respect to the foregoing, or announce its
               intention to do any of the foregoing with respect to any
               particular Person (each of which is referred to herein as a
               "Disposition Event"), without first obtaining the written consent
               of the Seller to such Disposition Event, which consent may not be
               unreasonably withheld;

         (iii) if the assignee acquires all or substantially all of the Fee
               Simple Real Property (other than the Mill Property), it agrees
               with the Seller to deliver, on Closing, the Post- Closing
               Guarantee; and

         (iv)  the Buyer has covenanted in writing with the Seller that the
               assignee's obligations in respect of Closing are covered by the
               Closing Guarantee.

A withholding of consent by the Seller to a Disposition Event shall be deemed to
be unreasonable if the Buyer establishes that:

         (v)   the Disposition Event will not materially increase the risk that
               any or all of the conditions to Closing contained in Sections
               12.1 and 12.2 will not be met, and will not materially delay the
               completion of the Purchase beyond the date the Closing could
               reasonably be expected to occur in the absence of such
               Disposition Event, including for this purpose that the time
               required to meet the conditions to Closing set out in Sections
               12.1(k), 12.2(f), 12.2(g) and 12.2(h) will not be materially
               increased as the result of the Disposition Event;

         (vi)  after completion of the Disposition Event and the Closing, the
               entity that will beneficially own all or substantially all of the
               Fee Simple Real Property (other than the Mill Property) will be
               the guarantor under the Post-Closing Guarantee, and that entity
               has agreed with the Seller that any subsequent assignee or
               transferee of, or successor in interest to, all or substantially
               all of the Fee Simple Real Property will be required to assume
               the guarantor's obligations under the Post-Closing Guarantee.

   (b)   Prior to the sixth anniversary of the Closing Date, the Buyer shall not
         transfer or assign (whether by agreement, operation of law or
         otherwise) all or substantially all of its interest in the Fee Simple
         Real Property (other than the Mill Property) without the Seller's
         written consent (which right to consent may be exercised in its
         absolute discretion) unless the transferee, assignee or successor in
         interest:

         (i)   grants or assumes the Post-Closing Guarantee; and

         (ii)  has given the Seller a covenant substantially similar to that
               contained in this Section 1.11(b).

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<PAGE>

1.12     SEVERABILITY

Each provision of this Agreement is hereby declared to be separate, severable
and distinct. If any provision of this Agreement is determined to be invalid,
illegal or unenforceable in any respect, the remainder of this Agreement shall
not be affected thereby and shall be applied and construed as if such invalid,
illegal or unenforceable provision had been omitted unless such provision or
provisions are so material that its or their invalidity, illegality or
unenforceability would materially change the transactions contemplated hereby so
as to make them unreasonable and contrary to the intentions of the parties.

1.13     CONFLICT

If there is a conflict between any provision of this Agreement and any provision
of any other document contemplated by or delivered under or in connection with
this Agreement, the relevant provision of this Agreement is to prevail, unless
such other document expressly states that it prevails over this Agreement.

1.14     AMENDMENTS AND WAIVERS

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

1.15     SCHEDULES

The Schedules listed in Schedule 1.15 are attached to and form part of this
Agreement.

During the Interim Period, the Seller will continue to operate the Purchased
Business in the normal course and may, with the Buyer's consent (which may not
be unreasonably withheld), amend, modify or add to the existing information
contained in the Schedules to this Agreement to include new information arising
out of ongoing operations and not in existence at the time of execution and
delivery of this Agreement; provided that such new, amended or modified
information is not material with respect to the operation of the Purchased
Business or the value of the Purchased Assets.

1.16     STATUTORY REFERENCES

Unless otherwise stated herein, any reference to a statute includes all
regulations made under that statute and includes all amendments made to the
statute and the regulations in force from time to time, and any statute or
regulation that supplements or replaces that statute or regulation.

1.17     PERFORMANCE ON HOLIDAYS

If any action is required to be taken pursuant to this Agreement on or by a
specified date, which is not a Business Day, then such action will be valid if
taken on or by the next succeeding Business Day.

                                      -29-

<PAGE>

1.18     INTEREST

Any amount owed by one party to another party hereunder that is not paid when
due, will bear interest until paid at a rate per annum equal to the Prime Rate
plus 1%, compounded monthly on the last Business Day of each month, both before
and after default and judgment, with interest on overdue interest at the same
rate.

2.       PURCHASE AND SALE OF PURCHASED ASSETS

2.1      PURCHASED ASSETS

Subject to the provisions of this Agreement, the Seller hereby agrees to sell,
assign and transfer to the Buyer and the Buyer hereby agrees to purchase,
acquire and accept from the Seller, effective as of the Time of Closing, as a
going concern, all of the Purchased Assets.

2.2      EXCLUDED ASSETS

The Excluded Assets shall be excluded from and shall not be included in or
comprise part of the Purchased Assets.

2.3      GRANT OF LICENCES

   (a)   The Buyer, effective on Closing, hereby grants to the Seller a
         fully-paid, royalty free, worldwide, perpetual, and non-exclusive
         licence to use the Transferred IP, and to make, have made and use
         Modifications to the Transferred IP. Any Modifications made by the
         Seller after the Time of Closing to the Transferred IP shall be the
         exclusive property of the Seller.

   (b)   The Seller, effective on Closing, hereby grants to the Buyer a
         fully-paid, royalty free, worldwide, perpetual, and non-exclusive
         licence to use the Licensed IP, and to make, have made and use
         Modifications to the Licensed IP. Any Modifications made by the Buyer
         to the Licensed IP after the Time of Closing shall be the exclusive
         property of the Buyer.

2.4      THIRD PARTY CONSENTS

The Seller hereby declares that with respect to any Purchased Asset or interest
in any Purchased Assets intended to be sold, conveyed, assigned, granted,
transferred or set over to the Buyer by this Agreement, the unencumbered title
to which may not have passed the Buyer by virtue of this Agreement because the
interest is not assignable without the consent of any Person or satisfaction of
a condition imposed by Applicable Law or by any Governmental Authority or legal
right in favour of any Person, the Seller shall hold the same in trust for the
Buyer and shall forthwith sell, convey, grant, assign, transfer and set over the
same to the Buyer upon the required consent being obtained or satisfaction of
any other applicable condition. Until such time, the Seller shall to the extent
reasonably necessary, at the request and consent of the Buyer, perform all
obligations with respect to the Purchased Assets in the name of the Buyer and
all benefits derived therefrom and costs relating thereto shall be for the
account of the Buyer.

                                      -30-
<PAGE>

2.5 TIMBER REALLOCATION AGREEMENT

That portion of the Timber Reallocation Agreement that relates to the Purchased
Business shall be assigned by the Seller to the Buyer at the Closing, however
the rights, benefits and obligations of the Seller and the Buyer under the
assigned portion of the Timber Reallocation Agreement will be apportioned as
between the Buyer and Seller as follows:

      (a)   compensation in respect of the Tenure Take-Back, as described in
            Sections 8 and 9 of the Timber Reallocation Agreement, will be for
            the benefit of the Seller;

      (b)   compensation in respect of the right of the Province of British
            Columbia to expropriate or use roads or facilities, as described in
            Section 3 of the Timber Reallocation Agreement on Real Property,
            will be for the benefit of the Buyer;

      (c)   compensation under Section 4 of the Timber Reallocation Agreement in
            respect of roads, improvements and soft costs relating to those
            lands identified by the Province of British Columbia as Tenure
            Take-Back lands as of the date of this Agreement on the map attached
            as Schedule 1.1(vvvv) for the British Columbia Timber Sales Program
            under the Forest Act will be for the benefit of the Seller;

      (d)   compensation under Section 4 of the Timber Reallocation Agreement in
            respect of roads, improvements and soft costs, other than those
            described in paragraph (c), will be for the benefit of the Buyer;
            and

      (e)   the Seller will be responsible for any Liabilities to the Province
            of British Columbia arising under the Timber Reallocation Agreement
            in respect of roads, facilities or soft costs:

            (i)   for which the Seller was compensated under the Timber
                  Reallocation Agreement; and

            (ii)  for which the Buyer was compensated under the Timber
                  Reallocation Agreement to the extent that Liabilities exceed
                  the amount of compensation received by the Buyer for the road,
                  facilities, or soft costs in respect of which the Liability
                  arose except with respect to any Environmental Conditions
                  which occurred or came into existence after the Time of
                  Closing for which the Buyer will be responsible and except
                  that the Buyer shall also be responsible for all other
                  Liabilities that arise in connection with events or
                  circumstances occurring after the Time of Closing or that
                  would otherwise be limited by Section 14.10(b).

2.6 QUOTA

If after the Closing Date the Seller becomes entitled to any Quota, then the
Seller will, subject to Applicable Laws, transfer the Coastal Amount of that
Quota to the Buyer at no additional cost to the Buyer. However, the Buyer
acknowledges and agrees that if the Buyer receives or becomes entitled to any
Quota after or as a result of acquiring the Purchased Business which is based on
the criteria for determination of Quota relating to the Purchased Business for
the time before

                                      -31-
<PAGE>

Closing and which, if an equivalent amount of that Quota is included in the
Coastal Amount of any Quota, would in effect result in the Buyer benefiting
twice or to some extent greater than what is due for the time before Closing,
the equivalent amount of that portion of the Quota is not included in and will
be deducted from the Coastal Amount of any Quota and, if it is or has at that
time already been transferred by the Buyer to the Seller, will be transferred by
the Buyer back to the Seller. The Seller shall use its commercially reasonable
efforts in its dealings with Governmental Authorities, to ensure that the
Coastal Amount of the Quota is allocated by such Governmental Authority to the
Buyer in the first instance. If the Seller is prevented by Applicable Laws from
transferring the Coastal Amount of the Quota to the Buyer, then the Seller and
the Buyer shall discuss, in good faith, ways in which the Seller may be able to
provide the Buyer with the benefit of the Coastal Amount of the Quota.

3. PURCHASE PRICE

3.1 PURCHASE PRICE

The aggregate purchase price (the "PURCHASE PRICE") payable by the Buyer to the
Seller for the Purchased Assets shall be $1,221,500,000 (as adjusted by Section
3.12(b)), plus the Net Working Capital and the amount of the Assumed Liabilities
(other than the Forestry Liabilities) and adjusted as described herein by the
Purchase Price Adjustment. Any amount payable (or receivable) by either party
pursuant to any of Sections 3.4, 3.6, 3.7, 3.12(b), 3.13, 3.14, 3.15, or 9.3
shall be a decrease or increase, as the case may be, in the Purchase Price. All
amounts payable under Sections 9.19 or 9.20 shall be satisfied by crediting a
portion of the Purchase Price thereto.

3.2 PAYMENT OF PURCHASE PRICE

The Purchase Price shall be paid and satisfied as follows, subject to the
provisions of this Agreement:

      (a)   as to the amount of $1,221,500,000, plus the Net Working Capital
            Estimate, by wire transfer to the bank account of the Seller at the
            Time of Closing;

      (b)   as to any Purchase Price Adjustment, in accordance with Sections
            3.4, 3.6, 3.7, 3.12(b), 3.13, 3.14, 3.15 and 9.3 herein; and

      (c)   by the Buyer assuming the Assumed Liabilities (other than the
            Forestry Liabilities), at the Time of Closing as provided in Section
            5.1.

3.3 REFORESTATION PAYMENTS

The Seller shall pay by wire transfer to the bank account of the Buyer, at the
Time of Closing the amount specified in the Forestry Liabilities Statement
delivered on the Closing Date, which amount is to be paid by the Seller to the
Buyer in consideration for the Buyer assuming the Forestry Liabilities at the
Time of Closing.

                                      -32-
<PAGE>

3.4 WORKING CAPITAL STATEMENT

On or promptly after the Closing Date, the Seller and the Buyer shall jointly
conduct an evaluation of the Net Working Capital as at the Time of Closing.
Within sixty days of the Closing Date, the Seller shall deliver to the Buyer the
Working Capital Statement in draft form (the "Draft Working Capital Statement")
together with advice from KPMG LLP that they have completed their review
procedures and, upon approval of the Draft Working Capital Statement will
deliver its opinion in the form set out in Schedule 1.1(vvvvv). For the purpose
of preparing the Draft Working Capital Statement, the Buyer agrees to grant the
Seller's authorized representatives reasonable access to relevant records,
facilities and personnel of the Buyer. The Seller shall provide the Buyer and
the Buyer's representatives with all cooperation and supporting audit working
papers as they may reasonably require to enable them to review the Draft Working
Capital Statement. The Buyer shall have a period of thirty days from the date it
receives the Draft Working Capital Statement from the Seller in which to review
the Draft Working Capital Statement, and:

      (a)   APPROVAL OF WORKING CAPITAL STATEMENT - if no objection to the Draft
            Working Capital Statement is given to the Seller by the Buyer within
            that thirty day period, the Draft Working Capital Statement shall be
            deemed to have been approved as of the last day of that thirty day
            period or, if the Buyer gives notice to the Seller that it approves
            the Draft Working Capital Statement, on the date that notice is
            given. Upon approval or deemed approval, the Seller will deliver to
            the Buyer the final Working Capital Statement including the auditors
            report.

      (b)   OBJECTION TO WORKING CAPITAL STATEMENT - if the Buyer objects to the
            Draft Working Capital Statement within that thirty day period by
            giving notice to the Seller setting out in reasonable detail the
            nature of the objection, the parties agree to attempt to resolve the
            matters in dispute within thirty days from the date the Buyer gives
            the notice to the Seller. If all matters in dispute are resolved by
            the parties, the Draft Working Capital Statement shall be modified
            to the extent required to give effect to that resolution and shall
            be deemed to have been approved as of the date of that modification.
            Upon resolution, the Seller will deliver to the Buyer the final
            Working Capital Statement including auditors report.

      (c)   RESOLUTION BY FINANCIAL EXPERT - If the parties cannot resolve all
            matters in dispute within the thirty day period, all unresolved
            matters shall be submitted to the Financial Expert for resolution,
            and the Financial Expert shall be given access to all materials and
            information reasonably requested by it for that purpose and will be
            provided with all other materials or submissions as either party
            considers to be relevant, acting reasonably. The Financial Expert
            will act as an expert and not as an arbitrator. As promptly as
            practicable, the Financial Expert will deliver a written report to
            the parties setting forth its opinion as to the resolution of the
            matters in dispute. The Financial Expert's opinion of all of the
            matters in dispute shall be final and binding on both parties absent
            error and shall not be subject to appeal by either party absent
            error. The fees and expenses of the Financial Expert shall be borne
            equally by the parties. The Draft Working Capital Statement shall

                                      -33-
<PAGE>

            be modified to the extent required to give effect to the Financial
            Expert's opinion and shall be deemed to have been approved as of the
            date of that modification.

Once the Working Capital Statement has been deemed to have been approved or
approved by the Buyer or determined by the Financial Expert:

      (d)   ADJUSTMENT PAYMENT BY THE SELLER - if the Net Working Capital is
            less than the Net Working Capital Estimate the Seller shall pay to
            the Buyer as a reduction of that portion of the Purchase Price
            allocated to Net Working Capital the Net Working Capital Adjustment
            on the tenth Business Day following the date on which the Working
            Capital Statement has been approved or determined by the Financial
            Expert; or

      (e)   ADJUSTMENT PAYMENT BY THE BUYER - if the Net Working Capital is more
            than the Net Working Capital Estimate, the Buyer shall pay to the
            Seller as an increase in that portion of the Purchase Price
            allocated to Net Working Capital the amount of the Net Working
            Capital Adjustment on the tenth Business Day following the date on
            which the Working Capital Statement has been approved or determined
            by the Financial Expert;

subject to any set-offs of the above payments that may be agreed to by the
parties.

3.5 FORESTRY LIABILITIES ADJUSTMENT

The Seller shall deliver to the Buyer the Forestry Liabilities Statement on the
Closing Date. The Buyer shall have a period of ninety days from the date it
receives the Forestry Liabilities Statement from the Seller in which to review
the Forestry Liabilities Statement, and:

      (a)   APPROVAL OF FORESTRY LIABILITIES STATEMENT - if no objection to the
            Forestry Liabilities Statement is given to the Seller by the Buyer
            within that ninety day period, the Forestry Liabilities Statement
            shall be deemed to have been approved as of the last day of that
            ninety day period or, if the Buyer gives notice to the Seller that
            it approves the Forestry Liabilities Statement, on the date that
            notice is given.

      (b)   OBJECTION TO FORESTRY LIABILITIES STATEMENT - if the Buyer objects
            to the Forestry Liabilities Statement within that ninety day period
            by giving notice to the Seller setting out in reasonable detail the
            nature of the objection, the parties agree to attempt to resolve the
            matters in dispute within thirty days from the date the Buyer gives
            the notice to the Seller. If all matters in dispute are resolved by
            the parties, the Forestry Liabilities Statement shall be modified to
            the extent required to give effect to that resolution and shall be
            deemed to have been approved as of the date of that modification. If
            the parties cannot resolve all matters in dispute within the thirty
            day period, all unresolved matters shall be submitted to the
            Silviculture Expert for resolution, and the Silviculture Expert
            shall be given access to all materials and information reasonably
            requested by it for that purpose and will be provided with all other
            materials or submissions as either party considers to be relevant,
            acting reasonably. The Silviculture Expert will act as an

                                      -34-
<PAGE>

            expert and not as an arbitrator. The Silviculture Expert will only
            make a determination as to whether the Forestry Liabilities
            Statement has been prepared in accordance with the principles set
            out in Schedule 1.1(yy), and shall not impose his or her own views
            as to the appropriate valuation principles to apply. As promptly as
            practicable, the Silviculture Expert will deliver a written report
            to the parties setting forth its opinion as to the resolution of the
            matters in dispute. Absent manifest error, the Silviculture Expert's
            opinion of all of the matters in dispute shall be final and binding
            on both parties and shall not be subject to appeal by either party.
            The fees and expenses of the Silviculture Expert shall be borne
            equally by the parties. The Forestry Liabilities Statement shall be
            modified to the extent required to give effect to the Silviculture
            Expert's opinion and shall be deemed to have been approved as of the
            date of that modification.

Once the Forestry Liabilities Statement has been deemed to have been approved or
approved by the Buyer or determined by the Silviculture Expert:

      (c)   ADJUSTMENT PAYMENT BY THE SELLER - if the amount paid to the Buyer
            under Section 3.3 is less than the amount determined by the
            Silviculture Expert, the Seller shall pay to the Buyer the
            difference on the tenth Business Day following the date on which the
            modified Forestry Liabilities Statement has been approved or
            determined by the Silviculture Expert; or

      (d)   ADJUSTMENT PAYMENT BY THE BUYER - if the amount paid to the Buyer
            under Section 3.3 is more than the amount determined by the
            Silviculture Expert, the Buyer shall pay to the Seller the
            difference on the tenth Business Day following the date on which the
            modified Forestry Liabilities Statement has been approved or
            determined by the Silviculture Expert.

subject to any set-offs of the above payments that may be agreed to by the
parties.

3.6 CAPITAL EXPENDITURE ADJUSTMENT

The Seller shall make the maintenance expenditures and the mutually agreed
capital expenditures in the capital plan and budget described in Schedule 3.6
(the "CAPITAL PLAN") during the Interim Period in accordance with the Capital
Plan. If the Seller does not make the maintenance expenditures and the mutually
agreed capital expenditures in the Capital Plan during the Interim Period, the
parties will reduce the Purchase Price by an amount equal to the difference
between the amount shown in the Capital Plan and the amount actually expended.
Amounts in respect of any partial month in the Interim Period will be prorated
to the number of days from that month in the Interim Period.

The Buyer shall have 60 days following the Closing to send the Seller notice
that the maintenance expenditures and/or the mutually agreed capital
expenditures required by the Capital Plan during the Interim Period have not
been made and setting out the amount. The Seller shall have 30 days from the
receipt of that notice to object to its contents and if no objection is made by
the Seller within that period, the Seller will be deemed to have accepted the
Buyer's notice. The Seller shall pay to the Buyer within 10 Business Days of the
deemed

                                      -35-
<PAGE>

acceptance or final resolution of the difference between the Seller's actual
expenditures and the amount set out in the Capital Plan.

3.7 ROADS AND LOSS OF TIMBER

      (a)   The Seller shall carry out road construction on the Real Property
            and Timber Tenures during the Interim Period in accordance with
            Schedule 3.7(a). If the Seller does not expend the amounts shown in
            Schedule 3.7(a) during the Interim Period, the Parties will reduce
            the Purchase Price by an amount equal to the difference between the
            amount shown in Schedule 3.7(a) and the amount actually expended.
            Amounts in respect of any partial month in the Interim Period will
            be prorated to the number of days from that month in the Interim
            Period.

            The Buyer shall have 60 days following the Closing to send the
            Seller notice that the road construction expenditures required of
            the Seller during the Interim Period have not been made and setting
            out the amount. The Seller shall have 30 days from receipt of that
            notice to object to its content and if no objections are made by the
            Seller within that period, the Seller will be deemed to have
            accepted the Buyer's notice. The Seller shall pay to the Buyer
            within 10 Business Days of the deemed acceptance or final resolution
            of the difference between the Seller's actual expenditures and the
            amount required in accordance with Schedule 3.7(a).

      (b)   The parties acknowledge that losses of timber may occur during the
            Interim Period as a result of, but not limited to:

            (i)   theft, fire, flood, storm, wind, war, sabotage, insurrection,
                  natural disaster, disease, insects or any other casualty;

            (ii)  acts of Governmental Authorities; or

            (iii) unauthorized timber harvest by Third Parties.

            In the event of any such loss during the Interim Period in excess of
            $500,000 as determined by the Destruction Value Table set out in
            Schedule 3.7(b), the parties agree to adjust the Purchase Price, for
            the amount in excess of $500,000, at Closing based upon the
            Destruction Value Table. In no event shall the cumulative
            adjustments for the matters described in this Section 3.7 exceed 20%
            of the Purchase Price.

3.8 ALLOCATION OF PURCHASE PRICE

The Seller and the Buyer agree to allocate the Purchase Price among the
Purchased Assets in accordance with Schedule 3.8 and, for greater certainty, the
Purchase Price allocated to an Ownership Interest in an Acquired Entity shall
include the Net Working Capital of that Acquired Entity. The Seller and the
Buyer agree that the values so attributed to the Purchased Assets are the
respective fair market values thereof, and each party shall report the sale and
purchase of the Purchased Assets for all federal, provincial, state and local
tax purposes in mutually agreeable form and in a manner consistent with such
allocation. Each party will promptly notify the other

                                      -36-
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if it receives notice that a taxing authority proposes any allocation that is
different from the allocation in Schedule 3.8.

3.9 ADJUSTMENTS

To the extent not included in Net Working Capital or otherwise dealt with in
this Agreement, all adjustments relating to the Fee Simple Real Property and
Timber Tenures, both incoming and outgoing, including without limitation annual
rents, property taxes, local improvement charges, utilities, deposits and
interest thereon, if any, and all other similar matters customarily pro-rated in
the sale of real property shall be pro-rated between the parties as of the
Closing Date, so that the Seller shall bear and pay all such expenses in respect
of the period before the Closing Date and the Buyer shall bear all expenses in
respect of the period on and after the Closing Date.

3.10 DEPOSIT

      (a)   Upon execution of this Agreement, the Buyer shall deposit in escrow
            with the Escrow Agent the Deposit, which amount shall be held by the
            Escrow Agent in escrow in an interest bearing account. At the
            Closing, the Deposit shall, at the Seller's election, either be
            credited against the Purchase Price or returned to the Buyer.

      (b)   If the Buyer fails to consummate the purchase of the Purchased
            Business when it is otherwise obligated to do so hereunder, then the
            Deposit shall be paid over to the Seller, the same being agreed upon
            as liquidated damages for such failure. The Seller agrees to accept
            and take the Deposit as its total damages and relief and as the
            Seller's sole and exclusive remedy hereunder. The parties agree and
            acknowledge that:

            (i)   the Seller would suffer damages by reason of a failure of this
                  transaction to close;

            (ii)  the exact amount of such damages would be difficult to
                  ascertain and to prove with certainty;

            (iii) the Deposit constitutes a fair and reasonable estimate of the
                  actual damages the Seller would suffer; and

            (iv)  the parties have negotiated and attempted, in good faith, to
                  estimate the amount of such damages and to compensate the
                  Seller therefore as set forth herein.

3.11 REDEEMABLE SHARES

Notwithstanding Section 3.2(a), the Seller agrees to accept as payment for the
amount of the Purchase Price allocated to the purchase of Purchased Assets in
respect of which PST is exigible the issuance by the Buyer to the Seller of
redeemable preferred shares ("PREFERRED SHARES") having a redemption price equal
to the amount of the Purchase Price so allocated; and the Buyer agrees to
advance to the Seller at the Closing as an interest-free loan an amount equal to
such

                                      -37-
<PAGE>

allocated amount of the Purchase Price and recourse of the Buyer against the
Seller under such loan shall be limited to the Preferred Shares. The Seller
agrees not to redeem the Preferred Shares until at least eight months and one
day after the Closing Date. Upon redemption of such Preferred Shares by the
Seller, the redemption price thereof may be set off by the Buyer against the
amount of such loan outstanding. The Seller has the right to redeem the
Preferred Shares at any time that is at least eight months and one day after
Closing by way of set-off against the full amount of the interest free loan from
the Buyer to the Seller. The Buyer agrees to indemnify the Seller for all costs
and Liabilities to the Seller with respect to this arrangement.

3.12 PRE-CLOSING TRANSACTIONS

      (a)   During the Interim Period, the Seller, at its sole discretion, may
            undertake any of the transactions described in Schedule 3.12.

      (b)   If the amount of a debt owing by an Acquired Entity to the Seller
            arising from a transaction described in Schedule 3.12 exceeds the
            net working capital of the Acquired Entity without taking into
            account such debt (an "Excess") then (i) $1,221,500,000 shall be
            reduced by the aggregate of each such Excess and (ii) the related
            portion of the Purchase Price allocated on Schedule 3.8 to the
            Ownership Interest in each such Acquired Entity shall be reduced by
            such Excess.

3.13 REAL ESTATE SALES ADJUSTMENT

If the Seller enters into one or more executed purchase and sale agreements with
Third Parties in respect of Real Property that have closed prior to the Closing
Date or that are still in effect as of the Closing Date, the Purchase Price
shall be reduced by:

      (a)   if the sale(s) is in respect of Real Property other than a Permitted
            Sale, 90% of the proceeds from the disposition for all such sales;
            or

      (b)   if the sale(s) is in respect of Real Property which is a Permitted
            Sale, by 90% of the amount that the proceeds of the disposition for
            all such sales exceeds $18 million multiplied by the number of days
            from January 1, 2005 to the Closing Date divided by 365.

3.14 ACQUIRED ENTITIES ADJUSTMENT

In the event that, as a result of the exercise of any right to purchase held by
a Third Party, the Seller is unable to deliver any Ownership Interest, the
Purchase Price shall be reduced by the purchase price paid or payable to the
Seller, upon the exercise of that right by the Third Party.

3.15 RFR LANDS

The Seller shall take all steps required by the applicable right of first
refusal to permit the Seller to transfer to the Buyer fee simple title to the
properties subject to the right(s) of first refusal in favour of a Third Party
registered under No. EM52257 and No. ED2363. If the applicable Third Party does
not exercise the right of first refusal then the property subject to the right
of first refusal shall form part of the Fee Simple Real Property and shall be
transferred to the Buyer on

                                      -38-
<PAGE>

Closing. If the Third Party exercises the right of first refusal then the
Purchase Price shall be reduced by the purchase price paid or payable to the
Seller. The Buyer shall take all reasonable steps to cooperate and assist the
Seller with respect to the Seller's obligations under this Section.

4. TAX MATTERS

4.1 SALES TAX

      (a)   The Seller hereby represents that it is duly registered for the
            purpose of the GST under number 103440624RT0001.

      (b)   The Buyer hereby represents that it is duly registered for the
            purpose of the GST under number 856513833RT0001.

      (c)   The Buyer and the Seller shall, on the Closing Date, elect jointly
            under section 167(1)(b) of the ETA, in the prescribed form and
            containing the prescribed information to permit the Purchased Assets
            to be conveyed without GST being payable with respect to the
            purchase and sale thereof hereunder. The Buyer and the Seller shall
            jointly complete the election forms with respect to such elections
            and the Buyer covenants to file the said election forms no later
            than the due date for the Buyer's GST return for the first reporting
            period in which GST would, in the absence of such elections, become
            payable in connection with the transactions contemplated by this
            Agreement and provide the Seller with a copy of such filing.

      (d)   The Buyer shall deliver to the Seller, and the Seller shall collect
            from the Buyer on Closing, the amount of the PST imposed on the
            Buyer with respect to the sale and purchase of the Purchased Assets
            under this Agreement, except where the Buyer is required to pay such
            PST directly to a Governmental Authority in connection with the
            registration of the transfer of assets. The Seller shall remit the
            full amount of the PST collected from the Buyer and file the
            appropriate return with the applicable taxation authorities in
            respect thereof. The parties agree that the Buyer will not require
            the Seller to comply, or to assist the Buyer to comply, with the
            provisions of Section 99 of the Social Service Tax Act (British
            Columbia) which requires the Buyer to obtain a clearance certificate
            with respect to the bulk sale of assets, applicable to the purchase
            and sale of the Purchased Assets pursuant to this Agreement.
            Notwithstanding the foregoing, the Seller hereby agrees to
            compensate, indemnify, defend and hold harmless the Buyer for, from
            and against all Claims that may be made or brought against the Buyer
            and Losses that the Buyer may suffer or incur as a result of, or in
            connection with, such non-compliance with Section 99 of the Social
            Service Tax Act.

4.2 TRANSFER TAXES

The Buyer shall be liable for and shall pay all federal, provincial and state
sales taxes (including any GST, PST, sales taxes and land transfer taxes) and
all other Taxes (other than income taxes) and registration fees of any
jurisdiction properly payable in connection with the transfer of the Purchased
Assets by the Seller to the Buyer. Without limiting the generality of the
foregoing,

                                      -39-
<PAGE>

the parties shall claim the benefit of any provisions of Applicable Law that
allows all or any part of the Purchased Assets to be transferred by the Seller
to the Buyer without payment of any Tax, including, any exemption for sales tax
relating to production equipment or for goods acquired for resale.

4.3 ELECTIONS

      (a)   The Seller and the Buyer shall execute jointly an election in the
            form prescribed in the Income Tax Act (Canada) to have Section 22 of
            the Income Tax Act (Canada) apply in respect of the transfer of any
            debts included in the Seller's income for purposes of the Income Tax
            Act (Canada) and of any loans made in the ordinary course of the
            Purchased Business.

      (b)   If requested by the Seller, the Seller and the Buyer shall jointly
            elect under subsection 20(24) of the Income Tax Act (Canada) in
            respect of an undertaking of the Seller for which the Seller has
            included an amount in income under paragraph 12(1)(a) of the Income
            Tax Act (Canada) and where such undertaking is being assumed by the
            Buyer.

5. ASSUMPTION OF LIABILITIES

5.1 ASSUMPTION OF CERTAIN LIABILITIES BY THE BUYER

Subject to the provisions of this Agreement, the Buyer hereby agrees to assume,
and agrees to pay, satisfy, discharge, perform and fulfil the Assumed
Liabilities from and after the Time of Closing. The Buyer shall also be
responsible for all Liabilities with respect to the operations of the Purchased
Business and the ownership of the Purchased Assets arising from and after the
Time of Closing, and shall, in accordance with Article 14, indemnify and hold
harmless the Seller from and against the Assumed Liabilities and all Liabilities
with respect to the operations of the Purchased Business and the ownership of
the Purchased Assets arising from and after the Time of Closing.

5.2 EXCLUDED LIABILITIES

Other than as expressly assumed pursuant to this Agreement, the Buyer shall not
assume any liability other than the Assumed Liabilities, and the Seller shall be
solely responsible for and shall, in accordance with Article 14, indemnify and
hold harmless the Buyer from and against all Liabilities other than the Assumed
Liabilities, provided that the Seller shall not be required to provide any
indemnity to the Buyer in respect of any Liabilities of the Acquired Entities.

5.3 INSURANCE

The Seller's insurance polices do not provide any coverage to the Buyer or to
any entities acquired by the Buyer on or after the Closing. The Buyer will
arrange its own insurance coverage commencing from the Time of Closing with
respect to the Purchased Assets and the Purchased Business including all
property and liability coverage.

                                      -40-
<PAGE>

6. REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller represents and warrants to the Buyer as at the time of execution and
delivery of this Agreement as follows and acknowledges that the Buyer is relying
on the accuracy of each representation and warranty of the Seller set out in
Article 6 in entering into this Agreement. In Sections 6.4 through 6.33
references to the "Seller" shall mean the Seller and the Acquired Entities
(other than Boom Chain Transportation Company Limited, Gulf Log Salvage
Co-Operative Association, Marine Leasing Ltd. and Iisaak Forest Resources Ltd.)
on a consolidated basis.

The Buyer agrees that, notwithstanding that the Seller's representations and
warranties in any Section of this Agreement may refer to a specific Schedule to
this Agreement, the Seller will not be in breach of a representation or warranty
made pursuant to this Agreement if the true facts with respect to the
representation or warranty are disclosed in the Disclosure Letter, in any of the
other Schedules, or directly in the text of this Agreement; provided however,
that the following are exceptions to that general principle:

      (a)   the disclosure of information described in Schedules 10.1
            (Environmental Matters) and 1.1(k)(xiii) (Legal Proceedings) shall
            only act as disclosure in respect of those specific Schedules; and

      (b)   the exceptions to the representations and warranties contained in
            the Schedules referenced in Sections 6.5, 6.6, 6.8, 6.9, 6.15, 6.17,
            6.18 and 6.29 and in the Disclosure Letter, shall be the sole and
            only disclosures with respect to the representation or warranty to
            which the specific Schedule relates.

Except for the representations and warranties of the Seller set out in this
Article 6 and Section 10.1, in executing this Agreement the Buyer relies wholly
upon its own judgment and that of its advisors. The Buyer acknowledges that it
has not been influenced by and is not relying on any representations or
statements regarding any matter made by any Person, except the representations
and warranties of the Seller set out in this Article 6 and Section 10.1.

6.1 ORGANIZATION

The Seller is a corporation duly constituted and organized and validly
subsisting under the laws of Canada and has the corporate power and capacity and
is duly qualified to own or lease its property, to carry on the Purchased
Business as now being conducted by it and to enter into this Agreement and each
of the agreements, documents and instruments to be entered into by the Seller in
connection with this Agreement and to perform its obligations hereunder and
thereunder. The Seller is duly qualified as a corporation to do business in each
jurisdiction in which the nature of the Purchased Business or the Purchased
Assets makes such qualification necessary.

                                      -41-
<PAGE>

6.2 ACQUIRED ENTITIES

With respect to each Acquired Entity at the Closing Time:

      (a)   the Seller will own and have good and marketable title to the
            Ownership Interest in such Acquired Entity set forth in Schedule
            6.2(a) as the legal and beneficial owner thereof, free and clear of
            all Encumbrances other than Permitted Encumbrances;

      (b)   all such Ownership Interests will be outstanding as fully paid and
            non-assessable equity in the capital of each Acquired Entity and
            such equity will be duly and validly issued;

      (c)   any debt duly owing by an Acquired Entity to the Seller will be
            included in the calculation of Net Working Capital, and each such
            debt will be valid and outstanding in accordance with its terms; and

      (d)   except as set out in Schedule 6.2(d), no Person will have any
            agreement or option or any right capable at any time of becoming an
            agreement to:

            (i)   purchase or otherwise acquire the Ownership Interest in, or
                  outstanding debt of the Acquired Entities; or

            (ii)  require the Seller to sell, transfer, assign, pledge, charge,
                  mortgage or in any other way dispose or encumber any of the
                  Ownership Interest or outstanding debt of the Acquired
                  Entities to the Seller, other than pursuant to the terms of
                  this Agreement.

6.3 AUTHORIZATION

Subject to the Approvals required under Schedule 1.1(j), this Agreement and each
of the agreements, documents and instruments of the Seller contemplated hereby
has been or on the Closing Date will have been duly authorized, executed and
delivered by the Seller, and is a legal, valid and binding obligation of the
Seller, enforceable against the Seller by the Buyer in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency and
other Applicable Laws affecting the rights of creditors generally and except
that equitable remedies may be granted only in the discretion of a court of
competent jurisdiction. No other corporate proceedings or approvals on the part
of the Seller or its shareholders are necessary to authorize this Agreement and
each of the agreements, documents and instruments contemplated hereby.

6.4 NO OTHER AGREEMENTS TO PURCHASE

No Person other than the Buyer has any Contract or any right or privilege
(whether by law, pre-emptive or contractual) capable of becoming a Contract for
the purchase or acquisition from the Seller of any of the Purchased Assets or
any material assets of an Acquired Entity, other than in the normal course of
the Purchased Business or as provided in the Permitted Encumbrances or rights of
first refusal in respect of certain Ownership Interests.

                                      -42-
<PAGE>

6.5 NO VIOLATION

Except as described in Schedule 6.5, the execution and delivery of this
Agreement by the Seller and the consummation of the transactions herein provided
for will not result in:

      (a)   the breach or violation of any of the provisions of, or constitute a
            default under, or conflict with or cause or give rise to a right of
            termination, cancellation, loss of rights, purchase or sale rights
            or payment obligations or the acceleration of, any obligation of the
            Seller under:

            (i)   any Material Contract to which the Seller is a party or by
                  which it is or its properties are bound;

            (ii)  any provision of the constating documents or by-laws or
                  resolutions of the board of directors (or any committee
                  thereof) or shareholders of the Seller;

            (iii) any judgment, decree, order or award of any Governmental
                  Authority having jurisdiction over the Seller;

            (iv)  any material Licence or Permit held by the Seller or necessary
                  to the operation of the Purchased Business; or

            (v)   any Applicable Law, which in any event would have a Material
                  Adverse effect on the Purchased Assets or Purchased Business;
                  or

      (b)   the creation or imposition of any Encumbrance (other than a
            Permitted Encumbrance) on any of the Purchased Assets.

6.6 SUFFICIENCY OF PURCHASED ASSETS

Except: (i) as set forth in Schedule 6.6; (ii) as to be set forth in the
Transitional Services Agreement; (iii) the Excluded Assets; and (iv) the assets
to be acquired by the Seller from EDS as a condition of Closing as contemplated
in Section 12.1(l), the Purchased Assets owned, leased or held by the Seller are
sufficient to carry on the Purchased Business in all material respects as it is
presently conducted.

6.7 TITLE TO PERSONAL PROPERTY

Except for assets to be acquired by the Seller from EDS as a condition of
Closing as contemplated in Section 12.1(l), the Purchased Assets (other than the
Real Property or any leased personal property) are owned beneficially by the
Seller with a good and marketable title thereto, free and clear of all
Encumbrances other than Permitted Encumbrances. No other Person owns any assets
that are being used in or necessary for the conduct of the Purchased Business,
except for the Leased Real Property, the Leased Personal Property and the real
property in respect of which the Real Property Interests were granted.

                                      -43-
<PAGE>

6.8 LOCATION OF REAL PROPERTY

Except for the Excluded Assets, Schedule 1.1(uu) sets forth the legal
descriptions of all the real property that is used in the Purchased Business and
of which the Seller is the beneficial or registered owner of the fee simple.
Schedule 1.1(ooo) sets forth the description of all the real property that is
used in the Purchased Business and leased by or to the Seller as lessee.
Schedule 6.8 sets forth the description of all of the real property relating to
the Purchased Business and in respect of which the Seller holds Real Property
Interests.

6.9 TITLE TO REAL PROPERTY

With respect to the Purchased Business, the Seller is not the beneficial or
registered owner of and has not agreed to acquire any real property or any
interest in any real property other than the Real Property. The Seller has the
exclusive right to possess, use and occupy and has good and marketable title to
the Fee Simple Real Property and the Real Property is held by the Seller and
will be conveyed to the Buyer free and clear of all Encumbrances other than
Permitted Encumbrances. Without limiting the generality of the foregoing:

      (a)   all accounts for work and services performed and materials placed or
            furnished upon or with respect to the Real Property at the request
            of the Seller have been fully paid and satisfied, and no Person is
            entitled to claim a lien or any other form of security under any
            applicable construction lien legislation against the Real Property
            or any part thereof, other than current accounts with respect to
            which the payment due date has not yet passed;

      (b)   there is nothing owing with respect to the Real Property by the
            Seller to any municipal corporation or to any other corporation or
            commission owning or operating a public utility for water, gas,
            electrical power or energy, steam or hot water, or for the use
            thereof, other than current accounts with respect to which the
            payment due date has not yet passed;

      (c)   there are no overdue material levies, charges or fees assessed
            against the Real Property by any public authority (including
            development or improvement levies, charges or fees);

      (d)   to the knowledge of the Seller, the Seller has not received any
            deficiency notices, requests or written advice of any material
            breach of any Applicable Law in respect of the Real Property or the
            Seller's improvements thereon that could, if not corrected, become a
            material work order or could require performance of material work or
            expenditure of money to correct;

      (e)   other than the Tenure Take-Back and as set out in Schedule 6.9(e),
            to the knowledge of the Seller, no material part of the Real
            Property has been taken or expropriated by any Governmental
            Authority nor has any notice or proceeding in respect thereof been
            given to the Seller or commenced; and

      (f)   except as set out in Schedule 6.9(f), in respect of the Mill
            Property: (i) there are no material encroachments of the Seller's
            improvements beyond the boundaries of

                                      -44-
<PAGE>

            the Real Property; (ii) the use of each Mill Property for the
            principal purposes it is being used is permitted as of right under
            the applicable zoning legal requirements or constitutes a permitted
            nonconforming use and the land for each owned sawmill and
            remanufacturing facility on Real Property abuts on and has direct
            vehicular access to a public road or has access to a public road via
            a permanent, irrevocable, appurtenant easement benefiting such land
            and comprising a part of the Real Property; (iii) the Seller has not
            received written notice of any existing or proposed plan to modify
            or realign any street or highway that would result in the taking of
            all or any material part of any facility or that would prevent or
            materially hinder the conduct of the Purchased Business.

6.10 ABORIGINAL CLAIMS

The Seller, the Purchased Business, and the Purchased Assets have been, are and
in the future may be subject to a number of Aboriginal Claims. To the Seller's
knowledge as of the date of this Agreement, the materials referenced in Schedule
6.10 and the discussions to date between representatives of the Seller and the
Buyer disclose the material Aboriginal Claims. The Seller does not provide any
representation or warranty with respect to the basis for or outcome of any such
Aboriginal Claims or the effect of such Aboriginal Claims, or any outcome
thereof, on the Purchased Assets or Purchased Business.

6.11 LEASED REAL PROPERTY

      (a)   The Seller is not a party to or bound by or subject to nor has the
            Seller agreed or become bound to enter into any lease or agreement
            to lease with respect to any real property relating to the Purchased
            Business, whether as lessor or lessee, other than the leases (the
            "REAL PROPERTY LEASES") described in Schedule 6.11. Schedule 6.11
            sets out the parties to each of the Real Property Leases, their
            commencement dates and expiry dates, any options to renew, the
            locations of the leased lands and premises and the rent payable
            thereunder. Except as set out in Schedule 6.11, each of the Real
            Property Leases is in good standing in all material respects and in
            full force and effect, and neither the Seller nor, to the knowledge
            of the Seller, any other party thereto is in breach of any material
            covenants, conditions or obligations contained therein and the
            Seller is entitled to all rights thereunder. The Seller has provided
            a true and complete copy of each Real Property Leases and all
            amendments thereto to the Buyer.

      (b)   The Seller is exclusively entitled to all rights and benefits as
            lessee under the Real Property Leases for which the Seller is the
            lessee, and except as described in Schedule 6.11, the Seller has not
            sublet, assigned, licensed or otherwise conveyed any rights in the
            Leased Real Property to any other Person.

      (c)   Except as set forth in Schedule 6.11, all rental and other material
            payments and other material obligations required to be paid and
            performed by the Seller pursuant to the Real Property Leases have
            been duly paid and performed.

                                      -45-
<PAGE>

      (d)   Except as set forth in Schedule 6.11, the terms and conditions of
            the Real Property Leases will not be affected by, nor will any of
            the Real Property Leases be in default as a result of, the
            completion of the Purchase.

6.12 INTELLECTUAL PROPERTY

      (a)   Schedule 6.12 lists all material Transferred IP. Except as specified
            in Schedule 6.12 and except for the Seller and its affiliates, no
            Person has been granted any interest in or right to use the material
            Transferred IP.

      (b)   Except as specified in Schedule 1.1(k)(xiii), the Seller has no
            knowledge of a claim or any infringement of Intellectual Property
            Rights of any other Person that arises out of the conduct of the
            Purchased Business, nor has the Seller received any notice,
            complaint, threat or claim alleging that the conduct of the
            Purchased Business infringes upon any Intellectual Property Rights
            of any other Person.

6.13 LICENCE AGREEMENTS

Schedule 1.1(k)(i) lists all Licence Agreements that are Material Contracts,
entered into by the Seller in connection with the Purchased Business and
complete and correct copies of all of the agreements constituting the Material
Contracts that are Licence Agreements have been provided to the Buyer. Except as
disclosed herein or as set out in the Schedules, none of the Licence Agreements
listed in Schedule 1.1(k)(i) grant to any Person any authority to incur any
liability or to enter into any agreement on behalf of the Seller and no
proceeding is pending, or to the knowledge of the Seller, threatened to revoke
or limit any Licence Agreement that is a Material Contract.

6.14 NO EXPROPRIATION

Except for the Tenure Take-Back and the Timber Reallocation Agreement and as set
out in Schedule 6.9(e), no material part of the Purchased Assets has been taken
or expropriated by any Governmental Authority, nor has any notice or proceeding
in respect thereof been given or commenced, nor does the Seller have any
knowledge of any intent or proposal to give any such notice or commence any such
proceedings.

6.15 AGREEMENTS AND COMMITMENTS

Schedule 1.1(k)(i) sets out a list of all Material Contracts included in the
Purchased Assets, including all material amendments, each of which is valid and
legally binding on the parties thereto. Except as described in Schedule
1.1(k)(i), the Seller is not a party to or bound by or subject to, nor has the
Seller agreed to become bound to enter into any Material Contract relating to
the Purchased Business or the Purchased Assets. The Seller has performed all of
the material obligations required to be performed by it and is entitled to all
material benefits under, and neither the Seller, nor to the knowledge of the
Seller, the counterparty thereto, is in default or alleged to be in any material
default with respect to, any Material Contract relating to the Purchased
Business or the Purchased Assets to which it is a party or by which the Seller
is bound. To the knowledge of the Seller, no event, condition or occurrence
exists that, after notice or lapse of time or both, would constitute a material
default under any of the foregoing. The

                                      -46-
<PAGE>

Seller has provided to the Buyer a true and complete copy of each Material
Contract listed or described in the Schedules to this Agreement and all
amendments thereto.

6.16 COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATION

      (a)   Except with respect to:

            (i)   Environmental Laws, as to which Article 10 shall apply;

            (ii)  Aboriginal Claims, as to which Sections 6.10 and 14.12 shall
                  apply;

            (iii) Forestry Laws, as to which Section 6.16(b) shall apply; and

            (iv)  those matters disclosed in Schedule 6.16(a),

            the Seller has complied in all material respects with all Applicable
            Laws that apply to the Purchased Business and the Purchased Assets.
            Schedule 1.1(k)(iii) sets out a complete and accurate list of all
            Licences and Permits held by or granted to the Seller, and, except
            for Aboriginal Claims, to the knowledge of the Seller, there are no
            other Licences and Permits necessary to carry on the Purchased
            Business or to own or lease any of the Purchased Assets in the same
            manner as currently carried on by the Seller. Except with respect to
            Environmental Permits, as to which Article 10 shall apply and except
            for Aboriginal Claims as to which Sections 6.10 and 14.12 shall
            apply and Forestry Laws, as to which Section 6.16(b) shall apply, to
            the knowledge of the Seller, each Licence and Permit is valid,
            subsisting and in good standing in all material respects and the
            Seller is not in material default or breach of any Licence and
            Permit and no proceeding is pending or, to the knowledge of the
            Seller, threatened to revoke, amend or limit any Licence and Permit.

      (b)   Except as disclosed in Schedule 6.16(b), the Purchased Business and
            the Purchased Assets have been, since January 1, 2000, and are now
            owned and operated in compliance with all Forestry Laws in all
            material respects, and there are no outstanding notices or, to the
            Seller's knowledge, ongoing investigations by any Governmental
            Authority of any actual or alleged, defect or non-compliance under
            Forestry Laws with respect to any of the Purchased Assets or the
            Purchased Business.

6.17 CONSENTS AND APPROVALS

Except for:

      (a)   Aboriginal Claims, as to which Sections 6.10 and 14.12 shall apply;

      (b)   the Closing Consents described in Schedule 1.1(t); and

      (c)   Approvals that are not material or that relate solely to the
            identity of the Buyer or the nature of any business carried on by
            the Buyer;

                                      -47-
<PAGE>

there is no requirement to make any filing with, give any notice to or obtain
any Approval from any Governmental Authority or from any Person:

      (d)   as a condition to the lawful consummation of the transactions
            contemplated by this Agreement;

      (e)   to avoid the withdrawal of any material Licence and Permit;

      (f)   to avoid the violation, breach or termination of, or default under,
            or the creation of any material Encumbrance under the terms of any
            Applicable Law; or

      (g)   to enable the Purchased Business to continue to be carried on as
            currently conducted following Closing.

6.18 FINANCIAL STATEMENTS

The Financial Statements (and, as of the date thereof, the financial statements
referred to in Section 9.14) have been prepared, except as disclosed in Schedule
6.18, in accordance with GAAP applied on a basis consistent with prior periods,
are correct and complete, and present fairly the assets, Liabilities (whether
accrued, absolute, contingent or otherwise) and financial position of the
Purchased Business as at the date of the Financial Statements and the sales,
earnings and results of operations of the Purchased Business for the period
covered by the Financial Statements. A true and complete copy of the Financial
Statements is set out in Schedule 6.18. The Financial Statements, other than
those referred to in Section 9.14, are qualified by the fact that the Purchased
Business has not operated as a separate "stand-alone" entity within the Seller
and that the Purchased Business has not been separately audited.

6.19 BOOKS AND RECORDS

The Books and Records fairly and correctly set out and disclose the financial
position of the Seller and the Purchased Business as at the date hereof, and all
material financial transactions of the Seller relating to the Purchased Business
have been accurately recorded in such Books and Records.

6.20 ABSENCE OF CHANGES

Except as set out in Schedule 6.20, since December 26, 2004 the Purchased
Business has been carried on only in the normal course consistent with past
practice and there has been no Materially Adverse change in the business
operations, prospects, results of operations or condition (financial or
otherwise) of the Purchased Business, taken as a whole and to the knowledge of
the Seller there are no facts or conditions that are likely to cause any
Material Adverse change in the condition of the Purchased Assets or the
Purchased Business, taken as whole, in the future.

6.21 TAXES

With respect to the Purchased Business, the Seller has duly filed on a timely
basis all Tax returns required to be filed by it and has paid, or contested in
good faith, all material Taxes that are due

                                      -48-
<PAGE>

and payable, and all assessments, reassessments, Governmental charges,
penalties, interest and fines due and payable by it, the non-payment of which
could result in an Encumbrance on the Purchased Assets. The Seller is not now
the subject of a Legal Proceeding or Claim concerning any Tax that could result
in an Encumbrance against the Purchased Assets. There are no Encumbrances for
Taxes other than Permitted Encumbrances upon any of the Purchased Assets and no
event has occurred that with the passage of time or the giving of notice, or
both, could reasonably be expected to result in an Encumbrance for Taxes other
than Permitted Encumbrances on any of the Purchased Assets.

6.22 LEGAL PROCEEDINGS

Except as described in Schedule 1.1(k)(xiii):

      (a)   there are no Legal Proceedings pending or, to the knowledge of the
            Seller, threatened by or against or affecting the Purchased Business
            or the Purchased Assets that might result in any material adverse
            change in the business, affairs or prospects of the Purchased
            Business, financial or otherwise, or that might Materially Adversely
            effect the ability of the Seller to enter into this Agreement or to
            consummate the Purchase;

      (b)   there is no judgment, decree, injunction, ruling, order or award of
            any Governmental Authority outstanding against or affecting the
            Seller relating to the Purchased Business or the Purchased Assets
            that would materially impair the operation or use of the Purchased
            Assets as the Purchased Business; and

      (c)   to the Seller's knowledge, no facts or circumstances exist that
            could reasonably be expected to lead to any of the above.

6.23 RESIDENCY

The Seller is not a non-resident of Canada within the meaning of the Income Tax
Act (Canada).

6.24 GUARANTEES, WARRANTIES AND DISCOUNTS

Except as described in Schedule 6.24:

      (a)   the Seller has not given any guarantee or warranty relating to the
            Purchased Business with respect to the products sold or the services
            provided by it, except warranties made in the normal course of the
            Purchased Business, and in the form of the Seller's standard written
            warranties, and except for warranties implied by Applicable Law;

      (b)   the Seller is not required to provide any letters of credit, bonds
            or other financial security arrangements in connection with any
            transactions with its suppliers or customers of the Purchased
            Business; and

                                      -49-
<PAGE>

      (c)   the Seller has not given any other material guarantee of any
            obligation to any Third Party in respect of the Purchased Business
            or the Purchased Assets, and copies of any such guarantee or other
            obligation have been disclosed to the Buyer.

6.25 EMPLOYEE PLANS

Schedule 6.25 identifies each Benefit Plan. Except as specifically described in
Schedule 6.25:

      (a)   the Pension Plan for the Employees of Mid-Island Reman Inc. has been
            established, registered, qualified, amended, amalgamated,
            reorganized, administered and invested in compliance, in all
            material respects, with the terms thereof and all Applicable Laws,
            including the applicable pension and Tax legislation;

      (b)   all material contributions to, and payments from, the Pension Plan
            for the Employees of Mid-Island Reman Inc. that may have been
            required to be made in accordance with the terms of any such Benefit
            Plan, or with the recommendation of the actuary for such Benefit
            Plan, and Applicable Law, and have been made in a timely manner and
            there have been no improper withdrawals, applications or transfers
            of assets relating thereto; and the policy or other contract or
            agreement affecting the Pension Plan for the Employees of Mid-Island
            Reman Inc. does not require nor permit any retroactive increase in
            premiums or payments thereunder;

      (c)   all material reports, returns and similar documents (including
            applications for approval of contributions) with respect to the
            Pension Plan for the Employees of Mid-Island Reman Inc. required to
            be filed with any Governmental Authority or distributed to any such
            Benefit Plan participant have been duly filed or distributed in a
            timely manner and there have been no improper withdrawals,
            applications or transfers of assets relating thereto and have been
            prepared in accordance with GAAP, generally accepted standard of
            practice issued by the Canadian Institute of Actuaries and
            Applicable Law;

      (d)   there are no pending investigations by any Governmental Authority
            involving or relating to the Pension Plan for Employees of
            Mid-Island Reman Inc., no threatened or pending claims (except for
            claims for benefits payable in the normal operation of such Benefit
            Plan), suits or proceedings against such Benefit Plan or asserting
            any rights or claims to benefits under such Benefit Plan that could
            give rise to a material liability nor are there any facts that could
            give rise to any material liability in the event of such
            investigation, claim, suit or proceeding;

      (e)   no notice has been received by the Seller of any material complaints
            or other proceedings of any kind involving the Seller or any of the
            Employees or former employees of Mid-Island Reman Inc. before any
            pension board or committee relating to the Pension Plan for
            Employees of Mid-Island Reman Inc. or to the Purchased Business or
            the Purchased Assets;

      (f)   the Pension Plan for the Employees of Mid-Island Reman Inc. is a
            registered pension plan under the Tax Act and the PBSA and is not
            subject to the pension

                                      -50-
<PAGE>

            standards legislation of any jurisdiction other than the Province of
            British Columbia; and

      (g)   other than the Pension Plan for the Employees of Mid-Island Reman
            Inc., there is no pension plan or post-retirement non-pension
            benefit plan for the Employees of any Acquired Entity, that will
            result in a Liability on or subsequent to the Time of Closing in an
            Acquired Entity relating to a period prior to the Closing.

6.26 COLLECTIVE AGREEMENTS

Except as described in Schedule 1.1(x) (copies of which have been provided to
the Buyer), the Seller is not required to recognize and has not made any
Contracts with any labour union or employee association or any agent having
bargaining rights for the Employees nor made commitments to or conducted
negotiations with any labour union or employee association with respect to any
future agreements. The Seller has provided copies of all local agreements
associated with such Collective Agreements. Other than: (i) grievances brought
in the ordinary and normal course of the Purchased Business, none of which
could, individually or collectively with other such grievances, have a
Materially Adverse effect on the Purchased Business or the right or the ability
of the Seller or the Buyer to carry on the Purchased Business substantially in
the manner in which it has heretofore been carried on, and (ii) grievances
listed in Schedule 1.1(x) which describes, as at February 13, 2005, all current
and pending grievances under the Collective Agreements that have reached "Stage
2" or later under the grievance process under the Collective Agreements, there
are no grievances against the Seller of which the Seller has received a written
notice under any Collective Agreements.

6.27 EMPLOYEES

      (a)   Schedule 1.1(ii) contains a complete and accurate list of the names
            of all Employees (classified into union and non-union Employees)
            specifying the employee status (full-time, part-time, away) length
            of service (actual and deemed), title or classification and rate of
            salary or hourly pay for each such Employee. The Seller has provided
            to the Buyer copies of all written employment contracts, other than
            written offer letters and similar written communications to
            Employees that might constitute a "written employment contract",
            none of which provides a Salaried Employee with a contractual
            severance entitlement. In addition, Schedule 1.1(ii) specifically
            identifies all Employees, including those on lay-off (but other than
            those in receipt of benefits under workers' compensation
            legislation), who have been absent continually from work for a
            period in excess of one month, and the reason for their absence.

      (b)   Schedule 1.1(ii) specifically identifies all Employees with respect
            to whom the Seller has been advised by the Workers' Compensation
            Board that such Employees are in receipt of benefits under the
            Workers Compensation Act (British Columbia). With respect to the
            Purchased Business, the Seller is in material compliance with the
            Employment Standards Act (British Columbia), and other Applicable
            Law in relation to employment matters and, without limiting the

                                      -51-
<PAGE>

            generality of the foregoing and except as disclosed in Schedule
            1.1(gg), with respect to the Purchased Business:

            (i)   there are no appeals pending before the Workers' Compensation
                  Board of British Columbia involving the Seller;

            (ii)  all material levies, assessments and penalties made against
                  the Seller pursuant to the Workers Compensation Act (British
                  Columbia) have been paid by the Seller;

            (iii) the Seller does not know of any audit currently being
                  performed by the Workers' Compensation Board of British
                  Columbia; and

            (iv)  the Seller does not know of any liability for any material
                  damages to any Employee resulting from the violation or
                  alleged violation of any Applicable Law in relation to
                  employment matters.

6.28 EMPLOYEE ACCRUALS

All accruals for unpaid vacation pay, premiums for unemployment insurance,
health premiums, Canada Pension Plan premiums, accrued wages, salaries and
commissions and other benefits have been reflected in the books and records of
the Seller relating to the Purchased Business in accordance with GAAP applied on
a basis consistent with prior practices.

6.29 CONTRACTUAL RESTRICTIONS ON DOING BUSINESS

The Seller is not a party to or bound by any Contract that would materially
restrict or limit the rights of the Buyer to carry on the Purchased Business or
compete in any business or activity or to solicit business from any Person or in
any geographical area or otherwise to conduct the Purchased Business as
currently conducted.

6.30 BANKRUPTCY

The Seller is not insolvent and has not: (a) proposed a compromise or
arrangement to any of its creditors generally; (b) had any petition or receiving
order in bankruptcy filed against it; (c) taken any proceeding with respect to a
compromise or arrangement or become subject to such proceeding; (d) taken or
become subject to any proceeding to have it liquidated, dissolved, declared
bankrupt or wound-up; (e) taken any proceeding or become subject to any
proceeding to have a receiver appointed over any part of its assets; (f) had any
encumbrancer take possession of any of its property; or (g) had any execution or
distress become enforceable or become levied upon any of its property.

6.31 FORESTLANDS

Except for Aboriginal Claims, as to which Sections 6.10 and 14.12 shall apply:

      (a)   each Timber Tenure is validly subsisting and all levies, fees,
            rentals, charges, dues, stumpage, royalties and other costs payable
            up to the Time of Closing under

                                      -52-
<PAGE>

            each Timber Tenure have been or will be paid by the Seller except
            for levies, fees, charges, dues, rentals, stumpage and other costs
            to the extent that they will be included as Liabilities deducted
            from the calculation of the Net Working Capital in the Working
            Capital Statement and included in Assumed Liabilities. Schedule
            1.1(mmmmm) sets forth the 2004 and 2005 AAC under the forest
            licences and the 2004 and 2005 AAC under the management plans for
            the tree farm licences that are included in the Timber Tenures and
            the actual timber harvested pursuant to the forest licences and
            under the tree farm licences that are included in the Timber
            Tenures;

      (b)   the Seller has observed and performed in all material respects all
            covenants, agreements and obligations on its part to be observed or
            performed under the provisions of the Timber Tenures, the Forestry
            Laws and other Applicable Laws relating to the Timber Tenures;

      (c)   the Seller has not received any notice of breach by the Seller of
            any of the Timber Tenure or Forestry Law that has not been remedied
            by Seller or abandoned by the Person alleging such breach;

      (d)   the Seller has all material Licences and Permits and the other
            permissions necessary or advisable to provide unrestricted access in
            and out of the Timber Tenures and to transport logs to the mills and
            conversion facilities included in the Purchased Assets as the
            Purchased Business is currently conducted;

      (e)   other than as contemplated by the Forestry Revitalization Act
            (British Columbia) and the Timber Reallocation Agreement, no
            Governmental Authority has given any written notice to the Seller
            with respect to one or more of the Timber Tenures concerning any
            matter which would have the effect of reducing, impairing,
            suspending or terminating in a material manner such Timber Tenures
            or any rights or privileges attached thereto;

      (f)   the Seller has not made a "forestry revitalization proposal" under
            the Timber Harvesting Contract and Subcontract Regulation and has
            made no Contracts with any Person in relation thereto.

6.32 TIMBER INVENTORY DATA

The Seller has made available to the Buyer all material information maintained
by the Seller with respect to the timber inventory on the Fee Simple Real
Property. Such information has been prepared in accordance with the procedures
and practices described in Schedule 6.32. Notwithstanding any other provision of
this Agreement, the Seller's sole obligation to the Buyer in respect of the
quantity, quality, species mix, age or value of the timber inventory are
contained in this Section 6.32 and the related indemnification in Article 14 and
no actions with respect to Claims or Losses suffered or incurred by the Buyer
may be brought against the Seller unless the Seller has breached its obligations
pursuant to this Section 6.32.

                                      -53-
<PAGE>

6.33 INVENTORIES

Inventory levels are, in all material respects, at such amounts as are required
and adequate for the normal operation of the Purchased Business as now
conducted, in the ordinary course.

7. REPRESENTATIONS AND WARRANTIES OF THE BUYER

The Buyer represents and warrants to the Seller at the time of execution and
delivery of this Agreement as follows and acknowledges that the Seller is
relying on the accuracy of each such representation and warranty in entering
into this Agreement and completing the Purchase. Except for the representations
and warranties of the Buyer set out in this Article 7, in executing this
Agreement, the Seller relies wholly upon its own judgment and that of its
advisors. The Seller acknowledges that it has not been influenced by and is not
relying on any representations or statements regarding any matter made by any
Person, except the representations and warranties of the Buyer set out in this
Article 7.

7.1 ORGANIZATION

The Buyer is a company duly constituted and organized and validly subsisting
under the laws of British Columbia and has the corporate power to enter into
this Agreement and each of the agreements, documents and instruments to be
entered into by the Buyer in connection with this Agreement and to perform its
obligations hereunder and thereunder.

7.2 AUTHORIZATION

This Agreement and each of the agreements, documents and instruments of the
Buyer contemplated hereby has been duly authorized, executed and delivered by
the Buyer and is a legal, valid and binding obligation of the Buyer, enforceable
against the Buyer by the Seller in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency and other Applicable Laws
affecting the rights of creditors generally and except that equitable remedies
may only be granted in the discretion of a court of competent jurisdiction. No
other corporate proceedings or Approvals on the part of the Buyer or its
shareholder are necessary to authorize this Agreement and each of the
agreements, documents and instruments contemplated hereby, except for the
approval by the Buyer's Board of Directors and, if applicable, by its
shareholder.

7.3 NO VIOLATION

Subject to the Closing Consents being obtained, the execution and delivery of
this Agreement by the Buyer and the consummation of the transactions herein
provided for will not result in the breach or violation of, or constitute a
default under, or conflict with or cause a right of termination, cancellation or
the acceleration of, any obligation of the Buyer under:

      (a)   any material contract to which the Buyer is a party or by which it
            or its properties is bound;

      (b)   any provision of the constating documents or by-laws or resolutions
            of the board of directors (or any committee thereof) or shareholders
            of the Buyer;

                                      -54-
<PAGE>

      (c)   any judgment, decree, order or award of any Governmental Authority
            or arbitrator having jurisdiction over the Buyer; or

      (d)   any Applicable Law.

7.4 INVESTMENT CANADA

The Buyer is a Canadian within the meaning of the Investment Canada Act.

7.5 CONSENTS AND APPROVALS

Except for the Closing Consents, there is no requirement to make any filing
with, give any notice to or obtain any consent or approval from any Governmental
Authority or other Person as a condition to the lawful consummation by the Buyer
of the transactions contemplated by this Agreement in accordance with all
Applicable Laws.

7.6 LITIGATION

Except as set out in Schedule 7.6, there are no legal proceedings pending or
threatened by the Buyer, or to the knowledge of the Buyer, pending or threatened
against the Buyer that might have a Materially Adversely affect on the ability
of the Buyer to enter into this Agreement or to consummate the transactions
contemplated hereby, and to the knowledge of the Buyer no state of facts exist
which could constitute the basis of any such legal proceedings.

8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE SELLER

Subject to Articles 10 and 14, the representations and warranties of the Seller
contained in this Agreement shall survive the Closing and shall continue in full
force and effect.

8.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE BUYER

Subject to Article 14, the representations and warranties of the Buyer contained
in this Agreement shall survive the Closing and shall continue in full force and
effect.

8.3 SURVIVAL OF COVENANTS

Any provision of this Agreement that is capable of being performed after but
that has not been performed (and in respect of which performance has not been
duly waived) at or before the Time of Closing and all covenants of the parties
contained in this Agreement (including, without limitation, the indemnity
covenants but excluding any covenant the performance of which has been waived)
or in any agreement or other document delivered or given pursuant to or in
connection with this Agreement shall survive the Closing and shall continue in
full force and effect in accordance with their terms.

                                      -55-
<PAGE>

9. COVENANTS

9.1 ACCESS TO PURCHASED BUSINESS AND PURCHASED ASSETS

Subject to the provisions of this Agreement, during the Interim Period the
Seller shall forthwith make available to the Buyer and its authorized
representatives all Books and Records. During the Interim Period the Seller
shall afford the Buyer and its authorized representatives reasonable access to
the Purchased Assets on reasonable prior notice and will permit the Buyer and
its authorized representatives to make such investigations of the Purchased
Business and its assets, Liabilities, condition (financial or otherwise),
Claims, obligations, operations, prospects, results of operations and legal or
regulatory status or affairs as the Buyer, acting reasonably, deems necessary or
advisable. At the request of the Buyer, the Seller shall execute such consents,
authorizations and directions as may be necessary to permit any inspection of
the Purchased Business or any of the Purchased Assets or to enable the Buyer or
its authorized representatives to obtain full access to all files and records
relating to any of the Purchased Assets maintained by Governmental Authorities.
At the Buyer's reasonable request, the Seller shall co-operate with the Buyer in
arranging any such meetings as the Buyer should reasonably request with
Employees and suppliers or others except customers who have or have had a
business relationship with the Seller with respect to the Purchased Business.
Such meetings may be held for the Buyer's due diligence purposes or for the
purposes of planning post-Closing management and workforce integration.

In particular, without limitation, the Seller shall permit the Buyer's
representatives or consultants to conduct all such testing and inspection with
respect to forest inventory and environmental matters at such locations of the
Purchased Business as the Buyer may determine, in its sole discretion and its
sole cost, as may be reasonably required to satisfy the Buyer with respect to
such matters; provided, however, that the Buyer shall be responsible, at its own
cost, for restoring all such property or items tested or inspected by its
representatives or consultants to the condition in which such property or items
were immediately before such testing or inspection. The Buyer shall provide the
Seller with any data, reports, test results or other recorded information
obtained as a result of any testing or inspection with respect to environmental
matters at the Purchased Business. Furthermore, without limitation, the Buyer
and the Seller shall conduct, in co-operation with each other, such physical
review of the Purchased Business as is necessary so as to enable the
confirmation of the values carried on the Working Capital Statement with respect
to such assets, to the reasonable satisfaction of the Buyer. The Buyer assumes
full responsibility and all risk of conducting any testing and inspections. The
Buyer will indemnify the Seller for any damage caused by the Buyer or by any
Person for whom the Buyer is responsible at law during the Interim Period while
on the premises of the Seller. It is the Buyer's sole responsibility to evaluate
the lands, roads, bridges, improvements, access, hazards whether obvious or
concealed, and all other factors, and to decide whether and in what manner to
conduct testing and inspections. The Buyer releases the Seller from any and all
Claims that the Buyer or its successors in interest, predecessor firms, related
entities and affiliates, agents, contractors and subcontractors, and each of
their officers, directors, shareholders, servants, employees and agents, and
each of their heirs, executors, administrators, successors and assigns may have
in any way connected with any such testing and inspections except to the extent
caused by the negligence of the Seller.

                                      -56-
<PAGE>

9.2 CONDUCT OF PURCHASED BUSINESS BEFORE CLOSING

Without in any way limiting any other obligations of the Seller hereunder,
except as contemplated by Section 3.12, during the Interim Period:

      (a)   the Seller shall conduct the Purchased Business only in the ordinary
            and normal course consistent with past practice and the Seller shall
            not enter into any transaction or refrain from doing any action
            that, if effected before the date of this Agreement, would
            constitute a material breach of any representation, warranty,
            covenant or other obligation of the Seller contained herein, and the
            Seller shall not enter into any supply arrangements relating to the
            Purchased Business or make any material decisions or enter into,
            amend or surrender any Material Contracts with respect to the
            Purchased Business without the consent of the Buyer, which consent
            shall not be unreasonably withheld;

      (b)   during the Interim Period, the Seller shall provide to the Buyer, on
            a timely basis, monthly reconciliations of actual and budgeted
            operating and capital expenditures and the Seller shall not commence
            any capital expenditure project (other than maintenance
            expenditures) other than those set out in Schedule 9.2(b);

      (c)   without limiting paragraphs (a) and (b), the Seller shall harvest
            timber, conduct forest engineering and planning and conduct
            reforestation activities in the ordinary and normal course of
            business consistent with past practice and substantially in
            accordance with its operational plans and budgets;

      (d)   except as otherwise provided in Schedule 9.2(b) and except in the
            normal course of business consistent with past practice, the Seller
            shall not, make any general or specific increase in the remuneration
            of the Employees and service agents of the Purchased Business, nor
            grant them any additional benefits;

      (e)   the Seller shall use its commercially reasonable efforts to preserve
            the Purchased Business and the Purchased Assets and to carry on the
            Purchased Business as currently conducted and to keep available the
            services of the Transferred Employees, and the Seller shall use its
            commercially reasonable efforts to promote and preserve for the
            Buyer the goodwill of suppliers, customers and others having
            business relations with the Seller that relate to the Purchased
            Business;

      (f)   (i)   other than a Permitted Sale, the Seller shall not sell,
                  assign, lease or otherwise transfer or dispose of any asset
                  used in the Purchased Business, to any Person or otherwise, or
                  compromise any of its rights or claims, in a single
                  transaction or series of related transactions if such
                  transactions will in the aggregate have a value in excess of
                  $250,000, other than in the ordinary course of business,
                  without the consent of the Buyer, which consent may not be
                  unreasonably withheld; for greater certainty, the Seller
                  acknowledges that it would be out of the ordinary course to
                  consummate

                                      -57-
<PAGE>

                  any sale of Fee Simple Real Property or to grant any option to
                  purchase any Fee Simple Real Property, other than a Permitted
                  Sale;

            (ii)  with respect to a Permitted Sale, the Seller shall not enter
                  into a definitive purchase and sale agreement with a Third
                  Party with respect to any property set out on Schedule
                  1.1(hhhh), for less than 90% of the amount listed in the
                  Disclosure Letter;

      (g)   the Seller shall pay and discharge its Liabilities relating to the
            Purchased Business in the normal course in accordance and consistent
            with its previous practice, except those contested in good faith by
            it and the Seller will not agree to incur any Liability outside of
            the normal course in accordance and consistent with its previous
            practice, which is likely to remain an Assumed Liability on the
            Closing Date, whether in a single transaction or in a series of
            related transactions, if such transactions will in the aggregate
            exceed $250,000;

      (h)   to the extent commercially reasonable, the Seller shall attempt to
            complete the Purchase, during the Interim Period, from the entity
            known as EDS, the computer hardware, routers, switches and other
            equipment that are currently leased by the Seller from that entity
            and that are required in connection with the operation of the
            Purchased Business for the sale to the Buyer under this Agreement;

      (i)   the Seller will not create, assume or permit to be created or
            imposed any Encumbrances (other than Permitted Encumbrances) upon
            any of the Purchased Assets and shall use all commercially
            reasonable efforts to obtain by the Time of Closing discharges of
            all Encumbrances disclosed for the purpose of this Section 9.2(i) in
            Schedule 1.1(gggg)(x);

      (j)   the Seller shall promptly advise the Buyer of the occurrence of any
            event that would render any representation or warranty of the Seller
            contained in this Agreement untrue or inaccurate in a material way;

      (k)   the Seller shall promptly notify the Buyer in writing of the
            occurrence and circumstances of any Environmental Condition arising
            after the date hereof;

      (l)   the Seller will consult with the Buyer and will permit the Buyer to
            participate in discussions in respect of material decisions or
            commitments with respect to, the matters set forth in Schedule
            9.2(l); and

      (m)   the Seller shall, within ten business days after the end of each
            calendar month, provide the Buyer with monthly financial and
            operating statements by operating division, including a monthly
            statement of management's estimate of Net Working Capital.

      The Seller will not deviate from the requirements of this Section 9.2
      without first obtaining the consent of the Buyer, which consent will not
      be unreasonably withheld, and with respect to subparagraphs (c), (d), (f),
      (g), (h), (i) and (j) will cause the Acquired

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      Entities to comply with those subsections as if each Acquired Entity was
      the Seller and its business was the Purchased Business.

9.3 RISK OF LOSS

Until the Time of Closing, the Purchased Assets will remain at the risk of the
Seller. Subject to: (i) the Buyer's right not to complete the transactions
contemplated hereby pursuant to Section 12.1; (ii) those matters which are the
subject of Section 3.8; and (iii) ordinary wear and tear, if any destruction or
damage occurs to those Purchased Assets which are physical assets having an
aggregate value in excess of .1% of the Purchase Price during the Interim
Period, or, other than as disclosed in this Agreement, if Purchased Assets are
appropriated, expropriated or seized by a Governmental Authority, having an
aggregate value in excess of .1% of the Purchase Price during the Interim
Period, the Seller shall forthwith give notice thereof to the Buyer and the
Purchase Price will be reduced by an amount equal to the replacement value of
the affected Purchased Assets.

9.4 EXCLUSIVITY

Until the earlier of the termination of this Agreement and the Time of Closing,
the Seller shall not, and shall take reasonable steps to ensure that the
directors, officers, employees, agents or advisors of the Seller do not,
directly or indirectly enter into any Contract for, or take any action to
continue, solicit, initiate, entertain, discuss or consider any offers,
enquiries or proposals relating to the possible disposition or transfer of the
Purchased Assets whether by way of sale, amalgamation, merger, partnership
arrangement or otherwise.

9.5 COMMERCIALLY REASONABLE EFFORT TO OBTAIN CONSENTS

The Seller shall use its commercially reasonable efforts to obtain during the
Interim Period, the Approvals and the Closing Consents that are its
responsibility and to assist the Buyer to obtain, during the Interim Period, the
Approvals and the Closing Consents that are the Buyer's responsibility. The
Buyer shall use its commercially reasonable efforts to obtain, at or before the
Time of Closing, the Approvals and Closing Consents that are its responsibility
and shall use its commercially reasonable efforts to assist the Seller to
obtain, at or before the Time of Closing, the Approvals and Closing Consents
that are the Seller's responsibility. The parties acknowledge and agree that,
for all purposes of this Agreement, an obligation on the part of either party to
use commercially reasonable efforts to obtain or help in obtaining any Approval
or Closing Consent shall not require that party to make any payment to any
Person for the purpose of procuring that Approval or Closing Consent, other than
payments for amounts due and payable to that Person, payments for incidental
expenses incurred by that Person and any payments required by any Applicable
Law.

9.6 POST CLOSING RECEIPTS

      (a)   If at any time following the Time of Closing, the Seller receives,
            or comes into possession of, any of the Purchased Assets or any
            receipts, proceeds, cheques, securities or other property of any
            kind comprising, arising out of or derived from the Purchased Assets
            (including any cheques, notes or cash in payment of any Account
            Receivable and any other intangible constituting part of the
            Purchased

                                      -59-
<PAGE>

            Assets), or any invoices for amounts included in the Assumed
            Liabilities that are payable by the Buyer, the Seller shall
            immediately deliver that Purchased Asset or receipt, proceed,
            cheque, security or other property or invoice to the Buyer, with any
            endorsements, transfers or assignments that may be necessary or
            desirable to ensure that the Buyer receives the immediate and full
            benefit of that Purchased Asset or receipt, proceed, cheque,
            security or other property or any other information available to the
            Seller that is required to allow the Buyer to pay the invoice;

      (b)   If at any time following the Time of Closing, the Buyer receives, or
            comes into possession of, any asset or any receipts, proceeds,
            cheques, securities or other property of any kind that is retained
            by the Seller pursuant to this Agreement, (excluding any cheques,
            notes or cash in payment of any Account Receivable) or any invoices
            for amounts that are not included in the Assumed Liabilities that
            are payable by the Seller, the Buyer shall immediately deliver that
            asset or receipt, proceed, cheque, security or other property or
            invoice to the Seller, with any endorsements, transfers to
            assignments as may be necessary or desirable to ensure that the
            Seller receives the immediate and full benefit of that asset or
            receipt, proceed, cheque, security or other property or any other
            information available to the Buyer that is required to allow the
            Seller to pay the invoice.

9.7 CO-OPERATION REGARDING TAX RETURNS AND AUDITS

After the Closing Date, the Buyer shall furnish or cause to be furnished to the
Seller, upon request, as promptly as practicable, such information (including
access to Books and Records) and assistance relating to the Purchased Business
or the Purchased Assets as is reasonably necessary for the filing by the Seller
of any return relating to Taxes, for the preparation for any audit or for the
prosecution or defence of any Legal Proceeding or proposed adjustment relating
to Taxes of the Seller relating to the Purchased Business or the Purchased
Assets.

9.8 COMPLIANCE WITH AGREEMENT

Subject to the terms and conditions provided in this Agreement, each of the
parties will take such commercially reasonable actions as are within its power
to control and will use commercially reasonable efforts to cause, or cause to be
taken other actions that are not within its power to control so as to ensure
compliance with each of the terms and conditions and covenants set forth in this
Agreement that are for the benefit of any other party, including to satisfy the
conditions to Closing of each party as set out in Article 12; provided that, the
Buyer's obligation to execute and deliver the Transitional Services Agreement is
conditional upon the Seller being able to substantially provide the services set
out therein. The parties will, with reasonable diligence, do all such things and
provide all such reasonable assurances as may be required to consummate the
transactions contemplated by this Agreement and each party will provide such
further documents or instruments (on commercially reasonable terms) required by
any other party as may be reasonably required or desirable to effect the purpose
of this Agreement and to carry out its provisions, whether before or after the
Closing.

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<PAGE>

9.9  COMPLIANCE WITH THE FOREST ACT

The Seller and the Buyer will cooperate and assist each other in completing the
notification process under section 54 of the Forest Act (British Columbia) and
obtaining a notice to proceed from the Minister of Forests under section 54.1 of
the Forest Act (British Columbia) in connection with the transfer of the Timber
Tenures from the Seller to the Buyer as provided in this Agreement, including,
but without limitation, responding to any inquiries the Ministry of Forests may
make of the Buyer and the Seller in order to satisfy the Minister of Forests
that the transfer of the Timber Tenures from the Seller to the Buyer will not
unduly restrict competition in the standing timber markets, log markets or chip
markets. The Buyer acknowledges that under the Forest Act (British Columbia) the
Buyer may be required to enter into a Transfer Arrangement on or before the
Closing Date. The Buyer agrees that it will enter into the Transfer Arrangement,
provided that amounts arising before the Closing Date and payable under the
Transfer Arrangement are adjusted for pursuant to the Net Working Capital
Adjustment.

9.10 FEES

The Buyer and the Seller shall bear equally all fees in connection with
obtaining the Competition Act Approval and HSR Compliance.

9.11 COMBINED CONTRACTS

The parties acknowledge and agree that the contracts (the "COMBINED CONTRACTS")
set out in Schedule 9.11 hereto pertain in part to the Purchased Business and in
part to business activities of the Seller unrelated to the Purchased Business.
The parties will use commercially reasonable efforts to split the Combined
Contracts into agreements pertaining to the Purchased Business and agreements
unrelated to the Purchased Business on terms and conditions acceptable to the
parties, acting reasonably. If the parties are unable to complete the splitting
of the Combined Contracts by the Time of Closing then:

      (a)   the Seller shall hold that portion of the Combined Contracts
            pertaining to the Purchased Assets in trust for the Buyer and shall
            forthwith sell, convey, grant, assign, transfer and set over the
            same to the Buyer upon the splitting of such Combined Contract (in
            the manner described above) and until such time, the Seller shall,
            to the extent reasonably necessary, at the request and cost of the
            Buyer, perform all obligations with respect to such portion of such
            Combined Contracts pertaining to the Purchased Business in the name
            of the Buyer and all benefits derived therefrom shall be for the
            account of the Buyer; and

      (b)   if the Seller notifies the Buyer that it will be unable to obtain a
            splitting of any Combined Contract, the Buyer shall, as soon as
            reasonably practicable, use commercially reasonable efforts to enter
            into, at the sole cost and expense of the Buyer, alternative
            contractual arrangements in respect of the subject matter of the
            Combined Contract that pertains to the Purchased Business and the
            Buyer shall have no Claim for any Losses suffered as a result of the
            Seller's inability to split a Combined Contract or the Buyer's
            obligation to enter into a new contractual arrangement in respect
            thereof.

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<PAGE>

9.12 PERSONAL INFORMATION

In respect of any Personal Information contained in the Books and Records, the
Buyer covenants and acknowledges:

      (a)   during the Interim Period, to use the Personal Information solely
            for purposes relating to the transactions contemplated by this
            Agreement;

      (b)   if the transactions contemplated by this Agreement proceed, to use
            and disclose any such Personal Information only for the same
            purposes for which it was collected, used or disclosed by the
            Seller; and

      (c)   to the extent required by Applicable Law, any Person whose Personal
            Information has been disclosed to the Buyer through the Books and
            Records will be notified by the Buyer that the transactions
            contemplated by this Agreement have taken place and that such
            Personal Information was disclosed to the Buyer as a consequent of
            such transactions.

9.13 OFF-SITE BOOKS AND RECORDS

The Buyer shall have access to the Off-Site Books and Records as the Buyer may
reasonably require for the normal day to day operation of the Purchased Business
after Closing, upon reasonable prior written notice to the Seller, provided such
access is not unduly disruptive of the Seller's operations and is limited as far
as reasonably possible to information relating solely to the Purchased Business.
The Seller shall provide the Buyer with reasonable confidential access to backup
tapes and data if any comprised in the Off-Site Books and Records on a strictly
need to have and know basis if the On-Site Books and Records acquired by the
Buyer on Closing are destroyed or lost. The Buyer shall maintain the
confidentiality of any information relating to the Seller's operations as may be
contained in the Off-Site Books and Records, to at least the same extent as the
Buyer maintains for its own confidential information. The Buyer shall take
appropriate measures to protect the confidentiality of any information or data
that may be combined or commingled with the information data the Buyer has a
right of access to hereunder. The Seller will use commercially reasonable
efforts to segregate Off-Site Books and Records that primarily relate to the
Purchased Business for delivery at the Time of Closing.

9.14 UPDATING FINANCIAL STATEMENTS

The Seller shall deliver to the Buyer audited financial statements of the
Purchased Business for the financial years ended on December 29, 2003 and
December 26, 2004 as soon as such statements are available.

9.15 APPROVAL OF THE TRANSFER OF FORESTRY LIABILITIES

Upon execution and delivery of this Agreement, the Seller and the Buyer shall
cooperate and assist each other in preparing and submitting to the British
Columbia Ministry of Forests for the approval of the Minister of Forests under
section 29 or, if it has then come into effect, section 29.1, of the Forest and
Range Practices Act (British Columbia), an assignment and assumption agreement
in the form to be signed at Closing pursuant to which the Seller will

                                      -62-

<PAGE>

transfer to the Buyer, and the Buyer shall assume and agree to perform, all of
the Forestry Liabilities.

9.16 INFORMATION FOR COMPETITION BUREAU

For a period ending on the first anniversary of the Closing Date, the Seller
shall use its commercially reasonable efforts to assist the Buyer in providing
to the Buyer such information that may be reasonably requested by the Buyer as
part of any application that may be made by the Buyer to the Canadian
Competition Bureau relating to any subsequent dealings by the Buyer with the
Purchased Assets or the Purchased Business.

9.17 CONSENTS NOT OBTAINED BEFORE CLOSING

      (a)   If there are any Approvals that have not been obtained as of the
            Time of Closing, Buyer may either:

            (i)   elect to have Seller continue its efforts to obtain the
                  Approvals, in which case the Seller shall continue to use its
                  commercial reasonable efforts to obtain the Approvals;

            (ii)  accept the assignment of such Contract or Licence and Permit,
                  in which case, as between Buyer and Seller, such Contract or
                  License and Permit shall, to the maximum extent practicable
                  and notwithstanding the failure to obtain the applicable
                  consent, be transferred to the Buyer and the representation
                  contained in Section 6.5 shall be deemed to be modified
                  accordingly; or

            (iii) if such Contract or Licence and Permit is not legally and
                  validly assignable without consent, and the required consent
                  is not obtained by the Seller within one year from the Closing
                  Date (other than Contracts in respect of which consent has not
                  been obtained by the Seller as a result of concerns raised by
                  the counterparty to the Contract about the creditworthiness of
                  the Buyer), elect to have the Seller retain that Contract or
                  License and Permit and all Liabilities arising therefrom or
                  relating thereto;

      (b)   If Buyer elects to have Seller continue its efforts to obtain any
            consent in respect of a Contract or Licence and Permit which cannot
            be legally and validly assigned without such consent, neither this
            Agreement nor any other document related to the consummation of the
            sale and purchase of the Purchased Business shall constitute a sale,
            assignment, assumption, transfer, conveyance or delivery or an
            attempted sale, assignment, assumption, transfer, conveyance or
            delivery of that Contract or Licence and Permit, and following the
            Closing, the Parties shall use commercial reasonable efforts, and
            cooperate with each other, to obtain the consent relating to each
            such Contract or Licence and Permit as quickly as practicable.
            Pending the obtaining of such consents, the Parties shall cooperate
            with each other in any reasonable and lawful arrangements designed
            to provide to Buyer the benefits of use of the affected Contract or
            Licence and Permit for its

                                      -63-

<PAGE>

            term (or any right or benefit arising thereunder, including the
            enforcement for the benefit of Buyer of any and all rights of Seller
            against a party to that Contract or License and Permit). Once the
            consent is obtained, Seller shall promptly assign, transfer, convey
            and deliver such Contract or Licence and Permit to Buyer, and Buyer
            shall assume the obligations under such Contract or Licence and
            Permit assigned to Buyer from and after the date of assignment to
            Buyer.

9.18 LEASES/SUBLEASES OF PREMISES

The Buyer and the Seller shall, at the Time of Closing, enter into:

      (a)   a sublease for a portion of the office premises at 925 West Georgia
            Street, Vancouver;

      (b)   a lease for a portion of the Trus Joist office premises;

      (c)   a sublease for a portion of the premises used by MBKK personnel in
            Tokyo;

in each case in accordance with the term sheets set out in Schedule 9.18.

9.19 POPLAR INTERESTS

The Seller shall grant the following interests (collectively, the "POPLAR
INTERESTS") to the Buyer on the Closing Date:

      (a)   a timber reservation entitling the Buyer to all timber on the Poplar
            Lands, other than any poplar plantation that is the subject of a
            Poplar Licence, and the right to harvest such timber, in
            consideration of the fair market value of such timber which shall be
            payable on the Closing Date and shall form part of the Purchase
            Price;

      (b)   a lease of the Poplar Lands for a term ending on August 31, 2011,
            provided that where any Poplar Licence expires or terminates earlier
            than May 31, 2011, the lease shall terminate from time to time with
            respect to the parcels comprised in any such Poplar Licence, only,
            on the 90th day after the expiry or termination of the Poplar
            Licence applicable to such parcels, without affecting in any way the
            Seller and Buyer's continuing rights and obligations under the lease
            with respect to the balance of the Poplar Lands. The lease shall be
            a triple net lease under which the Buyer shall be responsible for
            all maintenance, repair, replacements, insurance and any and all
            other matters or costs relating to the Poplar Lands, including an
            allocation of environmental liabilities on the same basis as is
            applicable to the Fee Simple Real Property pursuant to this
            Agreement which, for greater certainty, means that the Buyer
            assumes, and will indemnify the Seller for, all Environmental
            Liabilities with respect to the Poplar Lands except for those
            Environmental Liabilities that are subject to an indemnity to be
            provided by the Seller on the same terms and conditions and subject
            to the same time, thresholds and limits of liability set out in
            Article 10 and Article 14. The Buyer shall pay basic rent in a lump
            sum at the Time of Closing, which will form part of the

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<PAGE>

            Purchase Price, that gives the Seller a 5% annual return on the fair
            market value of the Poplar Lands excluding the timber. The Seller
            shall assign and the Buyer shall assume the rights and obligations
            of the Seller under the Poplar Licences; and

      (c)   an option to purchase the Poplar Lands exercisable in respect of the
            parcels under each Poplar Licence by written notice to the Seller
            within 60 days of the expiry or termination of the Poplar Licence
            applicable to such parcels. The consideration for the option shall
            be as follows:

            (i)   an option fee payable at the Time of Closing equal to the
                  amount by which that portion of the Purchase Price otherwise
                  allocated to the Poplar Interests exceeds the aggregate of the
                  payments made by the Buyer to the Seller under Sections
                  9.19(a) and 9.19(b), which shall form part of the Purchase
                  Price; and

            (ii)  one dollar in respect of the parcels under each Poplar Licence
                  payable on each closing date under the option to purchase.

            Any purchase of parcels under the option to purchase shall close 30
            days after the Buyer exercises the option in respect of such
            parcels, with the Buyer being responsible for any taxes or
            registration fees in respect of the purchase, including property
            transfer tax. The option shall also contain a put whereby the Seller
            may, within 60 days of the expiry or termination of a Poplar
            Licence, give written notice to the Buyer requiring the Buyer to
            acquire the parcels which are the subject of the Poplar Licence for
            one dollar and the Buyer shall close the purchase of those parcels
            30 days after the Seller exercises the put in respect of those
            parcels. On any acquisition of all or any part of the Poplar Lands,
            the Buyer assumes, and will indemnify the Seller for all
            Environmental Liabilities with respect to the acquired lands on the
            same terms and conditions as set out in this Agreement with respect
            to Fee Simple Real Property.

The Seller represents, warrants and covenants to the Buyer that the grant of the
timber reservation, lease and option to purchase shall not constitute a breach
of the Poplar Licences and will not invoke the right of first refusal to
purchase the Poplar Lands contained in the Poplar Licences. The Seller shall
indemnify and save harmless the Buyer Indemnified Parties from and against all
Liabilities suffered or incurred by the Buyer as a result of or arising directly
or indirectly out of or in connection with the breach or inaccuracy of this
representation, warranty and covenant. On the Closing Date, the Seller shall
grant to the Buyer a registrable lease and option to purchase incorporating the
terms of this Section which shall be registered in priority to any financial
charges affecting the Poplar Lands. Notwithstanding the provisions of clauses
(b) and (c) where portions of a parcel are comprised in more than one Poplar
Licence, the expiry date of the lease and commencement of the period for
exercise of the option to purchase and put shall be based on the latest expiry
or termination of the Poplar Licences applicable to such parcel. The Buyer
acknowledges and agrees that the Poplar Interests shall be subject to the
Permitted Encumbrances, which include, without limitation, the Poplar Licences.
The Seller shall, following execution and delivery of this Agreement, request
Pacifica Poplars Ltd. to waive

                                      -65-

<PAGE>

the rights of first refusal to purchase the Poplar Lands contained in the Poplar
Licences with respect to this transaction (provided the Buyer agrees to honour
such Licences). If Pacifica Poplars Ltd. agrees to so waive its rights of first
refusal to purchase, the Seller agrees to convey fee simple title to the Poplar
Lands to the Buyer at the Time of Closing in lieu of granting the Poplar
Interests and in such event the Poplar Licences, including the rights of first
refusal to purchase therein, shall continue to be Permitted Encumbrances.

9.20 SPROAT LOT 98 INTERESTS

The Seller shall grant the following interests (collectively, the "SPROAT LOT 98
INTERESTS") to the Buyer on the Closing Date:

      (a)   a timber reservation entitling the Buyer to all timber on Lot 98,
            and the right to harvest such timber, in consideration of the fair
            market value of such timber which shall form part of the Purchase
            Price;

      (b)   a lease of Lot 98 for a term ending on October 31, 2006, provided
            that if the Timberwest Licence expires or terminates earlier than
            July 18, 2006, the lease shall terminate on the 90th day after the
            expiry or termination of the Timberwest Licence. The lease shall be
            a triple net lease under which the Buyer shall be responsible for
            all maintenance, repair, replacements, insurance and any and all
            other matters or costs relating to Lot 98, including an allocation
            of environmental liabilities on the same basis as is applicable to
            the Fee Simple Real Property pursuant to this Agreement which, for
            greater certainty, means that the Buyer assumes, and will indemnify
            the Seller for, all Environmental Liabilities with respect to Lot 98
            except for those Environmental Liabilities that are subject to an
            indemnity to be provided by the Seller on the same terms and
            conditions and subject to the same time, thresholds and limits of
            liability set out in Article 10 and Article 14. The Buyer shall pay
            basic rent in a lump sum on the Closing Date that gives the Seller a
            5% annual return on the fair market value of Lot 98 excluding the
            timber. The Seller shall assign and the Buyer shall assume the
            rights and obligations of the Seller under the Timberwest Licence;

      (c)   an option to purchase Lot 98 exercisable by written notice to the
            Seller within 60 days of the expiry or termination of the Timberwest
            Licence. The consideration for the option shall be as follows:

            (i)   an option fee payable on the Closing Date of this Agreement
                  equal to the amount by which that portion of the Purchase
                  Price otherwise allocated to the Sproat Lot 98 Interests
                  exceeds the aggregate of the payments made by the Buyer to the
                  Seller under Sections 9.20(a) and 9.20(b), which shall form
                  part of the Purchase Price; and

            (ii)  one dollar on the closing date under the option to purchase.

      The purchase under the option to purchase shall close 30 days after the
      Buyer exercises the option, with the Buyer being responsible for any taxes
      or registration fees in respect of the purchase, including property
      transfer tax. The option shall also contain a put

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<PAGE>

      whereby the Seller may, within 60 days of the expiry or termination of the
      Timberwest Licence, give written notice to the Buyer requiring the Buyer
      to acquire Lot 98 for one dollar and the Buyer shall close the purchase of
      Lot 98 30 days after the Seller exercises the put. On the acquisition of
      Lot 98, the Buyer assumes, and will indemnify the Seller for all
      Environmental Liabilities with respect to the acquired lands on the same
      terms and conditions as set out in this Agreement with respect to Fee
      Simple Real Property; and

      (d)   an assignment of the sale proceeds if and when payable under the
            Option to Purchase (Right of First Refusal) G-4707 dated July 19,
            2001 between the Seller and Timberwest Forest Company, a partnership
            (as successor to TFL Forest Ltd.). The Buyer shall, at its own cost,
            perform the Seller's obligations to subdivide Lot 98 as provided in
            Option to Purchase (Right of First Refusal) G-4707 and shall
            otherwise administer that agreement at its own cost on behalf of the
            Seller. The Seller shall, at the request of the Buyer, cooperate
            with the Buyer to execute and deliver such documents and plans at
            the Buyer may request to effect such subdivision and sale.

The Seller represents, warrants and covenants to the Buyer that the grant of the
Sproat Lot 98 Interests shall not constitute a breach of the Option to Purchase
(Right of First Refusal) G-4707 and will not invoke the right of first refusal
to purchase Lot 98 contained therein. The Seller shall indemnify and save
harmless the Buyer Indemnified Parties from and against all losses suffered or
incurred by the Buyer as a result of or arising directly or indirectly out of or
in connection with the breach or inaccuracy of this representation, warranty and
covenant. On the Closing Date, the Seller shall grant to the Buyer a registrable
lease and option to purchase incorporating the terms of this Section which shall
be registered in priority to any financial charges affecting Lot 98. The Buyer
acknowledges and agrees that the Sproat Lot 98 Interests shall be subject to the
Permitted Encumbrances, which include, without limitation, the Timberwest
Licence and Option to Purchase (Right of First Refusal) G-4707. The Seller
shall, following execution and delivery of this Agreement, request Timberwest
Forest Company to waive such Right of First Refusal with respect to this
transaction (provided the Buyer agrees to honour the Timberwest Licence and
Option to Purchase (Right of First Refusal) G-4707). If Timberwest Forest
Company agrees to so waive its Right of First Refusal, the Seller agrees to
convey fee simple title to Lot 98 to the Buyer on the Closing Date in lieu of
granting the Sproat Lot 98 Interests and in such event the Timberwest Licence
and Option to Purchase (Right of First Refusal) G-4707 shall continue to be
Permitted Encumbrances.

9.21 LITIGATION MANAGEMENT AGREEMENT

On the Closing Date, the parties shall enter into a litigation management
agreement substantially in the form set out as Schedule 9.21 (the "LITIGATION
MANAGEMENT AGREEMENT").

9.22 NEW ENCUMBRANCES

During the Interim Period, the Seller shall provide written notice to the Buyer
of all new Encumbrances registered against Real Property.

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9.23 BOOT LAGOON ACCESS

The Buyer and the Seller shall grant to the other the following on the Closing
Date:

      (a)   the Buyer shall grant to the Seller a permanent, irrevocable
            easement for access and services over the Fee Simple Real Property
            designated as F-0338 and F-0022 in Schedule 1.1(uu) for the benefit
            of the Seller's Boot Lagoon Lands, which easement shall be in a form
            satisfactory to the Seller and the Buyer, each acting reasonably.
            The easement shall be a blanket easement, but shall contain a
            covenant whereby the access and utility works shall be limited to
            the location of Ash River Main to be shown by a sketch plan appended
            to the easement and to be 66 feet wide. The easement shall also
            contain a covenant of the Buyer and Seller to execute and deliver,
            at the request of the other and at the cost of the Buyer, a
            replacement easement with a Land Title Office survey plan limiting
            the easement area to the location of Ash River Main. The Buyer shall
            cause the easement and any replacement easement to be registered
            against that Fee Simple Real Property in priority to any financial
            Encumbrances securing monetary obligations. The Buyer shall, at its
            own cost, be responsible for repair and maintenance of the road in
            the easement area; and

      (b)   the Seller shall grant to the Buyer a permanent, irrevocable
            easement for access and services over the Boot Lagoon Lands for the
            benefit of the Fee Simple Real Property designated as F-0021 in
            Schedule 1.1(uu). The easement shall otherwise contain the same
            provisions as set forth in subsection (a) above. The Seller shall
            also grant to the Buyer a statutory right of way for the same
            purposes over the Boot Lagoon Lands and containing the same
            provisions as set forth in subsection (a) above.

9.24 BEACH CAMP ACCESS

The Buyer shall grant to the Seller on the Closing Date a permanent, irrevocable
easement for access and services over the Fee Simple Real Property designated as
F-4059 and F-2329 in Schedule 1.1(uu) for the benefit of the Seller's Beach Camp
Lands, which easement shall be in a form satisfactory to the Seller and the
Buyer, each acting reasonably. The easement shall be a blanket easement, but
shall contain a covenant whereby the access and utility works shall be limited
to the location of the existing access road to be shown by a sketch plan
appended to the easement and to be 66 feet wide. The easement shall also contain
a covenant of the Buyer and the Seller to execute and deliver, at the request of
the other and at the cost of the Buyer, a replacement easement with a Land Title
Office survey plan limiting the easement area to the location of that road. The
Buyer shall cause the easement and any replacement easement to be registered
against that Fee Simple Real Property in priority to any financial Encumbrances
securing monetary obligations. The Buyer and Seller shall share the repair and
maintenance costs of the road based on annual usage. The Buyer shall dedicate
the road at the request of the Seller if the Seller develops the Beach Camp
Lands in the future, but any such dedication shall be at the cost of the Seller.

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9.25 DISTRIBUTION SERVICES

For a period of six months following the Closing Date, the Seller agrees to
provide or to cause the Seller's distribution Affiliate (the "Seller
Distributor") to provide to the Buyer such services (the "Distribution
Services") as the Buyer may reasonably require to market and distribute the
products produced by the Purchased Business and either forming a part of the
Purchased Assets or produced by the Purchased Business. The Distribution
Services shall be provided by the Seller and/or the Seller Distributor to the
Buyer on the following general terms and conditions:

      (a)   the Seller Distributor shall not be obligated to provide any
            Distribution Services other than those marketing and distribution
            services of the nature of those provided by the Seller Distributor
            to the Purchased Business during the one year period prior to the
            Closing Date (the "Benchmark Period");

      (b)   the Seller Distributor shall provide the Distribution Services of a
            quantity and quality consistent with the quantity and quality
            provided by the Seller Distributor to the Purchased Business as well
            as other Third Parties during the Benchmark Period;

      (c)   the Seller Distributor shall provide the Distribution Services to
            the Buyer at a price similar to prices charges by the Seller
            Distributor to Third Parties for similar products and services; and

      (d)   the Distribution Services shall be provided on terms and conditions
            with respect to billing, method of payment, terms of payment, and
            other commercial terms and conditions as are substantially similar
            to such terms and conditions as are in place between the Seller
            Distributor and other Third Parties for similar products and
            services.

10.  ENVIRONMENTAL MATTERS

10.1 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES

The Seller represents and warrants to the Buyer at the date of execution and
delivery of this Agreement as follows, and acknowledges that the Buyer is
relying on the accuracy of each of the following representations and warranties
of the Seller in entering into this Agreement and completing the Purchase:

      (a)   COMPLIANCE WITH ENVIRONMENTAL LAWS - to the Seller's knowledge and
            except as disclosed in Schedule 10.1 or in the documents listed in
            Schedule 10.1:

            (i)   the Purchased Assets are now owned and the Purchased Business
                  is currently conducted in compliance with all Environmental
                  Laws in all material respects; and

            (ii)  there are no outstanding notices or any on-going or current
                  investigations by any Governmental Authority of any actual or
                  alleged material default

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                  or non-compliance under Environmental Laws with respect to the
                  Purchased Business or any of the Purchased Assets;

      (b)   ENVIRONMENTAL PERMITS - to the Seller's knowledge, and except as
            disclosed in Schedule 10.1 or in the documents listed in Schedule
            10.1:

            (i)   the Seller or the Acquired Entities hold all Environmental
                  Permits required to own, use and operate the Purchased Assets
                  and carry on the Purchased Business as currently conducted and
                  all such Environmental Permits are described in Schedule 10.1;

            (ii)  all of the Environmental Permits are valid, subsisting and in
                  good standing and in full force and effect in accordance with
                  their terms, are being complied with in all material respects,
                  and the Seller is not in material default or breach of any of
                  the Environmental Permits;

            (iii) no Formal Legal Proceeding has been served or commenced and
                  there have been no Claims from any Governmental Authority to
                  revoke, modify, replace or limit any of the Environmental
                  Permits in any respect that would have a materially adverse
                  effect on the portion of the Purchased Business to which that
                  Environmental Permit relates;

            (iv)  the Seller is not actively seeking to amend any of the
                  Environmental Permits, in any respect the failure to obtain
                  which would have a materially adverse effect on the portion of
                  the Purchased Business to which that Environmental Permit
                  relates; and

            (v)   subject to any consents required under Environmental Laws
                  being obtained, none of the Environmental Permits will become
                  void or be in default as a result of this Agreement or the
                  completion of the transactions contemplated in this Agreement;

      (c)   CONTAMINATION - to the Seller's knowledge and except as disclosed in
            Schedule 10.1 or in the documents listed in Schedule 10.1:

            (i)   none of the Fee Simple Real Property is at the Time of Closing
                  a Contaminated Site and no Remediation of any of the Fee
                  Simple Real Property is being conducted by any Person; and

            (ii)  none of the Leased Real Property or the property subject to
                  the Real Property Interests is a Contaminated Site as a result
                  of the operations or activities of the Purchased Business
                  before the Time of Closing and no Remediation of any of the
                  Leased Real Property or the property subject to the Real
                  Property Interests is being conducted by any Person where such
                  Remediation is related to the operations or activities of the
                  Purchased Business before the Time of Closing;

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      (d)   REPORTS AND RECORDS UNDER ENVIRONMENTAL LAWS - to the Seller's
            knowledge and except as disclosed in Schedule 10.1 or in the
            documents listed in Schedule 10.1, the Seller has truthfully and
            completely completed and filed in all material respects all data,
            reports and notices required under Environmental Laws in connection
            with the Purchased Assets within the time required under
            Environmental Laws; and

      (e)   ENVIRONMENTAL DISCLOSURE - to the knowledge of the Seller and except
            as disclosed in Schedule 10.1 or the documents listed in Schedule
            10.1:

            (i)   there are no material Claims by or against the Seller with
                  respect to the Environmental Condition of the Purchased
                  Assets; and

            (ii)  there is no Environmental Condition that could reasonably be
                  expected to have a Materially Adverse effect on the Purchased
                  Assets or the Purchased Business.

The Buyer acknowledges that the sole representations and warranties made by the
Seller with respect to the Environmental Condition of the Purchased Assets and
the Purchased Business are set out in this Section 10 and all other
representations and warranties in Article 6 or elsewhere in this Agreement or in
any documents delivered pursuant to this Agreement are deemed to, and will be
construed to, exclude such matters.

10.2 COVENANT AND LIMITATIONS ON LIABILITY

The Seller covenants (the "ENVIRONMENTAL COVENANTS") that if at any time before
the date that is:

      (a)   18 months after the Closing Date the Buyer provides to the Seller
            written notice of any breach by the Seller of, or any inaccuracy in,
            any of the representations and warranties made by the Seller in
            Section 10.1, other than subsection (c), then, subject to the
            limitations in Article 14 and this Article 10, the Buyer will be
            indemnified by the Seller from and against all Liability or Losses
            suffered or incurred by the Buyer as a result of or arising directly
            or indirectly out of or in connection with that breach or
            inaccuracy;

      (b)   18 months after the Closing Date the Buyer provides to the Seller
            written notice of a breach by the Seller of, or any inaccuracy in,
            the representation made by the Seller in subsection (c) then,
            subject to the limitations in Article 14 and this Article 10, the
            Seller shall carry out Remediation at that Contaminated Site to the
            extent required to achieve material compliance with the Remediation
            Standards as applicable to the use of that site at the Closing Date;
            or

      (c)   18 months after the Closing Date the Buyer provides to the Seller
            written notice of:

            (i)   a breach by the Seller of, or any inaccuracy in, the
                  representation made by the Seller in subsection 10.1(c); and

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            (ii)  that the Buyer is subject to Formal Legal Proceedings
                  commenced by an arm's length Third Party (excluding any Third
                  Party to which the Buyer has transferred the Contaminated Site
                  after the Time of Closing) with respect to Contaminants that
                  were at the site at the Time of Closing,

            then, subject to the limitations in Article 14 and this Article 10,
            the Seller shall indemnify the Buyer from and against all Losses
            suffered or incurred by the Buyer in connection with the Formal
            Legal Proceeding, provided that the Seller shall be entitled to
            assume control of the negotiation, settlement or defence of the
            Formal Legal Proceeding in accordance with Article 14;

      (d)   Notwithstanding subsection 10.2 (b) and (c):

            (i)   the Seller shall only be required to carry out Remediation
                  with respect to those Contaminants that were present on the
                  Contaminated Site at the Time of Closing and the Buyer will be
                  solely responsible for the costs of remediating all other
                  Contaminants; and

            (ii)  the Buyer will be solely responsible for all costs of
                  remediating any Contaminants and all Losses or Liabilities for
                  any Contaminants to the extent such remediation, Losses or
                  Liabilities relate to standards that are more stringent than
                  the Remediation Standards;

      (e)   For greater certainty, but without limiting the Seller's obligations
            under subsection 10.2(c), if Remediation is required pursuant to
            this Section 10.2 then such Remediation is the Buyer's sole remedy
            for breach of the representation in subsection 10.1(c) and all other
            representations in Section 10.1 are deemed to exclude all matters
            that are subject to the representation in Section 10.1(c);

      (f)   Section 10.2 shall not require the Seller to pay or satisfy any
            Liability or Loss or to provide any indemnity for or to carry out
            any Remediation with respect to:

            (i)   any consequential, indirect, punitive or special losses or
                  damages, including loss of profit or loss of opportunity;

            (ii)  any business interruption that may be suffered by the Buyer,
                  except to the extent the Seller breaches its obligation
                  pursuant to Section 10.7 to conduct the Remediation work in a
                  manner that does not unreasonably interfere with the conduct
                  of the Purchased Business;

            (iii) any Environmental Condition or Remediation of any Contaminated
                  Site to the extent that any act or omission of the Buyer or
                  any other Person after the Time of Closing aggravated or
                  worsened, or materially contributed to, or otherwise increased
                  the cost of remedying the Environmental Condition or
                  Remediating the Contaminated Site, provided that closure or
                  decommissioning of a mill, plant, camp or other facilities or
                  improvements that are included in the Purchased Assets will
                  not, by itself, be considered to be an aggravation, worsening
                  or contribution to or increase in cost of

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<PAGE>

                  remedying an Environmental Condition or Remediating a
                  Contaminated Site;

            (iv)  any Environmental Condition or Remediation of any Contaminated
                  Site where the requirement to remedy the Environmental
                  Condition or to Remediate the Contaminated Site arises as a
                  result of any change in use of the Purchased Assets after the
                  Time of Closing.

10.3 PROCESS

The provisions of Article 14 apply to any Claim to enforce this Article 10,
mutatis mutandis.

10.4 NOTICE

The Buyer shall promptly notify the Seller of any pending or threatened Formal
Legal Proceedings that might give rise to a Claim by the Buyer against the
Seller pursuant to the Environmental Covenants and the Seller may elect, at its
expense, to participate in or assume control of the negotiation, settlement or
defence of the pending or threatened Formal Legal Proceedings or to carry out
Remediation pursuant to the Environmental Covenants at the site subject to the
pending or threatened Formal Legal Proceedings and the provisions of this
Article 10, including without limitation, Section 10.7 shall apply to such
Remediation.

10.5 SOLE RECOURSE AND RELEASE

The Buyer agrees that its sole recourse against the Seller with respect to any
Environmental Condition shall be recourse under the Environmental Covenants and
the Buyer and its Affiliates and the shareholders, directors, officers, agents,
employees, representatives, successors and assigns of the Buyer and its
Affiliates (the "BUYER PARTIES") hereby release the Seller and its Affiliates
and the shareholders, directors, officers, agents, employees, representatives,
successors and assigns of the Seller and its Affiliates (the "SELLER PARTIES")
from any Claims, Legal Proceedings, Liabilities and Losses (whether or not, such
Liabilities or Losses arise out of a Claim or Legal Proceeding), which the Buyer
Parties have, may have or will have arising from or in any way related directly
or indirectly to any Environmental Liability or any Environmental Condition
related to or involving the Purchased Assets or the Purchased Business except
for a claim to enforce the Environmental Covenants. The Buyer Parties shall not
directly or indirectly commence, assert or pursue, or threaten to commence,
assert or pursue, any type of Claim or Legal Proceeding (including an order
issued by a Governmental Authority) against any of the Seller Parties relating
to any Environmental Condition involving the Purchased Assets or the Purchased
Business other than a claim to enforce the Environmental Covenants, including:

      (a)   knowingly facilitating, assisting, promoting or encouraging any
            other Person or Governmental Authority to commence, assert or pursue
            or threaten to commence, assert or pursue a Claim or Legal
            Proceeding provided that compliance by the Buyer with any
            obligations under Applicable Laws to report, provided that any such
            report is limited to those facts that are required to be reported
            under Applicable Laws, an Environmental Condition, will not be
            considered to be a breach of this subsection; or

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      (b)   directly or indirectly (including encouraging any Person or
            Governmental Authority to) taking any material step or knowingly
            doing anything that is intended to directly or indirectly circumvent
            the objective or intent of the foregoing release.

If the Buyer breaches any of its covenants pursuant to this Section 10.5, the
Seller shall not be required to provide any indemnity to the Buyer in respect of
the matter with respect to which the Buyer has breached its covenant or
covenants (including, without limitation) any Claim or Legal Proceeding that may
arise with respect to that matter and the Buyer shall bear the cost of any Claim
or Legal Proceeding arising as a result of such breach regardless of any
limitations in subsection 14.13(b) of this Agreement.

10.6 SUBROGATION

To the extent that a Third Party caused or is liable with respect to an
Environmental Condition for which the Buyer is successful in obtaining recourse
against the Seller under this Agreement, the Seller shall be subrogated to all
rights of the Buyer with respect to those causes of action and Claims against
the Third Party, and the Buyer shall provide all reasonable assistance and
cooperation the Seller may request from time to time in respect of such causes
of action and Claims including providing all relevant On-Site Books and Records
and witnesses the Seller may require to pursue such causes of action and Claims.

10.7 CONTROL OF REMEDIATION

      (a)   Subject to subsection (b), the Seller shall direct and control any
            Remediation of Contaminated Sites the Seller is required to carry
            out pursuant to the Environmental Covenants including, by way of
            example and not of limitation, the selection and appointment of
            consultants and contractors required to carry out the Remediation,
            the establishment of the scope, strategy, schedule and budget for
            Remediation, the selection of materials, methods and protocols to
            accomplish the Remediation and the selection of the applicable
            Remediation standards, provided that the Remediation does not
            unreasonably interfere with the operation of the Purchased Assets
            and the carrying on of the Purchased Business as a going concern and
            provided the Remediation meets the Remediation Standards required
            under this Agreement. The Buyer shall permit the Seller and its
            employees, contractors and agents reasonable access to the Purchased
            Assets upon prior notice to inspect, test, obtain samples of
            substances or environmental media and to carry out Remediation.

      (b)   In controlling Remediation under subsection (a), the Seller will
            retain only qualified environmental consultants and contractors to
            perform Remediation studies and work, will comply with all
            Applicable Laws, and will conduct the Remediation in a manner that
            does not unreasonably interfere with the conduct of the Buyer's
            operations and business. The Seller will indemnify the Buyer against
            any Third Party Claims for personal injury or damage to property
            arising from any negligence by the Seller or its consultants or
            contractors in the conduct of the Remediation work and, on
            completion of the Remediation, will restore the

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            Buyer's property to substantially the condition it was before the
            commencement of the Remediation. The Buyer may at its sole expense
            (and with or without its own consultants) monitor the Remediation,
            including any field work undertaken by the Seller or its consultants
            and is entitled to copies of all reports, studies, investigations,
            analysis, correspondence and field notes prepared in connection with
            the Remediation. The Seller will provide the Buyer with progress
            reports on the Remediation so that the Buyer is kept informed on the
            status of the Remediation. If the Seller does not commence and
            diligently perform the Remediation in accordance with Section
            10.2(b), the Buyer may, after providing written notice of such
            default and allowing the Seller a reasonable time in the
            circumstances to correct such default, undertake the Remediation at
            Seller's cost, in which event the Seller will pay the amount of the
            Buyer's reasonable costs of Remediation.

10.8 DISPUTE RESOLUTION FOR ENVIRONMENTAL WORK

If there is a dispute over whether a particular Environmental Condition existed
before the Closing Date or the scope or adequacy of any Remediation required
under the Environmental Covenants, the parties agree to attempt to resolve the
matters in dispute within sixty days from the date either party gives notice of
the dispute to the other. If the parties cannot resolve the dispute within that
sixty (60) day period, each party shall identify an Environmental Expert to
provide a non-binding, advisory opinion. If the parties are unable to agree on a
mutually acceptable Environmental Expert, either party may apply to the
Association of Professional Engineers to have an Environmental Expert appointed,
which may involve appointment of an Environmental Expert from among the two
individuals initially proposed by the parties or from a more extensive list of
candidates provided by the parties. The Environmental Expert shall be given
access to existing materials and information reasonably requested by him or her
and shall be provided with all other materials or submissions as either party
considers to be material, acting reasonably. The Environmental Expert will act
as an expert and not as an arbitrator and shall render a non-binding, advisory
opinion in a written report to the parties setting forth her or his opinion as
to the resolution of the matters in dispute. The parties waive any objection to
the offering into evidence of the Environmental Expert's report and opinion or
related testimony in the event of any administrative or judicial proceeding or
arbitration between them. The fees and expenses of the Environmental Expert
shall be borne by the parties in equal shares. If after receipt of the
Environmental Expert's report, the parties are unable to resolve the matter in
dispute, either party may have recourse to the courts of British Columbia.

10.9 WAIVER OF SITE PROFILE

The Buyer waives the requirement, if any, under the Environmental Management Act
(British Columbia) or any replacement legislation, for the Seller to provide a
site profile for any of the Real Property.

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11.  EMPLOYEES

11.1 SALARIED EMPLOYEES

      (a)   The Buyer shall contemporaneously with the Time of Closing, offer
            employment to all active Salaried Employees (other than Employees
            employed by the Acquired Entities) listed on Schedule 1.1(ii) as
            updated to the Time of Closing in accordance with the terms of this
            agreement, and restate that offer on request of the Seller, provided
            that the request is made on a timely basis following Closing.

      (b)   The Buyer shall also offer employment to all Salaried Employees
            (other than Employees employed by the Acquired Entities) on
            authorized leave of absence or temporary leave of absence, including
            absence for workers compensation leave, short term or long term
            disability, parental and maternity leave, upon any such Employee
            becoming eligible for reinstatement for active employment.

      (c)   All offers contemplated in (a) and (b) above shall (i) be at a base
            salary no less than the Employee's base salary at the Time of
            Closing (ii) provide for a pension benefit entitlement which
            commences accruing from and after the Time of Closing and which
            entitlement is initially on substantially the same terms as are
            applicable to such Employees as of the Time of Closing (iii) provide
            for non-pension benefits as shall be competitive in the forest
            industry and (iv) shall recognize the service of the Employees for
            the purposes of vacation, service awards and safety awards and all
            severance and termination obligations, as if they had been employed
            by the Buyer since their individual dates of hire by the Seller or
            predecessor of the Seller.

      (d)   If applicable, for the purpose of determining the eligibility of a
            Transferred Employee for membership or benefits under a non-pension
            benefit plan established by the Buyer for Transferred Employees that
            are Salaried Employees:

            (i)   their period of employment shall include employment as
                  recognized with both the Seller and the Buyer and shall be
                  deemed not to have been interrupted by the transactions
                  contemplated hereby; and

            (ii)  their period of membership shall include membership in both
                  the relevant benefit plan of the Seller and the relevant
                  benefit plan of the Buyer and shall be deemed not to have been
                  interrupted by the transactions contemplated hereby.

      (e)   All Transferred Employees that are Salaried Employees shall be
            entitled to benefits under any relevant non-pension benefit plans
            established by the Buyer with respect to any condition existing at
            or event occurring before the Time of Closing, to the extent such
            condition was eligible for benefits under a Benefit Plan of the
            Seller and to the extent that the condition would otherwise be
            covered under the non-pension benefit plans established by the Buyer
            if such condition had occurred after the Time of Closing and
            provided the Seller disclosed in writing to the Buyer the existence
            of such condition and the occurrence of the event before

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            the Closing Date or promptly following the time of the Seller first
            having knowledge of the existence of such condition and the
            occurrence of the event. The Transferred Employees shall begin to
            accrue benefits under the non-pension benefit plans established by
            the Buyer as of the Time of Closing with respect to their employment
            by the Buyer. For greater certainty, nothing contained in this
            Section 11.1(e) shall in any way limit the Buyer's discretion in
            determining the benefits which are or are not provided by the
            Buyer's non-pension benefit plans.

11.2 UNION EMPLOYEES

      (a)   The Buyer acknowledges and agrees that it will be a successor
            employer and will assume all obligations to Union Employees in
            respect of (including obligations thereunder to employ Union
            Employees that are not currently actively employed in the Purchased
            Business as and when required under the Collective Agreements) and
            be bound by the terms of the Collective Agreements as required by
            Applicable Law until their termination, expiration or replacement
            and will make such offers of employment to all Union Employees as
            are required in connection therewith.

      (b)   The Seller shall deliver all notices required under the Collective
            Agreements or under Applicable Law in a manner sufficient to provide
            appropriate notice of Closing as required by the Collective
            Agreements.

      (c)   The Buyer acknowledges and agrees that all grievances, references
            and arbitrations under the Collective Agreements, that are made,
            filed, commenced or instituted before or after the Closing Date,
            including those based substantially on events or circumstances that
            occurred, existed or were initiated before the Closing Date, will be
            the sole responsibility of the Buyer. For greater certainty, the
            Buyer acknowledges that it will be solely responsible for any
            Liabilities that may arise as a result of any labour relations board
            decisions involving or affecting persons formerly employed in the
            Purchased Business under a Collective Agreement relating to the
            transactions set out in the Disclosure Letter.

11.3 REMITTANCES

The Seller shall remit promptly to the Buyer any reimbursements received by the
Seller from all relevant workers compensation boards or other Governmental
Authorities after the Time of Closing with respect to any and all claims filed
by the Employees with respect to periods after the Time of Closing. The Buyer
shall remit promptly to the Seller any reimbursements received by the Buyer from
all relevant workers compensation boards or other Governmental Authorities after
the Time of Closing with respect to any and all claims filed by the Employees
with respect to periods before the Time of Closing.

11.4 BENEFIT PLANS

      (a)   Effective as of the Time of Closing: the Buyer shall become the
            administrator of the Pension Plan for Employees of Mid-Island Reman
            Inc. and the Seller shall

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            assign to the Buyer Standard Life Assurance Company Policy No.
            RS100400-0131; and

      (b)   The Seller acknowledges that it is solely responsible for all
            obligations to Employees and former employees of the Purchased
            Business under its Benefit Plans (including, without limitation, any
            Benefit Plan contemplated in the letter dated October 22, 2003 from
            Weyerhaeuser confirming the continuation of certain post retirement
            benefits previously provided by MacMillan Bloedel to retired
            employees), including, without limitation, any benefits to which an
            Employee would have been entitled upon voluntary termination of
            employment (by way of retirement or otherwise) at the Time of
            Closing and that any Liabilities of the Seller for failure to
            provide or otherwise be responsible for such benefits and any
            changes made by the Seller to its Benefit Plans constitute
            Liabilities that are not Assumed Liabilities for the purposes of
            Section 5.2 and the Buyer's obligations under this agreement,
            including without limitation the obligations of the Buyer to
            indemnify the Seller pursuant to Section 14.2(b) shall be deemed not
            to include any amount related to the matters for which the Seller
            has responsibility for under this Section 11.4(b).

12.  CONDITIONS OF CLOSING

12.1 CONDITIONS OF CLOSING IN FAVOUR OF THE BUYER

The Purchase is subject to the following terms and conditions for the exclusive
benefit of the Buyer, to be performed or fulfilled at or before the Time of
Closing:

      (a)   the representations and warranties of the Seller contained in this
            Agreement, as may be modified pursuant to Section 1.15, shall be
            true and correct in all material respects at the Time of Closing
            with the same force and effect as if such representations and
            warranties were made at and as of such time, and a certificate of a
            senior officer of the Seller, dated the Closing Date, to that effect
            shall have been delivered to the Buyer, such certificate to be in
            form and substance satisfactory to the Buyer, acting reasonably;

      (b)   all of the terms, covenants and conditions of this Agreement to be
            complied with or performed by the Seller at or before the Time of
            Closing shall have been complied with or performed in all material
            respects and a certificate of a senior officer of the Seller, dated
            the Closing Date, to that effect shall have been delivered to the
            Buyer, such certificate to be in form and substance satisfactory to
            the Buyer, acting reasonably;

      (c)   all of the Closing Consents shall have been obtained in each case in
            form and substance satisfactory to the Buyer, acting reasonably;

      (d)   the Seller and the Buyer shall have entered into the Transitional
            Services Agreement;

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      (e)   no injunction or restraining order of a court or administrative
            tribunal of competent jurisdiction shall be in effect which enjoins
            or prohibits the Purchase;

      (f)   there shall have been no Materially Adverse change in the condition
            (financial or otherwise), assets, Liabilities, operations, earnings,
            business or prospects of the Purchased Business or the Purchased
            Assets since the date of the most recent of the Financial
            Statements; provided however, that, without limiting the generality
            of the foregoing, any change that results directly or indirectly in
            the diminution of value of the Purchased Business or the Purchased
            Assets by more than 20% of the Purchase Price shall be deemed to be
            Materially Adverse;

      (g)   all actions, proceedings, instruments and documents required from
            the Seller to implement this Agreement, or that are instrumental
            thereto, shall have been taken, executed or delivered, as the case
            may be, by the Seller;

      (h)   the Seller shall have delivered to the Buyer a favourable opinion of
            counsel to the Seller in form and substance reasonably satisfactory
            to the Buyer and its counsel;

      (i)   the Minister of Forests of British Columbia has provided a written
            notice to proceed under Section 54.1 of the Forest Act (British
            Columbia) with respect to the transfer of the Timber Tenures from
            the Seller to the Buyer on terms mutually acceptable to the Buyer
            and Seller, each acting reasonably, and the Closing shall occur by
            the date specified in that notice as the latest date by which the
            Purchase must be completed;

      (j)   the Minister of Forests of British Columbia has approved the
            assignment and assumption agreement in the form to be signed at
            Closing pursuant to which the Seller will transfer to the Buyer, and
            the Buyer shall assume and agree to perform, all of the Forestry
            Liabilities;

      (k)   the Competition Act Approval shall have been obtained and HSR
            Compliance shall have occurred, in each case, without conditions
            that would have a Materially Adverse effect on the Buyer, the
            business of the Buyer or the value of the Purchased Assets or the
            Purchased Business, provided that any consent order or other
            agreement reached with a Governmental Authority in order to obtain
            such Approvals shall not be considered in the determination of
            whether there has been a Materially Adverse effect on the Buyer, the
            business of the Buyer or the value of the Purchased Assets or
            Purchased Business; and

      (l)   the Seller shall have purchased on or before the Time of Closing,
            from the entity known as EDS, the computer hardware, routers,
            switches and other equipment that is currently leased by the Seller
            from that entity and that is required in the operation of the
            Purchased Business, or otherwise made the use of that computer
            hardware, routers, switches and other equipment available to the
            Buyer at a nominal fee in perpetuity from and after the Time of
            Closing.

If any of the conditions contained in this Section 12.1 shall not be performed
or fulfilled at or before the Time of Closing or such earlier time as noted in
this Section 12.1 to the satisfaction of

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the Buyer, acting reasonably, the Buyer may, by notice to the Seller, terminate
this Agreement and the obligations of the Seller and the Buyer under this
Agreement, other than the obligations contained in Sections 16.3 and 16.4, shall
terminate forthwith.

12.2 CONDITIONS OF CLOSING IN FAVOUR OF THE SELLER

The Purchase is subject to the following terms and conditions for the exclusive
benefit of the Seller, to be performed or fulfilled at or before the Time of
Closing:

      (a)   the representations and warranties of the Buyer contained in this
            Agreement shall be true and correct in all material respects at the
            Time of Closing with the same force and effect as if such
            representations and warranties were made at and as of such time, and
            a certificate of a duly authorized officer of the Buyer, dated the
            Closing Date, to that effect shall have been delivered to the
            Seller, such certificate to be in form and substance satisfactory to
            the Seller, acting reasonably;

      (b)   all of the terms, covenants and conditions of this Agreement to be
            complied with or performed by the Buyer at or before the Time of
            Closing shall have been complied with or performed in all material
            respects, and a certificate of a duly authorized officer of the
            Buyer dated the Closing Date, to that effect shall have been
            delivered to the Seller, such certificate to be in form and
            substance satisfactory to the Seller, acting reasonably;

      (c)   no injunction or restraining order of a court or administrative
            tribunal of competent jurisdiction shall be in effect which enjoins
            or prohibits the Purchase;

      (d)   all actions, proceedings, instruments and documents required from
            the Buyer to implement this Agreement, or that are instrumental
            thereto, shall have been taken, executed or delivered, as the case
            may be, by the Buyer;

      (e)   the Buyer shall have delivered to the Seller a favourable opinion of
            counsel to the Buyer in form and substance reasonably satisfactory
            to the Seller and its counsel;

      (f)   the Minister of Forests of British Columbia shall have provided a
            written notice to proceed under section 54.1 of the Forest Act
            (British Columbia) with respect to the transfer of the Timber
            Tenures from the Seller to the Buyer on terms acceptable to the
            Buyer and the Seller, each acting reasonably, and the Closing shall
            occur by the date specified in that notice as the latest date by
            which the Purchase must be completed;

      (g)   the Minister of Forests of British Columbia shall have approved the
            assignment and assumption agreement in the form to be signed at
            Closing pursuant to which the Seller will transfer to the Buyer, and
            the Buyer shall assume and agree to perform, all of the Forestry
            Liabilities; and

      (h)   all of the Closing Consents shall have been obtained in each case in
            form and substance satisfactory to the Seller, acting reasonably.

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<PAGE>

If any of the conditions contained in this Section 12.2 shall not be performed
or fulfilled at or before the Time of Closing to the satisfaction of the Seller
acting reasonably, the Seller may, by notice to the Buyer, terminate this
Agreement and the obligations of the Seller and the Buyer under this Agreement,
other than the obligations contained in Sections 16.3 and 16.4, shall terminate
forthwith.

13.  CLOSING DATE AND TRANSFER OF POSSESSION

13.1 TRANSFER

Subject to compliance with the terms and conditions hereof, the transfer of
ownership and possession of the Purchased Assets shall be deemed to occur and
take effect as at the Time of Closing.

13.2 PLACE OF CLOSING

The closing shall take place on the Closing Date at the offices of Borden Ladner
Gervais LLP in Vancouver.

13.3 DELIVERY OF CLOSING DOCUMENTS

      (a)   On or before the Closing Date, the Seller shall deliver or arrange
            for the delivery to the Buyer:

            (i)   all necessary deeds, conveyances, bills of sale, assurances,
                  transfers, assignments and any other documentation necessary
                  or reasonably required to transfer the Purchased Assets to the
                  Buyer with good title thereto, free and clear of all
                  Encumbrances, except for Permitted Encumbrances in registrable
                  form, as applicable;

            (ii)  payment of the amount of the Forestry Liabilities pursuant to
                  Section 3.3;

            (iii) a certificate of a senior officer of the Seller (in his or her
                  representative and not personal capacity), dated the Closing
                  Date with respect to Subsection 12.1(a) and 12.1(b);

            (iv)  a copy certified by a senior officer of the Seller (in his or
                  her representative and not personal capacity) as of the
                  Closing Date of the resolution of the directors of the Seller
                  authorizing the execution, delivery and performance by the
                  Seller of this Agreement and any material documents to be
                  provided by it pursuant to the provisions of this Agreement;

            (v)   the GST election pursuant to Section 4.1(c) duly signed by the
                  Seller;

            (vi)  the Transitional Services Agreement and Litigation Management
                  Agreement duly signed by the Seller;

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            (vii) an opinion of the Seller's counsel in form and substance
                  satisfactory to the Buyer and the Buyer's counsel, acting
                  reasonably;

            (viii) the Closing Consents to be delivered by the Seller;

            (ix)  the lease and sublease documents for Trus Joist, Tokyo and 925
                  W. Georgia; and

            (x)   such other documents relevant to the closing of the
                  transactions contemplated hereby as the Buyer, acting
                  reasonably, may request.

      (b)   On or before the Closing Date, the Buyer shall deliver or arrange
            for the delivery to the Seller:

            (i)   confirmation of payment of the amount of $1,221,500,000 (as
                  adjusted by Section 3.12(b)) and the Net Working Capital
                  Estimate pursuant to Subsection 3.2(a);

            (ii)  all documents necessary or reasonably required with respect to
                  the assumption by the Buyer from and after the Time of Closing
                  of the Assumed Liabilities, including without limitation, an
                  assumption agreement with respect to the Assumed Liabilities
                  each in form and substance acceptable to the Seller and Buyer
                  acting reasonably;

            (iii) copies certified by a senior officer of the Buyer (in his or
                  her representative and not personal capacity) as of the
                  Closing Date of the resolution of the directors of the Buyer
                  authorizing the execution, delivery and performance by the
                  Buyer of this Agreement and any documents to be provided by it
                  pursuant to the provisions of this Agreement;

            (iv)  a certificate of a senior officer of the Buyer (in his or her
                  representative and not personal capacity) dated the Closing
                  Date pursuant to Subsection 12.2(a) and 12.2(b);

            (v)   the GST election pursuant to Section 4.1(c) duly signed by the
                  Buyer;

            (vi)  the Transitional Services Agreement and Litigation Management
                  Agreement duly signed by the Buyer;

            (vii) an opinion of the Buyer's counsel in form and substance
                  satisfactory to the Seller and the Seller's counsel, acting
                  reasonably;

            (viii) the lease and sublease documents for Trus Joist, Tokyo and
                  925 West Georgia;

            (ix)  the Closing Consents to be delivered by the Buyer; and

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<PAGE>

            (x)   such other documents relevant to the closing of the
                  transactions contemplated hereby as the Seller, acting
                  reasonably, may request.

13.4 FURTHER ASSURANCES

Each party to this Agreement covenants and agrees that it will at all times
after the Closing Date, at the expense of the requesting party, promptly execute
and deliver all such documents, including, without limitation, all such
additional conveyances, transfers, consents and other assurances and do all such
other acts and things as the other party, acting reasonably, may from time to
time request be executed or done in order to better evidence or perfect or
effectuate any provision of this Agreement or of any agreement or other document
executed pursuant to this Agreement or any of the respective obligations
intended to be created hereby or thereby.

13.5 REGISTRATION OF TRANSFER OF REAL PROPERTY

All closing documents shall be executed and placed into escrow at the offices of
the Seller's Solicitors at 9:00 a.m. on the third Business Day prior to the
Closing Date. The Buyer shall provide the monies referred to in subsection
3.2(a) to its solicitors in trust by the same deadline. The closing documents
and those shall then be held in escrow until released as provided in this
Section. Upon all closing documents being escrowed and receipt by the Seller's
solicitors of written confirmation from the Buyer's solicitors that they hold
the monies referred to in Subsection 3.2(a) in trust, the transfers and
assignments in respect of the Real Property which are to be registered in the
Land Title Office shall be released to the Buyer's solicitors and the Buyer
shall cause the Buyer's solicitors to submit the transfers and assignments for
registration in the applicable Land Title Office. Upon making application for
registration of such transfers and assignments and upon the Buyer's solicitors,
acting reasonably, being satisfied on conducting a post-filing for registration
check of the title to such Real Property that such post-filing for registration
checks disclose only the following:

      (a)   the existing title numbers to such Real Property;

      (b)   the Permitted Encumbrances;

      (c)   pending numbers assigned to the transfers and assignments; and

      (d)   pending numbers assigned to any Encumbrances granted by or filed
            against the Buyer,

the Buyer's solicitors shall provide written notification of same to the
Seller's solicitors and the Buyer shall cause its solicitors to deliver to the
Seller at the Closing the monies referred to in Subsection 3.2(a), the Seller
shall cause its solicitors to deliver to Buyer the monies referenced to in
Section 3.3 and the closing documents held in escrow pursuant to this Section
shall be delivered at the Closing to the appropriate party, subject to the
satisfaction or waiver of any other applicable conditions in this Agreement. If
such post-filing for registration checks are not received by the Time of
Closing, or if the other transactions contemplated by this Agreement to occur at
the Closing have not occurred, and the monies referred to in Subsections 3.2(a)
and 3.3 have not been paid or tendered to and accepted by the receiving party in
the manner contemplated herein, then the Buyer shall, upon the written request
of the Seller or its solicitors,

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<PAGE>

forthwith cause its solicitors to make application to the Land Title Office for
withdrawal of the transfers and assignments and execute and deliver to the
Seller all instruments required to reconvey such Real Property to the Seller,
all without prejudice to any rights or remedies of the parties under this
Agreement, and upon receipt by such solicitors of the transfers and assignments
and delivery of same to the Seller, the solicitors for the Buyer shall release
the monies referred to in Subsection 3.2(a) to the Buyer, together with any and
all interest earned thereon, the solicitors for the Seller shall release the
monies referred to in Section 3.3 to the Seller, together with any and all
interest earned thereon and the remaining documents held by the solicitors shall
be redelivered to the relevant maker or makers thereof for cancellation, without
in any way impairing the rights and obligations of the parties to one another
under this Agreement. Any interest earned on the monies referred to in
subsection 3.2(a) during the escrow period shall be for the Buyer's account.

13.6 POST-CLOSING NOTIFICATION

Upon completion of the Closing, the Buyer and the Seller will confirm the
completion in writing to the Minister of Forests of British Columbia within
twenty-one (21) days after the completion as required by section 54.2 of the
Forest Act (British Columbia).

14.  INDEMNIFICATION

14.1 INDEMNIFICATION BY THE SELLER

Subject to Article 10 and the other provisions of this Article 14, the Seller
agrees to indemnify and save harmless the Buyer Indemnified Parties from and
against all Losses suffered or incurred by the Buyer as a result of or arising
directly or indirectly out of or in connection with:

      (a)   REPRESENTATIONS AND WARRANTIES - any breach by the Seller of, or any
            inaccuracy in, any representation or warranty of the Seller
            contained in this Agreement or in transfer document, certificate,
            document or instrument delivered by the Seller to the Buyer pursuant
            to this Agreement, but excluding the representations in Section
            10.1;

      (b)   LIABILITIES AND TAXES - all Liabilities of the Seller, contingent or
            otherwise, existing on the Closing Date other than the Assumed
            Liabilities and Taxes that are the responsibility of the Buyer under
            Section 4.2;

      (c)   COVENANTS - any breach or non-performance by the Seller of any
            covenant to be performed by the Seller that is contained in this
            Agreement or in any transfer document, certificate, document or
            instrument delivered by the Seller to the Buyer pursuant to this
            Agreement;

      (d)   SECTION 54.6 LIABILITIES - any joint and several liabilities imposed
            on the Buyer by subsection 54.6(2) of the Forest Act (British
            Columbia) for any Liabilities of the Seller that are not Assumed
            Liabilities to the extent the Buyer is not otherwise indemnified by
            the Seller for any such liability; and

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<PAGE>

      (e)   TIMBER REALLOCATION AGREEMENT - any Claim made by the Province of
            British Columbia under the Timber Reallocation Agreement in respect
            of a road, facility or soft costs for which the Seller is
            responsible under Section 2.5.

No claims for indemnification arising out of a breach or inaccuracy of any
representation or warranty of the Seller under subsection 14.1(a) may be made by
the Buyer Indemnified Parties pursuant to this section 14.1 unless notice of the
claim in accordance with section 14.3 is given by the Buyer Indemnified Parties
to the Seller:

      (f)   REPRESENTATIONS AND WARRANTIES - in the case of a claim with respect
            to a representation and warranty, except as expressly provided
            below, within a period of 18 months from the Closing Date;

      (g)   TITLE MATTERS - In the case a claim with respect to the
            representations and warranties contained in any of Sections 6.2(a),
            6.3, 6.4, 6.7 or 6.9, as to which a claim may be made at any time;

      (h)   TAXES - in the case of a claim with respect to the representation
            and warranty contained in section 6.21 within a period commencing on
            the Closing Date and ending on a date which is 60 days after the
            date on which the last applicable limitation period under any
            Applicable Law relating to Tax matters expires with respect to any
            taxation year that is relevant in determining any liability with
            respect to those Tax matters;

and upon the expiry of the relevant limitation period, the Seller shall have no
further liability to the Buyer Indemnified Parties with respect to the
representations and warranties referred to in those clauses except with respect
to claims that have been made within the times and in accordance with the
provisions set forth above. The Buyer agrees that its sole recourse against the
Seller in the event of any breach by the Seller of, or any inaccuracy in, any
representation or warranty of the Seller contained in this Agreement shall be
recourse to a claim for indemnification under this Article 14 and Article 10, if
applicable.

14.2 INDEMNIFICATION BY THE BUYER

      (a)   Subject to the other provisions of this Article 14, the Buyer agrees
            to indemnify and save harmless the Seller Indemnified Parties from
            and against all Losses suffered or incurred by the Seller
            Indemnified Parties as a result of or arising directly or indirectly
            out of or in connection with:

            (i)   REPRESENTATIONS AND WARRANTIES - any breach by the Buyer of,
                  or any inaccuracy in, any representation or warranty contained
                  in this Agreement;

            (ii)  COVENANTS - any breach or non-performance by the Buyer of any
                  covenant to be performed by the Buyer that is contained in
                  this Agreement;

            (iii) SECTION 54.6 LIABILITIES - any joint and several liability
                  imposed on the Seller by subsection 54.6(2) of the Forest Act
                  (British Columbia) for any

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<PAGE>

                  Liabilities that are Assumed Liabilities to the extent the
                  Seller is not otherwise indemnified by the Buyer for any such
                  liability; and

            (iv)  POST-CLOSING - the operations of the Purchased Business and
                  ownership of the Purchased Assets after the Time of Closing
                  including, without limitation, any failure by the Buyer to
                  pay, satisfy, discharge, perform or fulfil any of the Assumed
                  Liabilities or any of the other obligations and Liabilities of
                  the Seller to be assumed by the Buyer in accordance with the
                  provisions of this Agreement.

            No claim for indemnification arising out of a breach or inaccuracy
            of a representation or warranty of the Buyer under subsection
            14.2(a) may be made by the Seller Indemnified Parties pursuant to
            this section 14.2 unless notice of the claim in accordance with
            section 14.3 is given by the Buyer Indemnified Parties to the Seller
            Indemnified Parties within a period of 18 months from the Closing
            Date and, upon the expiry of that limitation period, the Buyer shall
            have no further liability to the Seller Indemnified Parties with
            respect to any of those representations or warranties, except with
            respect to Claims that have been made within the times and in
            accordance with the provisions set forth above. The Seller agrees
            that its sole recourse against the Buyer in the event of any breach
            by the Buyer of, or any inaccuracy in, any representation or
            warranty of the Buyer contained in this Agreement shall be recourse
            to a claim for indemnification under this Article 14; and

      (b)   The Buyer will indemnify and save harmless the Seller from any and
            all statutory and common law severance, wrongful dismissal
            obligations, constructive dismissal obligations, and layoff or
            severance obligations under the Collective Agreements relating to
            Employees to whom the Buyer is required to offer employment pursuant
            to Article 11 of this Agreement arising at or subsequent to the Time
            of Closing.

14.3  NOTICE OF CLAIM

If an Indemnified Party shall become aware of any Claim with respect to which
the Indemnifying Party agreed to indemnify an Indemnified Party pursuant to this
Agreement, the Indemnified Party shall promptly give written notice thereof to
the Indemnifying Party. Such notice shall specify whether the Claim arises as a
result of a Third Party Claim or whether it is a Direct Claim, and shall also
specify with reasonable particularity (to the extent that the information is
available):

      (a)   the factual basis for the Claim; and

      (b)   the amount of the Claim, if known.

If, through the fault of the Indemnified Party, the Indemnifying Party does not
receive notice of any Claim in time to effectively contest the determination of
any liability susceptible of being contested, the Indemnifying Party shall be
entitled to set off against the amount claimed by the

                                      -86-

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Indemnified Party the amount of any Losses incurred by the Indemnifying Party
resulting from the Indemnified Party's failure to give such notice on a timely
basis.

14.4 DIRECT CLAIMS

With respect to any Direct Claim, following receipt of notice from the
Indemnified Party of the Claim, the Indemnifying Party shall have thirty days to
make such investigation of the Claim as is considered necessary or desirable.
For the purpose of such investigation, the Indemnified Party shall make
available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other
information as the Indemnifying Party may reasonably request. If both parties
agree at or before the expiration of such thirty day period (or any mutually
agreed upon extension thereof) to the validity and amount of such Claim, the
Indemnifying Party shall immediately pay to the Indemnified Party the full
agreed upon amount of the Claim.

14.5 THIRD PARTY CLAIMS

With respect to any Third Party Claim, the Indemnifying Party shall have the
right, at its expense, to participate in or assume control of the negotiation,
settlement or defence of the Claim and, in such event, the Indemnifying Party
shall reimburse the Indemnified Party for all of the Indemnified Party's
out-of-pocket expenses as a result of such participation or assumption. If the
Indemnifying Party elects to assume such control, the Indemnified Party shall
have the right to monitor, but not participate in the negotiation, settlement or
defence of, such Third Party Claim and to retain counsel to act on its behalf,
provided that the fees and disbursements of such counsel shall be paid by the
Indemnified Party unless the Indemnifying Party consents to the retention of
such counsel or unless the named parties to any action or proceeding include
both the Indemnifying Party and the Indemnified Party and a representation of
both the Indemnifying Party and the Indemnified Party by the same counsel would
be inappropriate due to the actual or potential differing interests between them
(such as the availability of different defences). If the Indemnifying Party,
having elected to assume such control, thereafter fails to defend the Third
Party Claim within a reasonable time, the Indemnified Party shall be entitled to
assume such control and the Indemnifying Party shall be bound by the results
obtained by the Indemnified Party with respect to such Third Party Claim. If any
Third Party Claim is of a nature such that the Indemnified Party is required by
Applicable Law to make a payment to any Third Party with respect to the Third
Party Claim before the completion of settlement negotiations or related Legal
Proceedings, the Indemnified Party may make such payment and the Indemnifying
Party shall, forthwith after demand by the Indemnified Party, reimburse the
Indemnified Party for such payment. If the amount of any liability of the
Indemnified Party under the Third Party Claim with respect to which such a
payment was made, as finally determined, is less than the amount that was paid
by the Indemnifying Party to the Indemnified Party, the Indemnified Party shall,
forthwith after receipt of the difference from the Third Party, pay the amount
of such difference to the Indemnifying Party.

14.6 SETTLEMENT OF THIRD PARTY CLAIMS

If the Indemnifying Party fails to assume control of the defence of any Third
Party Claim, the Indemnified Party shall have the exclusive right to contest,
settle or pay the amount claimed.

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<PAGE>

Whether or not the Indemnifying Party assumes control of the negotiation,
settlement or defence of any Third Party Claim, the Indemnifying Party shall not
settle any Third Party Claim without the written consent of the Indemnified
Party, which consent shall not be unreasonably withheld or delayed; provided,
however, that the liability of the Indemnifying Party shall be limited to the
proposed settlement amount if any such consent is not obtained for any reason.

14.7 CO-OPERATION

The Indemnified Party and the Indemnifying Party shall co-operate fully with
each other with respect to Third Party Claims, and shall keep each other fully
advised with respect thereto (including supplying copies of all relevant
documentation promptly as it becomes available).

14.8 THRESHOLDS

Notwithstanding any other provision of this Agreement (other than section
14.13), neither party shall assert against the other party any Claim (including,
without limitation under Article 10) unless the aggregate amount of the Claim or
Claims asserted is at least 1.0% of the Purchase Price, without counting any
Claim under 0.05% of the Purchase Price. Once the amount of such Claims reaches
at least 1.0% of the Purchase Price in the aggregate, the obligation to
indemnify shall apply (in which case the Indemnifying Party will be obliged to
indemnify for only that portion of such Claims over 1.0% of the Purchase Price
in aggregate) with respect to all Claims having a value of at least 0.05% of the
Purchase Price. The thresholds set forth in this Section 14.8 shall not apply to
indemnification for breaches of warranties under Sections 6.1, 6.2, 6.3, 6.4,
6.5, 6.7, 6.9, 6.21, 7.1, 7.2, 7.3 or to any breach by the Indemnifying Party of
any covenant or obligation in this Agreement and the Indemnifying Party, subject
to Section 14.10, shall be liable for all damages with respect to any such
breaches. For the purposes of determining whether the thresholds in this Section
14.8 have been met: (i) the amount of the Claim is the amount of the Loss or
Liability suffered or incurred by the party making the Claim, and (ii) the
Purchase Price shall not include the Assumed Liabilities.

14.9 REDUCTION

The liability of the Indemnifying Party pursuant to this Article 14 shall be
reduced to the extent:

      (a)   COLLECTIBLE INSURANCE - that the Indemnified Party is entitled to be
            indemnified for any Loss by valid and collectible insurance; and

      (b)   TAXATION - of any related reasonably determinable Tax benefits
            available to the Indemnified Party as a result of the matters giving
            rise to the Indemnified Party's Claim so that the Indemnified Party
            is in the same position the Indemnified Party would have been, and
            not in a better position or a worse position than the Indemnified
            Party would have been, on an after Tax basis in the absence of the
            events or circumstances that gave rise to the Claim;

and the Indemnified Party shall have a duty to take all reasonable steps to
mitigate its Losses.

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14.10 LIMITATIONS

The liability of an Indemnifying Party with respect to any Claims under this
Agreement shall, in the aggregate, be limited as follows:

      (a)   an Indemnifying Party shall have no responsibility for any Losses
            with respect to indirect, consequential, punitive or special damages
            or damages for loss of profit, loss of opportunity or business
            interruption;

      (b)   an Indemnifying Party shall have no responsibility for any Losses to
            the extent that any act or omission of the Indemnified Party or any
            other Person after the Time of Closing aggravated or worsened, or
            materially contributed to, or otherwise increased the Losses; and

      (c)   an Indemnified Party shall not be entitled to make a Claim if the
            Indemnified Party has been advised in writing or otherwise has
            actual knowledge before the Time of Closing of the inaccuracy of a
            representation or warranty or breach or non-performance of a
            covenant of the Indemnifying Party that is the basis of that Claim
            and the Indemnified Party completes the transactions contemplated in
            this Agreement notwithstanding that inaccuracy, breach or
            non-performance.

14.11 CAP

In no event shall either party be liable to the other for Claims including,
without limitation, pursuant to Article 10, to the extent that the aggregate
value of such Claims exceeds $150,000,000.

14.12 AS IS, WHERE IS

Notwithstanding any other provision of this Agreement and for greater certainty,
the Seller's sole obligations in respect of Aboriginal Claims are contained in
Section 6.10 and no actions with respect to Claims or Losses suffered or
incurred by the Buyer in respect of Aboriginal Claims (including without
limitation any Claims with respect to title to any Purchased Asset) may be
brought against the Seller unless there is a breach of the representation and
warranty contained in Section 6.10.

14.13 ASSUMED LIABILITIES

      (a)   Notwithstanding any other provision of this Article 14, but subject
            to subsection 14.13(b) there are no limits or thresholds: (i) to the
            obligations of the Buyer in respect of the matters described in
            subsections 14.2(a)(iv) and 14.2(b); (ii) to the obligations of the
            Seller in respect of matters described in Section 5.2; and (iii) to
            the obligations of the parties in respect of the matters described
            in Section 16.2.

      (b)   The Buyer shall not be liable to the Seller for Claims pursuant to
            subsection 14.2(a)(ii) and (iv) in respect of Environmental
            Conditions that came

                                      -89-

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            into existence or occurred before the Time of Closing to the extent
            that the aggregate value of such Claims exceeds $100,000,000.

14.14 SUBROGATION

In the event that an Indemnified Party has a right of recovery against any Third
Party with respect to any Third Party Claim or Direct Claim in connection with
which a payment is made to such Indemnified Party by an Indemnifying Party,
then:

      (a)   such Indemnifying Party will, to the extent of such payment, be
            subrogated to all of the rights of recovery of such Indemnified
            Party against such Third Party with respect to such Third Party
            Claim or Direct Claim; and

      (b)   such Indemnified Party will execute all documents reasonably
            required and take all action necessary to secure such rights,
            including the execution of such documents as are reasonably
            necessary to enable such Indemnifying Party to bring suit to enforce
            such rights.

14.15 EXCLUSIVE REMEDY

The provisions of Articles 10 and 14 will be the parties' exclusive remedies
with respect to any claim for breach of any covenant, representation, warranty
or other provision of this Agreement or any agreement, instrument or certificate
executed and delivered pursuant to this Agreement (other than a claim for
specific performance or injunctive relief) with the intent that all such claims
will be subject to the limitations and other provisions contained in Articles 10
and 14.

15.  TERMINATION

15.1 TERMINATION

This Agreement may be terminated at any time:

      (a)   by the written agreement of the parties;

      (b)   by either party at any time after June 30, 2005 if Closing has not
            occurred, other than by reason of a breach of, or default under, a
            term of this Agreement by the party seeking to terminate this
            Agreement.

Any termination of this Agreement made by a party pursuant to paragraph (b)
above will be without prejudice to such party's rights and remedies under this
Agreement accrued to the date of termination, including any related to any
breach of any representation, warranty or covenant of another party.

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16. MISCELLANEOUS

16.1 NOTICES

      (a)   Any notice or other communication required or permitted to be given
            hereunder shall be in writing and shall be delivered in person,
            transmitted by telecopy or similar means of recorded electronic
            communication or sent by registered mail, charges prepaid, addressed
            as follows with the mention "Strictly Confidential":

            (i)   if to the Seller:

                  Weyerhaeuser Company Limited
                  5th Floor
                  925 West Georgia Street
                  Vancouver BC V6C 3L2

                  Attention:  General Counsel
                  Telecopier: 604.687.2314
                  Email:      alex.shorten@weyerhaeuser.com

            (ii)  if to the Buyer:

                  Coastal Acquisition Ltd.
                  c/o Brascan Asset Management
                  Suite 2050, Royal Centre,
                  P.O. Box 11179
                  1055 West Georgia Street,
                  Vancouver, B.C.
                  V6E 3R5

                  Attention:  President
                  Telecopier: 604.687.3419
                  Email:      rcarter@brascanam.com

            (iii) with a copy to its counsel:

                   Davis & Company
                   2800 Park Place
                   666 Burrard Street
                   Vancouver, BC  V6C 2Z7

                   Attention:  Al Hudec
                   Telecopier: 604.605.3546
                   Email:      ajhudec@davis.ca

                                      -91-

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      (b)   Any such notice or other communication shall be deemed to have been
            given and received on the day on which it was delivered, transmitted
            (or, if such day is not a Business Day, on the next following
            Business Day) or, if mailed, on the third Business Day following the
            date of mailing; provided, however, that if at the time of mailing
            or within three Business Days thereafter there is or occurs a labour
            dispute or other event that might reasonably be expected to disrupt
            the delivery of documents by mail, any notice or other communication
            hereunder shall be delivered or transmitted by means of recorded
            electronic communication as aforesaid.

      (c)   Either party may at any time change its address for service from
            time to time by giving notice to the other party in accordance with
            this Section 16.1.

      (d)   Any notice sent by electronic mail must have been acknowledged by
            the recipient as having been received before the notice is deemed to
            have been given.

16.2 COMMISSIONS, ETC.

The Seller agrees to indemnify and save harmless the Buyer from and against all
Losses suffered or incurred by the Buyer with respect to any commission or other
remuneration payable or alleged to be payable to any broker, agent or other
intermediary who purports to act or have acted for or on behalf of the Seller.
The Buyer agrees to indemnify and save harmless the Seller from and against all
Losses suffered or incurred by the Seller with respect to any commission or
other remuneration payable or alleged to be payable to any broker, agent or
other intermediary who purports to act or have acted for or on behalf of the
Buyer.

16.3 CONSULTATION

The parties shall consult with each other before issuing any press release or
making any other public announcement with respect to this Agreement or the
transactions contemplated hereby and, except as required by any Applicable Law
or regulatory requirement, neither of them shall issue any such press release or
make any such public announcement without the prior written consent of the
other, which consent shall not be unreasonably withheld.

16.4 DISCLOSURE

Except for any public announcements of the transactions contemplated hereby
pursuant to Section 16.3, neither party shall disclose this Agreement or any
aspects of such transaction except to its board of directors, its senior
management, its legal, accounting, financial or other professional advisors, any
financial institutions contacted by it with respect to any financing required in
connection with such transactions and counsel to such institutions, or as may be
required by any Applicable Law or any regulatory authority or stock exchange
having jurisdiction.

16.5 RETENTION OF BOOKS AND RECORDS

For a period of seven years after the Closing Date or such longer period as
required by Applicable Laws (the "RETENTION PERIOD"), the Buyer shall retain the
On-Site Books and Records and the Seller shall retain the Off-Site Books and

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<PAGE>

Records. Following the Retention Period, any party wishing to dispose or destroy
the Books and Records in its possession shall provide not less than 30 days
prior written notice to the other party of such proposed action. If the
recipient of such notice desires to obtain any of such Books and Records, it may
do so by notifying the other party in writing at any time before the scheduled
date for such destruction or disposal. Such notice must specify the Books and
Records that the requesting party wishes to obtain. The parties shall then
promptly arrange for the delivery of such Books and Records. All out-of-pocket
costs associated with the delivery of the requested Books and Records shall be
paid by the requesting party. The Seller shall, at the Buyer's sole expense,
during normal business hours, afford the Buyer and its agents reasonable access
to and the opportunity to review and make copies of all cancelled cheques of the
Seller relating to the Purchased Business in connection with any reasonable
request of the Buyer. The Buyer shall, at the Seller's sole expense, during
normal business hours, afford the Seller and its agents reasonable access to and
the opportunity to review and make copies of all On-Site Books and Records
required by the Seller to defend against any Legal Proceeding and with respect
to any softwood lumber duty investigation. The Seller and the Buyer shall
cooperate with each other and with each other's agents, including accounting
firms and legal counsel, in connection with Tax matters relating to the
Purchased Business, including (i) preparation and filing of Tax returns, (ii)
determining the liability and amount of any Taxes due or the right to an amount
of any refund of Taxes, (iii) examinations of Tax returns, and (iv) any
administrative or judicial proceeding with respect to Taxes assessed or proposed
to be assessed. Such cooperation shall include each party, to the extent
reasonably requested by the other, making all Books and Records in its
possession available to the other party. Each of the parties shall also make
available to the other party, as reasonably requested and available, at no cost
to the other party, personnel (including officers, directors, employers and
agents) responsible for preparing, maintaining and interpreting information and
documents relevant to Taxes, and personnel reasonably required as witnesses or
for purposes of providing information or documents in connection with any
administrative or judicial proceedings relating to Taxes.

16.6 CONFIDENTIALITY

For a period of two (2) years after the Closing Date, the Seller shall maintain
as confidential all material non-publicly disclosed information respecting the
Purchased Assets and the Purchased Business including, without limitation, all
trade secrets, industrial designs and processes, inventions, current and planned
manufacturing and distribution methods and customer lists, customer
requirements, price lists, business plans and budgets, strategic plans, personal
information of Transferred Employees and other information relating to the
Purchased Assets and the Purchased Business; provided that, the Seller shall be
permitted to disclose such confidential information if required to do so under
Applicable Law or in conjunction with the filing of documents in connection with
any Legal Proceeding in respect of this Agreement.

16.7 NON-SOLICITATION

For a period of 18 months after the Closing Date, the Seller shall not, directly
or indirectly, hire, retain or attempt to hire or retain any of the Transferred
Employees or in any way interfere with the relationship of the Buyer and any of
the Transferred Employees, except that the Seller may hire Transferred Employees
who approach the Seller seeking employment other than as a result

                                      -93-

<PAGE>

of a solicitation by the Seller or who respond to an advertisement or other form
of general solicitation by the Seller.

16.8 DISCLOSURE LETTER

      (a)   If there is any inconsistency between the statements in this
            Agreement and those in the Disclosure Letter (other than an
            exception expressly set forth as such in the Disclosure Letter with
            respect to a specifically identified representation or warranty),
            the statements in this Agreement will control;

      (b)   The statements in the Disclosure Letter, and those in any supplement
            thereto, relate only to the provisions in the section of this
            Agreement to which they expressly relate and not to any other
            provision in this Agreement.

16.9 COSTS AND EXPENSES

Except as expressly otherwise provided for in this Agreement or the Disclosure
Letter, each party shall be responsible for its own costs and expenses
(including, without limitation, the fees and disbursements of legal counsel)
incurred in connection with this Agreement and the transactions herein
contemplated.

16.10 THIRD PARTIES

Except as specifically set forth or referred to herein, nothing herein is
intended or shall be construed to confer upon or give to any Person, other than
the parties hereto and their respective successors (including any successor by
reason of the amalgamation of any party) or assigns, any rights or remedies
under or by reason of this Agreement.

             [THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                      -94-

<PAGE>

16.11 COUNTERPARTS

This Agreement may be executed in counterparts, each of which shall constitute
an original and all of which taken together shall constitute one and the same
instrument. A party's transmission by facsimile or electronic mail transmission
of a scanned copy of this Agreement bearing that party's signature shall
constitute an effective execution and delivery of the Agreement by that party to
the party receiving the transmission.

IN WITNESS WHEREOF this Agreement has been executed by the parties on the date
hereinabove mentioned.

                                                    WEYERHAEUSER COMPANY LIMITED

                                              Per: _____________________________
                                                     Name:
                                                     Title:

                                              Per: _____________________________
                                                     Name:
                                                     Title:

                                                    COASTAL ACQUISITION LTD.

                                              Per: _____________________________
                                                     Name:
                                                     Title:

                                              Per: _____________________________
                                                     Name:
                                                     Title:

                                      -95-

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