SETTLEMENT AGREEMENT AND LETTER EXPLAING THE CLUBS POSITION
August 19, 1993

SETTLEMENT AGREEMENT
PENOBSCOT MILLS/RIPOGENUS
FERC PROJECT N0S. 2458-009; 2572-005

     This Settlement Agreement ("Agreement") is entered into between the Millinocket Fin & Feather Club ("F&F Club") and Great Northern Paper, Inc. ("Great Northern"). 
     The purpose of this Agreement is to set forth the agreement of Great Northern and F&F Club as to the terms upon which the F&F club agrees to withdraw its opposition to, and express its full support for, the applications of Great Northern for renewal of Federal Energy Regulatory Commission (FERC) Licenses Nos. 2458-009; 
2572-005 for the Ripogenus and Penobscot Mills projects (the "Projects" or the "Licenses").
 

The parties agree as follows:
l. F&F Club hereby withdraws all opposition to issuance of the Licenses and 
   supports, pursuant to the terms of thisAgreement, the issuance by FERC of 
   Licenses which reflect the allocation of water set forth in Great Northern's Water 
   Use Plan ("WUP") as incorporated within the applications for the Projects. As a 
   result of this Agreement, the F&F Club offers to work cooperatively with Great 
   Northern in a program to foster responsible land use by the general public.

2.The WUP reflects the best balance which can be achieved for the water 
   resources of the West Branch of the Penobscot River, given the many competing 
   water, including without limitation, recreation and hydro electric power generation.

3.Any Licenses issued by FERC should not be inconsistent or deviate in any 
   material manner from the findings, terms or conditions of the Water Quality 
   Certificates for the Projects issued to Great Northern by the Maine Land Use 
   Regulation Commission and Maine Department of Environmental Protection.

4. FERC should conduct an environmental assessment covering both projects and, 
    thereafter, based upon the applications as filed and addition information in the 
    record, proceed to promptly issue the Licenses without the need for an 
    environmental impact statement, given the lack of significant impacts on the 
    environment from the proposed relicensing and, considering the enhancements 
    proposed by Great Northern.

5. For the term of the Licenses, Great northern agrees that it will eliminate current
    and not impose future, access fees on non-commercial, day use by Maine 
    residents of its forest lands within the company's gate system in the state of Maine,
    provided however, that the F&F Club recognizes that Great Northern is entitled 
    to have recreational users of its land share in the cost of maintaining that land for 
    such use; and, provided further, that Great Northern has the right to limit the total 
    number of users of its land, but not to leas than 1993 levels, if in its sole judgment, 
    Great Northern determines thatincreased user levels have adversely impacted or 
    pose athreat of adversely impacting safety, recreational use, ecological resources, 
    or Great Northern's ability toproperly manage its forest lands for timber 
    harvesting purposes.

6. If approval of this Agreement is required by FERC and if FERC should fail to 
    approve this Agreement in itsentirety, or if FERC should fail to issue the Licenses 
    on the terms set forth above to Great Northern: or if any Licenses are issued 
    which  are inconsistent with this Agreement, either party may, within 30 days of 
    the commission's action (or inaction, if requested to cot), withdraw from this 
    Agreement upon providing written noticeto the other party. in the event of such 
    withdrawal, this Agreement shall be of no force and effect.

7. This Agreement shall became effective upon issuance by FERC of a final order 
    approving the Agreement, if such order or similar action is required, and, upon the 
    issuance of Licenses by FERC of at least a thirty (30) year term in accordance 
    with this Agreement.

8. This Agreement may only be modified by written consent of both parties to this 
    Agreement.