Document:

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                           NORSKE SKOG CANADA LIMITED

                          SUPPLEMENTAL RETIREMENT PLAN
                              FOR SENIOR EXECUTIVES

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                                  December 1994

FOREWORD

The Norske Skog Canada Limited Supplemental Retirement Plan is comprised of
three Sections. Section 1, comprised of Articles 1-5, contains general
provisions applicable to the Supplemental Plan, definitions and membership
provisions. Section 2, comprised of Articles 6-11, contains provisions related
to the Defined Benefit Segment of the Supplemental Plan. Section 3, comprised of
Articles 12-18, contains provisions related to the Defined Contribution Segment
of the Plan.

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         ii
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TABLE OF CONTENTS

Article 1 - Introduction.......................................................1

Article 2 - Construction.......................................................2

Article 3 - Participation......................................................8

Article 4 - Contributions.....................................................10

Article 5 - Miscellaneous Provisions..........................................11

Article 6 - Defined Benefit Segment - Retirement..............................16

Article 7 - Defined Benefit Segment - Amount of Retirement Income.............18

Article 8 - Defined Benefit Segment - Total and Permanent Disability..........20

Article 9 - Defined Benefit Segment - Termination of Service..................21

Article 10 - Defined Benefit Segment - Death Benefits.........................22

Article 11 - Defined Benefit Segment - Payment of Retirement Benefits.........24

Article 12 - Defined Contribution Segment - Supplemental DC Account...........25

Article 13 - Defined Contribution Segment - Vesting...........................28

Article 14 - Defined Contribution Segment - Retirement........................29

Article 15 - Defined Contribution Segment - Total and Permanent Disability....30

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                        iii
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TABLE OF CONTENTS (continued)

Article 16 - Defined Contribution Segment - Termination of Employment.........31

Article 17 - Defined Contribution Segment - Death Benefits....................32

Article 18 - Defined Contribution Segment - Amount and Form of
             Benefits Payable.................................................33

Appendix A....................................................................36

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         iv
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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                          1
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ARTICLE 1 - INTRODUCTION

1.1  Name of the Plan

            This is the Norske Skog Canada Limited Supplemental Retirement Plan
            for Senior Executives.

1.2  Purpose of the Supplemental Plan

            The purpose of the Supplemental Plan is to provide benefits to
            Participants to enable them to retire with a total retirement income
            deemed appropriate by the Board of Directors. Benefits provided by
            the Supplemental Plan are in addition to and integrated with the
            benefits provided under the Norske Skog Canada Limited Retirement
            Plan for Salaried Employees.

1.3  Administration of the Supplemental Plan

            The Human Resources Committee of the Board of Directors shall be
            responsible for the overall operation and administration of the
            Supplemental Plan.

1.4  Effective Date of Restatement

            This restatement of the Supplemental Plan is effective January 1,
            1994 and replaces the original version as of that date. Benefit
            entitlements in respecty of former plan members who have terminated
            their employment prior to January 1, 1994 shall be determined under
            the original version of the Supplemental Plan and shall not be
            affected by this restatement.

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                          2
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ARTICLE 2 - CONSTRUCTION

2.1  Definitions

            Wherever used in this Supplemental Plan, the words commencing with a
            capital letter have the meaning ascribed to them in Article 1.3 of
            the Basic Plan, unless otherwise defined in this subsection:

            (a)    "Basic Plan" shall mean the Norske Skog Canada Limited
                   Retirement Plan for Salaried Employees.

            (b)    "Basic Plan Offset" shall mean the amount determined in
                   accordance with Article 7.2. For those Participants
                   identified in Appendix A, "Basic Plan Offset" shall include
                   the amount of benefit payable under the specified pension
                   plan. Such amount of benefit shall be deemed to have been
                   converted to the Prescribed Optional Form for the purposes of
                   determining the "Basic Plan Offset" under Article 7.2 and the
                   spouse benefit under Article 10.2.

            (c)    "Best Average Earnings" shall have the same meaning as
                   ascribed to it in the Basic Plan, except that the amount
                   shall be recomputed incorporating amounts of Earnings as
                   defined in Article 2.1(k) of this Supplemental Plan.

            (d)    "Credited Service" shall mean "Credited Service", as
                   determined in accordance with Article 2.2 of the Basic Plan,
                   together with "Continuous Service", as defined under the
                   Basic Plan, for which benefit credit is provided under
                   Section 2.4.3 of the Basic Plan.

                   "Credited Service" shall be expressed in years and days, in
                   accordance with administrative rules approved by the Company.

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                          3
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                   For those Participants identified in Appendix A, "Credited
                   Service" shall include all service with those organizations
                   identified in Appendix A.

            (e)    "DB Participant" shall mean a Participant who is contingently
                   entitled to benefits under the Defined Benefit Segment of the
                   Supplemental Plan, as described in Section 3.2.

            (f)    "DC Participant" shall mean a Participant who is contingently
                   entitled to benefits under the Defined Contribution Segment
                   of the Supplemental Plan.

            (g)    "DC Allocations" shall mean the notional amounts allocated by
                   the Company to a DC Participant's Supplemental DC Account,
                   determined in accordance with Article 12.4.

            (h)    "Defined Benefit Segment" shall mean Sections 6 to 11 of the
                   Supplemental Plan, which deal with the provision of benefits
                   to DB Participants.

            (i)    "Defined Contribution Segment" shall mean Sections 12 to 18
                   of the Supplemental Plan, which deal with the provision of
                   benefits to DC Participants.

            (j)    "Early Retirement Reduction" shall have the meaning ascribed
                   to it in Article 7.3.

            (k)    "Earnings" shall mean, for purposes of this Supplemental Plan
                   only, all compensation which a Participant has received or
                   shall receive from the Company as part of his regular rate or
                   basic formula of

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                          4
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                   compensation, excluding commissions, contingent compensation,
                   expense allowances and any amounts paid in lieu of unused or
                   banked vacation, whether the vacation is classified as
                   regular, supplemental or extended.

                   "Earnings" shall include Eligible Incentive Compensation, but
                   in no event shall the amount of Eligible Incentive
                   Compensation recognized for purposes of this Article 2.1(k)
                   in respect of any fiscal year exceed fifty percent (50%) of
                   the Participant's target bonus, as determined by the Company,
                   for that year.

                   For the purposes of the Defined Benefit Segment, all amounts
                   of Eligible Incentive Compensation shall be allocated equally
                   to each month of the fiscal year in respect of which they are
                   paid or in respect of which they are otherwise credited in
                   accordance with this Article 2.1(k).

                   For the purposes of the Defined Contribution Segment, all
                   amounts of Eligible Incentive Compensation shall be deemed to
                   be paid as of the last day of September in the fiscal year
                   next following the fiscal year to which they are
                   attributable.

                   In the event that the full amount of the Participant's
                   Eligible Incentive Compensation in respect of a fiscal year
                   is not recognized by virtue of the foregoing 50% limit
                   related to the Participant's target bonus, the amount not
                   recognized may be carried forward to the immediately
                   succeeding fiscal year or years to augment the amount of
                   Eligible Incentive Compensation recognized in respect of that
                   year or those years, subject to the foregoing limit in
                   respect of each year, and shall be applied in the same manner
                   that would apply to Eligible Incentive Compensation earned in
                   that succeeding fiscal year.

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                          5
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                   If, at the time of a DB Participant's death or retirement,
                   there remain unrecognized amounts of Eligible Incentive
                   Compensation, the unrecognized amounts may be carried back
                   and allocated to the first preceding year in respect of which
                   fifty percent (50%) of the target bonus has not been
                   recognized, and, if necessary, to the next preceding year or
                   years, subject to the foregoing limit in respect of each
                   year. If, at the time of a DC Participant's date of death,
                   retirement or termination, there remain unrecognized amounts
                   of Eligible Incentive Compensation, and if there are prior
                   fiscal years after 1993 in which the amount of incentive
                   compensation recognized in "Earnings" has been less than the
                   limit related to the Participant's target bonus, the
                   unrecognized amounts, but not more than the total amounts
                   that would have been included in Earnings in such prior
                   fiscal years having regard for the aforementioned limit based
                   on 50% of the Participant's target bonus, shall be included
                   as Earnings, and the contributions attributable to these
                   amounts shall be credited to the Participant's DC Account on
                   the day preceding the date of death, termination or
                   retirement, as the case may be.

            (l)    "Effective Date" shall mean January 1, 1990.

            (m)    "Eligible Incentive Compensation" shall mean, in respect of a
                   fiscal year, fifty percent (50%) of the cash payments to a
                   Participant under the Company's incentive compensation
                   program in that year. For greater clarity, cash payments do
                   not include the value of options or shares issued under the
                   Company's phantom share plan, nor do they include amounts
                   accrued to the Participant but not yet paid under the
                   incentive compensation program.

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                          6
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            (n)    "Initial Account Value" shall mean the actuarial value
                   determined in Article 12.2.

            (o)    "Notional Investment Income" shall mean the investment
                   credits notionally allocated to a DC Participant's
                   Supplemental DC Account, determined in accordance with
                   Article 12.4.

            (p)    "Participant" shall mean an Employee who is entitled to
                   participate in the Supplemental Plan by virtue of the
                   provisions of Article 3.

            (q)    "Prescribed Optional Form" shall mean payments on a joint and
                   survivor basis such that reduced monthly income payments are
                   payable during a retired DB Participant's lifetime, and upon
                   his death, payments continue to his Spouse at the date of his
                   retirement, if any, if she is alive at the time of his death,
                   equal to sixty percent (60%) of the amount which the retired
                   DB Participant was receiving prior to his death.

            (r)    "Supplemental DB Benefit" shall have the meaning ascribed to
                   it in Article 7.1.

            (s)    "Supplemental DC Account" shall mean the account established
                   and maintained by the Company for each DC Participant to
                   which shall be credited Company allocations in accordance
                   with Article 12.1.

            (t)    "Supplemental Plan" shall mean the Norske Skog Canada Limited
                   Supplemental Retirement Plan for Senior Executives, as
                   amended from time to time.

            (u)    "Termination Date" shall mean the earliest of:

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                          7
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                   (i)        the date of termination of the Supplemental Plan
                              by the Company;

                   (ii)       the date upon which the Company ceases operations;

                   (iii)      the date on which the Company files an assignment
                              in bankruptcy, or otherwise becomes bankrupt,
                              files a proposal under the Bankruptcy and
                              Insolvency Act or a petition under the Companies'
                              Creditors Arrangement Act, or is wound up or
                              dissolved, or, if any receiver, trustee,
                              liquidator or sequester of or for the Company or
                              any substantial portion of its property is
                              appointed and is not discharged within a period of
                              sixty (60) days, the date following the end of the
                              sixty (60) day period; or

                   (iv)       the date on which the trustee, which holds the
                              letters of credit provided pursuant to Article 5.4
                              of the Supplemental Plan, elects to draw the
                              entire amount of the letters of credit as a result
                              of the Company failing to make benefit payments
                              under the Supplemental Plan or failing to renew
                              the letters of credit within the period agreed
                              upon between the trustee and the Company.

        (v)        "Total and Permanent Disability" and the related term
                   "Totally and Permanently Disabled" shall have the meaning
                   ascribed to the terms in Section 2.3.4 of the Basic Plan.

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                          8
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2.2       Common References

          For the purposes of this Supplemental Plan, words importing the
          masculine gender will include the feminine gender and vice versa,
          unless a specific reference is made to the particular sex of a
          Participant. Similarly, words in the singular may include the plural
          and the plural may include the singular.

          A reference to any Article shall be a reference to that Article
          referred to as set forth in this Supplemental Plan, unless otherwise
          expressly described to be of a different source.

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                          9
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ARTICLE 3 - PARTICIPATION

3.1       Participation and Commencement of Coverage

          Each senior executive who is designated by the Human Resources
          Committee of the Board of Directors of the Company to be a Participant
          on or after the Effective Date will become a Participant of the
          Supplemental Plan with effect from the date designated by the Human
          Resources Committee, provided he signifies his agreement to
          participate in writing. An employee of the Company whose employment
          terminated prior to the Effective Date shall not be a Participant.

3.2       Plan Segment

          A Participant who has elected to or is required to accrue benefits
          under the defined contribution segment (Part 3) of the Basic Plan
          shall be a DC Participant and shall be entitled to benefits only under
          the Defined Contribution Segment of the Supplemental Plan, as
          described in Articles 12 through 18. A Participant who has elected to
          remain in and accrue benefits under the defined benefit segment (Part
          2) of the Basic Plan shall be a DB Participant and shall be entitled
          to benefits only under the Defined Benefit Segment of the Supplemental
          Plan, as described in Articles 6 through 11.

3.3       Duration of Participation

          A Participant shall continue to participate in the Supplemental Plan
          until the earliest of his date of death, Early Retirement Date, Normal
          Retirement Date or the date on which he otherwise terminates his
          employment with the Company. Participation shall continue through any
          period of Total and Permanent Disability.

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         10
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3.4       Communication to Participants

          Each Participant will be provided with a copy of the provisions of the
          Supplemental Plan, together with a general description of the segment
          of the Supplemental Plan which is applicable to him, including an
          explanation of the coordination of benefits under the Supplemental
          Plan with those under the Basic Plan. The general description shall
          not have any effect on the rights or obligations of any person under
          the Supplemental Plan and shall not be referred to in determining the
          meaning of any provision of the Supplemental Plan. The Company shall
          not be liable for any loss or damage occasioned to any person by
          reason of any error or omission in the general description of the
          Supplemental Plan.

3.5       No Right to Employment

          Participation in the Supplemental Plan shall not give any Participant
          the right to be retained in the employ of the Company, nor any right
          or interest in the Supplemental Plan other than as expressly provided
          herein.

3.6       Dismissal for Cause

          Notwithstanding any other provision of this Supplemental Plan, in the
          event that a Participant is dismissed by the Company for cause, he
          shall forfeit his entitlement to any benefits which may otherwise have
          been provided under this Supplemental Plan.

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         11
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ARTICLE 4 - CONTRIBUTIONS

4.1       Contributions by Participants Not Permitted

          A Participant is not required nor permitted to make any contributions
          to the Supplemental Plan.

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         12
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ARTICLE 5 - MISCELLANEOUS PROVISIONS

5.1       Administration of the Supplemental Plan

          The Supplemental Plan shall be administered by the Company which shall
          interpret, construe and apply all provisions of the Supplemental Plan
          and the Company's decision with respect thereto shall be final.

5.2       Company's Power to Vary Supplemental Plan Terms

          In carrying out the administration of the Supplemental Plan, the
          Company is empowered, if it believes such action to be warranted, to
          vary the terms and conditions of the Supplemental Plan if necessary to
          comply with the terms of a judicial order, the terms of an agreement
          which has arisen out of the dissolution of a marriage or common-law
          relationship or the terms of a written separation agreement in respect
          of which the Company is obliged to comply in accordance with duly
          enacted provincial or federal legislation.

5.3       No Prefunding of Benefits

          Plan benefits will be paid as they fall due from general revenues of
          the Company. No prefunding of benefit obligations under the Defined
          Benefit Segment or the Defined Contribution Segment shall take place.
          For greater clarity, the Supplemental DC Account referred to in
          Article 12.1, the Initial Account Value referred to in Article 12.2
          and the DC Allocations referred to in Article 12.4 are notional and do
          not imply funding of the underlying amounts.

5.4       Security for Payment of Benefits

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         13
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          The Company will establish a letter of credit facility in order to
          secure the payment of Supplemental Plan benefits should the Company be
          unable to or fail to pay them. The letter of credit shall be held by a
          trustee under a trust agreement, the terms of which provide for the
          calling of the letter of credit and the funding of plan benefits using
          the proceeds should the Company be unable or unwilling to meet its
          payment commitments set out herein.

5.5       Expenses

          All expenses incurred in the administration of the Supplemental Plan
          shall be paid by the Company.

5.6       Non-Alienation of Benefits

          The retirement income and other benefits provided herein are for a
          retired Participant's own use and benefit and are not capable of
          assignment or alienation and do not confer upon any Participant,
          personal representative or dependent, or any other person, any right
          or interest in the pension benefits which is capable of being assigned
          or otherwise alienated. The retirement income benefits payable are not
          capable of surrender or commutation and do not confer upon any
          Participant, personal representative or dependent, or any other
          person, any right or interest in the retirement benefits capable of
          being surrendered or commuted.

5.7       Responsibility for Payment

          Notwithstanding any other provisions herein, whenever and as often as
          any person entitled to any payment hereunder shall, in the judgement
          of the Company, be physically or mentally incapable of personally
          receipting therefore, then unless a claim shall have been made by a
          duly appointed guardian or committee of such person, such payment may
          be made to any

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         14
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          individual or institution then maintaining such person in the
          judgement of the Company, and such payment shall in every case
          constitute a full discharge and acquittance of all obligations to make
          such payments to such person.

5.8       Amendment of Supplemental Plan

          The Company reserves the right to amend, modify or terminate this
          Supplemental Plan or to merge it with another plan of the Company, in
          any way the Company may determine. Without in any way limiting the
          generality of the foregoing, the Company specifically reserves the
          right to make any amendment, modification, termination or merger of
          the Supplemental Plan in whole or in part as it deems necessary to
          fulfill any requirement specified or to be specified in any relevant
          provincial or federal legislation or in special regulations prescribed
          thereby.

          Any amendment or modification to the Supplemental Plan may, at the
          discretion of and as specified by the Company, be applicable to either
          an individual Participant, a specified group of Participants or the
          entire membership of the Supplemental Plan.

          However, no amendment, modification, termination or merger will, other
          than as provided herein:

          (a)      cause a reduction in the amount or affect adversely the
                   payment of any retirement income benefits to any retired
                   Participant theretofore retired under this Supplemental Plan,
                   or

          (b)      cause a reduction in or affect adversely the payment of any
                   benefits to a Spouse hereunder in any case where such benefit
                   has become payable following the death of a Participant, or

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         15
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          (c)      cause a reduction in the accrued benefits of any Participant.

5.9       Benefits following Termination Date

          The following benefits shall be provided following a Termination Date.

          Effective on a Termination Date, no further benefits shall accrue
          under the Supplemental Plan.

          Each retired Participant or Spouse then in receipt of benefit payments
          shall continue to be entitled to receive such payments and the Spouse
          of a retired Participant shall remain eligible to receive the payments
          to which she is contingently entitled in accordance with Article 10.2.

          Each DB Participant who has not yet retired shall, if eligible to
          retire, be deemed to retire upon the first (1st) day of the month next
          following or coincident with the Termination Date and shall be
          entitled to commence to receive the benefits provided for in Article
          6, and the Company consent, required in accordance with Article 6.2,
          shall be deemed to have been given. The Spouse of each such DB
          Participant shall be eligible to receive the benefits to which she is
          contingently entitled in accordance with Article 10.2.

          Each DB Participant who is not yet eligible to retire shall be
          entitled to a deferred pension, payable commencing on the first (1st)
          day of the month next following or coincident with the day the member
          attains age fifty-five (55), equal to eighty-five percent (85%) of his
          Supplemental Benefit based on his Earnings and Credited Service up to
          the Termination Date, calculated in accordance with Article 7.1 as if
          the Termination Date was the Participant's Normal Retirement Date. The
          Spouse of each such DB Participant shall be eligible to receive the
          benefits to which she is contingently entitled in accordance with
          Article 10.2.

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         16
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          Each DC Participant shall be entitled to receive commencing upon the
          first (1st) day of the month coincident with or next following the
          Termination Date the benefits provided for in Article 18.4.

5.10      Proof of Age

          Payment of annual income benefits to a retired DB Participant in this
          Supplemental Plan upon his retirement or to his Spouse shall not
          commence until satisfactory proof of age of such DB Participant or
          Spouse has been submitted in approved form. Should it be found at any
          time that an error has occurred in the reporting of an age, the
          retirement income payments shall be adjusted, if necessary, in
          accordance with the true age of the DB Participant or Spouse.

5.11      Other Terms and Conditions

          Subject to the provisions of Article 5.8 hereof, the Company shall
          have the right to set such other terms and conditions and to change
          them from time to time, as the Company may determine.

5.12      British Columbia Laws Govern

          This Supplemental Plan and all the rights and obligations hereunder
          construed shall be governed and determined by the laws of the Province
          of British Columbia.

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         17
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ARTICLE 6 - DEFINED BENEFIT SEGMENT - RETIREMENT

6.1       Normal Retirement

          A DB Participant, who ceases to be employed by the Company upon
          attaining his Normal Retirement Date, shall become a retired DB
          Participant and shall be entitled to receive a retirement income from
          this Supplemental Plan, commencing on his Normal Retirement Date,
          equal to his Supplemental DB Benefit.

6.2       Early Retirement

          A DB Participant who has attained the age of fifty-five (55) years may
          elect early retirement in accordance with Article 2.3.2 of the Basic
          Plan. Providing that the Company has consented to his retirement for
          the purposes of this Supplemental Plan, the benefit payable,
          commencing on his Early Retirement Date, shall be his Supplemental DB
          Benefit.

          If the Company has not consented to the DB Participant's retirement,
          no benefit shall be payable under this Supplemental Plan.

          Company consent shall not be withheld provided that the DB Participant
          has given notice at least twelve (12) months prior to his intended
          Early Retirement Date and he remains employed throughout that twelve
          (12) month period. Company consent may be given to retirement after a
          notice period of less than twelve (12) months.

6.3       Postponed Retirement

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         18
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          A DB Participant may, upon the request of the Board of Directors,
          remain in active service with the Company after his Normal Retirement
          Date for a period to be agreed upon jointly by the DB Participant and
          the Company. In the event of the DB Participant's postponement of his
          retirement in accordance with this Article 6.3, he shall become a
          retired Participant on his Normal Retirement Date and his retirement
          income, determined as under Article 7.1, shall commence on his Normal
          Retirement Date, based on his Credited Service and Earnings up to his
          Normal Retirement Date.

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         19
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ARTICLE 7 - DEFINED BENEFIT SEGMENT - AMOUNT OF RETIREMENT INCOME

7.1       Supplemental DB Benefit

          The Supplemental DB Benefit, if any, of a DB Participant, payable
          commencing on his Normal Retirement Date, shall be determined as (a)
          minus (b), where:

          (a)      is two percent (2.0%) of his Best Average Earnings multiplied
                   by his Credited Service, where Best Average Earnings and
                   Credited Service are each determined on his Normal Retirement
                   Date; and

          (b)      is his Basic Plan Offset.

          The Supplemental DB Benefit, if any, of a DB Participant, payable
          commencing on an Early Retirement Date shall be determined as (c)
          minus (d), where:

          (c)      is two percent (2.0%) of his Best Average Earnings multiplied
                   by his Credited Service, reduced by the Early Retirement
                   Reduction, if any, where Best Average Earnings and Credited
                   Service are each determined on his Early Retirement Date; and

          (d)      is his Basic Plan Offset.

7.2       Basic Plan Offset

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         20
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          The Basic Plan Offset on any Retirement Date in respect of a DB
          Participant who elects the Prescribed Optional Form of payment of his
          retirement income under the Basic Plan shall be the amount of
          retirement income payable to him under the Basic Plan on that
          Retirement Date. The Basic Plan Offset on any Retirement Date in
          respect of a DB Participant who either does not have a Spouse or does
          not elect the Prescribed Optional Form of payment of his retirement
          income under the Basic Plan shall be the amount of retirement income
          that would be payable to him under the Basic Plan on that Retirement
          Date if he had elected a life annuity, without guaranteed period, as
          permitted under Article 2.7.1 of the Basic Plan.

7.3       Early Retirement Reduction

          The Early Retirement Reduction applicable to the benefit of a DB
          Participant who retires on an Early Retirement Date shall be
          determined as one-quarter of 1% (0.25%) for each month, if any, by
          which the Retirement Date elected by the DB Participant precedes:

          (a)      his sixtieth (60th) birthday, if his birthday falls on the
                   first day of a month, or

          (b)      the first day of the month which next follows the month in
                   which his sixtieth (60th) birthday falls, otherwise.

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NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         21
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ARTICLE 8 - DEFINED BENEFIT SEGMENT - TOTAL AND PERMANENT DISABILITY

8.1       Accrual of Benefits

          During any period of Total and Permanent Disability, a DB Participant
          shall not receive retirement income under this Supplemental Plan, but
          shall be entitled to continue to accumulate Credited Service
          throughout the duration of his Total and Permanent Disability. It
          shall be assumed that such DB Participant's Earnings shall have
          continued, during the period of Total and Permanent Disability, at the
          same rate as was in effect immediately prior to the commencement of
          his Total and Permanent Disability, except that the amount of Eligible
          Incentive Compensation to be included in Earnings shall be determined
          as 50% of the average of the amounts of incentive compensation paid to
          the DB Participant in respect of the five complete fiscal years
          preceding the fiscal year in which Total and Permanent Disability
          occurs, or in respect of all complete fiscal years of the DB
          Participant's employment if he shall have been employed for less than
          five complete fiscal years prior to the fiscal year in which Total and
          Permanent Disability occurs, subject to the applicable limits
          regarding the DB Participant's target bonus as set out in Article
          2.1(k).

8.2       Death of Totally and Permanently Disabled Participant

          In the event of the death of a DB Participant during any period of
          Total and Permanent Disability, any death benefit payable shall be
          determined in accordance with Article 10 of this Supplemental Plan.

<PAGE>

NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         22
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ARTICLE 9 - DEFINED BENEFIT SEGMENT - TERMINATION OF SERVICE

9.1       Termination of Service

          Notwithstanding any other provision of the Supplemental Plan, a DB
          Participant whose service with the Company is terminated prior to age
          fifty-five (55) for any reason other than Total and Permanent
          Disability shall not be entitled to any benefits under the
          Supplemental Plan.

<PAGE>

NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         23
--------------------------------------------------------------------------------

ARTICLE 10 - DEFINED BENEFIT SEGMENT - DEATH BENEFITS

10.1      Death of a DB Participant Prior to Normal Retirement Date

          No death benefits shall be payable under the Supplemental Plan in the
          event of death of a DB Participant prior to his Normal Retirement
          Date, other than those described in this Article 10.1.

          Upon the death of a DB Participant who has attained at least
          fifty-five (55) years of age, his Spouse shall be entitled to receive
          an annual income, payable in equal monthly instalments during her
          lifetime, equal to sixty percent (60%) of the retirement income which
          would have been payable to the DB Participant under the Supplemental
          Plan if:

          (a)      he had elected a Retirement Date of the first day of the
                   month which is coincident with or next following the date of
                   his death,

          (b)      the Company had granted its consent to his retirement on that
                   date, and

          (c)      he had elected the Prescribed Optional Form of payment of his
                   retirement income under the Basic Plan.

10.2      Death of a Retired DB Participant

          No death benefits shall be payable under this Supplemental Plan in the
          event of the death of a retired DB Participant unless the retired DB
          Participant has, prior to his retirement, elected the Prescribed
          Optional Form of payment of his entitlement under the Basic Plan.

          Upon the notification in writing to the Company of the death of a
          retired DB Participant who has made the required election as set out
          in the preceding

<PAGE>

NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         24
--------------------------------------------------------------------------------

          paragraph, there shall be paid to his Spouse, if any, provided that
          she is alive at the date of his death, monthly payments during her
          lifetime equal to 60% of the retirement income which the retired DB
          Participant is receiving under this Supplemental Plan.

<PAGE>

NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         25
--------------------------------------------------------------------------------

ARTICLE 11 - DEFINED BENEFIT SEGMENT - PAYMENT OF RETIREMENT BENEFITS

11.1      General Provisions

          Upon retirement of a DB Participant, the Company shall pay to the DB
          Participant an annual Supplemental DB Benefit, calculated in
          accordance with the terms of the Supplemental Plan, payable in equal
          monthly instalments. The first payment of such retirement income shall
          be made as of his Retirement Date and subsequent monthly instalments
          shall be paid on the first day of each month.

11.2      Form of Retirement Income

          The form of retirement income under the Defined Benefit Segment of the
          Supplemental Plan shall be one that provides monthly retirement income
          payments payable during the retired DB Participant's lifetime.
          Benefits payable to the Spouse of a retired DB Participant, if any,
          shall be determined in accordance with Article 10.2.

<PAGE>

NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         26
--------------------------------------------------------------------------------

ARTICLE 12 - DEFINED CONTRIBUTION SEGMENT - SUPPLEMENTAL DC ACCOUNT

12.1      Supplemental DC Account

          The Company shall establish and maintain a Supplemental DC Account for
          each DC Participant. The Supplemental DC Account shall be credited
          with DC Allocations in amounts and at the times specified in Article
          12.4, and shall be credited with Notional Investment Income, as
          described in Article 12.5. The Supplemental DC Account shall be paid
          in accordance with Article 18.

          The Company shall update the balance in the Supplemental DC Account of
          each DC Participant at the end of each calendar month, to reflect DC
          Allocations and Notional Investment Income for that month.

12.2      Transitional Provisions - Participants on January 1, 1994

          On January 1, 1995, there shall be credited to the Supplemental DC
          Account of any Participant who was a Participant on January 1, 1994
          and who elected, effective January 1, 1994, to participate in the
          defined contribution segment of the Basic Plan an Initial Account
          Value equal to the sum of (a) plus (b) plus (c) plus (d), where:

          (a)      is the Actuarial Value of the benefits accrued to the
                   Participant under the Supplemental Plan, in respect of
                   Credited Service prior to January 1, 1994, as determined by
                   the Actuary using assumptions approved by the Company;

          (b)      is 1994 investment credits on the amount described in
                   paragraph (a) computed monthly, for the first six months of
                   1994 at an annual rate of 7.5%, and for the last six months
                   of 1994 based on the percentage

<PAGE>

NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         27
--------------------------------------------------------------------------------

                   change in the value of the balanced fund pooled fund units
                   under the defined contribution segment of the Basic Plan;

          (c)      is 1994 DC Allocations determined in accordance with Article
                   12.4; and

          (d)      is 1994 investment credits on the 1994 DC Allocations at the
                   same monthly rates determined in accordance with (b) above.

12.3      Transitional Provisions - New Participants after January 1, 1994

          Effective on the date of his participation in the Supplemental Plan,
          there shall be credited to the Supplemental DC Account of a
          Participant, who becomes a Participant after January 1, 1994 and who
          immediately prior to his participation was a member of the defined
          contribution segment of the Basic Plan, an amount equal to 50% of the
          total account value of the Participant under the defined contribution
          segment of the Basic Plan on that date.

12.4      Allocations to Supplemental DC Account

          The Company shall make DC Allocations to the Supplemental DC Account
          of each Participant on the last day of each month. The DC Allocations
          shall be determined as 12% of Earnings less contributions which the
          Company makes to the defined contribution segment of the Basic Plan in
          respect of the Participant.

          Allocations which are based on Eligible Incentive Compensation in
          respect of a fiscal year shall be credited to the Supplemental DC
          Account on the last day of September of the fiscal year following the
          fiscal year to which they are attributable.

<PAGE>

NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         28
--------------------------------------------------------------------------------

          Allocations which are based on Eligible Incentive Compensation which
          has been carried forward from previous fiscal years shall be credited
          to the Supplemental DC Account on the last day of September of the
          fiscal year following the first fiscal year to which it may be
          allocated as set out in Article 2.1(k).

12.5      Notional Investment Income

          Notional Investment Income shall be credited each month to the
          Supplemental DC Account of each Participant. Such investment income
          may either be a positive or negative amount and shall be based on the
          change in the month end unit value of the balanced fund investment
          option under the defined contribution segment of the Basic Plan, and
          this change in unit value shall be applied to the balance of the
          Participant's Supplemental DC Account at the preceding month end.

<PAGE>

NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         29
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ARTICLE 13 - DEFINED CONTRIBUTION SEGMENT - VESTING

13.1      Vesting Provisions

          A DC Participant will be 100% vested in the amount in his Supplemental
          DC Account provided that he either has completed five years of
          participation in the Supplemental Plan, or has attained age 55.

          Notwithstanding the foregoing, in the event of his death while
          employed by the Company and prior to retirement, a DC Participant will
          be 100% vested in the amount in his Supplemental DC Account.

<PAGE>

NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         30
--------------------------------------------------------------------------------

ARTICLE 14 - DEFINED CONTRIBUTION SEGMENT - RETIREMENT

14.1      Normal Retirement

          A DC Participant who ceases to be employed by the Company upon
          attaining his Normal Retirement Date shall become a retired DC
          Participant and shall be entitled to commence to receive benefits in
          accordance with Article 18.

14.2      Early Retirement

          A DC Participant who has attained the age of fifty-five (55) years may
          elect to retire on the first day of any month and commence to receive
          benefits in accordance with Article 18 provided that the Company has
          consented to his early retirement.

          Company consent shall not be withheld provided that the DC Participant
          has given notice at least twelve (12) months prior to his intended
          Early Retirement Date and he remains employed throughout that twelve
          (12) month period. Company consent may be given to retirement after a
          notice period of less than twelve (12) months. In the event the DC
          Participant does not receive Company consent after providing
          insufficient notice, the DC Participant's Early Retirement Date for
          purposes of the Supplemental Plan shall be adjusted and shall be the
          first day of the month next following the date as of which twelve (12)
          months notice would have been provided.

14.3      Postponed Retirement

          A DC Participant may, upon the request of the Board of Directors,
          remain in active service with the Company after his Normal Retirement
          Date for a period to be agreed upon jointly by the DC Participant and
          the Company. In the event of the DC Participant's postponement of his
          retirement in accordance

<PAGE>

NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         31
--------------------------------------------------------------------------------

          with this Article 14.3, he shall become a retired Participant on his
          Normal Retirement Date, and he shall commence to receive benefits in
          accordance with Article 18.

<PAGE>

NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         32
--------------------------------------------------------------------------------

ARTICLE 15 - DEFINED CONTRIBUTION SEGMENT - TOTAL AND PERMANENT DISABILITY

15.1      Accrual of Benefits

          During any period of Total and Permanent Disability, a DC Participant
          shall not receive retirement income under this Supplemental Plan, but
          shall be entitled to continue to accumulate DC Allocations throughout
          the duration of his Total and Permanent Disability. It shall be
          assumed that such DC Participant's Earnings shall have continued,
          during the period of Total and Permanent Disability, at the same rate
          as was in effect immediately prior to the commencement of his Total
          and Permanent Disability, except that the amount of Eligible Incentive
          Compensation to be included in Earnings shall be determined as 50% of
          the average of the amounts of incentive compensation paid to the DC
          Participant in respect of the five complete fiscal years preceding the
          fiscal year in which Total and Permanent Disability occurs, or in
          respect of all complete fiscal years of the DC Participant's
          employment if he shall have been employed for less than five complete
          fiscal years prior to the fiscal year in which Total and Permanent
          Disability occurs, subject to the applicable limits regarding the DC
          Participant's target bonus as set out in Article 2.1(k).

15.2      Death of Totally and Permanently Disabled Participant

          In the event of the death of a DC Participant during any period of
          Total and Permanent Disability, any death benefit payable shall be
          determined in accordance with Article 17 of this Supplemental Plan.

<PAGE>

NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         33
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ARTICLE 16 - DEFINED CONTRIBUTION SEGMENT - TERMINATION OF EMPLOYMENT

16.1      Non-Vested Termination of Employment

          A DC Participant whose service with the Company is terminated for any
          reason other than Total and Permanent Disability prior to satisfaction
          of the vesting requirement specified in Article 13.1 shall not be
          entitled to any benefits from the Supplemental Plan.

16.2      Vested Termination of Employment Prior to Age 55

          A DC Participant whose service with the Company is terminated for any
          reason other than Total and Permanent Disability after satisfying the
          vesting requirement specified in Article 13.1 but prior to age 55
          shall be entitled to termination benefits in accordance with Article
          18.2.

16.3      Vested Termination of Employment After Age 55

          A DC Participant whose service with the Company is terminated for any
          reason other than Total and Permanent Disability after age 55 and
          before his Normal Retirement Date shall be entitled to early
          retirement benefits as provided in Article 18.1.

<PAGE>

NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         34
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ARTICLE 17 - DEFINED CONTRIBUTION SEGMENT - DEATH BENEFITS

17.1      Death of a DC Participant Prior to Retirement

          Upon the death of a DC Participant prior to his attaining a Retirement
          Date, his Spouse, or if there is no Spouse, his Beneficiary shall be
          entitled to receive, in a lump sum on the last day of the calendar
          month in which the Participant died, the full amount of the DC
          Participant's Supplemental DC Account as of that last day of the month
          in which the Participant died.

17.2      Death of a DC Participant After Retirement

          Upon the death of a DC Participant after attaining a Retirement Date,
          but before receiving all amounts payable in accordance with Article
          18, his Spouse, or if there is no Spouse, his Beneficiary shall be
          entitled to receive the present value of the remaining instalments,
          determined in accordance with Article 18.3.

<PAGE>

NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         35
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ARTICLE 18 - DEFINED CONTRIBUTION SEGMENT - AMOUNT AND FORM OF BENEFITS PAYABLE

18.1      Amount and Form of Benefit - Retirement

          If a DC Participant retires on a Normal Retirement Date or Early
          Retirement Date, the balance in his Supplemental DC Account as of his
          Retirement Date shall be distributed as follows:

          (a)      on his Retirement Date, the maximum retiring allowance, as
                   that term is defined in Section 248(1) of the Income Tax Act,
                   that may be transferred tax-free to a registered retirement
                   savings plan under Section 60(j.1) of the Income Tax Act

          (b)      on the first anniversary of this Retirement Date, and on each
                   of the subsequent nine anniversaries of his Retirement Date,
                   an annual payment such that the present value of the ten
                   equal instalments is equal to the excess of the balance in
                   his Supplemental DC Account as of his Retirement Date over
                   the amount paid under Article 18(1)(a) above. Such present
                   value shall be determined based on a rate of discount equal
                   to the average yield on Government of Canada marketable 5-10
                   year bonds (CANSIM Series B-113866) for all weeks of the
                   calendar month preceding the date of retirement, rounded to
                   the next higher multiple of one quarter percent (1/4%).

18.2      Amount and Form of Benefit - Termination

<PAGE>

NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         36
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          If a DC Participant terminates employment prior to age 55 with
          entitlement to a benefit in accordance with Article 16.2, the balance
          of his Supplemental DC Account at the end of the month in which his
          termination date falls shall be distributed in accordance with Article
          18.1, with the first day of the month following his termination date
          being substituted for his Retirement Date therein.

18.3      Amount of Benefit Payable on Death After Retirement

          If a DC Participant, who has retired and commenced to receive annual
          instalments in accordance with Article 18.1, should die prior to
          receiving his full entitlement of ten (10) annual instalments, his
          Spouse or if there is no Spouse, his Beneficiary shall be entitled to
          receive a lump sum payment equal to the present value as of the date
          of death of the remaining instalments. Such present value shall be
          determined based on a rate of discount equal to:

          (a)      if there are three (3) or less instalments remaining to be
                   paid, the average yield on Government of Canada marketable
                   1-3 year bonds (CANSIM Series B-133864) for all weeks of the
                   calendar month during which the date of death falls, rounded
                   to the next higher multiple of one-quarter percent (1/4%).

          (b)      if there are four (4), five (5) or six (6) instalments
                   remaining to be paid, the average yield on Government of
                   Canada marketable 3-5 year bonds (CANSIM Series B-133865) for
                   all weeks of the calendar month during which the date of
                   death falls, rounded to the next higher multiple of
                   one-quarter percent (1/4%).

          (c)      if there are seven (7), eight (8), nine (9) or ten (10)
                   instalments remaining to be paid, the average yield on
                   Government of Canada marketable 5-10 year bonds (CANSIM
                   Series B-133866) for all weeks of

<PAGE>

NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         37
--------------------------------------------------------------------------------

          the calendar month during which the date of death falls, rounded to
          the next higher multiple of one-quarter percent (1/4%).

18.4      Amount of Benefit Following Termination of the Plan

          Upon termination of the Supplemental Plan, a DC Participant whose
          benefits have not commenced to be paid shall be entitled to the full
          balance in his Supplemental DC Account as of the Termination Date. A
          DC Participant who has commenced to receive benefits as a result of
          retirement or termination of employment prior to the Termination Date
          shall be entitled to a lump sum payment equal to the amount that would
          be payable to his Spouse or Beneficiary in accordance with Article
          18.3, as if the DC Participant had died on the Termination Date of the
          Supplemental Plan.

<PAGE>

NORSKE SKOG CANADA LIMITED
SUPPLEMENTAL RETIREMENT PLAN
FOR SENIOR EXECUTIVES                                                         38
--------------------------------------------------------------------------------

APPENDIX A

                 LIST OF PARTICIPANTS WITH CREDITED SERVICE WITH
                      ORGANIZATIONS OTHER THAN THE COMPANY

<TABLE>
<CAPTION>

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

        NAME             CREDITED SERVICE INCLUDES SERVICE WITH    BASIC PLAN OFFSET INCLUDES BENEFITS UNDER
                                THE FOLLOWING COMPANIES                   THE FOLLOWING PENSION PLANS
---------------------------------------------------------------------------------------------------------------
<S>                     <C>                                       <C>
J.E. Longley            Fletcher Challenge Limited                None

J.M. Stenstrom          Norsk Pacific Steamship Company Limited   Fletcher Challenge Paper Company and Norsk
                                                                  Pacific Steamship Company Limited Pension
                                                                  Plan

A.C. Wallace            Blandin Paper Company                     Blandin Paper Company Salaried Employees
                                                                  Retirement Plan
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
</TABLE><PAGE>

                                    EXECUTIVE
                               SEVERANCE AGREEMENT

This Severance Agreement is made as of the 30th day of June, 2000

BETWEEN:

          FLETCHER CHALLENGE CANADA LIMITED, a company incorporated under the
          laws of the Province of British Columbia

          (the "Company")

                                                              OF THE FIRST PART,

AND:

          RUSSELL J. HORNER

          (the "Executive")

                                                             OF THE SECOND PART.

WHEREAS:

A.   The Executive is a senior executive of the Company and has made and is
     expected to continue to make significant contributions to the Company and
     its shareholders, including in particular, in connection with any proposed
     sale or disposition of the shares or assets of the Company which may be
     undertaken by the Company or its majority shareholder, Fletcher Challenge
     Limited ("FCL"); and

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

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

1.   INTERPRETATION

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

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

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

<PAGE>

                                       2

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

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

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

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

     (e)  "Common shares" means the Class A Common shares without par value in
          the capital of the Company;

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

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

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

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

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

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

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

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

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

<PAGE>
                                       3

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

     (m)  "Phantom Stock Plans" mean the Fletcher Challenge Canada Limited
          Phantom Stock Option Plans as constituted at the Effective Date;

     (n)  "Proposed Transaction" means any of the following:

          (i)  the acquisition, directly or indirectly, by a Person (other than
               FCL) or group of Related Persons (not including FCL) of Common
               shares that (when taken together with any Common shares already
               owned, directly or indirectly, by such Person or group of Related
               Persons) constitute 100% of the outstanding Common shares;

          (ii) the acquisition by a Person (other than FCL) or a group of
               Related Persons (not including FCL) of all or substantially all
               of the assets of the Company resulting in a realization by the
               holders of Common shares of all or a significant part of their
               investment in the Common shares;

         (iii) a series of transactions involving the acquisition of Common
               shares and/or assets of the Company (other than by FCL) which
               results in a realization by the Shareholders of all or a
               significant part of their investment in the Common shares;

          (iv) the sale or disposition (other than a sale or disposition by way
               of a secondary public offering) by FCL, directly or indirectly,
               of all or part of the outstanding Common shares owned directly or
               indirectly by FCL, such that any other Person or group of Related
               Persons becomes the owner, directly or indirectly, of 40% or more
               of the outstanding Common shares; or

          (v)  the acquisition, directly or indirectly, by the Company or one or
               more of its subsidiaries of Common shares or other securities as
               a result of which FCL no longer owns, directly or indirectly, or
               exercises control or direction over, any Common shares,

          and for these purposes, the term "acquisition" includes a transaction
          or series of transactions by way of purchase, amalgamation, merger,
          reorganization, arrangement, recapitalization, liquidation or other
          business combination.

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

     (p)  "Related Person" means in relation to any Person participating in a
          Proposed Transaction, any Affiliate (as defined in the COMPANY ACT
          (British Columbia)) of that Person and any other Person which,
          pursuant to any agreement, commitment or understanding, acts jointly
          or in concert with that Person in connection with the completion of a
          Proposed Transaction;

<PAGE>
                                       4

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

     (r)  "SAR" means any right granted pursuant to and in accordance with the
          terms of any of the Phantom Stock Plans;

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

     (t)  "Short Term Incentive Plan" means the Fletcher Challenge Canada
          Limited Short Term Incentive Plan as constituted and administered at
          the Effective Date;

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

     (v)  "Stock Option Plan" means the Fletcher Challenge Canada Limited 1995
          Stock Option Plan as constituted and administered at the Effective
          Date;

     (w)  "Term" means the period commencing as of the date hereof and ending on
          June 30, 2001 or such later date as the Company may from time to time
          by notice to the Executive specify;

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

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

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

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

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

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

<PAGE>
                                       5

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

2.   OPERATION OF AGREEMENT.

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

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

     (a)  the Executive has accepted employment with the purchaser (the
          "Purchaser"); and

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

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

3.   TERMINATION AFTER COMPLETION OF A PROPOSED TRANSACTION

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

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

<PAGE>
                                       6

4.   TERMINATION LEAVE ELECTION

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

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

     (b)  all benefits and perquisites to which the Executive was entitled
          immediately prior to the Effective Date will terminate on that Date,
          except that the Company will provide to, continue or maintain for the
          Executive, as applicable, the benefits and perquisites described in
          Schedule A (the "Executive Benefits"); provided that, despite Schedule
          A, the Executive's interest free housing loan, if any, shall not be
          repayable in full until the earlier of the date of commencement of
          alternate employment as contemplated in subsection 4.2 and the third
          anniversary of the date of the drawing of funds;

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

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

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

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

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

     (d)  to the extent that the Executive has at the Effective Date any
          rights in respect of the Company for obligations of the Company in
          respect of stock options issued on

<PAGE>
                                       7

          or prior to the Effective Date by FCL in respect of shares of FCL,
          all such rights will, notwithstanding anything to the contrary in
          this Agreement, continue in full force and effect and be determined
          in accordance with the terms of such stock options, but all other
          obligations, if any, of the Company to the Executive in respect of
          stock options in respect of shares of FCL shall terminate on the
          Effective Date; and

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

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

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

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

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

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

5.   LUMP SUM SETTLEMENT ELECTION

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

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

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

<PAGE>
                                       8

          (ii) an amount equal to 80% of the amount calculated by multiplying
               two times the Base Salary;

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

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

     (d)  to the extent that the Executive has at the Effective Date any rights
          in respect of the Company for obligations of the Company in respect of
          stock options issued on or prior to the Effective Date by FCL in
          respect of shares of FCL, all such rights will, notwithstanding
          anything to the contrary in this Agreement, continue in full force and
          effect and be determined in accordance with the terms of such stock
          options, but all other obligations, if any, of the Company to the
          Executive in respect of stock options in respect of shares of FCL
          shall terminate on the Effective Date; and

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

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

6.   DUTY TO MITIGATE

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

7.   DISPUTE RESOLUTION REGARDING CONSTRUCTIVE DISMISSAL AND OTHER BENEFITS

7.1. If any dispute or question (a "Dispute") arises between the Company and the
     Executive concerning the determination as to whether a Constructive
     Dismissal of the Executive has occurred (including with respect to the date
     of such dismissal), the entitlement of the

<PAGE>
                                       9

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

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

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

8.   SARS AND STOCK OPTIONS

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

     (a)  this Agreement will constitute a notice pursuant to the applicable
          provision of each of the Phantom Stock Plans such that, on the date of
          completion of the Proposed Transaction, the Company will pay to the
          Executive an amount equal to the result obtained by multiplying the
          excess, if any, of the Selling Price Per Share over the Exercise Price
          (as defined in the respective SAR) by the number of the Common shares
          in respect of which each SAR remains unexercised (whether or not such
          SAR would then be exercisable);

     (b)  upon payment of all amounts pursuant to subsection 8.1(a), all rights
          of the Executive pursuant to the SARs, any share appreciation rights
          agreement entered

<PAGE>
                                       10

          into between the Company and the Executive and the Phantom Stock Plans
          will terminate; and

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

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

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

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

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

          Fletcher Challenge Canada Limited
          9th Floor, 700 W. Georgia Street
          Vancouver, B.C.
          V7Y 1J7
          Attention: President

     (b)  in the case of the Executive, to the Executive at the last address of
          the Executive on the records of the Company

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

<PAGE>
                                       11

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

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

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

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

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

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

<PAGE>
                                       12

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

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

                                        FLETCHER CHALLENGE CANADA LIMITED

                                        by: /s/ Alexander Tolte
                                            -------------------------------
                                            Chairman of the Board

                                           /s/ Russell J. Horner
                                            -------------------------------
                                            RUSSELL J. HORNER

<PAGE>

                                   SCHEDULE A

                    TREATMENT OF BENEFITS AND PERQUISITES ON
                          ELECTION OF TERMINATION LEAVE

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

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

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

     (c)  Dental Benefits: coverage for Executive and dependants

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

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

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

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

          o    auto plan

          o    computer loan

          o    personal lines insurance

          o    leased vehicle driver option

          o    Canada Savings Bonds

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

<PAGE>
                                       2

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

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

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

     (b)  Accidental Death and Dismemberment Benefits:

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

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

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

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

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

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

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

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

<PAGE>
                                       3

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

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

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

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

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

5.   Pension Benefits:

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

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

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

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

     (b)  If the circumstances described in section 4.2 of the Agreement arise,
          the Executive shall immediately stop accumulating further benefits
          under the Pension

<PAGE>
                                       4

          Plans, and, without limitation, any payment the Executive becomes
          entitled to pursuant to section 4.2(a) of the Agreement shall not be
          recognized under any contribution (actual or notional) provision of
          the Pension Plans.

<PAGE>

                                   SCHEDULE B

                    TREATMENT OF BENEFITS AND PERQUISITES ON
                         ELECTION OF LUMP SUM SETTLEMENT

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

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

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

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

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

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

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

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

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

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

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

<PAGE>
                                       2

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

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

11.  Club Memberships:

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

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

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

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

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

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

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

<PAGE>

                                   SCHEDULE C

                                     RELEASE

IN CONSIDERATION for the payment to me of $1.00 by FLETCHER CHALLENGE CANADA
LIMITED (the "Company") and for the entry by the Company into the Executive
Severance Agreement (the "Agreement") dated as of the 30th day of June, 2000
between the Company and me (the receipt and sufficiency of which are hereby
acknowledged), I, Russell J. Horner, HEREBY RELEASE AND FOREVER DISCHARGE the
Company, its related and affiliated companies and subsidiaries (collectively
"Fletcher Challenge"), and its officers, directors, and employees, from any and
all actions, causes of action, claims and demands, which in any way relate to my
employment and the termination of my employment with Fletcher Challenge,
including any claim arising from the provisions of the EMPLOYMENT STANDARDS ACT,
HUMAN RIGHTS ACT or other applicable legislation. I FURTHER AGREE that the
consideration I have received includes full payment for any claim I may have
under such legislation.

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

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

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

Dated this ______ day of __________, 20__, at ________________, in the Province
of British Columbia.

WITNESSED BY:

___________________________                   ___________________________
Witness - Signature                           RUSSELL J. HORNER

___________________________
Witness - Address

___________________________
Witness - Occupation

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00033-of-00352.parquet"}]]