Preview | Registration Rights Agreement |

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THIS REGISTRATION RIGHTS AGREEMENT (this Agreement) is dated February 10, 2005, between Mercer International Inc., a business trust organized pursuant to the laws of the State of Washington (together with any successor entity, herein referred to as the Company), and Royal Bank of Canada (the Holders).

This Agreement is made pursuant to subsection 7.3 of the Asset Purchase Agreement dated November 22, 2004 between the Company, KPMG Inc. in its capacity as the receiver of all of the assets and undertakings of Stone Venepal (Celgar) Pulp Inc. (KPMG) and 0706906 B.C. Ltd. (the Purchase Agreement). KPMG has, on behalf and for the account of the Holders, agreed, pursuant to the terms of the Purchase Agreement, to receive from the Company for and on behalf of the Holders that number of shares of beneficial interest of the Company, par value $1.00 per share as may be determined thereunder (the Shares of Beneficial Interest). The Company has agreed to provide to the Holders the registration rights set forth in this Agreement. Pursuant to subsection 7.3 of the Purchase Agreement, KPMG has directed, at the request of the Royal Bank of Canada (RBC), that 2,085,937 Shares of Beneficial Interest be issued to RBC in its own name and that 2,124,589 Shares of Beneficial Interest be issued to KPMG as originally contemplated. The execution and delivery of this Agreement by the Holders is a condition to the closing under the Purchase Agreement. The registration rights agreement between KPMG and the Company dated November 22, 2004 continues in full force and effect in respect of the 2,124,589 Shares of Beneficial Interest to be issued to KPMG under the Purchase Agreement.

The parties hereby agree as follows:

1. Definitions. As used in this Agreement, the following capitalized terms shall have the following meanings:

Action has the meaning in Section 6(c) hereof.

Affiliate has the meaning set forth in Rule 405 under the Securities Act.

Blue Sky Application has the meaning in Section 6(a) hereof.

Broker-Dealer means any broker or dealer registered under the Exchange Act.

Business Day means a day other than a Saturday or Sunday or any federal holiday in the United States or any holiday in the Province of British Columbia, Canada.

Closing has the meaning set forth in the Purchase Agreement.

Closing Date has the meaning set forth in the Purchase Agreement.

Commission means the Securities and Exchange Commission.

Company has the meaning set forth in the preamble hereto.

Effectiveness Deadline has the meaning in Section 2(a) hereof.

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Effectiveness Period has the meaning in Section 2(b) hereof.

Exchange Act means the Securities Exchange Act of 1934, as amended.

Filing Deadline has the meaning in Section 2(a) hereof.

Holder means a Person who owns, beneficially or of record, Transfer Restricted Securities.

Indemnified Holder has the meaning in Section 6(a) hereof.

Lock-Up Agreement means the lock-up agreement in respect of the Transferred Restricted Securities entered into (or to be entered into) among the Holders, and/or one or more underwriters as provided for and pursuant to the terms of the Purchase Agreement.

NASD means National Association of Securities Dealers, Inc.

Notice and Questionnaire means the Selling Securityholder Notice and Questionnaire in substantially the form attached as Exhibit A hereto.

Person means an individual, partnership, limited liability company, corporation, unincorporated organization, trust, joint venture or a government or agency or political subdivision thereof.

Prime Rate means the prime rate of interest charged by Royal Bank of Canada to its most creditworthy customers for U.S. dollar or commercial loans at its main branch in Vancouver, British Columbia, from time to time.

Prospectus means the prospectus included in a Registration Statement, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus.

Purchase Agreement has the meaning set forth in the preamble hereto.

Rule 144 means Rule 144 under the Securities Act (or any successor provision), as it may be amended from time to time.

Rule 144A means Rule 144A under the Securities Act (or any successor provision), as it may be amended from time to time.

Securities Act means the Securities Act of 1933, as amended.

Shelf Registration Statement has the meaning in Section 2(a) hereof.

Suspension Period has the meaning in Section 4(b) hereof.

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Transfer Restricted Securities means each Share of Beneficial Interest until the earliest to occur of:

(a) the date on which such Share of Beneficial Interest has been effectively registered for resale under the Securities Act and disposed of in accordance with the Shelf Registration Statement;

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