Document:

EXHIBIT 10.1

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C L I F F O R D

C H A N C E

P U N D E R

                                                               EXECUTION VERSION

                             ZELLSTOFF STENDAL GMBH

                                       and

                       BAYERISCHE HYPO- UND VEREINSBANK AG

                                   EURO 827,950,000
                         PROJECT FINANCING FACILITY AGREEMENT

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                                    CONTENTS

CLAUSE                                                                      PAGE

1.    Definitions And Interpretation                                           2

2.    The Facility                                                            24

3.    Utilisation Of The Facility                                             26

4.    Interest                                                                30

5.    Market Disruption                                                       33

6.    Repayment                                                               34

7.    Voluntary Prepayments                                                   37

8.    Cancellation                                                            38

9.    Payments                                                                39

10.   Equity Reserve Account                                                  46

11.   Debt Service Reserve Account                                            47

12.   Illegality                                                              49

13.   Increased Costs                                                         50

14.   Taxes                                                                   51

15.   Mitigation                                                              53

16.   Representations And Warranties                                          53

17.   Financial Calculations (Wirtschaflichkeitsberechnungen)                 61

18.   Information Requirements                                                62

19.   Inspection Rights                                                       66

20.   Hedging Requirements                                                    67

21.   Covenants                                                               67

22.   Insurances                                                              77

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23.   Events of Default                                                       82

24.   Agent, Arranger And Lenders                                             87

25.   Advisers                                                                93

26.   Fees                                                                    93

27.   Costs and Expenses                                                      94

28.   Indemnity And Breakage Costs                                            96

29.   Set-Off                                                                 97

30.   Pro-Rata Sharing                                                        97

31.   Assignments And Transfers                                               98

32.   Sub-Participations                                                     100

33.   Calculations And Evidence Of Debt                                      100

34.   Non-Applicability of S 181 BGB                                         101

35.   Form Requirements And Amendments                                       101

36.   Conditions Of The State Guarantee                                      101

37.   Remedies And Waivers, Cumulative Rights, Partial Invalidity            101

38.   Notices                                                                102

39.   Governing Law                                                          104

40.   Jurisdiction                                                           104

41.   Counterparts                                                           104

SCHEDULE 1 Drawdown Request                                                  105

SCHEDULE 2 Conditions for the First Drawdown                                 108

SCHEDULE 3 General Drawdown Conditions                                       113

SCHEDULE 4 Conditions Subsequent                                             114

SCHEDULE 5 Lenders and Commitments                                           116

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SCHEDULE 6 Mandatory Cost Formulae                                           117

SCHEDULE 7 Form of Account Pledge Agreement                                  120

SCHEDULE 8 Form of Luxemburg Account Pledge Agreement                       146

SCHEDULE 9 Security Agreements                                               163

SCHEDULE 10 State Guarantee                                                  164

SCHEDULE 11 Financing of the Subsidiaries                                    169

ANNEX                                                                        188

SCHEDULE 12 Minimum Insurance Schedule                                       173

SCHEDULE 13 Sample Table of Content Regarding Quarterly Construction
    Progress Reports                                                         181

SCHEDULE 14 Transfer Certificate                                             183

SCHEDULE 15 Development Costs                                                187

SCHEDULE 16 Broker's Letter of Undertaking                                   188

SCHEDULE 17 Archeological Sites                                              191

SCHEDULE 18 Investment and Financing Plan                                    192

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THIS  AGREEMENT  is  made  on  26  August  2002

BETWEEN

(1)   ZELLSTOFF  STENDAL  GMBH,  a  limited  liability  company  incorporated,
      organized  and  validly  existing under the laws of the Federal Republic
      of Germany,  having  its  office at Niedergorner Damm 1, 39596 Arneburg,
      Federal Republic  of  Germany and registered in  the commercial register
      (Amtsgericht) of Stendal,  number  HRB  2446  (the  "Borrower");

(2)   BAYERISCHE  HYPO-  UND VEREINSBANK AG, a stock corporation incorporated,
      organised  and  validly  existing under the laws of the Federal Republic
      of Germany, having its office at Am Tucherpark 16, 80538 Munchen, Federal
      Republic  of  Germany  and  registered  in  the  commercial  register
      (Amtsgericht) of Munich, number  HRB  42148  (the  "Arranger");

(3)   BAYERISCHE  HYPO- UND VEREINSBANK AG (the "Agent" and "Security  Agent");
      and

(4)   BAYERISCHE  HYPO-  UND  VEREINSBANK  AG,  (the  "Original  Lender").

(together  referred  to  as  the  "Parties").

WHEREAS
(A)   The  Borrower  is  a  project  company  which  was  created as a limited
      liability  company  (Gesellschaft mit beschrankter Haftung) in 1996 as a
      project development  company.

(B)   The  Borrower  intends  to  build and operate a 552,000 tonnes per annum
      bleached  softwood  kraft pulp mill located in Arneburg, Sachsen-Anhalt,
      Federal Republic  of  Germany.

(C)   Mercer  International,  Inc.,  a Massachussetts trust incorporated under
      the  laws  of  the  state  of  Washington,  United  States  of  America
      ("Mercer  International"),  RWE  Industrie-Losungen  GmbH,  a  limited
      liability company incorporated  under  the  laws of the Federal Republic
      of  Germany  ("RWE-IN")  and  AIG  Altmark  Industrie  AG,  a  company
      incorporated under the laws of the Federal Republic  of  Germany  ("AIG")
      and  FAHR  Beteiligungen AG, a limited liability company  incorporated
      under  the  laws  of the Federal Republic of Germany have agreed  to  act
      as  sponsors  of  the  Project.

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(D)   The  Federal  Republic  of  Germany and the State of Sachsen-Anhalt have
      agreed to guarantee 80 % of the claims of the Lenders in connection with
      Tranche A and Tranche B (each as defined below) by issuing guarantees in
      favour of the Lenders  which  guarantees  will  be  administered  by C&L
      Deutsche Revision AG.

(E)   The Original Lender has agreed to provide the Borrower with the Facility
      (as  defined  below)  subject  to  the  terms  and  conditions  set  out
      below.

(F)   The  Borrower  acknowledges that the Facility will initially be provided
      by  the  Original  Lender but that the Original Lender intend to further
      syndicate the  Facility.

IT  IS  AGREED  as  follows:

1.    Definitions  And  Interpretation

1.1   Definitions

      "Acceptance":   The  date  on  which  the  Owner  issues  the  Acceptance
      Certificate in accordance  with  the  terms  and  conditions  of  the EPC
      Contract.

      "Advance":  A  principal  sum  drawn  by  the  Borrower  under  this
      Agreement or, depending  on  the  context,  the  principal sum outstanding
      as a result of such drawdown.

      "Advisers":  The  Technical  Adviser,  the  Wood Supply Adviser, the  Pulp
      Market Adviser, the Insurance Adviser and any other consultant agreed from
      time to time between  the  Lenders  and  the Borrower to act as an adviser
      in relation to the Project  or  this  Agreement.

      "Agreement":  This  agreement  including  all  of  its  schedules.

      "Amortisation  Schedule": The percentage amortisation Schedule pursuant to
      Clause 6.3.1 (Repayments  other  than  First  Repayment).

      "Annual  Debt  Service  Cover  Ratio":  On  a Repayment Date following the
      First Repayment  Date,  the  ratio  of  the  Available  Cash  Flow for the
      twelve (12) calendar months ending on the previous 31 December or 30 June,
      as  the  case may be,  to the total amount of interest, principal and fees
      payable  pursuant  to  the Financing  Documents (adjusted by interest rate
      hedging payments or receipts and excluding  payments  of  principal  under
      Tranche  E  for  that  period. In relation to the  First  Repayment  Date,
      the relevant period for the Available Cash

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      Flow and debt  servicing  will  be  from  Acceptance to the 31 December or
      30 June next preceeding the First Repayment Date (or, in the circumstances
      referred  to  in  Clause 9.4.3(c)(ii) (Restricted Application), from
      Acceptance to the First Repayment Date).

      "Assurance  of  Overall  Financing":  For  the purposes of this Agreement,
      the  overall  financing  is  assured  if  in  respect  to the Project as a
      whole,  the Overall  Funding  Requirements  are  covered  by  the  Overall
      Funding Sources.

      "Authority":  Any  national,  supranational,  regional or local government
      or governmental,  administrative,  fiscal,  judicial,  or government-owned
      body, department,  commission,  authority,  tribunal, agency or entity, or
      any person, whether  or  not  government  owned  and howsoever constituted
      or called, that exercises  the  functions  of  a  central  bank.

      "Authorisation":  Any  consent,  registration,  filing,  agreement,
      notarisation,  certificate,  license,  approval,  permit,  authority  or
      exemption from, by or with any Authority, whether given by express action
      or deemed given by failure to act within any specified time period and all
      corporate and creditors' approvals or consents.

      "Availability  Period":  The  relevant  period  mentioned  in  Clause 2.2
      (Availability of Facility).

      "Available  Cash  Flow": In relation  to  any  period,  operating revenues
      (Umsatzerlose) of  the  Borrower  (including any interest earnings on  the
      Cash  Collateral  Accounts,  insurance  proceeds for  loss  of  revenue or
      business  interruption and delay liquidated damages under the EPC Contract
      and adjusted for any currency or pulp price  hedging payments or receipts)
      for such  period  minus  all operating costs  for  such  period  (for  the
      avoidance of doubt, excluding depreciation and Financing  Costs),  Capital
      Expenditures (for  the  avoidance of doubt, excluding capital  expenditure
      financed  by  Shareholders'  funds  standing  to the credit of  the
      Shareholders'  Account,  or  by  additional  equity  contributions  or
      Shareholder  Loans),  corporate  tax  payments and local and other  taxes
      (except  VAT).  Revenues in the  form  of  Government Grants and recovery
      of VAT are not included in the Available  Cash  Flow.

      "Base  Case":  A statement  of the technical, economic and tax assumptions
      relating  to  the Project  in  the form of a run of the Financial Model as
      updated from time to  time.

      "Breakage  Costs":  The  costs pursuant to Clause 28.2 (Breakage  Costs).

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      "Business  Day":  A  day (other than a Saturday or Sunday) which is not  a
      public holiday and on which banks are open for general business in London,
      Munich and Frankfurt  am  Main  and:

      (a)   (in  relation  to  any  date  for  payment  or  purchase  of  a  sum
            denominated in a  currency  other  than  the  euro)  a  day on which
            banks are open for general business  in  the financial centre of the
            country  of  such  currency;  or

      (b)   (in  relation  to  any  date  for  payment  or  purchase  of  a  sum
            denominated in the  euro)  any  TARGET  Day.

      "C&L":  C&L  Deutsche  Revision AG,  Wirtschaftsprufungsgesellschaft,
      Dusseldorf as agent  (Mandatar)  of  the  Guarantors.

      "Capital  Contributions":  means  the  subscription  and  purchase  of
      Shares.

      "Capital  Expenditures":  Costs  and expenses of a capital nature pursuant
      to the generally  accepted  accounting  principles in the Federal Republic
      of Germany incurred  or to be incurred by the Borrower in the construction
      and  operation  of  the  Project  and  in  the  normal  acquisition and/or
      replacement  (but  excluding  any  replacement  cost  which  has  been
      confirmed  by  the  relevant  insurers  as  being payable out of insurance
      proceeds)  of  fixed  assets,  machinery,  parts and similar equipment  in
      relation  to  the  Project  according  to  the  Project  Budget.

      "Cash  Collateral  Accounts":  The  Disbursement  Account,  the  Proceeds
      Account, the Insurance Account,  Equity  Reserve  Account  and  the  Debt
      Service Reserve Account.

      "Change  of  Control":

      (a)  Any  change after Financial Close in the direct or indirect ownership
           of  the  Shares  without  the Majority Lenders' written consent (such
           consent not to be unreasonably  withheld  or delayed) after which the
           aggregate  direct or indirect shareholding  of  Mercer  International
           (on a fully diluted basis) no longer is equal  to  or  exceeds 51% of
           the  voting  rights  in  the  Borrower;  and/or

      (b)  any  change before Acceptance in the direct or indirect ownership  of
           the Shares  held  by  RWE-IN  or  FAHR  at  Financial  Close.

      "Commitment":  In  relation  to  each  Lender,  the  sum  of such Lender's
      commitments under  the  Facility,  as specified in Schedule 5 (Lenders and
                                                         ----------

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      Commitments) (as reduced  by any assignments/transfers in accordance with
      this Agreement) or as specified in  the relevant Transfer Certificate(s),
      to the extent  not cancelled or  reduced  hereunder.

      "Construction  Period":  The  period from the date of commencement of any
      of  the  Works  under  the  EPC  Contract  up  to  and  including
      Acceptance.

      "Cost  Overruns":

      (a)   Any  Project  Construction  Costs  and  Development Costs over and
            above those  set  out  in  the  Investment  and  Financing  Plan;

      (b)   any  Financing  Costs,  start-up  costs  and Working Capital Costs
            until Acceptance  over  and  above those set out in the Investment
            and Financing Plan;

      (c)   any  shortfall  in  Start-Up Cash Flows below the budgeted amount
           therefor  as  set out in the agreed Base Case delivered pursuant to
           Schedule 2 (Conditions for  the First Drawdown),  paragraph  9; and
           ----------

      (d)   any  shortfall  in Government Grants determined on or before
            Acceptance.

      "Debt  Service  Reserve  Account":  The  accounts  (including foreign
      currency and investment  accounts)  of  the  Borrower established for
      the  purposes  set out in Clause 11 (Debt  Service Reserve Account)
      and maintained with Bayerische Hypo- und Vereinsbank  AG  or  HVB
      Banque Luxembourg  Societe  Anonyme.

      "Derivative  Transaction":  Any  swap  agreement, warrant agreement,
      futures and forward  contracts  or  similar  arrangement with respect
      to  interest rates, currencies  or  commodity  prices.

      "Development  Costs":  Those  development costs, fees and expenses in
      connection with  the development of the  Project  incurred  prior  to
      Financial Close and which are  listed  in  Schedule  15  (Development
      Costs)  hereto.                            ------------

      "Direct Agreement":  The  contractor's  direct  agreement  on or about
      the date hereof  and made between the Borrower, RWE-IN, RWE Solutions
      AG and the Security Agent.

      "Disbursement  Account":  The  account of the Borrower established for
      the purposes set out in Clause 9.1 (Disbursement Account) and
      maintained with  the Agent.

      "Drawdown  Date":  The  day  an  Advance  is  made.

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      "Drawdown  Request":  A  request for an Advance pursuant to Schedule 1
      (Drawdown Request).                                         ----------

      "Environmental Claim": Any claim, notice, prosecution, demand, action,
      official  warning, abatement or other order (conditional or otherwise)
      relating to, or any notification  or  order requiring compliance with,
      any  Environmental Law or Environmental  Permits.

      "Environmental  Law":  Any  law  applicable  to  the  Project  and the
      Borrower which relates  to  the protection  of the environment or harm
      to or the protection of human  health  or  the  health  of  animals or
      plants.

      "Environmental  Permits":  Any  Authorisation  required  under  any
      Environmental Law for  the  construction  or  operation of the Project
      and business of the Borrower conducted on or from the properties owned
      or used by the Borrower in connection with  the  Project.

      "EPC Contract": The engineering, procurement and construction agreement
      dated 26 August  2002  between  RWE-IN  and  the  Borrower.

      "EPC  Contractor":  RWE-IN.

      "Equity  Reserve  Account":  The  accounts  (including foreign currency
      and investment  accounts)  of the Borrower established for the purposes
      set out in Clause 10  (Equity  Reserve  Account)  and  maintained  with
      Bayerische  Hypo- und  Vereinsbank  AG  or  HVB  Banque  Luxembourg
      Societe  Anonyme.

      "EU-Decision":  The  decision  by  the EU-Commission dated 19 June 2002
      in respect of  the  State  Guarantee  and  the  Government  Grants.

      "EU-Equity  Test":  The  EU-equity  test  as  defined  in the Financial
      Model.

      "EURIBOR":  In relation  to  any  amount  outstanding  for a particular
      period:

      (a)   the  percentage  rate  per  annum  determined  by  the  European
            Banking Federation for  the  relevant period which appears on the
            Telerate page Euribor for  that  period  or  any  other  page  it
            is  replaced  by  at  11.00 am; and

      (b)   if  the  Agent is unable to access the relevant screen rate or if
            a  rate  is  not  available  on  the  relevant  screen  for  the
            period, the arithmetic mean (rounded upwards to 4 decimal places)
            of  the rates (as notified to the Agent) at which  each  of  the
            Reference Banks was offered by prime

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            banks in the European interbank market deposits in euro in such
            amount and for such period as of 12.00 noon,

      in  each case on the Quotation Date for such period. If fewer than two
      Reference Banks  provide the Agent with notifications for a particular
      period,  this  method of  determining  EURIBOR  will  not  be used for
      that period and Clause 5 (Market Disruption)  will  apply  instead.

      "Event  of Default": Any of the events mentioned in Clause 23 (Events
      of Default).

      "Event  of  Force  Majeure":  An  Event  of  Force  Majeure as defined
      in the EPC-Contract.

      "Excess  Start-up  Cash Flows": Any amount of Start-up Cash Flows that
      exceeds  the  budgeted  amount  therefor as set out in the agreed Base
      Case  delivered pursuant to  Schedule  2  (Conditions  for  the  First
      Drawdown),  paragraph  9.    -----------

      "Existing  Financial  Indebtedness":

      (a)  the  indebtedness  under the loan made by Dresdner Bank in the
           amount of EUR  12,286,000;

      (b)  the  indebtedness  to  RWE-IN,  AIG  and  Thyssen Rheinstahl
           Technik  Projektgesellschaft  mbH  for  ancilliary  costs  for
           which  RWE-IN, AIG, Thyssen Rheinstahl  Technik  GmbH  and  its
           legal  successor Thyssen Rheinstahl Technik Projektgesellschaft
           mbH  have provided funds to the Borrower in connection with the
           purchase  of  the  Site,  in  the  amount  of  not  more  than
           EUR 2,708,339; and

      (c)  the  indebtedness  for  Shareholder  Loans  in  an  amount not
           exceeding EUR 55,255,646.

      "Facility": The facility comprising Tranche A, Tranche B, Tranche C,
      Tranche D1, Tranche  D2  and  Tranche E pursuant to Clause 2.1
      (Granting  of the Facility).

      "Facility  Office":  The  office or offices notified by a Lender to
      the Agent in writing  on or before the date it becomes a Lender (or,
      following  that  date,  by  not  less  than  five  (5) days' written
      notice) as the office or offices through which  it  will perform its
      obligations  under  this  Agreement.

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      "Federal  Guarantor": The Federal Government of the Federal Republic
      of Germany.

      "Fees":  The  fees  payable  pursuant  to  Clause 26 (Fees).

      "Fee  Letter":  The  fee  letter  by  Bayerische  Hypo-  und
      Vereinsbank AG and addressed  to  the  Borrower  dated  on  or  about
      the  date  hereof.

      "Final  Maturity  Date":  With  respect  to:

      (a)   Tranche  A:     the  first  (1st)  Repayment Date following the
            fifteenth (15th)  anniversary of the first Advance under Tranche
            A;

      (b)   Sub-Tranches  B1,  B2  and  B3:

                 for  each  Sub-Tranche the first (1st) Repayment Date
                 following the eighth (8th) anniversary  of  the first
                 Advance  under  such  Sub-Tranche;

      (c)   Sub-Tranche  B4:

                 the first (1st) Repayment Date following the fifteenth
                 (15th) anniversary of the first Advance under Tranche A;

      (d)   Tranche  C:  the  third  (3rd) Repayment Date following  the
            Scheduled First  Repayment  Date;

      (e)   Tranche  D1:  the  third (3rd) Repayment Date following the
            Scheduled First  Repayment  Date;

      (f)   Tranche  D2:  the  third (3rd) Repayment Date following the
            Scheduled First  Repayment  Date;  and

      (g)   Tranche  E:  the first (1st) Repayment Date following  the
            fifth  (5th)  anniversary  of  the  first  Advance  under
            Tranche  A.

      "Finance  Party":  The  Agent,  the  Arranger  or  a  Lender.

      "Financial  Close": The date on which all conditions precedent to
      first drawdown pursuant to Clause 3.3 (Drawdown  Conditions)  and
      3.4 (Drawdown  Restrictions)  are fulfilled  or  waived.

      "Financial  Indebtedness":  Without duplication, any indebtedness
      for  or in respect  of:

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      (a)  moneys  borrowed;

      (b)  any  amount  raised  by  acceptance  under  any  acceptance
           credit facility;

      (c)  any  amount  raised  pursuant  to  the issue of bonds or the
           issue of fixed rate  notes  dividend  debt  or  any  similar
           instrument;

      (d)  the  amount  of  any  liability  in  respect  of  any  lease  or
           hire purchase contract  which  would,  in  accordance  with
           German  generally  accepted  accounting principles,  be  treated
           as  a  capital  or  finance  lease;

      (e)  receivables sold or discounted (other than any receivables to the
           extent they  are  sold  on  a  non-recourse  basis);

      (f)  any  amount  raised  under  any other transaction (including any
           forward sale  or  purchase  agreement)  having  the  commercial
           effect  of a borrowing;

      (g)  any  Derivative  Transaction  entered  into  in  connection  with
           protection  against  or  benefit  from fluctuation in any rate or
           price  (and,  when  calculating  the  value  of  any  Derivative
           Transaction, only the marked to market value shall be  taken into
           account)  unless  entered  into  in accordance with  the  Hedging
           Strategy;

      (h)  any  counter-indemnity  obligation  in  respect  of  a guarantee,
          indemnity, surety,  standby  or documentary letter of credit or any
          other instrument issued by  a bank  or  financial  institution; and

      (i)  the  amount  of  any  liability  in  respect of any guarantee or
           indemnity for any  of  the  items  referred  to  in  paragraphs
           (a)  to  (h)  above.

      "Financial Model":  The  audited  financial  model agreed between the
      Parties at the time  of the signing of this Agreement as amended from
      time to time according to the  provisions  of  this  Agreement.

      "Financing  Costs":  The  interest costs and fees under the Financing
      Documents, but  excluding  during  the  Pre-Production Period interest
      payments on and fees pursuant  to  Clauses 26.4 (Fees  to  the  Federal
      Guarantor) and 26.5 (Fees to the State Guarantor)  attributable to
      Tranche  A  Advances.

      "Financing  Documents":  This  Agreement,  any  agreement  entered
      into with any Permitted  Subsidiary  in  connection with the financing
      of the wood supply or logistics  aspects  of  the  Project, the Hedging
      Agreements,  the  Security

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      Agreements,  the  Shareholders'  Undertaking Agreement,  the  Step-in
      -Rights Agreement between  SP  Holding, RWE-IN, FAHR and the Agent on
      or  about  the  date  hereof,  the  RWE  Solutions AG Guarantee,  any
      agreement  regarding  Shareholder  Loans  and  the  corresponding
      subordination  declarations, the Stand-By Equity Security,  the  Fee
      Letter,  any  waiver  requests,  waivers  and  other  binding
      notifications,  the  Direct Agreement, the Parent Company Guarantee,
      the advance payment,  performance  and  defects  liability guarantee
      issued in favour of the Borrower  by  a  first  class  bank  in
      respect  of  the performance of the EPC Contractor under the EPC
      Contract, the State Guarantee and any other document in relation  to
      the  financing  of  the  Project.

      "First  Repayment":  bears  the meaning ascribed to it in Clause 6.2
      (First Repayment).

      "First  Repayment  Date": The date on which the First Repayment is
      made in full.

      "Government  Grants":  The grants  which  will  be  given  as direct
      grants  (GA-Zuschuss  (investment  incentives))  by  the  State  of
      Sachsen-Anhalt  and  as  Investitionszulagen  (tax  grants)  by  the
      Federal Republic of Germany, both as approved  by  the  EU-Decision,
      for  the  Project  in  favour  of the Borrower.

      "Group":  The  Borrower  and  its  subsidiaries  from  time  to
       time.

      "Guarantors": The Federal Guarantor and the State Guarantor in their
      function as guarantors  under  the  State  Guarantee.

      "Hedging  Agreements":  The  agreements  to  be  concluded  in
      relation  to any  Derivative  Transaction  in  accordance  with
      the  Hedging  Strategy.

      "Hedging  Counterparty":  Bayerische  Hypo-  und  Vereinsbank  AG.

      "Hedging  Strategy":  The  hedging  strategy  in  relation  to  the
      Facility to be agreed in writing between the Borrower and the Arranger,
      as amended from time to time, for the hedging of the interest, currency
      and commodity price risks of the Borrower.

      "Information  Memorandum": The information memorandum relating to the
      Project to be  sent  to other credit institutions for their information
      with respect to the syndication  of  the  Facility.

      "Infrastructure  Agreement": The infrastructure agreement (Vereinbarung
      uber die Durchfuhrung  von  Infrastrukturmabnahmen  und die
      Bereitstellung

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      finanzieller Mittel)  dated  17  July  2002  between  the  Borrower and
      the city of Arneburg.

      "Insurance  Account":  Account  no.  57 53 171, banking code 700 202 70
      with the Agent  in  the  name  of  the  Borrower to be maintained for
      certain payments by insurers.

      "Insurance  Adviser":  Bankrisk  Services Marsh Ltd. and its successors
      as advisers to  the  Lenders  in  relation  to  insurance  issues.

      "Intellectual  Property  Rights": Any patent, trade secret, trademark,
      copyright or  other  proprietary  rights  or  knowhow,  licences  or
      design registrations required  in  connection  with  the  Project.

      "Interest  Period":  The interest periods pursuant to Clause 4.1
      (Interest Period).

      "Interest  Rate": The interest rate pursuant to Clause 4.2 (Interest
      Rate).

      "Investment  Account": The accounts referred to in Clause 9.2 (Proceeds
      Account) maintained  with  the Agent or HVB Banque Luxembourg Societe
      Anonyme in the name of  the  Borrower.

      "Investment  and  Financing  Plan":  The  investment and financing plan
      agreed  by  the  Arranger  and  the  Borrower  at  the  time  of  the
      signing of this Agreement in relation  to  the  Project and attached as
      Schedule 18 (Investment and Financing Plan).
      -----------

      "Lenders":  The  lenders  (including  the  Original  Lender),  acting
      through their respective Facility  Offices,  and  as far as permissible
      under this Agreement, their  successors,  transferees  and  assignees.

      "Majority  Lenders": Lenders representing at least 66 2/3% of the total
      aggregate of  unutilised  Commitments  and  outstanding  Advances under
      the Facility. When collecting  a  vote of the Lenders, the voting rights
      of a Lender which does not respond within such period as is fixed by the
      Agent  (being  a period  of  at least five  (5)  Business  Days)  or, if
      requested  by  the  Borrower,  within  thirty  (30)  Business  Days from
      receipt  of  any  request  by  the  Borrower  for  a  consent, waiver or
      amendment  under the Financing Documents, will be disregarded in
      determining whether  the  required  majority  was  achieved.

      "Mandatory  Costs":  The  percentage  rate  per annum calculated by the
      Agent in accordance  with  Schedule  6  (Mandatory  Cost  Formulae).
                                 -----------

<PAGE>

      "Margin":  For:

      (a)  Tranche  A:          0.75  %  per  annum;

      (b)  Tranche  B:          0.60  %  per  annum
                                (for  the  guaranteed portion of
                                Tranche  B);

                                1.50  %  per  annum  (for  the  non
                                guaranteed  portion  of  Tranche  B);

      (c)  Tranche  C:          1.55  %  per  annum;

      (d)  Tranches  D1
           and  D2:             1.55  %  per  annum;  and

      (e)  Tranche  E:          1.25%  per  annum.

      If  repayments  under  the  guaranteed  portions  of Tranche A and
      Tranche B are deferred  according to Clause 6.5 (Deferred Amortisation),
      the margin in respect of the  portions  so  deferred  will  be  increased
      by 0.10 % per annum until such deferred  repayments  are  paid.

      "Material  Adverse  Effect":  An  event,  occurrence  or  condition  which
      has materially  impaired,  or  which  will materially  impair (as compared
      with  the  situation  which  would  have prevailed  but  for  such  event,
      occurrence  or condition):

      (a)  the  business,  operation,  property  and  financial  condition
           of  the Borrower  and  as  a  result,  the ability of the Borrower to
           perform any of its obligations  under  the  Financing  Documents;  or

      (b)  the  validity  or  enforceability  of  the  Financing  Documents.

      An  event, occurrence or condition (other than an event, occurrence or
      condition affecting  a  Shareholder  itself)  shall  not  be  capable of
      having a Material Adverse  Effect  if  the  risks  and  consequences  of
      such event, occurrence or condition  are  fully  borne  by  a  Shareholder
      under  the terms of any of the Transaction  Documents within a period of
      thirty (30) days following such event, occurrence  or  condition.

      "Material  Insurances":  All insurances required to be taken  out  by  the
      Borrower  pursuant  to  the  Minimum  Insurance Schedule  as  set  out  in
      Schedule  12 (Minimum  Insurance  Schedule)  apart  from  any  employer's
      -----------
      liability or  motor vehicle liability  insurance.

<PAGE>

      "Minimum Insurance Schedule": The Schedule prepared by  the Insurance
      Adviser and set  out  in  Schedule  12  (Minimum Insurance Schedule),
                                ------------
      relating  to  insurances  during  the  Construction  Period  and  the
      Operation  Period.

      "Operation  Period":  The  period  beginning  on  the  day immediately
      following Acceptance.

      "Original  Financial  Statements":  The financial statements of the
      Borrower as of 31  December  2001.

      "Overall Funding  Requirements (Gesamtfinanzierungs-Planbedarf)":  The
      financing  requirements  for  the  Project  pursuant  to  the Project
      Budget as of the date hereof.

      "OveralL  Funding Sources (Gesamtfinanzierungsquellen)": The financing
      sources for  the  Project  comprising:

      (a)  Shareholder  Contributions;

      (b)  Government Grants (and,  pending  receipt  thereof,  Tranche  E);

      (c)  the  Facility;  and

      (d)  Start-up  Cash Flows but excluding Excess  Start-up  Cash  Flows.

      "Owner's  Scope":  Has  the  meaning  set  out  in  the  EPC-Contract.

      "Parent  Company  Guarantee":  The parent  company guarantee to be
      granted by RWE Solutions  AG in favour of the  Borrower  in  respect
      of  RWE-IN's obligations under the  EPC  Contract.

      "Permitted  Disposals":

      (a)  Annual disposals of assets with  an aggregate market value of not
           more than  EUR 5 million if such disposals do not have a Material
           Adverse Effect; and

      (b)  disposals of assets which are replaced according to the Base Case
           or funded  by  Shareholders'  funds.

      "Permitted  Encumbrances":  Encumbrances:

      (a)  created  by operation of law  or arising  in  the ordinary course
           of business (including any retention  of title arrangements) which
           do not secure indebtedness  for  money  borrowed;

<PAGE>

      (b)  existing at Financial Close which will be  released following the
           first drawdown  of  an  Advance  under  this  Agreement;

      (c)  created  with  the Majority Lenders' consent, which consent shall
           not be unreasonably  withheld,  provided  all  consents  required
           by the  Guarantors have been  obtained;

      (d)  constituting  Security;  and

      (e)  additional  encumbrances  in  an aggregate amount of not more than
           EUR 1 million.

      "Permitted  Financial  Indebtedness":  Financial  Indebtedness:

      (a)  incurred  under  the  Financing  Documents;

      (b)  Existing  Financial  Indebtedness;

      (c)  which  is  unsecured  and  subordinated  to  the  claims  of the
           Lenders hereunder;

      (d)  incurred  under  Derivatives  Transactions  permitted  under the
           Hedging Strategy;  and

      (e)  an  additional  aggregate  amount  of  not  more  than  EUR  5
           million.

      "Permitted  Investments": Investments  made  in  time deposits (Festgeld)
      and short term  euro debt securities  (and, to the  extent that funds are
      held in USD, also in  USD  debt  securities) with a maximum duration of 3
      years  of  issuers  with  a  short term A1 rating or better of Standard &
      Poor's  Corporation  or  an  equivalent rating  from  such  other  rating
      agency  approved  by  the  Agent.

      "Permitted  Subsidiaries":  The  two  support holding companies, the wood
      supply company  and  the  logistic  company.

      "Post-Acceptance  Costs":  The amounts  of costs specified by the Borrower
      in a Drawdown  Request,  requesting  a  drawdown  at  or  about  the  last
      day of the Availability  Period,  as  the Project Construction Costs (plus
      Cost Overruns in relation  thereto) and Working Capital Costs expected to
      be incurred in relation to  the  Project  after  Acceptance.

      "Potential  Event  of  Default":  Any  event  which  might  reasonably  be
      expected to become  (with  the  passage  of  time,  the  giving of notice,
      the making of any determination  hereunder  or  any  combination  thereof)
      an  Event  of Default.

<PAGE>

      "Pre-Production  Period":  The  portion of the Construction Period ending
      on the date  of  the  first  production  of  saleable  pulp  from  the
      Project.

      "Proceeds  Account":  The  Revenue  Account  and  the Investment Account.

      "Project":  The  design,  development,  financing,  construction  and
      operation of a 552,000  tonnes per annum bleached softwood kraft pulp mill
      located in Arneburg, near  Stendal  in  Sachsen-Anhalt,  Federal  Republic
      of  Germany.

      "Project  Budget":  The  financial  budget  of  the  Borrower  and its
      Permitted Subsidiaries  in the form delivered to and agreed  by  the Agent
      from  time to time  pursuant  to  the  provisions  of Clause 18.3 (Project
      Budget).

      "Project  Construction  Costs":  All  Project  Costs  excluding:

      (a)  Financing  Costs,  start up costs, Development Costs and Working
           Capital Costs;  and

      (b)  recoverable  VAT  payments  on  such  costs,

but  including  during  the  Pre-Production Period interest payments on and
fees pursuant to Clauses 26.4 (Fees to the Federal Guarantor) and 26.5
(Fees to the  State Guarantor)  attributable  to  Tranche  A  Advances.

      "Project Contracts": The EPC contract as well as all other contracts in
      relation  to  the  planning,  development  and  construction  of  the
      Project as well as the construction  of infrastructure, the sale of energy
      and the agreement on reserve electricity  services.

      "Project  Costs":  All  costs  of  the Borrower in relation to the Project
      up to  Acceptance  (including,  in  any  event,  Post-Acceptance Costs) as
      shown in the Financial  Model  or,  as the case may be, as approved by the
      relevant Advisers.

      "Pulp  Market  Adviser":  NLK  Consultants  Inc.,  Canada  and  its
      successors  as  advisers  to  the  Lenders  in  relation  to  pulp  market
      issues.

      "Quotation  Date":  With respect to any Interest Period, the Business Day
      which is two  (2)  Business  Days  prior  to  the  commencement  of such
      Interest Period.

      "Reference  Banks":  Bayerische  Hypo  und  Vereinsbank AG, Deutsche Bank
      AG and Barclays  Bank  PLC.

<PAGE>

      "Related  Party":  A company or person related to the Borrower, i.e. part
      of the "Konzern"  within  the  meaning  of  Sec.  18  German Act on Stock
      Corporation (Aktiengesetz).

      "Repayment  Date":  The First Repayment Date and each subsequent 31 March
      and  30  September  on  which  a repayment of any part of any Tranche (or
      Sub-Tranche) is scheduled  to  take  place.

      "Repayment  Schedule":  The  repayment  Schedule  pursuant to Clause 6.4
      (Repayment Schedule).

      "Required  Level": EUR 590 million plus 30% of the aggregate Advances
      made under Tranche  D2,  but  in  no  event  more  than  EUR 599 million.

      "Responsible  Officer":  The  chief  executive  officer  or general
      manager, the senior  financial  officer  and/or  the  responsible  project
      manager.

      "Revenue  Account":  The  account  referred  to  in  Clause 9.2 (Proceeds
      Account) maintained  with  the  Agent  in  the  name  of  the  Borrower.

      "RWE Solutions AG Guarantee": The guarantee given by RWE Solutions AG in
      respect of  RWE-IN's  obligations  under  the  Shareholders'  Undertaking
      Agreement.

      "Scheduled  First  Repayment Date": The repayment date set out in Clause
      6.2.1 (First Repayment).

      "Security":  The  security  from  time to time constituted by or pursuant
      to the Security  Agreements  securing all obligations of the Borrower and
      its Permitted Subsidiaries  in  relation  to  the  Project.

      "Security  Agreements":  The  security agreements listed in Schedule 9
                                                                  ----------
      (Security  Agreements),  the  Security Pooling Agreement and any other
      agreement pursuant  to  which  the  Borrower,  the  Shareholders,  the
      Sponsors  or  any third party grant security  to  the  Security  Agent
      and/or  the  Lenders  (other  than the State Guarantee),  including
      security agreements granting security in favour of or on behalf  of
      the  subsidiaries.

      "Security Pooling Agreement": The security pooling agreement dated on
      or about the  date  hereof  between the Security  Agent, the Lenders,
      the  Hedging  Counterparty,  the  Shareholders,  the  Sponsors  and
      the  Borrower.

      "Share":  An  ordinary  fully  paid  up  share  in  the  Share
      Capital.

<PAGE>

      "Share  Capital":  The  share  capital of the Borrower as increased
      from time to time  in  accordance  with  this  Agreement.

      "Shareholder Contributions": Contributions of the Shareholders to be
      made  by  way of  Capital  Contributions  or  Shareholder  Loans  in
      accordance  with  the Shareholders'  Undertaking  Agreement.

      "Shareholder  Loans":  Loans  by  the  Shareholders  to the Borrower
      made and subordinated  in  accordance  with the terms and conditions
      of the Shareholders' Undertaking  Agreement.

      "Shareholders":  As at  the date of this Agreement, SP Holding, RWE-IN
      and FAHR and  thereafter  includes  any  person  to  whom  Shares  may
      be  transferred.

      "Shareholders'  Account":  An account in the name of the Borrower over
      which  the  Lenders  have  no  security  and  to which the Borrower is
      allowed to make payments in accordance with Clauses 9.4.3 (a)
      (Priority  of  Payments)  and 9.4.3 (c) (Restricted Application).

      "Shareholders'  Agreement":  The  agreement  dated  on  or about the
      date hereof between  the  Shareholders  and  the  Borrower.

      "Shareholders'  Undertaking  Agreement":  The agreement of even date
      between the Sponsors,  the  Shareholders,  the  Borrower  and  the
      Agent.

      "Site":  That  portion  of  land

      (a)  more  particularly  defined  in  the  Land  Register  (Grundbuch)
           of  the Stendal  Local  Court  (Amtsgericht)  for  Arneburg folio
           (Blatt) 3129, communal district  (Gemarkung) Arneburg, under plot
           (Flur) 18, sub-plots (Flurstuck) nos. 90,  105/0 and 107/0, under
           plot  (Flur)  21, sub-plots (Flurstuck) nos. 52, 36, 44,  35,  40
           and  38,  under  plot  (Flur)  22, sub-plot (Flurstuck) no. 5 and
           under plot  (Flur)  24,  sub-plot  (Flurstuck)  no.  14/8;

      (b)  more  particularly  defined  in  the  Land  Register  (Grundbuch)
           of the Stendal  Local  Court  (Amtsgericht)  for  Arneburg folio
           (Blatt) 3215, communal district (Gemarkung)  Arneburg, under plot
           (Flur) 18, sub-plot (Flurstuck) no. 108  and  under  plot  (Flur)
           21,  sub-plot  (Flurstuck)  no.  67;

      (c)  more  particularly  defined  in  the  Land  Register  (Grundbuch)
           of the Stendal  Local  Court  (Amtsgericht)  for  Arneburg folio
           (Blatt) 3230,

<PAGE>

           communal district  (Gemarkung) Arneburg, under plot (Flur) 21,
           sub-plots (Flurstuck) nos. 1/57  and  33;

      (d)  more  particularly  defined  in  the  Land  Register  (Grundbuch)
           of the Osterburg  Local  Court  (Amtsgericht) for Altenzaun folio
           (Blatt) 284, communal district (Gemarkung)  Altenzaun, under plot
           (Flur) 1, sub-plot (Flurstuck) 324;

      (e)  Land Register (Grundbuch) of the Stendal Local Court (Amtsgericht)
           for Schonfeld  (for  the  time  being)  folio  (Blatt) 542, plot
           (Flur) 9, sub-plot (Flurstuck)  no.  2/23;

      (f)  and  that  portion  of  land  currently  leased  to the Borrower
           pursuant  to  a  lease  contract  dated  16  May  2002  and made
           between  AIG  and the Borrower (Land Register (Grundbuch) of the
           Stendal  Local  Court  (Amtsgericht)  for Arneburg folio (Blatt)
           3215,  communal  district  (Gemarkung)  Arneburg,  under  plot
           (Flur) 21, sub-plot  (Flurstuck)  no.  61).

      "SP  Holding":  Stendal  Pulp  Holding  GmbH.

      "Sponsors":  Mercer  International,  RWE-IN,  AIG  and  FAHR  as
      defined in the Recitals  to  this  Agreement  and  any  of  their
      respective  successors.

      "Stand-By  Equity  Security":

      (a)  an  irrevocable  letter  of  credit;  or

      (b)  an  unconditional  guarantee  on  first  demand,

in  each  case  in  form and substance satisfactory to the Agent and issued
by a  bank  whose  long  term  unsecured  credit  rating is at least A
from Standard & Poor's  Rating  Services  and  A 2 from  Moody's  Investors
Services Inc.; or

      (c)  an  interest  bearing  cash  deposit  in  the amount required by
           the  Shareholders'  Undertaking  Agreement  to  be  held  by the
           Agent or at HVB Banque Luxembourg  Societe Anonyme, such account
           to  be  pledged  in  favour  of the Lenders by  entering into an
           account pledge agreement providing for similar terms as set  out
           in Schedule 7 (Form of Account Pledge Agreement) in case the
              ----------
           account  is  held  by  the Agent and an account pledge agreement
           providing  for  similar  terms as set out  in  Schedule  8
                                                          -----------
           (Form  of  Luxembourg  Account  Pledge  Agreement)  in  case the
           account is  held  by  HVB  Banque  Luxembourg  Societe Anonyme.

<PAGE>

      "Start-up":  bears  the  meaning  ascribed  thereto  in  the  EPC
       Contract.

      "Start-up  Cash  Flows": Net  operating  cash  flows generated by the
      Project until  Acceptance  in  the  amount  confirmed by  an  auditor
      acceptable to the Agent after Acceptance.

      "State  Guarantee":  The  guarantees (Ausfallburgschaften) issued by
      the Federal Republic of Germany (for 48 % of the aggregate amount of
      Advances under Tranches A  and  B)  and the State of Sachsen-Anhalt
      (for 32 % of the aggregate amount of Advances under Tranches A and B)
      issued in the form attached to this Agreement as  Schedule  10 (State
                                                        ------------
      Guarantee) in favour of the Lenders with respect to this Agreement
      including  the  "Allgemeinen  Bestimmungen  fur Burgschafts bernahmen
      durch  die Bundesrepublik Deutschland (Bund) und parallel burgende
      Bundeslander" (General  Conditions  for  the  issuing of guarantees by
      the Federal Republic of Germany  and  Lander).

      "State  Guarantor":  The  State  Government  of  Sachsen-Anhalt.

      "Sub-Tranche":  a  sub-tranche  of  Tranche  B  as  more  particularly
      referred to in Clause 2.1.1 (b).

      "Supplier":  Suppliers  and  vendors  of  services  and  goods  to the
      Borrower and the EPC  Contractor  in  connection  with  the  EPC
      Contract.

      "Suspension  Notice":  The  notice  pursuant  to  Clause 5.1 (Market
      Disruption).

      "Target":  The  Trans-European  Automated  Real-time  Gross  Settlement
      Express Transfer  payment  system.

      "Target  Balance": The balance targeted to be standing to the credit of
      the Debt Service  Reserve  Account  pursuant  to Clause 11.3 (Target
      Balance).

      "Target  Day": Any day on which TARGET is open for the settlement of
      payments in euro.

      "Technical  Adviser":  JP Management Consulting (Europe) OY, Vantaa,
       Finland and its  successors  as  advisers  to  the  Lenders in relation
       to technical issues.

      "Tranche"  or "Tranches": Any or all of Tranche A, Tranche B, Tranche C,
      Tranche D1,  Tranche  D2  and  Tranche  E  as  the  case  may  be.

      "Tranche  A":  That  part  of  the  Facility  granted  to  the  Borrower
      pursuant to Clause 2.1.1 (a) (Granting  of  the  Facility).

<PAGE>

      "Tranche  B":  That  part  of  the  Facility  granted  to  the  Borrower
      pursuant to Clause 2.1.1 (b) (Granting  of  the Facility)  (comprising
      up  to  4  separate Sub-Tranches).

      "Tranche  C":  That  part  of  the  Facility  granted  to  the  Borrower
      pursuant to Clause 2.1.1 (c) (Granting  of  the  Facility).

      "Tranche  D1":  That  part  of  the  Facility  granted  to  the Borrower
      pursuant to Clause 2.1.1 (d) (Granting  of  the  Facility).

      "Tranche  D2":  That  part  of  the  Facility  granted  to  the Borrower
      pursuant to Clause 2.1.1 (e) (Granting  of  the  Facility).

      "Tranche  E":  That  part  of  the  Facility granted to the Borrower
      pursuant to Clause 2.1.2 (Granting  of  the  Facility).

      "Transaction  Documents": The Financing Documents, the Project Contracts
      and the Shareholders'  Agreement.

      "Transfer  Certificate":  The  transfer  certificate  pursuant  to
       Schedule  14 (Transfer  Certificate).
       ------------

      "Transferee":  Any  transferee pursuant to Clause 31.2 (Assignments and
      Transfers by the  Lenders).

      "Transferor":  Any  transferor pursuant to Clause 31.2 (Assignments and
      Transfers by the  Lenders).

      "Wood Supply Adviser": JP Management Consulting (Europe) OY, Vantaa,
      Finland and its  successors  as  advisers  to the Lenders in relation to
      wood supply issues.

      "Working  Capital  Costs":  Costs of working capital needed for the
      operation of the  Group's  business, including operating costs, wood,
      chemicals and other raw material  and consumables stock costs as well
      as intermediate - and end products.

      "Works":  Has  the  meaning  as  set  out  in  the  EPC  Contract.

1.2       INTERPRETATION

Any  reference  in  this  Agreement  to:

an  "affiliate"  of  a  specified  person  is construed as any other person that
directly,  or  indirectly  through  one  or  more  intermediaries,  controls, is
controlled by or is under common control with the person specified, or who holds
or  beneficially

<PAGE>

owns  10%  or  more  of  the  equity  interest  in  the  person  specified
or  10%  or  more  of  any  class  of voting securities of the person specified;

the  "Agent",  "Arranger",  "Lender"  and "Security Agent" is construed so as to
include  it  and any subsequent successors and permitted transferees and assigns
in  accordance  with  their  respective  interests;

"assets"  includes  present  and future properties, revenues and rights of every
description;

"calendar  quarter"  is a reference to the period from (and including) January 1
To  (and including) March 31, or from (and including) April 1 to (and including)
June 30, or from (and including) July 1 to (and including) September 30, or from
(and  including)  October  1  to  (and  including)  December  31;

"continuing", in relation to an Event of Default, is construed as a reference to
An  Event  of  Default  which  has  not been waived in accordance with the terms
Hereof  or  remedied and, in relation to a Potential Event of Default, one which
Has  not  been remedied within the relevant grace period or waived in accordance
With  the  terms  hereof;

"disposal"  is construed as any sale, lease, transfer, conveyance, assignment or
Other  disposal  and "dispose" and "disposals" is construed accordingly, but the
Payment  of  cash  permitted  hereunder  shall  not  constitute  a  disposal;

"encumbrance"  is  construed as a reference to a mortgage, pledge, lien, charge,
hypothecation,  security  interest, title retention, preferential right or trust
arrangement,  obligations  under  leasing  agreements  and  conditional purchase
agreements, and any other collateral agreement or similar arrangement whether on
existing or future assets (including, without limitation, Sicherungs bereignung,
Sicherungsubtretung,  Eigentumsvorbehalt,  Pfandrecht,  Grundpfand-rechte,
Treuhandvereinbarung,  NieBbrauch);

"include"  or  "including"  is construed without limitation and for avoidance of
doubt;

"indebtedness" is construed so as to include any obligation (whether incurred as
principal  or  as surety) for the payment or repayment of money, whether present
or  future,  actual  or  contingent;

a  "law"  is  construed  as  any law, statute, constitution, binding (bestandskr
aftig)  decree,  binding  (rechtskraftig)  judgement, order, treaty, regulation,
legally  binding  (bestands-  oder  rechtskraftig) directive, rules or any other
legally

<PAGE>

binding  (bestands-  oder  rechtskraftig)  legislative  measure  of  any
government,  supranational,  local  government,  statutory or regulatory body or
court;

a "month" is a reference to a period starting on one day in a calendar month and
ending  on  the  numerically  corresponding  day in the next succeeding calendar
month  save  that:

(d)     if  any  such  numerically corresponding day is not a Business Day, such
period  shall  end  on  the  immediately succeeding Business Day or, if none, it
shall  end  on  the  immediately  preceding  Business  Day;  and

(e)     if  there  is  no  numerically corresponding day in that next succeeding
calendar  month,  that  period  shall  end on the last Business Day in that next
succeeding  calendar  month,
(and  references  to  "months"  shall  be  construed  accordingly);

a  "person"  is  construed  as  a  reference  to  any  person,  firm,  company,
corporation,  government,  state  or Bundesland, authority, of an entry state or
foreigners  or  any  association  or partnership (whether or not having separate
legal  personality)  of  two  or  more  of  the  foregoing;

"repay" (or any derivative form thereof) is, subject to any contrary indication,
construed  to  include  "prepay"  (or,  as  the  case  may be, the corresponding
derivative  form  thereof);

a  "subsidiary"  of  a company or corporation is construed as a reference to any
company:

(a)     which  is  controlled,  directly  or  indirectly, by the first-mentioned
company  or  corporation  and, for these purposes, a company shall be treated as
being  controlled  by  a  company  if  that  other company is able to direct its
affairs  and/or  to  control  the  composition  of  its  board  of  directors or
equivalent  body;

(b)     more than half the issued share capital or partnership interest of which
is  beneficially  owned, directly or indirectly, by the first-mentioned company;
or

(c)     which  is  a  subsidiary  of  another  subsidiary of the first mentioned
company;

<PAGE>

a "successor" is construed so as to include a permitted assignee or successor in
title  of  such  party  and any person who under the laws of its jurisdiction of
incorporation  or  domicile has assumed the rights and obligations of such party
under  this  Agreement or to which, under such laws, such rights and obligations
have  been  transferred;

"tax"  is construed so as to include any tax, levy, impost, duty or other charge
of  a  similar  nature  (including any penalty or interest payable in connection
with  any  failure  to  pay  or  any  delay  in  paying  any  of  the  same);

"VAT"  is  construed as a reference to value added tax including any similar tax
which  may  be  imposed  in  place  thereof  from  time  to  time;

the "WINDING-UP" or "DISSOLUTION" of a company or corporation is construed so as
to  include  any  equivalent  or  analogous  proceedings  under  the  law of the
jurisdiction  in  which  such  company  or  corporation  is  incorporated or any
jurisdiction  in which such company or corporation carries on business including
the  seeking  of  liquidation,  winding-up,  reorganisation,  dissolution,
administration, general arrangement, general adjustment, protection or relief of
debtors.

1.3       CURRENCY  SYMBOLS
"EUR"  and  "euro"  mean  the  single  currency  unit  of  the European Union as
constituted  by  the  Treaty on European Union as referred to in EMU legislation
and  "euro  unit"  means  the  currency  unit  of  the  "euro" as defined in EMU
legislation.

1.4       AGREEMENTS  AND  STATUTES
Any  reference  in  this  Agreement  to:

1.4.1     this  Agreement  or  any other agreement or document is construed as a
reference  to  this  Agreement  or,  as the case may be, such other agreement or
document  as  the  same  may  have  been,  or may from time to time be, amended,
varied,  novated  or  supplemented;  and

1.4.2     a  statute  or  treaty  is construed as a reference to such statute or
treaty  as  the  same may have been, or may from time to time be, amended or, in
the  case  of  a  statute,  re-enacted.

1.5       HEADINGS
Clause,  Part  and  Schedule  headings  are  for  ease  of  reference  only.

<PAGE>

1.6       SINGULAR  AND  PLURAL
Words  incorporating  the  singular  number  include  the plural and vice versa.

1.7       TIME
Any  reference  in  this  Agreement  to  a  time  of  day  is, unless a contrary
indication  appears,  a  reference  to  German  time.

1.8       LANGUAGE
Where  a Financing Document is available in the English and German language, the
German  version  prevails.

2.        THE  FACILITY

2.1       Granting  of  the  Facility
Subject  to the terms and conditions of this Agreement, the Lenders will provide
the  Borrower  with  a  Facility  comprising:

2.1.1     a  euro denominated term loan facility in an aggregate amount of up to
EUR  668  million  divided  as  follows:

  (a)   Tranche  A  in  an  amount  of  EUR  464.55  million  ("Tranche  A");

  (b)   Tranche  B  in  an amount of EUR 122 million ("Tranche B") containing no
more  than  four  (4)  Sub-Tranches  in the respective amounts of EUR 20,666,666
("Sub-Tranche  B1"),  EUR  20,666,667  ("Sub-Tranche  B2"),  EUR  20,666,667
("Sub-Tranche  B3")  and  EUR  60  million  ("Sub-Tranche  B4");

  (c)   Tranche  C  in  an  amount  of  EUR  42  million  ("Tranche  C");

  (d)   Tranche  D1  in  an  amount  of  EUR  9.40  million  ("Tranche D1"); and

  (e)   Tranche  D2  that  may  be  drawn  in  an amount of up to EUR 30 million
("Tranche  D2");

2.1.2     a  euro  denominated revolving loan facility in an aggregate amount of
up  to  EUR  160  million  ("Tranche  E").

2.2       Availability  of  Facility
Provided  that  the  first  Advance  hereunder  is  made on or prior to the date
falling  three  months  after the date hereof, the Facility will, subject to the
next  following  sentence,  be  available for disbursement, on and in accordance
with  the  terms  hereof,  from  Financial Close up to and including the date on
which Acceptance is achieved, but no later than the date falling 40 months after
Financial  Close.

<PAGE>

Tranche D2 will, however, be available up to and including the date falling one
(1)  month  prior  to  the  First  Repayment  Date.

2.3       Borrower's  Obligations

2.3.1     The obligations of the Borrower to the Agent and each Lender hereunder
are  created  vis-a-vis  each  of  them as separate and independent obligations
(Teilschuldnerschaft).

2.3.2     Unless otherwise provided for under the Financing Documents, the Agent
and  each  Lender  may  separately  enforce  their  rights  hereunder.

2.4       Lender's  Obligations
The  obligations  of  each Lender under this Agreement are several. Failure of a
Lender  to  carry  out  its  obligations  pursuant to this Agreement in a proper
manner does not relieve any other party of its obligations under this Agreement.
No  Lender  is  responsible  for  the  obligations of any other party under this
Agreement.  Joint  liability  (gemeinschaftliche  Schuld)  or  joint and several
liability  (Gesamtschuldnerschaft)  is  excluded.

2.5       Purpose  and  Application
The  Facility  is  intended  to  finance  the  Project  in  accordance  with the
Investment  and  Financing Plan. It will exclusively be used by the Borrower for
the  following  purposes:

2.5.1     Tranche  A  will  only  be  used  by the Borrower for the financing of
Project  Construction  Costs  and  Development  Costs;

2.5.2     Sub-Tranches  B1,  B2 and B3 will only be used by the Borrower for the
financing  of the Financing Costs, up until Acceptance, start-up costs, up until
Acceptance,  and  other  Project  Construction  Costs  and Development Costs not
financed  under  Tranche  A;

2.5.3     Sub-Tranche  B4 will only be used by the Borrower for the financing of
Working  Capital  Costs;

2.5.4     Tranche  C  will only be used by the Borrower to fund in part the Debt
Service  Reserve  Account;

2.5.5     Tranche  D1  will  only  be  used by the Borrower for the financing of
Project  Construction  Costs;

<PAGE>

2.5.6     Up  to  and  including  the date of Acceptance Tranche D2 will only be
used by the Borrower for the financing of Cost Overruns; thereafter it will only
be  used  by  the  Borrower  for  a  prepayment of Tranche A (not already funded
pursuant to Clause 2.6.2 (b) (iv) of the Shareholders' Undertaking Agreement) to
the  extent necessary to meet the EU-Equity Test; or lastly for the financing of
shortfalls in Government Grants (not already funded pursuant to Clause 2.6.2 (b)
(i)  of  the  Shareholders' Undertaking Agreement or by an earlier drawing under
Tranche  D2)  as finally calculated one month prior to the First Repayment Date;
and

2.5.7     Tranche  E  will  only  be  used  by  the  Borrower to bridge finance:

(a)     the  portion  of  all  costs  in  relation  to the Project for which the
Government  Grants  are  expected  to  be  received;  and

(b)     recoverable  VAT  payments  on  Project  Construction  Costs.

2.5.8     Without  affecting  the  obligations  of  the  Borrower,  neither  the
Arranger, the Agent, the Security Agent, the Lenders nor any of them is required
to  monitor  or  verify  the application of any amount borrowed pursuant to this
Agreement.  The  Agent  will  however  require  from  the Borrower the documents
regarding  the  application  of  funds in accordance with Clause 3.4.3 (Drawdown
Restrictions).

2.6       Cash  Advances
The  Facility  will  be  available  only  in  the  form  of  cash  Advances.

2.7       Substitute  Lenders
In  the  event  the  Commitment of any Lender is terminated, and the Advances of
such Lender are prepaid or may be prepaid, pursuant to Clause 12 or Clause 13,
the Borrower  shall  have  the  right  to  seek  a substitute lender (which may
be a Lender)  to assume the Commitment and acquire the Advances (or make new
Advances in  substitution  for  Advances  prepaid)  of  such  terminating
Lender.

3.        UTILISATION  OF  THE  FACILITY

3.1       Delivery  of  Drawdown  Request
The  Borrower may from time to time request the making of an Advance by delivery
to  the  Agent of a duly completed Drawdown Request in form and substance as set
out  in  Schedule  1  (Drawdown  Request) not later than 11:00 a.m. on the fifth
         -----------
(5th)  Business  Day  before the Drawdown Date proposed in the Drawdown Request.

<PAGE>

3.2       Drawdown  Details
Each Drawdown Request delivered to the Agent pursuant to Clause 3.1 (Delivery of
Drawdown  Request)  is  irrevocable and will not be regarded as having been duly
completed  unless  it  specifies:

3.2.1     the  proposed  Drawdown  Date  which must be a Business Day within the
Availability Period and in the case of the first Advance hereunder no later than
the  date  falling  three  months  after  the  date  hereof;

3.2.2     the  term  of  the  initial  Interest  Period;

3.2.3     the  amount of any Advance requested which, if it is not for the whole
undrawn  amount  of  the  relevant  Tranche  or  Sub-Tranche,  must  be

  (a)   with  respect  to  Tranche  A  a  minimum amount of EUR 5 million or any
larger  amount  which  is  an integral multiple of EUR 1 million unless it is in
respect  of  Post-Acceptance  Costs;  and

  (b)   with  respect to Tranches B, D1 and D2 a minimum amount of EUR 2 million
or any larger amount which is an integral multiple of EUR 1 million unless it is
in  respect  of  Post-Acceptance  Costs;  and

3.2.4     the  specific  purposes  for  which  the  Advance  will be used by the
Borrower  and  which  Tranche  it  forms  part of; Advances made under Tranche B
(other  than  in  respect  of  Working  Capital Costs which will be allocated to
Sub-Tranche  B4)  will be allocated first to Sub-Tranche B1, then to Sub-Tranche
B2  and  lastly  to  Sub-Tranche  B3.

3.3       Drawdown  Conditions

3.3.1     The  Borrower  may  only  deliver  a Drawdown Request to the Agent if:

  (a)   the  conditions precedent listed in Schedule 2 (Conditions for the First
                                            ----------
Drawdown)  are  met with respect to the first Advance and the Agent has notified
the Borrower and the Lenders that it has received all of the documents and other
evidence  to be delivered in respect of such conditions precedent and each is in
form  and  substance  satisfactory  to  the  Agent  (and the Agent undertakes to
promptly  after  receipt of such documents and evidence notify the Borrower that
such conditions are met or inform the Borrower of the reasons they are not met);

  (b)   the  conditions  precedent  listed  in  Schedule  3  (General  Drawdown
                                                -----------
Conditions)  are  met  with  respect  to  any  Advance;  and

<PAGE>

  (c)   each  condition  subsequent listed in Schedule 4 (Conditions Subsequent)
                                              ----------
has  been  met  to the satisfaction of the Agent within three months of the date
indicated  in such Schedule for its satisfaction unless (i) the Agent, acting on
the  instruction  of  Majority  Lenders,  determines  that  failure  to meet the
relevant  condition subsequent will not be materially adverse in relation to the
Borrower's  ability  to  perform its obligations under the Transaction Documents
and/or  the validity or enforceability of the Transaction Documents or (ii) such
failure  is  subsequently  remedied.

3.3.2     The Agent may waive each drawdown condition with the Majority Lenders'
consent  upon  written  request  by  the  Borrower  to  the  Agent.

3.4       Drawdown  Restrictions

3.4.1     Drawings  except  under Tranche E will only be permitted to the extent
that  amounts  standing  to  (or  expected  to be standing to) the credit of the
Disbursement  Account  are  not  sufficient  to  meet  the  relevant  funding
requirements  for  which  the  Borrower  has  delivered  the  Drawdown  Request.

3.4.2     Drawings  will  further  only  be  permitted  if:

  (a)   on  the  Drawdown Date no Event of Default or Potential Event of Default
has  occurred  and remains uncured or unwaived or would occur as a result of the
making  of  the  Advance  to  be  drawn  down;  and

  (b)   the  representations  to  be  made  by  the  Borrower remain true in all
respects,

  (c)   the  Shareholders  have made the additional Shareholder Loans which they
are  required  to  make  under  the  last  paragraph  of  Clause  2.6.1  of  the
Shareholders'  Undertaking  Agreement.

3.4.3     Drawings in respect of Project Costs (excluding Financing Costs, costs
for  interest payments during the Construction Period and Post-Acceptance Costs)
will  further only be permitted against submission to the Agent of a list of all
invoices  as well as all detailed documents which the Agent requires in relation
to  any  item listed thereon evidencing the Project Costs for which the Borrower
has  delivered  a  Drawdown  Request  or  which have been or are to be paid from
equity  in  accordance  with  Schedule  2  (Conditions  for the First Drawdown),
paragraphs  6(a)  and  (b),  unless  such  Project  Costs  are anticipated to be
incurred  within  one  month  from the Drawdown Date specified in the respective
Drawdown  Request.  Upon  receipt  of  the  relevant  invoice the Borrower shall
deliver  to  the  Agent  without  undue  delay  a  list of any Project Costs not
previously  submitted  as  well

<PAGE>

as those detailed documents which the Agent has requested  in  relation  to  any
item  listed  thereon.

3.4.4     Drawings  under  Tranche  D2  will  be  permitted  only:

  (a)   if  approved  by  the Agent, and, in the case of , the Technical Adviser
and  the  Wood  Supply  Adviser,  such  approval  or,  as  the  case may be, the
procurement  of  such  approval  not  to  be  unreasonably  withheld or delayed;

  (b)   up  to and including the date of Acceptance to the extent that such Cost
Overruns are not required to be paid by the Shareholders under the Shareholders'
Undertaking  Agreement  and  in  any  case  only  so long as the portion thereof
required  to  be  paid  by  the Shareholders under the Shareholders' Undertaking
Agreement  has  first  been  paid;

  (c)   up  to a maximum amount of EUR 5,000,000 and only within 18 months after
Acceptance,  with  respect  to  a  prepayment  of  Tranche A (not already funded
pursuant to Clause 2.6.2 (b) (iv) of the Shareholders' Undertaking Agreement) to
the  extent  necessary  to  meet  the  EU-Equity  Test;  and

  (d)   for the financing of shortfalls in Government Grants (not already funded
pursuant  to  Clause 2.6.2 (b) (i) of the Shareholders' Undertaking Agreement or
by  an earlier drawing under Tranche D2) as finally calculated at the earlier of
the  conclusion  of  the subsidy audit (Mittelverwendungsnachweis) and one month
prior  to  the  First  Repayment  Date.

3.4.5     Drawings  under  Tranche C shall take place on or before Acceptance to
fund  the  Debt Service Reserve Account and will be permitted only to the extent
that  the Agent has received evidence that on or before the date of such Advance
the Shareholders have deposited into the Debt Service Reserve Account the amount
determined  pursuant  to Clause 2.6.2 (b) (iii) of the Shareholders' Undertaking
Agreement.

3.5       Participation  of  the  Lenders  in  Advances

3.5.1     Each  Lender  will  contribute  to  each Advance made hereunder in the
proportion  to  which  its  Commitment bears to the total Commitments of all the
Lenders  at  the  relevant  time.

<PAGE>

3.5.2     The  Agent  shall  no  later than three (3) Business Days prior to the
Drawdown  Date  notify  each  Lender  of the amount of the Advance, the Drawdown
Date,  the  Interest  Period  and  such  Lender's  participation in the Advance.

3.5.3     Upon receipt of the written notice pursuant to the previous paragraph,
each  Lender  will,  no  later  than 10:00 a.m. on the Drawdown Date, credit the
account in the name of the Agent with Bayerische Hypo- und Vereinsbank AG, which
has  been notified by the Agent to Lenders at the latest three (3) Business Days
prior to such Drawdown Date, with its participation in the Advance and the Agent
will,  with  same  day  value  as  the Drawdown Date, transfer the amount of the
Advance  to  the  Disbursement Account in accordance with Clause 9.3.1 (Payments
to the Borrower).

4.     INTEREST

4.1    Interest  Period

4.1.1  Tranche  A,  Tranche  B,  Tranche  C,  Tranche  D1  and  Tranche  D2

  (a)   Prior to the Scheduled First Repayment Date Interest Periods relating to
Advances  made  under  Tranche A, Tranche B, Tranche C, Tranche D1 or Tranche D2
will  be  of  one  (1),  three  (3)  or  six (6) months duration (or such lesser
duration  as  may  be  necessary  so  that  all  Interest Periods in relation to
Advances made under each Tranche will end on the Scheduled First Repayment Date)
at  the  option of the Borrower provided that any Interest Period relating to an
Advance  made under any Tranche commencing at the same time as or during another
Interest  Period  relating to an Advance made under the same Tranche shall be of
such  duration that it shall end on the same date as that other Interest Period.

  (b)   Interest  Periods  commencing  on or after the Scheduled First Repayment
Date relating to Advances made under Tranche A, Tranche B, Tranche C, Tranche D1
and  Tranche  D2 will end on a Repayment Date, thus in each case (other than the
first  such  Interest  Period)  being  of  six  (6)  months  duration.

4.1.2     Tranche  E:  The Interest Periods relating to Advances under Tranche E
will  be  of  one (1), three (3) or six (6) months duration at the option of the
Borrower  (or  such  shorter  period  as  is  required in order for the Interest
Periods  of the Advances under Tranche E to end on the Scheduled First Repayment
Date).

<PAGE>

4.1.3     The  Borrower  will, where appropriate, give irrevocable notice to the
Agent  of the chosen Interest Period in the relevant Drawdown Request or, if the
Advance  has  already been made, in an irrevocable written notice to be received
by  the  Agent no later than 11:00 a.m. on the fifth (5th) Business Day prior to
the  commencement of that Interest Period. At the latest three (3) Business Days
prior  to  the  commencement  of the Interest Period chosen by the Borrower, the
Agent  will give notice to the Lenders and the Guarantors of any notice given by
the  Borrower  pursuant  to  this  Clause 4.1.3.

4.1.4     If  the  Borrower fails to give notice of an Interest Period, its term
will  be  one  (1)  month,  or  any shorter period as the Agent determines to be
necessary  to  comply  with  the  requirements  pursuant  to  Clauses 4.1.5.

4.1.5     The  first Interest Period with respect to an Advance will commence on
its Drawdown Date, and each subsequent Interest Period will commence on the last
day  of  its  preceding  Interest  Period.

4.1.6     The  Agent  may,  with  the  approval of the Borrower, determine other
Interest  Periods  with  respect  to any or all Advances if the Agent deems such
other  Interest  Periods  necessary  or  appropriate  to facilitate syndication,
provided  that  any such other Interest Period will not be shorter than five (5)
Business  Days  nor  longer  than  six  (6)  months.

4.1.7     If  two  or  more Interest Periods relating to Advances under the same
Tranche  end  at the same time, then, on the last day of those Interest Periods,
the  Advances  to  which  they relate will be consolidated into and treated as a
single  Advance under such Tranche. Advances under Tranche B forming part of any
Sub-Tranche will however, not be consolidated with any Advance forming part of a
different  Sub-Tranche.

4.1.8     The  Agent will notify the Borrower and the Lenders of the duration of
each Interest Period in respect of each Advance promptly after having determined
the  same.

4.2       Interest  Rate
The  rate  of  interest  applicable to an Advance under any of the Tranches from
time to time during an Interest Period is the percentage rate per annum which is
the  aggregate  of EURIBOR on the Quotation Date therefor, the applicable Margin
and  Mandatory  Costs,  if  any.

<PAGE>

4.3       Payment  of  Interest
The  Borrower will pay accrued interest for each Interest Period on the last day
of  such  Interest Period. Interest will accrue during each Interest Period from
and  including  the  first day of such Interest Period to but excluding the last
day  of  such  Interest  Period.

4.4       Notification
The  Agent  will  promptly  notify  the  Borrower  and  the  Lenders  of  each
determination  of  the  Interest  Rate  and interest payable in relation to each
Advance.  Each  determination  of  the  Interest  Rate by the Agent will, in the
absence  of  a manifest error, be conclusive and binding on the Borrower and the
Lenders.

4.5       Default  Interest

4.5.1     If  the Borrower fails to pay any amount (other than interest) payable
by it hereunder on its due date, interest will accrue on the overdue amount from
the  due  date  up  to the date of actual payment at a rate of 1.5 per cent. per
annum  above:

  (a)   in  relation  to an amount becoming due and payable before expiration of
the  Interest  Period applicable thereto, for the period until the expiration of
such  Interest  Period  the  rate  applicable to such overdue amount immediately
prior  to  the  due  date;  and

  (b)  in  all other cases, the Interest Rate on the most recent Quotation Date
for  such  periods  as  the  Agent  may  designate, provided, however, that such
Interest  Period  will  not  exceed  three  (3)  months.

4.5.2     If  the  Borrower fails to pay any interest payable by it hereunder on
its due date, it will make, at the time of payment of all arrears of interest, a
lump  sum  payment  for  all  arrears of interest in the amount of 1.5 per cent.
above EURIBOR applicable to the respective Interest Period of the amount due and
payable.

4.5.3     The right of the Lenders to compensation for any loss arising from the
default  remains  unaffected.  Payments  made  under  Clause 4.5.2 will  however
be  deducted  from  such  compensation.

4.5.4     The  Agent  will  promptly  notify the Borrower and the Lenders of the
determination  of any default interest. Each determination by the Agent will, in
the  absence  of a manifest error, be conclusive and binding on the Borrower and
the  Lenders.

<PAGE>

5.      MARKET  DISRUPTION

5.1     Market  Disruption
If,  on  any  Quotation Date in relation to any Advance and any Interest Period:

5.1.1   EURIBOR  is to be determined by reference to Reference Banks and at or
about  11.00 a.m. on the Quotation Date for the relevant Interest Period none or
only  one  of the Reference Banks supplies a rate for the purpose of determining
the  EURIBOR  for  the  relevant  Interest  Period;  or

5.1.2   before  the  close  of  business in Frankfurt am Main on the Quotation
Date  for  such  Advance,  the  Agent  has  been  notified by Lenders to whom in
aggregate  50 per cent. or more of the principal of the relevant Advance is owed
that  EURIBOR  does  not,  by  reason  of circumstances affecting the inter-bank
market  generally,  accurately  reflect  the  cost to them of obtaining matching
deposits  for  their  participation  in  such  Advance,

then,  notwithstanding  anything  contrary  in  this  Agreement,  the Agent will
promptly  give  written notice (the "Suspension Notice") to the Borrower and the
Lenders  of  such  event.

5.2     Alternative  Basis  of  Interest

5.2.1   If Clause 5.1.1 (Market Disruption) applies, the applicable Interest
Period will  be one (1), three (3) or six (6) month(s) or such shorter period to
end on any  Repayment  Date,  and  the  interest  rate  applicable will be the
weighted average  of the interest rates notified by the Lenders to the Agent on
or before the  last  day  of  the  relevant Interest Period to reflect the cost
of funding (regardless  from  what  sources  a  Lender  may  reasonably  select
to fund its participation)  their  participation  in  the  relevant  Advance,
expressed as a percentage  per  annum  plus the Margin applicable to such
Advance and Mandatory Costs,  if  any.

5.2.2   If  Clause 5.1.2 (Market  Disruption) applies, the interest rate
applicable to  the  affected  Lenders'  participation  in  the  relevant
Advance shall be:

  (a)   in  respect  of each Lender having notified the Agent in accordance with
Clause 5.1.2 (Market  Disruption)  the  interest  rate  notified  by  it to the
Agent pursuant  to  the  principles  as  set  out  in  Clause 5.2 (Alternative
Basis  of Interest);  and

  (b)   in  respect  of  all  other Lenders EURIBOR and the Margin applicable to
such  Advance  and  Mandatory  Costs,  if  any.

<PAGE>

5.3     Negotiations
During  a  period  of thirty (30) days upon the giving of the Suspension Notice,
the Agent, the Lenders and the Borrower will negotiate in good faith with a view
to  agreeing  on  the rate of interest or a substitute basis for determining the
rate  of  interest, including without limitation alternative Interest Periods or
alternative methods of determining the interest rate from time to time, (whereby
a margin above the cost of funding of each Lender's participation in the Advance
equivalent  to  the  Margin has to be included) and any such rate of interest or
substitute  basis  that  is agreed will take effect in accordance with its terms
and  be  binding  on  each  party.

5.4     Prepayment
The  Borrower  may elect at any time during which an interest rate is determined
pursuant to Clause 5.2 (Alternative Basis of Interest) to give notice to a
Lender in  writing  through  the  Agent that it intends to prepay in full such
Lender's  participation in  each  Advance  on  the  last day of the then current
Interest Period  for  that  Advance.

6.      REPAYMENT

6.1     General
The  Borrower shall repay in full all Advances under each Tranche outstanding on
the  Final  Maturity  Date  with  respect  to  such  Tranche.

6.2     First  Repayment
6.2.1   Not  later  than  the first  (1st)  31 March or 30 September immediately
following the fourth (4th) anniversary of the first Advance under Tranche A (the
"Scheduled  First Repayment Date"), the Borrower will repay an amount which will
reduce  the  aggregate  Advances  outstanding (other than under Tranche E) to no
more  than  the  Required  Level  (the  "First  Repayment").

6.2.2   The  First  Repayment will be applied to the Tranches in the following
order:

  (a)   first,  for  the  repayment  of  70  %  of  Tranche  D2;

  (b)   second,  for  the  repayment  of  70  %  of  Tranche  D1;

  (c)   third,  for  the  repayment  of  70  %  of  Tranche  C;

  (d)   fourth,  for  the  repayment  of  part  of  any  Sub-Tranche  B1  to B3;

  (e)   fifth,  for  the  repayment  of  Tranche  A.

<PAGE>

6.3       Repayments  other  than  First  Repayment

6.3.1     The  Amortisation  Schedule  (expressed as a maximum percentage of the
Required  Level  to  be  outstanding  at  the close of business in Munich on the
relevant  Repayment Date) to be delivered pursuant to paragraph 12 of Schedule 2
                                                                      ----------
(Conditions  for  the  First  Drawdown)  shall  be  prepared on the basis that a
minimum  Annual  Debt  Service  Cover Ratio, as shown by the Base Case delivered
pursuant  to  paragraph  9  of Schedule 2 (Conditions for the First Drawdown) of
                               ----------
1.73  is achieved at each Repayment Date assuming repayment of all Advances made
hereunder  (other  than  under  Tranche  E)  in  accordance  with  the following
sub-clauses  of  this  Clause 6.3 (Repayments  other  than  First  Repayment).

6.3.2     Following  the repayment referred to in Clause 6.2 (First Repayment),
the  Borrower  will  repay  the  outstanding  Advances  under  Tranche  A  in 22
instalments  semi-annually  on  each  31  March  and  30 September following the
Scheduled First Repayment Date in accordance with the Amortisation Schedule. The
amount  of  each instalment shall be such that, after the repayments of Tranches
B,  C,  D1 and D2 required to be made on the relevant Repayment Date pursuant to
the  following  sub-clauses  of  this  Clause  6.3  (Repayments other than first
Repayment)  have  been  made,  the aggregate outstanding amount of all Advances,
other  than  Advances  under  Tranche  E, (at close of business in Munich on the
relevant  Repayment  Date)  expressed as a percentage of the Required Level does
not  exceed  the  percentage  set  out in the Amortisation Schedule against that
Repayment  Date.

6.3.3     The  Borrower  will  repay  the  outstanding  Advances  under  each of
Sub-Tranche  B1,  B2  and  B3, following the repayment referred to in Clause 6.2
(First  Repayment),  in eight (8) equal semi-annual instalments on the eight (8)
Repayment  Dates  ending  on the (1st) first Repayment Date following the eighth
(8th)  anniversary  of  the  first  Advance  under  the  relevant  Sub-Tranche.

6.3.4     The  Borrower  will  repay  Sub-Tranche  B4 in one amount on the Final
Maturity  Date  for  Sub-Tranche  B4.

6.3.5     The  Borrower  will  repay  the  outstanding Advances under Tranche C,
following  the  repayment  referred  to  in  Clause  6.2,  in  three  (3)  equal
semi-annual  instalments  on  the  three  (3)  Repayment Dates falling after the
Scheduled  First  Repayment  Date.

<PAGE>

6.3.6     The  Borrower  will repay the outstanding Advances under Tranche D1 in
three (3) equal semi-annual instalments on the three (3) Repayment Dates falling
after  the  Scheduled  First  Repayment  Date.

6.3.7     The  Borrower  will repay the outstanding Advances under Tranche D2 in
three (3) equal semi-annual instalments on the three (3) Repayment Dates falling
after  the  Scheduled  First  Repayment  Date.

6.3.8     The Borrower will repay the outstanding Advances under Tranche E in an
amount  equal to the proceeds of Government Grants and/or VAT refunds on Project
Costs  received from time to time and/or, as the case may be, out of one or more
drawings  made under Clause 2.6.2 (b) of the Shareholders' Undertaking Agreement
and/or  moneys  on  the  Proceeds Account which are available in accordance with
Clause  9.4.3(a)  (x)  (Application  of  Moneys  on  Proceeds Account). Any such
repayment  shall  be  made  on  the  interest  payment  date(s)  relating to any
Advance(s)  outstanding  under Tranche E next following receipt of such proceeds
or, in relation to the moneys on the Proceeds Account, on the relevant Repayment
Date.  Such repayment is, however, not necessary to the extent the Borrower used
the  proceeds of Government Grants and/or VAT refunds for purposes corresponding
to  the purpose of Tranche E. Any Advances under Tranche E remaining outstanding
at  Tranche E's Final Maturity Date will be repaid on that date by the Borrower.
Any  such repayment shall be made together with accrued interest thereon and any
other  amounts  outstanding  under  this  Agreement  in  respect  thereof.

6.4       Repayment  Schedule
The  Agent  will forward to the Borrower and the Lenders with respect to Tranche
A,  Tranche B, Tranche C, Tranche D1 and Tranche D2 a repayment Schedule setting
out  in accordance with Clause 6.3 (Repayments  other  than First Repayment) the
amount  of  the  repayment instalments and their respective payment dates at the
latest  15  days  prior  to  the  Scheduled First Repayment Date (the "Repayment
Schedule").  The  Repayment  Schedule  will  be  amended  pro  rata by the Agent
following  the  making  of  any  voluntary  prepayments or mandatory prepayments
according  to  this  Agreement  and  will  be  submitted to the Borrower and the
Lenders  upon  its  amendment.

6.5       Deferred  Amortisation
6.5.1     If  there  are  insufficient  funds  available  to  meet  scheduled
amortisation  payments from the Proceeds Account, the Equity Reserve Account and
the  Debt  Service  Reserve Account, deferral of the amortisation of the amounts
outstanding (less any amount payable by the Shareholders pursuant to the proviso
to  Clause 2.6.2 (b) (vi) of the Shareholders' Undertaking Agreement), excluding
Advances

<PAGE>

under  Tranche  E,  remaining  after  application  of  the  available funds, the
Borrower may, subject to  Clause 6.1 (General),  ask  for  a  deferral  of  the
outstanding  amounts  without triggering an Event of Default for a period of not
more  than  six  (6)  months  and  subject  to  the  maximum  permitted deferred
amortisation  amount  under  any  Tranche at any Repayment Date being no greater
than  the  principal  amortisation  amount  due  on  such  Repayment  Date.

6.5.2     Any deferral shall be apportioned rateably across the Tranches due for
repayment  on  the  relevant  Repayment  Date.  On  the First Repayment Date any
deferral  shall,  however,  first be apportioned rateably across Tranches D2, D1
and  C  and  only then rateably across Tranche A and Sub-Tranches B1, B2 and B3.

6.6       No  Other  Repayments
The  Borrower will not repay all or any part of the Advances except at the times
and  in  the  manner  expressly  provided  for  in  this  Agreement.

7.        VOLUNTARY  PREPAYMENTS

7.1       General
At  any  time  after  the Scheduled First Repayment Date the Borrower may, after
having  given  to  the  Agent  not  less  than fifteen (15) Business Days' prior
irrevocable  written  notice  to  that  effect,  prepay  any  part of the amount
outstanding  under Tranche A, Tranche B, Tranche C, Tranche D1 and Tranche D2 on
a Repayment Date in respect of such Tranche without Breakage Costs, subject to a
minimum  prepayment  amount  of  EUR  5 million or the total outstanding amount,
whichever is smaller. Voluntary prepayments under this Clause 7.1 (General) will
be applied first to Tranche  D2,  then to Tranche D1, then to Tranche C, then to
Tranche  B  (in  reduction  of  Sub-Tranche  B1 and then Sub-Tranche B2 and then
Sub-Tranche  B3)  then  to  Tranche  A  and  will  be  applied pro rata over the
remaining  instalments  of  the  respective  Tranche  and/or  Sub-Tranche.  The
Borrower  may,  subject  to paying Breakage Costs, where applicable, at any time
following  the  Scheduled  First  Repayment Date, by submitting at least fifteen
(15) Business Days in advance a written and irrevocable notice thereof, repay on
a  Repayment  Date  any outstanding amounts under Tranche E in whole or in part.

7.2       Prepayment  of  First  Repayment
The  Borrower  may,  by  giving  not  less  than  seven (7) Business Days' prior
irrevocable and written notice to the Agent, prepay all or from time to time any
part  of  the  First Repayment prior to the Scheduled First Repayment Date. Such
prepayment  must  fall  on the last day of an Interest Period relating to one or
more

<PAGE>

Advances having an aggregate principal amount at least equivalent to the amount
of  such  prepayment.

7.3       Prepayment  for  meeting  of  EU-Equity  Test
The  Borrower  shall  have the right, effective on the first day of any Interest
Period  commencing  within  18  months  after  Acceptance,  to prepay any amount
outstanding  under  Tranche  A  by  drawing an equivalent amount from the Equity
Reserve  Account  or,  if  the balance standing to the credit of such account is
insufficient for the purpose, by drawing an amount of up to EUR  5 million under
Tranche  D2  to  the  extent  necessary to meet the EU-Equity Test. The Borrower
shall  give  the  Agent  at  least  ten (10) Business Days prior written notice,
specifying  the  principal amount outstanding under Tranche A to be prepaid, and
the  amount to be drawn under the Equity Reserve Account or, as the case may be,
Tranche  D2. Any such prepayment made by the Borrower shall satisfy rateably the
remaining  obligations  of  the  Borrower  to  repay  Tranche  A.

7.4       Scope  of  Prepayment
All  prepayments  will  be  made  together  with  accrued interest on the amount
prepaid  and  all  other  amounts,  if any, owing by the Borrower to the Lenders
hereunder.

7.5       Notice  of  Prepayment
Any  notice  of  prepayment  given  by  the  Borrower pursuant to this Clause is
irrevocable  and  will specify the date upon which such prepayment is to be made
and the amount of such prepayment. The Agent will notify the Lenders promptly of
receipt  of  any  such  notice.

7.6       No  Other  Voluntary  Prepayments
The  Borrower will not voluntarily prepay all or any part of any Advances except
at  the  times  and  in  the  manner  expressly  provided for in this Agreement.

7.7       No  Re-Borrowing
The  Borrower  will  not  be  entitled  to  re-borrow  any  prepaid  amount.

8.       CANCELLATION

8.1      General

8.1.1    The  Borrower  may,  by giving to the Agent not less than fifteen (15)
days'  prior  written  notice to that effect, without premium or penalty, cancel
the  whole  or  any  part  of  the  undrawn  Commitments  under  any  Tranche.

<PAGE>

8.1.2     Any  notice  of  cancellation  given  by the Borrower pursuant to this
paragraph  will be irrevocable and specify the date upon which such cancellation
is  to  be  made  and  the  amount  of  such  cancellation.

8.2       End  of  Availability  Period;  End  of  Period  for  first  Advance
The  unutilised portion (if any) of the Facility will automatically be cancelled
at close of business on the last day of the Availability Period or, if the first
Advance  has  not been made hereunder on or before the date falling three months
after  the  date  hereof,  on  such  later  date  unless the Agent acting on the
instructions  of  all  Lenders  otherwise  notifies  the  Borrower  in  writing.

8.3       No  Re-borrowing
Cancelled  amounts  are  not  available  for  re-borrowing.

8.4       Reduction  of  Commitments
Any cancellation will reduce the Lenders' Commitments proportionately across the
Tranches  being  cancelled.

9.        PAYMENTS

9.1       Disbursement  Account

9.1.1     The  Borrower  will  open a disbursement account with the Agent at the
latest  at Financial Close, such account to be pledged by the Borrower in favour
of the Lenders by entering into an account pledge agreement substantially in the
form  set  out  in  Schedule  7  (Form  of  Account  Pledge  Agreement).
                    -----------

9.1.2     The  Disbursement  Account  will  be  used  to  deposit

  (a)   amounts  which  are  disbursed  under  the  Facility (Tranche E) (unless
otherwise  provided  for  in  Clause 9.3.2 to 9.3.4),

  (b)   amounts  which  are  provided  by  the  Shareholders  as  Shareholder
Contributions  up  to  Acceptance,

  (c)   Start-Up Cash Flows to the extent they do not exceed the budgeted amount
therefor  as  set  out  in  the  Base  Case  delivered  pursuant  to  Schedule 2
                                                                      ----------
(Conditions  for  the  First  Drawdown),  paragraph  9,

  (d)   material  loss or damage insurance proceeds received prior to Acceptance
which  will  be  applied  in  making  good  the  related  loss;  and

  (e)   delayed  start-up or business interruption insurance proceeds and/or any
delay  liquidated damages under the EPC Contract received, in either case, prior
to  Acceptance which will be applied first in or towards any increased costs and
expenses  incurred  by  the  Borrower  as  a  result  of  the  related  delay.

9.1.3     Save  as  otherwise  specifically  provided  herein,  the  Borrower is
entitled  to apply any moneys standing to the credit of the Disbursement Account
exclusively,  and,  in  the case of a continuing Event of Default, only with the
Agent's  prior  written  consent,  in  or towards payment of all due and payable
Project  Costs.

9.1.4     Any  amount  remaining  on  the Disbursement Account after Acceptance,
except for amounts to be used for the payment of Post-Acceptance Costs, shall be
applied  by  the  Borrower to make a mandatory prepayment of amounts outstanding
under  the  Facility  in  accordance  with  the  following  provisions:

  (a)   Any  such  prepayment  shall:

     (i) be applied first to Tranche D1, then to Tranche C, then to Tranche D2,
then  to  Tranche  B (in reduction of Sub-Tranche B1 and then Sub-Tranche B2 and
then  Sub-Tranche  B3)  and  then  to  Tranche  A;

    (ii) be  applied  pro-rata over the repayment instalments under each Tranche
and  Sub-Tranche;

   (iii) be  effected  on  the Repayment Date immediately following Acceptance;
and

    (iv) reduce  each  Lender's  participation  in the Advance outstanding under
each  Tranche  and/or  Sub-Tranche  in  proportion  to  such  prepayment.

  (b)   The  Repayment Schedule shall be amended by the Agent pursuant to Clause
6.4 (Repayment  Schedule).

  (c)   The  Borrower  authorises  the Agent (on behalf of the Lenders) to debit
the  Disbursement  Account  with  any  such  amount for the purposes of making a
mandatory  prepayment  pursuant  to  Clause 9.1.4.

9.2       Proceeds  Account

9.2.1     The  Borrower will open a current account (Kontokorrentkonto) with the
Agent  at  the  latest  at  Financial  Close,  such account to be pledged by the
Borrower  in  favour of the Lenders by entering into an account pledge agreement
substantially

<PAGE>

in  the  form  set  out  in  Schedule  7  (Form of Account Pledge
                                            -----------
Agreement)  (the  "Revenue  Account").

9.2.2     The  Revenue  Account  will be used to collect all revenues and income
generated by the Borrower's business apart from the budgeted Start-up Cash Flows
as  set  out  in  the Base Case delivered pursuant to Schedule 2 (Conditions for
                                                      ----------
First Drawdown) paragraph 9 and Excess Start-up Cash Flows in an amount of up to
EUR  15  million.  The  Borrower will ensure that all payments to be made by the
respective  counterparties  to  any agreement concluded with the Borrower, apart
from  Shareholder  Contributions,  are  made  into  the  Revenue  Account.

9.2.3     The  Borrower  may  elect  to  open  a further account with HVB Banque
Luxembourg  Societe Anonyme and/or the Agent in respect of investments which may
be  made by the Borrower pursuant to Clause 9.2.4 (each an "Investment Account",
together  with the Revenue Account, the "Proceeds Account"), such accounts to be
pledged  by  the  Borrower  in favour of the Lenders by entering into an account
pledge  agreement  substantially  in  the  form  set  out in Schedule 8 (Form of
                                                             ----------
Luxembourg  Account  Pledge  Agreement)  in  respect  of  the Investment Account
maintained with HVB Banque Luxembourg Societe Anonyme and in the form set out in
Schedule  7  (Form  of  Account  Pledge  Agreement) in respect of the Investment
-----------
Account maintained with the Agent. The Borrower will at its own cost provide the
-----
Agent  with  a legal opinion satisfactory to the Agent and issued by a reputable
Luxembourg  law  firm in respect of, inter alia, the validity and enforceability
of  such  Luxembourg  account  pledge  agreement.

9.2.4     The  Borrower  may  invest  the  balance standing to the credit of the
Revenue  Account  in  Permitted  Investments,  provided  that  such  Permitted
Investments  are  deposited  in  the Investment Account and the maturity of such
Permitted Investments does not conflict with the anticipated payments to be made
by  the  Borrower  pursuant  to  Clause 9.4.3 (Application of Moneys on Proceeds
Account).  To  the  extent  necessary to make payments in accordance with Clause
9.4.3  (Application  of  Moneys on Proceeds Account), the Borrower will transfer
sufficient  funds  from  the  Investment Account to the Revenue Account and will
liquidate  any  of  the  Permitted  Investments if necessary to meet its payment
obligations.

9.3       PAYMENTS  TO  OR  ON  BEHALF  OF  THE  BORROWER

9.3.1     The  proceeds  of  all  Advances to be made to the Borrower under this
Agreement  will,  to  the extent not otherwise provided in the following Clauses
9.3.2 and  9.3.4,  be  made  into  the Disbursement Account in  accordance  with
Clause 3.5.3.

<PAGE>

The Borrower  will procure that until Acceptance all funds in respect of
Shareholder Contributions  will  be  made  into  the  Disbursement  Account.

9.3.2     The  Borrower  authorises  the Agent to make payments on behalf of the
Borrower relating to the Financing Costs until Acceptance and costs for interest
payments for Tranche A Advances during the Pre-Production Period directly to the
Lender  having  incurred  such  costs.

9.3.3     The  Borrower  authorises  the Agent to make payments on behalf of the
Borrower  with  respect  to  the  provision of funds to the Debt Service Reserve
Account  directly  into  the  Debt  Service  Reserve  Account.

9.3.4     The  Borrower relieves the Agent from the restrictions of Sec. 181 BGB
in  respect  of  the  authority  conferred  upon  the  Agent  in  Clauses 9.3.2
and 9.3.3.

9.4       PAYMENTS  BY  THE  BORROWER  AND  THE  LENDERS

9.4.1     Time  and  Currency: Unless otherwise permitted, all payments required
to  be  made by the Borrower to the Lenders under any Financing Document will be
made in euro to the Agent on the due date therefor not later than 10:00 a.mIf a
payment  is  due  on  a  day  which is not a Business Day, the due date for that
payment will instead be the next Business Day in the same calendar month and, if
there  is  none,  on  the  immediately  preceding  Business  Day.

9.4.2     Set-off  and Retention Rights: All payments required to be made by the
Borrower  to  the  Lenders  under any Financing Document (other than the Hedging
Agreements)  will  be  made  without  set-off  or  counterclaim.

9.4.3     Application  of  Moneys  on  Proceeds  Account:

  (a)   Priority  of  Payments:  The  Borrower  is  entitled to apply any moneys
standing  to  the  credit of the Proceeds Account with the exception of proceeds
from Government Grants and/or VAT refunds on Project Costs applied in accordance
with Clauses 6.3.8 (Repayments other than First Repayment) and 21.1.11 (Payments
and Application of Payments) exclusively in the following order and, in the case
of  a  continuing  Event  of  Default,  only  with  the Agent's written consent:

     (i) first,  in  or  towards payment of all due and payable operating costs,
on-going  capital  costs,  and Working Capital Costs, all as shown in the latest
Project  Budget  and any scheduled amount then due and payable under the Hedging
Agreement;

<PAGE>

    (ii) second,  in  and  towards  payment of any tax payment and fee for State
Guarantee  then  due  and  payable;

   (iii) third,  in and towards payment of any unpaid costs and expenses of the
Lenders,  the  Agent  and  the  Security Agent due from the Borrower pursuant to
Clause 27 (Costs and Expenses) and any accrued interest and fees due and payable
to  the  Lenders  hereunder,  with the exception of the payments mentioned under
paragraphs 9.4.3 (a) (iv) to 9.4.3 (a) (vii);

    (iv) fourth,  in  or  towards payment of any deferred principal then due and
payable  to  the  Lenders under Tranche D2, Tranche D1, Tranche C, Tranche B and
Tranche  A  (in  that order and rateably, other than in respect of any principal
deferred  on the First Repayment Date where any principal relating to Tranches A
and  B  will  be  repaid  first);

     (v) fifth, in  or  towards payment of any principal then due and payable to
the  Lenders  under  Tranche  D2,  Tranche  D1  and  Tranche  C (in that order);

    (vi) sixth, at the Final Maturity Date of Tranche E in or towards payment of
any principal due and payable to the Lenders under Tranche E, but not repaid due
to  delays  in  the  receipt  of  Government  Grants  and/or  VAT  refunds;

   (vii) seventh,  in  or towards payment of any principal then due and payable
to the Lenders under Tranche B and Tranche A and the net amount of any close-out
or  termination  sums  then  due  and  payable  under  the  Hedging  Agreements;

  (viii) eighth,  in  or towards payment of any interest and principal due and
payable  under  any  other  Permitted  Financial  Indebtedness;

    (ix) ninth,  but only following Acceptance in or towards any payment due and
payable  into  the  Debt  Service  Reserve  Account;

     (x) tenth,  on  a Repayment  Date, towards repayment of amounts outstanding
under  Tranche  E;  and

    (xi) eleventh,  subject to Clause 9.4.3 (c) into the Shareholders' Account
to include any  interest  payable  on  any  Shareholder  Loan.

<PAGE>

  (b)   Authorisation  of Agent: The Borrower authorises the Agent (on behalf of
the  Lenders)  to debit and, to the extent necessary, to liquidate any Permitted
Investments  previously  purchased  with any funds standing to the credit of the
relevant  account:

     (i) the  Proceeds Account with all amounts referred to in Clause 9.4.3 (a)
(ii) (but only regarding the payment of fees in relation to the State Guarantee)
and Clause 9.4.3 (a) (iv) to 9.4.3 (a) (vii) inclusive  when  due;  and

    (ii) if  the  funds  in  the  Proceeds Account are not sufficient to pay any
amounts set out in Clause 9.4.3 (a) (iv) to 9.4.3 (a) (vii) inclusive, to debit
the Equity Reserve Account and  then  the  Debt  Service  Reserve  Account  with
any  such  amount,

and  to  apply  any  amount  so  debited  in  payment  of the relevant amounts.

  (c)   Restricted  Application:

     (i) Payments by the Borrower from the Proceeds Account to the Shareholders'
Account  pursuant  to  Clause 9.4.3 (a) (xi) are  permitted  only:

        (1) from  the  time the aggregate outstanding amounts have been paid
down to the  Required  Level;

        (2) Tranche  E  has  been  repaid  in  full;

        (3) subject  to  the  absence  of a continuing Event of Default or
Potential Event  of  Default;  and

        (4) within a period of ten  Business  Days  following  a Repayment Date.

      (ii) If  the  Annual  Debt Service Cover Ratio at any Repayment Date is
less  than  1.15, the moneys available to be paid into the Shareholders' Account
will  be  retained  in  the  Proceeds  Account, provided that if the Annual Debt
Service  Cover  Ratio  (taking  Available  Cash  Flow  from Acceptance to the 31
December  or  30 June next preceding the First Repayment Date) is less than 1.15
on  the  First  Repayment  Date,  the Borrower may nevertheless (notwithstanding
Clause  9.4.3 (c)(i)(4) make payments into the Shareholders' Account pursuant to
Clause  9.4.3(a)(xi)  prior  to  the

<PAGE>

next  following  Repayment Date if it submits to the Agent a further calculation
of  the Annual Debt Service Cover Ratio (taking into account Available Cash Flow
from  Acceptance  to  the  First  Repayment  Date)  certified by its independent
auditors  demonstrating  that  its  Annual Debt Service Cover Ratio at the First
Repayment  Date  equalled  or  exceeded  1.15.

9.4.4     Application  of  Insurance  Proceeds:

  (a)   Material loss or damage insurance proceeds each below or equal to EUR 10
million  until  Acceptance  and below or equal to EUR 5 million after Acceptance
will  be  applied,  for  repairs  or  replacements  by  the  Borrower.

  (b)   Material  loss  or  damage  insurance proceeds, each in excess of EUR 10
million  but  only  up to a total of EUR 50 million until Acceptance and each in
excess  of  EUR  5  million  after  Acceptance, but only up to a total of EUR 50
million  will  be applied, if insured damage occurs which, in the opinion of the
Technical  Adviser  and the Wood Supply Adviser, is repairable or replaceable by
application  of  insurance  proceeds (together with any monies then available to
the  Borrower),  directly  to  meet  the  cost  of such repairs or replacements.

  (c)   Material  loss  or  damage  insurance  proceeds

    (i) in  excess  of  EUR 10 million each, but only up to EUR 50 million until
Acceptance  and  in  excess of EUR 5 million each, but only up to EUR 50 million
after  Acceptance,  if  damage  occurs  which,  in  the opinion of the Technical
Adviser  and  the  Wood  Supply  Adviser,  is  not replaceable by application of
insurance  proceeds  (together  with any monies then available to the Borrower),

   (ii) in  excess  of  EUR  50  million,

will  be applied at the direction of the Majority Lenders.  For the avoidance of
doubt,  the  Lenders  will however provide insurance services to the Borrower in
respect  of  security measures provided by the EPC Contractor pursuant to Clause
13.2  of  the  EPC  Contract.

  (d)   Notwithstanding the provisions of Clauses 9.4.4 (a) and 9.4.4 (b) and to
the extent no material interests (versicherte Interessen) under the Construction
/Erection All Risks  Material  Damage  Insurance  Contract  of  any  co-insured
are affected, payments by the Borrower from the Insurance Account will be
permitted only if no Event  of  Default  has

<PAGE>

occurred and is continuing unless such Event of Default would  be  cured  by the
application  of  such  payment.

9.4.5     Distribution  of  Payments:

  (a)   Each  payment  made to the Agent by the Borrower pursuant to this Clause
9 will be promptly  distributed  proportionately  by the Agent among the Lenders
entitled  thereto.  Each such distribution will be made in like funds as and for
value  the  date  on  which  such  payment  is  received  by  the  Agent.

  (b)   The  previous paragraph applies mutatis mutandis to payments made to the
Agent  by  third  parties  under  any  Financing  Document.

10.       EQUITY  RESERVE  ACCOUNT

10.1      MAINTENANCE
The  Borrower will open an interest bearing equity reserve account at the latest
at  the First Repayment Date or earlier if required so that Excess Start-Up Cash
Flows  can  be  deposited  into  it  as  they  arise.

10.2      PURPOSE
The  Equity  Reserve Account will be used for securing the Lenders' claims under
the  Financing  Documents  in  priority to the funds on the Debt Service Reserve
Account.

10.3      ERA-BALANCE
The  Equity  Reserve Account will be funded by Excess Start-Up Cash Flows and by
the  amount  determined  in  accordance  with  Clause  2.6.2  (b)  (vi)  of  the
Shareholders'  Undertaking  Agreement  in  accordance with the provisions of the
Shareholders'  Undertaking  Agreement.

10.4      SET-OFF
The  Agent  is  entitled  to  set  off  the credit balance in the Equity Reserve
Account  against  any  obligations  of  the  Borrower  due and payable under the
Financing Documents to the Lenders if the Borrower does not, does not on time or
does  not  entirely  perform  such  obligations.

10.5      INVESTMENTS
10.5.1     The  Borrower  may  elect  to  open a further account with HVB Banque
Luxembourg  Societe Anonyme and/or the Agent in respect of investments which may
be made by the Borrower pursuant to Clause 10.5.2 (the "ERA Investment
Account"), such account  to be pledged by the Borrower in favour of the Lenders

<PAGE>

by entering into an  account  pledge  agreement  substantially  in the form set
out in Schedule 8 (Form  of  Luxembourg Account Pledge Agreement) in respect of
       ----------
the ERA  Investment  Account  maintained  with  HVB  Banque  Luxembourg Societe
Anonyme and in the  form  set  out  in  Schedule  7  (Form  of  Account  Pledge
                                        -----------
Agreement) in respect of the ERA Investment  Account maintained with the Agent.
The Borrower will at its  own  cost  provide  the  Agent  with  a legal opinion
satisfactory to the Agent  and issued by a reputable  Luxembourg  law  firm  in
respect  of,  inter alia, the validity and enforceability  of  such  Luxembourg
account  pledge agreement. Any interest or other  income  earned on balances on
the Equity Reserve Account may, so long as:

  (a)   the  balance  standing to the credit of the Debt Service Reserve Account
is  at  least  equal  to  the  then  Target  Balance;  and

  (b)   no  Event  of  Default or Potential Event of Default has occurred and is
then  continuing,
be  paid  into  the  Shareholders'  Account.

10.5.2     The Borrower may invest the balance standing to the credit of the ERA
Investment  Account  in  Permitted  Investments,  provided  that  such Permitted
Investments are deposited in the ERA Investment Account and the maturity of such
Permitted Investments does not conflict with any anticipated payments to be made
by  the  Borrower  out of the ERA Investment Account. To the extent necessary to
make  any  payments  out  of  the ERA Equity Account, the Borrower will transfer
sufficient  funds  from the ERA Investment Account to the ERA Equity Account and
will liquidate any of the Permitted Investments if necessary to meet its payment
obligations.

11.        DEBT  SERVICE  RESERVE  ACCOUNT

11.1       MAINTENANCE
The  Borrower  will open an interest bearing debt service reserve account at the
latest  at  Acceptance.

11.2       PURPOSE
The  Debt  Service Reserve Account will be used for securing the Lenders' claims
under  the  Financing  Documents.

11.3       TARGET  BALANCE
The target balance to be maintained on the Debt Service Reserve Account prior to
the  First  Repayment  Date  is  EUR 57 million and thereafter such amount as is
sufficient  to service the amounts due and payable under the Facility during the

<PAGE>

following  twelve (12) months, taking into consideration any amounts held in USD
in accordance with Clause 11.5 (Currency) (the "Target Balance"). Any balance on
the Equity  Reserve Account from time to time will count towards the Target
Balance.  The  Debt  Service  Reserve  Account  will  be  funded  through

  (a)   a  drawdown  under  Tranche  C,

  (b)   the  amount  determined  in  accordance  with  Clause 2.6.2 (iii) of the
Shareholders'  Undertaking  Agreement,

  (c)   out  of the Proceeds Account taking into consideration Clause 9.4.3 (a)
(Priority of  Payments).

When  determining  the  twelve (12) months debt service, the Agent will estimate
the  costs of interest on the basis of the interest rates then currently payable
on  outstanding  Advances and that repayments are made only according to Clauses
6.1 (General) to 6.3 (Repayments other than First Repayment). The Agent will
notify the Borrower  of  the  Target  Balance  at  the  latest two (2) Business
Days before Acceptance and each subsequent Repayment Date following the
notification on such date  pursuant  to  Clause 4.4 (Notification).

11.4       SET-OFF
The  Agent is entitled to set off the credit balance in the Debt Service Reserve
Account  against  any  obligations  of  the  Borrower  due and payable under the
Financing Documents to the Lenders if the Borrower does not, does not on time or
does  not  entirely  perform  such  obligations.

11.5       CURRENCY
The Borrower may elect to hold the moneys on the Debt Service Reserve Account in
USD  up  to  an amount corresponding to the notional amount of interest payments
and  payments  as  principal  with  regard  to  the EUR/USD cross-currency-swaps
concluded  in  accordance  with  the  Hedging  Strategy  if  (a)  the respective
USD-account is held with the Agent or HVB Banque Luxembourg Societe Anonyme, and
(b)  the  USD-account  is  pledged  by  the Borrower in favour of the Lenders by
entering  into  an account pledge agreement substantially in the form set out in
Schedule  8  (Form  of  Luxembourg  Account  Pledge Agreement) in respect of the
 ----------
USD-account  maintained  with  HVB  Banque Luxembourg Societe Anonyme and in the
 ----
form  set out in Schedule 7 (Form of Account Pledge Agreement) in respect of the
 --              ----------
USD-account  maintained  with  the  Agent,  and (c) the Agent is provided with a
legal opinion satisfactory to the Agent and issued by a reputable Luxembourg law
firm  in respect of, inter alia, the validity and enforceability of such account
pledge  agreement.  The  Agent will

<PAGE>

notify the Borrower of the minimum amount of the Debt  Service Reserve Account
that must be held in USD from time to time.

11.6       INVESTMENTS
The Borrower may elect to open a further account with HVB Banque Luxembourg Soci
ete Anonyme and/or  the Agent in respect of investments which may be made by the
Borrower pursuant to Clause 11.6.1 (the "DSRA Investment Account"), such account
to be pledged  by  the  Borrower  in favour of the Lenders by entering into an
account pledge  agreement  substantially  in  the  form  set  out in Schedule 8
                                                                     ----------
(Form  of Luxembourg Account Pledge Agreement) in respect of the DSRA Investment
Account  maintained  with  HVB Banque Luxembourg Societe Anonyme and in the form
and  substance  of  the  Account  Pledge  Agreement between the Borrower and the
Security  Agent  as of the date hereof in respect of the DSRA Investment Account
maintained  with  the Agent. The Borrower will at its own cost provide the Agent
with  a  legal  opinion  satisfactory  to  the  Agent  and issued by a reputable
Luxembourg  law  firm in respect of, inter alia, the validity and enforceability
of  such  Luxembourg  account  pledge agreement. Any balance on the Debt Service
Reserve  Account  in  excess of the Target Balance from time to time may be paid
into  the  Revenue  Account.

11.6.1     The  Borrower  may  invest  the balance standing to the credit of the
DSRA  Investment  Account in Permitted Investments, provided that such Permitted
Investments  are  deposited  in  the DSRA Investment Account and the maturity of
such Permitted Investments does not conflict with any anticipated payments to be
made by the Borrower out of the DSRA Investment Account. To the extent necessary
to  make any payments out of the Debt Service Reserve Account, the Borrower will
transfer  sufficient  funds from the DSRA Investment Account to the Debt Service
Reserve Account and will liquidate any of the Permitted Investments if necessary
to  meet  its  payment  obligations.

12.        ILLEGALITY
If  at  any  time  it  is or becomes unlawful or impracticable, by reason of any
adoption,  amendment  or change of official application or interpretation of any
law  or  regulation  or  any  directive,  request or requirement (whether or not
having  the  force  of  law)  from any central bank or other fiscal, monetary or
other authority, having jurisdiction over any Lender for such Lender to fund, or
to  allow  to  remain  outstanding, all or any of its participations in Advances
made  or  to  be  made,  or  to maintain its Commitment, or to charge or receive
interest  or  fees  hereunder  at the rate applicable, such Lender will promptly
after  becoming  aware  thereof  notify  the  Borrower  through  the  Agent and:

<PAGE>

12.1     the  Commitment  of  such  Lender  under the Facility will forthwith be
reduced  to  zero;  and

12.2     the  Borrower  will  prepay  to  such  Lender  its participation in any
relevant  Advances together with accrued interest and all other amounts owing to
such Lender hereunder on the next following date on which interest is payable on
the  relevant  Advance,  or  on such earlier date as such Lender certifies to be
necessary  having  regard  to  the  relevant  circumstances.

13.        INCREASED  COSTS

13.1       INCREASED  COSTS
Where  any Lender certifies that, as a result of the adoption or amendment of or
any  change  of  official  application or interpretation of any law, regulation,
directive,  request  or  requirement  (being  legally binding or, if not legally
binding  to  the  extent  that  non-compliance therewith would be impracticable)
(including  without  limitation  any  law, regulation or requirement relating to
taxation,  reserve  assets,  special  deposits, cash ratio, liquidity or capital
adequacy requirements, but not including any law, directive, request, regulation
or requirement as in effect on the date hereof or already adopted but not yet in
force  on  the  date  hereof):

13.1.1     such  Lender  or  any  of  its  affiliated companies incurs a cost in
relation  to  such  Lender  being  a  party to and/or performing its obligations
and/or  exercising  its  rights  under  this  Agreement;

13.1.2     the cost to such Lender of making available or maintaining or funding
its  participation  in  any  Advance or maintaining its Commitment is increased;

13.1.3     any  sum received or receivable by such Lender under or in connection
with  this  Agreement  is  reduced;

13.1.4     the effective return of such Lender in connection with this Agreement
is  reduced;  or

13.1.5     such  Lender  becomes liable to make any payment on account of tax or
otherwise  (except  for  taxes  imposed  on  its  net income or net worth) or is
required to forego any interest or other return on or calculated by reference to
the  amount  of any sum received or receivable by it under or in connection with
this  Agreement,

then  in  any  such  case:

<PAGE>

  (a)   a Lender intending to make a claim pursuant to the above will notify the
Borrower through the Agent setting forth in reasonable detail the basis for such
claim;

  (b)   the  Borrower  will pay to the Agent for the account of such Lender upon
demand of the Agent such amounts as are certified by such Lender to be necessary
to  fully  compensate  such Lender for such cost, reduction, payment or foregone
interest  or  other  return,  after  reduction  of benefits which accrue to such
Lender  directly or indirectly because of such event and reasonably allocable to
such  costs;  and

  (c)   the  Borrower  may, by giving irrevocable notice to the Agent, prepay to
such Lender its participation in each Advance together with accrued interest and
all  other  amounts  owing  to such Lender hereunder on the last day of the then
current Interest Period for that Advance, or on such earlier date as such Lender
certifies  to  be  necessary  having  regard  to  the  relevant  circumstances.

13.2     For the avoidance of doubt, this Clause 13 shall not apply in case of a
removal  of  the  guarantor's  liability  (Gewahrtragerhaftung) regarding German
public  savings banks, state banks and public credit institutions of the Federal
Republic  of  Germany  and  its  states.

14.       TAXES

14.1      All payments by the Borrower under this Agreement will be made without
any  deduction  or  withholding  on  account of any taxes unless the Borrower is
required  by  law  to  make  such  deduction  or  withholding, in which case the
Borrower  will:

14.1.1    ensure  that the deduction or withholding does not exceed the minimum
amount  legally  required;  and

14.1.2    forthwith  pay to the Lenders such additional amounts so as to ensure
that  the  amount received by each Lender will equal the full amount which would
have  been  received  by  it  had  no  deduction  or  withholding  been  made,

provided  that  the foregoing obligation to pay such additional amounts will not
apply  in  respect  of:

  (a)   any taxes measured or imposed upon the overall net income or the overall
capital  or  net  worth  of  any Lender or its applicable lending office,

<PAGE>

 or any
branch  or affiliate thereof, and all franchise taxes, branch taxes, or taxes on
doing  business;  or

  (b)   any  taxes  that  would not have been imposed but for the failure of any
Lender  to  comply  with  any  certification,  identification,  information,
documentation  or other reporting requirement, if compliance is required by law,
regulation, administrative practice or an applicable treaty as a precondition to
exemption  from,  or  reduction  in  the  rate  of,  such  taxes.

14.2     The  Borrower will pay all stamp, recording or similar taxes payable in
respect  of the execution, delivery and enforcement of the Transaction Documents
promptly  when  due.

14.3     If any Lender or the Agent is obliged to make any payment on account of
taxes referred to in Clause 14.2 or if any other additional tax burdens occur in
connection  with  the  Transaction  Documents  the  Borrower will indemnify each
Lender  and  the  Agent  from  any  payment  on  account  of  such  taxes.

14.4     If,  in  the  good  faith  determination  of  a  Lender:

  (a)   such  Lender has obtained a tax refund or tax allowance or tax credit as
a result of, and directly attributable to, an additional payment of the Borrower
under  Clause 14.1 ;  and

  (b)   it  can make a lawful payment to the Borrower in an amount leaving it in
no  better  or  worse  position  than  it would have been had the payment by the
Borrower  been  made  without  any  deduction  or  withholding,

then  after  actual  receipt or usage of such tax refund or tax allowance or tax
credit it will pay such amount to the Agent for the account of the Borrower. The
Lender will make commercially reasonable efforts where permitted by law to claim
a  refund  or  allowance  or  credit,  but  will  not be obliged to disclose any
information  as  to  its  tax  situation  to the Borrower or to any other person
acting  on  the  Borrower's  behalf.

14.5     If  the  Borrower  is required to make any payment to a relevant tax or
other authority for which the Borrower has made a deduction or withholding under
Clause  14.1  ,  the  Borrower  will  pay  the  full  amount of the deduction or
withholding  within  the  applicable  periods to the relevant authority and will
deliver  to  the  Agent  for  the  account  of  each Lender concerned as soon as
reasonably  practical  following the making of such payment the original receipt
or  a  certified  copy  thereof and/or other evidence reasonably satisfactory to
such  Lender  that  the  payment  has  been  made.

<PAGE>

15.        MITIGATION

15.1       MITIGATION
15.1.1     Each Finance Party shall, in consultation with the Borrower, take all
reasonable  steps  to  mitigate  any  circumstances  which arise and which would
result  in  any  amount  becoming  payable  under  or  pursuant to, or cancelled
pursuant  to,  any  of  Clause  12  (Illegality), Clause 13 (Increased Costs) or
Clause  14  (Taxes),  including, but not limited to, transferring its rights and
obligations  under  the  Financing  Documents  to  another affiliate or Facility
Office.

15.1.2     Clause 15.1.1 does  not  in  any  way limit the obligations of the
Borrower under  the  Financing  Documents.

15.2       LIMITATION  OF  LIABILITY
15.2.1     The  Borrower  shall  indemnify  each Finance Party for all costs and
expenses reasonably incurred by that Finance Party as a result of steps taken by
it  under  Clause 15.1.

15.2.2     A Finance Party is not obliged to take any steps under Clause 15.1
if, in the  opinion  of  that  Finance  Party  (acting  reasonably),  to do so
might be prejudicial  to  it.

16.      REPRESENTATIONS  AND  WARRANTIES

16.1     REPRESENTATIONS  AND  WARRANTIES
The  Borrower  represents  and warrants to each of the Arranger, Agent, Security
Agent  and  Lenders  that:

16.1.1     Status:  it is a limited liability company duly organised and validly
existing  under the laws of the Federal Republic of Germany, has the capacity to
sue and be sued in its own name and has the corporate power and authority to own
its  assets and to carry on its business as currently conducted and the Project;

16.1.2     Powers  and  Authority:  it  has the corporate power and authority to
enter  into  and perform its obligations under the Transaction Documents and has
taken  all  necessary  corporate  and  other  action  required  to authorise the
execution,  delivery  and  performance  of  the  Transaction  Documents;

16.1.3     Legal  Validity: the Transaction Documents that have been executed by
the  Borrower  on  or before the date as of which this representation is made or
repeated,  create  legal,  valid and binding obligations of the Borrower and the
other  parties  thereto  (apart  from  the  Lenders in their various capacities)
enforceable  in  accordance  with  the  terms  and  conditions of the respective

<PAGE>

agreements  and such agreements are in proper form for enforcement in the courts
of  the  Federal  Republic  of  Germany,  subject  to  applicable  bankruptcy,
insolvency,  liquidation  or  other  laws affecting creditors' rights generally;

16.1.4     Non-Conflict: the entry into and the execution and performance of the
Transaction  Documents  by  the  Borrower  do  not  and  will  not  conflict:

  (a)   in  any  material  respect  with  any agreement, mortgage, bond or other
instrument  or  treaty to which it is a party or which is binding upon it or any
of  its  assets  which  could  reasonably be expected to have a Material Adverse
Effect;

  (b)   with  its  constitutive  documents;  or

  (c)   with  any  applicable law in a manner which could reasonably be expected
to  be  materially adverse in relation to its ability to perform its obligations
under  the  Transaction  Documents  and/or the validity or enforceability of the
Transaction  Documents;

16.1.5     No  Event  of  Default:  no  Event  of  Default or Potential Event of
Default  has  occurred  and  is  continuing;

16.1.6     Authorisations:  except for such Authorisations not obtainable by the
date  as  of  which  this  representation  is  made or repeated, as to which the
Borrower  reasonably  believes  that they will be obtained as and when necessary
for the Project, all authorisations listed in Appendix 3, Exhibits 4.4 and 13 of
the EPC Contract and any other material Authorisations required for the Project,
including, without limitation, in connection with the performance by each of the
parties  of  their  obligations  under  the  Infrastructure  Agreement,  or  the
performance of its obligations under the Transaction Documents are in full force
and  effect,  have not been revoked or annulled by a first instance decision, to
the  best  of  the  Borrower's  knowledge  and  after  inquiry with the relevant
authority,  have  not  been  contested  as  a  result  of  which  the  direct
enforceability  of  such Authorisation has been suspended until a final decision
and  it has complied with the terms and conditions of such Authorisations in all
material respects; and such Authorisations have not been modified or amended and
there  are  no proposals to amend or modify the same unless such modification or
amendment  is  not  materially  adverse in relation to the Borrower's ability to
perform  its  obligations under the Transaction Documents and/or the validity or
enforceability  of  the  Transaction  Documents;

<PAGE>

16.1.7     Further Authorisations: to the best of its knowledge, having made due
inquiry, it knows of no reason why any Authorisation required for the Project or
the  performance of its obligations under the Transaction Documents (i) will not
be  granted  when  applied  for  or  requested,  or  (ii) will be withdrawn (zur
uckgenommen)  or  revoked  (widerrufen);

16.1.8     Financial  Statements:  its  most  recent audited consolidated annual
financial  statements:

  (a)   were  prepared  in  accordance  with  accounting  principles  generally
accepted  in  the  Federal  Republic  of  Germany  and  consistently  applied;

  (b)   disclose  all  material  liabilities  (contingent  or otherwise) and all
unrealised  or  anticipated  losses  of  any  member of the Group required to be
disclosed  by  accounting principles generally accepted and (except as disclosed
therein)  consistently  applied  in  the  Federal  Republic  of  Germany;  and

  (c)   give  a  true and fair view of the financial condition and operations of
the  Group  during  the  relevant  period.
Its  financial  year-end and the financial year end of the Group is 31 December;

16.1.9     No  Material  Adverse  Change:  since the date as at which the latest
audited  consolidated  financial statements were stated to be prepared there has
been  no  material adverse change in its business or financial condition (or the
business  or  consolidated  financial condition of the Group) apart from changes
affecting  the  industry  generally;

16.1.10     Taxation:  each member of the Group has duly and punctually paid and
discharged  all  taxes,  assessments and governmental charges imposed upon it or
its  assets  within  the  time  period  allowed  therefor  without  imposing tax
penalties,  or  creating  any  encumbrance having priority to the Lenders or the
Security (save to the extent payment thereof is being contested in good faith by
the  relevant  member  of  the  Group  and where payment thereof can lawfully be
withheld  and would not result in any encumbrance having priority to the Lenders
or  the  Security);

16.1.11     Claims  Pari-Passu:  the  claims of the Lenders against it under the
Financing  Documents  to  which it is a party will rank at least pari passu with
the  claims  of  all  its  unsecured and unsubordinated creditors save for those
preferred  solely  as a matter of law or resulting from those land charges which
will  be  released  following  the  first  Advance;

<PAGE>

16.1.12     No  Insolvency  or  Winding-Up:  neither  the Borrower or any of its
material  subsidiaries  has  taken any corporate action nor have any other steps
been  taken  or  legal proceedings been started or (to the best of its knowledge
and  belief)  threatened  against  the  Borrower  or any such subsidiary for the
opening  of  insolvency  proceedings  against it or its winding-up, dissolution,
administration  or  re-organisation (whether by voluntary arrangement, scheme of
arrangement  or  otherwise) or for the appointment of a receiver, administrator,
administrative  receiver,  conservator, custodian, trustee or similar officer of
it  or  of  any  or  all  of  its  assets  or  revenues;

16.1.13     No  Material  Proceedings: no action or administrative proceeding of
or  before  any  court,  arbitrator  or  agency  (including, but not limited to,
investigative  proceedings),  which  is  materially  adverse  in relation to the
Borrower's  ability  to  perform its obligations under the Transaction Documents
and/or  the  validity  or  enforceability of the Transaction Documents, has been
started  or  to  the  best of its knowledge threatened against any member of the
Group  or  its  assets,  nor  are  there  to  the  best  of  its  knowledge  any
circumstances  likely  to  give rise to any such action or proceedings which, if
resolved  adversely could reasonably be expected to be materially adverse to its
ability  to  perform  its obligations under the Transaction Documents and/or the
validity  or  enforceability  of  the  Transaction  Documents;

16.1.14     No Material Defaults: it is not in breach of or in default under any
agreement  to which it is a party or which is binding on it or any of its assets
in  a  way  which is materially adverse in relation to the Borrower's ability to
perform  its  obligations under the Transaction Documents and/or the validity or
enforceability  of  the  Transaction  Documents;

16.1.15     Project  Contracts:     (i)  all  existing  Project Contracts are or
will  be  in  full force and effect at the time of the first drawdown under this
Agreement  (except  for the EPC Contract, which will be in full force and effect
once  the  down  payment  under  the  EPC Contract has been made), (ii) no other
material Project Contracts have been concluded, which have not been disclosed to
the  Agent,  (iii)  the  Borrower  has no notice of any material breaches by any
contracting  party  under the Project Contracts, and (iv) with regard to Project
Contracts,  which  cannot be produced until the day on which this representation
and  warranty  is made or repeated, the Borrower assumes that these are produced
as  soon  as  and  to the extent that they may become necessary for the Project;

16.1.16     Information:  all  financial  projections contained in the Financial
Model  were  prepared  or  made  in  good  faith and on the basis of assumptions
believed  by  the  Borrower  to  be  reasonable;

<PAGE>

16.1.17     Environmental  Compliance: it has duly performed and observed in all
material  respects  all  Environmental  Law, Environmental Permits and all other
material  covenants,  conditions,  restrictions  or  agreements  including  in
connection  with  any  contamination,  pollution,  emissions,  waste, release or
discharge  of  any  toxic  or  hazardous  substance  where  failure  to do so is
materially  adverse  in  relation  to  the  Borrower's  ability  to  perform its
obligations  under  the  Transaction  Documents  and/or  the  validity  or
enforceability  of  the  Transaction  Documents;

16.1.18     Environmental  Claims:  no  Environmental  Claim  has been commenced
against  it  or  its  officers,  or  is  to the best of its knowledge threatened
against  it  or  its  officers  materially adverse in relation to the Borrower's
ability  to  perform  its obligations under the Transaction Documents and/or the
validity  or  enforceability  of  the  Transaction  Documents;

16.1.19     Relevant  Substances:  no substance which is capable of causing harm
to any living organism or damaging the environment, public health or welfare has
been  deposited,  disposed  of,  kept, treated, imported, exported, transported,
processed,  manufactured,  used, collected, sorted or produced at any time or is
present  in  the  environment  (whether or not on property owned, leased, owned,
occupied  or  controlled  by any member of the Group) in circumstances which are
likely to result in any liability of any member of the Group under Environmental
Laws  which  is  materially  adverse  in  relation  to the Borrower's ability to
perform  its  obligations under the Transaction Documents and/or the validity or
enforceability  of  the  Transaction  Documents;

16.1.20     Ownership  of  Assets:  the  Borrower  is the sole owner of or fully
entitled  to  use all of its assets and is the legal and beneficial owner of its
assets subject only to the Security Agreements and other Permitted Encumbrances;

16.1.21     Easements:  it  has  all easements, rights of way, rights of ingress
and  egress  necessary for the construction and operation of the Project, except
for  those  as to which it has no reason to believe will not be in place when so
necessary;

16.1.22     Encumbrances:  save for Permitted Encumbrances no encumbrance exists
over  all  or  any of the assets of any member of the Group and the execution of
the  Transaction  Documents to which it is a party and the exercise by it of its
rights  thereunder  will not result in the existence or imposition of nor oblige
any  member  of  the  Group  to  create  any  encumbrance  (save  for  Permitted
Encumbrances)  in  favour  of  any  person  over any of its or any member of the
Group's  assets;

<PAGE>

16.1.23     Indebtedness: on the day of signing this Agreement, the Borrower has
no  indebtedness  save  for:

  (a)   Permitted  Financial  Indebtedness  (except for indebtedness named under
paragraph  (e)  of  the  definition  of  Permitted  Indebtedness);

  (b)   indebtedness  for  Development  Costs  and  other  similar  costs,  not
exceeding  EUR  1.3  million, envisaged in the Investment and Financing Plan and
incurred  but  not  yet  invoiced  or  paid);

  (c)   indebtedness  under the Pre-Activity Agreement (as defined under the EPC
Contract)  not  exceeding  EUR  4,210,000  plus  VAT;  and

  (d)   indebtedness  to  the  former shareholders Kvaerner plc in the amount of
EUR 478,687 and Thyssen Rheinstahl Technik Projektgesellschaft mbH in the amount
of  EUR  2,648,000;

  (e)   indebtedness for the payment of the second purchase price instalment for
the Site towards AIG in the amount of EUR 1,755,686 plus VAT and for liabilities
under  the  tenancy  agreement  dated  16  May  2002;

  (f)   further  indebtedness  to  the  Shareholders and AIG to be waived at the
latest  on  the  day  after  Financial  Close;

  (g)   indebtedness  for  the ongoing payments which become due at the date the
guarantee  decision  is  delivered;  and

  (h)   further  indebtedness  not  exceeding  EUR  100,000;

16.1.24     Tax  Grants:  it  is  not  aware  of  any  reason why the Tax Grants
(Investitionszulagen) should not be paid in the amounts assumed in the Base Case
and  no encumbrances exist over any of its claims thereunder or rights and title
thereto;

16.1.25     Investment Incentives and State Guarantee: the Investment Incentives
(GA-Zuschuss)  given  by the State of Sachsen-Anhalt and the State Guarantee are
legal,  valid  and binding obligations of the State Guarantor and the Guarantors
respectively  and no encumbrances (other than as contemplated hereby) exist over
any  of  its  claims under the Investment Incentives (GA-Zuschuss) or rights and
title  thereto;

16.1.26     EU-Decision:  the  EU-Decision  is  in full force and effect, it has
complied  with  the terms and conditions of the EU-Decision in all respects, and
the  EU-

<PAGE>

Decision  has not been modified or amended in any material respect, withdrawn or
revoked, since the date of its issuance, and there are no proposals known to the
Borrower  to  amend  or  modify  in any material respect, withdraw or revoke the
same,  nor  is  it  the  subject of any existing challenge by any third party in
connection  with which the EU-Decision has been suspended pending the outcome of
any  appeal;

16.1.27     Intellectual  Property:  it  has,  or  as the case may be, will have
available  all  material  Intellectual  Property  Rights  and is not in material
breach of or has not infringed in any material respect any Intellectual Property
Rights  of  any  other  person;

16.1.28     Insurances:  all  insurances required to be in place, as provided in
the Minimum Insurance Schedule, are in full force and effect and all premia then
due in respect thereof have been paid in full or will be paid in full out of the
proceeds  of  the  following  Advance;

16.1.29     No  Deduction or Withholdings: under the laws of its jurisdiction of
incorporation  in  force at the date hereof, it will not be required to make any
deduction  or  withholding  from  any  payment  it  may  make  hereunder;

16.1.30     Shareholding:  upon the making of the Capital Contributions pursuant
to  Clause  2.6.1  of the Shareholders' Undertaking Agreement, the Share Capital
will  be  EUR 15,000,000 and the Shareholders will be the owner of the following
Shares

<TABLE>
<CAPTION>

SHAREHOLDER       NUMBER OF SHARES     NOMINAL VALUE OF SHARES    PERCENTAGE
-----------       ----------------     -----------------------    ----------
<S>               <C>                  <C>                         <C>

SP Holding        5                    EUR 27,360                 63,58 %
                                       EUR 27,360
                                       EUR 9,160
                                       EUR 30,320
                                       EUR 9,442,800

RWE-IN            4                    EUR 51,130                 29,42 %
                                       EUR 31,100
                                       EUR 38,970
                                       EUR 4,291,800

FAHR              3                    EUR 27,360                     7 %
                                       EUR 12,940

<PAGE>

                                       EUR 1,009,700

</TABLE>

and  no person will have any right to subscribe for any additional Shares in the
Share  Capital;

16.1.31      Liability  vis-a-vis Former Shareholders: it has no liabilities or
outstanding obligations to any of its former shareholders other than those to be
paid  to

    (i)  Kvaerner  plc  in  the  amount  of  EUR  478,687,

   (ii)  Thyssen Rheinstahl Technik Projektgesellschaft mbH in the amount of EUR
2,648,000  for  compensation  payments  and  EUR 570,646 for ancilliary costs in
relation  to  the purchase of the Site for which Thyssen Rheinstahl Technik GmbH
and  its legal successor Thyssen Rheinstahl Technik Projektgesellschaft mbH have
provided  funds;  and

   (iii)  AIG  in  the  amount  of  EUR  1,755,686  plus  VAT purchase price  in
relation  to  the  Site,  EUR  546,794  for  ancilliary costs in relation to the
purchase  of  the Site for which AIG has provided funds to the Borrower, and the
lease  agreement  dated  16  May  2002 between the Borrower and AIG all of which
(except  for the obligations under the lease agreement) will be repaid under the
first  Advance;

16.1.32     Assurance  of  Overall Financing: to the best of its knowledge there
is  an  Assurance  of  Overall  Financing;

16.1.33     Accounts:  the Borrower has no accounts other than those established
or  to  be  established  in  accordance  with  this  Agreement;

16.1.34     Subsidiaries  and  Affiliates:  it  does  not have any subsidiaries,
other  than  the  Permitted Subsidiaries, or any investments in any other person
other  than  Permitted  Investments;

16.1.35     Utilities  and  Facilities:  all  utility  services,  means  of
transportation,  facilities  and  other materials necessary for the importation,
construction,  installation,  and  operation  of the Project (including, without
limitation,  gas,  wood  receiving,  pulp

<PAGE>

dispatching,  fuel,  electrical,  water  supply,  storm  drainage,  rail,  port,
telephone  and sewage services and facilities, as necessary) are or, to the best
of  the Borrower's knowledge after due inquiry, will be available to the Project
(in  the  case  of utility services, at or within the boundaries of the Site) as
soon  as  required  for the construction, operation, testing and start-up of the
Project,  and  to the extent necessary or desirable, arrangements have been made
on  commercially  reasonable  terms  for such services, means of transportation,
facilities and other materials, except for such arrangements as are not required
to  be  made as of the date hereof by the applicable Transaction Documents, with
respect  to  which  arrangements  the  Borrower  has  no  reason to believe such
arrangements  will  not  be  made  at  the  time  so  required;

16.1.36     Adequate  Facilities:  other than those services to be performed and
materials  to  be  supplied  that  can reasonably be expected to be commercially
available  as  and when required or those described in Clause 16.1.35 (Utilities
and  Facilities)  which are not yet available, the services to be performed, the
facilities  and  materials  to  be supplied and the property interests and other
rights  granted  pursuant  to the Project Contracts comprise all of the property
interests  and  other rights necessary to secure any right or privilege which is
material  to  the  acquisition,  development,  construction,  installation,
completion,  operation  and  maintenance  of  the  Project  in accordance in all
material respects with the Transaction Documents and all Authorisations required
for  the  Project  or  the  performance of its obligations under the Transaction
Documents;

16.2     Repetition
Each  of  the  representations  and  warranties  pursuant  to  Clause  16.1
(Representations  and  Warranties)  (other than Clause 16.1.29) will be repeated
by the Borrower  by  reference  to  the  facts  and circumstances then existing
in each Drawdown  Request  and  on  the  first  day  of  each  Interest  Period.

17.       FINANCIAL  CALCULATIONS
          (WIRTSCHAFTLICHKEITSBERECHNUNGEN)

17.1     Method  of  Calculation  of  Annual  Debt  Service  Cover  Ratio
The  initial  projected Annual Debt Service Cover Ratios are set out in the Base
Case  delivered  pursuant to paragraph 9 of Schedule 2 (Conditions for the First
                                            ----------
Drawdown).

17.2      Recalculation
The  Agent  will calculate the Annual Debt Service Cover Ratio on each Repayment
Date  and on the basis of the financial statements most recently

<PAGE>

delivered to it pursuant  to  Clauses 18.1.1 (a), 18.1.1 (b) ,  or  as  the
case  may  be  Clause 9.4.3 (c)(ii).

17.3      Adjustments  to  Financial  Model
The  Borrower will provide information reasonably requested by the Agent for the
updating  of  the  Financial  Model.

18.       INFORMATION  REQUIREMENTS

18.1      Financial  Statements

18.1.1    The  Borrower  will deliver to the Agent and C&L in sufficient copies
for  each  of  the  Lenders:

  (a)   as soon  as  available,  but no later than 90 days after the end of its
financial  year:

    (i) the balance sheet, profit and loss statement and cash flow statement for
the  Borrower  and  (on  a  consolidated basis) for the Group for such financial
year,  audited by a recognised firm of independent auditors licensed to practise
in  the Federal Republic of Germany, together with a statement from the Borrower
reconciling  such  financial  statements  with  the budgeted yearly accounts and
explaining  all  material  deviations  of  such  financial  statements  from the
budgeted  yearly  accounts  referred  to  in  Clause 18.3 (Project  Budget);

   (ii) the  related  auditors'  report;  and

  (iii) a  confirmation  by such auditors that all transactions effected by the
Borrower  with Related Parties in such financial year have been made on terms no
less  beneficial to the Borrower than those obtainable on an arms' length basis;

  (b)   as  soon  as  available,  but no later than 60 days after the end of its
financial  half year, the balance sheet, profit and loss statement and cash flow
statement  for the Borrower and (on a consolidated basis) for the Group for such
period  which will be in a form reasonably acceptable to the Lenders and will be
accompanied  by  data  necessary  for the calculation of the Annual Debt Service
Coverage  Ratio,  certified  by  its  independent  auditors;  and

<PAGE>

  (c)   no later than thirty (30) days after the end of each calendar quarter, a
management  commentary  as  to,  inter  alia,  the  Borrower's  and  the Group's
performance  during  such  calendar  quarter  and  any  material developments or
proposals  affecting  the  Borrower  and  the  Group  or  its  business.

18.1.2     The  Borrower  will  ensure that each set of accounts delivered by it
pursuant  to  this Clause 18 is prepared  on  the  same basis as was used in the
preparation of its Original Financial Statements or, in the case of a divergence
therefrom, will be accompanied by a statement explaining each changed accounting
principle  and  its  effects.

18.1.3     The  Borrower  will at the request of the Agent require and authorise
its  auditors  to  discuss  with  the  Lenders  matters reasonably related to or
arising  out  of  the  annual  audit  of  the  Borrower  by  such  auditors.

18.1.4     The  Borrower  will  provide the financial information required to be
provided  to  the  Lenders under this  Clause 18 in  the  German and the English
language.

18.2       Compliance  Certificates
Each  of  the financial statements delivered by the Borrower under Clause 18.1.1
(a) and 18.1.1 (b) will be accompanied by a compliance certificate signed by two
directors  of the Borrower certifying that all payments effected by the Borrower
out  of  the  Proceeds Account were in compliance with the priorities set out in
Clause  9.4.3  (Application  of  Moneys  on  Proceeds  Account).

18.3       Project  Budget

18.3.1     The  Borrower  will  deliver to the Agent, with sufficient copies for
each  of  the  Lenders, starting from the calendar year in which the Start-Up is
expected  to  occur as soon as available, but no later than 30 days prior to the
beginning  of  the  relevant  financial  year,  the  budgeted balance sheet, the
budgeted  profit and loss statement and the budgeted cash flow statement for the
next  following  financial year and the Borrower will be available for a meeting
with the Lenders within two (2) weeks thereafter, to discuss such documents with
the  Lenders.  Such statements will forecast the costs of maintenance, overhauls
and  Capital Expenditure for the next following three years in each case for the
Borrower  and  for  the  Group.

18.3.2     Following  review by the Agent and if necessary the Technical Adviser
and  the  Wood  Supply  Adviser,  if the Agent is satisfied with the information
supplied pursuant to Clause 18.3.1, it will confirm the same to the Borrower. If
the

<PAGE>

Technical  Adviser,  the  Wood Supply Adviser or the Agent is not satisfied with
such  information,  the Borrower shall make such amendments to such documents as
may  be  reasonably required by the Technical Advisor and/or Wood Supply Adviser
and/or  the  Agent.

18.4       Reports  during  Construction  Period

18.4.1     During  the  Construction Period the Borrower will provide the Agent,
the Technical Adviser and the Wood Supply Adviser with the following information
within  fifteen  (15)  days  of  the  last  day  of  each  calendar  quarter:

  (a)   quarterly  construction  progress  reports  in  accordance  with  the
conditions  set  out in Schedule 14 (Sample Table of Content regarding Quarterly
                        -----------
Construction  Progress  Reports);  and

  (b)   quarterly  reports  on  the  development  of  the  costs  budgeted  for
construction,  including  a  confirmation or a proposal for a revised version of
the  Project  Budget  including  a  budgeted  cost/actual  cost  comparison; and

  (c)   any  material reports and other material notifications issued by the EPC
Contractor  and/or  any of its sub-contractors to the Borrower in respect of the
Project,  including  but not limited to the Detailed Program and any work around
plan  (both  as  described  in  Clauses  8.7  and 8.11, respectively, of the EPC
Contract).

18.4.2     The  Technical  Adviser  and the Wood Supply Adviser will review such
reports  as to their compliance with the requirements of this Agreement, the EPC
Contract and the Investment and Financing Plan. If the Technical Adviser and the
Wood  Supply Adviser is satisfied with such reports, he will confirm the same to
the  Agent.  If  the Technical Adviser and/or the Wood Supply Adviser and/or the
Agent  is  not  satisfied with such reports, the Borrower shall consult with the
Agent,  the  EPC  Contractor  and/or  any  of  its subcontractors with a view to
rectifying  the  situation and ensuring that all future reports are satisfactory
to  the  Technical  Adviser  and/or  Wood  Supply  Adviser  and/or  the  Agent.

18.5       Reports  during  Operation  Period
During the Operation Period the Borrower will provide the Agent with a quarterly
production  report,  including, inter alia, actual production figures, operating
cost  figures,  sales  and  sales price figures and the budgeted figures thereof
plus  an  actual/budget  comparison within thirty (30) Business Days of the last
day  of  each  calendar  quarter.

<PAGE>

18.6       Other  Financial  Information
The  Borrower  will from time to time on the request of the Agent or any Lender,
furnish  the  Agent  or  such  Lender  with such information about its business,
condition  (financial  or  otherwise),  operations,  performance,  properties or
prospects  as the Agent or such Lender through the Agent may reasonably require,
in  particular  all  information  and  documents  as  may  be required under the
provisions  of  the  German  Banking  Act  (Gesetz uber das Kreditwesen) and any
material  changes  to the information included in the Information Memorandum and
the  Financial  Model.

18.7       Miscellaneous  Information

18.7.1     The  Borrower  will  inform  the  Agent  in  writing:

  (a)   promptly  upon  a  Responsible  Officer  becoming  aware  of  it, of the
occurrence  of any Event of Default or Potential Event of Default and confirm to
the Agent in each Drawdown Request and, after the Facility has been fully drawn,
not  later  than  thirty  (30) days after the end of each calendar quarter that,
save as previously notified to the Agent or as notified in such Drawdown Request
or,  as the case may be, confirmation, no Event of Default or Potential Event of
Default  has  occurred  and  is  continuing;

  (b)   promptly  upon  a  Responsible  Officer  becoming  aware  of  it, of any
circumstances  which  are likely to delay in any material respect the completion
of the Project in accordance with the Base Case, including any event which might
reasonably  be  expected  to  result  in  Cost  Overruns;

  (c)   promptly  upon  a  Responsible  Officer  becoming  aware  of  it, of any
material  delay  in the payment or non-payment of the Government Grants compared
with  the  assumption  made  in  the  Finance  Model;

  (d)   promptly  upon  a  Responsible  Officer  becoming  aware  of  it, of any
circumstances  which  are  likely  to  have  a  materially adverse impact on the
validity,  enforceability and continuance of the State Guarantee, the Government
Grants  and  the  EU-Decision;

  (e)   promptly  upon  a Responsible Officer becoming aware of it, of any Event
of  Force Majeure or any other event which might delay construction or operation
or  which  might  reasonably be expected to interrupt or reduce the operation of
the plant excluding any planned outage or maintenance

<PAGE>

period previously notified to  the  Agent  or which might reasonably be expected
to have a Material Adverse Effect;

  (f)   promptly  upon  a  Responsible  Officer  becoming  aware  of  it, of any
Environmental  Claim  commenced  or  threatened  against  it;

  (g)   promptly  upon  a  Responsible  Officer  becoming  aware  of  it, of any
material  default  of  any  party  to  a  Project  Contract;

  (h)   within  ten (10) Business Days upon a Responsible Officer becoming aware
thereof,  of  the  details  of  each  litigation,  arbitration or administrative
proceeding  pending  or  threatened  against  it  which is likely to result in a
liability  of  the Borrower in an amount or amounts exceeding, in aggregate, EUR
2,000,000  or  the  equivalent  in  other  currencies;

  (i)   of  any  Change  of  Control;

  (j)   of  any  changes  in  its  senior  management;

  (k)   as  soon  as  reasonably  possible  after a Responsible Officer becoming
aware  of  it,  of possible Capital Expenditures in an amount of more than EUR 2
million  in  excess  of  the  Project  Budget  for  that  financial  year.

18.7.2     The  Borrower  will  provide  upon  request  such  verbal  or written
information  concerning  the  Project as the Agent or the Lenders may reasonably
require  including  information  that  is  publicly  available.

The  Borrower will fulfil its reporting requirements pursuant to this Clause 18
in a form which will  allow  the  Agent to make the information available to the
Lenders  without  material  effort.  The  Agent  will notify the Borrower of the
number  of  copies  needed  and  the  form  (e-mail,  fax,  mail)  in  which the
information  will  have  to  be  provided.  The Agent will promptly upon receipt
forward  any  information  to  the  Lenders and, to the extent necessary, to the
Guarantors.

19.        INSPECTION  RIGHTS
The Borrower shall permit the Agent, the Lenders or any of their representatives
or  the  Advisers  to  inspect  the  Site and its books and records during usual
business  hours,  and  upon reasonable prior notice, for the purpose of checking
whether  the  Borrower  is  in compliance with the provisions of the Transaction
Documents.  Any  requests  for such inspections shall be made through the Agent.

<PAGE>

20.        HEDGING  REQUIREMENTS

20.1       Implementation
The  Borrower  will  implement the Hedging Strategy in a manner which is in form
and  substance  acceptable  to  the  Agent  and  will  enter into all Derivative
Transactions  necessary  for  such  purpose  with  the  Hedging  Counterparty.

20.2       Compliance  with  Hedging  Strategy
The Borrower will not enter into any Derivative Transaction except in compliance
with  the  Hedging  Strategy.

20.3       Adjustments
The Borrower and the Agent will negotiate in good faith and agree to adjustments
of  the  Hedging  Strategy from time to time whenever adjustments are considered
necessary  by  the  Borrower  or  the  Agent  at  all times having regard to the
interests  of  the  Lenders  and  the  financial  condition  of  the  Borrower.

21.        COVENANTS

21.1       Positive  Covenants
The  Borrower  shall:

21.1.1     Maintenance  of  Legal  Validity  and  Legal  Status:  do  all things
necessary  to  maintain  its  existence  as  a  legal  person  and to ensure the
legality,  validity,  enforceability or admissibility in evidence in the Federal
Republic  of  Germany  of  the Transaction Documents including the obtaining and
maintaining  of  all applicable Authorisations necessary for the Project and the
performance  of  its  obligations  under  the Transaction Documents, as and when
required,  and,  on  request  of  the Agent, shall supply copies (certified by a
director  of  the  Borrower  as  true,  complete  and  up  to  date) of any such
Authorisations;

21.1.2     Applicable  Laws  and  Authorisations:  with  the  exception  of
Environmental  Laws  and  Environmental  Permits  where  the  obligations of the
Borrower  with  respect  thereto  are  set  out  in Clause 21.1.5 (Environmental
Compliance)  comply  in  all  material  respects  with all laws and comply with,
obtain, maintain and renew, all applicable Authorisations in each case which are
applicable  in  connection  with  the  Project  and  the Borrower's business and
operation  generally  and  required  for  its ability to perform its obligations
under the Transaction Documents. As soon as the Authorisations granted after the
conclusion  of  this  Agreement  become valid and upon request by the Agent, the
Borrower  will  obtain legal opinions on such validity from a reputable law firm
addressed  to  and  for  the  benefit  of  the  Agent;

<PAGE>

21.1.3     Transaction  Documents:  Subject  to  Clause 21.2.15 (b) (Additional
Project Contracts  and  Amendments  to  Project  Contracts) enter into, maintain
in full force  and  effect  and  comply  with  all  Transaction  Documents;

21.1.4     Authorised  signatories:  provide  the  Agent  with a list of persons
authorised  to  sign Change Orders as defined in the EPC Contract and amendments
to  the  EPC  Contract;

21.1.5     Relevant Advisers: from time to time and on the reasonable request of
the  Agent  inform the relevant Advisers and co-operate with them to enable each
such  Adviser  fully  to  perform  its obligations under its advisory agreement;

21.1.6     Information  regarding Permitted Encumbrances and Permitted Financial
Indebtedness:  provide  details  to  the  Agent  of  any newly created Permitted
Encumbrance  granted  outside  the  ordinary  course  of  business  or any newly
incurred  Permitted  Financial  Indebtedness  incurred  to  any  person;

21.1.7     Information of Technical Adviser and Wood Supply Adviser: provide the
Technical  Adviser and the Wood Supply Adviser during the Construction Period on
a  quarterly  basis  and  upon  request  with  all information and documentation
reasonably  required  for the purposes of this Agreement and bear the reasonable
costs  of the report to be provided by the Technical Adviser and the Wood Supply
Adviser  pursuant  to  Clause 18.4.2 (Reports  during  Construction  Period);

21.1.8     Preservation  of  Assets:  maintain and preserve all of its assets in
good  condition  and  undertake regular maintenance, except disposal of obsolete
assets, in accordance with prudent industry practice or the EPC Contractor's and
Suppliers'  recommendations;

21.1.9     Transactions  with  Third  Parties:  conclude  and  procure  that any
subsidiary  of  the  Borrower  concludes  any  transaction  with  a third party,
irrespective  of  whether  or  not  it is a Related Party, only on terms no less
beneficial  to  it than those obtainable on an arm's length basis. All contracts
to  be  concluded  by  it with a Related Party will be submitted to the Agent in
their  final  draft  form  for  approval,  such  approval not to be unreasonably
withheld. It will further waive any Financial Indebtedness owed by any person to
it  only  for  valuable  market  consideration;

21.1.10     Conduct  of  Business:  cause  the Project to be built, operated and
maintained in accordance with good industry practices, the Project Contracts and
all  conditions,  obligations,  requirements  set  out  in  any Authorisation or
technical  specifications from time to time agreed with the EPC Contractor or by
Suppliers,

<PAGE>

or  issued by any Authority in respect of the Borrower or the Project and ensure
that  all staff necessary for the proper and efficient operation of its business
or  that  of  its  subsidiaries  in  place;

21.1.11     Payments  and Application of Payments: otherwise than as referred to
in  Clause 9.1.2 (Disbursement  Account)  and  save  for

  (a)   any  proceeds  of  material  loss  and  damage  insurance obtained after
Acceptance which will be paid to the Insurance Account and applied in accordance
with  Clause 9.4.4 (Application  of  Insurance  Proceeds),

  (b)   any  third  party liability insurance which will be paid directly to the
relevant  third  party,  and

  (c)   Excess  Start-up  Cash  Flows  up  to a maximum amount of EUR 15 million
which  will  be  paid  into  the  Equity  Reserve  Account

ensure that all monies received by it in connection with the Project are paid to
the Proceeds Account and applied in accordance with Clause 9.4.3 (Application of
Moneys  on  Proceeds  Account).

Amounts  received  in  respect  of  the Government Grants and VAT refunds shall,
however,  be  applied  to  the  repayment of Tranche E in accordance with Clause
6.3.8  (Repayments  other than First Repayment) or for purposes corresponding to
the  purpose  of  Tranche  E.  To the extent that, at the time these amounts are
received and at such time after the First Repayment Date when Tranche E has been
completely  repaid  in accordance with Clause 9.4.3(a)(x) (Application of Moneys
on  Proceeds  Account),  the Borrower will however transfer these amounts to the
Shareholders'  Account.

21.1.12     Tax:  duly  and  punctually  pay  and  discharge:

  (a)   all  taxes,  assessments and governmental charges imposed upon it or its
assets  within  the  time period allowed therefor without imposing penalties and
without  resulting  in  an  encumbrance  having  priority  to the Lenders or any
security  purported  to  be  granted  by  or  created  pursuant  to the Security
Agreements;  and

  (b)   all  lawful  claims  which,  if unpaid, would by law become encumbrances
upon  its  assets
(save  to  the  extent  payment  thereof is being contested in good faith by the
Borrower and where payment thereof can lawfully be withheld and would not

<PAGE>

result  in  an  encumbrance  having  priority  to  the  Lenders  or any security
purported  to  be  granted  by  or created pursuant to the Security Agreements).

21.1.13     Filing  of  Tax  Returns:  file or cause to be filed all tax returns
required  to  be  filed in all jurisdictions in which the Borrower or any of its
subsidiaries  is situated or carries on business or is otherwise subject to tax;

21.1.14     Claims  Pari-Passu:  ensure  that  at  all  times  the claims of the
Lenders  against  it under the Financing Documents rank at least pari passu with
the  claims  of  all its unsecured and unsubordinated creditors save those whose
claims are preferred by any bankruptcy, insolvency, liquidation or other similar
laws  of  general  application and save for the claims resulting from those land
charges,  which  will  be  released  following  first  drawdown;

21.1.15     Environmental  Compliance:  comply in all material respects with all
Environmental  Law  and obtain and maintain any Environmental Permits and notify
the  Agent,  promptly  after a Responsible Officer becomes aware of the same of:

  (a)   any  material  Environmental  Claim made on it or to any occupier of any
property  owned or leased by it under any Environmental Law which may affect the
compliance  with  this  Agreement;  and

  (b)   any  circumstances  which  arise whereby any material remedial action is
likely  to  be required to be taken by, or at the expense of, it pursuant to any
Environmental  Law;

21.1.16     Enforcement:  take  all  reasonable  steps  to  promptly enforce its
rights under any Project Contract where failure to do so is material in relation
to  the  Project  and  the  rights  and obligations of the parties to any of the
Financing  Documents;

21.1.17     Compliance  with  Conditions  for  State  Guarantee  and  Government
Grants:  comply, at all times, with all conditions, obligations and requirements
of, and assume all undertakings in, the EU-Decision, the State Guarantee and the
Government  Grants,  in  particular:

  (a)   to  allow  inspections by the Guarantors or C&L (either by themselves or
by  agents  appointed by them) at any time for the purpose of checking whether a
drawdown  under  the  State  Guarantee may be made or whether the conditions for
such  drawdown  are  satisfied  or  have  been  satisfied;

<PAGE>

  (b)   to  authorise  the Agent and the Lenders to submit to the Guarantors and
C&L  all  documents  concerning the Facility and the Security and to give to the
Guarantors  and  C&L  all  information  requested  by  each  of  them;

  (c)   to  pay  all  fees  in  connection  with  the  State  Guarantee;  and

  (d)   to discharge the Arranger, the Agent, the Security Agent and the Lenders
vis-a-vis  the  Guarantor and C&L from any duty of discretion (Schweigepflicht)
whereby  any  requests  by  the  Lenders  shall  be  made  through  the  Agent;

21.1.18     Intellectual  Property:  procure and comply in all material respects
with  all  material  Intellectual  Property  Rights  necessary  to construct and
operate  the  Project  and  conduct  the  Borrower's  business;

21.1.19     Security:  provide  and maintain the Security and any other security
to  be  provided  to the Lenders pursuant to the Financing Documents and procure
that the Security is effective and maintained and upon reasonable request of the
Agent  provide additional security over its assets in favour of the Lenders. The
Agent  will  determine  the  details  of  the  additional  security  within  its
reasonable  discretion  (billiges  Ermessen)  pursuant  to  Sec.  315  BGB.  The
provision  of  additional  security  will  not  affect  existing  Permitted
Encumbrances;

21.1.20     Defects  Liability  Protection:  refrain  from  any  acts  which may
prejudice  materially and adversely any defects liability protection afforded to
the  Borrower  by  the  Contractor  under the EPC Contract or, to the Borrower's
knowledge,  by  any  subcontractor  (at  any level) to the Contractor and/or the
Borrower;

21.1.21     Management:  employ  experienced professionals in the paper and pulp
industry;

21.1.22     Syndication:  provide  at  its  own  cost assistance to the Original
Lender  in  the  syndication  of  the Facility, including without limitation, by
taking  all  reasonable  steps  to  make management available for the purpose of
making  presentations  to, or meeting, potential lending institutions and comply
with  all  reasonable requests for information from potential syndicate members;

21.1.23     Technical  Assistance:  as and when reasonably requested obtain such
assistance  as  may  be  necessary  prior  to  Acceptance in connection with the
construction,  commissioning,  testing,  start-up,  management,  operation  and
maintenance  of  the  Project;

<PAGE>

21.1.24     Information  Memorandum:  use best endeavours to assist the Arranger
in  the  preparation  of  the  Information  Memorandum  and ensure that, save as
otherwise  disclosed  in  the  Information  Memorandum,  the factual information
contained in the Information Memorandum is true and accurate and complete in all
material  respects on the date thereof (or, if different, as of the date when it
is  stated)  and  that  the  Borrower  and  the Sponsors do not omit to make any
disclosure  which  would  make  the  Information  Memorandum  misleading  in any
material respect, and in the case of any financial projections or expressions of
opinion  contained in the  Information Memorandum, procure that such projections
and  expressions  are  prepared  or  made  in  good  faith  and  on the basis of
assumptions believed by the Borrower or any of its subsidiaries to be reasonable
and  ensure  that,  if  in  the  opinion of the Arranger it is necessary for the
purpose  of syndication, the Information Memorandum is updated immediately prior
to  syndication;

21.1.25     Rented  part  of  the  Site:  not terminate the site lease agreement
dated  16 May 2002 and made between the Borrower and AIG, before the acquisition
of  the  part  of  the  Site leased to it without the Majority Lenders' consent;

21.1.26     Owner's  Scope:  implement  the  Owner's  Scope  in  accordance with
internationally  recognised engineering standards in a prudent and timely manner
so as not to hinder achievement of Acceptance by month 28 after the Commencement
Date (as defined in the EPC-Contract) and so that such additional works are free
from  any  Defects  and do not violate any intellectual property rights of third
parties;

21.1.27     Permitted  Subsidiaries:  save as the Majority Lenders may otherwise
agree (such agreement not to be unreasonably withheld) ensure that any Permitted
Subsidiaries  operate  their  respective  businesses  in  a proper and efficient
manner  and  in accordance with the principles set out in Schedule 11 (Financing
                                                          -----------
of  the  Subsidiaries);

21.1.28     Reduction  of  Existing Financial Indebtedness: repay in full, using
funds  from the first Advance, and in any event within 5 Business Days following
such  Advance:

  (a)   the  EUR  12,286,000  loan  made to the Borrower by Dresdner Bank AG and
discharge  all  encumbrances  securing  any  amounts  payable  thereunder;

  (b)   the  claims  of ex-shareholder Kvaerner plc in the amount of EUR 478,687
and  Thyssen  Rheinstahl  Technik  Projektgesellschaft  mbH in the amount of EUR
2,648,000;

<PAGE>

  (c)   the  claims  of  AIG  for  the  payment  of the second instalment of the
purchase  price  for  the  Site  in  the  amount  of EUR 1,755,686 plus VAT; and

  (d)   the  claims  of  RWE-IN,  AIG  and  Thyssen  Rheinstahl  Technik
Projektgesellschaft mbH for the ancilliary costs in connection with the purchase
of  the  Site  for  which  RWE-IN,  AIG, Thyssen Rheinstahl Technik GmbH and its
successor  in  title  Thyssen  Rheinstahl  Technik  Projektgesellschaft mbH have
provided  to  the  Borrower  funds  in  the  amount  of  EUR  2,708,339.

21.1.29     Accounts: close any existing bank account within one (1) month after
the  first  Advance  other  than  as  contemplated  by  this  Agreement.

21.2        Negative  Covenants
The  Borrower  will  not  (by  action  or  omission):

21.2.1     Negative Pledge: create or permit to subsist any encumbrance over all
or  any  of  its  assets  other  than  a  Permitted  Encumbrance  or  create any
restriction  or  prohibition  on  encumbrances  over  all  or any of its assets;

21.2.2     Investments,  Loans  and Guarantees: make any investment in, make any
loans  to,  grant  any  credit  or  other  financial accommodation to or for the
benefit  of any person or give or have outstanding any guarantee or indemnity to
or  for  the  benefit  of any person other than product liability assumed in the
ordinary  course  of  business  or  otherwise  voluntarily assume any liability,
whether  actual  or contingent, in respect of any obligation of any other person
other  than  Permitted Investments and save as set out in the principles set out
in  Schedule  11  (Financing of the Subsidiaries), nor will it make any material
    ------------
fixed  asset  investments  (Sachinvestitionen)  or  financial  investments
(Finanzinvestitionen)  without  the prior consent of the Guarantors or except as
permitted  by  this  Agreement  in  relation  to  the  Project;

21.2.3     Disposals:  dispose of the whole or any part of its assets other than
in  the ordinary course of business or other than by way of Permitted Disposals,
nor  sell  any material investments (Beteiligungen) or divisions of its business
(Betriebsteile)  without  the  prior  consent  of  the  Majority Lenders and the
Guarantors.  Any emission permits under the Kyoto Protocol to the United Nations
Framework  Convention  on Climate Change dated 11. December 1997 shall, however,
be  disposed  of  only  with  the  Agent's  consent;

<PAGE>

21.2.4     Financing:  use  the  proceeds of any Advances for any other purposes
than  those  set  out  herein;

21.2.5     Transfer  of  Shares or Shareholder Loans: consent to any transfer of
Shares  or  Shareholder  Loans  in  violation  of  the Shareholders' Undertaking
Agreement;

21.2.6     Shares  in  Subsidiaries:  sell  or  otherwise  dispose  of  (in  any
transaction  or  series  of  transactions  whether  related or not) its existing
shares  in  any  subsidiary  and  procure that no subsidiary shall issue any new
shares  to  any third party where following any such sale and/or issue more than
24.9%  of  the issued ordinary share capital of the relevant subsidiary would be
owned  by  one  or more third parties unless the terms of such sale and/or issue
(including  the  terms  upon  which any new shareholder may enter into contracts
with  such  subsidiary) have been previously approved in writing by the Majority
Lenders,  such  approval  not to be unreasonably withheld. In no event shall any
such  new  shareholder  be  a  Sponsor  or  any  affiliate  of  a Sponsor unless
previously  approved in writing by the Majority Lenders (such approval not to be
unreasonably  withheld).

21.2.7     Shareholders' Account: make any payments to the Shareholders' Account
other  than  in  compliance  with  the  provisions  of  this  Agreement;

21.2.8     Capital  Expenditures:  incur any Capital Expenditures at any time or
in  any  amount  of  more than EUR 2 million in excess of the Project Budget for
that  financial  year  other  than  with  the  consent  of the Majority Lenders;

21.2.9     Capital  Reserves:  repay  any  capital  reserves set up for Kvaerner
plc's,  Thyssen Rheinstahl Technik Projektgesellschaft mbH  or any Shareholder's
waivers  of  repayment claims under the shareholder loans granted by them to the
Borrower  unless  (a)  the  tax audit of the accounts has accepted the amount of
such  capital  reserves and (b) they are funded out of the Shareholders' Account
and  such capital reserves shall be identified in a separate balance sheet item;

21.2.10     Shareholder  Loans:  (a)  prior  to  the  First  Repayment  Date pay
interest  on  any  Shareholder  Loans and thereafter only in accordance with the
terms  hereof  and  of  the  Shareholder  Loans  and  (b) prepay, repay, redeem,
purchase or otherwise acquire any Shareholder Loans prior to the Tranche A Final
Repayment  Date and the repayment in full of each outstanding Advance hereunder;

21.2.11     Financial  Indebtedness:  incur, create or permit to subsist or have
outstanding  any  Financial  Indebtedness  or  enter  into  any  agreement  or
arrangement  whereby  it  is  entitled to incur, create or permit to subsist any
Financial  Indebtedness  other  than,  in  each  case,  Permitted  Financial
Indebtedness;

<PAGE>

21.2.12     Encumbrances:  create or permit to subsist any encumbrance on any of
its  assets  other  than  Permitted  Encumbrances;

21.2.13     Mergers:  split,  merge  or consolidate with any other person, enter
into  any  demerger  transaction,  or participate in any other type of corporate
reconstruction  without  the  prior  consent  of  the  Majority  Lenders and the
Guarantors;

21.2.14     Subsidiaries:  create any subsidiary or permit to exist any interest
in  any person (whether by shareholding, joint venture, partnership, whether any
income  or  profits are, or would be, shared or transferred with any other party
or  otherwise),  other  than  the  Permitted  Subsidiaries;

21.2.15     Additional  Project  Contracts  and Amendments to Project Contracts:

  (a)   enter  into  any  additional  material Project Contracts with a value of
more than EUR 4 million or contracts for the sale of energy and the agreement on
reserve electricity services save with the prior written consent of the Majority
Lenders  (such  consent  not  to  be  unreasonably  withheld  or  delayed);

  (b)   subject to Clause 21.2.16 (Project Specifications), only, amend in any
material  respect, or grant any waiver or consent under, any Project Contract if
such  amendment,  waiver  or  consent  would  not  reasonably  be expected to be
materially  adverse  in  relation  to  the  Borrower's  ability  to  perform its
obligations  under  the  Transaction  Documents  and/or  the  validity  or
enforceability  of  the  Transaction Documents. In the case of Project Contracts
with  a value of more than EUR 4 million or contracts for the sale of energy and
the  agreement  on  reserve  electricity  services  such amendments, waivers and
consents  will  have  to  be  notified to the Agent in writing seven (7) days in
advance;

  (c)   cancel or terminate any Project Contract with a value of more than EUR 4
million  or  any  contract  for  the sale of energy and the agreement on reserve
electricity  services  (other  than  the  EPC  Contract  or any contract for the
carrying  out of the necessary infrastructure works at the Site), without having
given  thirty  (30) days prior written notice to the Agent and then only so long
as  a  replacement  contract  is  in  place  on  terms no less beneficial to the
Borrower  as  the  cancelled/terminated  Project  Contract;  and

  (d)   cancel,  terminate  or  suspend the EPC Contract or any contract for the
carrying  out  of  the necessary infrastructure works at the Site or (subject

<PAGE>

to Clause 21.2.16 (Project Specifications)) grant any waiver or consent under
or amend the same  without  Majority  Lenders'  prior  written  consent;

21.2.16     Project  Specifications:  make  any  changes  to  the  design,
specification  or  configuration  of the plant without Majority Lenders' consent
except  for  such  amendments  and  changes which are in conformity with the EPC
Contract  or  are  of  a  minor nature, it being understood that any such change
which might result in an increase in the Project Costs in an aggregate amount of
at  least  EUR  1  million or a delay in a System Start-Up as defined in the EPC
Contract  or  in  Acceptance  will  not  be  deemed  to  be  of  a minor nature;

21.2.17     Waiver  of  tests  under EPC Contract: waive or materially alter any
test  procedures  or approve any test results in connection with the tests under
Clauses  16 to 19 of the EPC Contract where this could have an adverse effect on
the  Project  without  Majority  Lenders'  consent  (such  consent  not  to  be
unreasonably  withheld  or  delayed);

21.2.18     Acceptance  Certificate: issue the Acceptance Certificate as defined
in  the  EPC  Contract  without  the  Agent's  consent  (such  consent not to be
unreasonably  withheld  or  delayed);

21.2.19     Shares:  purchase,  cancel  or  redeem any Share Capital, reduce the
Share Capital, issue any Shares otherwise than to an existing Shareholder, grant
any  option over or make any offer of Shares to any person or alter any material
rights attaching to the Shares without the Majority Lenders' and the Guarantors'
consent.  Their  consent  is  however  not  required in relation to the offer of
Shares;

21.2.20     Shareholders'  Agreement:  change its Shareholders' Agreement in any
manner  which  would  be  inconsistent  with  the  provisions of any Transaction
Document  without Majority Lenders' consent (such consent not to be unreasonably
withheld);

21.2.21     Change  of Business: make any material changes to the general nature
of  its  business as a pulp mill and any business incidental thereto or carry on
any  other  business  which results in any material change to the nature of such
business;

21.2.22     Abandonment:  abandon  the  Project;

21.2.23     Withdrawals  from  Cash  Collateral Accounts: withdraw any moneys on
the  Cash  Collateral  Accounts  other  than  pursuant  to the provisions of the
Financing  Documents;

<PAGE>

21.2.24     Accounts:  open  or  operate  any  bank  accounts  other  than  as
contemplated  by  this  Agreement;

21.2.25     Assignment  and  Encumbrance of Government Grants: assign, pledge or
otherwise  charge, encumber or dispose of its claims, rights and title under and
to  the  Government  Grants  except  as  provided  in  the Investment Incentives
Assignment  Agreement  listed  in  Schedule  9  (Security  Agreements);
                                   -----------

21.2.26     Financial  Year:  change  its  financial  year;

21.2.27     Obligations:  incur  any material obligations not contemplated by or
permissible  under  this Agreement or which the Borrower assumes in the ordinary
course  of  business in connection with the delivery and performance to it or by
it  or  otherwise,  without  the  prior  consent  of  the  Guarantors;

22.         INSURANCES

22.1        General
The  Borrower will effect through brokers, previously approved in writing by the
Agent,  pay  the premiums when due, maintain in full force and effect and comply
with  all  provisions  of  the  insurances  for  the Construction Period and the
Operation  Period, under forms of policies commonly accepted in the industry and
with  reputable  insurance  companies  reasonably  acceptable to the Agent. Such
insurances  include  the  insurances  set  out in Schedule 12 (Minimum Insurance
                                                  -----------
Schedule)  and  such  other insurances as the Agent specifies are required to be
maintained  in  connection with the Project in accordance with prudent operating
practice.

22.2        Specific  Provisions  of  the  Insurances
The  Borrower  will  provide  for  the  following  with  respect to all Material
Insurances:

22.2.1     Sole  Loss Payee the Security Agent to be named as sole loss payee in
all  policies  save,  in relation to policies relating to third party liability,
where  payment  is  made directly to the third party claiming thereunder in full
and  final  settlement  of  his claim. A payment to the loss payee in accordance
with  this Clause shall, to the extent of that payment, be made to the Insurance
Account or any other account specified to the insurers by the Security Agent and
discharge  the  liability of the respective insurer to pay the Borrower or other
claimant  insured party. The arrangements in this Clause shall continue to apply
notwithstanding  the  liquidation  or  insolvency  of the Borrower or any of the
insurers;

<PAGE>

22.2.2     Waiver  the  insurers  to agree to waive all rights of subrogation or
action  against  the  Security  Agent unless any of the members of the executive
board  (Vorstand)  of  the  Security Agent acted with gross negligence or wilful
misconduct  (Vorsatz);

22.2.3     Reduction  of  Insurance  Proceeds  the  insurers  not  to reduce any
insurance  proceeds  due  and payable to the Security Agent (on behalf of itself
and other beneficiaries) as loss payee, save in respect of any unpaid premium if
so  required  by  the  respective  insurer;

22.2.4     Insurance  Claims  Assignment  cause the insurers to acknowledge that
they  have noticed that, by the Insurance Claims Assignment Agreement as set out
in Schedule 9 (Security Agreements), the Borrower assigned to the Security Agent
   ----------
(for and on behalf of the Lenders) all its existing and future rights and claims
in  and  to  the  Material Insurances (including all claims of whatsoever nature
thereunder and return of premiums and proceeds in respect thereof). The insurers
shall  also  confirm that they have not received notice of any other assignment,
charge  or  other  encumbrance  of  the  Borrower's  rights and claims under the
respective  insurance.

22.2.5     Adequate  Information  the  insurers  to  acknowledge  that they have
received  adequate  information  in  order  to evaluate the risk of insuring the
Borrower  in  respect  of  the  risks  hereby  insured;

22.2.6     Cancellation  the  insurers  not  to  cancel  (kundigen) the Material
Insurances  during  the  Construction  Period;

22.2.7     Notices  the  insurers  to  give  in  writing  to  the Security Agent

  (a)   a  thirty  (30)  days  notice  of cancellation, non-renewal (whether for
non-payment  of  premium  or  otherwise),  suspension (if applicable) or adverse
change  of  terms;

  (b)   a  thirty  (30)  days notice of any reduction in limits or coverage, any
increase in deductibles or any termination before the original expiry date is to
take  effect;  and

  (c)   as  soon  as any of the insurers becomes aware, notice of any act, event
or  omission which such insurer considers may invalidate or render unenforceable
in  whole  or  in  part  any  insurance.

22.2.8     Delivery  of Notices and Documents the policies to stipulate that any
notice  or  document  to be served in relation to any policy may be delivered or
sent  by

<PAGE>

prepaid  recorded  delivery post (if within the Federal Republic of Germany), by
prepaid airmail (if elsewhere) or facsimile process to the party to be served at
its  registered  office  or at such other address as it may have notified to the
other parties in writing in accordance with this Clause. Any such notice will be
deemed  to  be  given  as  follows:

  (a)   if  delivered  by  hand  or  by  mail,  when  delivered;  and

  (b)   if by  facsimile  when  transmitted, but only if, immediately after the
transmission,  the  sender's  fax  machine  records  the  correct  answerback;

22.2.9     Governing  Law and Jurisdiction the insurance policies to be governed
by  German  law  and each of the insurers and co-insured to agree that any legal
proceedings arising out of or in connection with the policies will be brought in
the  exclusive  jurisdiction  of  a  German  court.

22.3       Insurance  Documentation

The  Borrower  will  promptly  provide to the Security Agent copies of all cover
notes and policies (including endorsements) issued from time to time in relation
to  each insurance, and of all changes requested or effected thereto, and, if so
requested by the Security Agent, of placing slips and all documents disclosed or
disclosable to the insurers of each insurance and relating to claims notified or
notifiable  to insurers or the insurance brokers. In addition, the Borrower will
promptly  deliver to the Security Agent the originals of all policies (including
endorsements)  and  placing  slips.

22.4       Inspection  Right

The  Security  Agent  or  any  of  its  representatives  or the Advisers will be
entitled  to  review from time to time the compliance of the insurances effected
by  the  Borrower  with the above provisions and the provisions contained in the
Minimum  Insurance  Schedule  and the Borrower undertakes to co-operate with the
Security  Agent  or any of its representatives or the Advisers, respectively, in
this  respect  and  to  furnish  to  it all information requested by it for such
purpose.

22.5     Broker's  Letter  of  Undertaking

The  Borrower  will procure that every insurance broker who effects an insurance
writes  a  broker's  letter of undertaking (substantially in the form set out in
Schedule  16  (Broker's  Letter  of  Undertaking))  to  the Security Agent. Such
  ----------
letters  have to be provided prior to Financial Close with respect to insurances
  ----

<PAGE>

during  the  Construction  Period  and  at  least five (5) Banking Days prior to
inception  with  respect  to  insurances  during  the  Operation  Period.

22.6       Changes  to  Insurance  Programme

22.6.1     If  any  variation  is  proposed  to  be  made  to  the  terms of any
insurance, the Borrower will give at least thirty (30) days prior written notice
thereof  to the Security Agent. No variation to any insurance should be effected
or  agreed  by  the  Borrower  until the Security Agent notifies the Borrower in
writing either that the variation is not material to the Lenders or is otherwise
agreeable  to  the  Security  Agent.  The  Security  Agent will not unreasonably
withhold  or  delay  its  agreement  after  obtaining  any  advice that it deems
appropriate  in  considering  the  Borrower's  request.

22.6.2     No  Event  of  Default  occurs  to  the extent the Borrower has given
notice  pursuant  to  Clause 22.6.1 (Changes to Insurance Programme), and for so
long as, cover required to be maintained is not available to the Borrower in the
international insurance or reinsurance market on what the Security Agent accepts
in  writing  to  the  Borrower to be reasonable commercial terms. In determining
whether  such  cover  is  available on reasonable commercial terms, the Security
Agent shall have on-going regard to the scope of such insurance, its cost in the
context of the financing of the Project and the direct and indirect interests of
the  Lenders  under  the  Financing  Documents.

22.7       Notification
The  Borrower  will  promptly  notify the Security Agent and the insurers of any
increase  or  material  change in any risk insured under any Material Insurance.

22.8       Claim  Handling

The  Borrower  will

  (a)   diligently  pursue  any  valid  claim  under  any  insurance,

  (b)   promptly  notify  the  Security Agent and the insurers of any matter for
which  it  may  be  entitled  to  a  claim  under  any  insurance,

  (c)   keep  the  Security Agent informed on a regular basis regarding progress
towards  settling  any  such  claim,

  (d)   take  account  of  any  representations  made  by  the Security Agent in
relation  to  any  such  claim,  and

<PAGE>

(e)     not negotiate, compromise or settle any claims with a potential value in
excess  of EUR 5 million without the written consent of the Security Agent, such
consent  not  to  be  reasonably  withheld  or  delayed.

22.9       Renewals

The  Borrower  will,  at  least  thirty  (30)  days  prior to the renewal of any
insurance  satisfy the Security Agent that the cover proposed to be effected for
the  renewal  period  will,  on  and  after  the  renewal  date, comply with the
requirements  of  the  Minimum  Insurance  Schedule.

22.10      Changes  in  Insurer  Security

If  an insurer under a Material Insurance ceases to carry a claims paying rating
from  Standard & Poor's Corporation of at least A-, or an equivalent rating from
such  other  rating  agency  approved  by  the Security Agent, the Borrower will
promptly  inform  the Security Agent thereof and, at the request of the Security
Agent,  promptly  replace the affected cover with cover from another insurer, or
insurers, reasonably acceptable to the Security Agent and terminate the affected
insurer's  participation in the risk, provided that there will at no time be any
period  when  any  relevant  risk  is  not  insured as required by the Financing
Documents.

22.11      Lender's  Right  to  Insure  if  Borrower  Defaults

If  at any time and for any reason any insurance is not in full force and effect
on  the  terms or for the insured values required under the Financing Documents,
then  the Security Agent shall forthwith be entitled, at the cost and expense of
the  Borrower, to procure and pay for such insurance as the Borrower should have
effected  or  procured  pursuant  to the terms hereof or at any time whilst such
failure  is  continuing.

22.12      Disputes  over  Availability  of  Cover  Borrower  Defaults

Any  disagreement  between  the  Borrower  and  the  Security  Agent  over  the
availability  of cover in the international insurance market will be referred to
an  independent  expert  appointed  with  the  agreement of the Borrower and the
Security  Agent, or, if the parties cannot so agree within 20 days of the notice
given  by the Borrower under the covenant referred to in Clause 22.6 (Changes to
Insurance  Programme),  to  a person nominated at the request of either party by
the  President  of the German Association of Insurers, in each case acting as an
independent  expert.  The  expert's  decision  will  be final and binding on the

<PAGE>

parties  hereto.  The  expert's  fees  and  disbursements  will  be borne by the
Borrower.

23.       EVENTS  OF  DEFAULT

23.1      Each of following circumstances constitutes an Event of Default for
the purposes  of this Agreement, irrespective of whether or not caused by any
reason within  the  control  of  the  Borrower  or  any  other  person:

23.1.1     Payment  Obligations:  subject to Clause 6.5, failure by the
Borrower to make:

  (a)   any payment of principal or interest due under the Facility within seven
(7)  Business  Days  from  the  due  date  thereof;  and

  (b)   any  other  payment  due  under  the Financing Documents within five (5)
Business Days from a notification by the Agent of the Borrower's failure to pay;

23.1.2     Representations  and  Warranties:  any  representation,  warranty  or
statement  made  in  any  Financing  Document, certificate, statement or opinion
delivered by or on behalf of the Borrower hereunder or in connection herewith is
or  proves  to have been incorrect, untrue or misleading in any material respect
when  made and which, if capable of being remedied, has not been remedied within
thirty  (30)  days  from  notification  by  the  Agent  of  such  breach;

23.1.3     Covenants:  the  Borrower  or  any  of  its Shareholders breaches any
covenant  or material obligation under the Financing Documents which, if capable
of  being remedied, has not been remedied within fifteen (15) Business Days from
notification  by  the  Agent  of  such  breach;

23.1.4     Consents  and  Approvals:  any  Authorisation necessary to enable the
Borrower  to  comply  with any of its material obligations under the Transaction
Documents  and  Project  is revoked, withheld or modified or is limited in a way
which  materially  prejudices the validity and enforceability of the Transaction
Documents and/or the ability of the Borrower to meet its obligations thereunder;

23.1.5     EU-Decision,  State  Guarantee  and  Government  Grants:  any  of the
EU-Decision,  State  Guarantee  or Government Grants is modified in any material
respect,  revoked,  withdrawn, withheld or suspended, or does not remain in full
force  and  effect;

23.1.6     Insolvency  and  Rescheduling: any cause exists on the basis of which
insolvency  proceedings  under  the  German  Insolvency Code should be initiated
against  the

<PAGE>

Borrower,  the  Borrower  commences  negotiations  with  any  one or more of its
creditors  with  a  view  to  the  general  readjustment  or rescheduling of its
indebtedness  or  makes  a  composition  with  its  creditors;

23.1.7     Winding-up:  (a)  the  Borrower, (b) while it has any liability under
the  Shareholders'  Undertaking  Agreement any of the Shareholders or any of the
Sponsors or (c) while it has any liability under the RWE Solutions AG Guarantee,
the  Direct Agreement or the Parent Company Guarantee RWE Solutions AG takes any
corporate  action  or any other steps are taken or legal proceedings are started
for  its  winding-up,  dissolution or reorganisation or for the appointment of a
liquidator,  receiver,  administrator,  administrative  receiver,  conservator,
custodian,  trustee  or  similar  officer  of  it  or  of any part or all of its
revenues  and  assets;

23.1.8     Insolvency or Winding-up of EPC-Contractor: the EPC-Contractor during
the  Construction  Period is unable to pay its debts as they fall due, commences
negotiations  with  any  one or more of its creditors with a view to the general
readjustments  or rescheduling of its indebtedness, makes a composition with its
creditors, or takes any corporate action or other steps or legal proceedings are
started  for  its winding-up, dissolution, re-organisation (except for a solvent
re-organisation  previously  approved  in  writing  by  the  Agent)  or  for the
appointment of a liquidator, receiver, administrator, administrative receiver or
similar  officer  of  it  or  of  any  or  all  of  its  revenues  and  assets;

23.1.9     Indebtedness:  failure  by  the  Borrower  to pay any other Financial
Indebtedness  over  EUR  100,000  when due or after the expiry of any applicable
grace  period  unless  such  payment is contested in good faith by the Borrower;

23.1.10     Obligations  of  the  Borrower:  at  any time it is unlawful for the
Borrower  to  perform  any  of  its  material  obligations under the Transaction
Documents,  or  to  own  its  material  assets  or  to  carry on its business in
materially  the same fashion as contemplated in the Financing Documents and such
condition  continues  for  period  of  sixty  (60)  days;

23.1.11     Obligations  of  the  Parties to Shareholders' Undertaking Agreement
and  the RWE Solutions AG Guarantee: any of the Shareholders or Sponsors (or any
of  their  successors)  fails to comply with any obligation assumed by it in the
Shareholders'  Undertaking  Agreement  and/or  RWE  Solutions  AG (or any of its
successors)  fails  to  comply  with  any  obligation  assumed  by it in the RWE
Solutions AG Guarantee, the Direct Agreement or the Parent Company Guarantee and
such  failure,  if  capable  of  remedy, is not remedied within thirty (30) days
after  receipt  of  written  notice  from  the  Agent  requesting  the  same;

<PAGE>

23.1.12     Change  of  Control:  a  Change  of Control occurs without the prior
written  consent  of  the  Majority  Lenders;

23.1.13     The  Borrower's  Business: the Borrower ceases or threatens to cease
to  carry on all or a substantial part of the business it carries on at the date
hereof,  abandons  or  threatens  to  abandon  the  Project  or  disposes  of  a
substantial part of its business or assets or a substantial part of its business
or assets is seized, nationalised or expropriated or compulsorily acquired by or
under  the  authority  of  any  government;

23.1.14     Assets  of  the  Borrower:  except  as  permitted  by  the Financing
Documents,  the  Borrower  ceases to be the sole lawful and beneficial owner of,
and  having  good  title to, any material part of its assets, and such assets or
part  thereof,  are  not re-acquired or replaced in a manner satisfactory to the
Lenders  within  fifteen  (15)  days  of  such  cessation;

23.1.15     Acceptance:  Acceptance does not occur by the date falling 40 months
after  Financial  Close;

23.1.16     Default under Transaction Documents: a material default under any of
the  Transaction  Documents  which,  if  capable of being remedied, has not been
remedied  within  thirty  (30)  days  in  the case of any Financing Document and
ninety  (90)  days  in  the  case  of  any  Project  Contract  in  each  case of
notification  by  the  Agent  of  such  default;

23.1.17     Invalid,  Non-binding  and  Non-enforceable  Obligations: a material
provision  of  the  Financing Documents is not, or is contested by a party other
than  a  Lender  to  be  not,  legal,  valid,  binding  and  enforceable;

23.1.18     Qualifications  in  the  Auditors'  Report: the auditors have made a
qualification  in  their  report  and  there  are reasonable doubts (vernunftige
Zweifel)  concerning  the  continuation  of  the  Borrower's business on a going
concern  basis  unless  within  twenty  (20)  Business Days from the date of the
auditor's  report  the  Borrower  has  presented a certificate from the auditors
showing  that the reasons for the doubts raised have been remedied or sufficient
measures  have  been  taken  for  their  remedy;

23.1.19     Security: any Security ceases to be in full force and effect for any
reason  other  than:
  (a)   the  assignment  of  any  credit or portion of the finance to which such
Security  relates;

<PAGE>

  (b)   the  failure  to  make  the required filings or registrations where such
filings  or  registrations  are  under  the  control  of  the  Lenders;

23.1.20     Litigation:  any  material  judgement,  award  or  decision  on  any
litigation,  arbitration,  administrative  proceedings  or  governmental  or
regulatory  investigations,  proceedings  or  disputes  is commenced against the
Borrower or its assets which is materially adverse in relation to the Borrower's
ability  to  perform  its obligations under the Transaction Documents and/or the
validity  or  enforceability of the Transaction Documents unless such judgement,
award  or  decision  is  stayed  pending  appeal  without  the necessity for the
Borrower  to  provide  any  security  in  connection  therewith;

23.1.21     Enforceability  of  Encumbrance:  any encumbrance over any assets of
the  Borrower  securing  an  indebtedness  of  not less than EUR 100,000 becomes
enforceable;

23.1.22     Execution  or  Distress:  any  execution  (Zwangsvollstreckung)  or
distress  (Beschlagnahme) is levied against, or an encumbrancer takes possession
of  the  whole,  or any material part of the assets of the Borrower or any event
which  under the laws of any jurisdiction has a similar effect is not discharged
within  thirty  (30)  days;

23.1.23     Insurances: Subject to Clause 22.6.2 (Changes to Insurance
Programme), the Borrower  fails  to maintain the insurances pursuant to the
provisions of Clause 22 (Insurances);

23.1.24     Destruction  of Project: the Project or any substantial part thereof
is  destroyed or damaged in a manner which is not covered in full by proceeds of
insurance,  (excluding  any  agreed  deductibles);

23.1.25     Material  Adverse  Change:  any  event or circumstance (or series of
events  or  circumstances)  that  have  a  Material  Adverse  Effect;

23.1.26     Force  Majeure:  an  Event  of  Force  Majeure occurs or a series of
Events  of  Force  Majeure occur the effects of which continue (on an aggregated
basis)  for  a  period  of  230  days  under  the  EPC-Contract.

23.1.27     Registration  of  Capital  Increase:  (i) the Borrower has failed to
produce within four (4) Business Days from receipt by it and the notary (who, in
accordance  with  Clause  2.6.1  of  the Shareholders' Undertaking Agreement has
certified  the capital increase) of a written confirmation by the Agent that the
Shareholder  Contributions  have  been credited to the Disbursement Account, the
confirmation  by  the  notary required as proof thereof that the registration of
the  EUR

<PAGE>

15,000,000 has been sent to the commercial register, or (ii) the registration of
the  capital  increase  has  been  revoked  by  the  Shareholders.

23.2       Acceleration  and  Cancellation
23.2.1     Upon the occurrence of an Event of Default and at any time thereafter
while  such  Event  of  Default  is continuing, the Agent may and shall upon the
direction  of  the  Majority  Lenders  by  notice  to  the  Borrower:

  (a)   declare  all  or  any  part  of  the  Advances to be immediately due and
payable  or declare all or any part of the Advances to be due and payable on its
demand (whereupon the same will become so payable together with accrued interest
thereon  and  any  other  sums  then  owed  by  the Borrower under the Financing
Documents);

  (b)   declare  that  any unutilised portion of the Facility will be cancelled,
whereupon  the Lenders' undrawn Commitments shall be cancelled and each Lender's
undrawn  Commitment  will be reduced to zero, provided that, notwithstanding the
foregoing,  upon  the  occurrence  of  an  Event of Default specified in Clauses
23.1.5  (Insolvency  and  Rescheduling),  23.1.7  (Winding  Up),  the  undrawn
Commitments  of each Lender will immediately be reduced to zero and all Advances
and  other sums then owed by the Borrower hereunder shall become immediately due
and  payable;  and/or

  (c)   exercise  all  rights  and  remedies  under  any  Financing  Document or
instruct  the  Security  Agent  to  do  so.

23.2.2     A notice of the Agent pursuant to Clause 23.2.1 may only be given (a)
if  an Event of Default pursuant to Clauses 23.1.1 (Payment Obligations), 23.1.6
(Insolvency  and  Rescheduling),  23.1.7  (Winding-Up),  23.1.13 (The Borrower's
Business)  and  23.1.24 (Destruction of Project) has occurred and is continuing,
or  (b)  if any other Event of Default has occurred and is continuing only after
careful  consideration of the reasonable concerns of the Borrower or in case the
Majority  Lenders  have  determined in their reasonable opinion that due to such
Event  of  Default the ability of the Borrower to perform any of its obligations
under  the  Financing  Documents  has  been  materially  impaired.

23.3     Advances  Due  on  Demand
If,  pursuant  to  Clause  23.2.1(a),  the Agent declares all or any part of the
Advances  to  be  due  and payable on demand of the Agent, then, and at any time
thereafter  within  a  period  of  three  months, the Agent may by notice to the
Borrower:

<PAGE>

  (a)   require repayment of all or such part of the Advances on such date as it
may  specify  in  such notice (whereupon the same will become due and payable on
the  date  specified  together  with accrued interest thereon and any other sums
then  owed  by  the  Borrower  under  the  Financing  Documents);  and/or

  (b)   select  as  the duration of any Interest Period which begins whilst such
declaration  remains  in  effect  a  period  of  six  months  or  less.

23.4       Waivers
The Lenders may, subject to Clause 23.5.2,  waive  any Event of Default with the
Majority  Lenders'  consent  upon  written request by the Borrower to the Agent.

23.5       Participation  of  Guarantors

23.5.1     Upon  the  occurrence  of an Event of Default the Agent will promptly
inform  the  Guarantors  thereof.

23.5.2     The  Lenders  may  waive  any  Event  of  Default  pursuant to Clause
23.4 (Waivers)  only  with  the  consent  of  the  Guarantors.

24.        AGENT,  ARRANGER  AND  LENDERS

24.1       Appointment  And  Authorisation

Each  Lender  hereby  irrevocably  (except  for  a  removal  under  Clause 24.15
(Resignation))  appoints  the  Agent  to act as its agent in connection with the
administration  of  the  Facility under the Financing Documents, and irrevocably
(except for a removal under Clause 24.15 (Resignation)) authorises the Agent, to
take  such  action  and  to  exercise  and  carry  out such rights, discretions,
authorities, powers and duties as are specifically delegated to the Agent in the
Shareholders'  Undertaking  Agreement,  the  Security  Agreements  and  the  RWE
Solutions  AG  Guarantee  together  with  such rights, discretions, authorities,
powers  and duties as are reasonably incidental thereto, provided that the Agent
will  not  commence  any  legal  action  or  proceedings on behalf of any Lender
without  such  Lenders'  consent. Each Lender hereby relieves the Agent from the
restrictions  of  Sec.  181 BGB in respect of the authority conferred upon it in
this  Agreement.

24.2     No  Obligation
Neither  the  Agent  nor  the  Arranger  is  obliged:

24.2.1     to  take  any  action  to  ascertain whether any Event of Default has
occurred  or  is  outstanding;

<PAGE>

24.2.2     to  ascertain  the  correctness  of  any  representation  made by the
Borrower  or  any  other  party  in  connection with this Agreement or any other
Transaction  Document;

24.2.3     to  inquire  as to the performance by the Borrower or any other party
of  its  obligations  under this Agreement or any other Transaction Document, or
any  breach  of  the  Borrower  or any other party of its obligations under this
Agreement  or  any  other  Transaction  Document;  or

24.2.4     to  give  notice  to the Lenders of any information or event of which
the  Agent  becomes  aware  otherwise  than  by  notice given by a party to this
Agreement  or  to  any  of  the  Advisers  in  accordance  with  this Agreement.
The  Agent  will not be deemed to have knowledge of the occurrence of a Event of
Default  until  it  has  received  notice thereof from a party to this Agreement
describing  the  Event  of  Default  and  stating  that the event is an Event of
Default,  in  which  case  it  will  promptly  notify  the  Lenders.

24.3       Reliance
The Agent is entitled to rely on any communication or document believed by it to
be  genuine  and  correct,  and  on  the  advice  given  in connection with this
Agreement  by  any  of the Advisers appointed in connection with this Agreement,
and  will  not be liable to any of the parties hereto and any of the Lenders for
any  of  the consequences of such reliance where such reliance is in good faith.

24.2       Information  Obligations
Notwithstanding  any specific provisions in this Agreement relating to reporting
requirements,  the  Agent  will  within  the  scope  of  its  appointment:

24.4.1     promptly  upon receipt notify each of the Lenders affected thereby of
any material information and notice received by it from the Borrower, any of its
Shareholders  or  any  of the Advisers and will, to the extent it has obtained a
sufficient  number  of photocopies from the Borrower, any of its Shareholders or
such  Adviser,  supply  photocopies  of  relevant  documents  to  the  Lenders;

24.4.2     promptly  notify each of the Lenders of the occurrence of an Event of
Default  or  any  default  by the Borrower, any of its Shareholders or any other
party  in the performance of or compliance with its respective obligations under
this  Agreement  and  the  other  Transaction  Documents  of which the Agent has
received  notice  from  a  party  to  this  Agreement  or any of the Advisers in
accordance  with  this  Agreement.

<PAGE>

24.5       Compliance  with  Legal  Provisions
Nothing  in this Agreement obliges the Agent to do anything which would or might
in  its opinion be contrary to the law of any relevant jurisdiction or render it
liable  to  any  person,  and  the Agent may do anything which in its opinion is
necessary  to  comply  with  any  such  law.

24.6       Advisers
The  Agent  may retain and pay for the advice or services of any of the Advisers
or  any  expert whose advice in its opinion is necessary or appropriate and rely
upon any advice so obtained and shall not be liable to any of the parties hereto
or  to  any of the Lenders for any of the consequences where such reliance is in
good  faith.

24.7       Liability
Neither  the  Agent  nor  the  Arranger  nor  any of their respective directors,
officers,  employees or agents will be liable for any action taken or omitted by
it,  him  or  them  under  or  in  connection  with this Agreement, the Security
Agreements,  the  Shareholders'  Undertaking  Agreement or any other Transaction
Document  and  any  related  documentation  except,  notwithstanding  any  other
provision  of  this  Agreement,  to  the  extent  of  its,  his,  or their gross
negligence,  wilful  misconduct  or  bad  faith.

24.8       Agency
The  Agent will in performing its functions and duties under this Agreement, the
Security  Agreements,  Shareholders'  Undertaking  Agreement  and  any  other
Transaction  Document solely act as the agent of the Lenders and will not assume
or  be  deemed  to  have  assumed  any  obligation as agent or otherwise for the
Borrower  or any of its Shareholders, except as specifically stated herein or in
any  other  Transaction  Document.  The  Agent  will  have  no  liability  or
responsibility  to  the Borrower or any Lender in connection with any failure or
delay in performance or breach by any Lender or Lenders (other than the Agent in
its  capacity  as a Lender) or the Borrower of any of its obligations under this
Agreement,  the  Security Agreements, the Shareholders' Undertaking Agreement or
any  other  Transaction  Document.

24.9       No  Verification  Duties
Neither the Agent nor the Arranger will be responsible for or obliged to verify:

24.9.1     the  accuracy  and/or completeness of any statements, representations
or  warranties  made  in  or  in  connection  with  this Agreement, the Security
Agreements,  the  Shareholders'  Undertaking  Agreement or any other Transaction
Document;

<PAGE>

24.9.2     for  any  information  given  to any of the Lenders in respect of the
Borrower  or any matter relating to the Facility (including, without limitation,
the  Information  Memorandum);

24.9.3     the recoverability of any of the sums due or to become due under this
Agreement;

24.9.4     any  failure,  omission  or defect in perfecting any Security, or the
enforceability  or  value  of  any  Security;  or

24.9.5     the  legality,  validity,  effectiveness,  adequacy or sufficiency of
this  Agreement,  the  Security  Agreements  and  the other Financing Documents.

24.10      Transaction  Analysis
Each  Lender  acknowledges that it has made its own analysis of this transaction
(including,  without  limitation, all agreements entered into in connection with
this  Agreement)  without relying on the Agent or the Arranger and based on such
information  as it has deemed appropriate, and has reached its decision to enter
into  this  Agreement based on its own investigations, and that it will continue
to  make its decisions in taking or not taking action under this Agreement based
on such investigations as it shall deem appropriate. Each Lender hereby confirms
that  it  does  not  have  any objections against any agreements entered into in
accordance  with  this  Agreement.

24.11      Instruction  by  Majority  Lenders
In  the  exercise  of  any  right  or  power  and  in relation to any matter not
expressly  provided  for  by  this  Agreement,  the  Security  Agreements,  the
Shareholders'  Undertaking Agreement or any other Transaction Document the Agent
may  act  (or  refrain  from  acting) in accordance with the instructions of the
Majority Lenders to be given by the Lenders within ten (10) Business Days of the
Lenders  having  received  a respective request from the Agent and will be fully
protected  in so doing, except to the extent of its own gross negligence, wilful
misconduct  or bad faith. In the absence of such instructions being given, or if
the  Agent were not provided with security satisfactory to it, whether by way of
payment  in  advance  or  otherwise,  against any liability or loss which it may
incur in taking any proceedings or action in connection with this Agreement, the
Security  Agreements,  the  Shareholders'  Undertaking  Agreement  or  any other
Transaction  Document,  then  the  Agent  may act (or refrain from acting) as it
thinks  fit  provided  that it shall only take action while the above period for
the  issue  of  instructions is running if it determines that there is an urgent
need  to  do  so.

<PAGE>

24.12      Indemnity
Each Lender will indemnify the Agent and the Arranger on demand from and against
any  and  all  liabilities,  losses,  damages, costs and expenses of any kind or
nature  whatsoever including any VAT thereon which the Agent or the Arranger may
incur  other  than by reason of its own gross negligence or wilful misconduct in
acting  in  its  respective  capacity as Agent or Arranger. Such indemnification
will  be  made  rateably  in  proportion  to  each  Lender's  Commitment.

24.13     Same  Rights  and  Liabilities,  Business  with  the  Borrower
In  relation  to its participation in the Facility which the Agent or any Lender
and/or  the  Arranger will or may have from time to time, each of them will have
the  same  rights,  liabilities and powers under this Agreement as though it had
not assumed such capacity. The Agent, the Arranger or any Lender or any of their
respective  associated  companies  may  engage  in any kind of business with the
Borrower  or  any of their respective associated companies as if it were not the
Agent,  a  Lender  or,  as  the  case  may  be,  the  Arranger.

24.14     Designation  of  New  Office
Subject  to  Clause  24.5 (Compliance with Legal Provisions), the Agent may from
time  to  time  by  giving  notice  to the Borrower and the Lenders designate an
office  or  branch different from that acting at the time of giving notice, from
which its duties under this Agreement will be performed thereafter provided that
the  Borrower  will  not  be  obligated to pay any fees, taxes or other costs or
expenses  to  the  extent the same would not have been payable in the absence of
such  designation.

24.15     Resignation
The  Agent may resign at any time its appointment under this Agreement by giving
written notice thereof to the other parties hereto, and the Agent may be removed
from  its  position  under this Agreement by the Majority Lenders giving written
notice  to  that  effect  to the Borrower and the Agent. Any such resignation or
removal  shall  take  effect  upon  the  notification  of  the acceptance of the
appointment  by  the  successor  in  its  respective position in accordance with
Clause 24.16 (Appointment  of  Successor).

24.16     Appointment  of  Successor
In the event of a resignation or removal of the Agent, the Majority Lenders will
be  entitled  to  appoint  a  successor  in  the position, upon agreement of the
Borrower. If no such successor has been appointed within 30 days from the notice
of  resignation  or  notice  of  removal  then  the Agent will be entitled, upon
agreement  of  the  Borrower,  to  appoint any reputable and experienced bank or
other  financial  institution  as  its  successor.

<PAGE>

24.17     Acceptance  of  Appointment
The acceptance of the appointment will be notified by any Lender being appointed
for such purpose by the Majority Lenders to the Agent and upon such notification
the  relevant  successor  will  succeed  to  and  become vested with all rights,
powers, privileges and duties of its predecessor. The resigning or removed Agent
will do all such things as may be necessary to give effect to the succession and
will  thereupon  be  discharged  from  its  duties  and  obligations  under this
Agreement  (except  for those under Clause 24.7 (Liability)), but shall continue
To benefit  from  the  provisions  of  this  Clause 24.7 (Liability)  in respect
of any actions  or  omissions  taken  in  its capacity as Agent. Such discharges
do not exempt  the  Borrower  from  any  of  its  liabilities.

24.18     Arranger
The Arranger has no duties or responsibilities whatsoever in connection with the
operation  or  administration  of  the  Facility.

24.19     Facility  Office
The  Agent  may  assume  that  the  Facility Office or, as the case may be, each
Facility  Office  of  each  Lender is that identified in Schedule 5 (Lenders and
                                                         ----------
Commitments)  (or,  in  the  case  of  a  transferee, at the end of the Transfer
Certificate  to  which  it  is a party as transferee) until it has received from
such Lender a notice designating some other office of such Lender to replace any
such  Facility Office, and the Agent may act upon any such notice until the same
is  superseded  by  a  further  such  notice.

24.20     Missing  Communication
The  Agent  may,  if  it  is unable to obtain instructions or communicate with a
Lender  after making reasonable attempts to do so, either refrain from acting as
Agent  on  behalf of such Lender or take such action on behalf of such Lender as
it in its absolute discretion deems appropriate, and shall not be liable to such
Lender  as  a  result  of  any  such  action  or  inaction.

24.21     Majority  Lenders'  Decisions
Aside  from  changes  in  maturity,  amounts  payable,  size of Commitments, the
definition of Majority Lenders, this Clause 24.21 and as otherwise stated in the
Financing  Documents,  all  amendments, consents and waivers under the Financing
Documents  may  be  given  by  the Agent acting on the direction of the Majority
Lenders.

<PAGE>

25.      ADVISERS

25.1     The  resignation  or dismissal of an Adviser will be in accordance with
its  respective  mandate.

25.2     Subject to the terms of the relevant mandate the Agent or the Arranger,
as  the  case  may be, will, if so instructed by the Majority Lenders cancel the
appointment  of  an  Adviser.

25.3     If  the  mandate  of  an Adviser is terminated prematurely for whatever
reason,  the  Agent  will, with the consent of the Majority Lenders and with the
consent  of  the Borrower, appoint a successor at terms and conditions which are
as  similar  to the terms and conditions on the initial mandate as is reasonably
practical,  and  in  such  a  manner that the duties of the relevant Adviser are
continuously  performed.

25.4     The  Borrower  hereby  consents  to  the  appointment  of the Technical
Adviser  and  the Wood Supply Adviser until six (6) months after Acceptance upon
the  expiry  of  its  existing  mandate.

26.      FEES

26.1     Commitment  Fee
From  the date of signing of this Agreement the Borrower will pay to the Lenders
quarterly  in arrears on each 31 March, 30 June, 30 September and 31 December on
the  undrawn  portion  of  each Tranche a commitment fee to be calculated at the
following  rates:

Tranche  A:     0.375%   per  annum
Tranche  B:     0.250%   per  annum
Tranche  C:     0.375%   per  annum
Tranche  D1:    0.375%   per  annum
Tranche  D2     0.375%   per  annum
Tranche  E:     0.375%   per  annum

26.2     Arranging  Fee
The  Borrower  will  pay to the Arranger an arranging fee in accordance with the
Fee  Letter.

26.3     Agency  Fee
The  Borrower  will  pay  to  the Agent an agency fee in accordance with the Fee
Letter.

<PAGE>

26.4      Federal  Guarantee  Fee
The  Borrower  will pay to the Federal Guarantor a guarantee fee on each 1 April
and  1 October. The guarantee fee will be calculated for each half year starting
at  these  dates  at  a per annum rate of 0.25 % of the amount guaranteed by the
Federal  Guarantor  at those dates and is payable to C&L Deutsche Revision AG, D
sseldorf,  Anderkonto  Bundesminister  der  Finanzen,  account  301  51  12 with
Westdeutsche Landesbank Girozentrale, by making reference to the State Guarantee
number.  An amount of 0.25 % of the maximum guaranteed amount is due and payable
by the Borrower in accordance with the grading granted by the Federal Guarantor.
The  Borrower  will  promptly  inform the Agent of any payments made pursuant to
this  Clause 26.4 (Federal  Guarantee  Fee).

26.5      State  Guarantee  Fee
The Borrower will pay to the State Guarantor a guarantee fee on each 1 April and
1  October.  The guarantee fee will be calculated for each half year starting at
these  dates at a per annum rate of 0.25 % of the amount guaranteed by the State
Guarantor at those dates and is payable to C&L Deutsche Revision AG, Dusseldorf,
Anderkonto  Bundesminister  der  Finanzen,  account  301 51 12 with Westdeutsche
Landesbank  Girozentrale,  by making reference to the State Guarantee number. An
amount  of  0.25  %  of  the maximum guaranteed amount is due and payable by the
Borrower  in  accordance  with  the  grading granted by the State Guarantor. The
Borrower  will  promptly  inform the Agent of any payments made pursuant to this
Clause 26.5 (State  Guarantee  Fee).

26.6      VAT
Any  fee referred to in this Clause 26 (Fees) is exclusive of any VAT or other
tax which  might  be  chargeable  in  connection  with  that  fee.

27.       COSTS  AND  EXPENSES

27.1      Transaction  Expenses
The  Borrower  will,  from  time  to  time on demand of the Agent, reimburse the
Agent, the Security Agent and the Arranger for all reasonable external costs and
expenses  properly  incurred  (including  travel  and  out-of-pocket  expenses,
notarial fees, the reasonable fees for the Advisers and counsel to the Agent and
related  expenses)  on  a  full  indemnity  basis  together with any VAT thereon
incurred  by  them  in  connection  with:

  (a)   the  carrying  out  of  all  due  diligence  enquiries  and  searches in
connection  with  the  Transaction  Documents;

<PAGE>

  (b)   the  negotiation,  preparation  and execution and translation of each of
the  Financing Documents and if any such party is involved in the negotiation of
any  Project  Contract,  the  relevant  Project  Contract;

  (c)   the  completion  and performance of the transactions contemplated in the
Transaction  Documents;

  (d)   the  activities  of  C&L pursuant to Clause 21.1.17 (Compliance with
Conditions for  State  Guarantee  and  Government  Grants);

  (e)   any  initial  syndication  (excluding  any  legal  counsel's fees of any
transferee  under  the  syndication);

  (f)   the  conduct  of  any  audits;  or

  (g)   any  exercise  or attempted exercise of any right, power or remedy under
any  Financing  Document  or  any failure to exercise any right, power or remedy
except  where  that  failure is due to the wilful misconduct or gross negligence
of,  as  the  case  may  be,  the  Arranger,  the  Agent  or the Security Agent;

in each case subject to the terms of any agreement then made by the Borrower and
the  Agent  relating  to  such  costs  and  expenses.

27.2      Preservation  and  Enforcement  of  Rights
The  Borrower  will,  from  time  to  time  on demand of the Agent reimburse the
Lenders, the Agent, the Security Agent and the Arranger for all reasonable costs
and  expenses  (including  reasonable  legal  fees)  on  a  full indemnity basis
together  with  any  VAT  thereon  incurred  by  them  in  connection  with  the
preservation  and/or enforcement of any of the rights of the Agent, the Security
Agent  or the Lenders under the Financing Documents and any document referred to
in  the  Financing  Documents.

27.3      Registration  Fee
The  Borrower  will  pay  all registration and other fees to which the Financing
Documents,  any  other  document  referred  to in the Financing Documents or any
judgment  given  in  connection  therewith  is or at any time may be subject and
shall,  from  time  to  time  on demand of the Agent, indemnify the Lenders, the
Agent and the Security Agent against any liabilities, costs, claims and expenses
resulting  from  any  failure  to  pay  or  any  delay  in paying any such fees.

<PAGE>

27.4       Amendment  Costs
If  the  Borrower requests any amendment, waiver or consent then it will, within
five  (5)  Business  Days  of demand by the Agent, reimburse the Lenders for all
reasonable  external  costs and expenses (including reasonable legal fees of one
law  firm  for  the Lenders selected by the Agent) together with any VAT thereon
incurred  by  such  Lender  in  responding  to  or  complying with such request.

27.5       Lenders'  Liabilities  for  Costs
If the Borrower fails  to  perform  any  of its obligations under this Clause 27
(Costs  and  Expenses),  each  Lender  will,  in  proportion  to  its  aggregate
participation  in the Advances (or, if no Advances have been made, the Facility)
for  the  time  being (or, if the Advances have been repaid in full, immediately
prior  to  the  final repayment), indemnify the Agent (or as the case may be the
Security  Agent)  against any loss incurred by it as a result of the failure and
the  Borrower  will immediately reimburse each Lender for any payment made by it
pursuant  to  this  Clause 27.5 (Lenders'  Liabilities  for  Costs).

28.        INDEMNITY  AND  BREAKAGE  COSTS

28.1       Indemnity
The  Borrower  undertakes  to  indemnify the Lenders, the Agent and the Security
Agent,  except  where  any such costs, loss, expense or liability results from a
Lender's, the Agent's and the Security Agent's gross negligence, wilful default,
bad  faith  or  the  breach  of  any of a Lender's, the Agent's and the Security
Agent's  obligations  under  the  Financing  Documents  against:

28.1.1     any reasonable cost, claim, loss, expense (including reasonable legal
fees)  or liability together with any VAT thereon, which it may sustain or incur
as a consequence of the occurrence of any Event of Default or any default by the
Borrower in the performance of any of the obligations expressed to be assumed by
it  in  any  of  the  Transaction  Documents;  and

28.1.2     any reasonable cost or loss it may suffer as a result of any claim or
proceeding  against  it  relating  to  its  involvement  in  the  transactions
contemplated  hereby  or  any  use  of  the  proceeds  of  the  Facility.

28.2       Breakage  Costs
28.2.1     If:

  (a)   any payment is made otherwise than on the last day of an Interest Period
applicable  thereto;

  (b)   any  other  payment  is  made  otherwise  than on the due date therefor;

<PAGE>

  (c)   any  Advance requested cannot be made because the Borrower has failed to
fulfil  a  condition  precedent;  or

  (d)   the  Borrower  refuses  to  accept  a  requested  Advance,

then  the Borrower will pay to the Agent for the account of each Lender to which
such  payment  is  made  or  who  participated  in  the  Advance requested, such
additional  amount  as  the  relevant  Lender  may  reasonably  certify as being
necessary  to  compensate  it  for  any  loss  (excluding however the Margin) or
expense  incurred on account of funds borrowed, funds contracted for or utilised
to  fund  its  participation  in the amount so paid or the Advance so requested,
which  it  has suffered or incurred as the result of such amount not having been
paid  on  the last day of such Interest Period or on its due date or the Advance
not  having  been  disbursed  or  accepted,  as  the  case  may  be.

28.2.2     The  Borrower  will  pay  to the Agent for the account of the Hedging
Counterparty  to  which  such  payment  is  made,  such additional amount as the
Hedging  Counterparty may reasonably certify as being necessary to compensate it
for  any  loss or expense arising as a result of the termination, in whole or in
part, of any Hedging Agreement entered into in relation to any amounts cancelled
or  prepaid  hereunder.

29.        SET-OFF
Each  Lender  may set off any matured obligation owed by the Borrower under this
Agreement  against any obligation owed by the Lender to the Borrower, regardless
of the place of payment, booking branch or currency of either obligation. If the
obligations  are  in  different  currencies,  the  Lender  may  convert  either
obligation  at a market rate of exchange in its usual course of business for the
purpose  of  set-off.

30.        PRO-RATA  SHARING

30.1       If  at any time the proportion received or recovered by any Lender by
way  of  set-off  or  otherwise (other than through the Agent in accordance with
Clause 9 (Payments)) in respect  of  its  portion  of  any amounts due from the
Borrower  to  the  Lenders  under  this Agreement is greater than the proportion
thereof which the Lender would have received through the Agent if distributed in
accordance  with Clause 9 (Payments) (the difference between the amount received
or  recovered (after deduction of any costs incurred by the Lender in connection
with  such  receipt  or  recovery) by the Lender and the amount which the Lender
would  have  received  or  recovered  had the recovery been received through the

<PAGE>

Agent  if distributed in accordance with Clause 9 (Payments) hereinafter called
the  "Excess  Amount"),  then:

30.1.1     such  Lender  will  promptly notify the Agent and pay to the Agent an
amount  equal  to  the  Excess  Amount  within  three  (3) Business Days of such
notification;

30.1.2     the Agent will account for such payment to the Lenders (excluding the
Lender  having  received  the  Excess  Amount)  as  if  it were a payment by the
Borrower  on  account  of  the sum owed to the Lenders under this Agreement; and

30.1.3     the  liability  of  the  Borrower  to the Lenders will be adjusted in
accordance  with  the  distribution  of  the  Excess  Amount  among the Lenders,

provided  that:

  (a)   if  the Excess Amount or any part thereof thereafter has to be repaid to
the  Borrower  by  the  Lender  having  received  the Excess Amount, each of the
Lenders  will  repay to the Agent for the account of such Lender such proportion
of the amount received by it out of the Excess Amount (plus any interest legally
demanded  by  the  Borrower in respect of such proportion) as corresponds to the
proportion of the Excess Amount which has to be repaid by the relevant Lender to
the  Borrower;  and

  (b)   sums  recovered as a result of litigation started by a Lender to enforce
its  rights  under this Agreement and resulting in an Excess Amount will only be
shared  with  all Lenders other than Lenders which were aware of such litigation
and  did  not join in such litigation without being legally prevented from doing
so.

31.      ASSIGNMENTS  AND  TRANSFERS

31.1     Assignments  and  Transfers  by  the  Borrower
The  Borrower  is  not  entitled to assign or transfer all or any of its rights,
benefits  and  obligations  under  the  Financing  Documents.

31.2     Assignments  and  Transfers  by  the  Lenders

31.2.1     Each  of  the Lenders (a "Transferor") may at any time assign all its
rights  and benefits under this Agreement or transfer its rights and obligations
under this Agreement in whole or in part to members of the European Central Bank
System,  banks,  financial  service providers, financial institutions, insurance
companies, institutional investors, funds, pension funds, public pension schemes
and  similar institutions (a "Transferee") subject to Clause 31.2.2 and any such

<PAGE>

transfer  will  comprise  a  pro  rata share of the entirety of the Transferor's
rights  and  obligations  in  relation  to this Agreement. Participations in any
disbursement  of  an  Advance  may  not  be  transferred  independently  from
corresponding  participations  in  Commitments.

31.2.2      A  transfer  will  only  be  permissible:

  (a)   if  the  amount  of  the  Commitment and/or Advance, as the case may be,
under  the  Facilities  which  is  transferred  is  not less than EUR 10 million
applied  rateably  across  the  Tranches  and in any particular Tranche rateably
between  the  Transferor's  share in each outstanding Advance thereunder and its
undrawn  Commitment  in  relation  thereto;

  (b)   with  the  consent  of the Borrower, such consent not to be unreasonably
withheld  provided that consent will not be required if such transfer is made to
an  affiliate  (belonging  to  the same group of companies within the meaning of
Sec. 18 AktG) of a Lender or to another Lender provided there are no adverse tax
or  other detriments (e.g. Germany's thin capitalisation rules, Sec. 8a KStG) to
the  Borrower;  and

  (c)   following  such  transfer  the  circumstances  envisaged  in  Clauses 12
(Illegality)  or 13 (Increased  Costs) would neither  apply,  nor  reasonably be
expected  to  apply and the Borrower would not have, and would not reasonably be
expected  to  have,  any  obligations  under  Clause 14.1.2 (Taxes).

31.2.3      A transfer  will  only  become  effective  upon  execution  by  the
Transferor  and  the  Transferee and countersignature by the Agent of a transfer
certificate  in  the  form  of Schedule 14 (Transfer Certificate) (the "Transfer
                               -----------
Certificate")  or,  if  later, at the time specified in the Transfer Certificate
and  the  payment  by  the  Transferee  of a transfer fee of EUR 1,000. Upon the
transfer  becoming  effective,  and for such part of the Transferor's rights and
obligations,  as  is  transferred,  the  Transferor  shall  be released from its
obligations  under  the Financing Documents and all other related documentation,
and  its  rights and obligations under such documents shall transfer to and vest
in  the  Transferee  provided  that  it  will  be the sole responsibility of the
Transferee  to  ensure  that  any  additional  action  which may be required for
securing the valid transfer to it of any rights in respect of Security is taken.

31.2.4      The Transferor  will  give prompt notice of any proposed transfer to
the  Agent  who  will  promptly  inform  the  Borrower.

<PAGE>

31.2.5      The Agent  will  promptly  inform  the  Borrower  of  any  perfected
transfer.

31.2.6      The Borrower  will  undertake  all  reasonable efforts to assist the
Arranger  in  all  acts in connection with a syndication pursuant to this Clause
31.2 (Assignments  and  Transfers  by  the  Lenders).

31.2.7      The Guarantors  must consent to any transfer by the Lenders provided
that consent shall not be required if the transfer is to a credit institution or
branch  of  a  credit  institution  within the European Union and the Transferor
assumes the Transferees' rights and obligations under the Financing Documents on
a  fiduciary  basis.

31.3        Disclosure  of  Information
The  Agent  may  disclose  to  any  actual or potential assignee, participant or
Transferee  or  to any person who may otherwise enter into contractual relations
with  such  bank  or  financial  institution in relation to any of the Financing
Documents  such  information  about  the Borrower or such details of the Project
Contracts  as  the  Agent  considers  appropriate  provided that such person has
executed  and delivered to the Borrower a confidentiality undertaking reasonably
satisfactory  to  the  Borrower.  The  Agent  will  not  in any way be liable or
responsible  for  such  information not being kept confidential by such proposed
assignee,  participant  or  Transferee  or  other  person  if  a  reasonable
confidentiality  undertaking  was  obtained  prior  to  such  disclosure.

32.         SUB-PARTICIPATIONS

32.1        Each Transferor may,  in accordance with standard banking practices,
grant  at  any  time  sub-participations  with respect to all or any part of its
rights  and claims under this Agreement to Transferees and may make dispositions
with  respect  to  such  rights  and  claims.

32.2     Clauses 31.2.4 , 31.2.7 (Assignment  and Transfers by the Lenders) and
31.3  (Disclosure of  Information)  apply  mutatis  mutandis.

33.        CALCULATIONS  AND  EVIDENCE  OF  DEBT

33.1     Basis  of  Accrual
Unless  otherwise provided, interest and Fees payable per annum will accrue from
day  to  day  and be calculated for the actual number of days elapsed and on the
basis  of  a  year  of  360  days.

33.2       Prima  Facie  Evidence

33.2.1     In  any  legal  action  or proceeding arising out of or in connection
with  this Agreement, the entries made in the accounts maintained with the Agent
and/or  the  Lenders are, in the absence of manifest error, prima facie evidence
of  the  existence  and  amounts  of the specified obligations of the Borrowers.

33.2.2     A  certificate of and determination by the Agent, Security Agent or a
Lender  as  to  the interest rate and amounts owed under the Financing Documents
are, in the absence of manifest error, prima facie evidence of the existence and
amounts  of  the  specified  obligations  of  the  Borrower.

34.        NON-APPLICABILITY  OF  SEC.  181  BGB

Sec.  181  BGB  does  not  apply  to any authorisation the Borrower gives to the
Arranger,  Agent,  Security  Agent  and  Lenders.

35.     FORM  REQUIREMENTS  AND  AMENDMENTS

35.1     No  oral  agreements  (Nebenabreden)  have  been  made.

35.2     Any modification or amendment of this Agreement, including this Clause,
and  any  waiver  by  the  Agent  or any of the Lenders of its rights under this
Agreement,  must  be  made  in  writing.

35.3     Any  modification  or amendment of this Agreement needs the Guarantors'
consent.

36.     CONDITIONS  OF  THE  STATE  GUARANTEE

The  conditions  of  the  State  Guarantee  as  set  out  in  Schedule 10 (State
                                                              -----------
Guarantee)  are  incorporated in this Agreement, even if they are not explicitly
provided  for  in  this  Agreement. In the case of any discrepancies between the
conditions  of  the  State Guarantee and the terms of this Agreement, the former
will  apply.

37.     REMEDIES  AND  WAIVERS,  CUMULATIVE  RIGHTS,  PARTIAL  INVALIDITY

37.1     Remedies  and  Waiver
No failure to exercise, nor any delay in exercising, on the part of the Lenders,
any  right  or  remedy  under  any  Financing Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right or remedy prevent
any  further  or  other  exercise  thereof or the exercise of any other right or
remedy.

<PAGE>

37.2     Cumulative  Rights
The  rights  and remedies provided in the Financing Documents are cumulative and
not  exclusive  of  any  other  rights  and  remedies  provided in the Financing
Documents  or  by  law.

37.3     Partial  Invalidity
Should  any provision of this Agreement be invalid or unenforceable, in whole or
in  part,  or  should  any provision later become invalid or unenforceable, this
shall  not affect the validity of the remaining provisions of this Agreement. In
lieu  of  the  invalid  or  unenforceable provision another reasonable provision
shall  apply, which as far as legally possible comes as close as possible to the
intention  of  the  contracting  parties,  or  to  what  would  have  been their
intention,  in correspondence with the spirit and the purpose of this Agreement,
had  the  parties upon entering into this Agreement taken into consideration the
invalidity or unenforceability of the respective provision. The same shall apply
mutatis  mutandis  to  fill  possible  gaps  in  this  Agreement.

38.     NOTICES

38.1     Communications  in  Writing
Each  communication to be made by the parties hereto under this Agreement or any
other  Financing  Document  that does not contain a provision comparable to this
Clause 38.1 will be made in writing and, unless otherwise stated, will be made
by fax,  letter  or  e-mail.  Each  communication  will  be  in  German or
English.

38.2     Addresses
Any  communication  or  document  to  be made or delivered by the parties hereto
pursuant  to  this  Agreement  or  to any other Financing Document that does not
contain a provision comparable to this Clause 38.2 will (unless the recipient of
such  communication or document has, by fifteen (15) days' written notice to the
Agent,  specified  another  address  or  fax number) be made or delivered to the
address  set  out  below:

(a)     to  the  Borrower:
        Zellstoff  Stendal  GmbH
        Niedergorner  Damm  1
        D  -  39596  Arneburg

        attn.:Wolfram  Ridder

<PAGE>

        Tel.:    +49  -  (0)  39321  -  50321
        Fax.:    +49  -  (0)  39321  -  50422

(b)     to  the  Arranger:

        Bayerische  Hypo-  und  Vereinsbank  AG
        Am  Tucherpark  1  (FPA1)
        D  -  80538  Munchen

        attn.:  Marc  Thumecke

        Tel:     +49  -  89  378  21654
        Fax:     +49  -  89  378  41518

(c)     to  the  Agent  and/or  Security  Agent:

        Bayerische  Hypo-  und  Vereinsbank  AG
        Am  Tucherpark  1  (FPA13)
        D  -  80538  Munchen

        attn.:  FPA  Agency

        Tel:     +49  -89-378  29541
        Fax:     +49  -89  378  41517

(d)     to  the  Lenders:

         to  the  contact  addresses  mentioned  in Schedule 5 (Lenders
         and Commitments).                          ----------

38.2.2     Communications  or documents addressed to C&L in connection with this
Agreement  or  any  other  Financing  Document,  not  containing  a  provision
corresponding  to  this  Clause  38.2,  shall  be  addressed  to  it  at:

C&L  Deutsche  Revision  AG
Moskauer  Strasse  19
D-40227  Dusseldorf

attn.:    Katharina  VoB

Tel.:     +49  -  (0)  211  -  981  2805
Fax.:     +49  -  (0)  211  -  981  2810

<PAGE>

38.3     Delivery
Any  communication  or document to be made or delivered by one person to another
pursuant  to  the  Financing Documents will (if by way of fax) be deemed to have
been  received  when transmission has been completed and evidenced by a positive
transmission  statement  (and,  if  such  date  is  not  a  Business  Day  or if
transmission  is completed after 5.30 p.m. in the place of receipt on a Business
Day,  will  be  deemed to have been received on the next Business Day) or (if by
way  of  letter)  deemed to have been delivered when left at that address or, as
the  case  may be, ten days after being deposited in the post postage prepaid in
an  envelope addressed to it at that address, provided that any communication or
document  to  be  made  or  delivered  to  the Agent will be effective only when
received  by  its  agency division and then only if the same is expressly marked
for  the  attention  of  the  department  or officer identified with the Agent's
signature  below  (or  such  other department or officer as the Agent shall from
time  to  time  specify  for  this  purpose).

39.     GOVERNING  LAW
This  Agreement  will be governed by, and construed in accordance with, the laws
of  the  Federal  Republic  of  Germany.

40.     JURISDICTION
The  exclusive  place  of jurisdiction to hear and determine any suit, action or
proceeding,  and  to settle any disputes which may arise out of or in connection
with  this  Agreement  is  Munich. The Lenders, the Agent and the Security Agent
may,  however,  also commence proceedings before any other court in which assets
of the Borrower are located. Mandatory places of jurisdiction remain unaffected.

41.     COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which taken
together  constitute  one  and  the  same  instrument.

<PAGE>

                                   SCHEDULE 1
                                DRAWDOWN REQUEST

[Borrower's  Letterhead]

To:     Bayerische  Hypo-  und  Vereinsbank  AG
        Attn:  FPA  Agency

        Telefax:  +49  -  89  -  378  -  41517

Date:  [  ]

We refer to the USD 827,950,000 facility agreement dated August 26, 2002 whereby
a  facility  has  been  made  available to Stendal Zellstoff GmbH by [a group of
banks] on whose behalf Bayerische Hypo- und Vereinsbank AG is acting as agent in
connection therewith (such agreement as from time to time amended being referred
to  herein as the "Facility Agreement"). Terms defined in the Facility Agreement
shall  have  the  same  meanings  herein  unless  specified  otherwise  herein.

Pursuant  to  Clause  3.1  of  the  Facility  Agreement,  we hereby request the
following drawdown  under

[  ]   Tranche  A

[  ]   Tranche  B:       [  ]   Sub-Tranche  B1
                         [  ]   Sub-Tranche  B2
                         [  ]   Sub-Tranche  B3
                         [  ]   Sub-Tranche  B4

[  ]   Tranche  C

[  ]   Tranche  D1

[  ]   Tranche  D2

[  ]   Tranche  E

of  the  Facility  Agreement:

<PAGE>

Drawdown  Date:
                    ----------------------------

Interest  Period:
                    ----------------------------

Amount  of  Advance:   EUR
                            --------------------

The  Advance will  be  used  for  the  following  specific  purposes:
Tranche  A:  [Project  Construction  Costs, Development Costs],
             in particular

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

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

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

             an amount  of  EUR [*] hereof are Post-Acceptance Costs
             regarding Project Construction  Costs.

Tranche B[1, 2, 3]:   [Financing Costs, start-up costs as well as construction
             costs  and  development  costs  which  are  not  financed  under
             Tranche A], in particular
                                       ---------------------------------------

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

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

Tranche  B4:   Working  Capital  Costs  of  Borrower,  in  particular

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

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

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

               An  amount  of  EUR  []  hereof  are  Post-Acceptance  Costs.

Tranche  C:    Funding  of  the  Debt  Service  Reserve  Account

Tranche  D1:   Financing  of  Project  Construction  Costs,  in  particular

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

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

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

Tranche  D2:   Financing of Cost Overruns/shortfall in Government Grants post
               Acceptance/prepayment  of  Tranche  A  for  EU-Equity  Test,
               in  particular

<PAGE>

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

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

Tranche  E:   [Bridge Financing of costs in relation to the Project for which
              Government  Grants  are  to  be  received,  recoverable  VAT
              payments on Project Construction  Costs],  in  particular
                                                                        -----

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

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

The  amount  of  the  Advance  shall  be  credited  to the Disbursement Account.

We  hereby  confirm  that

1.     the  representations  and  warranties pursuant to Clause 16.1
(Representation and  Warranties) of the Facility Agreement are correct as at
the date hereof and will  be  correct  immediately  after  the  Advance  is
made;

2.     no  Event  of Default or Potential Event of Default as set out in Article
21 of the Facility Agreement has occurred and is continuing or might result from
the  making  of  the  Advance;

3.     no  Material  Adverse  Effect  has  occurred  and  is  continuing;

4.     Assurance  of  Overall  Financing  is  still  fulfilled;

5.     the  drawdown  conditions  for the requested Advance have been met unless
otherwise waived pursuant to Clause 3.3.2 (Drawdown Conditions) of the Facility
Agreement.

Zellstoff  Stendal  GmbH
by:

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

<PAGE>

                                   SCHEDULE 2
                        CONDITIONS FOR THE FIRST DRAWDOWN

The  following  documentation and information in form and substance satisfactory
to  the  Agent  has  been  received  by  the  Agent:

1.     A  certified  and  up-to-date copy of the commercial register extract and
the  articles  of  association  of  the  Borrower,  RWE-IN,  AIG,  FAHR,  Mercer
International  and  SP  Holding.

2.     A  copy of the corporate authorisations and/or shareholder resolutions of
the  Borrower  relating  to  the  execution,  delivery  and  performance  of all
Financing  Documents  to  which  it  is  a  party.

3.     A certified copy of the Secretary Certificates of the Corporate Secretary
of  Mercer  International:

      (a) authorising the execution,  delivery  and performance of all Financing
Documents  to  which  Mercer  International  is  a  party  as approved by Mercer
International's  board  of  trustees;  and

      (b) setting out the names and signatures of the authorised signatories for
the  signing  of  such  documents  duly  certified  to  be  true  and  correct.

4.     Specimen  signatures  of  the  persons  authorised  to sign the Financing
Documents  and  notices  thereunder.

5.     Original  executed  copies of the Transaction Documents, in each case, in
full force and effect (with respect to the Hedging Agreements, however, only the
agreement  for  the  interest  rate  swap  other  than

       (a) in  the case of the Transaction Documents, which will be concluded or
be in  full  force  and  effect  upon  first  drawdown  hereunder  and

       (b) in  the case of the EPC Contract, which will be in full force and
effect upon  the  payment  of  the  down  payment  under  the  EPC  Contract,

together,  in  each  case,  with  any  necessary  notices  of  assignment  and
acknowledgements  thereof  in  form  and  substance  acceptable  to  the  Agent,
registrations  (save  for  the  land charges to be created) etc in each case, in
full  force  and  effect.

6.     Evidence  that  the  Shareholders have paid into the Disbursement Account
the  following  funds:

<PAGE>

       (a) EUR  14,744,354  in  the form of equity in respect of a subscription
for Share  Capital;  and

       (b) EUR  37,520,412  million  in  the  form  of  Shareholder  Loans,

and  have  made  Shareholder  Loans  in  the  amount  of  EUR  17,735,234.

7.     Evidence  that  the  Government Grants for the Project as contemplated in
the  Investment  and  Financing  Plan  in  an  amount of not less than EUR 274,7
million  are  available  of  which  EUR  109,2  will  be  given as direct grants
(GA-Zuschuss  (Investment  Incentives))  by  the State of Sachsen-Anhalt and the
Agent is satisfied that EUR 165,5 million as Investitionszulagen (Tax Grants) by
the  Federal  Republic  of  Germany  will  be  granted,  both  approved  by  EU
notification,  for  the  Project  in  favour  of  the  Borrower.

8.     A  copy  of  the EU-Decision the contents of which is satisfactory to the
Agent  and  its  legal  advisors.

9.     The  audited  Financial  Model  and  the  agreed  Base Case and the model
auditors'  report  thereon  as  well  as  the  Investment  and  Financing  Plan.

10.     Provision  of  the  Amortisation  Schedule.

11.     The  Project  Budget  in accordance with the Financial Model setting out
all  costs  over  the  Construction  Phase.

12.     Execution  by  the parties thereto of the letter setting out the Hedging
Strategy.

13.     Uncontested  (nicht  angefochten)  official approval of the subsidies (F
ordermittelzuwendungsbescheid) to  be  granted by the State of Sachsen-Anhalt to
the  city  of  Arneburg  with  respect  to  infrastructure  measures.

14.     Evidence  from  RWE-IN  satisfactory  to the Agent that such part of the
Owner's  Scope  in  relation to the EPC Contract required to have been completed
prior  to  first  drawdown  has  been  fulfilled.

15.     All  Authorisations  required for the Project and the performance of the
Borrower's  obligations under the Transaction Documents required as of the first
Drawdown  Date  as  contemplated by Clause 16.1.6 (Authorisations) have been
obtained.

16.     Written  confirmation  by the Borrower that the official approval of the
plan  (PlanfeststellungsbeschluB) has not been contested (nicht angefochten) and
all  Authorisations  required  for  the  Project  and  the  performance  of  the
Borrower's

<PAGE>

obligations  under  the  Transaction Documents required as of the first Drawdown
Date as contemplated by Clause 16.1.6 (Authorisations) have been obtained. The
Borrower will  further  present  copies  of  the  official  approval  of  the
plan (PlanfeststellungsbeschluB)  and  the  other  Authorisations  required
for the Project  and the performance of the Borrower's obligations under the
Transaction Documents  required  as  of  the  first  Drawdown Date as
contemplated by Clause 16.1.6 (Authorisations).

17.     Written  confirmation  from  the  Technical  Adviser and the Wood Supply
Adviser  and  an  auditor  acceptable  to  Agent  that the Development Costs are
reasonable.

18.     Delivery of final reports from the Technical Adviser and the Wood Supply
Adviser  and  the  Pulp  Market  Adviser  satisfactory  to  the  Agent.

19.     Delivery  of  plan  concepts  prepared  by  the  Borrower regarding wood
supply,  logistics  (and  sales).

20.     Presentation  of  wood supply Letters of Intent (LOI) covering, together
with  own  procured  volumes,  1.25x  the  required  wood  volume  of 3 Mio. M3.

21.     Report by the Insurance Adviser containing, inter alia, the confirmation
that  the  insurances  entered  into  are  satisfactory.

22.     Brokers'  letter(s)  of  undertaking,  insurance  cover notes and agreed
draft  policy  wordings  satisfactory  to  the  Insurance  Advisor.

23.     Presentation  of  clearance  letter  by the German Federal Cartel Office
(Bundeskartellamt) concerning a positive decision on the capital increase in the
Borrower.

24.     The  most  recent  audited  financial  statements  of  the  Borrower.

25.     The  most  recent  audited  accounts  of  each  of  the  Sponsors  and
Shareholders.

26.     Written  confirmation by Kvaerner plc that, vis-a-vis the Borrower, they
only  have one claim in the amount of EUR 478,687, by Thyssen Rheinstahl Technik
Projektgesellschaft  mbH  that  they  only  have  claims  in  the  amount of EUR
2,648,000  (compensation payment) and EUR 570,646 for ancilliary costs for which
Thyssen  Rheinstahl  Technik  GmbH  and its successor Thyssen Rheinstahl Technik
Projektgesellschaft  mbH  have provided funds to the Borrower in connection with
the  purchase  of  the  Site.

<PAGE>

27.     Written  confirmation  by RWE-IN that the profit loss transfer agreement
between  RWE  AG and RWE Solutions AG dated 27/29 June 2000 is in full force and
effect  at  Financial  Close.

28.     Evidence  that  all  real  estate  necessary for the construction of the
Project  has been acquired and is free of any right of third parties (save under
that  certain  site  lease  agreement  dated  16  May  2002 and made between the
Borrower and AIG and except for Permitted Encumbrances) which may interfere with
the  Project  as  contemplated  in  the  Financing  Documents.

29.     Delivery  of  the  confirmation  by  the  local  office  of  archeology
(Landesamt  fur Archaologie) declaring that the excavations on locations 1 to 4
as  set  out  in  Schedule  17  (Archeological  Sites)  have  been  finalised.
                  ------------

30.     All  Advisers  fees and amounts payable hereunder have been paid in full
or  will  be  paid  in  full  out  of  the  first  Advance.

31.     Receipt  by the Agent of evidence that the proceeds of the first Advance
will be used, inter alia, to repay indebtedness of the Borrower to Dresdner Bank
AG,  to  Kvaerner  plc  in the amount of EUR 478,687; Thyssen Rheinstahl Technik
Projektgesellschaft mbH in the amount of EUR 2,648,000; AIG in the amount of EUR
546,794,  RWE-IN  in  the amount of EUR 1,590,899 and Thyssen Rheinstahl Technik
Projektgesellschaft  mbH  in  the amount of EUR 570,646 for ancilliary costs for
which  AIG,  RWE-IN  and  Thyssen  Rheinstahl  Technik  Projektgesellschaft have
provided  to  the  Borrower in connection with the purchase of the Site; and for
payment  of  the  second  instalment  of the purchase price to AIG for the Site.

32.     The  Lenders  are  satisfied  in  all respects with the construction and
operating  arrangements  for  the  Project.

33.     Evidence  satisfactory  to the Agent that SP Holding (on a fully diluted
basis)  holds  at  least  63.58  %  of the voting rights in the Borrower and has
control  over  the  board  of directors of the Borrower and that SP Holding is a
wholly  owned  subsidiary  of  Mercer  International.

34.     A  legal opinion from Cleary, Gottlieb, Steen & Hamilton with respect to
the  obligations of Mercer International, SP Holding, AIG, FAHR and RWE-IN under
the  Transaction  Documents  to  which  it  is  a  party.

35.     A  legal  opinion  of  the  Borrower's legal counsel with respect to the
EU-Decision  having  been  validly  issued  together with a report analysing the
risks  of  an  appeal  from  this  decision.

<PAGE>

36.     A  legal  opinion  of  the  Agent's  German  legal counsel regarding the
transaction  in  form  and  substance  satisfactory  to  the  Agent.

<PAGE>

                                   SCHEDULE 3
                           GENERAL DRAWDOWN CONDITIONS
1.     The  Agent has received a duly completed irrevocable Drawdown Request not
later  than  11:00 a.m. on the fifth (5th) Business Day before the Drawdown Date
proposed  in  the  Drawdown  Request.

2.     The  representations  and  warranties  continue  to  be true and correct.

3.     No  Event  of  Default  or  Potential  Event  of Default has occurred and
remains  uncured  or  unwaived  or  would occur as a result of the making of the
Advance  to  be  drawn  down.

4.     Neither of the events mentioned in Clauses 5.1. and 5.1.2 has  occurred.

5.     All  terms  and  conditions  of the State Guarantee are met, no event has
occurred,  as  a  result  of which C&L refuses to allow disbursements under this
Agreement  and  the  State Guarantee continues to be valid and in full force and
effect.

6.     Certificate  by  the  Insurance  Adviser  stating  that  the  Project  is
sufficiently  insured  in  accordance  with  the  construction  progress.  Such
certificate  is  not  needed  if  the respective insurance company is obliged to
inform  the  Lenders  promptly  of  a  termination  of  any  insurance.

7.     The  Borrower  has:

       (a) paid all due and unpaid fees and expenses due under any of the
           Financing Documents;  or

       (b) instructed  the  Lenders  to deduct the amount of such fees and
           expenses from the amount of the Advance to be disbursed to the
           Borrower and the amount of the  Advance  is  sufficient  to satisfy
           all such outstanding fees and expenses.

<PAGE>

                                   SCHEDULE 4
                              CONDITIONS SUBSEQUENT

(A)     Wood  and  Logistic  related  Issues

6 months after             Employment of a wood supply
first drawdown             manager satisfactory to the Agent

10 months after            Management, in particular a purchasing director
first drawdown             and a harvesting manager, in place satisfactory

10 months after            The wood supply company and the logistic company
first drawdown             have been incorporated

10 months after            Final company agreement of the wood supply company
first drawdown             and the logistic company and final agreements to
                           be entered into between the Borrower and the
                           Permitted Subsidiaries in place and heads of terms
                           Regarding the agreements to be entered into the
                           Borrower and the Permitted Subsidiaries in place

5 months before            Presentation of final agreements, including prices
expected Start-up          and volume, for 45 % of the required first year
                           volume of about 2.2 mio.m3 of round wood and chips
                           volumes with chips making up at least 20% of the
                           contracted volume

3 months before            All staff required for the Start-up with regard to
expected Start-up          the wood supply company and the logistic company
                           has been contracted

2 months before            Wood inventory of 230.000 m3  at the mill or road
expected Start-up          side

2 months before            Presentation of final agreements, including prices
expected Start-up          and volume, for 55 % in aggregate of the required
                           first year volume of about 2.2 mio. m3 of round
                           wood chips volumes with chips making up at least
                           20% of  the contracted volume

<PAGE>

(B)     Pulp  production  related  Issues

4 months after             Employment of a Pulp Mill manager satisfactory
first drawdown             to the Agent

4 months after             Technical plans regarding railroad and natural
first drawdown             gas connection in place

10 months after            Presentation of final personnel recruitment and
first drawdown             training plan

11 months after            Employment of senior production, sales and
first drawdown             maintenance management

3 months before            Presentation of a detailed production start-up and
expected Start-up          operation plan showing that the whole corp

<PAGE>

                                   SCHEDULE 5
                             LENDERS AND COMMITMENTS

<TABLE>
<CAPTION>

Lender                             Commitment  in  Euro
------                             --------------------
<S>                                <C>
Bayerische  Hypo-  und             827,950,000
Vereinsbank  AG
Am  Tucherpark  1  (FPA1)
D  -  80538  Munchen

attn.:  Marc  Thumecke

Tel:     +49  -89-378  21654
Fax:     +49  -89  378  41518

--------------------------------------------------------
Total  Commitments                 827,950,000

</TABLE>

<PAGE>

                                   SCHEDULE 6
                             MANDATORY COST FORMULAE

1.     The  Mandatory  Cost  is  an  addition to the interest rate to compensate
Lenders  for  the  cost  of  compliance with (a) the requirements of the Bank of
England  and/or  the Financial Services Authority (or, in either case, any other
authority  which replaces all or any of their functions) or (b) the requirements
of  the  European  Central  Bank.

2.     On  the  first  day  of  each  Interest  Period  (or  as soon as possible
thereafter)  the  Agent  shall  calculate,  as  a  percentage  rate, a rate (the
"Additional  Cost  Rate") for each Lender, in accordance with the paragraphs set
out  below.  The  Mandatory  Cost  will be calculated by the Agent as a weighted
average  of  the  Lenders'  Additional Cost Rates (weighted in proportion to the
percentage  participation  of  each  Lender in the relevant Advance) and will be
expressed  as  a  percentage  rate  per  annum.

3.     The Additional Cost Rate for any Lender lending from a Facility Office in
a  Participating  Member State will be the percentage notified by that Lender to
the Agent. This percentage will be certified by that Lender in its notice to the
Agent  to be its reasonable determination of the cost (expressed as a percentage
of  that  Lender's participation in all Advances made from that Facility Office)
of  complying  in  respect  of  Advances  made  from  that  Facility  Office.

4.     The Additional Cost Rate for any Lender lending from a Facility Office in
the  United  Kingdom  will  be  calculated  by  the Agent in accordance with the
formula  set  out  below  (expressed  as  a  percentage  rate  per  annum):

                         A x 0.01
                         --------  % per annum.
                           300

Where  A  is the rate of charge payable by that Lender to the Financial Services
Authority  pursuant  to the Fees Rules (calculated for this purpose by the Agent
as  being  the  average of the fee tariffs specified in the Fees Rules under the
activity  group  A.1 Deposit acceptors, ignoring any minimum fee or zero related
fee required pursuant to the Fees Rules) and expressed in pounds per E 1,000,000
of  the  Tariff  Base  of  that  Lender.

5.     For  the  purposes  of  this  Schedule:

<PAGE>

       (a) "FEE  RULES"  means  the  Banking Supervision (Fees) Regulations 2000
or such other law as may be in force from time to time in respect of the payment
of fees  for  banking  supervision;

       (b) "PARTICIPATING  MEMBER  STATE"  means  any  member state of the
European  Communities that adopts or has adopted the euro as its lawful currency
in  accordance  with  legislation  of  the  European  Union relating to European
Monetary  Union;

       (c) "SPECIAL  DEPOSITS" has the meanings given to it from time to time
under  or pursuant to the Bank of England Act 1998 or (as may be appropriate) by
the  Bank  of  England;

       (d) "TARIFF  BASE" has the meaning given to it in, and will be calculated
in accordance  with,  the  Fees  Rules;  and

       (e) the  resulting  figure  will  be  rounded  to  four  decimal  places.

6.     The Agent may from time to time, after consultation with the Borrower and
the  Lenders,  determine  and  notify  to  all  parties hereto any amendments or
variations  which  are  required  to be made to this Schedule in order to comply
with any change in law, regulation or any requirements from time to time imposed
by  the  Bank  of  England, the Financial Services Authority and/or the European
Central  Bank (or, in any case, any other authority which replaces all or any of
their  functions)  and  any such determination shall, in the absence of manifest
error,  be  conclusive  and  binding  on  all  the  parties  hereto.

7.     Each  Lender  shall  supply any information required by the Agent for the
purpose  of  calculating  its  Additional  Cost Rate. In particular, but without
limitation, each Lender shall supply the following information in writing  on or
prior  to  the  date  on  which  it  becomes  a  Lender:

       (a) its  jurisdiction  of incorporation and the jurisdiction of its
Facility Office;  and

       (b) any  other  information  that  the Agent may reasonably require for
such purpose.

Each  Lender  shall  promptly  notify  the Agent in writing of any change to the
information  provided  by  it  pursuant  to  this  paragraph.

8.     The  percentages  or  rates of charge of each Lender for the purpose of A
above  shall be determined b the Agent based upon the information supplied to it

<PAGE>

pursuant  to  paragraph  7  above  and  on  the assumption that, unless a Lender
notifies  the  Agent  to  the contrary, each Lender's obligations in relation to
cash ratio deposits, Special Deposits and the Fee Rules are the same as those of
a  typical bank from its jurisdiction of incorporation with a Facility Office in
the  same  jurisdiction  as  its  Facility  Office.

9.     The  Agent  shall  have  no liability to any person if such determination
results  in  an  Additional Cost Rate which over or under compensates any Lender
and  shall  be  entitled  to  assume that the information provided by any Lender
pursuant  to  paragraphs  3  and  7  above  is true and correct in all respects.

10.     The  Agent  shall distribute the additional amounts received as a result
of  the  Mandatory  Cost to the Lenders on the basis of the Additional Cost Rate
for  each  Lender  based  on the information provided by each Lender pursuant to
paragraphs  3  and  7  above.

11.     Any  determination by the Agent pursuant to this Schedule in relation to
the  formula,  the Mandatory Cost, an Additional Cost Rate or any amount payable
to  a  Lender shall, in the absence of manifest error, be conclusive and binding
on  all  of  the  parties  to  this  Agreement.

<PAGE>

                                   SCHEDULE 7
                        FORM OF ACCOUNT PLEDGE AGREEMENT

<PAGE>

                             ZELLSTOFF STENDAL GMBH
                             AS BORROWER AND PLEDGOR

                                       AND

               BAYERISCHE HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT
                     AS ORIGINAL PLEDGEE AND SECURITY AGENT

                               ACCOUNT PLEDGE AGREEMENT

<PAGE>

                                    CONTENTS

CLAUSE                                                       PAGE

1.     Definitions                                            123

2.     Pledge                                                 129

3.     Secured Obligations                                    130

4.     List of Bank Accounts                                  132

5.     Enforcement of the Pledges                             132

6.     Right of Inspection                                    134

7.     Representations ad Warranties                          135

8.     Pledgor's Undertakings                                 135

9.     Notices                                                136

10.    Legal Succession                                       137

11.    Amendments                                             137

12.    Release (Pfandfreigabe)                                137

13.    Partial Invalidity                                     138

14.    Miscellaneous                                          138

15.    Applicable Law, Jurisdiction                           139

Schedule 1 "List Of Accounts"                                 140

Schedule 2 "Security Agreements"                              141

Schedule 3 "Notice of Pledge"                                 142

<PAGE>

THIS  ACCOUNT  PLEDGE  AGREEMENT  is  made  on  the  [Date]  (the  "Agreement")
BETWEEN:

(1)     ZELLSTOFF  STENDAL  GMBH,  a  limited  liability  company  incorporated,
organised  and  validly  existing  under  the  laws  of  the Federal Republic of
Germany,  having  its  office  at  Niedergorner Damm 1, 39596 Arneburg, Federal
Republic  of  Germany and registered in the commercial register (Amtsgericht) of
Stendal,  number  HRB  2446  (the  "Borrower"  and  "Pledgor");

(2)     BAYERISCHE  HYPO-  UND VEREINSBANK AG, a stock corporation incorporated,
organised  and  validly  existing  under  the  laws  of  the Federal Republic of
Germany,  having its office at Am Tucherpark 16, 80538 Munchen, Federal Republic
of  Germany  and  registered in the commercial register (Amtsgericht) of Munich,
number  HRB  42148  (the  "Original  Pledgee"  and  "Security  Agent").

WHEREAS:

(A)     The Lenders and the Pledgor have concluded a facility agreement dated
[*]  August 2002 in the amount of EUR 827,950,000 for the purpose of the design,
development, construction and operation of a pulp mill located in Arneburg, near
Stendal  in  Sachsen-Anhalt  (the  "Facility  Agreement").

(B)     Pursuant  to the Facility Agreement the Pledgor and its shareholders are
obliged  to  grant  certain security for the purpose of securing the obligations
under  the  Financing  Documents  in  accordance  with  the terms and conditions
therein.

NOW,  IT  IS  HEREBY  AGREED  as  follows:

1.     DEFINITIONS

1.1     Unless otherwise stated in this Agreement or required by the context the
definitions and principles of interpretation in the Facility Agreement are to be
used  in  this  Agreement.

1.2     Definitions:
"Accounts":  The  bank  accounts listed in Schedule 1 hereto and "Account" means
any  of  them.

<PAGE>

"Account  Bank":  A  bank  administering  any  of  the  Accounts.

"Advance":  A  principal  sum drawn by the Borrower under the Facility Agreement
or,  depending on the context, the principal sum outstanding as a result of such
drawdown.

"Agent":  Bayerische  Hypo-  und  Vereinsbank  AG  or  its  successor.

"AIG":  AIG  Altmark  Industrie AG, a company incorporated under the laws of the
Federal  Republic  of  Germany.

"Arranger":  Bayerische  Hypo-  und  Vereinsbank  AG  and  its  successors.

"Derivative  Transaction":  Any  swap  agreement,  option  agreement,  futures
contract,  forward  contract  or  similar  arrangement  with respect to interest
rates,  currencies  or  commodity  prices.

"EPC Contract": The engineering, procurement and construction agreement dated 26
August  2002  between  REW-IN  and  the  Borrower.

"EPC-Contractor":  RWE-IN.

"EU-Decision":  The  decision by the EU-Commission dated 19 June 2002 in respect
of  the  State  Guarantee  and  the  Government  Grants.

"Event of Default": Any of the events mentioned in Clause 23 (Events of Default)
of  the  Facility  Agreement.

"Facility": The facility comprising Tranche A, Tranche B, Tranche C, Tranche D1,
Tranche  D2  and  Tranche E pursuant to Clause 2.1 (Granting of the Facility) of
the  Facility  Agreement.

"Facility  Office":  The  office or offices notified by a Lender to the Agent in
writing  on  or before the date it becomes a Lender (or, following that date, by
not  less  than  (5) five days' written notice) as the office or offices through
which  it  will  perform  its  obligations  under  the  Facility  Agreement.

"FAHR":  FAHR  Beteiligungen  AG.

"Fee  Letter":  The  fee  letter  by  Bayerische  Hypo-  und  Vereinsbank AG and
addressed  to  the  Borrower  dated  on  or  about  the  date  hereof.

<PAGE>

"Financing  Documents":  The Facility Agreement, any agreement entered into with
any  Permitted Subsidiary in connection with the financing of the wood supply or
logistics  aspects  of  the  Project,  the  Hedging  Agreements,  the  Security
Agreements,  the  Shareholders'  Undertaking  Agreement,  the  Step-In-Rights
Agreement  between  SP  Holding, RWE-In, Fahr and the agent on or about the date
hereof,  the  RWE  Solutions  AG  Guarantee, any agreement regarding Shareholder
Loans  and  the  corresponding  subordination  declarations, the Stand-By Equity
Security,  the  Fee  Letter,  any  waiver  requests,  waivers  and other binding
notifications,  the  Direct Agreement, the Parent Company Guarantee, the advance
payment,  performance  and  defects  liability guarantee issued in favour of the
Borrower  by  a  first  class  bank  in  respect  of  the performance of the EPC
Contractor under the EPC-Contract, the State Guarantee and any other document in
relation  to  the  financing  of  the  Project.

"Future Pledgees": any entity which may become a pledgee hereunder by way of (i)
transfer of the Pledges by operation of law following the transfer or assignment
(including  by way of novation or assumption (Vertragsubernahme)) of any part of
the  Secured  Obligations  (as defined hereinafter) from the Original Pledgee or
any  Future  Pledgee  to  such  future  pledgee  and/or  (ii)  accession to this
Agreement  pursuant  to  Clause 2.6 hereof  as  pledgee.

"Government  Grants":  The  grants  which  will  be  given  as  direct  grants
(GA-Zuschuss  (investment  incentives))  by  the  State of Sachsen-Anhalt and as
Investitionszulagen  (tax  grants)  by  the Federal Republic of Germany, both as
approved  by  the  EU-Decision,  for  the  Project  in  favour  of the Borrower.

"Hedging  Agreements":  The  Hedging  Agreement dated 26 August 2002 between the
Hedging  Counterparts  and  the Borrower in relation to any swap agreements, cap
agreements, collar agreements, future agreements, forward agreements and similar
agreements  with  respect  to  interest rates, currencies or commodity prices as
well  as  any  single  transactions  to  be  concluded by the Hedging Agreement.

"Hedging  Counterparty":  Bayerische  Hypo-  und  Vereinsbank  AG.

"Hedging  Strategy":  The  hedging  strategy  in  relation to the Facility to be
agreed in writing between the Borrower and the Arranger, as amended from time to
time, for the hedging of the interest, currency and commodity price risks of the
Pledgor.

<PAGE>

"Lenders":  The  lenders  (including  the Original Lender), acting through their
respective Facility Offices, and their successors, transferees and assignees, as
permitted  under  the  Facility  Agreement.

"Mercer  International":  Mercer  International  Inc.,  a  Massachussetts  trust
incorporated  und the laws of the state of Washington, United States of America.

"Original  Lender":  Bayerische  Hypo-  und  Vereinsbank  AG.

"Parent  Company  Guarantee":  The parent company guarantee to be granted by RWE
Solutions  AG in favour of the Borrower in respect of RWE-IN's obligations under
the  EPC  Contract.

"Permitted  Subsidiaries":  The  two  support holding companies, the wood supply
company  and  the  logistic  company.

"Pledgees":  the  Original  Pledgee  and  the  Future  Pledgees.

"Project":  The  design, development, financing, construction and operation of a
552,000  tonnes per annum bleached softwood kraft pulp mill located in Arneburg,
near  Stendal  in  Sachsen-Anhalt,  Federal  Republic  of  Germany.

"RWE Solutions AG Guarantee": The guarantee given by RWE Solutions AG in respect
of  RWE-IN's  obligations  under  the  Shareholders'  Undertaking  Agreement.

"RWE-IN":  RWE Industrie-L sungen GmbH, a limited liability company incorporated
under  the  laws  of  the  Federal  Republic  of  Germany.

"Secured  Creditors":  The  Lenders  and  the  Hedging  Counterparty.

"Security  Agreements":  The  security agreements listed in Schedule 2 (Security
                                                            ----------
Agreements),  the Security Pooling Agreement and any other agreement pursuant to
which  the  Borrower,  the  Shareholders,  the Sponsors or any third party grant
security  to  the  Security  Agent  and/or  the  Lenders  (other  than the State
Guarantee),  including  security agreements granting security in favour of or on
behalf  of  the  subsidiaries.

"Security  Pooling  Agreement": The security pooling agreement dated on or about
the  date  hereof  between  the  Security  Agent,  the  Lenders,  the  Hedging
Counterparty,  SP  Holding,  RWE-IN,  FAHR  and  the  Borrower.

"Share  Capital":  The  share  capital of the Borrower as increased from time to
time  in  accordance  with  the  Facility  Agreement.

<PAGE>

"Share":  An  ordinary  fully  paid  up  share  in  the  Share  Capital.

"Shareholder  Loans":  Loans  by  the  Shareholders  to  the  Borrower  made and
subordinated  in  accordance  with the terms and conditions of the Shareholders'
Undertaking  Agreement.

"Shareholders'  Undertaking  Agreement":  The agreement of even date between the
Sponsors,  the  Shareholders,  the  Borrower  and  the  Agent.

"Shareholders":  As  at the date of this Agreement, SP Holding, RWE-IN and FAHR,
and  thereafter  includes  any  person  to  whom  Shares  may  be  transferred.

<PAGE>

"Shareholder's  Account":  An account in the name of the Borrower over which the
Lenders  have  no security and to which the Borrower is allowed to make payments
in  accordance  with  Clauses  9.4.3  (a)  (Priority  of Payments) and 9.4.3 (c)
(Restricted  Application)  of  the  Facility  Agreement.

"Sponsors":  Mercer  International,  RWE-IN  and AIG and any of their respective
successors.

"Stand-By  Equity  Security":

(e)  an  unconditional  letter  of  credit;  or
(f)  an  unconditional  guarantee  on  first  demand,

in  each  case  in  form and substance satisfactory to the Agent and issued by a
bank  whose  long  term  unsecured  credit  rating is at least A from Standard &
Poor's  Rating  Services  and  A  2  from  Moody's  Investors  Services Inc.; or

an  interest  bearing  cash  deposit in the amount required by the Shareholders'
Undertaking Agreement to be held by the Agent or at HVB Banque Luxembourg
Societe Anonyme, such account to be pledged in favour of the Lenders by entering
into an account  pledge  agreement substantially in the form set out in
Schedule 7 (Form of  Account  Pledge  Agreement) of the Facility Agreement
----------
in case the account is held  by the Agent and an account pledge agreement
substantially in the form set out  in Schedule 8 (Form of Luxembourg Account
                                      ----------
Pledge Agreement) of the Facility  Agreement  in case the account is held by
HVB Banque Luxembourg Societe  Anonyme.

"State  Guarantee":  The  guarantees (Ausfallburgschaften) issued by the Federal
Republic of Germany (for 48 % of the aggregate amount of Advances under Tranches
A  and  B)  and the State of Sachsen-Anhalt (for 32 % of the aggregate amount of
Advances under Tranches A and B) issued pursuant to the  EU-Decision in the form
attached  to  the  Facility  Agreement  as  Schedule 11 (State Guarantee) of the
                                            -----------
Facility  Agreement  in  favour  of  the  Lenders with respect to this Agreement
including  the  "Allgemeinen  Bestimmungen  fur Burgschaftsubernahmen durch die
Bundesrepublik  Deutschland  (Bund) und parallel burgende Bundeslander" (General
Conditions  for the issuing of guarantees by the Federal Republic of Germany and
Lander).

<PAGE>

2.      PLEDGE
2.1     The  Pledgor  hereby  pledges  to  the  Pledgees

        (a) all  present,  conditional  and  future  claims  including  the
account  balances (Salden) of current accounts (Kontokorrentkonten), as the case
may  be,  and  all  respective  rights  of  the Pledgor arising under all of its
accounts,  including  the bank accounts listed in Schedule 1 hereto and all such
accounts  which  will  be  mentioned  in  the relevant Account Lists pursuant to
Clause 4 ;

        (b) all securities and other instruments including all secondary rights,
in  particular  the  rights from interest and profit share coupons, which are or
will in the future be credited into the custody accounts mentioned in Schedule 1
hereto;

(each  right  of  the Pledgees created hereunder is hereinafter referred to as a
"Pledge").

2.2     Excluded  from  the  Pledge  is  the  Shareholder's  Account.

2.3     The  Original  Pledgee  hereby  accepts  its  Pledges  for  itself.

2.4     For  the  purpose  of  the  Pledges  the  Pledgor  hereby assigns to the
Pledgees its claims for possession regarding the items listed in Clause 2.1 (b)
above against  the  account holding bank. If order papers (Orderpapiere) are
deposited or  will  be  deposited  in  the deposit of security mentioned under
Clause 2.1 (b) the Pledgor  of  such  order papers will be provided with a
blank endorsement, if it has  not  been  provided  with  such  blank
endorsement  already.

2.5     The Pledgor undertakes to notify the Account Bank and any other relevant
third  party  of  the  Pledges  in  substantially the form set out in Schedule 4
attached to this Agreement without undue delay requesting to acknowledge receipt
of  the  notification  of  and  acceptance  of the terms thereof to the Security
Agent.

2.6
        (a) Upon  transfer  or  assignment (including by way of assumption
(Vertragsubernahme)) of all or part of the Secured Obligations by a Pledgee the
Pledges  created  hereunder shall transfer by operation of law pursuant to para.
401  BGB.  In the event that for any reason such transfer by operation of law is
not  totally effective then the Security Agent shall, and hereby does accept, as
representative  without power of attorney (Vertreter ohne Vertretungsmacht), the
respective  Pledges  for  and  on

<PAGE>

behalf  of  each  Future  Pledgee. Each Future Pledgee ratifies and confirms the
declarations  and  acts so made by the Security Agent on its behalf by accepting
the transfer or assignment (including by way of novation or assumption (Vertrags
ubernahme)) of  the  Secured  Obligations (or part of them) from a Pledgee. Upon
such  ratification  (Genehmigung)  such  Future  Pledgee becomes a party to this
Agreement, it being understood that any future or conditional claim (zukunftiger
oder  bedingter  Anspruch)  of  such  Future  Pledgee  arising under the Secured
Obligations  shall  be  secured  by  the  Pledges  constituted  hereunder.

        (b) All  parties  hereby  confirm  that  the validity of the Pledges
granted  hereunder  shall  not  be  affected  by  the  Security  Agent acting as
representative  without  power  of  attorney  for  each  Future  Pledgee.

        (c) The  Pledgor  herewith  authorises  the  Security  Agent  to  notify
the  identity  of  such  Future  Pledgee and the new pledges created pursuant to
Clause 2.6 (a) above to the Pledgor and the Account Bank. Upon request of the
Security Agent,  the  Pledgor  shall without undue delay give such notice and
provide the Security  Agent  with  a  copy  thereof.

2.7     The validity and effect of each of the Pledges shall be independent from
the  validity and the effect of the other Pledges created hereunder. The Pledges
to  each  of  the Pledgees shall be separate and individual pledges ranking pari
passu  with  the  other  Pledges  created  hereunder.

2.8     Each  of the Pledges is in addition, and without prejudice, to any other
security  a  Pledgee  may  now  or  hereafter  hold  in  respect  of the Secured
Obligations.

2.9     The  Pledgor  is  not  entitled  to  demand the delivery of interest and
profit share coupons with regard to securities which are pledged hereunder other
than  provided  in  Clause  10.5.1  of  the  Facility  Agreement.

3.     SECURED  OBLIGATIONS
The  Pledges  hereunder  shall secure all claims (present and future, actual and
contingent)  of  the  Secured Creditors which are or become owing by the Pledgor
pursuant  to  or  in  connection  with

     (i)     the  Facility  Agreement,

     (ii)    the  Security  Agreements and all of the other Financing
  Documents; and

<PAGE>

     (iii)   the  Hedging  Agreements  between  the  Hedging  Counterparty
             and the Pledgor;

<PAGE>

in  their  respective  valid,  amended,  supplemented, novated or newly arranged
forms.

(The  claims mentioned  in  this Clause 3 will be hereinafter referred to as the
"Secured  Obligations").

4.      LIST  OF  BANK  ACCOUNTS

4.1     The Pledgor shall supply at its own expense to the Security Agent a list
of  the  pledged  accounts  referred to in this Agreement within a period of ten
(10)  days  from  the  end  of  each  calendar  quarter. The first list shall be
supplied  on  the  [Date]  (the  "Account  List").

4.2     The  Account  List  shall  contain  the  account  number, the accounting
balances,  the  bank  code  number  and the addresses of the banks holding these
accounts.

4.3     The  parties  to  this  Agreement  agree  that  all claims from the bank
accounts  that are specified in the Account List pursuant to Clause 4.1 are
pledged to  the  Pledgees  having  equal  priority.

4.4     The  Pledgees  are  entitled  to  request further Account Lists from the
Pledgor  at its expense, such Account Lists to be supplied by the Pledgor to the
Security  Agent.

5.     ENFORCEMENT  OF  THE  PLEDGES

5.1     Until  the  Security  Agent gives notice to the contrary to the Pledgor,
the  Pledgor shall be authorised to withdraw money from the pledged accounts and
to  transfer  monies  within the ordinary course of its business and pursuant to
Clause  9.2 of the Facility Agreement. The same does apply mutatis mutandis with
regard  to  transactions  concerning  the  pledged  custody  accounts.

5.2     If  the  requirements  set  forth  in Section 1204 et seq. of the German
Civil  Code  (Burgerliches Gesetzbuch) with regard to the enforcement of any of
the  Pledges  are  met  (Pfandreife),  in  particular,  if  any  of  the Secured
Obligations  have  become due and payable and, in addition, an Enforcement Event
pursuant  to  the  Facility Agreement has occurred, then in order to enforce the
Pledges,  the  Pledgees  (acting  through  the  Security  Agent) may at any time
hereafter  avail  themselves  of  all rights and remedies to enforce the pledges
that  a  pledgee  has  upon  default  of  a  pledgor by rights (the "Enforcement
Event").

5.3     Notwithstanding  Section  1277  of  the German Civil Code, the Pledgees,
acting  through the Security Agent are entitled to exercise their rights without
obtaining  enforceable  judgment  or  other  instrument (vollstreckbarer Titel).

<PAGE>

5.4     The  Pledgor  hereby  expressly agrees that two (2) weeks' prior written
notice  to the Pledgor of the place and time of any such public auction shall be
sufficient.  The  public  auction  may  take  place  at any place in the Federal
Republic  of  Germany designated by the Security Agent, acting for and on behalf
of  the  Pledgees.

5.5     The  Pledgor  hereby  expressly  waives  all defences of voidability and
set-off  pursuant to sections 770 and 1211 of the German Civil Code (Einrede der
Anfechtbarkeit  und  der  Aufrechenbarkeit).

5.6     Provided  that the other  requirements in  Clause 5.2 are met and to the
extent  permissible  under  the  applicable  law the Pledgees acting through the
Security  Agent  shall  be  entitled  to

        (a) collect the monies standing to the credit of the pledged accounts
and to apply  them  to  the  satisfaction  of  the  Secured  Obligations;

        (b) realise  the  securities  booked  on  the  Accounts;

        (c) request  that all documents relating to the Pledge be handed over to
the Security  Agent  and  the Pledgor hereby agrees to comply promptly with any
such request;  and

        (d) take any other actions not mentioned in Section 5.5 (a) to 5.5 (c)
above  which  are  necessary  or  appropriate  for  the purpose of realising the
security granted by the Pledgor in accordance with this Agreement, to the extent
that  such  actions  are  permissible  under  the  applicable  law.

5.7     The  Pledgees  acting through the Security Agent may realise the Pledges
only  to  the  extent  necessary to satisfy any outstanding Secured Obligations.

5.8     Among  several claims the Pledgees acting through the Security Agent may
select  at  their  own  discretion  which claims shall be realised. The Pledgees
shall,  however,  use  their best efforts to give priority to actions which will
not  endanger the ongoing concern of the Pledgor's business. Other actions shall
only  be  taken  if  necessary  to  satisfy  in  full  the  Secured Obligations.

5.9     The  proceeds  resulting  from  the  realisation of the Pledges shall be
applied  pursuant  to  Clause  7.7  of  the  Security  Pooling  Agreement.

<PAGE>

6.      RIGHT  OF  INSPECTION

6.1     The  Security  Agent  is entitled during usual business-hours and with a
reasonable  advance notice to demand and to inspect all information, records and
instruments  which  are  required or useful in order to examine or to assert the
value  of  the Pledges created under this Agreement. If the Pledgor employs data
processing  systems  it  will  at  its own cost and on reasonable request of the
Security  Agent  produce  print-outs of the information, records and instruments
which are required or useful for the aforementioned purposes or will supply data
carriers  to  the  Security  Agent  on  which  such  information,  records  and
instruments  are  recorded.

6.2     In  case  any  third  party  other  than  the  Pledgor  has  access  to
information,  records and instruments described in Section 6 the Pledgor already
hereby  irrevocably  authorises the Security Agent and its successors acting for
and  on  behalf  of  the  Pledgees  to  obtain  such  information,  records  and
instruments  in  the  name  of the Pledgor. The Security Agent shall immediately
inform  the Pledgor of any such acts under the conditions set out in Clause 6.2.

6.3     The  Pledgor  shall  on  request  update  all  information,  records and
instruments  relating to the claims and securities pledged under this Agreement.

6.4     A  consultant  or  adviser authorised by the Security Agent may exercise
the  Security  Agent's  rights  under  this  Section  6.

7.      REPRESENTATIONS  AND  WARRANTIES

7.1     The  Pledgor  represents  and  warrants  to  the  Pledgees  that:

        (a) it  alone  holds  title  to  and  may  freely  dispose  of the
Accounts;

        (b) the Accounts have not been pledged to third parties or encumbered
in any other  way  in  favour  of  third  parties;

        (c) no  counterclaims as to which a right to set-off or a right of
retention  could  be  exercised  exist  to  date and, to the extent that this is
legally  practicable  and from a reasonable business perspective appropriate and
within  the  ordinary course of business, such counterclaims will not be allowed
to  come  into  existence  in  the  future;  and

        (d) it does not hold any bank accounts other than the accounts allowed
under the  Facility  Agreement.

<PAGE>

7.2     If  any  of the warranties of the Pledgor under Section 7.1 should be
incorrect,  wholly  or  in part, the Pledgor will place the Pledgees in the same
position  as  if  the respective warranty given by the Pledgor had been correct.
The aforementioned claim of the Pledgees does not require negligence on the part
of  the  Pledgor.

8.      PLEDGOR'S  UNDERTAKINGS

The  Pledgor  undertakes:

        (a) unless  permitted  in  this Agreement and the Facility Agreement,
not to dispose of any assets booked on the accounts pledged hereunder other than
in  the  ordinary  course  of  its  business and in accordance with the Facility
Agreement as well as to refrain from encumbrances or any acts or omissions which
might  result  in  a material decline of the aggregate value or in a loss of the
assets  and  not  to  enter into obligations to refrain from disposals of assets
(Verfugungsverbote);

        (b) to  identify  the  Pledge  immediately  in  its books and records
and  to refrain from any acts or omissions which could prevent third parties who
may  have  a  legitimate  interest  in  obtaining  knowledge  of the Pledge from
obtaining  knowledge  thereof;

        (c) to  open  a new account only with prior written consent of the
Pledgees,  which consent shall not be unreasonably withheld. In such a case, the
Pledgor  shall  grant  a  corresponding  account pledge to the Pledgees over the
newly  established  account;

        (d) to  inform  the  Security  Agent  as  soon  as  possible in the case
the  Pledgees'  rights in respect of the Pledge are prejudiced or jeopardised by
attachment  or  are prejudiced or jeopardised by other material actions of third
parties.  Such  information shall be accompanied, in the case of any attachment,
by  a copy of the order for attachment as well as all documents required for the
filing of an objection against the attachment, and, in case of any other actions
by  third  parties,  by  copies  evidencing which actions have or will be taken,
respectively,  as  well as all documents required for the filing of an objection
against  such actions. The Pledgor shall further be obliged to inform as soon as
possible  the  attaching  creditors or other third parties asserting rights with
respect  to the transferred rights and claims in writing of the Pledgees' rights
in  respect  of  the  assets. All reasonable and adequately documented costs and
expenses  for  countermeasures  of  the  Pledgees  shall  be  borne  by  the

<PAGE>

Pledgor. This shall  also  apply  to  the  institution  of  legal  action  which
the Pledgees reasonably  consider  necessary;

        (e) to inform the Security Agent promptly of any subsequent material
changes  in  the  value of the accounts pledged hereunder resulting from any set
off  or  other  reasons,  after becoming aware of such changes other than in the
ordinary  course  of  business;  and

        (f) to notify the Security Agent promptly of any event or circumstance
which  might  be  expected  to have a material adverse effect on the validity or
enforceability  of  this  Agreement.

9.     NOTICES

9.1     Communications  in  Writing

Each communication to be made by the parties hereto under this Agreement will be
made  in  writing  and,  unless otherwise stated, will be made by letter, fax or
e-mail.  Any  communication  to be made by the parties hereto in connection with
the  enforcement  of the security created hereunder shall, however, only be made
by  letter.  Each  communication  will  be  in  German  or  English.

9.2     Addresses

Any  communication,  information  or  document  to  be  made or delivered by the
parties  hereto  pursuant  to  this Agreement will (unless the recipient of such
communication  or  document  has,  by  fifteen  (15) days' written notice to the
Security Agent, specified another address or fax number) be made or delivered to
the  address  set  out  below:

(a)     to  the  Pledgor:

        Zellstoff  Stendal  GmbH
        Niedergorner  Damm  1
        D  -  39596  Arneburg

        attn.:     Wolfram  Ridder  or  Harald  Gatzke

        Tel.:     +49  -  (0)  39321  -  50321
        Fax.:     +49  -  (0)  39321  -  50422

(b)

<PAGE>

         to  the  Security  Agent:

         Bayerische  Hypo-  und  Vereinsbank  AG
         Am  Tucherpark  1  (FPA  13)
         D  -  80538  Munchen

         attn.:  FPA  Agency

         Tel:     +49  -  (0)89-378  -  29541
         Fax:     +49  -  (0)89-378  -  41517

10.      LEGAL  SUCCESSION

10.1     This  Agreement  shall  create  rights  and  obligations of the parties
hereto  and  of  their  respective  permitted  successors.

10.2     The  Security  Agent may transfer its rights and obligations under this
Agreement  to third parties at any time after having resigned from its office as
Security  Agent.  However,  all rights and obligations shall only be transferred
collectively to the same third party. The Borrower hereby irrevocably grants its
consent that the relevant third party shall become a party hereto in lieu and as
successor  of  the  Security  Agent  upon  the  transfer becoming effective. The
Borrower  is  obliged  not  to  transfer  its  rights and obligations under this
Agreement  without  the  prior  written  consent  of  the  Security  Agent.

10.3     This  Agreement  shall continue to apply in the case of a change of the
Pledgor's  shareholders  or legal form and in the case of a universal succession
(Gesamtrechtsnachfolge)  on  the  part  of  the  Pledgor  or the Security Agent.

11.     AMENDMENTS

Changes to this Agreement and any waiver of rights under this Agreement shall be
made  in  writing.  The  parties  may  waive  this  form  requirement by written
agreement  only.

12.     RELEASE  (PFANDFREIGABE)

Upon  complete  and  irrevocable  satisfaction  of  the Secured Obligations, the
Pledgees will as soon as reasonably practical declare the release of the Pledges
(Pfandfreigabe)  to  the  Pledgor  as  a  matter of record. For the avoidance of
doubt,  the  parties  are  aware that upon full and complete satisfaction of the
Secured  Obligations  the Pledges, due to their accessory nature (Akzessorietat)
cease  to  exist  by  operation  of  German  mandatory  law.

<PAGE>

PARTIAL  INVALIDITY,  WAIVER

13.1     Should  any  provision  of  this Agreement be invalid or unenforceable,
wholly  or  in  part,  or  should  any  provision  later  become  invalid  or
unenforceable, this shall not affect the validity of the remaining provisions of
this  Agreement.  In  lieu  of  the  invalid  or unenforceable provision another
reasonable  and  enforceable provision shall apply which corresponds to what the
parties  would  have  agreed  taking into account the spirit and purpose of this
Agreement  had  they  considered the invalidity or lack of enforceability of the
relevant  provision  upon conclusion of this Agreement, and which corresponds to
the  intentions  of  the  parties  in relation to the spirit and purpose of this
Agreement.  The  above  provision  shall apply mutatis mutandis to fill possible
gaps  in  this  Agreement.

13.2     No failure to exercise, nor any delay in exercising, on the part of the
Security Agent, any right or remedy hereunder shall operate as a waiver thereof,
nor  shall  any  single  or  partial exercise of any right or remedy prevent any
further  or other exercise thereof or the exercise of any other right or remedy.
The  rights  and remedies provided hereunder are cumulative and not exclusive of
any  rights  or  remedies  provided  by  law.

14.     MISCELLANEOUS

14.1     The  Security  Agent  acts  as  agent for each of the Stendal Creditors
against  the Borrower in the event of an assertion of the rights and obligations
under  this  Agreement.  The  Security  Agent is authorised to authorise a third
party  if  necessary. The Security Agent and the third party are exempt from the
restrictions  laid  down  in  Section  181  of  the  German  Civil  Code  (BGB).

14.2     Each  Pledgee  authorises  the  Security  Agent to act as agent for the
Pledgees  in  the event of an assertion of the rights and obligations under this
Agreement.  The  Security  Agent  is  authorised  to  authorise a third party if
necessary.  The  Security  Agent  and  the  third  party  are  exempt  from  the
restrictions  laid  down  in  Section  181  of  the  German  Civil  Code  (BGB).

14.3     The  Security  Agent  in  its capacity as account keeping bank herewith
agrees  that  its  lien  pursuant  to  its  general  business  conditions
(AGB-Pfandrecht)  shall  rank behind all the pledges over the Account granted to
the  Pledgees  by  the  Pledgor  pursuant  to  this  Agreement.

14.4     This  Agreement  has  been  translated  into  the  English language for
convenience  purposes  only.  For  the avoidance of doubt, the German version of
this  Agreement  shall  prevail.

<PAGE>

15.      APPLICABLE  LAW,  JURISDICTION

15.1     This Agreement shall be governed by the laws of the Federal Republic of
Germany.

15.2     The  courts  in  Munich shall have exclusive jurisdiction in respect of
any  dispute out of or in connection with this Agreement. The Pledgees, however,
shall  be  entitled  to  take  action  against the Pledgor in any other court of
competent  jurisdiction.

<PAGE>

                                   SCHEDULE 1
                               "LIST OF ACCOUNTS"

<TABLE>
<CAPTION>

BANK          CURRENCY          ACCOUNT NUMBER      USE
----          --------          --------------      ---
<S>           <C>               <C>                 <C>

</TABLE>

<PAGE>

                                   SCHEDULE 2
                              "Security Agreements"

1.     First  ranking  Land Charge by the Borrower in an aggregate amount of EUR
827,950,000  on  the  site  of  the  Borrower  dated on or about the date hereof
whereby  the  Borrower  submits  in  a  separate  certificate  to  the immediate
enforcement  of  judgement  concerning  the Site in an amount of EUR 60,000,000;

2.     Security  Purpose  Agreement  between the Borrower and the Security Agent
dated  on  or  about  the  date  hereof;

3.     Security  Transfer  Agreement between the Borrower and the Security Agent
as  of  the  date  hereof;

4.     Global  Assignment  Agreement between the Borrower and the Security Agent
dated  on  or  about  the  date  hereof;

5.     Insurance  Claims  Assignment  Agreement  between  the  Borrower  and the
Security  Agent  dated  on  or  about  the  date  hereof;

6.     Investment  Incentives  Assignment Agreement between the Borrower and the
Security  Agent  dated  on  or  about  the  date  hereof;

7.     Account  Pledge  Agreement  between  the  Borrower and the Security Agent
dated  on  or  about  the  date  hereof;

8.     Pledge  of  Hedging  Claims  between  the Borrower and the Security Agent
dated  on  or  about  the  date  hereof;

9.     Share  Pledge  Agreement  between  SP  Holding,  RWE-IN  and FAHR and the
Security  Agent  dated  on  or  about  the  date  hereof;  and

<PAGE>

                                   Schedule 3
                               "Notice of Pledge"

From:     Zellstoff  Stendal  GmbH

To:       [Account  Bank]

Date:

Dear  Sirs

Re:  [Account  No.  [  ],  Banking  Code  [  ]   (the  "Account")]

We  hereby give you notice that by an account pledge agreement dated [Date] (the
"Account  Pledge  Agreement")  we have pledged in favour of Bayerische Hypo- und
Vereinsbank Aktiengesellschaft (the "Security Agent") and others as pledgees all
of  our  right,  title  and  interest  in  and to the above account (which shall
include all sub-accounts, renewals, replacements and redesignations thereof) and
all  monies  and  interest  from time to time standing or accruing to the credit
thereof.

Until  notice  to  the  contrary  from the Security Agent to be served on you as
Account  Bank  we  may  continue  to  operate  the Account and in particular may
dispose  over the amounts standing to the credit of the Account. Upon receipt of
such  aforesaid notice to the contrary you, as Account Bank, shall not allow any
dispositions  by  ourselves  of  amounts  standing to the credit of the Account.

<PAGE>

Please acknowledge receipt of this notice and your agreement to the terms hereof
by  signing  the  enclosed  copy  and returning the same to Bayerische Hypo- und
Vereinsbank  Aktiengesellschaft,  Am  Tucherpark  1,  FPA  13,  D-80538 Munchen.
Yours  faithfully,

-----------------------------------------------------------
For  and  on  behalf  of  Zellstoff  Stendal  GmbH

<PAGE>

                          Annex to the Notice of Pledge
                        [Letterhead of the Account Bank]

To:

Bayerische  Hypo-  und  Vereinsbank  AG
Am  Tucherpark  1  (FPA  13)
80538  Munchen

Re:  [Account  No.  -[  ],  Banking  Code  [  ]   (the  "Account")]

Dear  Sirs,

We  acknowledge  receipt  of  the  above  notice  and our agreement to the terms
thereof  and confirm that we have neither received any previous notice of pledge
relating  to this Account nor are we aware of any third party rights in relation
to  this  Account.  We  hereby  grant our consent on behalf of ourselves and our
legal  successors  in  title  to  the  pledge  of  any claims arising out of the
Account.

We  hereby  irrevocably  and  unconditionally waive our rights in respect of and
agree not to make any set-off or deduction from the Account or invoke any rights
of  retention  in  relation  to  this  Account.

We  agree that the pledge in our favour over the Account granted pursuant to our
General  Business  Conditions shall rank behind all the pledges over the Account
granted  to the Pledgees by the Pledgor pursuant to the Account Pledge Agreement
of  which  we  have  been  notified  by  the  Pledgor.

--------------------------------------------            ------------------------
For  and  on  behalf  of  [Account  Bank]               Date

<PAGE>

                                 EXECUTION PAGE
                            ACCOUNT PLEDGE AGREEMENT

Zellstoff  Stendal  GmbH
as  "Borrower"  and  "Pledgor")

------------------------------               --------------------------
Name:                                        Name:
Address:     Niedergorner  Damm  1
             D-39596  Arneburg

Bayerische  Hypo-  und  Vereinsbank  AG
as  "Original  Pledgee"  and  "Security  Agent"

-----------------------------                --------------------------
Name:                                        Name:
Address:     Am  Tucherpark  16
             D-80538  Munchen

<PAGE>

                                   SCHEDULE 8
                   Form of Luxemburg Account Pledge Agreement

<PAGE>

C L I F F O R D

C H A N C E

P U N D E R

                             ZELLSTOFF STENDAL GMBH
                                   as Pledgor
                      HVB BANQUE LUXEMBOURG SOCIETE  ANONYME
                                 as Account Bank
               BAYERISCHE HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT
                                as Security Agent

                       [*] LUXEMBOURG ACCOUNT PLEDGE AGREEMENT

<PAGE>

                                    CONTENTS

CLAUSE                                                        PAGE

1.     Definitions                                             149

2.     Pledge over pledged account claims                      151

3.     Undertaking                                             152

4.     Power of Attorney                                       153

5.     Remedies upon Default                                   153

6.     Change of Value                                         154

7.     Indemnity                                               154

8.     Representatives and Warranties                          154

9.     Release of Security                                     155

10.    Partial Enforcement                                     155

11.    Effectiveness of Collateral                             155

12.    Cost and Expenses                                       156

13.    Notices                                                 156

14.    Legal Successors                                        157

15.    Amendment and Partial Invalidity                        158

16.    Law and Jurisdiction                                    158

SCHEDULE 1 List of Bank Accounts                               159

<PAGE>

THIS  ACCOUNT PLEDGE AGREEMENT (the "Pledge Agreement") is dated as of 26 August
2002  and  made  between:

(1)     ZELLSTOFF  STENDAL  GMBH,  a  limited  liability  company  incorporated,
organised  and  validly  existing  under  the  laws  of  the Federal Republic of
Germany,  having  its  office  at  Niedergorner Damm 1, 39596 Arneburg, Federal
Republic  of  Germany and registered in the commercial register (Amtsgericht) of
Stendal,  number  HRB  2446  (the  "Pledgor");

(2)     BAYERISCHE HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT, a stock corporation
incorporated  organised  and  validly  under the laws of the Federal Republic of
Germany  as  Security  Agent and as such acting for and on behalf of the Secured
Creditors  (the  "Security  Agent");

AND  IN  THE  PRESENCE  OF

(3)     HVB  BANQUE  LUXEMBOURG  SOCIETE  ANONYME,  a company duly organized and
existing  under the laws of the Grand Duchy of Luxembourg, having its registered
office  in  4,  rue  Alphonse  Weicker,  2099  Luxembourg  (the "Account Bank");

WHEREAS:

(A)     The Lenders and the Pledgor have concluded a Facility Agreement dated 26
August  2002  in  the  amount  of EUR 827,950,000 for the purpose of the design,
development, construction and operation of a pulp mill located in Arneburg, near
Stendal  in  Sachsen-Anhalt  (the  "Facility  Agreement").

(B)     Pursuant  to  the  Facility  Agreement  the  Pledgor is obliged to grant
certain  security for the purpose of securing the obligations under the Facility
Agreement  in  accordance  with  the  terms  and  conditions  therein.

NOW  IT  IS  HEREBY  AGREED  as  follows:

1.      DEFINITIONS

1.1     Unless otherwise stated in this Agreement the definitions and principles
of  interpretation  in  the  Facility  Agreement  shall apply to this Agreement.

"2001  Law"  means  the Luxembourg law dated 1 August 2001 on the circulation of
securities  and  other  fungible  instruments  (loi  du  1er  aout  2001 sur la
circulation  de  titres  et  d'autres  instruments  fongibles).

"Bank  Account"  means the bank account held with the Account Bank as set out in
Schedule  1  (List  of  Bank  Accounts)  including  any  sub-account,  renewal,
redesignation  or  replacement  thereof.

<PAGE>

"Eligible  Securities" means investments made in short term euro debt securities
with  a  maximum  duration  of 3 years of issuers with a short term A1 rating or
better of Standard & Poor' s Corporation or an equivalent rating from such other
rating  agency  approved  by  the  agent.

"Hedging  Counterparty"  means  Bayerische  Hypo-  und  Vereinsbank  AG:

"Lenders"  means  the  financial  institutions being, from time to time, Lenders
under  the  Facility  Agreement.

"Pledged  Assets"  means the Pledged Account Claims, the Pledged Securities
and  the  Related  Assets.

"Pledged  Account Claims" means any claim to the cash credit balance of the Bank
Account as well as any other claim the Pledgor may have against the Account Bank
in  relation  to  such  Bank Account, including, for the avoidance of doubt, any
pecuniary  claim  for  the  payment  of  the  relevant credit balance or for the
repayment  of  a terms deposit (Festgeld) as well as any other claim, regardless
of  the  nature  thereof  in  relation  to  the Bank Account, including, for the
avoidance  of  doubt,  any  claim for the payment of the interests paid into the
Bank  Account.

"Pledged  Securities"  means  any  securities  and,  in particular, any Eligible
Securities  which,  from  time  to  time will be deposited by the Pledgor on the
securities  ledger  of  the  Bank  Account.

"Related  Assets"  means  all  dividends,  interest  and other monies payable in
respect of the Pledged Securities and all other rights, benefits and proceeds in
respect of or derived from the Pledged Securities (whether by way of redemption,
bonus,  preference,  option,  substitution,  conversion  or  otherwise).

"Secured  Creditors"  means  the  Lenders  and  the  Hedging  Counterparty.

"Secured  Obligations"  means  all  present  and  future,  conditional  and
unconditional claims, rights, title, interests (whether actual or contingent) of
the  Secured  Creditors  or  any  of  them  against  the  Pledgor  or any of its
successors  which are or become owing by the Pledgor or any of its successors to
the  Secured  Creditors  under or in connection with the Facility Agreement, the
Security  Agreements,  all  other  Financing  Documents,  the  Hedging Agreement
between  the  Hedging  Counterparty  and  the  Pledgor  and  any other agreement
including  any renewal, extension, novation or any other amendment, modification
or  supplement  to  such  agreements including the Financing Documents concluded
between  the Pledgor, on the one hand, and the Secured Creditors or any of them,
on  the  other  hand,  in  connection with or related to the Financing Documents
irrespective  of  whether  any  other  persons  or  entities are parties to such
agreements  or  supplements  including  letters  of  credit  and/or  guarantees
including  all  obligations  of the Pledgor now or hereafter existing under this
Agreement including, without limitation,

<PAGE>

all fees, costs and expenses whether in connection  with  a  collection  action
hereunder  or  other enforcement action hereunder.

1.2     References  to  Clauses, Recitals and Schedules are to clauses, recitals
and  schedules  of  this  Agreement.

2.     PLEDGE  OVER  PLEDGED  ACCOUNT  CLAIMS

2.1     Pursuant  to Article 110 et seq. of the Luxembourg Code of Commerce, the
Pledgor  hereby  irrevocably  and unconditionally grants a first priority pledge
("gage")  over the Pledged Account Claims (the "Pledge over Account ") in favour
of the Security Agent, who accepts, as security for the due and full payment and
discharge  of  all  of  the  Secured  Obligations.

2.2     Pursuant  to  Article 110 et seq. of the Luxembourg Code of Commerce and
Article  9  of  the 2001 Law, the Pledgor hereby irrevocably and unconditionally
grants a first priority pledge ("gage") over the Pledged Securities (the "Pledge
over  Securities", and together with the Pledge over Accounts, the "Pledges") in
favour  of  the  Security  Agent,  who accepts, as security for the due and full
payment  and  discharge  of  all  of  the  Secured  Obligations.

2.3     The  parties agree, to the extent necessary, that the Pledged Securities
shall  be  subject  to  the  fungibility  regime  organised  by  the  2001  Law.

2.4     The  Pledgor  undertakes  that  the  Pledge over Securities shall at all
times  remain  perfected  in  accordance  with article 9 of the 2001 Law and, in
particular,  that  the  Pledged Securities shall be held in a sub-account to the
Bank  Account which shall be identified as an account holding securities pledged
in  favour  of  the  Security  Agent  (the  "Securities  Sub-Account").

2.5     Without  prejudice  to  the  above  provisions,  the  Pledgor  hereby
irrevocably authorises and empowers the Security Agent to cause any formal steps
to  be  taken  by  the  Account  Bank  or  any  other  person for the purpose of
perfecting  the  Pledges and, for the avoidance of doubt, undertakes to take any
such  steps  itself  if so directed by the Security Agent. In particular, should
any  such  steps  be  required in relation to Pledged Securities acquired in the
future,  the  Pledgor  undertakes  to  take  any  such  steps  immediately  upon
acquisition  or  delivery  of  the  relevant  Pledged  Securities.

2.6     Without  prejudice  to the restrictions contained in this respect in the
Facility  Agreement,  the  Pledgor  shall  be  allowed  to dispose of any monies
standing  to the credit of the Bank Account. The parties however expressly agree
that  the  Account  Bank  shall not be under an obligation to monitor compliance
with  the  restrictions  contained  in  the  Facility  Agreement.

<PAGE>

3.      UNDERTAKING

The  Pledgor  undertakes  to  the  Security Agent during the subsistence of this
Agreement  that:

3.1     it  shall from time to time promptly execute, acknowledge, deliver, file
and  register  all  such  additional  documents,  instruments,  agreements,
certificates,  consents  and assurances and do all such other acts and things as
may  be  necessary  or as the Security Agent may reasonably request from time to
time  in  order  to  perfect  the  security constituted by this Agreement and to
exercise  and  enforce the rights and remedies under this Pledge Agreement or in
respect  of  the  Pledged  Assets;

3.2     it  shall  promptly  furnish  to  the  Security  Agent such information,
reports  and  records in respect of the Pledged Assets as the Security Agent may
reasonably  request  from  time  to  time;

3.3     it  shall abstain from any act or omissions affecting the enforceability
of the pledge or through which the rights and interests of the Security Agent as
the  owner  of  security  rights  therein  may  be  impaired;

3.4     it shall not close the Bank Account without the prior written consent of
the  Security  Agent;

3.5     it  shall  refrain  from any acts or omissions including but not limited
to,  the  creation of any encumbrances, which might result in a material decline
of  the  aggregate  value  or  in  a  loss  of  the  Bank  Account.

3.6     it  shall  identify  the Pledge immediately in its books and records and
refrain  from  any acts or omissions which would reasonably be likely to prevent
third  parties  who may have a legitimate interest in obtaining knowledge of the
Pledge;

3.7     it  shall  inform  the  Security  Agent  as soon as possible in case the
Security  Agent's  rights  in  respect  of  the  Bank  Account are prejudiced or
jeopardised  by  attachment or are materially prejudiced or jeopardised by other
actions  of third parties. Such information shall be accompanied, in case of any
attachment,  by  a  copy  of  the order for attachment, as well as all documents
required  for the filing of an objection against the attachment, and, in case of
any  other  actions by third parties, by copies evidencing which actions have or
will be taken, respectively, as well as all documents required for the filing of
an  objection  against  such  actions.  The  Pledgor shall further be obliged to
promptly  inform  as  soon  as  possible  the attaching creditors or other third
parties  asserting  rights  with  respect  to the Bank Account in writing of the
Security  Agent's rights in respect of the claims. All reasonable and adequately
documented  costs  and  expenses  for  any  actions  of  intervention  and
countermeasures  of the Security Agent shall be borne by the Pledgor. This shall
also  apply  to  the  institution  of  legal  action,  which  the Security Agent
considers  necessary;

<PAGE>

3.8     it  shall  inform  the  Security Agent, forthwith upon becoming aware of
such  event,  in  the  event  that  any  Pledged Securities no longer qualify as
Eligible  Securities.

3.9     it  shall  sell,  if  so  requested  by  the Security Agent, any Pledged
Securities  in  accordance  with (i) Clauses 2.3 and 3.5 and (ii) any particular
instructions  the  Security  Agent  may  have  given;  and

3.10     it  shall notify the Security Agent as soon as possible of any event or
circumstance  which  may  be  expected  to have a material adverse effect on the
validity  or  enforceability  of  this  Agreement.

4.       POWER  OF  ATTORNEY

4.1      The Pledgor  irrevocably appoints the Security Agent to be its attorney
and  in its name and on its behalf to execute, deliver and perfect all documents
and  do  all things that the Security Agent may consider to be requisite for (a)
carrying  out  any  obligation  imposed on the Pledgor under this Agreement, (b)
perfecting  or  maintaining  the  security  interest  created  hereunder  or (c)
exercising  any  of the rights conferred on the Security Agent by this Agreement
or  by  law,  it  being  understood  that the enforcement of the pledge over the
Pledged Assets  must  be  carried  out  as  described in Clause 5 (Remedies upon
Default) hereunder. The Pledgor shall ratify and confirm all things done and all
documents  executed  by  the  Security  Agent  in  the exercise of that power of
attorney.

5.     REMEDIES  UPON  DEFAULT

5.1     Three  Eight  days  after  a demand to pay (mise en demeure) the Secured
Obligations  (or any part thereof) which may only be made if an Event of Default
(Kundigungsgrund)  according  to  Clause  23.1.1  of the Facility Agreement has
occurred  and  is continuing is given to the Pledgor in the form provided for in
Clause  13,  the  Security Agent shall be entitled, and in addition to all other
rights  and  remedies  granted  hereunder  and  under  any  other  instrument or
agreement  securing,  evidencing  or  relating  to  the  Secured Obligations, to
exercise  all  rights and remedies of a pledgee under the laws of Luxembourg (or
any  other  applicable  laws)  and may enforce the Pledge in the most favourable
manner  available  under applicable law, including, but not limited to, by using
any right of set-off arising under Article 118 (2) of the Code of Commerce or by
requesting  direct payment from the Account Bank pursuant to the same provision.

5.2     For  that purpose, the Security Agent shall be irrevocably empowered and
authorised  to  represent  the  Pledgor  in  relation  to  the  Account Bank, in
particular  but  not  limited  to  for  the  purpose of requesting the temporary
closure  ("arret  de compte") of the Bank Accounts or for the purpose of making
any  other  administrative  arrangements  necessary  for  the enforcement of the
Pledge.  It  may also request the "attribution judiciaire" of any claim or asset
pursuant to Article 2078 of the Civil Code, as well as exercise all other rights
to  which it is entitled in such circumstances under Luxembourg law or any other
applicable  laws.

<PAGE>

6.      CHANGE  OF  VALUE

In  the  event  the  Bank  Account will substantially change in its value due to
objections,  suspension  or due to set-offs or for any other reasons the Pledgor
is  obliged  to  promptly  inform  the  Security  Agent  thereof.

7.      INDEMNITY

7.1     The Security Agent and the Secured Creditors shall not be liable for any
loss  or  damage  suffered by the Pledgor save in respect of such loss or damage
which is suffered as a result of wilful misconduct or gross negligence of either
of  them.

7.2     The  Pledgor will indemnify the Secured Creditors and the Security Agent
and  keep  the  Secured Creditors and the Security Agent indemnified against all
damages, losses, actions, claims, expenses, demands and liabilities which may be
incurred  by  or  made  against the Secured Creditors and the Security Agent for
anything  done  or  omitted  in the exercise or purported exercise of the powers
contained  herein  and  occasioned  by  any  breach of the Pledgor of any of its
obligations  or undertakings herein contained other than to the extent that such
damages, losses, actions, claims, expenses, demands and liabilities are incurred
or made against the Secured Creditors or the Security Agent as a result of gross
negligence  or wilful misconduct of the Secured Creditors or the Security Agent.

8.      REPRESENTATIONS  AND  WARRANTIES

8.1     The  Pledgor  represents and warrants to the Security Agent that, except
as  expressly  provided  in  the  Facility Agreement and the Security Documents:

8.1.1   it  alone  holds  title  to  and  may,  except  for the Pledge created
hereunder,  freely  dispose  of  the  Bank  Account;

8.1.2   the  Bank  Account has not been pledged to third parties or encumbered
in  any  way  in  favour  of  third  parties;

8.1.3   the  pledgeability  of  the  Bank  Account  is  neither  excluded  nor
restricted  in  any  way;

8.1.4   it  has  the  power  to execute and perform its obligations under this
Agreement  and  all  necessary  corporate, shareholder and other action has been
taken  to  authorise  the  execution  and  performance  of  the  same;

8.1.5   no  litigation,  arbitration or administrative proceeding is presently
in  progress, and the Pledgor has not received notice that the initiation of any
such proceedings is intended, to restrain the entry into, exercise of any of the
Pledgor's  rights  under and/or performance or enforcement of or compliance with
any  of its obligations under this Agreement, which, if adversely determined, is
reasonably  likely  to  have  a  material  adverse  effect on the ability of the
Pledgor  to  perform  its  obligations  under  this  Agreement;  and

<PAGE>

8.1.6   no  counterclaims as to which a right to set-off or right of retention
could  be  exercised  exist  with  respect  to  the  Bank  Account.

8.2     The representations under Clause 8.1 (Representations and Warranties)
shall be expressly repeated by the Pledgor by reference to the facts and
circumstances then  existing  at  each  Drawdown  Date

8.3     If any of the representations and warranties of the Pledgor under Clause
8.1 (Representations and  Warranties) should be incorrect, in whole or in part,
the Pledgor  will  use  its  best  efforts  to  place the Security Agent in the
same position  as  if  the respective representation or warranty given by the
Pledgor had  been correct. The rights and claims of the Security Agent
contained in this Clause 8.3 do  not  require  negligence  on  the  part
of  the  Pledgor.

9.      RELEASE  OF  SECURITY

The  Pledge  shall  be  discharged  by, and only by, the express release thereof
granted  by  the  Security  Agent.  The  Pledgor shall be entitled to demand the
release  and  the  Security  Agent  shall  be under the obligation to grant such
release  upon  good  and  final  discharge  of  the  Secured  Obligations.

10.     PARTIAL  ENFORCEMENT

The Security Agent shall have the right, pursuant to the procedures set forth in
Clause 5 (Remedies upon Default) of this Agreement, to request enforcement of
all or  part  of  the  Pledge  in  its  most absolute discretion. In particular,
the Security  Agent  shall,  in its most absolute discretion, be entitled to
enforce the  Pledge  over all or part of the Pledged Account Claims only and/or
over all or  part  of the Pledged Securities only. No action, choice or absence
of action in  this  respect, or partial enforcement, shall in any manner affect
the Pledge as  it  then  shall be. The security interest/pledge thereover shall
continue to remain in full and valid existence until the Security Agent
releases the Pledges in  accordance  with  Clause  9.

11.     EFFECTIVENESS  OF  COLLATERAL

11.1    The  Pledge  shall be a continuing security and shall not be considered
as satisfied or discharged or prejudiced by any partial payment, satisfaction or
settlement of any part of the Secured Obligations and shall remain in full force
and  effect  until  the  Security  Agent releases the Pledges in accordance with
Clause  9.

11.2     The Pledge shall be cumulative, in addition to and independent of every
other security which the Security Agent may at any time hold as security for the
Secured Obligations or any rights, powers and remedies provided by law and shall
not operate so as in any way to prejudice or affect or be prejudiced or affected
by any security interest or other right or remedy which the Secured Creditors or
the  Security  Agent may now or at any time in the future have in respect of the
Secured  Obligations.

<PAGE>

11.3     This  Pledge  shall not be prejudiced by any time or indulgence granted
to  any  person,  or  any  abstention  or  delay by the Secured Creditors or the
Security  Agent  in  perfecting  or enforcing any security interest or rights or
remedies that they may now or at any time in the future have from or against the
Pledgor or any other person having granted security for the Secured Obligations.

11.4     No  failure  on the part of the Security Agent to exercise, or delay on
its  part  in  exercising,  any  of the rights under this Pledge Agreement shall
operate  as  a  waiver  thereof, nor shall any single or partial exercise of any
such  right  preclude any further or other exercise of that or any other rights.

11.5     None  of  the  Secured  Creditors or the Security Agent or any of their
agents  shall  be  liable  by  reason of (a) taking any action permitted by this
Pledge  Agreement  or  (b) any neglect or default in connection with the Pledged
Assets  or  (c) the realisation of all or any part of the Pledged Assets, except
in  the  case  of  gross  negligence  or  wilful  default  upon  its  part.

11.6     The  Pledgor  hereby expressly renounces the benefit of article 2037 of
the  Luxembourg  Civil  Code.

12.      COST  AND  EXPENSES

12.1     All reasonable costs, charges, fees and expenses incurred in connection
with  the  negotiation,  preparation, execution registration, implementation and
preservation  and  amendments,  waivers  or  consents  of this Agreement and all
reasonable  costs,  charges,  fees  and expenses incurred in connection with the
enforcement of this Agreement (in each case including fees for legal advisers to
the  Security  Agent)  shall  be  borne  by  the  Pledgor.

13.      NOTICES

13.1     All  notices  or  communications  pursuant, under or in connection with
this  Agreement  shall  be  made  pursuant  to  and in accordance with Clause 38
(Notices)  of  the  Facility  Agreement.

13.2     Any  notice  or  other  communication  under or in connection with this
Agreement  to  the  Account  Bank  shall be made or delivered with a copy to the
Security  Agent  to  the  following  address  of  the  Account  Bank:

         HVB  Banque  Luxembourg  Societe  Anonyme
         address:         4,  rue  Alphonse  Weicker
                          L-2099  Luxembourg
                          Luxembourg

         attention  of:   FKA/PKR

         telephone:     +352  -  42  722  131

<PAGE>

         fax:          +352  -  42  724  548

         For the avoidance of doubt, unless another address has been
communicated  in  accordance  with Clause 38 (Notices) of the Facility Agreement
the  addresses  of any other party to the Agreement shall be determined pursuant
to  Clause  38  (Notices)  of  the  Facility  Agreement.

13.3     Any  notice  or  other  communication  under or in connection with this
Agreement  shall  be  in  the  English  language  or,  if in any other language,
accompanied  by a translation into English. In the event of any conflict between
the  English  text  and  the  text in any other language, the English text shall
prevail.

14.      LEGAL  SUCCESSORS

14.1     This  Pledge  Agreement shall remain in effect despite any amalgamation
or  merger  (howsoever  effected)  relating to Secured Creditors or the Security
Agent,  and  references  to the Secured Creditors or the Security Agent shall be
deemed to include any assignee or successor in title of Secured Creditors or the
Security  Agent  and  any  person who, under any applicable law, has assumed the
rights  and  obligations of Secured Creditors or the Security Agent hereunder or
under  any  other  agreements  or  to  which  under such laws the same have been
transferred  or  novated  or  assigned  in  any  manner. To the extent a further
notification or registration or any other step is required by law to give effect
to  the  above,  such  further registration shall be made and the Pledgor hereby
gives  power  of attorney to the Security Agent to make any notifications, or to
take  any  other  steps,  and undertakes to do so himself if so requested by the
Security  Agent  .

14.2     For  the  purpose  of Article 1278 of the Luxembourg Civil Code, to the
extent  required  under  applicable law and without prejudice to any other terms
hereof  or of any other agreements and in particular paragraph 1 of this Clause,
the  Security  Agent  hereby  expressly  reserve  and  the Pledgor agrees to the
preservation of this Pledge and the security interest created thereunder in case
of  assignment,  novation,  amendment  or  any  other  transfer  of  the Secured
Obligations  or any other rights arising for it under the Financing Documents or
any  other  agreements  to  which  the  Pledgor  is  a  party.

15.     AMENDMENTS  AND  PARTIAL  INVALIDITY

15.1     Changes to this Agreement and any waiver of rights under this Agreement
shall  require  written  form.  The  parties  may waive this form requirement by
written  agreement  only.

15.2     Should  any  provision  of  this Agreement be invalid or unenforceable,
wholly  or  in  part,  or  should  any  provision  later  become  invalid  or
unenforceable, this shall not affect the validity of the remaining provisions of
this  Agreement.  In  lieu  of  the  invalid  or unenforceable provision another
reasonable  and  enforceable provision shall apply which corresponds to what the
parties  would  have  agreed  taking into account the spirit and

<PAGE>

purpose  of  this  Agreement  had  they  considered  the  invalidity  or lack of
enforceability  of the relevant provision upon conclusion of this Agreement, and
which corresponds to the intentions of the parties in relation to the spirit and
purpose  of  this  Agreement.

16.     LAW  AND  JURISDICTION
16.1     This  Pledge  Agreement  shall  be  governed  by Luxembourg law and the
courts  of  Luxembourg-City  shall  have  exclusive  jurisdiction  to settle any
dispute  which  may  arise  from  or  in  connection  with  it.

16.2     To the extent that the Pledgor may in any jurisdiction claim for itself
or  its  assets  immunity  from  suit,  execution, attachment (whether in aid of
execution,  before  judgement  or  otherwise)  or other legal process and to the
extent  that  in  any such jurisdiction there may be attributed to itself or its
assets  such  immunity  (whether or not claimed), the Pledgor hereby irrevocably
agrees  not  to  claim  and  hereby irrevocably waives such immunity to the full
extent  permitted  by  the  laws  of  such  jurisdiction.

<PAGE>

                                   SCHEDULE 1
                              List of Bank Accounts

<TABLE>
<CAPTION>

                                         Currency and
Bank               Address               amount outstanding      Account-No.:
<S>                <C>                   <C>                     <C>
HVB Banque         4, rue Alphonse
Luxembourg         Weicker
Societe            2099 Luxembourg        EUR [*]                [*]
Anonyme

</TABLE>

<PAGE>

          SIGNATURE PAGE OF THE [*] LUXEMBOURG ACCOUNT PLEDGE AGREEMENT

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

                               SIGNATORIES TO THE
                            ACCOUNT PLEDGE AGREEMENT

The  Pledgor
ZELLSTOFF  STENDAL  GMBH

By:
     -----------------------------            ------------------------------
     Name:  Harald  Gatzke                    Name:  Wolfram  Ridder
     Title:                                   Title:

     Address: Niedergorner  Damm  1
              D-39596  Arneburg
              Federal  Republic  of  Germany

The  Security  Agent
BAYERISCHE  HYPO-  UND  VEREINSBANK  AKTIENGESELLSCHAFT

By:
    ------------------------------            ------------------------------
     Name:  Thomas  Reppenthien               Name:  Christoph  Wagner
     Title:                                   Title:

     Address: Am  Tucherpark  1
              D-80538  Munchen
              Federal  Republic  of  Germany

<PAGE>

          SIGNATURE PAGE OF THE [*] LUXEMBOURG ACCOUNT PLEDGE AGREEMENT

By  signing  below,  the  Pledgor  hereby expressly and specifically accepts the
limitation  of liability in favour of the Security Agent (Clauses 4, 7, 11.5 and
11.6)  and  the  jurisdiction  of  the  Luxembourg  courts  (Clause  16.2).

The  Pledgor
ZELLSTOFF  STENDAL  GMBH

By:
     -----------------------------            ---------------------------------
     Name:  Harald  Gatzke                    Name:  Wolfram  Ridder
     Title:                                   Title:

ACKNOWLEDGEMENT

By  signing  hereunder for acceptance, the Account Bank acknowledges and accepts
the  existence  of  this  Pledge  Agreement and of the security interest created
hereunder over the Pledged Account Claims for the purposes of Article 114 of the
Luxembourg  Code  of  Commerce and article 2074 of the Luxembourg Civil Code and
takes  notice  of  the  terms  of  the  Pledge  Agreement.

Furthermore,  by signing hereunder for acceptance, the Account Bank acknowledges
and  accepts the security interest created hereunder over the Pledged Securities
for  the  purposes  of  Article  9  of  the  2001 Law and undertakes to mark the
Securities  Sub-Account  in accordance with Clause 2.3 of this Pledge Agreement.

The  Account  Bank  confirms that it is not aware of any prior encumbrances over
the  Bank  Account  or  the Pledged Assets. The Account Bank hereby releases any
pledge  or  lien  resulting  from  the  application  of  its  general  terms and
conditions  or  any  other agreement over the Bank Account or Pledged Assets and
waives  its  right  of retention, set-off rights and, more generally, any rights
that may adversely affect the Pledge and waives any option to create new pledges
or  liens  over  future  accounts  of  the  Pledgor.

The  Account  Bank
HVB  BANQUE  LUXEMBOURG  SOCIETE  ANONYME

By:
     ----------------------------               -------------------------------
     Name:                                      Name:
     Title:                                     Title:

     Address:  4,  rue  Alphonse  Weicker

<PAGE>

               L-2099  Luxembourg
               Luxembourg

<PAGE>

                                   SCHEDULE 9
                               Security Agreements

1.     First  ranking  Land Charge by the Borrower in an aggregate amount of EUR
827,950,000  on  the  Site  of  the  Borrower  dated on or about the date hereof
whereby  the  Borrower  submits  in  a  separate  certificate  to  the immediate
enforcement  of  judgement  concerning  the Site in an amount of EUR 60,000,000;

2.     Security  Purpose  Agreement with regard to the first ranking Land Charge
between  the  Borrower and the Security Agent dated on or about the date hereof;

3.     Security  Transfer  Agreement as security transfer of equipment (plant or
machinery) and as security transfer of all assets of the Borrower on the Secured
Site  between  the  Borrower  and  the  Security  Agent  as  of the date hereof;

4.     Global  Assignment Agreement (including claims out of pocket and delivery
agreements)  between  the  Borrower and the Security Agent dated on or about the
date  hereof;

5.     Insurance  Claims  Assignment  Agreement  between  the  Borrower  and the
Security  Agent  dated  on  or  about  the  date  hereof;

6.     Investment  Incentives  Assignment Agreement between the Borrower and the
Security  Agent  dated  on  or  about  the  date  hereof;

7.     Account  Pledge  Agreement  between  the  Borrower and the Security Agent
dated  on  or  about  the  date  hereof;

8.     Pledge  of Hedging Claims Agreement between the Borrower and the Security
Agent  dated  on  or  about  the  date  hereof;  and

9.     Share  Pledge  Agreement  between  SP  Holding,  RWE-IN  and FAHR and the
Security  Agent  dated  on  or  about  the  date  hereof.

<PAGE>

                                   SCHEDULE 10
                                 State Guarantee

                                                           C&L Deutsche Revision
                                                              Aktiengesellschaft
                                                 Wirtschaftsprufungsgesellschaft
                                                             Moskauer Strasse 19
                                                                40227 Dusseldorf

                                                                   June 20, 2002

To:  Bayerische  Hypo-  und  Vereinsbank  AG

Global  Project  Finance

Attn:  Mr.  Wagner

Am  Tucherpark  1

80538  Munich

Federal/State  guarantees  /  Zellstoff  Stendal  GmbH

Ladies  and  Gentlemen:,

attached  you  will  find  the  decision  regarding  guarantees  by  the Federal
government  and  the  State  of Sachsen-Anhalt as resolved on the meeting of the
ministers  on  March  27,  2002.  Also  attached  you will find the grant of the
Federal  government  and  the  State  with  the  request  to  give notice of the
recognition  of  the  above  decision  in  writing.

Since  the  decision  about  the  grant  of  guarantees  is  not  subject to any
preconditions,  we  ask  you  to  transfer  0.25%  of  the  guarantee, i.e. Euro
1.174,000)  onto  our  account  as  described  in the Section labeled "Comments"
(Account  of  the Federal Ministry of Finances, Account No. 3015112, Routing no.
300500000)  In  the  future due payments

<PAGE>

(October  1st  and  April  1st  of  each  year of the guarantee), please pay the
amounts  required  pursuant  to  the guarantee agreement on your own initiative.

Please  submit  the draft of the credit agreement so we can issue the guarantee.

Regards,

C&L  Deutsche  Revision

(Signature  Hohn)     (Signature  Ringelstein)

<PAGE>

Decision of the meeting of ministers on March 27, 2002 regarding the application
              of Zellstoff Stendal GmbH, Arneburg, for a guarantee

A.  Borrower

Zellstoff  Stendal  GmbH,  Niedergorner  Damm  1,  39596  Arneburg

B.  Credtior

Consortium  of banks led by Bayerische Hypo- und Vereinsbak AG, Am Tucherpark 1,
80538  Munich

The  Syndication  of  parts  of  the  credited  amount  is  planned.

C.  Credited  amount

Total  of  EUR  587.000.000  by  banks,  consisting  of

a)     EUR  465.000.000     of  investment  financing

b)     EUR  122.000.000     of  internal  financing

The  credits  are  to  be  certified  based  on  the  Master  Credit  Agreement
F.02.01.2001 and pursuant to the "Comments" (version 2001) known to the creditor
and borrower and in accordance with the attached term sheet dated March 27, 2002
provided that for the

<PAGE>

amount  of the guarantee fee based on the application for a guarantee dated June
29,2000,  the  terms  and  conditions  known  to  the  creditor  and  the debtor
"Comments"  (F.12.10.1990;  version  1993)  are  still  applicable.

D.  Terms  and  Conditions  of  the  credit

Relating  to  a)  Investment  credit
------------------------------------

Payment:     Pursuant  to  the  progress  of  the  project,  a  total  of  100%

Interest:    The  customary  market  interest variable, based on EURIBOR and an
additional  payment  of  0.75%  per  annum.

Amortization: In semi-annual  rates,  beginning  on  the  date of the first
repayment  date  for  years  after  the  first  valutation.

Duration:     Until  the  first  payment  after  the  15th  year after the first
drawdown.

The  required credit for investment purposes may partly or in whole be described
by  program  credits  that are not relevant to granted project-related financing
aids.  In this case, the terms and conditions of the respective credit agreement
apply.

Relating  to  b)  Internal  financing  credit
---------------------------------------------

Payment:      As required in a maximum of four tranches, totaling 100% latest
due on  the  day  of  "Acceptance".

Interest:     Common  market  interest valuable and based on the EURIBOR plus an
additional  payment  of  0.6% per annum for  the guaranteed portion and 1.5% per
annum  on the continually increasing amount that is not covered by the guarantee
as  reduced  by  the  continually  rising  amount  that  is  not  subject to the
guarantee.

Amortization: 1.     For  a  partial  sum  of  EUR 62 million, consisting of
three  subtranches,  each  subtranche  will  be  reduced  in  eight  consecutive
following  semi-annual  payments of the same amount.  The subtranches have to be
reduced  until  the  first  repayment  date  after  the  8th  year  of the first
utilization  of  each  subtranche.

              2.     For  partial  sum  of EUR 60 million, between creditor
and borrower until the  due  date  of  the  investment  credit:  none.

Duration:     Each under the above number 1 described subtranche until the first
repayment  date  after  the  8th  year  of  the first utilization of the credit;

the partial amount as described under number two pursuant to the duration of the
investment  credit  as  described  under  lit.a).

Certification  period  for  a)  and  b):
----------------------------------------

<PAGE>

     Until  September  30,  2002

     If  the  credit  agreements  are  not  signed  within  this period, the
grant of guarantee  by the Federal  government and the State of Sachsen-Anhalt
will cease to  exist.  Under special circumstances the guarantors may grant an
extension of the  certification  period.

E.  Guarantee  of  the  federal  government  and  the  state  of  Sachsen-Anhalt

A total of 80% of the amount due after the realization of securities pursuant to
the  Exhibit  F.02.01.2001 FEDERAL/STATE subsidiary guarantee (without the right
to  prior  settlement  of  claims)  pursuant  to  the  Section  "Comments".  The
guarantees  will  be accepted in the form of pro rata and parallel guarantees of
the  Federal  government  (48%)  and  the  State  of  Sachsen-Anhalt  (32%).

The  guarantees  of  the  Federal  government  and  the state for the respective
subtranches  of  the  credit  for  internal funds in the amount totaling EUR 122
million will be reduced semi-annually by 12.5% per annum, beginning on the first
payback  date  four  years  after  the  first  utilization  of  each subtranche.

F.  Utilization  of  the  credit

Financing  of  the  investment  and  company  with regard to a construction of a
facility for the production of bleached softwood pulp including the financing of
the  company  pursuant  to  the  following  financing  plan.

<PAGE>

<TABLE>
<CAPTION>

FINANCE REQUIREMENTS                  EUR THOUSAND                 EUR THOUSAND
--------------------                  ------------                 ------------
<S>                                   <C>                          <C>
Capitalized investment financing
- real estate cost and
  cost/infrastructure                  28,900
- project development, planning
  and permit costs until
  financial close                      22,000
- EPC contact (setup costs)            716,000
- EPC contract (incidental
  expenses)                            10,500
- Setup costs and management,
  ZSG portion                          46,500
- Construction period interest
  of tranche A to start-up             20,342

Total                                                                844,242

Operating assets                                                     121,478

Debt service reserves account
 (initially debt-financed)                                           42,000

Cost overrun and debt service
 reserves (financed from
 internal funds)                                                     30,000

TOTAL FINANCE REQUIREMENTS                                           1,037,720

FINANCE REQUIREMENTS                  EUR THOUSAND                 EUR THOUSAND
--------------------                  ------------                 ------------
<S>                                   <C>                          <C>

Internal funds
- equity                              15,000
- subordinated shareholder loans      55,000
- reserves of internal funds/cost
  overrun financing                   15,000
- internal funds (debt service        15,000
  reserve account)
Total internal funds                                                100,000

Start-up cashflow                                                   26,016

                                      109,161
Subsidies                             165,515
- GA subsidy
- investment subsidy                  465,000
Total subsidies                       122,000                       274,676
                                      9,000

Borrowed funds                        42,000
- guaranteed credit long-term
  (Tranche A)
- guaranteed credit short-term
  (Tranche B)
- guaranteed credit (not
  guaranteed,
  Tranche D 1)
- bank loan for debt service
  reserve account (not
  guaranteed, Tranche C)
(- bank loan (cost overrun
reserve, not guaranteed,
Tranche  D2))                         (30,000)
Total borrowed funds
  (excluding reserve)                                               638,000
TOTAL FINANCING                                                   1,038,692

</TABLE>

The  slight  excess  of  the financing requirements results from rounding up the
guaranteed  credits  and  shall  serve  as  additional  reserve for the project.

The  financing  plan  is  based  on  the  Term  Sheet  dated  March 27, 2002 and
additionally  covers  a  preliminary credit line of EUR 160 Mio. as Tranche E as
well  as  credit lines for futures relating to dealing in currencies, agreements
to  protect  interest  rates  and  hedging  agreements  relating  to  pulp.

<PAGE>

After  the  investment, the start-up and the finalization of the test-run of the
company,  a  financial  statement of the project including information as to how
far  reserved financing capital has been used must be submitted to the leader of
the consortium and the Federal government and the State as guarantor (attention:
C&L  Deutsche  Revision).

G.  Collateral  of  the  credit

Collateral (as described below) serves on a pro rata basis and is equally ranked
as  security  of  the guaranteed credit and the credit tranches C, D1, D2, and E
totaling  EUR 241 million as to be provided by the creditor pursuant to the Term
Sheet  dated  March 27, 2002, and the credits for future relating to currencies,
agreements  for  the  protection  of interest and hedging agreements relating to
pulp  up  to  an  amount  totaling  EUR  200  million.

1.     First  ranking  land  deed  in  the amount of EUR 638 million on the real
estate  of  the  debtor  in  Arneburg.

Existing  charges

In  column  II  of  the  land  register:  only charges customary to the industry

In  column  III  of  the  land  register:  none

2.     Transfer  by way of security of all machines and technical equipment that
will  be  bought in the process of the project, provided they are not subject to
third  parties  rights.

3.     Transfer  by way of security of assets located in the storage area of the
borrower in their respective state, free of third parties' rights, except assets
delivered under a retention of title as is customary in the respective business.

4.     Assignment of the claims against customers of the borrower, free of third
parties'  rights,  excluding  items sold under an extended retention of title by
suppliers  in  the  ordinary  cause  of  their  business.

5.     Assignment  of  the rights and claims of all material agreements relating
to  the  project.

6.     Pledge  of  the  accounts  of  the  borrower  relating  to  the  project.

7.     Assignment  of  all  claims  with  respect to insurances of the borrower.

8.     Pledge  of  all  claims  resulting  from  hedging  contracts.

9.     Pledges  and  assignments of the shares of the borrower Zellstoff Stendal
GmbH.

<PAGE>

As  permissible  under  law:

10.    Assignment  of  claims  relating  to  the  payment of investment grants.

Alternatively,  the  borrower  shall pay the grants for investment to an account
that  has  been  pledged  to  the  creditor.

H.     Miscellaneous

I.     Conditions  relating  to  the  validity  of  the  credit

Prior to first drawdown of the credit, the creditor needs to receive proof that,

1.     the  investment  grants  have  been  granted;

2.     equity to contribute to the financing to the project in the amount of EUR
70  million  serving  as  equity and/or subordinated credits of the shareholders
have  been  utilized  and  that  reserve  equity  funds  are  available;

3.     the  entire  financing  of  the  project  is  secured.

II.    Conditions  and  other  provisions

1.     Prior  to  the  first drawdown of the credit proof has to be submitted to
the  creditor  that  authorization  required under law and needed to realize the
project  have  been  granted  (in case such authorization cannot be presented, a
written  statement  of the respective authority shall be submitted, stating that
the submitted information relating to the applied authorization currently do not
pose  an  obstacles  for  the  authorization).

2.     Granted  investment  aids  and  other  investment  payments  have  to  be
pre-financed in the amount of the granted credit line of EUR 160 million without
guarantee.

3.     The  borrower  is  required  to establish an account pursuant to the Term
Sheet  dated  March  27,  2002  consisting of surplus from cash-flow, equity and
credits  that are not subject to guarantees in the amount needed for payments in
the  respectively  following  twelve  months, which may be reduced by equity not
needed to repay the debts, such as equity with respect to the increase in costs.

4.     The maximum interest rate of credits by the shareholders is 7% per annum.
Payment  of  the  interest is permissible, beginning on the date that the credit
covered by the guarantee needs to be paid back, after the respective payments on
credits  and the obligations arising under the subsidiary debt account have been
made.  The  afore  mentioned conditions apply as far as permissible by law, also
to  the  distribution  of  earnings.

5.     Commercial  transactions  between  the  borrower and its shareholders and
other  companies under the influence of the shareholders or of the borrower,

<PAGE>

for example affiliates for the supply of wood and transportation, have to comply
with  contracts  customary to the market; in the annual financial statement, the
annual  auditor  shall  make  a  statement  with  respect  to such transactions.

6.     Any  moratorium  of  credit payments pursuant to section II par. 3 of the
"General  Conditions  for  Guarantees granted by the Federal Republic of Germany
and  parallel  Guarantees of the States" will only be granted if with respect to
the  quota  of  credits  that are not subject to a guarantee, and that have been
given  an  extension.  Payments  on  the first payback date, however, need to be
repaid  pursuant to term sheet dated March 27, 2002, unless sufficient funds are
not  available  for  the  payback of all tranches except for Tranche E.  In this
case  the Tranches C, D 1 and D 2 will be subject to a moratorium.  A moratorium
for  credits  subject to the guarantee on the first date of payback will only be
granted  if  no  sufficient  funds  for  repayment  are  available.

7.     The  acceptance  of  the grant of guarantee includes a restatement of the
prior  statement  of  the  borrower  that  it has knowledge of the laws of state
grants  and  their  conditions.

<PAGE>

Bonn/Berlin, April 8 and 9,      Per procuration            Per procuration
2002

                                 Federal Ministry           Federal Ministry
                                 for Economy and            for Finance
                                 Technology
                                                            (Holzhauer)
                                 (Kleinpoppen)

Magdeburg, April 12, 2002        Per procuration            Per procuration

                                 Federal Ministry           Federal Ministry
                                 for Economy and            for the state
                                 Technology of              Sachen-Anhalt
                                 of the state
                                 Sachsen-Anhalt             (Hoppe)

                                 (Spieler)

Dusseldorf, April 2, 2002        Per procuration

                                 C&L Deutsche Revision

                                 (Sinne)                    (Ringelstein)

<PAGE>

Federal  Ministry  for  Commerce  and  Technology

                                                             Bonn, June 20, 2002

Bayerische  Hypo-  und  Vereinsbank  AG
Global  Project  Finance
z.Hd.  Herrn  Dr.  Wagner
Am  Tucherpark

80538  Munchen

Guarantees  of  the  Federal  Government  and  the State/Zellstoff Stendal GmbH,
Arneburg

Your  application  dated  June  29,  2000

Dear  Ladies  and  Gentlemen,

With  approval  of  the Federal Minister of Finance and in coordination with the
state and with respect to the discussions of ministers I have made the following
decision  as  you  can see attached to the letter to C&L Deutsche Revision AG, D
usseldorf, dated June 20, 2002. In this matter, please communicate directly with
C&L  Deutsche  Revision  AG,  D  sseldorf,  who  is the fiduciary of the federal
government  and  the  state.

Regards

(by  order)

Dr.  Hirsch

<PAGE>

                                   SCHEDULE 11
                          Financing of the Subsidiaries

Structure

                                ZSG
--------------------------------------------------------------------------
                                                           100%
Support Holding Company                      Support Holding Company
          |                                             |  greater than or
          |                                             |  equal to 51%
Wood supply company                           Logistics company

Contractual  Matrix

[  ]  All  pulp  sales  contracts  entered  into  by  ZSG  as  principal.

[  ]  Up to 50%  of  the wood will be sourced through the wood supply operating
company  acting  as principal. Contracts for the balance will be entered into by
ZSG  as  principal  acting  either directly or through the wood supply operating
company  as  its  agent.

[  ]  Profit and  Loss Transfer  Agreement entered into between ZSG and support
holding  companies.

[  ]  Maximum working capital  limited  to  EUR 8mn down-streamed by ZSG to the
Holding  Companies  and,  from  such  companies,  to  subsidaries.

[  ]  Service agreement entered  into  between  ZSG  and  Wood Supply Operating
Company  providing for provision of up to 100% of total wood supply requirement.
Payment  for  wood supplied by Wood Supply Operating Company only against actual
delivery at mill.   Average price over any 12 month period not to exceed average
market  price  over similar period as evidenced by contracts entered into by ZSG
as  principal  unless  justified  by  ZSG  to the reasonable satisfaction of the
Majority  Lenders  for exceptional reasons (e.g start-up, initial development of
new  sources  of  supply  etc.).

[  ]  Support holding companies employ all employees except management. Support
holding  company  will  on their "own-account" enter into leasing agreements for
wood  harvest  equipment  and  trucks  with  a  maximum  exposure  of EUR 17 mn.

[  ]  Each holding company  enters into a service agreement with its respective
operating  companies  pursuant to which it will make available personnel (and in
the  case  of  the  holding  company "own-account"-trucks on their own accounts)
against  payment of fee covering annual operating / financing costs etc. of such
Support  Holding  Company.

<PAGE>

OTHER  ISSUES

[  ]  Pledge of all bank accounts of Support Holding Companies to secure ZSG
debt  and of Operating Companies to extent of working capital loans downstreamed
to  them  from  time  to  time  from  ZSG.

[  ]  Direct Agreement (substantially  in  the form annexed hereto) between ZSG
lenders  and leasing companies providing that leasing companies cannot terminate
leases  without  giving  prior  notice  to ZSG lenders and not at all if the ZSG
lenders  "step-in"  to  the  leases  making  good  any existing payment default.

[  ]  The  Borrower  delivers  to  the  Agent:

      (a) as soon as possible and no later than ninety (90) days after the close
of its financial year (i) the balance sheet, the profit and loss calculation and
the  cashflow  statement for the subsidiaries in respect of that financial year,
audited  by  a  recognised  independent  firm  of  accountants with a license to
practice  in  the Federal Republic of Germany as well as a reconciliation of the
annual  financial  statements  with  the  annual  budgeted  accounts made by the
Borrower which includes an explanation of all material deviations of it from the
budgeted annual financial statements; and (ii) the corresponding auditing report
of  the firm of accountants; and (iii) a certificate of this firm of accountants
certifying  that  all business contracts of the Borrower with Related Parties in
this  financial  year have been entered into on conditions not less advantageous
to  the  Borrower  than  those business contracts achievable with third parties;

      (b) upon request by the Agent semi-annually unaudited economic
evaluations,  a  list  of  balances and a statement of the board of directors in
respect  of  the  development  of  the  subsidiaries.

<PAGE>

                                      Annex

THIS  DIRECT  AGREEMENT  is  made  on  [          ],  2002  between
(1)     [LEASING  COMPANY]  (the  "Leasing  Company")
(2)     ZELLSTOFF  STENDAL  GmbH  ("ZSG")
(3)     ZSG  SUPPORT  HOLDING  COMPANY  ("Holding")  and
(4)     BAYERISCHE  HYPO-UND  VEREINSBANK  AG  (the  "Agent")

WHEREAS

A.     ZSG  [will  build and operate/has built and operates] a bleached softwood
kraft  pulpmill located at Arneburg, Sachsen-Anhalt, Federal Republic of Germany
(the  "Mill").

B.     The  Leasing  Company  has  agreed to lease certain ["trucks/harvesters"]
(the  "Equipment")  to  the  Holding  (a wholly-owned subsidiary of ZSG) as more
particularly  identified  in  that certain Leasing Agreement dated [          ],
2002  (the  "Leasing  Agreement")  for  use  in  the  operation  of  the  Mill.

C.     The Agent is agent for a syndicate of banks who have lent money to ZSG to
finance  the  construction  and  operation  of  the  Mill.

IT  IS  AGREED  as  follows:

1.     The Leasing Company agrees not to take any steps ("Enforcement Steps") to
terminate,  rescind  or  suspend  performance  of  the  Leasing  Agreement or to
repossess  or  seek  to  repossess any of the Equipment without first giving not
less  that  30  days  prior  written  notice thereof to the Agent specifying the
amount  of  any  existing  payment  default  under  the  Leasing  Agreement.

2.     If  during  such  30  day period the Agent or its nominee makes good such
payment  default  and  undertakes  by notice (a "Step-in-Notice") to the Leasing
Company  that it will assume together with Holding responsibility for compliance
with  the Leasing Agreement from the date of its notice until the date it serves
on the Leasing Company a further notice (a "Step-out Notice") specifying that it
will no longer be responsible for such compliance, the Holding undertakes not to
take  any  Enforcement  Steps  in  respect  of  any default by Holding under the
Leasing  Agreement  which  occurred  prior  to the effective date of the Step-in
Notice.

3.     During  the  30 days period referred to in Clause 1 and thereafter if the
Agent  makes  good  the  payment default and serves a Step-in Notice the Leasing
Company  shall  continue to perform its obligations under the Leasing Agreement.
If  the  Agent does not make good the payment default and serve a Step-in Notice
or  if  having  done so it serves a Step-out Notice the Leasing Company may take
such action as it thinks fit to enforce its rights against the Holding under the
Leasing  Agreement  with effect from the expiry of such 30 day period or, as the
case  may  be,  the  effective  date  of  the  Step-Out  Notice

4.     All notices or other communications required or permitted hereunder shall
be in writing addressed to the relevant party at its address identified with its
signature below or such other address as any party may, by notice to each of the
other  parties,  specify.  All  notices  shall be deemed delivered upon receipt.

5.     This  Direct  Agreement  shall be governed by and construed in accordance
with  the  laws  of  the  Federal  Republic  of  Germany.

6.     The  exclusive  place  of  jurisdiction  to  hear and determine any suit,
action  or  proceeding  and  to  settle any dispute which may arise out of or in
connection  with  this  Direct  Agreement  is  [Munich].  Mandatory  places  of
jurisdiction  remain  unaffected.

AS  WITNESS  the  hands  of  the  parties
[LEASING  COMPANY]                            ZELLSTOFF  STENDAL  GmbH

by                                            By
   ----------------------------------            -------------------------------

<PAGE>

   Address:                                      Address:
   Fax  No:                                      Fax  No:

BAYERISCHE  HYPO-UND  VEREINSBANK  AG

By
   ----------------------------------
Address:
Fax  No:

<PAGE>

                                   SCHEDULE 12

                                Minimum Insurance

                                    Schedule

Bankrisk  Services                                 Stendal  Pulp  Mill  Project
Insurance  Due  Diligence                        Arranger's  Insurance  Concept

                           Minimum Insurance Schedule

                          CONSTRUCTION PHASE INSURANCE

1.     Construction/Erection  "All  Risks"  Material  Damage  Insurance

1.1    The  Insured  Parties

(a)     Borrower  and  any  Subsidiary  Companies;

(b)     The  EPC  Contractor and/or Contractor's Suppliers in respect of the EPC
Contract  and  the  Contractor  and/or  Contractor's Suppliers in respect of the
non-EPC  ancillary  Contracts;

(c)     Any  consultants  and  suppliers  for  their  site  activities  only;

(d)     The  Independent  Engineer,

Each  for  their  respective  rights  and  interests.

1.2     The  Insured  Property

All permanent and temporary works, preliminary works (including associated works
and  site  mobilisation)  executed  or in course of execution, materials, goods,
parts,  excavations,  spare parts inventory, debris removal, consumables, fuels,
chemicals  and oils and all other things equipment of whatsoever nature used for
or  intended  for  incorporation  within  the  Site,  including  the  rail spur,
electricity,  steam,  gas  and  water  interconnections,  all  designs  drawings
specifications  plans  to  be  provided,  together  with  computer  and building
services equipment, all other parts or units or equipment plant and machinery or
whatever  nature  the property of the insured or for which they are responsible,
(but  excluding  any  contractor's  or sub contractor's constructional plant and
equipment),  while  on  or adjacent to the Site and all associated and ancillary
works  connected  to  the  Plant.

1.3     Geographical  Limits

Europe  and  Scandinavia.

1.4     Sum  Insured

EURO  625,000,000  representing the amount equivalent to the total reinstatement
value  of  the  Works  and  the  Plant,  including  allowance  for  the costs of
demolition  and  debris  removal  and  professional fees (including construction
management,  Technical Advisers fees and fuel, chemical, raw material and Spares
Inventory  at  Site  at the date of Acceptance), customs duties of the Works and
the  Plant  (as  applicable).  The  sum insured is to operate in respect of each
occurrence  of  loss  or  damage  to  the  insured  property.

1.5     Indemnity

All risks of physical loss of or damage to any part of the Insured Property from
any  cause  not  excluded.

1.6     Period  of  Insurance

From  Financial  Close  (or  the  Commencement  Date  under  the EPC Contract if
earlier)  until  the  date  of Acceptance, extending for an additional 18 months
thereafter  with  respect  to  cover  during  the  Defects  Liability  Period.

<PAGE>

Bankrisk  Services                                 Stendal  Pulp  Mill  Project
Insurance  Due  Diligence                        Arranger's  Insurance  Concept

1.7     Main  Exclusions

The  Insurers  shall  not  be  liable  for:

(a)     War,  Civil War, etc., including Terrorism (until such time as insurance
against  acts of Terrorism becomes available in the international market on what
the  Security  Agent  accepts  to  be  reasonable  commercial  terms);

(b)     Radioactive  Contamination,  etc.;

(c)     Wear  and  Tear  and  gradual  deterioration  but this shall not exclude
consequent  loss  or  damage;

(d)     Date  Recognition  Clause;

(e)     Unexplained  Disappearance  or  Shortages;

(f)     Consequential  Losses,  loss  of  use,  delay  penalties;

(g)     Contractor's  or its Subcontractor's Constructional Plant and Equipment;

(h)     Loss  of  cash,  banknotes,  treasury  notes,  money  orders, cheques or
stamps;

(i)     Costs  incurred  arising  out  of  wear,  tear, wasting or wearing away,
gradual  deterioration, rust, oxidation, corrosion or erosion but not consequent
damage;

(j)     Marine  and  Air  transits  (but  not  transits  inland  waterways);

(k)     Vehicles  licensed  for  road  use.

1.8     Maximum  Deductible

Not  exceeding  EURO  75,000  in respect of each and every occurrence of loss or
damage.

1.9     Main  Extensions/Conditions

(a)     Including loss or damage arising from acts of Terrorism, strikes, riots,
civil  commotion  and  criminal/malicious  damage (except that insurance against
acts  of  Terrorism  will  be excluded until such time as that insurance becomes
available  in  the international market on what the Security Agent accepts to be
reasonable  commercial  terms);

(b)     Natural  Hazards  Limit;  Euro 12,500,000 each event and Euro 25,000,000
per  annum;

(c)     Defective  Design  cover  only  excluding  the  component  part  that is
defective  but  otherwise  covering  consequential  damage;

(d)     Debris  removal;

(e)     Expediting  expenses;

(f)     Professional  and  surveyor's  fees;

(g)     Automatic  reinstatement  of  sum  insured;

(h)     Escalator  on  Sum  Insured;

(i)     Escalator  on  Limit  of  liability  applied  to  Sum  Insured;

(j)     Seventy-two  Hour  Clause;

(k)     Plans  Specifications  Drawings  Electronic  Records  and  data  Clause;

(l)     50/50  Marine/Construction  Loss  Sharing  Clause;

(m)     Temporary  Repairs  and  Minimizing  Loss;

(n)     Offsite  Storage  and  inland  Transits;

(o)     Cover  during Defects Liability Period to cover loss or damage caused to
the  Works  and the Plant by defects or whilst work is being undertaken pursuant
to  the  Defects  Liability  provisions  of  the  relevant  EPC  Contract.

2.     Delay  in  Start  up/Advance  Loss  of  Revenue  Insurance (Construction)

2.1     The  Insured  Parties

Borrower

<PAGE>

Bankrisk  Services                                 Stendal  Pulp  Mill  Project
Insurance  Due  Diligence                        Arranger's  Insurance  Concept

2.2     Period  of  Insurance

From  Financial  Close  (or  the  Commencement  Date  under  the EPC Contract if
earlier)  until  the  date  of  Acceptance.

2.3     Indemnity

Fixed  operating  costs  and  standing  charges  including  loss of debt service
(interest  -  including  fees  -  and  Principal);  plus any minimum take or pay
obligations;  plus  increased  cost  of  working following delays in the date of
Start Up, including in the five month period from the date of Start Up until the
scheduled  date  of  Acceptance,  as  a direct result of physical loss or damage
covered  under  Paragraph  1, "Construction/Erection "All Risks" Material Damage
Insurance,"  of  this Minimum Insurance Schedule including loss or damage, which
would  be  insured  but  for  the  application of any deductible, that causes an
interference in the construction work resulting in a delay to the scheduled date
of  Start  Up or such later date on which the Insured Business would have become
operational  or  causes  an  interruption of the operation as scheduled from the
date  of  Start  Up  until  schedule  date  of  Acceptance,  respectively.

2.4     Sum  Insured

EURO  160  million  for  any 12 months period of indemnification being an amount
sufficient  to  cover the Plant's fixed operating costs including interest, fees
and  principal payable plus any minimum take or pay obligations for the duration
of  the  Indemnity  Period.

2.5     Indemnity  Period

A period of 18 months from the scheduled Start Up date including the period from
the  scheduled date of Start Up until the scheduled date of Acceptance for FLEXA
(Fire  Lightning  Explosion  and  Aircraft) perils and Acts of God and 12 months
from the scheduled Start Up date including the period from the scheduled date of
Start  Up  until  the scheduled date of Acceptance for Machinery Breakdown & all
other  damage.

2.6     Main  Exclusions

The  insurance  excludes  any  event  not  insured  under  paragraph  1
"Construction/Erection  "All  Risks"  Material  Damage  Insurance,  above.

2.7     Maximum  Time  Excess

Not  exceeding  60  days  any  one  delay.

3.     Marine  Cargo  and  Inland  Transit  Insurance

3.1     The  Insured  Parties

(a)     Borrower  and  any  Subsidiary  Companies;
(b)     The  EPC  Contractor and/or Contractor's Suppliers in respect of the EPC
Contract  and  the  Contractor  and/or  Contractor's Suppliers in respect of the
non-EPC  ancillary  Contracts;
(c)     The  Independent  Engineer,

Each  for  their  respective  rights  and  interests.

3.2     Period  of  Insurance

From  Financial  Close  (or  the  Commencement  Date  under  the EPC Contract if
earlier)  until  date  of  delivery  of  the  final  consignment  to  the  Site.

<PAGE>

Bankrisk  Services                                 Stendal  Pulp  Mill  Project
Insurance  Due  Diligence                        Arranger's  Insurance  Concept

3.3     The  Insured  Property

All  imported  Cargoes  and/or  interest  and/or stock of whatsoever description
including  plant,  equipment,  machinery,  (other than Contractor's construction
plant  and  equipment), spare parts and other items for incorporation within the
Site.

3.4     Sum  Insured

EURO  40,000,000  any  one  shipment but not less than 110% of the maximum value
(including  cost of freight and insurance) any one conveyance and/or location of
each  shipment  and  EURO  10,000,000  for  Inland  Transit.

3.5     Indemnity

Against  "All  Risks" of physical loss or damage while in transit by sea, air or
land  or  inland  waterway portion of the journey or whilst in storage en route.
From  the  time the insured items leave the warehouse or factory anywhere in the
world  for  shipment or transit to, and until they are delivered and unloaded at
the  Site,  and  return.

3.6     Main  Exclusions

(a)     German  Institute  Insolvency  Exclusion  Clause  or  Equivalent;

(b)     German  Institute  Radioactive  Contamination  Exclusion  Clause  or
Equivalent;

(c)     Excluding  electrical  and  mechanical  derangement  unless caused by an
insured  peril.

3.7     Main  Extensions/Conditions

(a)     German  Institute  Cargo  and  Air  Cargo  Clauses  (A)  or  Equivalent;

(b)     German  Institute  War  Clauses  (Cargo,  Air  Cargo)  or  Equivalent;

(c)     German  Institute  Strikes  Clause  (Cargo,  Air  Cargo)  or Equivalent;

(d)     German  Institute  Classification  Clause  or  Equivalent;

(e)     German  Institute  Replacement  Clause  or  Equivalent;

(f)     50/50  Marine  Construction  Loss  Sharing  and Concealed Damage clause;

(g)     Debris  Removal  Clause;

(h)     Expediting  Expenses;

(i)     Transhipment  Clause;

(j)     Accumulation  Clause/Off-Site  Storage.

3.8     Maximum  Deductible

Not  to  exceed  EURO  10,000  each  and  every  loss.

4.     Marine  Delay  in  Start  Up/Marine  Advance  Loss  of  Revenue

4.1     The  Insured  Parties

Borrower

4.2     Period  of  Insurance

From the date of Financial Close or the Commencement Date under the EPC Contract
(if  earlier)  until  the  date  of  Start  Up.

<PAGE>

Bankrisk  Services                                 Stendal  Pulp  Mill  Project
Insurance  Due  Diligence                        Arranger's  Insurance  Concept

4.3     Indemnity

Fixed  operating  costs  and  standing  charges  including  loss of debt service
(interest  -  including  fees  -  and  Principal);  plus any minimum take or pay
obligations;  plus  increased  cost of working following delays in Start Up as a
direct  result  of  physical  loss  or damage covered under Paragraph 3, "Marine
Cargo/Transit  Insurance,"  of this Minimum Insurance Schedule including loss or
damage,  which  would be insured but for the application of any deductible, that
causes  an  interference  in  the  construction work resulting in a delay to the
scheduled  date  of  Start  Up  or such later date on which the Insured Business
would  have  become  operational.

4.4     Sum  Insured

EURO  160,000,000  being  an  amount  sufficient  to  cover  the Project's fixed
operating  costs including interest, fees and principal payable plus any minimum
take  or  pay  obligations  for  the  duration  of the maximum Indemnity Period.

4.5     Indemnity  Period

A  minimum  of  12  months  from  the  schedule  date  of  Start  Up.

4.6     Main  Exclusions

The  insurance  excludes  any  event  not  insured  under  paragraph  3, "Marine
Cargo/Transit  Insurance,"  above.

4.7     Maximum  Time  Excess

Not  exceeding  60  days  any  one  delay.

5.     Third  Party  Liability/Environmental  Impairment  Liability

5.1     The  Insured  Parties

(a)     Borrower  and  Subsidiary  Company;

(b)     The  EPC  Contractor and/or Contractor's Suppliers in respect of the EPC
Contract  and  the  Contractor  and/or  Contractor's Suppliers in respect of the
non-EPC  ancillary  Contracts;

(c)     Any  consultants  and  suppliers  for  their  site  activities  only;

(d)     The  Independent  Engineer;

(e)     Each  of their respective assigns, employees, agents, officers, partners
and  Directors,

Each  for  their  respective  rights  and  interests.

5.2     Period  of  Insurance

From  Financial  Close  (or  the  Commencement  Date  under  the EPC Contract if
earlier)  until  the  date  of Acceptance, extending for an additional 18 months
thereafter  with  respect  to  cover  required  in respect of the EPC Contractor
and/or  its  Suppliers  during  the  Defects  Liability  Period.

5.3     Indemnity

The  legal  and  contractual  liability  of an Insured to pay damages, costs and
expenses  as  a  result  of:

<PAGE>

Bankrisk  Services                                 Stendal  Pulp  Mill  Project
Insurance  Due  Diligence                        Arranger's  Insurance  Concept

(a)     Death, bodily injury and disease (including mental shock) of any person;

(b)     Loss  or  damage to any third party property and/or loss of use thereof;

(c)     Interference  with  traffic  or  property or any easement, right of air,
light,  water,  support  or  way  or  enjoyment  of  use by obstruction, loss of
amenities,  nuisance,  trespass  or  any  like  cause;  and

(d)     false  arrest,  invasion  of  privacy,  detention,  eviction or any like
cause,

Arising  out of or in the course of or in connection with the performance of the
Works.

5.4     Geographical  Limits

World-wide.

5.5     Limit  of  Indemnity

Not  less  than  EURO  10,000,000 for any one occurrence or all occurrences of a
series  consequent  upon or attributable to one source or original source but in
respect  of  Products  Liability  EURO  10,000,000  in  the  aggregate.

5.6     Maximum  Deductible

Not more than EURO 25,000 in respect of third party property damage only and not
more  than  EURO  250,000  in  respect  of  EIL.

5.7     Main  Extensions/Conditions

(a)     Cross  Liabilities  Clause;

(b)     World-wide  jurisdiction  clause;

(c)     legal  costs  and  expenses;

(d)     Contingent  Motor  Liability.

5.8     Main  Exclusions

(a)     Death  of, or bodily injury to, or illness or disease contracted by, the
employees  of  the Insured claiming indemnity arising out of or in the course of
their  employment;

(b)     Property  belonging  to,  or in the charge, or under the control of, the
Insured;

(c)     Liability  arising  out  of technical or professional advice given for a
fee  by  the Insured or by any person acting on behalf of the Insured other than
advice  relating  to  the  construction  and operation of the Plant in so far as
insured  under  paragraph  1, "Construction/Erection "All Risks" Material Damage
Insurance,"  of  this  Minimum  insurance  Schedule;

(d)     Liability  arising out of the use of mechanically propelled vehicles for
which compulsory insurance or security is required by legislation, except whilst
in  use  as  a  tool  of  trade;

(e)     The  cost of making good loss of or damage to property indemnified under
the  insurance  referred  to  in  paragraph 1 "Construction/Erection "All Risks"
Material  Damage  Insurance,"  of  this  Minimum  Insurance  Schedule;

(f)     Liability  arising  from  ownership,  possession,  use or control of any
aircraft  or  watercraft;  and

(g)     Liquidated  damages  or penalties under any agreement in connection with
delay  or  guarantees  of  performance  or  efficiency.

5.9     Environmental  Impairment  Insurance  ("Umwelthaftpflichtversicherung")

(a)     All events for which one of the insured becomes liable to pay in respect
of  legal liabilities to third parties arising from contamination of the Project
Site,  which  results  in a pollution event causing third party bodily injury or
property  damage;

<PAGE>

Bankrisk  Services                                 Stendal  Pulp  Mill  Project
Insurance  Due  Diligence                        Arranger's  Insurance  Concept

(b)     Temporary  ownership  in  Cover  Component  2.6  of  the
Umwelthaftpflicht-Modell  des  HUK-Verbandes;

(c)     36  month  extended  reporting  period  after  cancellation.

<PAGE>

                                   SCHEDULE 13
                        Sample Table of Content Regarding
                     Quarterly Construction Progress Reports

Summary

1.        Inspection  Programme

1.1       Visits  and  Events

1.2       Next  Steps

2.        Organisation  and  Staffing

2.1       Recruitment

2.2       Site  Organisation

3.        General  Progress  and  Observations

3.1       Pulp  Mill,  General

3.2       Pulp  Mill,  Technical  Issues

3.3       Review  of  Quality  of  Installations

3.4       Training

3.5       Owner's  Scope  of  Work

3.5.1     Works

3.5.2     Infrastructure  and  Connections

3.5.3     Municipalities

3.5.4     Utilities  Supply

3.5.5     Administration

3.5.6     Chemicals  and  Supplies

4.        Permits

4.1       Review  of  Permit  Situation

4.2       New  Permits  and  Inspections

5.        Commissioning  Plan

<PAGE>

5.1       Departmental  Plans

5.2       Start-up  of  Pulp  Production

5.3       Operational  budget

5.4       Wood  Supply

5.5       Wood  Transport

6.        Investment  Budget  Follow-up

7.        Main  Events  Causing  Deviations  and  Change  Orders

8.        Milestones

8.1       Intermediate  Steps

8.2       CMC  4

8.3       Start-up

8.4       Operational  Acceptance

8.5       PAC  4

8.6       Performance  Tests  FAC  4

9.        Certificates

9.1       Certificates  Issued

9.2       New  Certificates

ANNEXES

(A)       Recruitment  Plan

(B)       Time  Schedules

(C)       Time  Schedule  Follow-up

<PAGE>

                                   SCHEDULE 14
                              Transfer Certificate

                               Transfer Agreement

                                     Between

                                      [  ]

                            (the "Assigning Lender")

                                       and

                                      [  ]

                                (the "Assignee")

Preamble

Whereas,  by  the  agreement dated 26 August 2002 (the "Facility Agreement") the
Assigning  Lender  together  with the other Lenders has provided to the Borrower
the  Facility  Agreement  for  an  aggregate  principal  amount  of  up  to  EUR
827,950,000.  The  Assigning  Lender  has  assumed  a Lender's Commitment in the
amount  of  EUR  [  ].

Whereas,  the Assigning Lender has pursuant to Clause 31.2 of the Facility
Agreement  the  right  to  assign  to  a bank or financial institution its legal
position  as Lender including all its rights, benefits and obligations under the
Facility  Agreement  in  whole  or  in  part  in amounts of not less than EUR 10
million.

Whereas,  the  Assigning Lender is desirous to transfer its rights, benefits and
obligations  related  to  an amount of EUR [  ] of the Facility Agreement to the
Assignee  and  the  Assignee  is  desirous of assuming the legal position of the
Assigning Lender related thereto including all rights, benefits and obligations.

Now  therefore,  the parties to this Transfer Agreement hereby agree as follows:

1.      Definitions

Terms used but not otherwise defined herein shall have the meaning given to them
in  the  Facility  Agreement.

2.      Transfer  of  Assigning  Lender's  Participation  in  Advances

<PAGE>

Subject  to  the payment to the Agent of a fee in the amount of EUR 1,000 and to
the condition precedent that the Assignee pays the transfer price on the date of
payment as  defined  in  Clause 6.2 , the Assigning  Lender herewith assigns and
transfers  and  the  Assignee  herewith  assumes,  the  Assigning Lender's legal
position  related  to  such  Lender's  portion  of  its  participation  in  each
outstanding Advance and/or the Commitments (applied rateably across the Tranches
and  in  any particular Tranche rateably between the Assigning Lender's share in
each  outstanding  Advance  thereunder  and  its  undrawn Commitment in relation
thereto)  in  the amount set out in Clause 6.2 hereof, including but not limited
to  all  rights,  benefits  and  obligations  of  the Assigning Lender under the
Facility  Agreement,  the  Shareholders'  Undertaking  Agreement,  the  Security
Agreements  and  the  Security  Pooling  Agreement  as  against the Borrower (if
transferable)  and  the  other  parties  thereto  (the  "Transferred  Position")
effective  as of the date of payment as defined in Clause 6.2. Upon the transfer
as  set  forth  above becoming effective, the Assigning Lender shall be released
from  the obligations related to the Transferred Position to the Borrower on the
one  hand  and  to  the  Lenders  on  the  other  hand.

3.      Confirmations

3.1     The  Assignee  confirms  that  it  has  received  a copy of the Facility
Agreement  and  all  other  documentation  and  information  required  by  it in
connection  with  the  transaction  contemplated  by  this  Transfer  Agreement.

3.2     The Assignee confirms that it has made and will continue to make its own
assessment  of  the  validity,  enforceability  and  sufficiency of the Facility
Agreement and the Transfer Agreement and has not relied and will not rely on the
Assigning  Lender,  the  Original Lender and the Agent or any statements made by
any  of  them  in  this  respect.

3.3     The  Assigning  Lender  hereby  confirms  that  it  has  fulfilled  its
obligations  arising  out  of  the  Facility  Agreement  with  respect  to  the
Transferred  Position  until  the  date  hereof.  The  Assigning Lender gives no
representation  or  warranty  and  assumes no responsibility with respect to the
validity  or  enforceability  of  the Facility Agreement or any document related
thereto  and  assumes  no  responsibility  for  the  financial conditions of the
Borrower or any other party to the Facility Agreement or for the performance and
observance  by  the  Borrower or any other party of any of its obligations under
the  Facility  Agreement  and  all  such representations and warranties, whether
expressed  or  implied  by  law  or  otherwise,  are  hereby  excluded.

<PAGE>

3.4     The Assignee hereby ratifies and confirms the declarations and acts made
by  the  Security Agent on its behalf pursuant to Clause 4.3 of the Share Pledge
Agreement  dated  26  August  2002  between the Shareholders as pledgors and the
Security  Agent  as pledgee (as amended from time to time) and Clause 2.5 of the
Account  Pledge  Agreement  dated 26 August 2002 between the Borrower as pledgor
and  the  Security  Agent  as  pledgee  (as  amended  from  time  to  time).

4.      Miscellaneous

4.1     The  Assigning  Lender shall inform the Agent without undue delay of the
transfer of the Transferred Position pursuant to Clause 2 by sending an executed
copy  of  this  Transfer  Agreement  to  it.

4.2     The Assignee herewith empowers the Agent to exercise such rights, powers
of  attorney  and  discretions  as  set forth in the provisions of the Financing
Documents.

4.3     Without prejudice to any future change of address, all correspondence to
the  Assignee  shall  be  sent  to  the  following  address:

        [  ]
        Attn.:
        Fax:

5.      Legal  Provisions

5.1     Any  alteration  or  amendment  to  this  Transfer Agreement shall be in
writing.

5.2     The  form and content of this Transfer Agreement shall be subject to and
construed  in  accordance  with  the  laws of the Federal Republic of Germany in
every  respect. Non-exclusive place of jurisdiction for all disputes arising out
of  or  in  connection  with  this  Transfer  Agreement  shall  be  Munich.

5.3     Should  any  provision of this Transfer Agreement be or become wholly or
partly  invalid,  then  the  remaining  provisions  shall  remain valid. Invalid
provisions  shall  be construed in accordance with the intent of the parties and
the  purpose  of  this  Transfer  Agreement.

5.4     This  Transfer  Agreement  has  been  executed in the German language in
three  (3)  counterparts.  One  executed copy shall be provided to the Assigning
Lender,  the Assignee and the Agent. Each executed copy shall have the effect of
an  original.

6.     Commitments  and  Advances  Subject  to  Transfer

<PAGE>

6.1     Assigning  Lender's  Commitment  prior  to  transfer:     EUR  [  ]
        Assigning  Lender's  participation  in  Advances
        prior to transfer:                                        EUR  [  ]
        Position  transferred  to  Assignee:                      EUR  [  ]

6.2     Date  of  payment  by  Assignee  to  Assigning  Lender:     [  ]

6.3     Account of Assigning Lender to which payment shall be effected:     [  ]

-----------------------------------
[Assigning  Lender]

-----------------------------------
[Assignee]

We  hereby  confirm  the  Borrower  has  consented  to  the above assignment and
transfer  and  we  hereby agree on our own behalf as Lender and on behalf of the
other  Lenders  to  the  above  Transfer  Agreement.

[place],  [date]

-----------------------------------
[Agent]

<PAGE>

                                   SCHEDULE 15
                                Development Costs
Development  costs in the amount of EUR 26.5 million which, in the course of the
planning of the project until 31 July 2002, have been confirmed by the Technical
Adviser  to  be  project  development costs until Financial Close and which have
been  incurred  mainly  in  the  following  areas:

*     project  management

*     conceptual  pre-planning  of  the  process  technology

*     obtaining  of  authorisations  and  approval  (Genehmigungsplanung)  (Beh
      ordenengineering)

*     availability/provision  of  wood  and  logistics

*     financing  and  subsidies,  EU  notification,  state  guarantees

*     ordering/commissioning  and  legal  advice

*     business  management  and  local  operating  costs

*     archeological  excavations

<PAGE>

                                   SCHEDULE 16
                         Broker's Letter of Undertaking

                        [Letterhead of insurance broker]

                              LETTER OF UNDERTAKING

To:     Bayerische  Hypo-und  Vereinsbank  AG (the "Agent" and "Security Agent")

Dear  Sirs,

[               ]  (the  "Project")

We  have  been  requested by Zellstoff Stendal GmbH (the "Borrower"), to provide
you  with certain confirmations relating to certain insurances arranged by us in
relation  to  the Project. Accordingly we provide you with the confirmations set
out  below.

The  insurances  summarised  in  Appendix  1  attached  to  this  letter  (the
"Insurances")  are,  at  the date hereof, in full force and effect in respect of
the  risks and liabilities as set out in the insurance policies evidenced in the
policies/cover  notes  attached  as  Appendix  2  (the  "Policies").

We further confirm in our capacity as insurance brokers to the Borrower that the
Insurances  are,  to  the best of our knowledge and belief placed with insurers,
which  as  at  the time of placement, are reputable and financially sound. We do
not,  however,  make  any  representations  regarding  such insurer's current or
future  solvency  or  ability  to  pay  claims.

We  have  arranged  the  Insurances on the basis of information and instructions
given  by  the  Borrower.  We  have not made any particular or special enquiries
regarding  the  Insurances  beyond  those  that we normally make in the ordinary
course  of  arranging insurances on behalf of our insurance broking clients. The
confirmations  set  out  in  this  letter are given by reference to our state of
knowledge  at  the  date  hereof.

We  shall  use our best endeavours to notify the Borrower and the Security Agent
as soon as reasonably practicable after we become aware of an insurer ceasing to
carry  a claims rating from Standard & Poors Rating Agency of at least BBB+ or a
comparable  rating.

Pursuant  to  instructions  received  from  the  Borrower in connection with the
Insurances,  we  hereby  undertake:

(a)     to  notify  you as soon as reasonably practicable prior to the expiry of
the Insurances if we have not received instructions from the Borrower and/or any
insured  parties  or  the agents of any such party to negotiate renewal, and, in
the  event  of  our  receiving  instructions  to renew, to advise you as soon as
reasonably  practicable  after  receipt  of  the  details  thereof;

(b)     to  notify  you  as  soon  as  reasonably  practicable  after  giving or
receiving notice of termination of our appointment as brokers in relation to the
Insurances;

(c)     to  pay into the Revenue Account or such other account as you may inform
us  in  writing from time to time, without any set-off or deduction of any kind,
for any reason, all payments received by us from the insurers in relation to the
Insurances  (including refunds of premium) other than as may be permitted in the
relevant  loss  payable  clauses  in  the  Endorsements;

(d)     to  advise  you as soon as reasonably practicable after receiving notice
of  any  insurer's  cancellation  or  suspension  of  any  of  the Insurances or
receiving  notice  of  any  insurer's  intention to cancel or suspend any of the
Insurances;

(e)     in accordance with our duties to our clients, make the Borrower aware of
its  pre-contractual  duties  of  disclosure  to  the  insurers  by advising the
Borrower of the type of information which generally needs to be disclosed to the
insurers;

(f)     subject  to  the  Borrower's  consent,  to  hold  the insurance slips or
contracts,  the  policies  and  any  renewals  thereof  or any new or substitute
policies  to  the  extent  held  by  us, to the order of the Security Agent; and

(g)     to  treat  as confidential all information in relation to the Insurances
marked  as confidential and supplied to us by the Borrower or the Security Agent
and  not  to  disclose  such  information,  without  the  written consent of the
supplier,  to  any  third  party other than those persons who, in our reasonable
opinion,  have  a need to have access to such information from time to time. Our
obligations  of  confidentiality  shall not conflict with our duties owed to the
Borrower  and  shall  not apply to disclosure required by an order of a court of
competent  jurisdiction, or pursuant to any applicable law or regulations having
the  force  of  law  or  to  information  which  is  in  the  public  domain.

The  above  undertakings  are subject to our continuing appointment as insurance
brokers to the Borrower in relation to the Insurances and, following termination
of  such  appointment, our immediate release from all our obligations set out in
this  letter  (except  for  those  mentioned  in  paragraph  (g)  above).

<PAGE>

Nothing  in  this  letter shall prejudice the right that any insurer may have to
cancel  any  of the Insurances following default in excess of 30 days in payment
of  premiums,  nor shall the exercise of such right in circumstances amount to a
breach  of  any obligations accepted by us pursuant to the terms of this letter.
In  accordance  with  paragraph  (d)  above  we  will give you notice as soon as
reasonably  practicable  after  receiving  notice  of any insurer's intention to
cancel  any  of  the Insurances and where insurers wish to cancel for reasons of
non-payment  of  premium,  we  will  request that insurers give you a reasonable
opportunity  to  pay  amounts outstanding before such insurers issue a notice of
cancellation.

For  the  avoidance  of doubt, all undertakings and other confirmations given in
this  letter  relate  solely  to  the Insurances. They do not apply to any other
insurances  and  nothing  in  this  letter  should  be  taken  as  providing any
undertakings  or  confirmations  in relation to any insurance that ought to have
been  placed  or  may  at  some  future  date  be  placed  by  other  brokers.

This  letter  is  given  by  us on the instructions of the Borrower and with the
Borrower's  full  knowledge  and  consent  as  to its terms, as evidenced by the
Borrower's  signature  below.

This  letter  shall  be  governed  by  and shall be construed in accordance with
German  law  and any dispute as to its terms shall be submitted to the exclusive
jurisdiction  of  the  courts  of  Germany.

Yours  faithfully,

-------------------------------------------------------
For  and  on  behalf  of  [insurance  broker]

-------------------------------------------------------
For  and  on  behalf  of  [Zellstoff  Stendal  GmbH]

<PAGE>

                                  SCHEDULE 17
                                  ARCHEOLOGICAL
                                      SITES

                                    [Omitted]

      [Map of Archeological Sites 1-4 excavated at Stendal Pulp Mill Site.
              A Copy of this Schedule will be provided on request.]

<PAGE>

                                   SCHEDULE 18
                          INVESTMENT AND FINANCING PLAN

<TABLE>
<CAPTION>

Finance  Requirements        EUR  thousand       EUR  thousand
---------------------        -------------       -------------
<S>                          <C>                 <C>

Capitalized  investment
  financing
-  real estate cost
   and  additional
   real  estate
   cost/infrastructure           28,900
-  project  development,
   planning  and  permit
   costs  until
   financial  close              22,000
-  EPC  contact (setup
   costs)                       716,000
-  EPC contract
   (incidental
   expenses)                     10,500
-  Setup  costs
   and  management,
   ZSG  portion
-  Construction  period          46,500
   interest  of  tranche
   A  to  start-up               20,342

Total                                                  844,242

Operating  assets                                      121,478

Debt  service
reserves  account
(initially
debt-financed)                                            42,000

Cost  overrun  and
debt  service
reserves  (financed
from  internal  funds)                                    30,000

TOTAL  FINANCE  REQUIREMENTS                           1,037,720

</TABLE>

<TABLE>
<CAPTION>

Finance  Requirements        EUR  thousand       EUR  thousand
---------------------        -------------       -------------
<S>                          <C>                 <C>

Internal  funds
-  equity                        15,000
-  subordinated
   shareholder
   loans                         55,000
-  reserves  of
   internal
   funds/cost
   overrun
   financing                     15,000
-  internal
   funds  (debt
   service
   reserve
   account)                      15,000
Total  internal  funds                                100,000

Start-up  cashflow                                     26,016
                                 109,161
Subsidies                        165,515
-  GA  subsidy
-  investment  subsidy           465,000
Total  subsidies                 122,000               274,676
                                 9,000
Borrowed  funds                  42,000
-  guaranteed  credit
   long-term
   (Tranche  A)
-  guaranteed  credit
   short-term
   (Tranche  B)
-  guaranteed  credit
   (not  guaranteed,
   Tranche  D  1)
-  bank  loan  for
   debt  service
   reserve  account
  (not guaranteed,
   Tranche  C)

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

Finance  Requirements        EUR  thousand       EUR  thousand
---------------------        -------------       -------------
<S>                          <C>                 <C>

(-  bank  loan                    (30,000)
(cost  overrun
reserve,  not
guaranteed,
Tranche D2))

Total  borrowed  funds  (excluding  reserve)           638,000

Total  Financing                                      1,038,692

</TABLE>

<PAGE>

AS  WITNESS  the  hands  of  the  duly authorised representatives of the parties
hereto  the  day  and  year  first  before  written:

The  Borrower

Zellstoff  Stendal  GmbH

By:
     -----------------------------             ------------------------------
     Name:                                     Name:
     Title:                                    Title:

     Address:  Niedergorner  Damm  1
               39596  Arneburg
               Federal  Republic
               of  Germany

The  Arranger,  Agent,  Security  Agent  and  Lender

Bayerische  Hypo-  und  Vereinsbank  AG

By:
     -----------------------------             -------------------------------
     Name:                                     Name:
     Title:                                    Title:

     Address:  Am  Tucherpark  16
               80538  Munchen
               Federal  Republic
               of  GermanyEXHIBIT 10.2

<PAGE>

C L I F F O R D

C H A N C E

P U N D E R

                                                               Execution Version

                           MERCER INTERNATIONAL, INC.
                            STENDAL PULP HOLDING GMBH
                           RWE INDUSTRIE-LOSUNGEN GMBH
                            AIG ALTMARK INDUSTRIE AG
                                       and
                              FAHR BETEILIGUNGEN AG

                             ZELLSTOFF STENDAL GMBH

                                       and

               BAYERISCHE HYPO- UND VEREINSBANK AKTIENGESELLSCHAFT

                         SHAREHOLDERS' UNDERTAKING AGREEMENT

<PAGE>

                                    CONTENTS

CLAUSE                                                       PAGE

1.   Definitions and Interpretation                             1

2.   Undertakings                                               3

3.   Representing and Warranties                               13

4.   Funding and Shareholder Contributions and Nature
       of Obligations                                          18

5.   Guarantee                                                 20

6.   Conflict                                                  23

7.   Taxes                                                     23

8.   Indemnities                                               23

9.   Assignments and Transfer                                  24

10.  Remedies and Waivers, Cumulative Rights, Partial
       Invalidty                                               25

11.  Notices                                                   25

12.  Counterparts                                              28

13.  Process Agent                                             29

14.  Governing law                                             29

SCHEDULE 1 Terms Of Shareholders Loans                         30

<PAGE>

THIS  AGREEMENT  is  made  on  26  August  2002

BETWEEN

(1)     MERCER  INTERNATIONAL,  INC.  ("Mercer  International"), RWE INDUSTRIE-L
        OSUNGEN GmbH  ("RWE-IN")  and  AIG  ALTMARK  INDUSTRIE  AG  ("AIG")  and
        FAHR BETEILIGUNGEN  AG  ("FAHR")  (together  the  "Sponsors");

(2)     STENDAL  PULP HOLDING GmbH ("SP Holding"), RWE-IN and FAHR (together the
       "Shareholders");

(3)     ZELLSTOFF  STENDAL  GmbH  (the  "Borrower");

(4)     MERCER  INTERNATIONAL,  INC.  (the  "Guarantor");  and

(5)     BAYERISCHE  HYPO-  UND  VEREINSBANK  AKTIENGESELLSCHAFT  for  itself  as
        Arranger,  Agent,  Security  Agent  and  an  Original  Lender  and  on
        behalf of the Lenders.

WHEREAS

(A)     The  Borrower  is a special purpose project company created as a limited
        liability  company  in  1996  to  undertake  the  Project.

(B)     Mercer  International,  RWE-IN,  FAHR  and  AIG  are the sponsors of the
        Project.

(C)     The  Shareholders  are  shareholders  in  the  Borrower. SP Holding is a
        wholly-owned  subsidiary  of  Mercer  International  and  FAHR  is AIG's
        holding company.

(D)     The  Lenders  have agreed to provide the Borrower with a project finance
        facility  in  the amount of EUR 827,950,000 pursuant to the terms of the
        Facility Agreement.

(E)     The  entering  into  of  this  Agreement  by  the parties is a condition
        precedent  to  the  obligations  of  the  Lenders  under  the  Facility
        Agreement.
IT  IS  AGREED  as  follows:

1.     DEFINITIONS  AND  INTERPRETATION

1.1     Definitions

Terms  used but not otherwise defined herein shall have the meanings ascribed to
them  in  the  Facility  Agreement. The following terms shall have the following
meanings  when  used  herein:

<PAGE>

"Agreement"  means  this  agreement  and  includes  the  schedules  hereto.

"Approved  Cost  Overruns" means Cost Overruns approved by the Agent as provided
in  Clause  3.4.4  of  the  Facility  Agreement.

"Capital  Contributions"  means  the  subscription  and  purchase  of  Shares.
"Contractors"  means  all  suppliers,  contractors,  employees and agents of the
Borrower.

"Facility  Agreement"  means the project financing facility agreement bearing or
intended  to  bear  even  date  herewith  between  the  Borrower, the Agent, the
Security  Agent,  the  Arranger  and  the  Original  Lender.

"Obligor"  means  each  of  the Sponsors and the Shareholders and the Guarantor.
"Shareholder  Criteria"  means  in  relation  to  any  Transferee,  that:

(a)     such person, its assets or its country of residence or incorporation, is
not  subject  to  any  economic  or  political  sanctions;

(b)     such person has delivered to the Agent its most recent three consecutive
years  of  audited  financial  statements  which  (except  in any case where its
obligations  are  guaranteed  by  Mercer  International)  demonstrate  to  the
satisfaction  of  the  Agent  that  such  person could reasonably be expected to
fulfil  its  future  obligations  under  the  Financing  Documents.

"Shareholder  Percentage"  means in relation to a Shareholder the percentage set
out  opposite  its  name  in  Clause 2.6.2 (a) as the same may be reduced by any
transfer  made in accordance with the Transfer Conditions and in relation to any
other  person  who  becomes  a  Shareholder  in  accordance  with  the  Transfer
Conditions  such  percentage  as may be specified in the document referred to in
(c)  of  the  definition  thereof.

"Stand-By  Equity  Amount"  bears  the  meaning  ascribed  thereto  in  Clause
2.6.2(a).

"Transfer  Conditions"  means,  in  relation  to  any  disposal of Shares, that:

(a)     the  Transferee  satisfies  the  Shareholder  Criteria;

(b)     the person intending to dispose of Shares has provided the Agent with at
least 60 days' notice of the identity of the Transferee together with details

<PAGE>

of the number of Shares that are to be transferred to and the amount of
Shareholder Loans  that  are  to  be  assumed  by  the  Transferee;

(c)     the  Transferee  has  become  bound  by the terms of the Shareholders
Agreement, Shareholder Loans and this Agreement by execution of such document as
the  Agent  may  reasonably  require  specifying,  inter  alia,  its Shareholder
Percentage  and has delivered a legal opinion in form and substance satisfactory
to  the  Agent  addressing the representations set out in Clause 3.1 (Individual
Shareholder  Representations  and  Warranties);

(d)     the  Shares  which are the subject of the disposal remain subject to the
Security;  and

(e)     the  Transferee has provided Stand-By Equity Security in relation to its
pro  rata  share  of  any  remaining  Stand-By  Equity  Amount.

"Transferee"  means  a  person to whom a Shareholder intends, in conformity with
the provisions hereof and the constitutive documents of the Borrower, to dispose
of  all  or  part  of  its  Shares  and  Shareholder  Loans.

1.2     Interpretation
Any  reference  in  this Agreement to a "Clause" or "Schedule" shall, subject to
any  contrary  indication,  be  construed as a reference to a clause or schedule
hereof.

The  provisions  of  clauses 1.2 to 1.7 of the Facility Agreement shall apply to
this  Agreement,  mutatis  mutandis,  as  if  set  out  in  full  herein.

1.3     In  respect  of  any  obligations  of  the Shareholders and the Borrower
hereunder,  whether  for  payment  of  money  or  otherwise,  the Agent shall be
authorised  and entitled to demand payment or performance in accordance with the
terms  of  such  obligations  as  set  out  herein.

2.     UNDERTAKINGS

2.1     Undertakings  of  SP  Holding
So  long  as  the  Borrower  has any liability to the Lenders under the Facility
Agreement  SP  Holding  shall:

2.1.1     unless  otherwise  consented to in writing by the Majority Lenders, at
all  times  maintain control over at least 51 % of the voting rights attached to
the  Shares;  and

<PAGE>

2.1.2     not  dispose  of  any  of its Shares unless it has first satisfied the
Transfer  Conditions.

2.2     Undertakings  of  Mercer  International
So  long  as  the  Borrower  has any liability to the Lenders under the Facility
Agreement  and  unless  otherwise  consented  to by the Majority Lenders, Mercer
International shall at all times with effect from Financial Close ensure that on
a  fully  diluted  basis  its  aggregate  direct or indirect shareholding in the
Borrower  equals  or  exceeds  51%  of  the  voting  rights  in  the  Borrower.

2.3     Undertakings  of  RWE-IN
So  long  as  the  Borrower  has any liability to the Lenders under the Facility
Agreement  RWE-IN  shall:

2.3.1     with  effect  from  Financial  Close  at  all  times  until Acceptance
maintain directly or indirectly ownership of not less than 29.4 per cent. of the
Share Capital and thereafter, so long as it has any liability under Clause 2.6.2
of  this  Agreement,  only  dispose  of  its  Shares  after it has satisfied the
Transfer  Conditions;

2.3.2     notify  the  Agent  forthwith upon becoming aware of any change in the
terms  of,  cancellation,  revocation  or replacement of the RWE profit and loss
transfer  agreement  between  RWE AG and RWE Solutions AG dated 27/29 June 2000;
and

2.3.3     procure  the  issue  by  RWE  Solutions  AG  of  any  payment security
requested  by  the  EPC  Contractor  under  the  EPC  Contract.

2.4     Undertakings  of  FAHR
So  long  as  the  Borrower  has any liability to the Lenders under the Facility
Agreement  FAHR  shall  with  effect  from  Financial  Close  at all times until
Acceptance  maintain  directly or indirectly ownership of not less than 7.00 per
cent  of the Share Capital of the Borrower and thereafter, so long as it has any
liability under Clause 2.6.2 of this Agreement, only dispose of its shares after
it  has  satisfied  the  Transfer  Conditions;  and

2.5     Undertakings  of  AIG
So  long  as  the  Borrower  has any liability to the Lenders under the Facility
Agreement AIG shall co-operate with and provide all reasonable assistance to the
Borrower  and its Contractors in relation to all matters concerning the Site and
any  land  adjoining  the  Site.

<PAGE>

2.6     Undertakings  of  the  Shareholders
Each  of the Shareholders undertakes to the Lenders that it shall so long as the
Borrower  has  any  liability  to  the  Lenders  under  the  Facility Agreement:

2.6.1     Initial  Shareholder  Contributions:  on  a  several  basis,  make
Shareholder  Contributions  at  Financial  Close  as  follows:

Share  Capital               Euro  14,744,354
Shareholder  Loans           Euro  55,255,646

For  such  purpose  the  Shareholders  shall  contribute  the following amounts:

<TABLE>
<CAPTION>

Table 1              Capital Contributions            Shareholder Loans
-------              ---------------------            -----------------
<S>                  <C>                              <C>

SP Holding           Euro 9,442,820                   Euro 35,063,180
RWE-IN               Euro 4,291,824                   Euro 16,302,176
FAHR                 Euro 1,009,710                   Euro 3,890,290
Total                Euro 14,744,354                  Euro 55,255,646
                     ==================================================

</TABLE>

Against those Shareholder Loans, a Shareholder may set off any Shareholder Loans
which  have already been made (SP HOLDING in the amount of EUR 4,648,526; RWE-IN
in the amount of 11,055,891; FAHR in the amount of EUR 3,888,048) but only after
the  following  amounts  have  been  deducted  at  Financial  Close:

*     Parts  of  the  Shareholder  Loans  made  by  RWE-IN  in the amount of EUR
1,095,427  to  finance  non-approved  development  costs;

*     RWE-IN's  share in the amount of EUR 676,046 in the total option costs for
keeping  the Site available (in the amount of EUR 1,577,335), as shown on page 9
of,  and  the  annex  to the schedule to, the auditor's report for the financial
year  of  the  Borrower  ending  31  December  2001;

*     RWE-IN's share in the amount of EUR 360,339 in the ancilliary costs of the
Site;

and  the  following  amount  has  been  added:

*     the  liabilities owed by the Borrower to FAHR for delivery and performance
in  the  amount  of  EUR 274,580, whereas this amount is a partial amount of the
liabilities  of  the Borrower to AIG for delivery and performance in the overall
amount  of  EUR  985,023  (cf.  Limited  Scope  Review  by

<PAGE>

PricewaterhouseCoopers  dated  31 July 2002, p. 26, Liabilities to Shareholders,
paragraph  AIG/FAHR,  row  Trade  Liabilities).

Of  the  Shareholder  Loans to be made in accordance with Table 1 of this Clause
2.6.1, the following loans have thus already been made taking into consideration
that  FAHR  has assigned Shareholder Loans capable of being set off in an amount
of  EUR  272,338  to  RWE-IN:

<TABLE>
<CAPTION>

                  Shareholder Loans             Shareholder Loans
Table 2           before assignment             after assignment
-------           -----------------             -----------------
<S>               <C>                           <C>

SP HOLDING        Euro   4,648,526              Euro   4,648,526
RWE-IN            Euro   8,924,079              Euro   9,196,417
FAHR              Euro   4,162,628              Euro   3,890,290
Total             Euro   17,735,233             Euro   17,735,233
                  ===============================================

</TABLE>

After deductions (and after assignment to RWE-IN of the EUR 272,338 mentioned in
the  previous  paragraph), the Shareholders shall make the following Shareholder
Loans  at  Financial  Close.:

<TABLE>
<CAPTION>

Table 3                 Shareholder Loans
-------                 -----------------
<S>                     <C>

SP HOLDING              Euro 30,414,654
RWE-IN                  Euro 7,105,759
FAHR                    Euro 0

</TABLE>

Each  Shareholder  undertakes,  until  after  Financial  Close, not to demand or
accept  repayment  of  any  Shareholder  Loans  that may be set off under Clause
2.6.1,  Table  2  or  to  allow  the  distribution of any reserves. In addition,
immediately  after  Financial Close, the Shareholders will have the Agent choose
and  mandate a firm of auditors company to confirm whether the Shareholders have
complied  with their obligations to make Shareholder Loans in the amounts stated
in  Clause 2.6.1, Table 1, also taking into consideration the amounts allowed to
be  set  off  under  this  Clause 2.6.1 . Such firm of auditors will certify and
produce  their  findings  at  Financial Close, including an account audit and an
audit  of  the ancilliary costs for RWE-IN, AIG, Thyssen Rheinstahl Technik GmbH
and  its  successor  in title Thyssen Rheinstahl Technik Projektgesellschaft mbH
who  have  contributed  funds  in connection with the purchase of the Borrower's
Site,  and  a  complete  account statement (Summen- und Saldenliste). Should the
report  reveal  any  discrepancy  between  the Shareholder Loans to be made by a
Shareholder  under  Clause  2.6.1,  Table  1  and  the  Shareholder  Loans

<PAGE>

actually  made,  the  respective  Shareholder  shall  immediately  make  another
Shareholder Loan covering the amount that is outstanding taking into account any
amounts allowed to be set off under Clause 2.6.1 provided that such amounts were
confirmed  by  the  findings of the firm of auditors, as indicated above. Should
the  report  reveal  that  the  total  of the audited ancilliary costs for which
RWE-IN,  AIG, Thyssen Rheinstahl Technik GmbH and its successor in title Thyssen
Rheinstahl  Technik  Projektgesellschaft  mbH  have  provided  the Borrower with
certain  funds  in  connection  with  the purchase of the Borrower's Site do not
exceed the payments in the amount of EUR 2,708,339 to be refunded to RWE-IN, AIG
and  Thyssen  Rheinstahl  Technik  Projektgesellschaft  mbH  under  the Facility
Agreement  and this Agreement, then RWE-IN and AIG will be jointly and severally
liable  to provide the difference to the Borrower as a capital contribution. The
Borrower  shall  bear  the  costs  of  such  an  audit.

2.6.2
   (a)  Stand-By  Equity  Amount:  on  a  several  basis,  make  Shareholder
Contributions  upon  demand from the Agent or the Borrower in the manner set out
in  this  Clause  2.6.2(b)  in an aggregate amount of EUR 30 million ("Stand -By
Equity  Amount"), which shall be contributed by each Shareholder pro rata in the
following  amounts:

<TABLE>
<CAPTION>

                        EUR                 %
<S>                     <C>                <C>

SP Holding              19,074,000        63.58
RWE-IN                  8,826,000         29.42
FAHR                    2,100,000         7.00
                        =======================
Total                   30,000,000          100

</TABLE>

   (b)  Approved  Cost  Overrun, DSRA Support and Government Grant: on a several
basis,  the  Shareholders  shall  pay upon demand from the Agent or the Borrower
from  time to time, out of the Stand-By Equity Amount to the extent the Borrower
has  insufficient  freely  available  funds to pay the relevant amount when due:

        (i)   an  amount  equal to any Approved Cost Overruns incurred by the
Borrower  on  or  before  Acceptance  (including with respect to Post-Acceptance
Costs)  that  are less than or equal to EUR 15 million, it being understood that
any  Approved Cost Overruns incurred by the Borrower in excess of EUR 15 million
but  less

<PAGE>

than  or  equal  to  EUR  45  million will be paid by the Borrower by drawing on
Tranche  D2  under  the  Facility  Agreement;

       (ii)   an  amount equal to any Approved Cost Overruns incurred by the
Borrower on  or  before Acceptance (including with respect to Post-Acceptance
Costs) that are  greater  than  EUR 45 million but less than or equal to EUR
60 million; and

      (iii)   an  amount,  for  the  purposes  of  funding  the Debt Service
Reserve Account  at  Acceptance,  equal  to  the  lesser  of:

              (1)     EUR  15  million;  and

              (2)     the  Stand-By  Equity  Amount  less  any  amounts  paid
to the Borrower  pursuant  to  Clauses 2.6.2(b)(i) and (ii) ;

       (iv)   an  amount  equal  to  any amount by which Tranche A must be
prepaid to meet  the  EU-Equity  Test  equal  to  the  lesser  of:

              (1)     the  amount  required  to  be  prepaid;  and

              (2)     the  Stand-By  Equity  Amount  less  any  amounts  paid
to the Borrower pursuant  to  Clauses 2.6.2(b)(i),(ii), (iii), and (iv);

        (v)   an  amount  equal  to  any  shortfall  in Government Grants (not
already  funded  pursuant  to  a  payment  to  the  Borrower pursuant to Clauses
2.6.2(b)(i)  or (ii) or by a drawing on Tranche D2 under the Facility Agreement)
as  finally calculated one month prior to the First Repayment Date, equal to the
lesser  of

              (1)     such  shortfall;  and

              (2)     the  Stand-By  Equity  Amount  less  any  amounts  paid
to the Borrower pursuant  to  Clause 2.6.2(b)(i), (ii) ,  and (iii) ;

       (vi)   an amount, for the purposes of funding the Equity Reserve Account
on or before  the  First  Repayment  Date,  equal  to  the  lesser  of:

              (1)     EUR  15  million;  and

              (2)     the  Stand-By  Equity  Amount  less  any  amounts
paid  to  the Borrower pursuant to Clause 2.6.2(b)(i), (ii), (iii), (iv) and (v)

<PAGE>

less  in each case the amount of any Excess Start-Up Cash Flows provided that if
the Borrower has insufficient cash to make the First Repayment as required under
the  Facility Agreement, then any amount by which the shareholders contributions
under  this  sub-clause  (vi)  may  have  been  reduced on account of any Excess
Start-Up Cash Flows shall be ignored and an amount equal to such reduction shall
forthwith  become  due  and  payable  by  the  Shareholders  on a several basis;

   (c)  Shareholders'  Proportion:  each  amount  payable under Clause 2.6.2(b)
shall  be  contributed  by each Shareholder within five days of demand therefore
from  the  Borrower  or  the Agent pro rata in its Shareholder Percentage at the
time  such  demand  is  made.

2.6.3     Stand-By  Equity  Security

   (a)  As  security  for  the  payment  obligations  set  out  in  Clause 2.6.2
each  Shareholder  shall  provide  to  the  Lenders,  prior  to Financial Close,
Stand-By  Equity  Security  in  the  amount  set  out next to its name in Clause
2.6.2(a).

   (b)  To  the  extent  a  Shareholder  elects  to  provide the Stand-By Equity
Security  in  the  form  of  an  interest-bearing  cash  deposit,  the following
conditions  must  be  met:

        (i)  The  cash  deposit  needs  to be in the form of a term deposit for
terms between  1 and 6 months or in the form of call money or overnight money
(a "Cash Deposit");

       (ii)  Such  deposits  must  be  held on accounts with the Agent or HVB
Banque Luxembourg  Societe  Anonyme or in the case of call money or overnight
money with HVB  Banque  Luxembourg  Societe  Anonyme and pledged in favour of
the Lenders in accordance  with  the  provision  contained in the definition
of Stand-By Equity Security  in  the  Facility  Agreement;

      (iii)  To  the  extent  a Shareholder does not fulfil its payment
obligations  pursuant to Clause 2.6.2(b) , such Shareholder and/or the Agent may
cancel  the  Cash  Deposits  of  such  Shareholder  to the effect that an amount
sufficient  to  meet the relevant Shareholder's payment obligations under Clause
2.6.2(b)  is  available  from  the Cash Deposits. The Agent is entitled to apply
such  amounts  from  the  Cash  Deposits  in  fulfilment  of  the

<PAGE>

relevant Shareholder's payment obligation. The aforementioned cancellation right
of  the  Agent  does  not  exist if the respective Shareholder informs the Agent
within  the  time  period  pursuant  to Clause 2.6.2(c) that it will provide the
amount  due as Shareholder Contribution pursuant to Clause 2.6.2(c) from its own
source  and not from the Stand-By Equity Security, unless the relevant amount is
not  paid  in  as  Shareholder  Contribution  on  the  due  date.

       (iv)  A  Shareholder  may  cancel  any term deposit if it wants to
convert it into  another  kind  of  Cash  Deposit.

        (v)  It will be the sole responsibility of each of the Shareholders to
choose  the  right  terms  for  the  term  deposits  to  meet  in respect of the
respective  maturity  of  the  term deposits the relevant point in time at which
amounts  will  be  needed in order to meet the Shareholders' payment obligations
under Clause 2.6.2(b). Any loss of interest due to any premature cancellation of
the term deposits shall exclusively be borne by the respective Shareholder whose
term  deposits  were  cancelled.  The respective Shareholder who has prematurely
cancelled,  or  in  whose  interest  the  Agent  has prematurely cancelled, term
deposits  shall  indemnify the Agent or HVB Banque Luxembourg Societe Anonyme as
account  holding bank, as the case may be, for any breakage costs the respective
account  holding  bank  has  incurred  due  to  such  cancellation.

   (c)  The interest  received  on  the  Cash  Deposits  can  be claimed by the
relevant  Shareholder.

2.6.4     Shareholder  Loans:  provide  or  have  provided  on  a pro rata basis
Shareholder  Loans in the amounts set out in Clause 2.6.1 to the Borrower on the
Terms  set  out  in Schedule 1, a copy of which it will provide to the Agent and
not  accept  payment whether of principal, interest or otherwise by the Borrower
under  the  Shareholder  Loans, if such payment would constitute a breach by the
Borrower  of  its  undertakings  pursuant  to  Clauses  9.4.3  (c)  (Restricted
Application) and 21.2.10 (Shareholder Loans) of the Facility Agreement and shall
comply  at  all  times  with and shall not amend, vary or waive the terms of the
Shareholder  Loans.  It  will  further  not accept security from the Borrower in
respect  of  the  Borrower's  obligations  under  any  Shareholder Loan, set off
against  any payments under any Shareholder Loan any payment obligation owing by
it  or  make  any  application for the commencement of insolvency proceedings in

<PAGE>

relation  to  the  Borrower  based on its claims under any Shareholder Loan. The
maximum  rate  of  interest chargeable on Shareholder Loans shall be 7% p.a. and
interest  thereon  may  not  be  payable  before  the  First  Repayment Date and
thereafter  only  on  Repayment Dates. Payment of interest under any Shareholder
Loan otherwise permitted to be paid pursuant to the Financing Documents may only
be  paid  (a)  so  long  as  any  principal  and interest due under the Facility
Agreement  has  been  paid  and  no deferral has occurred and not been made good
under  Clause  6.5  of  the  Facility  Agreement  and (b) so long as the balance
standing  to  the  credit  of  the  Debt  Service Reserve Account then equals or
exceeds  the  Target  Balance;

2.6.5     Distributions:  not  accept  any  distribution  by  way of declared or
constructive  dividend  payments  or  other  payment  from the Borrower, if such
payment  would  constitute  a  breach  by the Borrower of any of its obligations
under  the  Facility  Agreement;

2.6.6     Management  of  Borrower:  appoint  in  a  timely  manner  experienced
professionals  in  the  paper  and  pulp  industry  and  experienced  finance
professionals  as  general  managers  (Geschaftsfuhrer)  of  the  Borrower;

2.6.7     Authorisations:  assist,  where appropriate, the Borrower in obtaining
the  authorisations  required  to  perform  the  Project;

2.6.8     Winding  Up  of  Borrower: not sue or commence proceedings against the
Borrower  or  seek  a  resolution  or  order  for  the  voluntary  winding-up or
dissolution of the Borrower and in any dissolution or winding up of the Borrower
it  shall  not  demand  or  sue  for  any  payment  in  respect of its Shares or
Shareholder  Loans unless all amounts payable under the Financing Documents have
been  indefeasibly  paid  in  full;

2.6.9     Reduction of Share Capital: not approve the reduction of or permit the
Borrower  to  reduce  its Share Capital unless such reduction is approved by the
Majority  Lenders;

2.6.10     Voting  Rights:  refrain  from exercising its voting rights and other
influence  in  a  way  that would not permit the Borrower to fulfil promptly its
obligations under the Transaction Documents, and not, without the consent of the
Majority  Lenders,  vote in favour of a redemption (Einziehung) of shares in the
Borrower.

2.6.11     Indebtedness:  procure that the Borrower does not incur any Financial
Indebtedness  save  for  indebtedness  stated  in  Clause 3.2.6 (Indebtedness);

<PAGE>

2.6.12     No Encumbrances or Disposals: not dispose of any Shares other than in
accordance  with the terms of this Agreement and shall not grant any option with
respect  to,  or  create, incur, assume or suffer to exist any encumbrance over,
any  of  its Shares or Shareholder Loans in the Borrower other than encumbrances
created  under  the  Security  Agreements;

2.6.13     Transfer  of  Shares  and  Shareholder  Loans:  concurrently with any
permitted  transfer of its Shares to a Transferee, it shall also transfer to the
Transferee  a  pro  rata  portion  of  any  Shareholder  Loans  then held by it;

2.6.14     Abandonment  of  Project:  in  its  capacity  as  a  Shareholder, not
exercise  its  voting rights in the Borrower to cause or allow the Project to be
abandoned;

2.6.15     Repayment  of  Borrower  Payments: promptly repay to the Borrower any
sum  received  by  it  (including  by  way of set-off) from the Borrower (in its
respective capacity as Shareholder or as lender of the Shareholder Loans), where
the  payment  of  such  sum  by the Borrower breaches its undertakings under the
Facility  Agreement or, in the case of a payment under the Shareholder Loans, if
such  payment  was  not  due;

2.6.16     Amendments  to  Documents:  not  agree to any amendment, variation or
waiver  of  or  in  relation  to,  the  Shareholders' Agreement or any Financing
Document  to  which  it  is  a  party that would materially adversely affect the
rights  of  the  Lenders  under  any  Financing  Document;

2.6.17     Maintain Existence: preserve and maintain its corporate existence and
corporate  rights  (except  for a solvent re-organisation previously approved in
writing  by  the  Agent)  and  obtain  and maintain in full force and effect all
necessary  authorisations  applicable  to  it in connection with any Transaction
Documents  to  which it is a party as and when such necessary authorisations are
required  to  be  obtained  in  accordance  with  applicable  law;

2.6.18     Shareholder  and Sponsor Information: provide such information as the
Agent  may  reasonably require from time to time with respect to its business or
financial  condition  and any relevant litigation, arbitration or administrative
proceeding  or  claim  in  which  it  may  from  time  to  time  be  involved;

2.6.19     Reports:  so  long as any amount under any of the Financing Documents
remains  outstanding,  provide  the  Agent, in sufficient copies for each of the
Lenders, with the following statements, prepared in compliance with all relevant
legal  and  professional  requirements  and  according  to  generally  accepted
accounting  principles  consistently  applied:

<PAGE>

   (a)  as  soon  as  available,  but in any event no later than one hundred and
twenty  (120)  days  after  the  end  of each financial year, the audited fiscal
year-end  financial statements, including the balance sheet, the profit and loss
account,  the  certified  auditor's  report  (Wirtschaftspruferbericht);

   (b)  as  soon  as  available, but in any event no later than ninety (90) days
after  the  end  of  each fiscal half-year, its half-year reports, including the
balance  sheet  and  the  profit  and  loss  account.

All  such  financial  information  shall  be  in  English  and/or  German;

2.6.20     Mergers:  shall  not permit the Borrower to merge or consolidate with
any  other  person,  enter  into any demerger transaction, or participate in any
other  type  of  corporate  reconstruction  without  the Majority Lenders' prior
written  consent;

2.6.21     Competition:  shall  not  (otherwise  than  as  an  EPC  Contractor)
participate  in  any  way  in  any  new  pulp mill which is located within a 350
kilometre  radius  of  the  Project;

2.6.22     Technical  Assistance:  procure that the Borrower and its Contractors
receive  such  assistance  as  may be reasonably desirable or necessary prior to
Acceptance  in  connection  with  the  construction,  commissioning,  testing,
start-up,  management,  operation  and  maintenance  of  the  Project;

2.6.23     Financing of ZSG Subsidiaries: provide any additional sponsor support
on a several basis required by any Permitted Subsidiaries in connection with the
financing  of  their  respective  businesses  over and above that referred to in
Clause  21.2.2  of  the  Facility  Agreement;

2.6.24     Archaeological  Discoveries:  on  a several basis, indemnify and keep
indemnified  the  Borrower  against  any  cost,  expense or claim incurred by or
asserted  against  the  Borrower  in  connection  with  any  archaeological
investigation  commenced  in  relation  to  the  Site  after  the  date  hereof.

The  undertakings of the Shareholders in Clauses 2.6.1, 2.6.2, 2.6.4, 2.6.22 and
2.6.24  shall  be  deemed  to  be given also in favour of the Borrower (as third
party  beneficiary  pursuant  to  Sec.  328  German  Civil  Code).

3.     REPRESENTATIONS  AND  WARRANTIES

3.1     Individual  Shareholder  Representations  and  Warranties
Each  Shareholder,  for  itself,  makes  the  following  representations  and
warranties:

<PAGE>

3.1.1     Corporate  Existence  and  Due  Authorisation:  it  is  a company duly
incorporated  and  validly  existing  under  the  laws  of  its  jurisdiction of
incorporation  and it has the power to enter into and perform, and has taken all
necessary  action to authorise the entry into, performance and delivery of, this
Agreement  and  the  transactions  contemplated  hereby,  and  this  Agreement
constitutes  its  legal,  valid and binding obligation enforceable in accordance
with  its  terms;

3.1.2     Authorisations:  all  necessary  authorisations  required  on the date
hereof  in  connection  with  its  entry  into,  performance,  validity  and
enforceability  of  this Agreement and the transactions contemplated hereby have
been  obtained  or effected by the Shareholder and are in full force and effect,
such Authorisations have not been modified or amended and there are no proposals
to  amend  or  modify  the  same  unless  such  modification or amendment is not
materially  adverse  in  relation  to  such Shareholder's ability to perform its
obligations  under  this Agreement and/or the validity or enforceability of this
Agreement  and  such  Shareholder  is not aware of any reason why such necessary
authorisations required after the date hereof shall not be obtained or effected;

3.1.3     Tax: under the laws in force on the date hereof in the jurisdiction of
its incorporation and the law in force in the jurisdiction from which any amount
is payable by it all amounts payable by it under this Agreement can be made free
and  clear of and without deduction or withholding for or on account of any tax,
and no stamp or registration duty or similar taxes or charges are payable in its
jurisdiction  of  incorporation  in  respect  thereof;

3.1.4     No  Conflict:  the  entry  into  and  performance  by  it  of, and the
transactions  contemplated  by,  this  Agreement  do  not  and  will  not:
   (a)  conflict  with  any applicable law or regulation or judicial or official
order  which  could  reasonably  be  expected  to  have an adverse effect on its
ability  to  perform  its  obligations  under  this  Agreement;  or

   (b)  conflict  with  its  constitutive  documents;  or

   (c)  conflict  with  any document which is binding upon it or upon any of its
assets  which  could  reasonably  be  expected  to have an adverse effect on its
ability  to  perform  its  obligations  under  this  Agreement;

3.1.5     Repayment  of existing Shareholder Loans and distribution of reserves:
No  repayment of Shareholder Loans capable of being set off under Clause 2.6.1,
Table 2 has been accepted and no reserves have been distributed by the Borrower
to the Shareholder's  since  31  July  2002;

<PAGE>

3.1.6     Litigation:  no  litigation, arbitration, administrative proceeding or
claim  relating  to  it before any court, tribunal, arbitrator or other relevant
authority  is  presently  in progress, pending or, to the best of its knowledge,
threatened  and  which, if resolved adversely to it could reasonably be expected
to  be  materially  adverse to its ability to perform its obligations under this
Agreement  and/or  the  validity  or  enforceability  of  this  Agreement;

3.1.7     Financial Statements of Shareholder: its most recent audited financial
statements:

   (a)  were  prepared  in  accordance  with  accounting  principles  generally
accepted  in  the  country  of  its  incorporation  and  consistently  applied;

   (b)  disclose  all its material liabilities (contingent or otherwise) and all
its  unrealised or anticipated losses required to be disclosed by the accounting
principles  generally  accepted  in  the  country  of  its  incorporation;  and

   (c)  give  a  true  and  fair  view of its financial condition and operations
during  the  relevant  period.

Its  financial  year  end  is  31  December;

3.1.8     No  Material  Adverse Change in relation to the Shareholder: since the
date  as  at  which  the  latest  audited consolidated financial statements were
stated  to be prepared there has been no material adverse change in its business
or  financial  condition;

3.1.9     Monetary  claims  by  the  Shareholders:  At  Financial  Close,  no
Shareholder  has  any monetary claims against the Borrower except for the claims
under  the  Shareholder  Loans mentioned in Clause 2.6.1, Table 1 and, as far as
RWE-IN  is concerned, the additional claims under the Pre-Activity Agreement (as
defined  under  the  EPC-Contract) and the claims for certain funds which RWE-IN
has provided to the Borrower for ancilliary cost in connection with the purchase
of  the  Site  in  the  amount  of  EUR  1,590,899.

3.2     Additional  Shareholder  Representations  and  Warranties
Each  Shareholder,  on  a several basis, makes the following representations and
warranties:

3.2.1     Share Capital: as of the registration of the Shareholder Contributions
in accordance with Clause 2.6.1 each Shareholder will be the beneficial owner of
the  following  Shares:

<PAGE>

<TABLE>
<CAPTION>

                        Number of        Nominal Value
Shareholder             Shares           of Shares               Percentage
-----------             ---------        -------------           ----------
<S>                     <C>               <C>                    <C>

SP Holding              5                EUR 27,360              63,58 %
                                         EUR 27,360
                                         EUR 9,160
                                         EUR 30,320
                                         EUR 9,442,800

RWE-IN                  4                EUR 51,130              29,42 %
                                         EUR 31,100
                                         EUR 38,970
                                         EUR 4,291,800

FAHR                    3                EUR 27,360                  7 %
                                         EUR 12,940
                                         EUR 1,009,700

</TABLE>

and  to  the best of its knowledge and belief such Shares represent 100 per cent
of  the  Share Capital and no other Shares are currently in issue or proposed to
be  issued;

3.2.2     Encumbrances:  there  is  no  encumbrance and there is no agreement or
arrangement  to  which  it  is  a  party or obligation to which it is subject to
create  or  give  an  encumbrance,  in relation to any of the issued or unissued
Shares  other  than  encumbrances  constituted  by  the  Share Pledge Agreement;

3.2.3     Additional  Arrangements: except as provided for in Clause 2.6.1
and  except  for  the compensation payment to Kvaerner plc. in the amount of EUR
478,687,  there  is  no  agreement  or  arrangement  to  which  it is a party or
obligation  to  which  it  is  subject requiring the creation, allotment, issue,
transfer,  redemption  or  repayment  of,  or the grant to a person of the right
(conditional  or not) to require the issue, transfer, redemption or repayment of
a  Share  (including,  without  limitation, an option or right of pre-emption or
conversion);

3.2.4     Financial  Statements  of Borrower: the Borrower's most recent audited
consolidated  financial  statements:

   (a)  were  prepared  in  accordance  with  accounting  principles  generally
accepted  in  the  Federal  Republic  of  Germany  and  consistently  applied;

<PAGE>

   (b)  disclose  all  material  liabilities  (contingent  or otherwise) and all
unrealised  or  anticipated  losses  of  any  member of the Group required to be
disclosed  by  the  accounting  principles  generally  accepted  in  the Federal
Republic  of  Germany;  and

   (c)  give  a  true and fair view of the financial condition and operations of
the  Group  during  the  relevant  period.

The  financial  year  end  of  the  Group  is  31  December;

3.2.5     No  Material  Adverse Change in relation to the Borrower: since the 31
May  2002  deadline  in  relation  to  the  Limited  Scope  Review  by
PricewaterhouseCoopers  dated  19 August 2002 there has been no material adverse
change  in  its business or financial condition (or the business or consolidated
financial  condition  of  the  Group).

3.2.6     Indebtedness:  On  the date of signing of this Agreement, the Borrower
has  no  indebtedness,  other  than:

   (a)  Permitted  Financial  Indebtedness  (save for the indebtedness stated in
the  definition  of  Permitted  Financial  Indebtedness  under  );

   (b)  indebtedness  for Development Costs and other similar costs in an amount
not  exceeding  EUR 1,300,000 provided for in the Investment and Financing Plan,
but  not  yet  calculated  or  paid;

   (c)  indebtedness  under the Pre-Activity Agreement (as defined under the EPC
Contract)  in  an  amount  not  exceeding  EUR  4,210,000  plus  VAT;

   (d)  indebtedness  to  the  former shareholders Kvaerner plc in the amount of
EUR 478,687 and Thyssen Rheinstahl Technik Projektgesellschaft mbH in the amount
of  EUR  2,648,000;

   (e)  indebtedness  for payment of the second purchase instalment for the Site
to  AIG  in  the  amount of EUR 1,755,686 plus VAT and for obligations under the
lease  contract,  dated  16  May  2002;

   (f)  further  indebtedness  to the Shareholders and AIG which has been waived
at  the  latest  on  the  day  after  Financial  Close;

   (g)  indebtedness  for  the  ongoing payments which become due at the date of
delivery  of  the  guarantee  decision;  and

   (h)  further  indebtedness  in  an  amount  not  exceeding  EUR  100,000.

<PAGE>

3.3     AIG  Representation
AIG  represents  and  warrants  that:

3.3.1      (i)  it  has  sold  the  Site  to  the Borrower for full and valuable
consideration,  (ii)  it  has  no further claim or rights in respect of the Site
against the Borrower except for its entitlement to payment of the purchase price
of  EUR  1,755,686  plus VAT and to the payment of the claims resulting from the
provision  of  certain  funds by AIG for ancilliary costs in connection with the
purchase  of  the  Site,  in the amount of EUR 546,794 out of the proceeds of an
Advance  on  the first drawdown, and (iii) it knows of no other claims or rights
of  any other person in relation to the Site other than pursuant to a site lease
agreement  dated 16 May 2002 and made between the Borrower and AIG and Permitted
Encumbrances;

3.3.2     the  Site contains no hazardous substances or contamination and to the
best  of  its  knowledge  having  made  due  enquiry  it  is  not  aware  of any
Environmental  Claim  in  relation  to  the  Site.

3.4     The  representations  and warranties made in Clauses 3.1, 3.2  and 3.3
are for the benefit  of  each Lender (which representations and warranties shall
survive the execution  of this Agreement) and each Shareholder acknowledges that
each of the Lenders  has  entered  into  the  Facility  Agreement  in  reliance
on  those representations  and  warranties.

4.     FUNDING  OF  SHAREHOLDER  CONTRIBUTIONS  AND  NATURE  OF  OBLIGATIONS

4.1     Shareholder  Contributions
All  Shareholder  Contributions have or will be made as Capital Contributions or
Shareholder Loans. The proceeds of all future Shareholder Contributions shall be
credited  to such account in the name of the Borrower as the Agent shall specify
in  the  notice  of  demand  for  such  payment  or,  in  the  absence  of  any
specification,  to  the  Disbursement Account.  Prior to making such Shareholder
Contributions,  each  Shareholder  shall  inform  the Agent in writing as to the
classification  of  such  payment.

4.2     Satisfaction  of  Obligations
The Shareholders'  obligations to fund the amounts set out in Clause 2 shall not
be  extinguished  if and to the extent that, at any time following the making of
such  payment, all or any portion of such payment is rescinded or must otherwise
be returned to the Shareholders upon the insolvency, bankruptcy, reorganisation,
winding-up,  dissolution  or  liquidation  of the Borrower, a Shareholder or any
other  person or otherwise.  They will however be extinguished, if a Shareholder
transfers  to a Transferee his Shareholder Percentage and the corresponding part

<PAGE>

of  his Shareholder Loans, and the Transfer Conditions are satisfied.  As far as
the  relevant Shareholder has not assigned the Stand-By Equity Security provided
by  it to the Transferee, the Lenders shall release such security (to the extent
it  has  not  already  been  utilised  under  Clause 2.6.2).

4.3     Survival  of  Obligations
The  obligations of each Obligor under this Agreement shall not be discharged or
affected  in  any  way  by  reason  of:

4.3.1     the  avoidability or unenforceability of this Agreement as regards any
other  Obligor;

4.3.2     the insolvency, bankruptcy, reorganisation, liquidation, winding-up or
dissolution  of  the  Borrower  or  any  other  Obligor.

4.4     Continuing  Obligations
The  obligations  of  each  Obligor  under  this  Agreement:

4.4.1     shall  be in addition to and independent of every assurance, guarantee
or  security which any Lender may at any time hold for any of the obligations of
the  Borrower  under  the  Financing  Documents;

4.4.2     shall  remain  in full force and effect as a continuing security until
the  indefeasible  payment  in  full  of all amounts payable under the Financing
Documents;  and

4.4.3     shall  not  be  discharged,  impaired  or  otherwise  affected  by:
   (a)  any  failure  by any Lender to take any assurance, guarantee or security
agreed  to  be  taken  by  such  Lender  under  or  in relation to the Financing
Documents;

   (b)  time  or  other  indulgence given or agreed to be given by any Lender to
the  Borrower  in respect of its obligations under the Financing Documents or to
any  person  in  respect  of  its  obligations under any assurance, guarantee or
security  relating  thereto;

   (c)  any  amendment to any Financing Document or Project Contract or any such
assurance,  guarantee  or  security;

   (d)  any  release  or  exchange  of  any  security;

   (e)  any  amendment  to,  or  variation of, the constitutive documents of the
Borrower;  or

<PAGE>

   (f)  any other act or event (other than an Event of Force Majeure relating to
any obligation of an Obligor other than an obligation relating to the payment of
money)  or  omission  which  (but for this provision) might operate to impair or
discharge  the  obligations  hereby  created.

4.5     Allocation  of  Liability
Each  Shareholder's liability in connection with Clauses 3.2.1, 3.2.4, 3.2.5 and
3.2.6  is  pro  rata to the Shareholder Percentage it holds in the Borrower. The
same  applies  to  any  assumed liabilities of a Shareholder expressed to be pro
rata,  and  also where no express provisions has been made in this Agreement. No
Shareholder  is  under  any  duty to procure that other Shareholders comply with
their  obligations  under  this  Agreement.

4.6     Obligations/Representations  of  AIG  and  FAHR
Obligations/representations  of  AIG  and/or  FAHR  hereunder shall be joint and
several  obligations/representations  of  AIG  and  FAHR.

5.     GUARANTEE

5.1     Guarantee
The  Guarantor  irrevocably  and  unconditionally:

   (a)  guarantees  to each Lender punctual performance by SP Holding of all the
SP  Holdings'  obligations  under  this  Agreement;

   (b)  undertakes  with  each  Lender that whenever SP Holding does not pay any
amount  when  due  hereunder, the Guarantor shall immediately on demand pay that
amount  as  if  it  was  the  principal  obligor;  and

   (c)  indemnifies  each Lender immediately on demand against any cost, loss or
liability  suffered  by  that  Lender  if  any obligation guaranteed by it is or
becomes  unenforceable,  invalid  or  illegal.  The  amount of the cost, loss or
liability  shall  be  equal to the amount which that Lender would otherwise have
been  entitled  to  recover.

5.2     Continuing  Guarantee
This guarantee is a continuing guarantee and will extend to the ultimate balance
of  sums payable by SP Holding hereunder, regardless of any intermediate payment
or  discharge  in  whole  or  in  part.

<PAGE>

5.3     Reinstatement
If  any  payment  by  SP  Holding or any discharge given by a Lender (whether in
respect  of  the obligations of SP Holding or any security for those obligations
or  otherwise)  is  avoided  or reduced as a result of insolvency or any similar
event:

   (a)  the liability of SP Holding shall continue as if the payment, discharge,
avoidance  or  reduction  had  not  occurred;  and

   (b)  each  Lender  shall  be  entitled to recover the value or amount of that
security  or payment from SP Holding, as if the payment, discharge, avoidance or
reduction  had  not  occurred.

5.4     Waiver  of  Defences
The obligations  of the Guarantor under this Clause 5 will not be affected by an
act, omission, matter or thing which, but for this Clause, would reduce, release
or  prejudice any of its obligations under this Clause 5 (without limitation and
whether  or  not  known  to  it  or  any  Lender)  including:

   (a)  any  time  period, waiver or consent granted to, or composition with, SP
Holding  or  any  other  person;

   (b)  the  release  of  SP  Holding or any other person under the terms of any
composition  or  arrangement  with  the  Borrower  of  any  member of the Group;

   (c)  the  taking,  variation, compromise, exchange, renewal or release of, or
refusal  or  neglect  to  perfect,  assume  or  enforce,  any rights against, or
security  over  assets of, SP Holding or other person or any non-presentation or
non-observance  of  any  formality  or  other  requirement  in  respect  of  any
instrument  or  any  failure  to  realise  the  full  value  of  any  security;

   (d)  any  incapacity  or  lack of power, authority or legal personality of or
dissolution  or  change  in  the  members  or  status of SP Holding or any other
person;

   (e)  any  amendment  (however  fundamental)  or  replacement  of  a Financing
Document  or  any  other  document  or  security;

   (f)  any  unenforceability, illegality or invalidity of any obligation of any
person  under  any  Financing  Document  or  any  other document or security; or

   (g)  any  insolvency  or  similar  proceedings.

<PAGE>

5.5     Immediate  Recourse
The Guarantor waives any right it may have of first requiring any Lender (or any
trustee  or  agent on its behalf) to proceed against or enforce any other rights
or  security  or  claim  payment  from any other person before claiming from the
Guarantor  under  this  Clause 5. This waiver applies irrespective of any law or
any  provision  of  a  Financing  Document  to  the  contrary.

5.6     Reserves
Until  all amounts which may be or become due and payable by SP Holding under or
in  connection  with  this  Agreement  have  been irrevocably paid in full, each
Lender  (or  any  trustee  or  agent  on  its  behalf)  may:

   (a)  refrain  from applying or enforcing any other moneys, security or rights
held  or  received  by  that  Lender  (or any trustee or agent on its behalf) in
respect of those amounts, or apply and enforce the same in such manner and order
as  it  sees  fit (whether against those amounts or otherwise) and the Guarantor
shall  not  be  entitled  to  the  benefit  of  the  same;  and

   (b)  hold  in  an  interest-bearing suspense account any moneys received from
the  Guarantor  or  on account of the Guarantor's liability under this Clause 5.

5.7     Deferral  of  Guarantor's  rights
Until  all  amounts  which  may  be  or become payable by SP Holding under or in
connection with this Agreement have been irrevocably paid in full and unless the
Agent otherwise directs, the Guarantor will not exercise any rights which it may
have  by  reason  of  performance  by  it  of  its  obligations  hereunder:

   (a)  to  be  indemnified  by  SP  Holding;

   (b)  to  claim  any  contribution  from  any  other guarantor of SP Holding's
obligations  under  this  Agreement;  and/or

   (c)  to  take  the  benefit  (in  whole  or  in  part  and  whether by way of
subrogation  or  otherwise)  of  any  rights  of the Lenders under the Financing
Documents  or  of  any  other  guarantee  or  security  taken pursuant to, or in
connection  with,  the  Financing  Documents  by  any  Lender.

5.8     Additional  Security
This  guarantee  is in addition to and is not in any way prejudiced by any other
guarantee  or  security  now  or  subsequently  held  by  any  Lender.

<PAGE>

6.     CONFLICT

Notwithstanding  any  other provision of the Shareholders Agreement or any other
Transaction  Document,  each  Obligor  agrees  that  the terms of this Agreement
shall,  without  prejudice  to the rights of the Lenders under this or any other
Transaction  Document,  prevail  over the rights of the Obligors under any other
Transaction  Document  (excluding the Share Pledge Agreement between SP Holding,
RWE-IN  and  FAHR  and the Security Agent dated on or about the date hereof, the
provisions  of  which  shall  prevail in case of any conflicts between the Share
Pledge  Agreement  and  this  Agreement).

7.     TAXES

7.1     Payment  and  Gross  Up
All  payments  by  a  Obligor  under  this  Agreement  shall be made without any
deduction or withholding on account of any taxes unless that Obligor is required
by  law  to make such deduction or withholding, in which case the Obligor shall:

7.1.1     ensure  that  the deduction or withholding does not exceed the minimum
amount  legally  required;  and

7.1.2     forthwith  pay such additional amounts so as to ensure that the amount
received  by the recipient will equal the full amount which would have been paid
but  for  such  deduction  or  withholding.

7.2     Stamp  duties  etc
The  Shareholders  shall  pay  pro  rata  all  stamp, recording or similar taxes
payable  in respect of the execution, delivery and enforcement of this Agreement
promptly  when  due.

7.3     Tax  Indemnity
If  any Lender is obliged to make any payment on account of taxes referred to in
Clause  7.2  the  Shareholders  shall  indemnify  such  Lender pro rata from any
payment  on  account  of  such  taxes.

8.     INDEMNITIES

8.1     Judgement  Currency
If  any  sum  due  from  an  Obligor  under this Agreement or under any order or
judgement given or made in relation hereto has to be converted from the currency
(the  "first  currency")  in  which  the same is payable under this Agreement or
under  such order or judgement into another currency (the "second currency") for
the  purpose  of:

<PAGE>

   (a)  making  or  filing  a  claim  or  proof  against  such  Obligor;  or

   (b)  obtaining  an  order  of  judgement  given  or  made in relation hereto,
the Obligor shall on demand of the Agent pay to the Agent (or such person as the
Agent  may nominate) for account of each of the persons to whom such sum is owed
an amount sufficient to indemnify such person from and against any loss suffered
as  a  result  of  any  discrepancy  between:

        (i)  the  rate  of  exchange  used  for  such  purpose  to convert the
sum in question  from  the  first  currency  into  the  second  currency;  and

       (ii)  the rate of exchange at which such person may in the ordinary
course  of  business  purchase  the first currency with the second currency upon
receipt  of  a  sum paid to it in satisfaction, in whole or in part, of any such
order,  judgement,  claim  or  proof.

The  obligations  of  each  Obligor  under this Clause 8.1 are separate from its
other obligations under this Agreement and shall survive the giving or making of
any  judgement  or  order  in  relation to all or any of such other obligations.

8.2     Preservation  and  Enforcement  Rights
The  Shareholders  shall  on  a  several basis from time to time pro rata on the
basis  of  their  then current shareholding on demand of the Agent reimburse the
Lenders  for  all reasonable costs and expenses (including legal fees) on a full
indemnity  basis  together  with  any VAT thereon incurred by them in connection
with  the  preservation  and/or  enforcement of any of the rights of the Lenders
under  this  Agreement.

9.      ASSIGNMENTS  AND  TRANSFER

9.1     Assignments  and  Transfers  by  the  Shareholders
No  Obligor  shall  assign  or  transfer  all or any of its rights, benefits and
obligations under this Agreement other than in accordance with the terms hereof.

9.2     Assignments  and  Transfers  by  the  Lenders
Each  of  the  Lenders  may at any time assign all its rights and benefits under
this  Agreement  or  transfer its rights and obligations under this Agreement in
whole  or  in part to any other bank or financial institution in accordance with
the  Facility  Agreement.

<PAGE>

10.      REMEDIES  AND  WAIVERS,  CUMULATIVE  RIGHTS,  PARTIAL  INVALIDTY

10.1     Remedies  and  Waiver
No failure to exercise, nor any delay in exercising, on the part of the Lenders,
any  right  or  remedy  under any Transaction Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right or remedy prevent
any  further  or  other  exercise  thereof or the exercise of any other right or
remedy.

10.2     Cumulative  Rights
The  rights  and  remedies  provided  in  this  Agreement are cumulative and not
exclusive of any other rights and remedies provided in the Financing Document or
by  law.

10.3     Partial  Invalidity
Should  any provision of this Agreement be invalid or unenforceable, in whole or
in  part,  or  should  any provision later become invalid or unenforceable, this
shall  not affect the validity of the remaining provisions of this Agreement. In
lieu  of  the  invalid  or  unenforceable provision another reasonable provision
shall  apply, which as far as legally possible comes as close as possible to the
intention  of  the  contracting  parties,  or  to  what  would  have  been their
intention,  in correspondence with the spirit and the purpose of this Agreement,
had  the  parties upon entering into this Agreement taken into consideration the
invalidity  or  unenforceability  of  the  respective  provision.

11.     NOTICES

11.1     Communications  in  Writing
Each  communication to be made under this Agreement will be made in writing and,
unless otherwise stated, will be made by fax or letter.  Each communication will
be  in  English.

11.2     Addresses
Any communication or document to be made or delivered pursuant to this Agreement
will  (unless  the  recipient  of such communication or document has, by fifteen
(15) days' written notice to the Agent, specified another address or fax number)
be  made  or  delivered  to  the  address  set  out  below:

<PAGE>

(a)     to  the  Borrower:

        Zellstoff  Stendal  GmbH
        Niedergorner  Damm  1
        D-39596  Arneburg

        attn.:     Wolfram  Ridder

        Tel.:     +49  -  39321  -  50321

        Fax.:     +49  -  39321  -  50422

(b)     to  the  Arranger:

        Bayerische  Hypo-  und  Vereinsbank  AG
        Am  Tucherpark  1  (FPA13)
        D  -  80538  Munchen

        attn.:     Marc  Thumecke

        Tel.:     +49  -  89  -  378  -  21654

        Fax.:     +49  -  89  -  378  -  41518

(c)     to  the  Agent  and  the  Security  Agent:

        Bayerische  Hypo-  und  Vereinsbank  AG
        Am  Tucherpark  1  (FPA13)
        D  -  80538  Munchen

        attn.:     FPA  Agency

        Tel.:     +49  -  89  -  378  -  29541

        Fax.:     +49  -  89  -  378  -  41517

(d)     to  the  Lenders:

        to the contact address as set out in Schedule 5 (Lenders and
        Commitments) of the Facility  Agreement

(e)     to  Mercer  International:

        Mercer  International,  Inc.
        c/o  Heller  Ehrman  White  &  McAuliffe
        701  Fifth  Avenue

<PAGE>

        Seattle,  WA  98104-7098
        United  States  of  America

        attn.:     David  Wilson

        Fax.:     +1  -  206  -  4467  -  0900

        with  a  copy  to:

        Mercer  International,  Inc.
        Schutzengasse  32
        CH  -  8001  Zurich

        attn.:  Jimmy  S.H.  Lee

        Tel.:     +41  -  43344  7070

        Fax.:     +41  -  43344  7077

(f)     to  RWE-IN:

        Sonnenwall  85
        D  -  47051  Duisburg

        attn.:     Norbert  Kreutzer

        Tel.:     +49  -  203  -  309  1066

        Fax.:     +49  -  203  -  309  1048

(g)     to  AIG:

        AIG  Altmark  Industrie  AG
        Niedergorner  Damm  1
        D-39596  Arneburg

        attn.:     Harald  Gatzke,  Heinz  Peter  Heinen

        Tel.:     +49  -  39321  -  50310

        Fax.:     +49  -  39321  -  50322

(h)     to  SP  Holding:

        Stendal  Pulp  Holding  GmbH
        Charlottenstr.  59

<PAGE>

        D-10117  Berlin

        attn.:     Wolfram  Ridder

        Tel.:  0049  -  30  -  2094  5812

        Fax:  0049  -  30  -  2094  5811

(i)     to  FAHR:

        FAHR  Beteiligungen  AG
        Dillenburger  Strasse  69
        D-50115  Koln

        attn.:     Heinz  Peter  Heinen,  Johann  Georg
                   Zimmermann

        Tel.:     +49  -  221  822  -  1704

        Fax.:     +49  -  221  822  -  6403

11.3     Delivery

Any  communication  or document to be made or delivered by one person to another
pursuant  to  this  Agreement  will  (if  by  way of fax) be deemed to have been
received  when  transmission  has  been  completed  and  evidenced by a positive
transmission  statement  (and,  if  such  date  is  not  a  Business  Day  or if
transmission  is completed after 5.30 p.m. in the place of receipt on a Business
Day,  will  be  deemed to have been received on the next Business Day) or (if by
way  of  letter)  deemed to have been delivered when left at that address or, as
the  case  may be, ten days after being deposited in the post postage prepaid in
an  envelope addressed to it at that address, provided that any communication or
document  to  be  made  or  delivered  to  the Agent will be effective only when
received  by  its  agency division and then only if the same is expressly marked
for the attention of the department identified in  Clause 11.2(c) (or such other
department  or  officer  as  the  Agent shall from time to time specify for this
purpose).

12.     COUNTERPARTS

This Agreement may be executed in any number of counterparts, all of which taken
together  constitute  one  and  the  same  instrument.

<PAGE>

13.     PROCESS  AGENT

13.1     Mercer  International herewith designates and appoints SP Holding as it
authorised  agent  upon  which  process  may  be  served.

13.2     If  SP  Holding  is not or ceases to be effectively appointed to accept
service of process on Mercer International, Mercer International shall appoint a
further  person  in  Germany  to  accept  service  of process on its behalf and,
failing  such  appointment within fifteen (15) Business Days, the Agent shall be
entitled to appoint such a person by written notice to Mercer International. For
this  purpose,  Mercer  International  irrevocably  appoints  the  Agent  as its
attorney-in-fact.  Sec.  181  German  Civil  Code  shall  not  apply  to  this
power-of-attorney.  Nothing  contained  herein  shall  affect the right to serve
process  in  any  other  manner  permitted  by  law.

13.3     Any  Shareholder  or Sponsor which is not incorporated in Germany shall
designate  and  appoint  an authorised agent for service of process and, failing
such  appointment within fifteen (15) Business Days, the Agent shall be entitled
to  appoint  such  a person by written notice to that Shareholder or Sponsor, as
the  case  may  be.

14.     GOVERNING  LAW

This  Agreement  will be governed by, and construed in accordance with, the laws
of  the  Federal  Republic  of  Germany.

15.     JURISDICTION

The  exclusive  place  of jurisdiction to hear and determine any suit, action or
proceeding,  and  to settle any disputes which may arise out of or in connection
with  this  Agreement  is Munich. The Lenders, the Agent and the Security Agent,
may,  however, also commence proceedings before any court in which assets of the
Shareholders,  the  Sponsors  or the Guarantor are situated. Mandatory places of
jurisdiction  remain  unaffected.

<PAGE>

                                   SCHEDULE 1
                           Terms Of Shareholder Loans

                     SUBORDINATED SHAREHOLDER LOAN AGREEMENT
                                  dated [    ]

[Insert Name] having its registered office at [    ] (hereinafter referred to as
the  "Lender")

                                       and

Zellstoff  Stendal  GmbH,  having  its registered office at Niederg rner Damm 1,
39596  Arneburg,  Federal  Republic  of  Germany (hereinafter referred to as the
"Borrower")

1.      LOAN  PRINCIPAL  AND  PAYMENT

1.1     The  Lender hereby grants to the Borrower a loan in the aggregate amount
of EUR [  ] (in words: Euro [    ]) (hereinafter referred to as the "Shareholder
Loan")  in  accordance  with  the  terms  and  conditions  of  this  agreement
(hereinafter  referred  to  the  "Shareholder  Loan  Agreement").

1.2     The  Shareholder  Loan  shall  be  due  for  disbursement  on  [    ].

1.3     The  Shareholder Loan shall be repaid in full, including but not limited
to  principal  and  any  accrued unpaid interest, on [date] subject to the prior
repayment in full by the Borrower of all outstanding amounts payable pursuant to
that  certain  facility agreement in an aggregate amount of EUR 827,950,000 made
between  Bayerische  Hypo-und Vereinsbank AG and Zellstoff Stendal GmbH dated 26
August  2002  (the  "Facility  Agreement").

2.     INTEREST

2.1     The  Shareholder  Loan  shall  bear  interest  at  a  rate  of  7%  p.a

<PAGE>

2.2     The  interest  shall  be  due and payable in arrears semi-annually on 31
March  and  30  September of each year, the first interest payment being due and
payable  no  earlier  than  the  First  Repayment  Date.

2.3     Should  any  payment  of  interest under this Shareholder Loan Agreement
involve  any  infringement by the Borrower of any other contract that is binding
on  the  Borrower,  including  without  limitation  the  Facility Agreement, the
relevant interest payment shall be deferred until the next due date provided for
in  Clause  2.2  above and on which it is possible for the Borrower to make such
interest  payment  without  infringing  any  other contractual obligation.  This
Clause  2.3  shall  be valid until the Borrower has satisfied its obligations to
the  Lenders  under the Facility Agreement and the financing documents connected
therewith.

2.4     The Borrower agrees that any interest due and payable on the Shareholder
Loan  shall  be  paid  with  priority  from funds available in the Shareholders'
Account  established  pursuant  to  the  Facility  Agreement.

3.     STATUS  OF  LOAN

The  Shareholder  Loan is subordinated to all other obligations of the Borrower,
in  particular  to all its obligations under and in connection with the Facility
Agreement.  Therefore,  in  the event of any excess of liabilities over assets (
Uberschuldung)  of  the  Borrower which would exist without having regard to the
subordination or an insolvency or a liquidation of the Borrower, the Shareholder
Loan will only be repaid to the Lender upon the full discharge of the Borrower's
obligations, including all interest due and payable, towards all creditors which
have a right to preferential payment. For the avoidance of doubt, creditors with
right  to preferential payment are all creditors whose claims and rights against
the  Borrower  are  not  subordinated  to  the  Lender's  claims  and  rights.

4.     TERMINATION

The  Shareholder  Loan may only be prematurely terminated and repaid, in full or
in part, upon the prior written consent of Bayerische Hypo-und Vereinsbank AG as
Agent  under the Facility Agreement and the guarantors under the state guarantee
issued  by  the  Federal  Republic and the State of Sachsen-Anhalt dated 20 June
2002.

<PAGE>

5.     LAW  AND  JURISDICTION

5.1     This  Shareholder  Loan shall be governed by and construed in accordance
with  the  laws  of  the  Federal  Republic  of  Germany.

5.2     The courts in Frankfurt shall have non-exclusive jurisdiction in respect
of  any  dispute  arising  out  of  or in connection with this Shareholder Loan.

6.     LANGUAGE

This Shareholder Loan Agreement has been translated into English for convenience
purposes  only.  The  German language version of this Shareholder Loan Agreement
shall  prevail  over  any  translation  of  this  Shareholder  Loan  Agreement.

----------------------------------        ------------------------------------
Place,  Date          (Borrower)          Place,  Date               (Lender)

<PAGE>

AS  WITNESS  the  hands  of  the  duly authorised representatives of the parties
hereto  the  day  and  year  first  before  written:

Zellstoff  Stendal  GmbH  as  Borrower

By:
          ------------------------            ------------------------------
          Name:                               Name:
          Title:                              Title:

Address:  Niedergorner  Damm  1
          39596  Arneburg
          Federal  Republic  of  Germany

Bayerische  Hypo-  und  Vereinsbank  AG  as  Arranger, Agent, Security Agent and
Lender

By:
          ------------------------            ------------------------------
          Name:                               Name:
          Title:                              Title:

Address:  Am  Tucherpark  16
          80538  Munchen
          Federal  Republic  of  Germany

<PAGE>

Mercer  International,  Inc.  as  Sponsor  and  Guarantor

By:
          ------------------------
          Name:
          Title:

Address:  c/o  Heller  Ehrman  White  &  McAuliffe
          701  Fifth  Avenue
          Seattle,  WA  98104-7098
          United  States  of  America

AIG  Altmark-Industrie  AG  as  Sponsor

By:
          ------------------------            ------------------------------
          Name:                               Name:
          Title:                              Title:

Address:  Niedergorner  Damm  1
          39596  Arneburg
          Federal  Republic  of  Germany

RWE  Industrie-Losungen  GmbH  as  Sponsor  and  Shareholder

By:
          ------------------------            ------------------------------
          Name:                               Name:
          Title:                              Title:

Address:  Sonnenwall  85
          47051  Duisburg

<PAGE>

          Federal  Republic  of  Germany
          FAHR  Beteiligungen  AG  as  Sponsor  and  Shareholder

By:
          ------------------------            ------------------------------
          Name:                               Name:
          Title:                              Title:

Address:  Dillenburger  Stra  e  65
          50115  Koln
          Federal  Republic  of  Germany

Stendal  Pulp  Holding  GmbH  as  Shareholder

By:
          ------------------------            ------------------------------
          Name:                               Name:
          Title:                              Title:

Address:  Charlottenstr.  59
          D-10117  Berlin

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