MERCER INTERNATIONAL INC
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>doc2.txt
<TEXT>

THIS  AGREEMENT  is  made  the  5th  day  of  August,  2003

BY  AND  AMONG:

                 MERCER  INTERNATIONAL  INC.,  a business trust organized
                 ---------------------------
                 pursuant to the laws of the State of Washington,  having
                 an  address  at  14900 Interurban Ave. South, Suite 282,
                 Seattle,  Washington,  USA  98169

AND:

                 GREENLIGHT CAPITAL, L.L.C., a limited liability  company
                 --------------------------
                 organized pursuant to the laws of the State of Delaware,
                 and GREENLIGHT CAPITAL, INC.,  a  corporation  organized
                     ------------------------
                 pursuant to the laws of  the  State  of  Delaware,  each
                 having an address at  420  Lexington Avenue, Suite 1740,
                 New  York,  New  York,  USA,  10170.

WHEREAS:

A.     The  Company  has  called  the  Meeting to, among other things, elect two
Trustees  to  the  Board;

B.     Greenlight, directly and/or indirectly through the Greenlight Funds, owns
and/or  has voting power over approximately 14.9% of the currently issued shares
of  the  Company  and  pursuant  to  the  Greenlight Proxy Materials proposed to
nominate  two  individuals  for  election  as  Trustees  at  the  Meeting;  and

C.     The  Company,  Greenlight  and  the  Unrelated Shareholders have mutually
agreed  upon  a consensual slate of two individuals to be nominated for election
as  Trustees  pursuant  to  the  Company Proxy Materials at the Meeting upon the
terms  and  conditions  hereinafter  set  forth.

NOW  THEREFORE  in consideration of the premises hereof and the mutual covenants
and  agreements  hereinafter  set  forth  and  for  other  good  and  valuable
consideration,  the  receipt and sufficiency of which are hereby acknowledged by
each  of  the  parties hereto, the parties hereby covenant and agree as follows:

                                    ARTICLE 1
                                 INTERPRETATION

1.1     DEFINITIONS
        -----------

For the purposes of this Agreement, including the recitals hereto, the following
terms  shall  have  the  following  meanings,  respectively:


<PAGE>


     (a)  "2003 OPTION PLAN" means a non-qualified stock option plan pursuant to
          which  the  Board,  or  a duly authorized committee thereof, can issue
          stock  options  to  purchase  an  aggregate of up to 375,000 shares of
          beneficial interest from the treasury of the Company, which plan shall
          provide  for  the  issuance  of the G.A. Options, GWA Options and S.D.
          Options;

     (b)  "AFFILIATE"  has  the  meaning ascribed thereto in the Securities Act;

     (c)  "AGREEMENT"  means  this  agreement  made by and among the Company and
          Greenlight  and  any  and  all  schedules  and  amendments  hereto;

     (d)  "BOARD"  means  the  Board  of  Trustees  of  the  Company;

     (e)  "BUSINESS  DAY"  means  a  day  excluding Saturday and Sunday on which
          banking  institutions  are open for business in New York, New York and
          Vancouver,  Canada;

     (f)  "COMPANY"  means Mercer International Inc., a business trust organized
          pursuant  to  the  laws  of  the  State  of  Washington;

     (g)  "COMPANY  PRESS  RELEASE"  means the press release to be issued by the
          Company  attached  hereto  as  Schedule  A;

     (h)  "COMPANY  PROXY  MATERIALS"  means  the  definitive  proxy statements,
          definitive  additional  materials  and  any  other  proxy statement or
          materials  filed by the Company with the SEC in respect of the Meeting
          pursuant  to  Section  14(a)  of  the  Exchange  Act;

     (i)  "CONSENSUAL NOMINEES" means Guy W. Adams and the Unrelated Shareholder
          Nominee;

     (j)  "DECLARATION  OF TRUST" means the Restated Declaration of Trust of the
          Company  dated  May  31, 1990, as amended and/or restated from time to
          time;

     (k)  "EXCHANGE  ACT"  means  the  United  States Securities Exchange Act of
          1934,  including  the  rules  and regulations thereto, as amended from
          time  to  time;

     (l)  "G.A. OPTIONS" means options granted by the Company to Guy W. Adams to
          purchase  shares  of  beneficial  interest  from  the  treasury of the
          Company  pursuant  to  the  terms  set  forth  in the Option Agreement
          attached  hereto  as  Schedule  B.  Notwithstanding the foregoing, the
          number  of  shares  of beneficial interest subject to the G.A. Options
          shall  be  reduced  by  the number of shares acquired by Mr. Adams, if
          any,  pursuant  to  the  Greenlight  Adams  Agreement;


                                        2


<PAGE>


     (m)  "GREENLIGHT"  means,  collectively,  Greenlight  Capital,  L.L.C.,  a
          limited  liability company organized pursuant to the laws of Delaware,
          and  Greenlight Capital, Inc., a corporation organized pursuant to the
          laws  of  Delaware;

     (n)  "GREENLIGHT  13D"  means the Schedule 13D filed by Greenlight with the
          SEC dated June 20, 2003, and any amendments thereto, in respect of its
          shares  of  the  Company;

     (o)  "GREENLIGHT  ADAMS  AGREEMENT"  means  the  agreement  made  between
          Greenlight  and  Guy  W.  Adams  dated  June  20, 2003 and included as
          Exhibit  3  to the Greenlight 13D, together with the option agreements
          related  thereto;

     (p)  "GREENLIGHT  FUNDS"  means  the investment funds managed by Greenlight
          including  Greenlight  Capital L.P., Greenlight Capital Qualified L.P.
          and  Greenlight  Capital  Offshore,  Ltd.;

     (q)  "GREENLIGHT INDEMNITY AGREEMENT" means the Greenlight Adams Agreement,
          as  amended  by  that  certain First Amendment to the Greenlight Adams
          Agreement  in  the  form  attached  hereto  as  Schedule C (the "FIRST
          AMENDMENT");

     (r)  "GREENLIGHT  PRESS  RELEASE"  means  the press release to be issued by
          Greenlight  attached  hereto  as  Schedule  D;

     (s)  "GREENLIGHT  PROXY  MATERIALS" means the preliminary proxy statements,
          definitive  proxy  statements, definitive additional materials and any
          other  proxy  statement  or  materials (including, without limitation,
          those  filed  pursuant  to  Section 2.6(c) hereof) filed by Greenlight
          with  the  SEC  in respect of the Meeting pursuant to Section 14(a) of
          the  Exchange  Act;

     (t)  "GWA"  means  GWA  Investments  LLC;

     (u)  "GWA  OPTIONS" means options granted by the Company to GWA to purchase
          shares  of  beneficial  interest  from  the  treasury  of  the Company
          pursuant  to  the  terms  set  forth  in the Option Agreement attached
          hereto  as  Schedule  E.  Notwithstanding the foregoing, the number of
          shares  of  beneficial  interest  subject  to the GWA Options shall be
          reduced  by  the number of shares acquired by GWA, if any, pursuant to
          the  Greenlight  Adams  Agreement;

     (v)  "MEETING"  means  the  annual  meeting  of shareholders of the Company
          scheduled  to  be  held  on  August  22,  2003  and  any  adjournment,
          postponement  or  rescheduling  thereof;

     (w)  "MERCER  STOCK VALUE" means the closing market price of the underlying
          shares  of beneficial interest of the Company on the day the Option is
          exercised  as  reported on the Nasdaq National Market or if the shares
          are  not  reported  on  the  Nasdaq  National  Market,  the  principal
          established  stock  exchange  that lists such


                                        3


<PAGE>


          shares, or if the shares are not quoted on the Nasdaq National  Market
          or an established stock exchange, the fair market value of such shares
          as determined by the Board;

     (x)  "OPTION  SPREAD"  means  the number of Options exercised multiplied by
          the  difference between the Mercer Stock Value and $4.53, the exercise
          price  of  the  Options;

     (y)  "OPTIONS"  shall  have  the  meaning  ascribed  thereto in Section 2.8
          hereof;

     (z)  "S.D.  AGREEMENT" means the agreement made between Greenlight and Saul
          Diamond  dated  June  20,  2003  and  included  as  Exhibit  2  to the
          Greenlight  13D,  together  with the option agreement related thereto;

     (aa) "S.D. OPTIONS" means options granted by the Company to Saul Diamond to
          purchase  shares  of  beneficial  interest  from  the  treasury of the
          Company  pursuant  to  the  terms  set  forth  in the Option Agreement
          attached  hereto  as  Schedule  F.  Notwithstanding the foregoing, the
          number  of  shares  of beneficial interest subject to the S.D. Options
          shall  be  reduced by the number of shares acquired by Mr. Diamond, if
          any,  pursuant  to  the  S.D.  Agreement;

     (bb) "SEC"  means  the  Securities  and  Exchange  Commission;

     (cc) "SECURITIES  ACT"  means  the  United  States  Securities Act of 1933,
          including  the  rules and regulations thereto, as amended from time to
          time;

     (dd) "TRUSTEE"  means  a  trustee  of  the  Company;

     (ee) "UNRELATED  SHAREHOLDER  NOMINEE"  means  a  nominee for election as a
          Trustee  proposed  by  the  Unrelated  Shareholders;  and

     (ff) "UNRELATED SHAREHOLDERS" means Coghill Capital Management, LLC, Cramer
          Rosenthal  McGlynn,  LLC  and  Peter  R.  Kellogg;

1.2     HEADINGS
        --------

All  article  and section headings are for convenience only and shall not limit,
alter  or  otherwise  affect  the  meaning  or  construction  of this Agreement.

1.3     INCLUDED  WORDS
        ---------------

Wherever  the  singular  or  the  masculine are used in this Agreement, the same
shall  be  deemed to include the plural or the feminine or vice versa and a body
politic  or  corporate  where  the  context  or  the  parties  so  require.


                                        4


<PAGE>


1.4     CROSS  REFERENCES
        -----------------

Unless otherwise stated, a reference in this Agreement to a numbered or lettered
paragraph,  subparagraph  or  schedule  refers to the paragraph, subparagraph or
schedule  bearing  that  number  or  letter  in  the  Agreement.

1.5     USE  OF  WORD  "INCLUDING"
        --------------------------

The word "including", when following any general term or statement, is not to be
construed  as  limiting  the  general term or statement to the specific terms or
matters  set  forth  immediately  following  such  word  or  to similar items or
matters,  but  such  general  term  or  statement  shall  rather be construed as
referring to all items or matters that could reasonably fall within the broadest
possible  scope  thereof.

                                    ARTICLE 2
                MEETING, NOMINEES, PROXY MATERIALS, VOTING, ETC.

2.1     NOTICE  OF  AND  BUSINESS  AT  THE  MEETING
        -------------------------------------------

The  Notice  for  the  Meeting,  which  shall  be  included in the Company Proxy
Materials,  shall  provide that the purpose of the Meeting is solely to consider
the following matters: (i) the election of two Trustees to the Board to serve as
Class  III  Trustees;  (ii)  the  ratification  of  Deloitte & Touche LLP as the
independent  auditors  for  the  Company;  (iii) the approval of the 2003 Option
Plan;  and  (iv)  such other business as may properly come before the Meeting or
any  adjournment,  postponement  or  rescheduling  thereof.  No other matters or
business will be proposed by the Company in the Notice for the Meeting or by the
Company  Proxy  Materials.

2.2     NO  OTHER  BUSINESS  TO  BE  PROPOSED  AT  THE  MEETING
        -------------------------------------------------------

Neither  the  Company  nor  Greenlight  shall, directly or indirectly, initiate,
raise  or  bring any business or matters before the Meeting or for a vote at the
Meeting  other  than  the items set forth in (i) to (iii) of Section 2.1 hereof.

2.3     NO  POSTPONEMENT,  ADJOURNMENT  OR  RESCHEDULING  OF  THE  MEETING
        ------------------------------------------------------------------

Neither the Company nor Greenlight shall seek to postpone, adjourn or reschedule
the  Meeting from August 22, 2003, except as may be necessary to obtain a quorum
or  pursuant  to  Section  4.6  hereof.

2.4     NOMINATION  OF  CONSENSUAL  NOMINEES
        ------------------------------------

The  Company  shall  file  supplemental  Company Proxy Materials to nominate the
Consensual  Nominees  (and  no  other  persons)  for election as Trustees at the
Meeting,  shall  solicit proxies for the due election of the Consensual Nominees
as  Trustees, shall cause the Consensual Nominees to be nominated at the Meeting
and  shall  cause  all  such  proxies received by the Company to be voted in the
manner  specified  by  such  proxies.


                                        5


<PAGE>


2.5     ADDITIONAL  COMPANY  PROXY  MATERIALS
        -------------------------------------

The  Company shall: (i) ensure that any additional or supplemental Company Proxy
Materials  filed  or  disseminated  after the date hereof accurately reflect and
implement  the terms of this Agreement and are consistent with the Company Press
Release and Greenlight Press Release; (ii) provide Greenlight with copies of any
additional  or supplemental Company Proxy Materials at least one Business Day in
advance of filing such materials with the SEC or disseminating the same in order
to  permit  Greenlight  a  reasonable  opportunity to review and comment on such
materials;  and  (iii)  act  reasonably  in considering any comments that may be
provided by Greenlight in respect of any such additional or supplemental Company
Proxy  Materials.

2.6     GREENLIGHT
        ----------

Greenlight  shall:

     (a)  cause  all  the  shares  of  the  Company owned by it or over which it
          exercises  voting power, including those held by the Greenlight Funds,
          totaling  2,517,500 shares of the Company (the "Greenlight Shares") to
          be  present  and  counted at the meeting of purposes of establishing a
          quorum;

     (b)  duly  vote  and/or cause to be voted the Greenlight Shares in favor of
          and  to approve: (i) the election of the Consensual Nominees; (ii) the
          ratification  of  Deloitte & Touche LLP as independent auditors of the
          Company;  and  (iii)  the  2003  Option  Plan;

     (c)  within  three  Business  Days  of  the  date hereof, notify the SEC in
          writing  (and  provide  a  true  copy  thereof  to  the  Company) that
          Greenlight  will  not  use its definitive proxy statement, now on file
          with  the  SEC,  to solicit shareholder votes for the nominees therein
          and  will  not  nominate  or  propose  any person(s) for election as a
          Trustee  (other  than  the  Consensual  Nominees)  at  or prior to the
          completion of the Meeting unless this Agreement is terminated pursuant
          to  Section  4.6  hereof;

     (d)  forthwith  cease  and  desist  its  current solicitation of proxies in
          respect  of  the  Meeting;

     (e)  not,  directly or indirectly, either individually or in partnership or
          in  conjunction with any other person, make or in any way participate,
          in  any  solicitation of proxies or directions to vote with respect to
          shares  of  the  Company at the Meeting other than as provided in this
          Agreement;  and

     (f)  not, directly or indirectly, seek to advise or influence any person or
          entity  with respect to the voting of any shares of the Company at the
          Meeting (other than the voting or causing the Greenlight Funds to vote
          their  shares  of  the  Company  as  set  forth in this Agreement), or
          otherwise  act,  alone  or in concert with others, to seek


                                        6


<PAGE>


          to control, influence or comment negatively on the management,  Board,
          business policy or affairs  of  the  Company  prior  to the completion
          of the Meeting.

2.7     GREENLIGHT  PROXY  MATERIALS
        ----------------------------

Greenlight  shall:  (i)  ensure  that  any additional or supplemental Greenlight
Proxy  Materials  filed or disseminated after the date hereof accurately reflect
and  implement  the  terms of this Agreement and are consistent with the Company
Press Release and Greenlight Press Release; (ii) provide the Company with copies
of  any  additional  or  supplemental  Greenlight  Proxy  Materials at least one
Business  Day  in advance of filing such materials with the SEC or disseminating
the  same  in order to permit the Company a reasonable opportunity to review and
comment  on such materials; and (iii) act reasonably in considering any comments
that  may  be  provided  by  the  Company  in  respect of any such additional or
supplemental  Greenlight  Proxy  Materials.

2.8     OPTION  PLAN
        ------------

If  at  the  Meeting  the  2003  Option Plan is duly approved and the Consensual
Nominees  are  elected as Trustees, the Company shall on the date of the Meeting
issue  the G.A. Options to Guy W. Adams and the GWA Options to GWA and issue the
S.D. Options to Saul Diamond.  Prior to the issuance, the Company shall take all
reasonable action necessary to exempt the acquisition of the G.A. Options by Guy
W.  Adams  and  the  GWA  Options by GWA under Rule 16b-3 promulgated by the SEC
under the Exchange Act.  If the shareholders do not approve the 2003 Option Plan
at  the Meeting, the Company shall promptly issue to Greenlight upon exercise of
any  of  the  options (the "Options") previously granted by Greenlight to Guy W.
Adams  and GWA pursuant to the Greenlight Adams Agreement and to Saul E. Diamond
pursuant  to  the S.D. Agreement, the number of shares of beneficial interest of
the  Company  equal  to  (1)  the  Option Spread divided by (2) the Mercer Stock
Value.  If  the  number of shares determined pursuant to this section results in
Greenlight  receiving  a  fractional share, the number of shares that Greenlight
receives  shall  be  rounded up to the next whole share (with a half share being
rounded  down).  Greenlight  hereby acknowledges and agrees that it is acquiring
the  shares  set  forth in this Section 2.8 (the "Spread Shares") for investment
purposes only, for Greenlight's own account, and not as nominee or agent for any
other  person  or  entity,  and  not with a view to, or for resale in connection
with,  any  distribution  thereof  within  the  meaning  of  the Securities Act.
Greenlight  represents  and  warrants  that  it  has  no  agreements  or  other
arrangements  with  any person or entity to sell, transfer or pledge any part of
the  Spread  Shares  and  has  no  plans  to  enter  into  any such agreement or
arrangement.  Greenlight acknowledges and agrees that the Spread Shares shall be
subject  to restrictions on transfer and understands that any sale of the Spread
Shares  may  be  made  only in accordance with the Securities Act and applicable
state  securities  laws.  Each  Spread  Share  certificate may be imprinted with
legends  reflecting  federal  and  state  securities  laws,  restrictions  and
conditions,  and  the  Company  may  comply therewith and issue "stock transfer"
instructions  to  its  transfer  agent  and  registrar  in  good  faith  without
liability.


                                        7


<PAGE>


2.9     GREENLIGHT  ADAMS  AGREEMENT
        ----------------------------

Greenlight  and  Guy  W.  Adams  shall  enter  into  the  First Amendment, which
agreement  shall be effective no later than the date of the Meeting and promptly
provide  a  true  copy  of  the  Greenlight  Indemnity Agreement to the Company.
Except  as provided in the Greenlight Indemnity Agreement, Greenlight shall not,
directly  or  indirectly,  whether  through  the  Greenlight Funds or otherwise,
during Guy W. Adams' tenure as a Trustee:  (i) indemnify him for acting as or in
his  capacity as a Trustee; (ii) subject to the issuance of the G.A. Options and
the GWA Options, pay, remunerate or otherwise compensate him for acting as or in
his  capacity as a Trustee; or (iii) subject to the issuance of the G.A. Options
and  the  GWA  Options, grant to him or any of his Affiliates options to acquire
any  securities  of  the  Company.

2.10     LEAD  TRUSTEE
         -------------

If  the  Consensual Nominees are elected as Trustees at the Meeting, the Company
will  within  15 days of the Meeting convene a meeting of the Board at which the
agenda  shall  include, among other things, the sole nomination of the Unrelated
Shareholder  Nominee  to  be  elected as the "Lead Trustee" of the Board and the
establishment of the terms of reference for the Lead Trustee which shall include
chairing  any  Board meetings held in the absence of management Trustees and the
power  to  engage such counsel as he feels he may require from time to time with
respect  to his duties as Lead Trustee on the Board, whose expense will be borne
solely  by  the  Company.

2.11     RIGHTS  OF  CONSENSUAL  NOMINEES
         --------------------------------

If  the  shareholders  elect the Consensual Nominees at the Meeting, the Company
agrees  to provide the Consensual Nominees with all rights, including all rights
to  indemnification,  advancement of expenses and director and officer liability
insurance,  provided  by  the  Company to other Trustees (excluding, for greater
certainty,  remuneration  and benefits provided to Trustees in their capacity as
an  employee,  officer  or  executive  of  the Company and/or its subsidiaries).
Without limiting the foregoing, the Company agrees to enter into indemnification
agreements in the form attached hereto as Schedule G with each of the Consensual
Nominees  to  be  effective  no  later  than  the  date  of  the  Meeting.

                                    ARTICLE 3
                         REPRESENTATIONS AND WARRANTIES

3.1     REPRESENTATIONS  AND  WARRANTIES  OF  GREENLIGHT
        ------------------------------------------------

Greenlight  represents  and  warrants  to  the Company and acknowledges that the
Company  is  relying  on  such representations and warranties in connection with
entering  into  this  Agreement:

     (a)  Organization  of Greenlight Capital, L.L.C. Greenlight Capital, L.L.C.
          is a limited liability company duly organized, validly existing and in
          good  standing  under  the  laws  of the State of Delaware and has all
          necessary power and authority to enter into this Agreement and perform
          its  obligations  hereunder;


                                        8


<PAGE>


     (b)  Organization of Greenlight Capital, Inc. Greenlight Capital, Inc. is a
          corporation  duly  organized,  validly  existing  and in good standing
          under  the  laws  of  the  State  of  Delaware  and  has all necessary
          corporate power and authority to enter into this Agreement and perform
          its  obligations  hereunder;

     (c)  Authorization.  The  execution  and  delivery  of  this  Agreement  by
          Greenlight  has  been  duly  authorized by all necessary action and no
          other proceedings on the part of Greenlight are necessary to authorize
          this  Agreement. Greenlight concurrently herewith is delivering to the
          Company  true  and  complete  copies  of  resolutions  adopted  by the
          respective  board  of  directors  of  Greenlight  Capital,  L.L.C  and
          Greenlight  Capital,  Inc. authorizing the execution of this Agreement
          and  consummation  of  the  transactions  contemplated  hereby,  which
          resolutions  have  not been amended, modified, revoked or rescinded in
          any  respect  since their adoption and remain in full force and effect
          as  of  the  date  hereof;

     (d)  Execution,  Delivery  and Binding Effect. This Agreement has been duly
          executed  and  delivered  by Greenlight and constitutes a legal, valid
          and  binding  obligation  of  Greenlight,  enforceable  against  it in
          accordance  with  its  terms, subject to the availability of equitable
          remedies  and  the  enforcement  of  creditor's  rights  generally;

     (e)  No  Violation.  The  execution  and  delivery  of  this  Agreement  by
          Greenlight  and  the performance and consummation by Greenlight of the
          transactions  contemplated  hereby  will not (i) violate or breach any
          law, statute, rule, regulation or order to which Greenlight is subject
          or  any  provision of the organizational documents of Greenlight; (ii)
          breach any agreement, contract, order or permit to which Greenlight is
          a  party  or  by  which  Greenlight  is  bound  or  to  which  any  of
          Greenlight's  assets  is  subject; or (iii) result in any violation or
          breach of, or default under, or give rise to any right of termination,
          cancellation  or  acceleration  under  any of the terms, conditions or
          provisions  of  any  note,  lease, license, agreement or obligation to
          which  Greenlight  is  a  party  or  may  be  bound;  and

     (f)  Greenlight  Shares.  Greenlight  owns and/or has voting power over the
          Greenlight  Shares.

3.2     REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY
        --------------------------------------------------

The  Company  represents  and  warrants  to  Greenlight  and  acknowledges  that
Greenlight  is relying on such representations and warranties in connection with
entering  into  this  Agreement:

     (a)  Organization.  The Company is a business trust duly organized, validly
          existing  and  in  good  standing  under  the  laws  of  the  State of
          Washington  and  has  all  necessary power and authority to enter into
          this  Agreement  and  perform  its  obligations  hereunder;


                                        9


<PAGE>


     (b)  Authorization.  The  execution  and  delivery of this Agreement by the
          Company  has been duly authorized by all necessary action and no other
          proceedings on the part of the Company are necessary to authorize this
          Agreement.  The  Company  concurrently  herewith  is  delivering  to
          Greenlight  true  and  complete  copies  of resolutions adopted by the
          Board  authorizing the execution of this Agreement and consummation of
          the  transactions contemplated hereby, which resolutions have not been
          amended,  modified,  revoked  or  rescinded in any respect since their
          adoption  and  remain  in full force and effect as of the date hereof;

     (c)  Execution,  Delivery  and Binding Effect. This Agreement has been duly
          executed  and  delivered by the Company and constitutes a legal, valid
          and  binding  obligation  of  the  Company,  enforceable against it in
          accordance  with  its  terms, subject to the availability of equitable
          remedies  and  the  enforcement  of  creditor's  rights  generally;

     (d)  Declaration  of  Trust  and  Regulations.  The  Company  concurrently
          herewith  is delivering to Greenlight true and complete copies of each
          of  the  Declaration  of  Trust  and  Regulations of the Company. Such
          Declaration  of Trust and Regulations have not been amended, modified,
          revoked  or  rescinded  in  any  respect  and remain in full force and
          effect  as  of  the  date  hereof  and  the  Board has not adopted any
          resolutions  to  amend, modify, revoke or rescind any provision in the
          Declaration  of  Trust  or  Regulations;

     (e)  Amendment  of  Rights  Agreement. The Company concurrently herewith is
          delivering  to  Greenlight  a  true  and  complete  copy  of the First
          Amendment  to  the Rights Agreement dated as of August 20, 1993 by and
          between  the  Company  and Montreal Trust Company, which Amendment has
          not  been  amended,  modified, revoked or rescinded in any respect and
          remains  in  full  force  and  effect  as  of  the  date  hereof;  and

     (f)  No  Violation.  The  execution  and  delivery of this Agreement by the
          Company  and  the  performance  and consummation by the Company of the
          transactions  contemplated  hereby  will not (i) violate or breach any
          law,  statute,  rule,  regulation  or  order  to  which the Company is
          subject  or  any  provision  of  the  organizational  documents of the
          Company; (ii) breach any agreement, contract, order or permit to which
          the  Company  is  a party or by which the Company is bound or to which
          any  of  the  Company's  assets  is  subject;  or  (iii) result in any
          violation or breach of, or default under, or give rise to any right of
          termination,  cancellation  or  acceleration  under  any of the terms,
          conditions  or  provisions  of  any note, lease, license, agreement or
          obligation  to  which  the  Company  is  a  party  or  may  be  bound.


                                        10


<PAGE>


                                    ARTICLE 4
                                     GENERAL

4.1     EXPENSES
        --------

The  Company shall reimburse Greenlight for its reasonable third party costs and
expenses  in  respect  of  the  Greenlight  Proxy  Materials,  the  Meeting  and
negotiation  and  execution of this Agreement, including amounts paid or payable
by  Greenlight  to  each  of  Guy  W.  Adams and Saul E. Diamond pursuant to the
Greenlight  Adams Agreement and S.D. Agreement, respectively, up to a maximum of
$250,000.  Greenlight  shall promptly provide to the Company reasonable evidence
and  vouchers  or  receipts  for  such  expenses.  The  Company  shall reimburse
Greenlight for such costs and expenses within the later of 10 days of receipt of
such  evidence  and  one Business Day after the Meeting; provided, however, that
Mercer  has  no  obligation to pay such expenses if this Agreement is terminated
pursuant  to  Section  4.6  hereof.

4.2     DECLARATION  OF  TRUST,  REGULATIONS
        ------------------------------------

The Company agrees not to amend its Declaration of Trust or Regulations prior to
the Meeting without the prior consent of Greenlight.  During the three year term
of  the  Consensual  Trustees,  the  Company  agrees  not  to amend or adopt any
provision  to  the Declaration of Trust or Regulations inconsistent with Section
2.1 of the Regulations, which provides that special meetings of the Board may be
called  by  two  Trustees.

4.3     JOINT  AND  SEVERAL
        -------------------

The  obligations  of  Greenlight  hereunder  shall  be  joint  and  several.

4.4     ENTIRE  AGREEMENT
        -----------------

This Agreement constitutes the entire agreement between the parties with respect
to the subject matter of this Agreement and supersedes every previous agreement,
communication,  expectation,  negotiation,  representation  or  understanding,
whether  oral  or written, express or implied, statutory or otherwise, among the
parties  with  respect  to  the  subject  matter  of  this  Agreement  except as
specifically  set  out  herein.

4.5     AMENDMENTS
        ----------

This  Agreement  may  not  be  amended except by written agreement among all the
parties  to  this  Agreement.

4.6     EXTENSION/TERMINATION
        ---------------------

If  the  Unrelated  Shareholders do not provide the Company with the name of the
Unrelated  Nominee  and the information regarding the Unrelated Nominee required
for  purposes  of  the Company Proxy Materials by August 8, 2003, then:  (i) the
Meeting  will  be  postponed  until September 22, 2003 or such earlier date that
Greenlight  and  the Company shall agree upon; (ii)


                                        11


<PAGE>


on or before  August  22,  2003  Greenlight  and  the  Company  will  select an
independent unrelated nominee for Trustee that is mutually  acceptable  to  the
Company and Greenlight (the "Replacement Nominee"); and (iii)  if  the  parties
cannot agree upon the Replacement  Nominee  by  August  22,  2003, either party
can at its sole option terminate  this  Agreement  upon  written notice to  the
other.

4.7     GOVERNING  LAW  AND  VENUE
        --------------------------

This Agreement shall be construed and interpreted in accordance with the laws of
the State of Washington, USA.  Each of the parties hereto irrevocably attorns to
the  non-exclusive  jurisdiction  of  the  courts  of  the  State of Washington,
situated  in Seattle, with respect to any matters arising out of this Agreement.

4.8     TIME  OF  ESSENCE
        -----------------

Time  is  of  the  essence  of  this  Agreement.

4.9     FURTHER  ASSURANCES
        -------------------

Each  party  will,  at  its  own  expense,  execute and deliver all such further
agreements  and  documents  and  do  such  further  acts  and  things  as may be
reasonably  required  to  give  effect  to  this  Agreement.

4.10     COSTS  AND  EXPENSES
         --------------------

Except  as  otherwise  expressly  set forth in Section 4.1 hereof, all costs and
expenses of or incidental to the transactions contemplated in this Agreement are
to  be  assumed  and  paid  by  the  party  incurring  such  costs and expenses.

4.11     INUREMENT
         ---------

This Agreement shall inure to the benefit of and be binding upon the parties and
their  respective  successors  and  permitted  assigns.

4.12     CONFIDENTIALITY  AND  PUBLIC  DISCLOSURE.
         ----------------------------------------

Disclosure  of  this  Agreement,  its  terms and conditions and the transactions
contemplated  hereby  shall  be  made only: (i) with the approval of each of the
parties  hereto, which approval shall not be unreasonably withheld, may be oral,
and  may  be  given on behalf of a party by its counsel; (ii) as required by any
applicable  law, rule or regulation or the rules, regulations or policies of the
NASDAQ  National  Market;  or  (iii)  as  may  be  necessary  to  implement  the
transactions  contemplated  by  this  Agreement.

The  parties  shall  consult with each other as to the timing and wording of any
press  release  and  other  disclosure  of  or  relating  to  the  transactions
contemplated hereby provided that promptly upon execution of this Agreement, the
parties shall issue and disseminate the Company Press


                                       12


<PAGE>


Release  and the Greenlight Press  Release,  respectively.  Notwithstanding  the
foregoing, the parties shall be entitled to describe this Agreement and  provide
copies thereof to their respective  boards  of directors and to those  employees
and professional advisors that  need  to know  details  about  this Agreement in
order for the parties to perform  their  obligations  hereunder.

4.13     NOTICE
         ------

All  notices,  requests, demands or directions to any party to this Agreement by
any  other  party  must  be  in  writing  and  delivered  by  hand  or facsimile
transmission  between  the  hours  of  8:30 a.m. and 4:30 p.m., Pacific Standard
time, on a Business Day to the address specified below and addressed as follows:

     (a)  To  the  Company:

          Mercer  International  Inc.
          Schutzengasse  32
          CH-8001  Zurich
          Switzerland
          Attention:  Jimmy  S.H.  Lee
          Facsimile:  (011)  41-43-344-7077

          With  a  copy  to:

          Sangra,  Moller
          1000  Cathedral  Place
          925  West  Georgia  Street
          Vancouver,  B.C.,  V6C  3L2
          Attention:   H.S.  Sangra
          Facsimile:  (604)  669-8803

     (b)  To  Greenlight:

          Greenlight  Capital,  L.L.C.  and
          Greenlight  Capital,  Inc.
          420  Lexington  Avenue,  Suite  1740
          New  York,  New  York,  USA,  10170
          Attention:  Daniel  Roitman
          Facsimile:  (212)  973-9219


                                       13


<PAGE>


          With  a  copy  to:

          Akin  Gump  Strauss  Hauer  &  Feld  LLP
          1700  Pacific  Avenue,  Suite  4100
          Dallas,  TX,  USA  75201
          Attention:  Eliot  D.  Raffkind
          Facsimile:  (214)  969-4343

Any  party  may, by notice to the other party, change its address for notices to
some  other  no less convenient address suitable for delivery of notices by, and
will  so  change  its  address  whenever  its  current  address  ceases to be so
suitable.  Any  notice,  request, demand or direction so given will be deemed to
have been received by the party to whom it is given when delivered in accordance
herewith.

4.14     COUNTERPARTS
         ------------

This  Agreement  may  be  executed  in  any number of counterparts with the same
effect  as  if  all  parties had signed the same document. All counterparts will
constitute  one  and  the  same  agreement.  This  Agreement may be executed and
transmitted  by  facsimile  transmission and if so executed and transmitted this
Agreement  will be for all purposes as effective as if the parties had delivered
an  executed  original  Agreement.

4.15     NO  THIRD  PARTY  BENEFICIARIES
         -------------------------------

This  Agreement  shall  not  confer any rights or remedies upon any person other
than  the  parties hereto and their respective successors and permitted assigns.

4.16     SEVERABILITY
         ------------

Should  any  part  of this Agreement be declared or held invalid for any reason,
that  invalidity  will  not  affect  the  validity  of  the remainder which will
continue  in  force  and  effect  and be construed as if this Agreement had been
executed  without the invalid portion and it is hereby declared the intention of
the  parties  hereto  that  this  Agreement  would  have  been  executed without
reference  to  any  portion  which may, for any reason, be hereafter declared or
held  invalid.


                                       14


<PAGE>


IN WITNESS WHEREOF, this Agreement has been signed by each of the parties hereto
with  effect  as  of  the  day  and  year  first  above  written.

MERCER  INTERNATIONAL  INC.


By:  /s/ Bill McCartney

Name:  Bill McCartney

Title: Trustee


GREENLIGHT CAPITAL, L.L.C.                       GREENLIGHT  CAPITAL,  INC.


By: /s/ David Einhorn                            By: /s/ David Einhorn

Name:  David Einhorn                             Name:  David Einhorn

Title: Managing Member                           Title:  President


                                        15


<PAGE>


                                   SCHEDULE A

                              COMPANY PRESS RELEASE

<PAGE>

                                      FOR:  MERCER  INTERNATIONAL  INC.

                             APPROVED  BY:  Jimmy  S.H  Lee
                                            Chairman, Chief Executive Officer &
                                            President
                                            (41)  43  344-7070
FOR  IMMEDIATE  RELEASE
-----------------------
                                            Financial  Dynamics
                                            Investors:  Eric  Boyriven
                                            Media:  Jeffrey  Zack
                                            (212)  850-5600

               MERCER AND SIGNIFICANT SHAREHOLDERS MUTUALLY AGREE
                          ON TWO NOMINEES TO THE BOARD

     NEW YORK, New York, August 6, 2003 - Mercer International Inc. ("Mercer" or
the  "Company")  (Nasdaq:  MERCS,  TSX:  MRI.U,  Nasdaq-Europe:  MERC  GR) today
announced  that  the  Company  and  four  significant shareholders have mutually
agreed  upon a consensual slate of two nominees to be elected as trustees at the
Company's  upcoming  shareholders'  meeting  on  August  22, 2003.  As a result,
Greenlight  Capital  Inc.  ("Greenlight") has withdrawn its proposed nominations
for  trustees  and  terminated  its  proxy  solicitation.

     Mercer  will  nominate  for  election as a trustee Guy W. Adams, one of the
nominees  originally  proposed  by  Greenlight.  Pursuant  to the agreement, Mr.
Adams  will  now  be  compensated  in  his role and capacity as a trustee by the
Company  and  not  by  Greenlight.  The  other nominee will be proposed by three
other  significant  shareholders  and  serve  as a lead trustee on the Company's
board.

     Mercer's  management, trustees and significant shareholders are expected to
support  the election of the two nominees.  Mercer will reimburse Greenlight for
certain  reasonable  third-party  costs  incurred  in  connection with its proxy
solicitation.

     Jimmy  S.H.  Lee,  the  Chief  Executive  Officer  and President of Mercer,
stated:  "We  are  pleased  to resolve this matter on a consensual basis that is
supported  by  our management, trustees and significant shareholders.  This will
permit  the  Company  to  refocus on creating value for shareholders through our
strategy  of  becoming  a  leading  global  market  pulp  producer."

     He  added:  "To  this  end, we will focus on the completion and start up of
our  new  Stendal  pulp  mill  and revive our plan to refinance two bridge loans
which had initially been put on hold as a result of the resignation of our prior
CFO."

     The  Company will file supplemental proxy materials to nominate the two new
candidates  for election as trustees at the upcoming shareholders' meeting.  The
proxy  materials  will  be mailed to shareholders of record as of July 23, 2003.


<PAGE>


ABOUT  MERCER  INTERNATIONAL  INC.

     Mercer  International  Inc.  is  a  European  pulp  and paper manufacturing
company.

     The  preceding  includes forward looking statements which involve known and
unknown  risks  and  uncertainties  which  may  cause Mercer's actual results in
future  periods  to  differ  materially from forecasted results.  For a list and
description of such risks and uncertainties, see Mercer's reports filed with the
Securities  and  Exchange  Commission.

                                     #  #  #


<PAGE>


                                   SCHEDULE B

                              G.A. OPTION AGREEMENT


<PAGE>


                                OPTION AGREEMENT

     This  Option  Agreement  (the "AGREEMENT"), dated as of August __, 2003, is
made  by  and  between Mercer International Inc. ("MERCER" or the "COMPANY") and
Guy  W.  Adams  ("OPTIONEE").

     WHEREAS,  Mercer,  Greenlight  Capital, L.L.C. and Greenlight Capital, Inc.
(Greenlight  Capital,  L.L.C.  and  Greenlight  Capital,  Inc.  collectively,
"GREENLIGHT")  are  parties to that certain Agreement dated as of August 5, 2003
(the "AGREEMENT"), pursuant to which, among other things, Mercer agreed to issue
options  to  purchase  shares  of beneficial interest, $1.00 par value per share
(the  "COMMON  STOCK"),  of  Mercer  to Optionee pursuant to terms substantially
similar to the terms set forth in the Option Agreement dated as of June 20, 2003
by  and among Optionee and Greenlight Capital, LP, Greenlight Capital Qualified,
LP  and  Greenlight  Capital  Offshore,  Ltd;  and

     WHEREAS, Mercer and Optionee are entering into this Option Agreement to set
forth  the  terms  of  the  options  granted  by  Mercer  to  Optionee.

     NOW,  THEREFORE,  in  consideration  of  the agreements and obligations set
forth  herein  and  for  other  good and valuable consideration, the receipt and
sufficiency  of  which are hereby acknowledged, the parties hereto, intending to
be  legally  bound,  hereby  agree  as  follows:

                            STATEMENT  OF  AGREEMENT

     1.     Option  to  Purchase  Stock.  Until and including June 20, 2004 (the
            ---------------------------
"EXPIRATION  DATE"),  Optionee  shall have the right, but not the obligation, to
purchase from Mercer up to one hundred thousand (100,000) shares of Common Stock
(the  "SHARES").  Notwithstanding the foregoing, should Mercer's insider trading
policy or Regulation BTR of the Sarbanes-Oxley Act of 2002 prohibit the Optionee
from  exercising  the  option granted under this Agreement for any reason on the
Expiration  Date,  Mercer  shall  extend  the Expiration Date to August 4, 2004.

     2.     Price.  The  exercise  price  for  each  Share  shall  be $4.53 (the
            -----
"EXERCISE  PRICE").  The Aggregate Exercise Price for the Shares shall equal the
number of Shares multiplied by the  Exercise Price.  If the option is exercised,
the  Aggregate  Exercise  Price  shall  be  paid by wire transfer of immediately
available  funds  to  an  account  or  accounts  specified  by  Mercer.

     3.     Notice  of  Exercise.  At  any  time  prior  to the Expiration Date,
            --------------------
Optionee  may  exercise  the right to purchase the Shares (the "EXERCISE DATE").
Optionee  shall  deliver  to  Mercer written notice which shall state Optionee's
exercise of the purchase rights hereunder and the number of Shares in respect of
which  the  rights are being exercised.  Optionee may, subject to any applicable
laws,  in  his  sole  discretion during any period for which the Common Stock is
publicly  traded  (i.e.,  the  Common  Stock  is listed on any established stock
exchange  or  a  national market system, including without limitation the Nasdaq
National  Market, or if the Common Stock is quoted on the Nasdaq System (but not
on  the  Nasdaq  National  Market)  or  any  similar system whereby the stock is
regularly  quoted  by a recognized securities dealer but closing sale prices are
not reported), decide to pay Mercer the Exercise Price by reducing the number of
Shares  he  would receive upon the exercise of his option ("CASHLESS EXERCISE").
In  order  to  effectuate  such  Cashless  Exercise,  the  number of Shares that
Optionee  would  receive upon


<PAGE>


exercise of the option (the "OPTION SHARES") shall be  reduced  by  the quotient
of (i) the Aggregate Exercise Price of such Option Shares  and  (ii) the closing
price of the day of the receipt of the written notice of exercise (the "EXERCISE
SHARES").  The  option shall be deemed exercised  upon receipt by  Mercer of (a)
such  written  notice and (b) the aggregate  purchase price as  contemplated  by
Section 2 above.  In the event  that  the  Cashless  Exercise  would  result  in
Optionee receiving a fractional  share,  the  number  of  Shares  that  Optionee
receives shall be rounded up to the next whole Share.

     4.     Transaction  Costs.  Mercer will not charge any transaction costs to
            ------------------
deliver  the  Shares  to  Optionee.

     5.     Investment  Purposes.  Optionee  is  acquiring  the  Shares  for
            --------------------
investment  purposes  only,  for  Optionee's  own account, and not as nominee or
agent  for  any other person or entity, and not with a view to, or for resale in
connection  with,  any distribution thereof within the meaning of the Securities
Act  of  1933, as amended (the "SECURITIES ACT").  Optionee has no agreements or
other  arrangements  with  any  person or entity to sell, transfer or pledge any
part  of  the  Shares,  and  has  no  plans  to enter into any such agreement or
arrangement.

     6.     Restrictions  Regarding  Shares.  Optionee  acknowledges  that  the
            -------------------------------
Shares acquired upon exercise of the purchase rights hereunder may be subject to
restrictions on transfer and understands that any sale of the Shares may be made
only in accordance with the Securities Act and applicable state securities laws.

     7.     Adjustments.  In  the  event of any change in the outstanding shares
            -----------
of  Common Stock of the Company by reason of a stock dividend and stock split or
similar adjustment, the number and kind of shares subject to this option and the
option  price of such shares shall be appropriately adjusted.  In the event that
the  above  would result in Optionee receiving a fractional share, the number of
Shares  that  the Optionee receives shall be rounded up to the next whole Share.

     8.     Covenants  of  Mercer.  Mercer  covenants  that until the Expiration
            ---------------------
Date  Mercer  will at all times reserve and keep available such number of shares
of  Common  Stock  as the Optionee has the right to receive upon the exercise of
the  option  provided  for  in  this Agreement and that such Shares will be duly
authorized  and  validly  issued  and  will  be  free  and  clear  of  any lien,
encumbrance,  adverse  claim, restriction on sale or transfer, preemptive right,
limitations  on  voting  rights  or  option  on  such  Exercise  Date.

     9.     2003  Option Plan.  This Agreement is entered into and the rights to
            -----------------
acquire  shares  hereunder  are  granted  pursuant  and  subject to the terms of
Mercer's 2003 Non-Qualified Stock Option Plan dated August __, 2003 (the "OPTION
PLAN").

     10.     Miscellaneous.
             -------------

          10.1     Further Assurances.  Each party agrees to perform any further
                   ------------------
acts  and  to execute and deliver any further documents or instruments which may
be  reasonably  necessary  to carry out the provisions of this Agreement and the
transactions  contemplated  hereby.


<PAGE>


          10.2     Amendments.  This  Agreement may not be amended, supplemented
                   ----------
or  modified  except  by  an instrument in writing signed by each of the parties
hereto.

          10.3     Interpretation.  The headings contained in this Agreement are
                   --------------
for  reference  purposes  only  and  shall  not affect in any way the meaning or
interpretation  of  this  Agreement.

          10.4     Counterparts.  This  Agreement  may  be  executed in multiple
                   ------------
counterparts,  each  of  which shall be deemed to be an original and which taken
together  shall  constitute  one  and  the  same  agreement.

          10.5     Entire  Agreement.  This Agreement (i) constitutes the entire
                   -----------------
agreement  and  supersedes all prior agreements and understandings, both written
and  oral,  among the parties with respect to the subject matter hereof and (ii)
is  not  intended  to  confer  upon any person other than the parties hereto any
rights  or  remedies  hereunder.

          10.6     Notice.  All  notices  and  other  communications required or
                   ------
permitted  hereunder  shall be in writing and delivered personally, by telecopy,
by  a  nationally-recognized  overnight  courier  service  or  by  registered or
certified  mail,  postage prepaid, if to Optionee at the address of Optionee set
forth  on  the  signature  page  hereof  and  if  to  Mercer,  as  follows:

          Mercer  International  Inc.             with  a  copy  to:
          14900  Interurban  Avenue  South        Sangra,  Moller
          Suite  282                              1000 - 925 West Georgia Street
          Seattle,  Washington  98168             Vancouver,  B.C.  V6C  3L2
          Attn:  Chief  Financial  Officer        Attn:  H.S.  Sangra

          10.7     Governing  Law.  THIS  AGREEMENT  SHALL  BE  GOVERNED  BY AND
                   --------------
CONSTRUED  IN ACCORDANCE WITH THE LAWS OF THE STATE OF WASHINGTON WITHOUT GIVING
EFFECT  TO  THE  CONFLICTS  OF  LAWS  RULES  THEREOF.

          10.8     Severability.  If  any provision of this Agreement as applied
                   ------------
to  any  part  or  to  any  circumstance  shall  be  held  invalid,  illegal  or
unenforceable,  the  validity,  legality  and  enforceability  of  the remaining
provisions  of this Agreement and the application of such provision to any other
part  or  to  any  other circumstance shall not be affected or impaired thereby.

          10.9     Waiver.  Any of the terms or conditions of this Agreement may
                   ------
be  waived in writing at any time by the party which is entitled to the benefits
thereof.  No  waiver of any provision of this Agreement shall be deemed or shall
constitute  a  waiver of such provision at any time in the future or a waiver of
any  other  provision  hereof.

          10.10     Regulatory  Expenses.  Mercer  shall, upon timely receipt of
                    --------------------
any  information required from Optionee, use its reasonable best efforts to make
any  required  regulatory  filings  relating  to the grant of or exercise of the
option  granted  under  this  Agreement  on  behalf  of  the  Optionee.


<PAGE>


     IN  WITNESS  WHEREOF,  the parties have executed this Agreement on the date
first  above  written.

                                        MERCER  INTERNATIONAL  INC.


                                        By:
                                           -------------------------------------
                                        Name:
                                             -----------------------------------
                                        Title:
                                              ----------------------------------

                                        OPTIONEE:

                                        ----------------------------------------
                                        Guy  W.  Adams

                                        Address:
                                                --------------------------------
                                        ----------------------------------------


<PAGE>


                                   SCHEDULE C

                               FIRST AMENDMENT TO
                         GREENLIGHT INDEMNITY AGREEMENT


<PAGE>


                          FIRST AMENDMENT TO AGREEMENT

     FIRST  AMENDMENT TO AGREEMENT (the "AMENDMENT") dated as of August __, 2003
between  Greenlight  Capital,  L.L.C.  ("GREENLIGHT")  and  Guy  W.  Adams  (the
"INDEMNITEE").  This  Amendment  amends  the Agreement dated as of June 20, 2003
between Greenlight and Indemnitee (the "AGREEMENT").  Capitalized terms used but
not  otherwise  defined  herein  are  defined  in  the  Agreement.

          WHEREAS,  Greenlight  and  Indemnitee  entered into an Agreement dated
June  20,  2003  (the  "AGREEMENT"),  which  provided,  among other things, that
Greenlight  would  provide  indemnification  to Indemnitee in certain situations
relating  to  Indemnitee's  nomination  and election to the Board of Trustees of
Mercer  International  Inc.  (the  "COMPANY")  at  the  2003  annual  meeting of
shareholders  of  the  Company  (the  "ANNUAL  MEETING");  and

     WHEREAS,  this Amendment amends the Agreement with respect to the terms and
conditions  set  forth  below.

     NOW,  THEREFORE,  in  consideration of the foregoing and for other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  is  hereby
acknowledged,  the  parties  hereto  agree  as  follows:

     1.     Indemnification in Capacity as Trustee.  Notwithstanding anything to
            --------------------------------------
the  contrary  in  the  Agreement,  from  and  after  the effective date of this
Amendment,  Greenlight  shall  continue  to  be  obligated  to  provide  the
indemnification  and  advancement  of expenses as and to the extent set forth in
the  Agreement,  except that with respect to any indemnification and advancement
of  expenses related to actions or omissions taken in Indemnitee's capacity as a
trustee  of  the Company, such indemnification and advancement of expenses shall
be  limited  to  the  following:

     a)   Greenlight  shall,  subject  to Section 7 hereof, indemnify Indemnitee
          and  advance  expenses  pursuant  to Section 3 of the Agreement to the
          extent  Indemnitee  as  a  result of actions or omissions taken in his
          capacity  as  a  trustee  of  the Company while serving as such at the
          request  of  Greenlight  was,  is  or  becomes  a  party  to  or other
          participant  in,  or  is  threatened  to  be  made a party to or other
          participant  in, (A) any threatened, pending or completed action, suit
          or  proceeding  (whether  civil,  administrative,  formal or informal,
          investigative  or  other),  which is instituted by or on behalf of, or
          directly or indirectly funded to the extent of 25% or more by, any one
          or  more  of (i) the Company and/or any one or more of its affiliates,
          (ii)  MFC Bancorp Ltd. and/or any one or more of its affiliates and/or
          (iii)  any  one or more third party(ies) who has an executive officer,
          director  or 10 percent shareholder who is an affiliate of the Company
          and/or  MFC Bancorp Ltd., or (B) any inquiry or investigation that the
          Indemnitee in good faith believes might lead to the institution of any
          such  action  or  proceeding.  For  purposes  of  this Section 1(a), a
          derivative  action,  suit or proceeding shall not be deemed instituted
          by  or  on  behalf  of  the  Company  unless the plaintiff shareholder
          bringing  such action, suit or proceeding, or any person providing 25%
          or  more  of  the  funding  for  such  lawsuit, is an affiliate of the
          Company,  MFC Bancorp


<PAGE>


          Ltd. or any of its affiliates or any third party who has  an executive
          officer, director or 10 percent shareholder who is an affiliate of the
          Company or such action is otherwise managed or controlled by any  such
          one  or  more  persons.

     b)   Greenlight shall advance Indemnitee all reasonable attorney's fees and
          all  other  reasonable  fees,  costs, expenses and obligations paid or
          incurred  in  connection  with  any  claim for liability under Section
          16(b)  of  the  Securities Exchange Act of 1934 or under United States
          federal  or  state  securities laws for "insider trading" arising as a
          result of actions or omissions taken while serving as a trustee of the
          Company  at  the  request of Greenlight, including without limitation,
          investigating,  defending  or  participating  (as  a party, witness or
          otherwise)  in  (including  on  appeal)  or  preparing  to  defend  or
          participate  in  any  such claim, as such expenses are incurred by the
          Indemnitee; provided, however, that all amounts advanced in respect of
          such  expenses shall be repaid to Greenlight by Indemnitee if it shall
          ultimately  be determined in a final judgment without further right to
          appeal  by  a  court  of  appropriate  jurisdiction that Indemnitee is
          liable  under  Section  16(b)  or  such  "insider  trading"  laws.

     c)   Greenlight  shall  provide the same indemnification and advancement of
          expenses  to Indemnitee with respect to any actions or omissions taken
          by Indemnitee while serving as a trustee of the Company at the request
          of  Greenlight  that  the  Company  would  be  obligated  to  provide
          Indemnitee,  in  his  capacity  as  trustee, pursuant to the Indemnity
          Agreement  entered  into  between  the  Company  and Indemnitee to the
          extent  the  Company  for  any  reason  defaults on its obligations to
          Indemnitee  under  such  Indemnity  Agreement.

     2.     Costs of Legal Counsel.  Section 2(c)(iv) of the Agreement is hereby
            ----------------------
deleted  in  its  entirety  and  is  of  no  further  force  and  effect.

     3.     Enforcement of Settlement Agreement. Greenlight hereby agrees to use
            -----------------------------------
its reasonable best efforts  to  enforce  on Indemnitee's behalf Section 2.11 of
the Agreement dated August 5, 2003  by  and  among  the  Company, Greenlight and
Greenlight  Capital,  Inc.

     4.     Effective Time.  This  Amendment  shall  become  effective  upon the
            --------------
execution   and   effectiveness  of  the  Indemnity  Agreement  (the  "INDEMNITY
AGREEMENT") entered into  between the Company and Indemnitee,  which is attached
hereto as Exhibit A.  Indemnitee  hereby agrees to  execute  and enter into such
          ---------
Indemnity Agreement immediately upon his  becoming  a trustee of the Company and
the tendering of such Indemnity  Agreement  by  the  Company.

     5.     Remainder of  Agreement  Not  Affected.  Greenlight  and  Indemnitee
            ---------------------------------------
acknowledge  and  agree  that,  except as specifically supplemented and amended,
changed  or modified hereby, the Agreement shall remain in full force and effect
in  accordance  with  its  terms.  On  or after the date of this Amendment, each
reference in the Agreement to "this Agreement," "hereunder," "hereof," "herein,"
or words of like import referring to the Agreement shall mean and be a reference
to  the Agreement as amended, and this Amendment shall be deemed to be a part of
the  Agreement.


                                        2


<PAGE>


     6.     Subrogation.  In the event of any payment  under  the  Agreement, as
            -----------
amended,  Greenlight shall be subrogated to the extent of such payment to all of
the rights of recovery of Indemnitee from the Company and/or under any policy or
policies  of  insurance  that may be maintained from time to time by the Company
with  respect  to  the action or omission to which such payment relates, and the
Indemnitee  shall  execute  all  papers  reasonably required and shall take such
action  that  may  be  reasonably necessary to secure such rights, including the
execution  of  such  documents  reasonably  necessary  to  enable  Greenlight
effectively  to  bring  suit  to  enforce  such  rights.

     7.     Indemnification by Company.  Notwithstanding  anything  herein or in
            -----------------------------
the Agreement to the contrary, Greenlight  shall  not  be  obligated  to provide
indemnification  or  advance  Expenses hereunder or pursuant to the Agreement to
the  extent  the  Indemnitee  is in fact indemnified or advanced Expenses as the
case may be, by the Company or under any such policy or policies of insurance or
any  other  source.  In  the  event  the  Company  is indemnifying and advancing
expenses  in  accordance  with  the  Indemnity  Agreement,  Section  3(b) of the
Agreement  shall  not  apply  in  such  circumstances.

     8.     Governing  Law; Venue.  This  Amendment  shall  be  governed  by and
            ---------------------
construed in accordance with the laws of the State of Delaware,  without  giving
effect to principles  of  conflicts  of  laws.  Any action brought to enforce or
interpret this Amendment will be brought  only  in  the  state  or federal court
sitting in the County  of  Los  Angeles,  State of California,  and the  parties
hereby waive any objection  to  and  submit  to  the  personal  jurisdiction  of
such courts.  The parties  also  hereby waive any claim of forum non conveniens.

     9.     Counterparts.  This  Amendment  may  be  executed  in  one  or  more
            ------------
counterparts for the convenience of the parties hereto,  all of  which  together
shall constitute  one  and  the  same  instrument.

                            [Signature Page Follows]


                                        3


<PAGE>


     IN  WITNESS  WHEREOF, the parties hereto have executed this Amendment as of
the  date  first  above  written.

                                      GREENLIGHT  CAPITAL,  L.L.C.

                                      By:
                                         ---------------------------------------
                                      Name:
                                           -------------------------------------
                                      Title:
                                            ------------------------------------

                                      ------------------------------------------
                                      Name:     Guy  W.  Adams


                                        4


<PAGE>


                                    EXHIBIT A

                               INDEMNITY AGREEMENT


<PAGE>


                          TRUSTEE'S INDEMNITY AGREEMENT
                          -----------------------------


THIS  AGREEMENT  dated  for  reference  the * day  of *, 2003.

BETWEEN:

           *,  Businessman

           (the  "Trustee")

AND:

           MERCER  INTERNATIONAL  INC.,  a Massachusetts business trust
           organized under the laws  of the State of Washington with an
           office at 14900 Interurban  Ave. South, Suite 282,  Seattle,
           Washington,  USA  98169

           (the  "Company")


WITNESSES  THAT  WHEREAS:

A.     It  is  essential  to  the  Company to retain and attract as trustees and
       officers  the  most  capable  persons  available;

B.     The  Trustee  is  a  trustee  and/or  officer  of  the  Company;

C.     Both  the  Company  and  the  Trustee  recognize  the  increased  risk of
       litigation  and  claims  being  asserted  against directors, trustees and
       officers of public  companies  in  today's  environment;  and

D.     In  recognition  of the Trustee's need for substantial protection against
       personal  liability  and  in  order  to  enhance  the Trustee's continued
       service to the  Company  in  an  effective  manner,  the  Company  wishes
       to provide in this Agreement for the indemnification of  the  Trustee  to
       the  fullest  extent  permitted   by  law   and  as  set  forth  in  this
       Agreement.

NOW  THEREFORE in consideration of the premises, the respective covenants of the
parties  herein  and  other  good  and  valuable  consideration (the receipt and
sufficiency  of  which  is hereby acknowledged), the parties hereto covenant and
agree  as  follows:

1.     INTERPRETATION

1.1  DEFINITIONS.  For  the  purposes  of  this  Agreement,  the following terms
     -----------
shall  have  the  following  meanings,  respectively:

     (a)  "BOARD"  means  the  board  of  trustees  of  the  Company;


<PAGE>


                                        2


     (b)  "CLAIM"  or  "CLAIMS"  has  the  meaning  ascribed  to  such  term  in
          Subsection 2.1(a)  hereof;

     (c)  "CHANGE  IN  CONTROL"  shall  be  deemed  to  have  occurred  if:

          (i)  any "person" (as such term is used in Sections 13(d) and 14(d) of
               the  Securities  Exchange  Act of 1934, as amended), other than a
               trustee  or  other fiduciary holding securities under an employee
               benefit  plan  of the Company or a corporation owned, directly or
               indirectly,  by  the shareholders of the Company in substantially
               the  same  proportions as their ownership of shares of beneficial
               interest  of  the  Company,  becomes  the  "beneficial owner" (as
               defined in Rule 13d-3 under said Act), directly or indirectly, of
               securities  of  the Company representing 20% or more of the total
               voting power represented by the Company's then outstanding Voting
               Securities;

          (ii) during  any  period  of two consecutive years, individuals who at
               the  beginning  of  such  period constitute the Board and any new
               trustee  of the Company whose election by the Board or nomination
               for election by the Company's shareholders was approved by a vote
               of  at least two-thirds of the trustees of the Company then still
               in  office  who  either  were  trustees  of  the  Company  at the
               beginning  of  such  period  or  whose election or nomination for
               election  was  previously  so  approved,  cease for any reason to
               constitute  a  majority  thereof;  or

         (iii) the shareholders of the Company approve a merger or consolidation
               of  the  Company  with any other corporation, other than a merger
               or consolidation which would result in the Voting  Securities  of
               the Company outstanding immediately prior thereto  continuing  to
               represent (either by remaining outstanding or by being  converted
               into Voting Securities of the surviving entity)  at  least  50.1%
               of  the  total voting power represented by the Voting  Securities
               of  the  Company or such surviving entity outstanding immediately
               after  such merger or consolidation, or the  shareholders  of the
               Company  approve  a  plan of complete liquidation of the  Company
               or  an  agreement  for the sale or disposition  by the Company of
               (in   one  transaction  or  a  series  of  transactions)  all  or
               substantially all of the Company's assets;

     (d)  "COSTS" has the  meaning ascribed thereto in Subsection 2.1(b) hereof;

     (e)  "EXPENSE ADVANCE" has the meaning ascribed to such term in Section 2.2
          hereof;

     (f)  "INDEMNIFIABLE EVENT"  has  the  meaning  ascribed  to  such  term  in
          Subsection  2.1(a)  hereof;

     (g)  "INDEPENDENT LEGAL COUNSEL"  means  an  attorney or firm of attorneys,
          selected  in accordance with the provisions of Section 6.1 hereof, who
          shall not have otherwise performed services for  the  Company  or  the
          Trustee within the last two


<PAGE>


                                        3


          years (other than with respect to matters concerning the rights of the
          Trustee under this Agreement, or of  other  trustees  of  the  Company
          under similar indemnity  agreements);

     (h)  "POTENTIAL CHANGE IN  CONTROL"  shall  be  deemed to have occurred if:

          (i)  the Company enters into an agreement, the consummation  of  which
               would result in  the  occurrence  of  a  Change  in  Control;

         (ii)  any  person  (including  the  Company)   publicly   announces  an
               intention  to  take  or  to  consider  taking  actions  which  if
               consummated would constitute a Change  in  Control;

        (iii)  any  person,  other  than  a  trustee  or other fiduciary holding
               securities under  an  employee benefit  plan of  the Company or a
               corporation owned, directly or  indirectly,  by the  shareholders
               of the Company in substantially the  same  proportions  as  their
               ownership of shares of beneficial interest of the Company, who is
               or  becomes  the  beneficial  owner,  directly  or indirectly, of
               securities of  the  Company  representing  10%  or  more  of  the
               combined voting power of the Company's  then  outstanding  Voting
               Securities, increases his beneficial ownership of such securities
               by five percentage points (5%) or  more  over  the  percentage so
               owned  by  such  person;  or

         (iv)  the Board adopts a resolution to the effect that, for purposes of
               this Agreement, a Potential Change  in  Control  has  occurred;

     (i)  "RELATED  COMPANIES"   has  the  meaning  ascribed  to  such  term  in
          Subsection 2.1(a)  hereof;

     (j)  "REVIEWING PARTY" means any appropriate person or body consisting of a
          member or members of  the  Board or any other person or body appointed
          by the Board who is  not  a  party  to  the particular Claim for which
          the  Trustee  is  seeking  indemnification,  or  the Independent Legal
          Counsel;  and

     (k)  "VOTING SECURITIES" means  any  securities  of  the Company which vote
          generally  in  the  election  of  trustees  of  the  Company.

1.2  EFFECTIVE  DATE.  Notwithstanding  the  date of its execution and delivery,
     --------------
this  Agreement  shall  be  conclusively  deemed  to  commence  on,
and  be  effective  as  of,  the day upon which the Trustee first became or
becomes a trustee or officer of the Company and shall survive and remain in
full  force  and effect after the Trustee ceases to be a trustee or officer
of  the  Company and after the termination of the Trustee's employment with
the  Company.

2.     INDEMNITY

2.1     INDEMNIFICATION.  Subject  to  Section  3.1, the Company shall indemnify
        ---------------
and save harmless the Trustee to the fullest extent permitted by law against and
from:


<PAGE>


                                        4

     (a)  any  and  all  charges  and claims of every nature and kind whatsoever
          which  may  be  brought,  made  or  advanced  by  any  person,  firm,
          corporation  or  government,  or by any governmental department, body,
          commission,  board,  bureau,  agency  or  instrumentality  against the
          Trustee,  and  any  and  all threatened, pending or completed actions,
          suits  or  proceedings,  or  any  inquires  or investigations, whether
          instituted  by  the  Company  or any other person, that the Trustee in
          good  faith believes might lead to the institution of any such action,
          suit  or  proceeding,  whether  civil,  criminal,  administrative,
          investigative  or  other,  against  the Trustee, including any and all
          actions,  suits,  proceedings, inquires or investigations in which the
          Trustee  was,  is,  becomes  or is threatened to be made a party to or
          witness  or  other  participant  in  (a  "CLAIM",  or,  collectively,
          "CLAIMS"),  by reason of (or arising in part out of) the Trustee being
          a director, officer, trustee, employee or agent of the Company, any of
          the  Company's  subsidiaries,  or  any  company,  partnership,  joint
          venture,  trust  or other enterprise related to or affiliated with the
          Company or which the Trustee was serving at the request of the Company
          as  a  director,  officer,  trustee,  employee  or agent (the "RELATED
          COMPANIES"), or that arise out of or are in any way connected with the
          management, operation, activities, affairs or existence of the Company
          or  any  of  its  Related  Companies  (an  "INDEMNIFIABLE  EVENT");

     (b)  any  and  all  costs,  damages,  expenses  (including  legal  fees and
          disbursements  on  a  full  indemnity  basis),  judgements,  fines,
          liabilities,  penalties  (statutory and otherwise), losses and amounts
          paid  in  settlement  (including  all  interest, assessments and other
          charges  paid  or  payable  in  connection  with or in respect of such
          costs,  damages,  expenses, judgements, fines, liabilities, penalties,
          losses  or amounts paid in settlement) (referred to herein as "COSTS")
          which the Trustee may sustain, incur or be liable for by reason of (or
          arising  in  part  out of) an Indemnifiable Event whether sustained or
          incurred  by reason of his negligence, default, breach of duty, breach
          of  trust,  failure to exercise due diligence or otherwise in relation
          to  the  Company or its Related Companies or any of their affairs; and

     (c)  in  particular,  and without in any way limiting the generality of the
          foregoing,  any  and all Costs which the Trustee may sustain, incur or
          be  liable  for as a result of or in connection with the release of or
          presence  in  the  environment  of hazardous substances, contaminants,
          litter,  waste,  effluent, refuse, pollutants or deleterious materials
          and that arise out of or are in any way connected with the management,
          operation,  activities,  affairs or existence of the Company or any of
          its  Related  Companies.

2.2  EXPENSE  ADVANCES.  Subject  to  Section  3.1, the Company shall advance to
     -----------------
the  Trustee  the  Costs  reasonably  estimated  to  be  sustained,  incurred or
suffered  by  him,  in  connection  with  the  indemnification  set  forth  in
Section 2.1  hereof  within two business days of receipt  by  the Company of a
written request for such advance (an "EXPENSE ADVANCE").  The  Trustee  hereby
undertakes to repay such amounts advanced only  if,  and  to  the extent that,
it  shall  ultimately  be determined by a  court  of  competent  jurisdiction,
which


<PAGE>


                                        5


     determination is not subject to any subsequent appeals, that the Trustee is
     not  entitled  to  be  indemnified  by  the  Company  as authorized by this
     Agreement.

2.3  INDEMNIFICATION  OF  EXPENSES  OF  SUCCESSFUL  PARTY.  Notwithstanding  any
     --------------------------------------------------
other  provision  of  this  Agreement,  to  the extent that the Trustee has been
successful  on  the  merits or  otherwise  in the defence of any Claim or in the
defence  of any charge, issue  or  matter  therein, including the dismissal of a
Claim, the Company shall  indemnify  the  Trustee  against  any  and  all  Costs
actually and  reasonably  sustained  or  incurred  by  him  in  connection  with
the investigation,  defence  or  appeal  of  such  Claim.

2.4  INDEMNIFICATION  FOR  EXPENSE  OF  A  WITNESS.  Notwithstanding  any  other
     --------------------------------------------
provision  of  this  Agreement, the  Company  will  indemnify the Trustee if and
whenever he is a witness or participant,  or  is threatened to be made a witness
or  participant,  to  any  action,  suit,  proceeding,  hearing,  inquiry  or
investigation  to which the  Trustee  is not a party, by reason of the fact that
he is or was a trustee, director,  officer,  employee or agent of the Company or
any of its Related Companies  or  by  reason of anything  done  or  not  done by
him  in  such  capacity,  against  any  and  all  Costs  actually and reasonably
sustained  or  incurred  by the Trustee or on the Trustee's behalf in connection
therewith.

2.5  INDEMNIFICATION  FOR  EXPENSES  IN  OBTAINING  INDEMNITY. The Company shall
     ----------------------------------------------------
indemnify  the  Trustee  against  any  and  all  Costs, and, if requested by the
Trustee, shall subject to  Section  3.1 hereof (within two business days of such
request)  advance  such  Costs  to the Trustee, which are sustained, incurred or
suffered  by  the  Trustee  in  connection  with  any action, suit or proceeding
brought by the Trustee  for:  (i)  indemnification,  or an advance thereof, by
the  Company  under  this  Agreement,  any  other  agreement  or  the  Restated
Declaration of Trust  of  the  Company,  as amended; or (ii) recovery under any
trustees', directors'  and  officers'  liability  insurance policies maintained
by the Company,  regardless  of whether the Trustee ultimately is determined to
be entitled to such indemnification or insurance recovery, as the case may be.

2.6  PARTIAL  INDEMNITY.  If  the  Trustee  is  entitled under any provisions of
     ------------------
this Agreement to  indemnification by the Company for some  or  a portion of the
Costs  sustained, incurred or suffered by him but not,  however, for all of  the
total amounts thereof, the Company shall  nevertheless indemnify the Trustee for
the portion thereof to which Trustee  is  entitled.

3.     INDEMNITY  EXCEPTIONS

3.1  EXCEPTIONS  TO  INDEMNIFICATION.  Notwithstanding  the  provisions  of
     -------------------------------
Sections  2.1,  2.2  and  2.5  hereof, the Company  shall  not  be obligated to
indemnify or save harmless the Trustee against  and  from  any  Claim  or Costs
or  make  an  Expense  Advance:

     (a)  if,  in respect thereof, a court of competent jurisdiction determines,
          which determination is not subject to any subsequent appeals, that the
          Trustee  failed  to  act honestly and in good faith with a view to the
          best  interests  of  the  Company;

     (b)  arising  out  of any criminal conviction of the Trustee if the Trustee
          pleaded  guilty  or  was  found  guilty  by  a  court  of  competent
          jurisdiction,  which  finding is not subject to any subsequent appeals
          by  the  Trustee,  other  than in the case of a


<PAGE>


                                        6


          criminal proceeding in respect of which the Trustee had no  reasonable
          cause to believe that his  conduct  was  unlawful;

     (c)  arising  out  of a determination by a court of competent jurisdiction,
          which  determination  is  not subject to any subsequent appeals, that:
          (i)  the  Trustee  failed  to  disclose  his  interest or conflicts as
          required  under the Washington Business Corporation Act - Title 23B of
          the  Revised  Code  of Washington, as amended (the "RCW"); or (ii) the
          Company  is  not permitted to indemnify the Trustee as provided in RCW
          23B.08.510(4);

     (d)  in connection with any liability under Section 16(b) of the Securities
          Exchange  Act  of  1934, as amended, or under United States federal or
          state  securities  laws  for  "insider  trading";

     (e)  if, in respect thereof,  the  Expense  Advance,  or  any other advance
          to the Trustee under  this  Agreement,  is  prohibited by the Sarbanes
          -Oxley Act of 2002, as  amended;  or

     (f)  in  connection  with  any  settlement  of a Claim effected without the
          Company's  written  consent.

4.     BURDEN  OF  PROOF  AND  PRESUMPTIONS

4.1  BURDEN  OF  PROOF.  In  connection with any determination by the Company as
     ---------------
to  whether  the  Trustee  is  entitled  to be indemnified hereunder, the burden
of  proof  shall  be  on  the  Company  to establish that the  Trustee is not so
entitled.

4.2  NO  PRESUMPTIONS.  For  purposes  of this Agreement, the termination of any
     ---------------
Claim,  by judgement, order, settlement (whether with or without court approval)
or conviction, or upon a plea of nolo contendere, or  its equivalent, shall  not
create a presumption that the Trustee did not meet  any  particular  standard of
conduct  or  have any particular belief or that  a  court  had  determined  that
indemnification  is not permitted by  applicable  law.

5.     CONTRIBUTION

5.1  If  the  indemnification  provided in this Agreement is unavailable and may
not  be  paid  to  the  Trustee  for any reason other than statutory limitations
set  forth  in  applicable  law,  then  in  respect  of  any  Claim in which the
Company  is  jointly liable with the Trustee (or would  be  if  joined  in  such
Claim),  the  Company  shall contribute to the  amount  of  Costs  actually  and
reasonably sustained or incurred and paid or  payable  by  the  Trustee  in such
proportion  as is appropriate to  reflect  (i) the  relative  benefits  received
by  the  Company  and all  officers,  trustees,  directors  or  employees of the
Company  and  any of its Related Companies,  other  than  the Trustee,  who  are
jointly  liable  with  the Trustee (or would  be  if  joined  in  such Claim) on
the one hand, and the Trustee, on the  other  hand,  from the  transaction  from
which  such Claim arose, and (ii) the  relative  fault  of  the  Company and all
officers,  trustees,  directors  or employees of  the  Company and  any  of  its
Related  Companies, other than the Trustee, who  are  jointly  liable  with  the
Trustee  (or would be if joined in such Claim), on  the  one  hand,  and of  the
Trustee, on the other, in connection


<PAGE>


                                        7


with the events which resulted in such Costs, as well as any other relevant
equitable considerations. The relative fault  referred  to  above shall  be
determined by reference  to,  among  other  things,  the  parties' relative
intent, knowledge, access to  information  and  opportunity  to  correct or
prevent  the  circumstances resulting in such  Costs.  The  Company  agrees
that it would not be just and equitable if contribution  pursuant  to  this
Section  were  determined  by  pro  rata allocation  or any other method of
allocation   that   does  not  take  account  of  the  foregoing  equitable
considerations.

6.   CHANGE  IN  CONTROL

6.1  CHANGE  IN  CONTROL.  The  Company  agrees  that  if  there  is a Change in
     -------------------
Control of the Company (other than a Change in Control which  has  been approved
By  a majority of the trustees of the Company who were  trustees  of the Company
immediately prior to such Change in Control) then  with  respect to all matters
thereafter  arising  concerning  the  rights  of  the  Trustee  to  indemnity
payments  and  Expense Advances under this Agreement,  any other agreement or
the Restated Declaration  of  Trust  of  the  Company,  as  amended,  now  or
hereafter  in effect relating to Claims for Indemnifiable  Events,  the  Company
shall  seek  legal  advice  only from Independent  Legal  Counsel  selected  by
the  Trustee  and  approved  by  the  Company  (which  approval  shall  not  be
unreasonably withheld). Such counsel, among  other  things,  shall  render  its
written opinion to the Company and the Trustee  as to whether and to what extent
the Trustee would be permitted to be  indemnified  under  applicable  law.  The
Company  agrees  to  pay the reasonable  fees  of the Independent Legal Counsel
referred to above and to indemnify fully such counsel against any and all
Costs, claims and charge arising  out  of  or  relating to this Agreement or
its engagement pursuant hereto.

6.2  ESTABLISHMENT  OF  TRUST.  In  the  event of a Potential Change in Control,
     -----------------------
the  Company  shall,  upon  written request by the Trustee,  create  a  trust
for the benefit of the Trustee and from time to time upon written request of the
Trustee shall fund such trust in an amount sufficient  to satisfy any and all
Costs reasonably anticipated at the time of  such  request  to  be sustained  or
incurred  in  connection  with investigating,  preparing  for  and  defending
any  Claim,  and  the Costs sustained  or  incurred  by  the  Trustee  from time
to time, or reasonably anticipated  to  be sustained or incurred by the Trustee
in connection with any Claim, provided that in no event shall more than $25,000
be required to be deposited in any trust created hereunder in excess of amounts
deposited in  respect  of  reasonably  anticipated Costs. The amount or amounts
to be deposited  in  the trust pursuant to the foregoing funding obligation
shall be  determined  by the Reviewing Party in any case in which the
Independent Legal  Counsel  referred to above is involved. The terms of the
trust shall provide that upon a Change in Control (i) the trust shall not be
revoked or the  principal thereof invaded, without the written consent of the
Trustee, (ii)  the  trustee  of  such trust shall advance to the Trustee,
within two business days of a request by the Trustee, the Costs sustained or
incurred, or  reasonably  anticipated  to be sustained or incurred, by the
Trustee in connection  with  any Claim (and the Trustee hereby agrees to
reimburse the trust  under the circumstances under which the Trustee would be
required to reimburse  the  Company  under  Section 2.2 hereof), (iii) such
trust shall continue  to  be  funded by the  Company  in  accordance with the
funding obligation  set  forth above, (iv) the trustee of such trust shall
promptly pay  to  the Trustee all amounts for which the


<PAGE>


                                        8


Trustee shall be entitled to indemnification  pursuant  to  this  Agreement
or  otherwise,  and (v) all unexpended  funds  in  such  trust shall revert
to the Company upon a final determination by the Reviewing Party or a court
of competent jurisdiction, as  the  case may be, that the Trustee has  been
fully indemnified under the terms  of  this  Agreement.  The trustee of the
trust established hereunder shall  be  chosen by the  Trustee.  Nothing  in
this Section 6.2 shall relieve the Company of any of its obligations  under
this  Agreement.

7.   RESIGNATION

7.1  Nothing  in  this  Agreement  shall prevent the Trustee from resigning as a
     trustee  or  officer  of the Company or any of its Related Companies at any
     time.

8.   DEFENCE

8.1  NOTICE  TO  COMPANY.  Upon  the  Trustee  becoming  aware of any pending or
     -------------------
threatened  Claim, written notice shall be given by or on  behalf  of  the
Trustee  to  the  Company  as  soon  as  is reasonably practicable.

8.2  INVESTIGATION  BY  COMPANY.  The  Company  shall conduct such investigation
     -------------------------
of  each Claim as is reasonably necessary in the  circumstances,  and  shall
pay  all  costs  of  such  investigation.

8.3  DEFENCE  BY  COMPANY.  Subject  to  this  Section,  the Company shall, upon
     --------------------
the written request of the Trustee, defend, on behalf of  the  Trustee,  any
Claim,  even  if  the Claim is groundless, false or fraudulent.

8.4  APPOINTMENT  OF  DEFENCE  COUNSEL.  The  Company  shall  consult  with  and
     ---------------------------------
accept  the  reasonable  choice  of  the Trustee  concerning the appointment of
any defence counsel to be engaged by the Company in fulfillment of its
obligations to defend a Claim pursuant to Section  8.3;  thereafter  the
Company  shall  appoint  such  counsel.

8.5  SETTLEMENT  BY  COMPANY.  With  respect to a Claim for which the Company is
     ---------------------
obliged  to  indemnify  the  Trustee  hereunder, the Company  may  conduct
negotiations  towards the settlement of a Claim and, with  the  written  consent
of the Trustee (which the Trustee agrees not to unreasonably  withhold)  the
Company  may make such settlement as it deems expedient, provided however that
the Trustee shall not be required, as part of  any  proposed  settlement  of  a
Claim, to admit liability or agree to indemnify  the  Company  in  respect  of,
or  make  contribution  to,  any compensation  or  other  payment  for  which
provision  is  made under the settlement.  The  Company  shall  pay any
compensation or other payment for  which  provision  is  made  by  such
settlement.

9.     GENERAL

9.1  LIMITATION  OF  ACTIONS.  No  legal action shall be brought and no cause of
     ---------------------
action  shall  be asserted by or in the right of the Company  or any of its
Related Companies against the Trustee, the Trustee's spouse,  heirs,  executors
or  personal or legal representatives after the expiration  of  two years from
the date of accrual of such cause of action, and  any  claim  or  cause
of action of the Company and any of its Related Companies  shall be
extinguished


<PAGE>


                                        9


and deemed released unless  asserted  by  the  timely  filing  of  a  legal
action within such two-year period; provided, however, that  if any shorter
period of limitation is otherwise applicable to such cause of  action  such
shorter  period  shall  govern.

9.2  GENDER;  PLURAL.  In  this  Agreement wherever the singular or masculine is
     --------------
used  it  will be construed as if the plural or feminine or neuter,  as  the
case  may  be,  had been used where the context otherwise requires,  and  a
reference  to  a section by number is a reference to the section  so  numbered
in  this  Agreement.

9.3  NOTICES.  All  notices  and  other communications required to be given by a
     -------
party  hereunder  shall  be in writing and shall be deemed to have been  duly
given:  (a)  upon  delivery,  if delivered by hand; (b) one (1) business  day
after the business day of deposit with an overnight courier, if delivered
by overnight courier, freight prepaid; (c) five (5) days after
deposit  with  the  applicable  postal service, if delivered by first class
mail postage prepaid; or (d) one (1) day after the business day of delivery
by  facsimile  transmission,  if  delivered by facsimile transmission and a
facsimile  transmission confirmation is obtained in respect thereof, with a
copy  by  first class mail postage prepaid, to the other party at the other
party's  address  specified  above or to the last known facsimile number of
such  party,  as  applicable,  or  at  such  other address or to such other
facsimile  number  as the other party may have last specified in writing to
the  party  intending  to  convey  the  notice  or  other  communication.

9.4  TIME.  Time  shall  be  of  the  essence  of  this  Agreement.
     ----

9.5  HEADINGS.  The headings in this Agreement are inserted for ease of
      --------
reference  only  and  shall  have  no  effect  on  the  construction  or
interpretation  of  this  Agreement.

9.6  GOVERNING  LAW.  This  Agreement  shall be construed, interpreted, governed
     -------------
by  and enforced in accordance with the laws of the State of
Washington, U.S.A., applicable to contracts made and to be performed in the
State  of  Washington,  U.S.A.,  without giving effect to the principles of
conflicts  of  laws.  Each of the parties hereby irrevocably attorns to the
non-exclusive  jurisdiction  of  the courts of Seattle, Washington, U.S.A.,
with  respect  to  any  matters  arising  out  of  this  Agreement.

9.7  ENTIRE  AGREEMENT.  This  Agreement  contains  the entire agreement between
     -----------------
the  parties  relating  to the subject matter hereof and
there are no agreements, representations or warranties, express or implied,
which  are  collateral  hereto.

9.8  NONEXCLUSIVITY.  The  rights  of  the  Trustee  hereunder  shall  be  in
     --------------
addition  to  any  rights  the  Trustee  may have under the
Restated  Declaration  of  Trust  of  the Company, including any amendments
thereto  or  restatements  thereof,  Chapter  23.90 of the RCW, as amended,
Title  23B  of  the  RCW,  as amended, or otherwise. To the extent that any
change(s)  in Chapter 23.90 and/or Title 23B of the RCW (whether by statute
or  judicial  decision)  permits  greater indemnification by agreement than
would  be  afforded  currently  under the Company's Restated Declaration of
Trust,  as  amended,  and  this  Agreement, it is the intent of the parties
hereto  that  the  Trustee  shall  enjoy  by this Agreement the benefits so
afforded  by  such  change(s).


<PAGE>


                             10


9.9  INSURANCE.  To  the  extent  the  Company  maintains an insurance policy or
     ---------
policies providing trustees', directors' and officers' liability
insurance,  the  Trustee  shall  be  covered by such policy or policies, in
accordance  with  its or their terms, to the maximum extent of the coverage
available  for  any  trustee,  director  or  officer  of  the  Company.

9.10 AMENDMENTS.  This  Agreement  may  only  be  amended by a written agreement
     ----------
signed  by  both  of  the  parties  hereto.

9.11 WAIVERS.  No  waiver  of  any  of the provisions of this Agreement shall be
     -------
deemed or shall constitute a waiver of any other provisions hereof
(whether  or  not  similar)  nor  shall such waiver constitute a continuing
waiver.

9.12 FURTHER  ASSURANCES.  Each  of  the  parties agrees to promptly do all such
     ------------------
further acts, and promptly execute and deliver all such
further  documents,  as  may  be  necessary or advisable for the purpose of
giving  effect  to  or  carrying  out  the  intent  of  this  Agreement.

9.13 SUCCESSORS  AND  ASSIGNS.  This  Agreement  shall  enure  to the benefit of
     ------------------------
and  be  binding  upon the parties  hereto  and  their
respective  successors,  including  any  direct  or  indirect  successor by
purchase, merger, consolidation or otherwise to all or substantially all of
the  business  and/or  assets  of  the  Company,  assigns,  spouses, heirs,
executors  and  personal  and  legal  representatives. This Agreement shall
continue  in effect regardless of whether the Trustee continues to serve as
a director, officer or trustee of the Company, any of its Related Companies
or  of  any  other  enterprise  at  the  Company's  request.

9.14 SEVERABILITY.  The  provisions  of  this  Agreement  shall  be severable in
     ------------
the  event  that  any of the provisions hereof (including any
provision  within  a  single  section, paragraph or sentence) are held by a
court  of  competent  jurisdiction  to  be  invalid,  void  or  otherwise
unenforceable  in  any  respect, and the validity and enforceability of any
such  provision  in  every  other  respect  and of the remaining provisions
hereof  shall  not  be  in any way impaired and shall remain enforceable to
fullest  extent  permitted  by  law.


<PAGE>


                                       11

9.15 COUNTERPARTS.  This Agreement may be executed in any number of
     ------------
counterparts  with  the  same  effect as if all parties had signed the same
document. All counterparts will constitute one and the same agreement. This
Agreement  may be executed and transmitted by facsimile transmission and if
so  executed  and  transmitted  this  Agreement will be for all purposes as
effective  as  if the parties had delivered an executed original Agreement.

IN  WITNESS WHEREOF the parties hereto have executed this Agreement, in the case
of  a corporate party by its duly authorized officer or officers, as of the date
first  written  above.

SIGNED,  SEALED  AND  DELIVERED  in  the    )
presence  of:                               )
                                            )
------------------------------------------  )
Signature                                   )
                                            )
--------------------------------------------)
Name                                        )
                                            )
--------------------------------------------)  -----------------------------
Address                                     )  *
                                            )
------------------------------------------- )
------------------------------------------- )
Occupation                                  )


MERCER  INTERNATIONAL  INC.

By:
   ----------------------------------------
Name:
      -------------------------------------
Title:
       ------------------------------------


<PAGE>


                                   SCHEDULE D

                            GREENLIGHT PRESS RELEASE

<PAGE>


                               [GRAPHIC OMITED]


                GREENLIGHT CAPITAL REACHES AGREEMENT WITH MERCER
                       INTERNATIONAL ON TWO BOARD NOMINEES

New  York,  NY;  August 6, 2003:  Greenlight Capital, Inc., ("Greenlight") today
announced  that  it  has  reached  an  agreement with Mercer International, Inc.
(Nasdaq:  MERCS)  ("Mercer")  under  which  Mercer will nominate for election as
Trustees  at its upcoming annual shareholders' meeting Guy W. Adams, a candidate
proposed  by  Greenlight,  and  an  independent  candidate  proposed by three of
Mercer's  other largest shareholders.  Accordingly, Greenlight has withdrawn its
proposed  nominations  for  trustees  and  terminated  its  proxy  solicitation.

"We  are  pleased  that  Mercer's  management  has listened to our concerns over
corporate  governance,"  said  Daniel  Roitman,  Chief  Operating  Officer  of
Greenlight.  "We  are also pleased that other significant shareholders in Mercer
have  participated  in  achieving  a  resolution  that  is  supported  by  all
stakeholders  and  is  in  the  best  interests  of  the  Company."

"We  believe  there  is substantial value in Mercer that can be delivered to all
shareholders,  which  is why we decided to push for change, rather than sell our
position.  We  hope  that  Guy  Adams and the other new independent board member
will  work cooperatively with Mercer's board and management to enhance corporate
governance,  successfully  implement  the  business  plan,  and  represent  all
shareholders."

David  Einhorn,  President of Greenlight added, "We believe this resolution will
enhance  investor  confidence  in  the  marketplace and ensure that the value of
Mercer's  assets are maximized for the benefit of Mercer's shareholders.  I want
to  thank Peter Kellogg, Coghill Capital Management and Cramer Rosenthal McGlynn
for  assisting  Mercer  and  Greenlight  in  reaching  an  agreement."

Mercer's  Board  of  Trustees  currently  has  seven  members,  two  of whom are
scheduled  to  be  elected  at  the  company's annual meeting of shareholders on
August  22,  2003.   On  July  2,  2003,  Greenlight  filed  a  definitive proxy
statement with the Securities and Exchange Commission nominating two independent
candidates  in opposition to management's candidates.  Greenlight, an investment
management  firm with a focus on long-term value investing, has been an investor
in  Mercer  since  August  1997.  Greenlight  owns  14.9%  of  Mercer's  shares
outstanding,  and has been the company's largest shareholder since 2000.  Mercer
is  a  pulp  and  paper  manufacturing  company  with  operations  in  Europe.

CONTACT  INFORMATION:

Steve  Frankel  /  Ed  Rowley
The  Abernathy  MacGregor  Group
(212)  371-5999


<PAGE>


                                   SCHEDULE E

                              GWA OPTION AGREEMENT


<PAGE>


                                OPTION AGREEMENT


     This  Option  Agreement  (the "AGREEMENT"), dated as of August __, 2003, is
made  by  and  between Mercer International Inc. ("MERCER" or the "COMPANY") and
GWA  Investments  LLC  ("OPTIONEE").

     WHEREAS,  Mercer,  Greenlight  Capital, L.L.C. and Greenlight Capital, Inc.
(Greenlight  Capital,  L.L.C.  and  Greenlight  Capital,  Inc.  collectively,
"GREENLIGHT")  are  parties to that certain Agreement dated as of August 5, 2003
(the "AGREEMENT"), pursuant to which, among other things, Mercer agreed to issue
options  to  purchase  shares  of beneficial interest, $1.00 par value per share
(the  "COMMON  STOCK"),  of  Mercer  to Optionee pursuant to terms substantially
similar to the terms set forth in the Option Agreement dated as of June 20, 2003
by  and among Optionee and Greenlight Capital, LP, Greenlight Capital Qualified,
LP  and  Greenlight  Capital  Offshore,  Ltd;  and

     WHEREAS, Mercer and Optionee are entering into this Option Agreement to set
forth  the  terms  of  the  options  granted  by  Mercer  to  Optionee.

     NOW,  THEREFORE,  in  consideration  of  the agreements and obligations set
forth  herein  and  for  other  good and valuable consideration, the receipt and
sufficiency  of  which are hereby acknowledged, the parties hereto, intending to
be  legally  bound,  hereby  agree  as  follows:


                             STATEMENT OF AGREEMENT

     1.     Option  to  Purchase Stock.  For the period of time between the date
            --------------------------
of  the 2003 annual meeting of shareholders of Mercer (the "ANNUAL MEETING") and
30  days  after the date of the Annual Meeting (the "EXPIRATION DATE"), Optionee
shall  have the right, but not the obligation, to purchase from Greenlight up to
two  hundred  twenty  five  thousand  (225,000)  shares  of  Common  Stock  (the
"SHARES");  provided,  however, if Guy W. Adams is not elected to Mercer's Board
of  Trustees at the Annual Meeting, Optionee's rights under this Agreement shall
terminate.  Notwithstanding  the  foregoing,  if  the  Expiration  Date  has not
occurred  prior to October 15, 2003, this Agreement shall terminate and be of no
further  effect  on  October  15,  2003.

     2.     Price.  The  exercise  price  for  each  Share  shall  be $4.53 (the
            -----
"EXERCISE  PRICE").  The Aggregate Exercise Price for the Shares shall equal the
number of Shares multiplied by the  Exercise Price.  If the option is exercised,
the  Aggregate  Exercise  Price  shall  be  paid by wire transfer of immediately
available  funds  to  an  account  or  accounts  specified  by  Mercer.

     3.     Notice  of  Exercise.  At  any  time  prior  to the Expiration Date,
            --------------------
Optionee  may  exercise  the right to purchase the Shares (the "EXERCISE DATE").
Optionee  shall  deliver  to  Mercer written notice which shall state Optionee's
exercise of the purchase rights hereunder and the number of Shares in respect of
which the rights are being exercised.  The option shall be deemed exercised upon
receipt  by  Mercer  of  (a)  such written notice and (b) the Aggregate Exercise
Price  as  contemplated  by  Section  2  above.


<PAGE>


     4.     Transaction  Costs.  Mercer will not charge any transaction costs to
            ------------------
deliver  the  Shares  to  Optionee.

     5.     Investment  Purposes.  Optionee  is  acquiring  the  Shares  for
            --------------------
investment  purposes  only,  for  Optionee's  own account, and not as nominee or
agent  for  any other person or entity, and not with a view to, or for resale in
connection  with,  any distribution thereof within the meaning of the Securities
Act  of  1933, as amended (the "SECURITIES ACT").  Optionee has no agreements or
other  arrangements  with  any  person or entity to sell, transfer or pledge any
part  of  the  Shares,  and  has  no  plans  to enter into any such agreement or
arrangement.

     6.     Restrictions  Regarding  Shares.  Optionee  acknowledges  that  the
            -------------------------------
Shares acquired upon exercise of the purchase rights hereunder may be subject to
restrictions on transfer and understands that any sale of the Shares may be made
only in accordance with the Securities Act and applicable state securities laws.

     7.     Adjustments.  In  the  event of any change in the outstanding shares
            -----------
of  Common Stock of the Company by reason of a stock dividend and stock split or
similar adjustment, the number and kind of shares subject to this option and the
option  price of such shares shall be appropriately adjusted.  In the event that
the  above  would result in Optionee receiving a fractional share, the number of
Shares  that  the Optionee receives shall be rounded up to the next whole Share.

     8.     Covenants  of  Mercer.  Mercer  covenants  that until the Expiration
            ---------------------
Date  Mercer  will at all times reserve and keep available such number of shares
of  Common  Stock  as the Optionee has the right to receive upon the exercise of
the  option  provided  for  in  this Agreement and that such Shares will be duly
authorized  and  validly  issued  and  will  be  free  and  clear  of  any lien,
encumbrance,  adverse  claim, restriction on sale or transfer, preemptive right,
limitations  on  voting  rights  or  option  on  such  Exercise  Date.

     9.     2003  Option Plan.  This Agreement is entered into and the rights to
            -----------------
acquire  shares  hereunder  are  granted  pursuant  and  subject to the terms of
Mercer's 2003 Non-Qualified Stock Option Plan dated August __, 2003 (the "OPTION
PLAN").

     10.     Miscellaneous.
             -------------

          10.1     Further Assurances.  Each party agrees to perform any further
                   ------------------
acts  and  to execute and deliver any further documents or instruments which may
be  reasonably  necessary  to carry out the provisions of this Agreement and the
transactions  contemplated  hereby.

          10.2     Amendments.  This  Agreement may not be amended, supplemented
                   ----------
or  modified  except  by  an instrument in writing signed by each of the parties
hereto.

          10.3     Interpretation.  The headings contained in this Agreement are
                   --------------
for  reference  purposes  only  and  shall  not affect in any way the meaning or
interpretation  of  this  Agreement.

          10.4     Counterparts.  This  Agreement  may  be  executed in multiple
                   ------------
counterparts,


<PAGE>


each  of  which shall be deemed to be an original and which taken together shall
constitute  one  and  the  same  agreement.

          10.5     Entire  Agreement.  This Agreement (i) constitutes the entire
                   -----------------
agreement  and  supersedes all prior agreements and understandings, both written
and  oral,  among the parties with respect to the subject matter hereof and (ii)
is  not  intended  to  confer  upon any person other than the parties hereto any
rights  or  remedies  hereunder.

          10.6     Notice.  All  notices  and  other  communications required or
                   ------
permitted  hereunder  shall be in writing and delivered personally, by telecopy,
by  a  nationally-recognized  overnight  courier  service  or  by  registered or
certified  mail,  postage prepaid, if to Optionee at the address of Optionee set
forth  on  the  signature  page  hereof  and  if  to  Mercer,  as  follows:

          Mercer  International  Inc.            with  a  copy  to:
          14900  Interurban  Avenue  South       Sangra,  Moller
          Suite  282                             1000 - 925 West Georgia  Street
          Seattle,  Washington  98168            Vancouver,  B.C.  V6C  3L2
          Attn:  Chief  Financial  Officer       Attn:  H.S.  Sangra

          10.7     Governing  Law.  THIS  AGREEMENT  SHALL  BE  GOVERNED  BY AND
                   --------------
CONSTRUED  IN ACCORDANCE WITH THE LAWS OF THE STATE OF WASHINGTON WITHOUT GIVING
EFFECT  TO  THE  CONFLICTS  OF  LAWS  RULES  THEREOF.

          10.8     Severability.  If  any provision of this Agreement as applied
                   ------------
to  any  part  or  to  any  circumstance  shall  be  held  invalid,  illegal  or
unenforceable,  the  validity,  legality  and  enforceability  of  the remaining
provisions  of this Agreement and the application of such provision to any other
part  or  to  any  other circumstance shall not be affected or impaired thereby.

          10.9     Waiver.  Any of the terms or conditions of this Agreement may
                   ------
be  waived in writing at any time by the party which is entitled to the benefits
thereof.  No  waiver of any provision of this Agreement shall be deemed or shall
constitute  a  waiver of such provision at any time in the future or a waiver of
any  other  provision  hereof.

          10.10     Regulatory  Expenses.  Mercer  shall, upon timely receipt of
                    --------------------
any  information  required from the Optionee, use its reasonable efforts to make
any  required  regulatory  filings  relating  to the grant of or exercise of the
option  granted  under  this  Agreement  on  behalf  of  the  Optionee.

                            [Signature Page Follows]


<PAGE>


     IN  WITNESS  WHEREOF,  the parties have executed this Agreement on the date
first  above  written.

                                 MERCER  INTERNATIONAL  INC.


                                 By:
                                    --------------------------------------
                                 Name:
                                      ------------------------------------
                                 Title:
                                       -----------------------------------


                                 OPTIONEE:

                                 GWA  Investments  LLC

                                 By:
                                    -------------------------------------
                                 Name:     Guy  W.  Adams
                                 Title:     Managing  Member

                                 Address:
                                         --------------------------------
                                 ----------------------------------------


<PAGE>


                                   SCHEDULE F

                              S.D. OPTION AGREEMENT


<PAGE>


                                OPTION AGREEMENT


     This  Option  Agreement  (the  "OPTION  AGREEMENT"), dated as of August __,
2003,  is  made  by  and  between  Mercer  International  Inc.  ("MERCER" or the
"COMPANY")  and  Saul  E.  Diamond  ("OPTIONEE").

     WHEREAS,  Mercer,  Greenlight  Capital, L.L.C. and Greenlight Capital, Inc.
(Greenlight  Capital,  L.L.C.  and  Greenlight  Capital,  Inc.  collectively,
"GREENLIGHT")  are  parties to that certain Agreement dated as of August 5, 2003
(the "AGREEMENT"), pursuant to which, among other things, Mercer agreed to issue
options  to  purchase  shares  of beneficial interest, $1.00 par value per share
(the  "COMMON  STOCK"),  of  Mercer  to Optionee pursuant to terms substantially
similar to the terms set forth in the Option Agreement dated as of June 20, 2003
by  and among Optionee and Greenlight Capital, LP, Greenlight Capital Qualified,
LP  and  Greenlight  Capital  Offshore,  Ltd;  and

     WHEREAS, Mercer and Optionee are entering into this Option Agreement to set
forth  the  terms  of  the  options  granted  by  Mercer  to  Optionee.

     NOW,  THEREFORE,  in  consideration  of  the agreements and obligations set
forth  herein  and  for  other  good and valuable consideration, the receipt and
sufficiency  of  which are hereby acknowledged, the parties hereto, intending to
be  legally  bound,  hereby  agree  as  follows:


                             STATEMENT OF AGREEMENT

     1.     Option  to  Purchase  Stock.  Until and including June 20, 2004 (the
            ---------------------------
"EXPIRATION  DATE"),  Optionee  shall have the right, but not the obligation, to
purchase  from  Mercer up to fifty thousand (50,000) shares of Common Stock (the
"SHARES").  Notwithstanding  the  foregoing,  should  Mercer's  insider  trading
policy or Regulation BTR of the Sarbanes-Oxley Act of 2002 prohibit the Optionee
from  exercising  the  option granted under this Agreement for any reason on the
Expiration  Date,  Mercer  shall  extend  the Expiration Date to August 4, 2004.

     2.     Price.  The  exercise  price  for  each  Share  shall  be $4.53 (the
            -----
"EXERCISE  PRICE").  The Aggregate Exercise Price for the Shares shall equal the
number  of Shares multiplied by the Exercise Price.  If the option is exercised,
the  Aggregate  Exercise  Price  shall  be  paid by wire transfer of immediately
available  funds  to  an  account  or  accounts  specified  by  Mercer.

     3.     Notice  of  Exercise.  At  any  time  prior  to the Expiration Date,
            --------------------
Optionee  may  exercise  the right to purchase the Shares (the "EXERCISE DATE").
Optionee  shall  deliver  to  Mercer written notice which shall state Optionee's
exercise of the purchase rights hereunder and the number of Shares in respect of
which  the  rights  are  being  exercised.  Optionee may, in his sole discretion
during  any  period  for  which  the  Common Stock is publicly traded (i.e., the
Common  Stock  is  listed on any established stock exchange or a national market
system,  including  without  limitation  the  Nasdaq  National Market, or if the
Common  Stock  is  quoted  on  the Nasdaq System (but not on the Nasdaq National
Market)  or  any  similar  system  whereby  the  stock  is regularly quoted by a
recognized  securities  dealer but closing sale prices are not reported), decide
to  pay  Mercer  the  Exercise  Price  by reducing the number of Shares he would
receive  upon  the  exercise


<PAGE>


of  his option ("CASHLESS EXERCISE").  In  order  to  effectuate  such  Cashless
Exercise,  the  number of Shares that Optionee would receive  upon  exercise  of
the option (the "OPTION SHARES") shall be reduced by the  quotient  of  (i)  the
Aggregate Exercise Price of such Option Shares and  (ii) the  closing  price  of
the  day  of  the  receipt  of  the  written  notice  of exercise (the "EXERCISE
SHARES").  The option shall be deemed exercised upon receipt  by  Mercer  of (a)
 such  written  notice  and  (b) the aggregate purchase price as contemplated by
Section 2 above.  In  the  event  that  the  Cashless  Exercise would result  in
Optionee  receiving  a  fractional  share, the  number  of  Shares that Optionee
receives  shall  be  rounded  up  to  the  next  whole  Share.

     4.     Transaction  Costs.  Mercer will not charge any transaction costs to
            ------------------
deliver  the  Shares  to  Optionee.

     5.     Investment  Purposes.  Optionee  is  acquiring  the  Shares  for
            --------------------
investment  purposes  only,  for  Optionee's  own account, and not as nominee or
agent  for  any other person or entity, and not with a view to, or for resale in
connection  with,  any distribution thereof within the meaning of the Securities
Act  of  1933, as amended (the "SECURITIES ACT").  Optionee has no agreements or
other  arrangements  with  any  person or entity to sell, transfer or pledge any
part  of  the  Shares,  and  has  no  plans  to enter into any such agreement or
arrangement.

     6.     Restrictions  Regarding  Shares.  Optionee  acknowledges  that  the
            -------------------------------
Shares acquired upon exercise of the purchase rights hereunder may be subject to
restrictions on transfer and understands that any sale of the Shares may be made
only in accordance with the Securities Act and applicable state securities laws.

     7.     Adjustments.  In  the  event of any change in the outstanding shares
            -----------
of  Common Stock of the Company by reason of a stock dividend and stock split or
similar adjustment, the number and kind of shares subject to this option and the
option  price of such shares shall be appropriately adjusted.  In the event that
the  above  would result in Optionee receiving a fractional share, the number of
Shares  that  the Optionee receives shall be rounded up to the next whole Share.

     8.     Covenants  of  Mercer.  Mercer  covenants  that until the Expiration
            ---------------------
Date  Mercer  will at all times reserve and keep available such number of shares
of  Common  Stock  as the Optionee has the right to receive upon the exercise of
the  option  provided  for  in  this Agreement and that such Shares will be duly
authorized  and  validly  issued  and  will  be  free  and  clear  of  any lien,
encumbrance,  adverse  claim, restriction on sale or transfer, preemptive right,
limitations  on  voting  rights  or  option  on  such  Exercise  Date.

9.     2003  Option  Plan.  This  Agreement  is  entered  into and the rights to
       ------------------
acquire  shares  hereunder  are  granted  pursuant  and  subject to the terms of
Mercer's 2003 Non-Qualified Stock Option Plan dated August __, 2003 (the "OPTION
PLAN").

     10.     Miscellaneous.
             -------------

          10.1     Further Assurances.  Each party agrees to perform any further
                   ------------------
acts  and  to execute and deliver any further documents or instruments which may
be  reasonably  necessary  to carry out the provisions of this Agreement and the
transactions  contemplated  hereby.


<PAGE>


          10.2     Amendments.  This  Agreement may not be amended, supplemented
                   ----------
or  modified  except  by  an instrument in writing signed by each of the parties
hereto.

          10.3     Interpretation.  The headings contained in this Agreement are
                   --------------
for  reference  purposes  only  and  shall  not affect in any way the meaning or
interpretation  of  this  Agreement.

          10.4     Counterparts.  This  Agreement  may  be  executed in multiple
                   ------------
counterparts,  each  of  which shall be deemed to be an original and which taken
together  shall  constitute  one  and  the  same  agreement.

          10.5     Entire  Agreement.  This Agreement (i) constitutes the entire
                   -----------------
agreement  and  supersedes all prior agreements and understandings, both written
and  oral,  among the parties with respect to the subject matter hereof and (ii)
is  not  intended  to  confer  upon any person other than the parties hereto any
rights  or  remedies  hereunder.

          10.6     Notice.  All  notices  and  other  communications required or
                   ------
permitted  hereunder  shall be in writing and delivered personally, by telecopy,
by  a  nationally-recognized  overnight  courier  service  or  by  registered or
certified  mail,  postage prepaid, if to Optionee at the address of Optionee set
forth  on  the  signature  page  hereof  and  if  to  Mercer,  as  follows:

          Mercer  International  Inc.             with  a  copy  to:
          14900  Interurban  Avenue  South        Sangra,  Moller
          Suite  282                              1000 - 925 West Georgia Street
          Seattle,  Washington  98168             Vancouver,  B.C.  V6C  3L2
          Attn:  Chief  Financial  Officer        Attn:  H.S.  Sangra

          10.7     Governing  Law.  THIS  AGREEMENT  SHALL  BE  GOVERNED  BY AND
                   --------------
CONSTRUED  IN ACCORDANCE WITH THE LAWS OF THE STATE OF WASHINGTON WITHOUT GIVING
EFFECT  TO  THE  CONFLICTS  OF  LAWS  RULES  THEREOF.

          10.8     Severability.  If  any provision of this Agreement as applied
                   ------------
to  any  part  or  to  any  circumstance  shall  be  held  invalid,  illegal  or
unenforceable,  the  validity,  legality  and  enforceability  of  the remaining
provisions  of this Agreement and the application of such provision to any other
part  or  to  any  other circumstance shall not be affected or impaired thereby.

          10.9     Waiver.  Any of the terms or conditions of this Agreement may
                   ------
be  waived in writing at any time by the party which is entitled to the benefits
thereof.  No  waiver of any provision of this Agreement shall be deemed or shall
constitute  a  waiver of such provision at any time in the future or a waiver of
any  other  provision  hereof.


<PAGE>


     IN  WITNESS  WHEREOF,  the parties have executed this Agreement on the date
first  above  written.

                                           MERCER  INTERNATIONAL  INC.


                                           By:
                                              -------------------------------
                                           Name:
                                                -----------------------------
                                           Title:
                                                 ----------------------------

                                           OPTIONEE:

                                           ----------------------------------
                                           Saul  E.  Diamond

                                           Address:
                                                   --------------------------

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


<PAGE>


                                   SCHEDULE G

                               INDEMNITY AGREEMENT
                         BETWEEN GUY W. ADAMS AND MERCER


<PAGE>


                          TRUSTEE'S INDEMNITY AGREEMENT
                          -----------------------------


THIS  AGREEMENT  dated  for  reference  the * day  of *, 2003.

BETWEEN:

           *,  Businessman

           (the  "Trustee")

AND:

           MERCER  INTERNATIONAL  INC.,  a Massachusetts business trust
           organized under the laws  of the State of Washington with an
           office at 14900 Interurban  Ave. South, Suite 282,  Seattle,
           Washington,  USA  98169

           (the  "Company")


WITNESSES  THAT  WHEREAS:

A.     It  is  essential  to  the  Company to retain and attract as trustees and
       officers  the  most  capable  persons  available;

B.     The  Trustee  is  a  trustee  and/or  officer  of  the  Company;

C.     Both  the  Company  and  the  Trustee  recognize  the  increased  risk of
       litigation  and  claims  being  asserted  against directors, trustees and
       officers of public  companies  in  today's  environment;  and

D.     In  recognition  of the Trustee's need for substantial protection against
       personal  liability  and  in  order  to  enhance  the Trustee's continued
       service to the  Company  in  an  effective  manner,  the  Company  wishes
       to provide in this Agreement for the indemnification of  the  Trustee  to
       the  fullest  extent  permitted   by  law   and  as  set  forth  in  this
       Agreement.

NOW  THEREFORE in consideration of the premises, the respective covenants of the
parties  herein  and  other  good  and  valuable  consideration (the receipt and
sufficiency  of  which  is hereby acknowledged), the parties hereto covenant and
agree  as  follows:

1.     INTERPRETATION

1.1  DEFINITIONS.  For  the  purposes  of  this  Agreement,  the following terms
     -----------
shall  have  the  following  meanings,  respectively:

     (a)  "BOARD"  means  the  board  of  trustees  of  the  Company;


<PAGE>


                                        2


     (b)  "CLAIM"  or  "CLAIMS"  has  the  meaning  ascribed  to  such  term  in
          Subsection 2.1(a)  hereof;

     (c)  "CHANGE  IN  CONTROL"  shall  be  deemed  to  have  occurred  if:

          (i)  any "person" (as such term is used in Sections 13(d) and 14(d) of
               the  Securities  Exchange  Act of 1934, as amended), other than a
               trustee  or  other fiduciary holding securities under an employee
               benefit  plan  of the Company or a corporation owned, directly or
               indirectly,  by  the shareholders of the Company in substantially
               the  same  proportions as their ownership of shares of beneficial
               interest  of  the  Company,  becomes  the  "beneficial owner" (as
               defined in Rule 13d-3 under said Act), directly or indirectly, of
               securities  of  the Company representing 20% or more of the total
               voting power represented by the Company's then outstanding Voting
               Securities;

          (ii) during  any  period  of two consecutive years, individuals who at
               the  beginning  of  such  period constitute the Board and any new
               trustee  of the Company whose election by the Board or nomination
               for election by the Company's shareholders was approved by a vote
               of  at least two-thirds of the trustees of the Company then still
               in  office  who  either  were  trustees  of  the  Company  at the
               beginning  of  such  period  or  whose election or nomination for
               election  was  previously  so  approved,  cease for any reason to
               constitute  a  majority  thereof;  or

         (iii) the shareholders of the Company approve a merger or consolidation
               of  the  Company  with any other corporation, other than a merger
               or consolidation which would result in the Voting  Securities  of
               the Company outstanding immediately prior thereto  continuing  to
               represent (either by remaining outstanding or by being  converted
               into Voting Securities of the surviving entity)  at  least  50.1%
               of  the  total voting power represented by the Voting  Securities
               of  the  Company or such surviving entity outstanding immediately
               after  such merger or consolidation, or the  shareholders  of the
               Company  approve  a  plan of complete liquidation of the  Company
               or  an  agreement  for the sale or disposition  by the Company of
               (in   one  transaction  or  a  series  of  transactions)  all  or
               substantially all of the Company's assets;

     (d)  "COSTS" has the  meaning ascribed thereto in Subsection 2.1(b) hereof;

     (e)  "EXPENSE ADVANCE" has the meaning ascribed to such term in Section 2.2
          hereof;

     (f)  "INDEMNIFIABLE EVENT"  has  the  meaning  ascribed  to  such  term  in
          Subsection  2.1(a)  hereof;

     (g)  "INDEPENDENT LEGAL COUNSEL"  means  an  attorney or firm of attorneys,
          selected  in accordance with the provisions of Section 6.1 hereof, who
          shall not have otherwise performed services for  the  Company  or  the
          Trustee within the last two


<PAGE>


                                        3


          years (other than with respect to matters concerning the rights of the
          Trustee under this Agreement, or of  other  trustees  of  the  Company
          under similar indemnity  agreements);

     (h)  "POTENTIAL CHANGE IN  CONTROL"  shall  be  deemed to have occurred if:

          (i)  the Company enters into an agreement, the consummation  of  which
               would result in  the  occurrence  of  a  Change  in  Control;

         (ii)  any  person  (including  the  Company)   publicly   announces  an
               intention  to  take  or  to  consider  taking  actions  which  if
               consummated would constitute a Change  in  Control;

        (iii)  any  person,  other  than  a  trustee  or other fiduciary holding
               securities under  an  employee benefit  plan of  the Company or a
               corporation owned, directly or  indirectly,  by the  shareholders
               of the Company in substantially the  same  proportions  as  their
               ownership of shares of beneficial interest of the Company, who is
               or  becomes  the  beneficial  owner,  directly  or indirectly, of
               securities of  the  Company  representing  10%  or  more  of  the
               combined voting power of the Company's  then  outstanding  Voting
               Securities, increases his beneficial ownership of such securities
               by five percentage points (5%) or  more  over  the  percentage so
               owned  by  such  person;  or

         (iv)  the Board adopts a resolution to the effect that, for purposes of
               this Agreement, a Potential Change  in  Control  has  occurred;

     (i)  "RELATED  COMPANIES"   has  the  meaning  ascribed  to  such  term  in
          Subsection 2.1(a)  hereof;

     (j)  "REVIEWING PARTY" means any appropriate person or body consisting of a
          member or members of  the  Board or any other person or body appointed
          by the Board who is  not  a  party  to  the particular Claim for which
          the  Trustee  is  seeking  indemnification,  or  the Independent Legal
          Counsel;  and

     (k)  "VOTING SECURITIES" means  any  securities  of  the Company which vote
          generally  in  the  election  of  trustees  of  the  Company.

1.2  EFFECTIVE  DATE.  Notwithstanding  the  date of its execution and delivery,
     --------------
this Agreement shall be conclusively deemed to commence on, and  be  effective
as  of,  the day upon which the Trustee first became or becomes a trustee or
officer of the Company and shall survive and remain in full  force  and
effect after the Trustee ceases to be a trustee or officer of  the  Company
and after the termination of the Trustee's employment with the  Company.

2.     INDEMNITY

2.1     INDEMNIFICATION.  Subject  to  Section  3.1, the Company shall indemnify
        ---------------
and save harmless the Trustee to the fullest extent permitted by law against and
from:


<PAGE>


                                        4

     (a)  any  and  all  charges  and claims of every nature and kind whatsoever
          which  may  be  brought,  made  or  advanced  by  any  person,  firm,
          corporation  or  government,  or by any governmental department, body,
          commission,  board,  bureau,  agency  or  instrumentality  against the
          Trustee,  and  any  and  all threatened, pending or completed actions,
          suits  or  proceedings,  or  any  inquires  or investigations, whether
          instituted  by  the  Company  or any other person, that the Trustee in
          good  faith believes might lead to the institution of any such action,
          suit  or  proceeding,  whether  civil,  criminal,  administrative,
          investigative  or  other,  against  the Trustee, including any and all
          actions,  suits,  proceedings, inquires or investigations in which the
          Trustee  was,  is,  becomes  or is threatened to be made a party to or
          witness  or  other  participant  in  (a  "CLAIM",  or,  collectively,
          "CLAIMS"),  by reason of (or arising in part out of) the Trustee being
          a director, officer, trustee, employee or agent of the Company, any of
          the  Company's  subsidiaries,  or  any  company,  partnership,  joint
          venture,  trust  or other enterprise related to or affiliated with the
          Company or which the Trustee was serving at the request of the Company
          as  a  director,  officer,  trustee,  employee  or agent (the "RELATED
          COMPANIES"), or that arise out of or are in any way connected with the
          management, operation, activities, affairs or existence of the Company
          or  any  of  its  Related  Companies  (an  "INDEMNIFIABLE  EVENT");

     (b)  any  and  all  costs,  damages,  expenses  (including  legal  fees and
          disbursements  on  a  full  indemnity  basis),  judgements,  fines,
          liabilities,  penalties  (statutory and otherwise), losses and amounts
          paid  in  settlement  (including  all  interest, assessments and other
          charges  paid  or  payable  in  connection  with or in respect of such
          costs,  damages,  expenses, judgements, fines, liabilities, penalties,
          losses  or amounts paid in settlement) (referred to herein as "COSTS")
          which the Trustee may sustain, incur or be liable for by reason of (or
          arising  in  part  out of) an Indemnifiable Event whether sustained or
          incurred  by reason of his negligence, default, breach of duty, breach
          of  trust,  failure to exercise due diligence or otherwise in relation
          to  the  Company or its Related Companies or any of their affairs; and

     (c)  in  particular,  and without in any way limiting the generality of the
          foregoing,  any  and all Costs which the Trustee may sustain, incur or
          be  liable  for as a result of or in connection with the release of or
          presence  in  the  environment  of hazardous substances, contaminants,
          litter,  waste,  effluent, refuse, pollutants or deleterious materials
          and that arise out of or are in any way connected with the management,
          operation,  activities,  affairs or existence of the Company or any of
          its  Related  Companies.

2.2  EXPENSE  ADVANCES.  Subject  to  Section  3.1, the Company shall advance to
     -----------------
the  Trustee  the  Costs  reasonably  estimated  to  be sustained,  incurred
or  suffered  by  him,  in  connection  with  the indemnification
set forth in Section 2.1 hereof within two business days of
receipt  by  the Company of a written request for such advance (an "EXPENSE
ADVANCE").  The  Trustee  hereby  undertakes to repay such amounts advanced
only  if,  and  to  the extent that, it shall ultimately be determined by a
court  of  competent  jurisdiction,  which


<PAGE>


                                        5


determination is not subject to any subsequent appeals, that the Trustee is
not  entitled  to  be  indemnified  by  the  Company  as authorized by this
Agreement.

2.3  INDEMNIFICATION  OF  EXPENSES  OF  SUCCESSFUL  PARTY.  Notwithstanding  any
     --------------------------------------------------
other provision of this  Agreement, to the extent that the Trustee
has been successful on the merits  or  otherwise  in the defence of any Claim or
in the defence of any charge, issue  or  matter  therein, including the
dismissal of a Claim, the Company shall  indemnify  the  Trustee  against  any
and  all  Costs  actually and reasonably  sustained  or  incurred  by  him  in
connection  with  the investigation,  defence  or  appeal  of  such  Claim.

2.4  INDEMNIFICATION  FOR  EXPENSE  OF  A  WITNESS.  Notwithstanding  any  other
     --------------------------------------------
provision  of this Agreement, the  Company  will indemnify the Trustee if and
whenever he is a witness or participant,  or  is threatened to be made a witness
or participant, to any action,  suit,  proceeding,  hearing, inquiry or
investigation to which the Trustee  is not a party, by reason of the fact that
he is or was a trustee, director,  officer,  employee or agent of the Company or
any of its Related Companies  or  by  reason  of  anything  done  or  not  done
by him in such capacity,  against  any  and all Costs actually and reasonably
sustained or incurred by the Trustee or on the Trustee's behalf in connection
therewith.

2.5  INDEMNIFICATION  FOR  EXPENSES  IN  OBTAINING  INDEMNITY. The Company shall
     ----------------------------------------------------
indemnify the Trustee against  any and all Costs, and, if requested by the
Trustee, shall subject to  Section  3.1  hereof (within two business days of
such request) advance such Costs to the Trustee, which are sustained, incurred
or suffered by the Trustee  in  connection  with any action, suit or proceeding
brought by the Trustee  for:  (i)  indemnification,  or an advance thereof, by
the Company under  this  Agreement,  any other agreement or the Restated
Declaration of Trust  of  the  Company,  as amended; or (ii) recovery under any
trustees', directors'  and  officers'  liability  insurance policies maintained
by the Company,  regardless  of whether the Trustee ultimately is determined to
be entitled to such indemnification or insurance recovery, as the case may be.

2.6  PARTIAL  INDEMNITY.  If  the  Trustee  is  entitled under any provisions of
     ------------------
this  Agreement  to  indemnification by the Company for some  or  a portion of
the Costs sustained, incurred or suffered by him but  not,  however,  for  all
of  the  total amounts thereof, the Company shall nevertheless indemnify the
Trustee for the portion thereof to which Trustee is  entitled.

3.     INDEMNITY  EXCEPTIONS

3.1  EXCEPTIONS  TO  INDEMNIFICATION.  Notwithstanding  the  provisions  of
     -------------------------------
Sections  2.1,  2.2  and  2.5  hereof, the Company  shall  not  be obligated
to indemnify or save harmless the Trustee against  and  from  any  Claim  or
Costs  or  make  an  Expense  Advance:

     (a)  if,  in respect thereof, a court of competent jurisdiction determines,
          which determination is not subject to any subsequent appeals, that the
          Trustee  failed  to  act honestly and in good faith with a view to the
          best  interests  of  the  Company;

     (b)  arising  out  of any criminal conviction of the Trustee if the Trustee
          pleaded  guilty  or  was  found  guilty  by  a  court  of  competent
          jurisdiction,  which  finding is not subject to any subsequent appeals
          by  the  Trustee,  other  than in the case of a


<PAGE>


                                        6


          criminal proceeding in respect of which the Trustee had no  reasonable
          cause to believe that his  conduct  was  unlawful;

     (c)  arising  out  of a determination by a court of competent jurisdiction,
          which  determination  is  not subject to any subsequent appeals, that:
          (i)  the  Trustee  failed  to  disclose  his  interest or conflicts as
          required  under the Washington Business Corporation Act - Title 23B of
          the  Revised  Code  of Washington, as amended (the "RCW"); or (ii) the
          Company  is  not permitted to indemnify the Trustee as provided in RCW
          23B.08.510(4);

     (d)  in connection with any liability under Section 16(b) of the Securities
          Exchange  Act  of  1934, as amended, or under United States federal or
          state  securities  laws  for  "insider  trading";  (e)  if, in respect
          thereof,  the  Expense  Advance,  or  any other advance to the Trustee
          under this Agreement, is prohibited by the Sarbanes-Oxley Act of 2002,
          as  amended;  or

     (f)  in  connection  with  any  settlement  of a Claim effected without the
          Company's  written  consent.

4.     BURDEN  OF  PROOF  AND  PRESUMPTIONS

4.1  BURDEN  OF  PROOF.  In  connection with any determination by the Company as
     ---------------
to  whether  the  Trustee  is  entitled  to be indemnified
hereunder,  the  burden  of proof shall be on the Company to establish that
the  Trustee  is  not  so  entitled.

4.2  NO  PRESUMPTIONS.  For  purposes  of this Agreement, the termination of any
     ---------------
Claim,  by  judgement,  order, settlement (whether with or
without  court  approval) or conviction, or upon a plea of nolo contendere,
or  its equivalent, shall not create a presumption that the Trustee did not
meet  any  particular  standard of conduct or have any particular belief or
that  a  court  had  determined  that  indemnification  is not permitted by
applicable  law.

5.     CONTRIBUTION

5.1  If  the  indemnification  provided in this Agreement is unavailable and may
     not  be paid to the Trustee for any reason other than statutory limitations
     set  forth  in  applicable  law,  then in respect of any Claim in which the
     Company  is  jointly liable with the Trustee (or would be if joined in such
     Claim),  the  Company  shall contribute to the amount of Costs actually and
     reasonably sustained or incurred and paid or payable by the Trustee in such
     proportion  as is appropriate to reflect (i) the relative benefits received
     by  the  Company  and all officers, trustees, directors or employees of the
     Company  and  any of its Related Companies, other than the Trustee, who are
     jointly  liable  with  the Trustee (or would be if joined in such Claim) on
     the one hand, and the Trustee, on the other hand, from the transaction from
     which  such Claim arose, and (ii) the relative fault of the Company and all
     officers,  trustees,  directors  or employees of the Company and any of its
     Related  Companies, other than the Trustee, who are jointly liable with the
     Trustee  (or would be if joined in such Claim), on the one hand, and of the
     Trustee, on the other, in connection


<PAGE>


                                        7


     with the events which resulted in such Costs, as well as any other relevant
     equitable considerations. The relative fault  referred  to  above shall  be
     determined by reference  to,  among  other  things,  the  parties' relative
     intent, knowledge, access to  information  and  opportunity  to  correct or
     prevent  the  circumstances resulting in such  Costs.  The  Company  agrees
     that it would not be just and equitable if contribution  pursuant  to  this
     Section  were  determined  by  pro  rata allocation  or any other method of
     allocation   that   does  not  take  account  of  the  foregoing  equitable
     considerations.

6.   CHANGE  IN  CONTROL

6.1  CHANGE  IN  CONTROL.  The  Company  agrees  that  if  there  is a Change in
     -------------------
Control of the Company (other than a Change in Control
which  has  been  approved by a majority of the trustees of the Company who
were  trustees  of the Company immediately prior to such Change in Control)
then  with  respect to all matters thereafter arising concerning the rights
of  the  Trustee  to  indemnity  payments  and  Expense Advances under this
Agreement,  any other agreement or the Restated Declaration of Trust of the
Company,  as  amended,  now  or  hereafter in effect relating to Claims for
Indemnifiable  Events,  the  Company  shall  seek  legal  advice  only from
Independent  Legal  Counsel  selected  by  the  Trustee and approved by the
Company  (which approval shall not be unreasonably withheld). Such counsel,
among other things, shall render its written opinion to the Company and the
Trustee  as to whether and to what extent the Trustee would be permitted to
be  indemnified  under  applicable  law.  The  Company  agrees  to  pay the
reasonable  fees  of the Independent Legal Counsel referred to above and to
indemnify  fully such counsel against any and all Costs, claims and charges
arising  out  of  or  relating to this Agreement or its engagement pursuant
hereto.

6.2  ESTABLISHMENT  OF  TRUST.  In  the  event of a Potential Change in Control,
     -----------------------
the  Company  shall,  upon  written request by the
Trustee,  create  a  trust  for the benefit of the Trustee and from time to
time upon written request of the Trustee shall fund such trust in an amount
sufficient  to satisfy any and all Costs reasonably anticipated at the time
of  such  request  to  be  sustained  or  incurred  in  connection  with
investigating,  preparing  for  and  defending  any  Claim,  and  the Costs
sustained  or  incurred  by  the  Trustee  from time to time, or reasonably
anticipated  to  be sustained or incurred by the Trustee in connection with
any Claim, provided that in no event shall more than $25,000 be required to
be  deposited in any trust created hereunder in excess of amounts deposited
in  respect  of  reasonably  anticipated Costs. The amount or amounts to be
deposited  in  the trust pursuant to the foregoing funding obligation shall
be  determined  by the Reviewing Party in any case in which the Independent
Legal  Counsel  referred to above is involved. The terms of the trust shall
provide that upon a Change in Control (i) the trust shall not be revoked or
the  principal thereof invaded, without the written consent of the Trustee,
(ii)  the  trustee  of  such trust shall advance to the Trustee, within two
business days of a request by the Trustee, the Costs sustained or incurred,
or  reasonably  anticipated  to be sustained or incurred, by the Trustee in
connection  with  any Claim (and the Trustee hereby agrees to reimburse the
trust  under the circumstances under which the Trustee would be required to
reimburse  the  Company  under  Section 2.2 hereof), (iii) such trust shall
continue  to  be  funded  by  the  Company  in  accordance with the funding
obligation  set  forth above, (iv) the trustee of such trust shall promptly
pay  to  the Trustee all amounts for which the


<PAGE>


                                        8


Trustee shall be entitled to indemnification  pursuant  to  this  Agreement
or  otherwise,  and (v) all unexpended  funds  in  such  trust shall revert
to the Company upon a final determination by the Reviewing Party or a court
of competent jurisdiction, as  the  case may be, that the Trustee has  been
fully indemnified under the terms  of  this  Agreement.  The trustee of the
trust established hereunder shall  be  chosen by the  Trustee.  Nothing  in
this Section 6.2 shall relieve the Company of any of its obligations  under
this  Agreement.

7.   RESIGNATION

7.1  Nothing  in  this  Agreement  shall prevent the Trustee from resigning as a
trustee  or  officer  of the Company or any of its Related Companies at any
time.

8.   DEFENCE

8.1  NOTICE  TO  COMPANY.  Upon  the  Trustee  becoming  aware of any pending or
     -------------------
threatened  Claim, written notice shall be given by or
on  behalf  of  the  Trustee  to  the  Company  as  soon  as  is reasonably
practicable.

8.2  INVESTIGATION  BY  COMPANY.  The  Company  shall conduct such investigation
     -------------------------
of  each Claim as is reasonably necessary in the circumstances,  and  shall
pay  all  costs  of  such  investigation.

8.3  DEFENCE  BY  COMPANY.  Subject  to  this  Section,  the Company shall, upon
     --------------------
the written request of the Trustee, defend, on behalf
of  the  Trustee,  any  Claim,  even  if  the Claim is groundless, false or
fraudulent.

8.4  APPOINTMENT  OF  DEFENCE  COUNSEL.  The  Company  shall  consult  with  and
     ---------------------------------
accept  the  reasonable  choice  of  the Trustee  concerning the appointment
of any defence counsel to be engaged by the Company in fulfillment
of its obligations to defend a Claim pursuant to Section  8.3;  thereafter
the  Company  shall  appoint  such  counsel.

8.5  SETTLEMENT  BY  COMPANY.  With  respect to a Claim for which the Company is
     ---------------------
obliged  to  indemnify  the  Trustee  hereunder, the
Company  may  conduct  negotiations  towards the settlement of a Claim and,
with  the  written  consent of the Trustee (which the Trustee agrees not to
unreasonably  withhold)  the  Company  may make such settlement as it deems
expedient, provided however that the Trustee shall not be required, as part
of  any  proposed  settlement  of  a  Claim, to admit liability or agree to
indemnify  the  Company  in  respect  of,  or  make  contribution  to,  any
compensation  or  other  payment  for  which  provision  is  made under the
settlement.  The  Company  shall  pay any compensation or other payment for
which  provision  is  made  by  such  settlement.

9.     GENERAL

9.1  LIMITATION  OF  ACTIONS.  No  legal action shall be brought and no cause of
     ---------------------
action  shall  be asserted by or in the right of the
Company  or any of its Related Companies against the Trustee, the Trustee's
spouse,  heirs,  executors  or  personal or legal representatives after the
expiration  of  two years from the date of accrual of such cause of action,
and  any  claim  or  cause  of action of the Company and any of its Related
Companies  shall be extinguished


<PAGE>


                                        9


and deemed released unless  asserted  by  the  timely  filing  of  a  legal
action within such two-year period; provided, however, that  if any shorter
period of limitation is otherwise applicable to such cause of  action  such
shorter  period  shall  govern.

9.2  GENDER;  PLURAL.  In  this  Agreement wherever the singular or masculine is
     --------------
used  it  will be construed as if the plural or feminine or
neuter,  as  the  case  may  be,  had been used where the context otherwise
requires,  and  a  reference  to  a section by number is a reference to the
section  so  numbered  in  this  Agreement.

9.3  NOTICES.  All  notices  and  other communications required to be given by a
     -------
party  hereunder  shall  be in writing and shall be deemed to have
been  duly  given:  (a)  upon  delivery,  if delivered by hand; (b) one (1)
business  day  after the business day of deposit with an overnight courier,
if delivered by overnight courier, freight prepaid; (c) five (5) days after
deposit  with  the  applicable  postal service, if delivered by first class
mail postage prepaid; or (d) one (1) day after the business day of delivery
by  facsimile  transmission,  if  delivered by facsimile transmission and a
facsimile  transmission confirmation is obtained in respect thereof, with a
copy  by  first class mail postage prepaid, to the other party at the other
party's  address  specified  above or to the last known facsimile number of
such  party,  as  applicable,  or  at  such  other address or to such other
facsimile  number  as the other party may have last specified in writing to
the  party  intending  to  convey  the  notice  or  other  communication.

9.4  TIME.  Time  shall  be  of  the  essence  of  this  Agreement.
     ----

9.5  HEADINGS.  The headings in this Agreement are inserted for ease of
      --------
     reference  only  and  shall  have  no  effect  on  the  construction  or
     interpretation  of  this  Agreement.

9.6  GOVERNING  LAW.  This  Agreement  shall be construed, interpreted, governed
     -------------
by  and enforced in accordance with the laws of the State of
Washington, U.S.A., applicable to contracts made and to be performed in the
State  of  Washington,  U.S.A.,  without giving effect to the principles of
conflicts  of  laws.  Each of the parties hereby irrevocably attorns to the
non-exclusive  jurisdiction  of  the courts of Seattle, Washington, U.S.A.,
with  respect  to  any  matters  arising  out  of  this  Agreement.

9.7  ENTIRE  AGREEMENT.  This  Agreement  contains  the entire agreement between
     -----------------
the  parties  relating  to the subject matter hereof and
there are no agreements, representations or warranties, express or implied,
which  are  collateral  hereto.

9.8  NONEXCLUSIVITY.  The  rights  of  the  Trustee  hereunder  shall  be  in
     --------------
addition  to  any  rights  the  Trustee  may have under the
Restated  Declaration  of  Trust  of  the Company, including any amendments
thereto  or  restatements  thereof,  Chapter  23.90 of the RCW, as amended,
Title  23B  of  the  RCW,  as amended, or otherwise. To the extent that any
change(s)  in Chapter 23.90 and/or Title 23B of the RCW (whether by statute
or  judicial  decision)  permits  greater indemnification by agreement than
would  be  afforded  currently  under the Company's Restated Declaration of
Trust,  as  amended,  and  this  Agreement, it is the intent of the parties
hereto  that  the  Trustee  shall  enjoy  by this Agreement the benefits so
afforded  by  such  change(s).


<PAGE>


                             10


9.9  INSURANCE.  To  the  extent  the  Company  maintains an insurance policy or
     ---------
policies providing trustees', directors' and officers' liability
insurance,  the  Trustee  shall  be  covered by such policy or policies, in
accordance  with  its or their terms, to the maximum extent of the coverage
available  for  any  trustee,  director  or  officer  of  the  Company.

9.10 AMENDMENTS.  This  Agreement  may  only  be  amended by a written agreement
     ----------
signed  by  both  of  the  parties  hereto.

9.11 WAIVERS.  No  waiver  of  any  of the provisions of this Agreement shall be
     -------
deemed or shall constitute a waiver of any other provisions hereof
(whether  or  not  similar)  nor  shall such waiver constitute a continuing
waiver.

9.12 FURTHER  ASSURANCES.  Each  of  the  parties agrees to promptly do all such
     ------------------
further acts, and promptly execute and deliver all such
further  documents,  as  may  be  necessary or advisable for the purpose of
giving  effect  to  or  carrying  out  the  intent  of  this  Agreement.

9.13 SUCCESSORS  AND  ASSIGNS.  This  Agreement  shall  enure  to the benefit of
     ------------------------
and  be binding upon the parties hereto and their
respective  successors,  including  any  direct  or  indirect  successor by
purchase, merger, consolidation or otherwise to all or substantially all of
the  business  and/or  assets  of  the  Company,  assigns,  spouses, heirs,
executors  and  personal  and  legal  representatives. This Agreement shall
continue  in effect regardless of whether the Trustee continues to serve as
a director, officer or trustee of the Company, any of its Related Companies
or  of  any  other  enterprise  at  the  Company's  request.

9.14 SEVERABILITY.  The  provisions  of  this  Agreement  shall  be severable in
     ------------
the  event  that  any of the provisions hereof (including any
provision  within  a  single  section, paragraph or sentence) are held by a
court  of  competent  jurisdiction  to  be  invalid,  void  or  otherwise
unenforceable  in  any  respect, and the validity and enforceability of any
such  provision  in  every  other  respect  and of the remaining provisions
hereof  shall  not  be  in any way impaired and shall remain enforceable to
fullest  extent  permitted  by  law.


<PAGE>


                                       11

9.15 COUNTERPARTS.  This Agreement may be executed in any number of
     ------------
counterparts  with  the  same  effect as if all parties had signed the same
document. All counterparts will constitute one and the same agreement. This
Agreement  may be executed and transmitted by facsimile transmission and if
so  executed  and  transmitted  this  Agreement will be for all purposes as
effective  as  if the parties had delivered an executed original Agreement.

IN  WITNESS WHEREOF the parties hereto have executed this Agreement, in the case
of  a corporate party by its duly authorized officer or officers, as of the date
first  written  above.

SIGNED,  SEALED  AND  DELIVERED  in  the    )
presence  of:                               )
                                            )
------------------------------------------  )
Signature                                   )
                                            )
--------------------------------------------)
Name                                        )
                                            )
--------------------------------------------)  --------------------------------
Address                                     )  *
                                            )
------------------------------------------- )
------------------------------------------- )
Occupation                                  )


MERCER  INTERNATIONAL  INC.

By:
   ----------------------------------------
Name:
      -------------------------------------
Title:
       ------------------------------------



</TEXT>
</DOCUMENT>
