Excerpts from the exchange yesterday between chief counsel for the House committee John W. Nields Jr. and Attorney General Edwin Meese III.

Nields:

"{Robert C.} McFarlane has told the committee that he met with {Lt. Col. Oliver L.} North on Sunday morning {Nov. 23, 1986}, prior to his interview with you, and that Col. North was unhappy because he felt that there was a record of the diversion {of funds to the contras} . . . . "

Meese:

" . . . When we presented him with the memo that afternoon -- Sunday afternoon -- he certainly seemed surprised."

Nields:

"Well, I was going to ask you about that. He seems like a fellow who's pretty cool under fire. Everyone has told the committee that he exhibited clear surprise when the document was shown him. Would you describe how he exhibited this surprise?"

Meese:

"Well, I'm not sure that I can describe it except to say that he was obviously -- I would describe him as being shocked that we had the memorandum and that we were raising this issue with him."

Nields:

"Was this in words? Was this a facial expression?"

Meese:

"I think it was a combination of words and facial expression, primarily facial expression and body language, if you will . . . . He was a little more concerned and upset I would say because we had the memo. And that was a source of concern to him because, in effect, what had gone on there was something he didn't realize anyone else knew, and it was {a} highly sensitive thing from his standpoint . . . . He was mostly concerned because this -- if this got out this would impede his efforts to help the Democratic resistance in Nicaragua."