CREDIT AGREEMENT among SMURFIT-STONE CONTAINER CORPORATION, a Debtor and Debtor-in-Possession under Chapter 11 of the Bankruptcy Code, as the Parent and a U.S. Guarantor,

Exhibit 10.1

EXECUTION VERSION

CREDIT AGREEMENT

among

SMURFIT-STONE CONTAINER CORPORATION,

a Debtor and Debtor-in-Possession under Chapter 11 of the Bankruptcy Code,

as the Parent and a U.S. Guarantor,

SMURFIT-STONE CONTAINER ENTERPRISES, INC.,

a Debtor and Debtor-in-Possession under Chapter 11 of the Bankruptcy Code,

as U.S. Borrower,

SMURFIT-STONE CONTAINER CANADA INC.,

a company operating pursuant to a proceeding under the CCAA and a Debtor and Debtor-in-Possession under Chapter 11 of the Bankruptcy Code,

as Canadian Borrower,

THE OTHER LOAN PARTIES PARTY HERETO,

THE LENDERS PARTY HERETO,

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent and Collateral Agent,

and

JPMORGAN CHASE BANK, N.A., TORONTO BRANCH,

as Canadian Administrative Agent and Canadian Collateral Agent,

X.X. XXXXXX SECURITIES INC. and DEUTSCHE BANK SECURITIES INC.

as Co-Lead Arrangers,

X.X. XXXXXX SECURITIES INC., DEUTSCHE BANK SECURITIES INC.,

GE CAPITAL MARKETS, INC. and BANC OF AMERICA SECURITIES LLC

as Joint Bookrunners,

DEUTSCHE BANK SECURITIES INC.,

as Syndication Agent,

and

GENERAL ELECTRIC CAPITAL CORPORATION and BANK OF AMERICA, N.A.

as Co-Documentation Agents

Dated as of January 28, 2009

CREDIT AGREEMENT
TABLE OF CONTENTS

ARTICLE 1.	DEFINITIONS	4
Section 1.1	Defined Terms	4
Section 1.2	Terms Generally	45
Section 1.3	Accounting Terms; GAAP	45
Section 1.4	Exchange Rate Calculations	45
Section 1.5	Québec Matters	46
ARTICLE 2.	AMOUNT AND TERMS OF CREDIT	47
Section 2.1	Commitment of the Lenders	47
Section 2.2	Availability of U.S. Loans	48
Section 2.3	Availability of Canadian Loans	48
Section 2.4	Letters of Credit	49
Section 2.5	Issuance	52
Section 2.6	Nature of Letter of Credit Obligations Absolute	53
Section 2.7	Making of Loans and Disbursements	53
Section 2.8	Repayment of Loans and Unreimbursed Draws; Evidence of Debt	58
Section 2.9	Interest on Loans	59
Section 2.10	Default Interest	60
Section 2.11	Optional Termination or Reduction of Commitment	61
Section 2.12	Alternate Rate of Interest	61
Section 2.13	Refinancing of Loans	62
Section 2.14	Mandatory Prepayment; Commitment Termination	64
Section 2.15	Optional Prepayment of Loans; Reimbursement of Lenders	68
Section 2.16	Reserve Requirements; Change in Circumstances	71
Section 2.17	Change in Legality	73
Section 2.18	Pro Rata Treatment, etc.	73
Section 2.19	Taxes	74
Section 2.20	Certain Fees	77
Section 2.21	Commitment Fee	77
Section 2.22	Letter of Credit Fees	77
Section 2.23	Nature of Fees	78
Section 2.24	Priority and Liens	78
Section 2.25	Use of Cash Collateral	84
Section 2.26	Right of Set-Off	84
Section 2.27	Security Interest in Collateral Accounts	85
Section 2.28	Payment of Obligations	85
Section 2.29	No Discharge; Survival of Claims	85
Section 2.30	Fifteen Month Facility Extension Option	85
Section 2.31	Eighteen Month Facility Extension Option	86
Section 2.32	Mitigation Obligations; Replacement of Lenders	87
Section 2.33	Defaulting Lenders	88

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ARTICLE 3.	REPRESENTATIONS AND WARRANTIES	90
Section 3.1	Organization and Authority	90
Section 3.2	Due Execution	90
Section 3.3	Statements Made	91
Section 3.4	Financial Statements	91
Section 3.5	Ownership	92
Section 3.6	Liens	92
Section 3.7	Compliance with Law	92
Section 3.8	Insurance	92
Section 3.9	The Orders	93
Section 3.10	Use of Proceeds	93
Section 3.11	Litigation	93
Section 3.12	Intellectual Property	93
Section 3.13	Taxes	93
Section 3.14	Investment Company Act; Other Regulations	94
Section 3.15	ERISA; Employee Matters	94
Section 3.16	Material Subsidiaries	95
Section 3.17	Receivables Securitization Indebtedness	95
ARTICLE 4.	CONDITIONS OF LENDING	95
Section 4.1	Conditions Precedent to Initial Loans	95
Section 4.2	Conditions Precedent to Each Loan and Each Letter of Credit	99
ARTICLE 5.	AFFIRMATIVE COVENANTS	100
Section 5.1	Financial Statements, Reports, etc.	100
Section 5.2	Existence	103
Section 5.3	Insurance	103
Section 5.4	Obligations and Taxes	104
Section 5.5	Notice of Event of Default, etc.	104
Section 5.6	Access to Books and Records; Collateral Reviews and Appraisals	104
Section 5.7	Maintenance of Concentration Account; Cash Dominion	105
Section 5.8	Borrowing Base Certificate	106
Section 5.9	Compliance with Laws	107
Section 5.10	Environmental Laws	107
Section 5.11	Additional Collateral; Further Assurances	107
Section 5.12	Material Contracts	108
Section 5.13	Receivables Securitization Programs	108
Section 5.14	Restructuring Advisors	108
Section 5.15	Public Rating	108
Section 5.16	Use of Proceeds	108
ARTICLE 6.	NEGATIVE COVENANTS	109
Section 6.1	Liens	109

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Section 6.2	Merger, etc.	109
Section 6.3	Indebtedness	109
Section 6.4	Capital Expenditures	110
Section 6.5	EBITDA	110
Section 6.6	Minimum Liquidity	111
Section 6.7	Guarantees and Other Liabilities	111
Section 6.8	Chapter 11/CCAA Claims	111
Section 6.9	Dividends; Capital Stock	111
Section 6.10	Transactions with Affiliates	111
Section 6.11	Investments, Loans and Advances	112
Section 6.12	Disposition of Assets	112
Section 6.13	Nature of Business	113
Section 6.14	Restrictive Agreements among Loan Parties	113
Section 6.15	Right of Subrogation among Loan Parties	113
Section 6.16	Derivative Agreements	113
Section 6.17	Reorganization Plan	113
ARTICLE 7.	EVENTS OF DEFAULT	113
Section 7.1	Events of Default	113
ARTICLE 8.	THE AGENTS	118
Section 8.1	Administration	118
Section 8.2	Advances and Payments	118
Section 8.3	Sharing of Setoffs	118
Section 8.4	Agreement of Required Lenders	119
Section 8.5	Liability of Agents	119
Section 8.6	Reimbursement and Indemnification	120
Section 8.7	Rights of Agents	120
Section 8.8	Other Duties, etc.	121
Section 8.9	Independent Lenders	121
Section 8.10	Notice of Transfer	121
Section 8.11	Successor Agents	121
Section 8.12	Quebec Security	121
ARTICLE 9.	MISCELLANEOUS	122
Section 9.1	Notices	122
Section 9.2	Survival of Agreement, Representations and Warranties, etc.	123
Section 9.3	Successors and Assigns	124
Section 9.4	Confidentiality	127
Section 9.5	Expenses	128
Section 9.6	Indemnity	129
Section 9.7	Choice of Law	130
Section 9.8	No Waiver	130
Section 9.9	Extension of Maturity	130

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Section 9.10	Amendments, etc.	130
Section 9.11	Severability	131
Section 9.12	Headings	132
Section 9.13	Execution in Counterparts	132
Section 9.14	Prior Agreements; Inconsistencies	132
Section 9.15	Further Assurances	132
Section 9.16	Waiver of Jury Trial	132
Section 9.17	Subordination of Intercompany Indebtedness	132
Section 9.18	Certain Post Closing Matters	133
Section 9.19	USA Patriot Act	136
Section 9.20	Judgment Currency	136
Section 9.21	Several Obligations; Nonreliance; Violation of Law	137
Section 9.22	Canadian Anti-Money Laundering Legislation	137
Section 9.23	Conversion	137
ARTICLE 10.	Guaranty	141
Section 10.1	U.S. Guaranty	141
Section 10.2	Canadian Guaranty	141
Section 10.3	Guaranty of Payment	142
Section 10.4	No Discharge or Diminishment of Guaranty	142
Section 10.5	Defenses Waived	143
Section 10.6	Rights of Subrogation	143
Section 10.7	Reinstatement; Stay of Acceleration	143
Section 10.8	Information	144
Section 10.9	Termination	144
Section 10.10	Taxes	144
Section 10.11	Maximum Liability	144
Section 10.12	Contribution	144
Section 10.13	Liability Cumulative	145
ARTICLE 11.	Collection Allocation Mechanism	145
Section 11.1	Implementation of CAM	145
Section 11.2	Letters of Credit	146
Section 11.3	Conversion	147
Annex A-1 — Canadian Revolving Commitment Amounts
Annex A-2 — U.S. Revolving Commitment Amounts
Annex A-3 — U.S. Term Loan Commitment Amounts
Annex A-4 — Canadian Term Loan Commitment Amounts
Exhibit A-1 — Form of U.S. Interim Order
Exhibit A-2 — Form of Initial Order
Exhibit A-3 — Form of Final Order
Exhibit B-1 — Form of Security and Pledge Agreement

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Exhibit B-2 — Form of Canadian Security Agreement

Exhibit C-1 — Form of Daily/Weekly Borrowing Base Certificate

Exhibit C-2 — Form of Monthly Borrowing Base Certificate

Exhibit D — Form of Opinion of Counsel

Exhibit E — Form of Assignment and Acceptance

Exhibit F — Form of Loan Party Joinder Agreement

Exhibit G — Form of Compliance Certificate

Schedule 1.1 — Eligible Equipment

Schedule 1.2 — Eligible Real Property

Schedule 2.24 — Non-Primed Liens

Schedule 3.5 — Subsidiaries

Schedule 3.6 — Liens

Schedule 3.7 — Environmental Matters

Schedule 3.12 — Intellectual Property

Schedule 4.1 — Closing Documents

Schedule 6.3 — Indebtedness

Schedule 6.11 — Other Investments

Schedule 6.12 — Permitted Asset Sales

Schedule 6.14 — Loan Party Transaction Restrictions

v

CREDIT AGREEMENT
Dated as of January 28, 2009

CREDIT AGREEMENT, dated as of January 28, 2009, among SMURFIT-STONE CONTAINER ENTERPRISES, INC., a Delaware corporation, a debtor and debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code (“U.S. Borrower”), SMURFIT-STONE CONTAINER CANADA INC., a company continued under the Companies Act (Nova Scotia), a company operating pursuant to a proceeding under the CCAA, and a debtor and debtor in possession in a case pending under Chapter 11 of the Bankruptcy Code (“Canadian Borrower,” and together with the U.S. Borrower, the “Borrowers”), SMURFIT-STONE CONTAINER CORPORATION, a Delaware corporation, a debtor and debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code (“Parent”), the other Loan Parties party hereto, the Lenders party hereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent and Collateral Agent, and JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, as Canadian Administrative Agent and Canadian Collateral Agent.

INTRODUCTORY STATEMENT

WHEREAS, on January 26, 2009, the Loan Parties filed voluntary petitions with the Bankruptcy Court initiating the U.S. Cases and have continued in the possession of their assets and in the management of their businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code; and

WHEREAS, on January 26, 2009, the Canadian Loan Parties (other than Smurfit-MBI and SLP Finance General Partnership) commenced the Canadian Cases in the Canadian Court under the CCAA; and

WHEREAS, on January 26, 2009, Smurfit-MBI and SLP Finance General Partnership commenced recognition proceedings under the Bankruptcy and Insolvency Act (Canada); and

WHEREAS, the Borrowers have applied to the Lenders for a credit facility in an aggregate principal amount of US$750,000,000 (subject to the terms and conditions of this Agreement) consisting of (i) a US$250,000,000 revolving credit and letter of credit facility available in Dollars to the U.S. Borrower or the Canadian Borrower; (ii) a US$400,000,000 term loan facility available in Dollars to the U.S. Borrower; (iii) a US$65,000,000 revolving credit and letter of credit facility available in Dollars or Canadian Dollars to the U.S. Borrower or the Canadian Borrower; and (iv) a US$35,000,000 term loan facility available in Dollars to the Canadian Borrower; and

WHEREAS, the proceeds of the Loans will be used for (i) working capital, Letters of Credit and Capital Expenditures; (ii) other general corporate purposes of the Loan Parties (including intercompany loans to the extent permitted by this Agreement); (iii) for the refinancing in full of Indebtedness outstanding under the Receivables Securitization Programs; (iv) payment of any related transaction costs, fees and expenses; and (v) the costs of administration of the Cases, all as provided for herein; and

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WHEREAS, to provide for the repayment of the Loans, the reimbursement of any drafts drawn under the Letters of Credit and the payment of the other Secured Obligations of the Loan Parties, the Loan Parties will provide to the Agents for the benefit of the Secured Parties the following (each as more fully described herein):

(a) With respect to the Secured Obligations of the U.S. Loan Parties and the Canadian Borrower:

(1) in the U.S. Cases pursuant to Section 364(c)(1) of the Bankruptcy Code, an allowed Superpriority Claim payable from and having recourse to all pre-petition and post-petition property of the estates of the U.S. Loan Parties and the Canadian Borrower and all proceeds thereof (including, upon entry of the Final Order, any proceeds of Avoidance Actions);

(2) in the U.S. Cases pursuant to Section 364(c)(2) of the Bankruptcy Code, a perfected first priority Lien on all unencumbered property of the U.S. Loan Parties and the Canadian Borrower (including, upon entry of the Final Order, any proceeds of Avoidance Actions) and on all cash maintained in any Collateral Account and any investments of the funds contained therein, provided that amounts in the Collateral Accounts shall not be subject to the Carve-Out or the CCAA Charges;

(3) in the U.S. Cases pursuant to Section 364(c)(3) of the Bankruptcy Code, a perfected junior Lien upon all property of the U.S. Loan Parties and the Canadian Borrower that is subject to valid and perfected Liens in existence on the Filing Date or that is subject to valid Liens in existence on the Filing Date that are perfected subsequent to the Filing Date as permitted by Section 546(b) of the Bankruptcy Code (other than certain property that is subject to the existing Liens that secure obligations under the Pre-Petition Credit Agreement, which Liens shall be primed by the Liens granted pursuant to Section 364(d)(1) of the Bankruptcy Code);

(4) in the U.S. Cases pursuant to Section 364(d)(1) of the Bankruptcy Code, a perfected first priority, senior priming Lien on all of the property of the U.S. Loan Parties and the Canadian Borrower (including, without limitation, cash, inventory, receivables, rights under license agreements, property, plant and equipment and the residual interest of the U.S. Loan Parties and the Canadian Borrower in any Receivables Securitization Programs) that is subject to the Primed Liens, which Primed Liens shall be primed by and made subject and subordinate to the perfected first priority senior priming Liens to be granted to the Administrative Agent, which senior priming Liens in favor of the Administrative Agent shall also prime any Liens granted after the commencement of the Cases to provide adequate protection Liens in respect of any of the Primed Liens, but shall not prime (1) Non-Primed Liens which secure the Calpine Debt or (2) other Non-Primed Liens solely to the extent such Non-Primed Liens secure claims in an aggregate amount less than or equal to US$60,000,000; and

(5) in the Canadian Cases, pursuant to an order of the Canadian Court, in respect of the Secured Obligations of the Canadian Borrower, a CCAA DIP Lenders’ Charge over all of the present and future assets of the Canadian Borrower with priority over all existing Liens and security, including the Primed Liens; and

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(b) With respect to the Secured Obligations of the Canadian Loan Parties:

(1) in the U.S. Cases pursuant to Section 364(c)(1) of the Bankruptcy Code, an allowed Superpriority Claim payable from and having recourse to all pre-petition and post-petition property of the estates of the Canadian Loan Parties and all proceeds thereof (including, upon entry of the Final Order, any proceeds of Avoidance Actions);

(2) in the U.S. Cases pursuant to Section 364(c)(2) of the Bankruptcy Code, a perfected first priority Lien on all unencumbered property of the Canadian Loan Parties (including, upon entry of the Final Order, any proceeds of Avoidance Actions) and on all cash maintained in any Collateral Account and any investments of the funds contained therein, provided that amounts in the Collateral Accounts shall not be subject to the Carve-Out or the CCAA Charges;

(3) in the U.S. Cases pursuant to Section 364(c)(3) of the Bankruptcy Code, a perfected junior Lien upon all property of the Canadian Loan Parties that is subject to valid and perfected Liens in existence on the Filing Date or that is subject to valid Liens in existence on the Filing Date that are perfected subsequent to the Filing Date as permitted by Section 546(b) of the Bankruptcy Code (other than certain property that is subject to the existing Liens that secure obligations under the Pre-Petition Credit Agreement, which liens shall be primed by the liens to be granted to the Administrative Agent pursuant to Section 364(d)(1) of the Bankruptcy Code);

(4) in the U.S. Cases pursuant to Section 364(d)(1) of the Bankruptcy Code, a perfected first priority, senior priming Lien on all of the property of the Canadian Loan Parties (including, without limitation, cash, inventory, receivables, rights under license agreements, property, plant and equipment and the residual interest of the Canadian Loan Parties in any Receivables Securitization Programs) that is subject to the Primed Liens, which Primed Liens shall be primed by and made subject and subordinate to the perfected first priority senior priming Liens to be granted to the Administrative Agent, which senior priming Liens in favor of the Administrative Agent shall also prime any Liens granted after the commencement of the Cases to provide adequate protection Liens in respect of any of the Primed Liens, but shall not prime (1) Non-Primed Liens which secure the Calpine Debt or (2) other Non-Primed Liens solely to the extent such Non-Primed Liens secure claims in an aggregate amount less than or equal to US$60,000,000; and

(5) in the Canadian Cases, pursuant to an order of the Canadian Court, the CCAA DIP Lenders’ Charge over all of the present and future assets of the Canadian Loan Parties with priority over all existing liens and security, including the Primed Liens;

WHEREAS, all of the claims and Liens granted hereunder to the Agents for the benefit of the Secured Parties in the U.S. Cases shall be subject to the Carve-Out to the extent provided in Section 2.24 and in the Canadian Cases shall be subject to the CCAA Charges to the extent provided in Section 2.24.

Accordingly, the parties hereto hereby agree as follows:

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ARTICLE 1.    DEFINITIONS

Section 1.1             Defined Terms.  As used in this Agreement, the following terms shall have the meanings specified below:

“ABR Loan” shall mean any Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of ARTICLE 2.

“Account” has the meaning specified in Article 9 of the UCC or the PPSA, as applicable, and shall include, without limitation, any right to payment owed to any Person arising out of the sale of goods or services by such Person.

“Account Debtor” shall mean, with respect to any Account, the obligor with respect to such Account.

“Additional Credit” shall have the meaning given such term in Section 4.2(d).

“Adjusted LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1.0%) equal to the greater of (a) 3.5% and (b) (i) the LIBO Rate in effect for such Interest Period multiplied by (ii) the Statutory Reserve Rate.  For purposes hereof, the term “LIBO Rate” shall mean the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period.  In the event that such rate is not available at such time for any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of US$5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period.

“Administration Charge” shall have the meaning given such term in Section 2.24.

“Administrative Agent” shall mean JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the Lenders hereunder.

“Administrative Questionnaire” shall mean an administrative questionnaire in a form supplied by the Administrative Agent.

“Affiliate” shall mean, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person.  For purposes of this definition, a Person (a “Controlled Person”) shall be deemed to be “controlled

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by” another Person (a “Controlling Person”) if the Controlling Person possesses, directly or indirectly, power to direct or cause the direction of the management and policies of the Controlled Person whether by contract or otherwise.

“Agents” shall mean the Administrative Agent, the Canadian Administrative Agent, the Collateral Agent, and the Canadian Collateral Agent, together, and “Agent” means any one of such Agents individually.

“Aggregate Credit Exposure” shall mean, at any time, the aggregate Credit Exposure of all the Lenders.

“Agreement” shall mean this Credit Agreement, as the same may from time to time be amended, restated, modified or supplemented.

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the greatest of (a) 4.5%, (b) the Prime Rate in effect on such day, (c) the Federal Funds Effective Rate in effect on such day plus ½ of 1% and (d) the Adjusted LIBO Rate for a one month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%, provided that, for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be based on the rate appearing on the Reuters Screen LIBOR01 Page (or on any successor or substitute page) at approximately 11:00 a.m. London time on such day (without any rounding).  For purposes hereof, “Prime Rate” shall mean the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City (or, in the case of Loans or Borrowings denominated in Dollars made by the Canadian Lenders pursuant to the Canadian Commitments, the rate per annum announced from time to time by the Canadian Administrative Agent as its U.S. base rate for commercial loans in effect at its office in Toronto); each change in the Prime Rate shall be effective on the date such change is publicly announced.  If the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms hereof, the Alternate Base Rate shall be determined without regard to clause (c) of the first sentence of this definition, as appropriate, until the circumstances giving rise to such inability no longer exist.  Any change in the Alternate Base Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.

“Applicable Agent” shall mean (a) with respect to the Canadian Commitments, extensions of credit thereunder, payments in respect thereof and other matters pertaining thereto, the Canadian Administrative Agent, (b) with respect to the U.S. Commitments, extensions of credit thereunder, payments in respect thereof and other matters pertaining thereto, the Administrative Agent and (c) with respect to any action or determination under any Collateral Document or Collateral thereunder, the Agent to which a security interest is granted under such Collateral Document; provided that the Administrative Agent shall be the Applicable Agent for all purposes not involving a particular Class of Commitments, extensions of credit thereunder,

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payments thereunder or other matters pertaining thereto, or actions or determinations under a particular Collateral Document.

“Applicable Margin” shall mean, for any day, with respect to any ABR Loan, Eurodollar Loan, Canadian Prime Rate Loan, Discount Rate Loan, or with respect to the Letters of Credit issued hereunder, as the case may be, the applicable rate per annum set forth below under the caption “ABR and Canadian Prime Rate Spread”, “Eurodollar and Discount Rate Spread”, “Letter of Credit Fees” or “Drafts Drawn under Letters of Credit”, as the case may be:

Pricing Level		ABR and Canadian Prime Rate Spread		Eurodollar and Discount Rate Spread		Letter of Credit Fees		Drafts Drawn under Letters of Credit
1		5.5	%	6.5	%	6.5	%	5.5	%
2		6.5	%	7.5	%	7.5	%	6.5	%
3		7.5	%	8.5	%	8.5	%	7.5	%

The Applicable Margin shall be determined based on Pricing Level 1; provided, that from and after January 28, 2010 (assuming the proper exercise of the Fifteen Month Facility Extension Option), the Applicable Margin shall be determined based on Pricing Level 2; provided, further, that from and after April 28, 2010 (assuming the proper exercise of the Eighteen Month Facility Extension Option), the Applicable Margin shall be determined based on Pricing Level 3.  Notwithstanding anything to the contrary contained in this definition, the determination of the Applicable Margin for any period shall be subject to the provisions of Section 2.10.

“Applicable Percentage” shall mean, with respect to (a) any U.S. Revolving Lender, a percentage equal to a fraction the numerator of which is such Lender’s U.S. Revolving Commitment and the denominator of which is the aggregate U.S. Revolving Commitment of all U.S. Revolving Lenders (if the U.S. Revolving Commitments have terminated or expired, the Applicable Percentages shall be determined based upon such Lender’s share of the aggregate U.S. Revolving Credit Utilization at that time), (b) any Canadian Revolving Lender, a percentage equal to a fraction the numerator of which is such Lender’s Canadian Revolving Commitment and the denominator of which is the aggregate Canadian Revolving Commitment of all Canadian Revolving Lenders (if the Canadian Revolving Commitments have terminated or expired, the Applicable Percentages shall be determined based upon such Lender’s share of the aggregate Canadian Revolving Credit Utilization at that time); provided that in the case of Section 2.33 when a Defaulting Lender shall exist, any such Defaulting Lender’s Revolving Commitment shall be disregarded in any calculation pursuant to the foregoing clauses (a) and (b), (c) any U.S. Term Loan Lender, a percentage equal to a fraction the numerator of which is such Lender’s outstanding principal amount of the U.S. Term Loans and the denominator of which is the aggregate outstanding amount of the U.S. Term Loans of all U.S. Term Loan Lenders, (d) any Canadian Term Loan Lender, a percentage equal to a fraction the numerator of which is such Lender’s outstanding principal amount of the Canadian Term Loans and the denominator of which is the aggregate outstanding amount of the Canadian Term Loans of all Canadian Term Loan Lenders and (e) the Aggregate Credit Exposure of any Lender, a percentage based upon such Lender’s share of the Aggregate Credit Exposure and the unused Commitments; provided that in the case of Section 2.33 when a Defaulting Lender shall exist, any such Defaulting Lender’s Commitment shall be disregarded in any calculation pursuant to this clause (e).

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“Approved Fund” shall have the meaning set forth in Section 9.3.

“Asset Sale” shall mean a sale, lease or sub-lease (as lessor or sublessor), sale and leaseback, assignment, conveyance, transfer or other disposition to, or any exchange of property with, any Person (other than a Loan Party), in one transaction or series of transactions, of all or any part of the Loan Parties’ or any of their Subsidiaries’ businesses, assets or properties of any kind, whether real, personal, or mixed and whether tangible or intangible, whether now owned or hereafter acquired, including, without limitation, the capital stock of any of the Loan Parties (other than the Parent) or their Subsidiaries in each case other than (i) Inventory sold in the ordinary course of business, and (ii) sales of assets for aggregate consideration of less than US$1,000,000 with respect to any transaction or series of related transactions and less than US$10,000,000 in the aggregate on a cumulative basis with respect to all such transactions during the term of this Agreement.

“Assignment and Acceptance” shall mean an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Administrative Agent, substantially in the form of Exhibit E.

“Available Cash” shall mean, on any date, (a) the fair market value on such date of unrestricted cash and cash equivalents held in securities accounts of the Loan Parties and their Subsidiaries, and (b) the amount of unrestricted available funds held on such date in bank deposit accounts of the Loan Parties and their Subsidiaries, in each case subject to no Liens other than (i) Liens in favor of the Agents on behalf of the Secured Parties, (ii) Liens in favor of the Pre-Petition Agent on behalf of the Pre-Petition Secured Lenders, (iii) the CCAA Charges and (iv) an unregistered Lien in respect of Priority Payables that are not yet due and payable, and in any event excluding amounts held in any Collateral Account, as evidenced in the applicable Borrowing Base Certificate delivered by each Borrower to the Administrative Agent pursuant to Section 5.8.

“Avoidance Actions” shall mean claims and causes of action under Sections 502(d), 544, 545, 547, 548, 549 and 550 of the Bankruptcy Code.

“Banking Services” shall mean each and any of the following bank services provided to any Loan Party by any Lender or any of its Affiliates: (a) commercial credit cards, (b) stored value cards and (c) treasury management services (including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, overdrafts and interstate depository network services).

“Banking Services Obligations” shall mean any and all obligations of the Loan Parties, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor) in connection with Banking Services.

“Banking Services Reserves” means all Reserves which the Applicable Agent from time to time establishes in its Permitted Discretion for Banking Services then provided or outstanding.

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“Bankruptcy Code” shall mean The Bankruptcy Reform Act of 1978, as heretofore and hereafter amended, and codified as 11 U.S.C. Section 101 et seq.

“Bankruptcy Court” shall mean the United States Bankruptcy Court for the District of Delaware or any other court having jurisdiction over the U.S. Cases from time to time.

“Board” shall mean the Board of Governors of the Federal Reserve System of the United States.

“Borrowers” shall have the meaning set forth in the Introduction.

“Borrowing” shall mean the incurrence of Revolving Loans or the Term Loans, as the case may be, of a single Type and Class made from all the Lenders in accordance with their Applicable Percentages on a single date and having, in the case of Eurodollar Loans or Discount Rate Loans, a single Interest Period or Contract Period (with any ABR Loan or Canadian Prime Rate Loan made pursuant to Section 2.17 being considered a part of the related Borrowing of Eurodollar Loans or Discount Rate Loans).

“Borrowing Bases” shall mean the U.S. Borrowing Base and the Canadian Borrowing Base.

“Borrowing Base Certificate” shall mean a certificate substantially in the form of Exhibit C-1 hereto (with respect to the certificate to be delivered by the Loan Parties weekly or more frequently) and Exhibit C-2 hereto (with respect to the certificate to be delivered by the Loan Parties monthly) (in each case with such changes therein as may be required by the Administrative Agent from time to time to reflect the components of and reserves against the U.S. Borrowing Base and the Canadian Borrowing Base as provided for hereunder from time to time), executed and certified as accurate and complete by a Financial Officer of each of the Loan Parties, which shall include appropriate exhibits, schedules and supporting documentation, and additional reports as (i) outlined in Exhibits C-1 and C-2, (ii) requested by the Administrative Agent, and (iii) provided in Section 5.8.

“Budget” shall have the meaning set forth in Section 4.1(j).

“Business Day” shall mean any day other than a Saturday, Sunday or other day on which banks in the State of New York are required or permitted to close (and, for a Letter of Credit, other than a day on which the applicable Fronting Bank issuing such Letter of Credit is closed); provided, however, that (a) when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits on the London interbank market and (b) when used in connection with a Borrowing of Canadian Revolving Loans, Canadian Term Loans or a Canadian Revolving Facility Letter of Credit, the term “Business Day” shall also exclude any day on which banks are not open for business in Toronto and Montreal.

“Calculation Date” shall mean (a) the last Business Day of each month, (b) the date of each notice of Borrowing or refinancing of Canadian Revolving Loans or Canadian Term Loans, or (c) the Business Day preceding the issuance, amendment, extension or renewal of each Canadian Revolving Facility Letter of Credit.

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“Calpine” shall mean Calpine Corrugated LLC, a California limited liability company.

“Calpine Debt” shall mean Indebtedness of Calpine under (i) that certain Amended and Restated Credit Agreement dated as of July 28, 2008 between Calpine and The CIT Group/Equipment Financing, Inc. in respect of a loan in the principal amount of US$40,350,000 and (ii) that certain Loan and Security Agreement dated as of March 30, 2006 between Calpine and Union Bank of California, N.A. as amended prior to and including that certain Sixth Amendment to Loan and Security Agreement dated as of July 28, 2008 in respect of a loan in the principal amount of US$12,000,000.

“CAM” shall mean the mechanism for the allocation and exchange of interests in the Credit Facilities and collections thereunder established under ARTICLE 11.

“CAM Exchange” shall mean the exchange of the Lenders’ interests provided for in Section 11.1.

“CAM Percentage” shall mean, as to each Lender, a fraction, expressed as a decimal, of which (a) the numerator shall be the aggregate Obligations owed to such Lender, and (b) the denominator shall be the aggregate Obligations owed to all the Lenders, in each case immediately prior to the Termination Date.  For purposes of computing each Lender’s CAM Percentage, all Obligations which shall be denominated in Canadian Dollars shall be translated into Dollars at the Exchange Rate in effect on the Termination Date.

“Canadian Administrative Agent” shall mean JPMorgan Chase Bank, N.A., Toronto Branch, in its capacity as Canadian administrative agent for the Lenders hereunder.

“Canadian Benefit Plans” shall mean all employee benefit plans of any nature or kind whatsoever (other than the Canadian Pension Plans) that are maintained or contributed to by the Canadian Borrower or any other Canadian Loan Party.

“Canadian Borrower” shall have the meaning set forth in the Introduction.

“Canadian Borrowing Base” shall mean, at the time of any determination, an amount equal to the sum (expressed in Dollars, based on the Exchange Rate determined in accordance with Section 1.4), without duplication, of (a) 85% of Eligible Accounts of the Canadian Loan Parties at such time plus (b) the lesser of (i) 65% of Eligible Inventory of the Canadian Loan Parties at such time and (ii) 85% of the Net Orderly Liquidation Value of Eligible Inventory of the Canadian Loan Parties at such time (in each case with respect to clauses (i) and (ii) with any Eligible Inventory to be valued at the lower of cost (determined on a first-in, first-out basis) or market), plus (c) the Canadian PP&E Component, minus (d) the amount of the Reserves at such time, minus, without duplication, (e) the then applicable aggregate amount of obligations secured by the CCAA Charges as calculated pursuant to Section 2.24 at such time, minus (f) to the extent not otherwise included in the CCAA Charges, the amount of Priority Payables at such time.  The Canadian Borrowing Base at any time shall be determined by reference to the most recent Borrowing Base Certificate delivered to the Administrative Agent pursuant to Section 5.8 of this Agreement.

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“Canadian Cases” shall mean the consolidated proceedings of the CCAA Cases and the Recognition Cases.

“Canadian Collateral Agent” shall mean JPMorgan Chase Bank, N.A., Toronto Branch, in its capacity as Canadian collateral agent for the Lenders hereunder and the other Secured Parties.

“Canadian Commitments” shall mean the Canadian Revolving Commitment and the Canadian Term Loan Commitment.

“Canadian Concentration Account” shall mean the blocked concentration account established by the Canadian Borrower pursuant to Section 5.7 and designated as the “Smurfit-Stone Canadian Concentration Account” with JPMorgan Chase Bank, N.A., Toronto Branch, or a bank acceptable to the Canadian Administrative Agent.

“Canadian Conversion Notice” shall have the meaning given such term in Section 9.23(c).

“Canadian Court” shall mean the Ontario Superior Court of Justice or any other court having jurisdiction over the Canadian Cases.

“Canadian Dollar Equivalent” shall mean, on any date of determination, with respect to any amount in Dollars, the equivalent in Canadian Dollars of such amount determined by the Administrative Agent using the Exchange Rate then in effect.

“Canadian Dollars” and “C$” shall mean lawful currency of Canada.

“Canadian Guaranteed Obligations” shall have the meaning set forth in Section 10.2.

“Canadian Guarantor” and “Canadian Guarantors” shall mean, individually or collectively, SMBI Inc. and each of the Canadian Subsidiaries party to this Agreement (other than the Canadian Borrower).  As of the Closing Date, the Canadian Guarantors are 3083527 Nova Scotia Company, a corporation organized under the laws of the Province of Nova Scotia, MBI Limited/Limitée, a corporation organized under the laws of the Province of New Brunswick, Smurfit-MBI, a limited partnership organized under the laws of the Province of Ontario, Stone Container Finance Company of Canada II, a corporation organized under the laws of the Province xx Xxxx Xxxxxx, 000000 Xxxxxxx Xxxxxxxx Ltd., a company with limited liability organized under the laws of the Province of British Columbia, B.C. Shipper Supplies Ltd., a corporation organized under the laws of the Province of British Columbia, Specialty Containers Inc., a corporation organized under the laws of the Province of Alberta, SLP Finance General Partnership, a general partnership formed and operated under the Civil Code of Québec, Francobec Company, a corporation organized under the laws of the Province of Nova Scotia, 605681 N.B. Inc., a corporation organized under the laws of the Province of New Brunswick, and SMBI Inc., a Delaware corporation, and, after the Closing Date, shall include each subsequently organized Canadian Subsidiary and each direct parent thereof.

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“Canadian Investment Account” shall mean the account established by the Canadian Borrower pursuant to Section 2.7(d) and designated as the “Smurfit-Stone Canadian Investment Account” with JPMorgan Chase Bank, N.A., Toronto Branch, or a bank acceptable to the Canadian Administrative Agent.

“Canadian Lender” shall mean, as of any date of determination, a Person constituting a Canadian Revolving Lender or Canadian Term Lender.

“Canadian Letter of Credit Account” shall mean the non-interest bearing account established by the Canadian Borrower under the sole and exclusive control of the Canadian Administrative Agent maintained at JPMorgan Chase Bank, N.A., Toronto Branch, or a bank acceptable to the Canadian Administrative Agent, designated as the “JPMorgan Chase Bank NA (Smurfit-Stone Canadian Letter of Credit) Account” that shall be used solely for the purposes set forth in Section 2.4(c) and Section 2.14.

“Canadian Letter of Credit Outstandings” shall mean, at any time of determination, the sum of (a) the aggregate undrawn amount of all outstanding Canadian Revolving Facility Letters of Credit that are denominated in Dollars, plus the U.S. Dollar Equivalent at such time of the aggregate undrawn amount of all Canadian Revolving Facility Letters of Credit that are denominated in Canadian Dollars and (b) the aggregate amount that has been drawn under any Canadian Revolving Facility Letter of Credit denominated in Dollars that has not been reimbursed by the Canadian Borrower or another Loan Party at such time plus the U.S. Dollar Equivalent of the aggregate amount that has been drawn under any Canadian Revolving Facility Letter of Credit denominated in Canadian Dollars that has not been reimbursed by the Canadian Borrower or another Loan Party at such time.  The Canadian Letter of Credit Outstandings with respect to any Canadian Revolving Lender at any time shall equal its Applicable Percentage of the aggregate Canadian Letter of Credit Outstandings at such time.

“Canadian Loan Party” and “Canadian Loan Parties” shall mean, individually or collectively, the Canadian Borrower and the Canadian Guarantors.

“Canadian Loans” shall mean the Canadian Revolving Loans and the Canadian Term Loans.

“Canadian Pension Plans” shall mean all plans that are considered to be pension plans for the purposes of, and are required to be registered under, the ITA or any applicable pension benefits standards statute or regulation in Canada and that are established, maintained or contributed to by the Canadian Borrower or any other Canadian Loan Party for its current or former employees.

“Canadian PP&E Component” shall mean the lesser of (x) (i) during the period commencing with the Closing Date until the twelve (12) month anniversary of the Closing Date, up to US$15,000,000, (ii) during the period commencing with the twelve (12) month anniversary of the Closing Date until the fifteen (15) month anniversary of the Closing Date, up to US$10,000,000, and (iii) on the fifteen (15) month anniversary of the Closing Date and thereafter, up to US$7,500,000, or, in each case, such lesser amount as may be specified by the Canadian Borrower on the Canadian Borrower’s most recent Borrowing Base Certificate, and

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(y) the greater of (A) (i) 50% of the Net Orderly Liquidation Value of Eligible Equipment of the Canadian Loan Parties at such time plus (ii) 50% of the Fair Market Value of Eligible Real Property of the Canadian Loan Parties at such time (as set forth in the most recent third party real estate appraisal in form and substance satisfactory to the Administrative Agent), and (B) 20% of the Net Orderly Liquidation Value In Place of (i) Eligible Equipment of the Canadian Loan Parties at such time and (ii) Eligible Real Property of the Canadian Loan Parties at such time.  Notwithstanding the foregoing sentence, until the earlier of (x) such time as appraisals satisfactory to the Administrative Agent are completed pursuant to Section 5.6 and (y) May 28, 2009, or such later date as the Administrative Agent may approve in its exclusive discretion, the Canadian PP&E Component shall be US$15,000,000 or such lesser amount as may be specified by the Canadian Borrower on the Canadian Borrower’s most recent Borrowing Base Certificate.

“Canadian Prime Rate” shall mean, on any day, the greatest of (a) 4.5%, (b) the annual rate of interest announced from time to time by the Canadian Administrative Agent as being its reference rate then in effect for determining interest rates on Canadian Dollar-denominated commercial loans made by it in Canada and (c) the CDOR Rate for a one month term in effect from time to time plus 100 basis points per annum.

“Canadian Prime Rate Loan” shall mean any Loan bearing interest at a rate determined by reference to the Canadian Prime Rate in accordance with the provisions of ARTICLE 2.

“Canadian Receivables Securitization Program” shall mean the Receivables Purchase Agreement, dated as of March 30, 2004, among MBI Limited/Limitee, in its capacity as general partner of Smurfit-MBI, Computershare Trust Company of Canada, in its capacity as trustee of King Street Funding Trust, and Scotia Capital Inc., as amended, restated, modified or waived from time to time.

“Canadian Revolving Commitment” shall mean, with respect to each Canadian Revolving Lender, the commitment of such Lender to make Canadian Revolving Loans hereunder and to acquire participations in Canadian Revolving Facility Letters of Credit in the amount set forth opposite its name on Annex A-1 hereto or as may subsequently be set forth in the Register from time to time, as the same may be reduced from time to time pursuant to the terms of this Agreement.  As of the Closing Date, the aggregate amount of the Canadian Revolving Commitments is US$65,000,000.

“Canadian Revolving Credit Utilization” shall mean, at any time of determination, the sum of (a) the aggregate principal amount of Canadian Revolving Loans outstanding at such time and denominated in Dollars, plus (b) the U.S. Dollar Equivalent of the aggregate principal amount of Canadian Revolving Loans outstanding at such time and denominated in Canadian Dollars, plus (c) the Canadian Letter of Credit Outstandings at such time.

“Canadian Revolving Facility Letters of Credit” shall mean any irrevocable letter of credit issued pursuant to Section 2.4 for the account of the Canadian Borrower or a Canadian Subsidiary by a Fronting Bank pursuant to the terms and conditions of ARTICLE 2, which letter of credit shall be (i) a standby or import documentary letter of credit, (ii) issued for

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purposes consistent with the ordinary course of business of the Loan Parties, as determined by the Loan Parties in their reasonable judgment, or for such other purposes as are acceptable to the Canadian Administrative Agent, (iii) denominated in Dollars or Canadian Dollars and (iv) otherwise in such form as may be approved from time to time by the Canadian Administrative Agent and the applicable Fronting Bank.

“Canadian Revolving Lenders” shall mean the Lenders having Canadian Revolving Commitments or holding Canadian Revolving Loans.

“Canadian Revolving Loan” shall mean a revolving loan to the U.S. Borrower or the Canadian Borrower made pursuant to Section 2.1(b)(ii) in Dollars or Canadian Dollars.

“Canadian Secured Obligations” shall mean (a) all Obligations owing by the Canadian Borrower (other than in respect of its guaranty of Obligations of the U.S. Borrower), (b) all Obligations owing by any other Canadian Loan Party, (b) all Banking Services Obligations owing by any Canadian Loan Party and (c) all Swap Obligations owing by any Canadian Loan Party to one or more Canadian Lenders or their respective Affiliates; provided that at or prior to the time that any transaction relating to a Swap Obligation is executed, the Canadian Lender or an Affiliate thereof party thereto (other than JPMCB) shall have delivered written notice to the Administrative Agent that such a transaction has been entered into and that it constitutes a Canadian Secured Obligation entitled to the benefits of the Collateral Documents.

“Canadian Security Agreement” shall mean the Canadian Security Agreement made by each of the Canadian Loan Parties in favor of the Canadian Collateral Agent and the Quebec Security Agreements.

“Canadian Subsidiary” shall mean any Subsidiary of the Parent incorporated, organized or formed under the laws of Canada or any province or other territory thereof.

“Canadian Term Loans” shall mean the term loans to the Canadian Borrower made pursuant to Section 2.1(a)(ii) (or made to the Canadian Borrower pursuant to Section 9.23(c))in Dollars.

“Canadian Term Loan Collateral Account” shall mean the account established by the Canadian Borrower under the sole and exclusive control of the Canadian Administrative Agent maintained with JPMorgan Chase Bank, N.A., Toronto Branch, or a bank acceptable to the Canadian Administrative Agent, designated as the “Smurfit-Stone Canadian Term Loan Collateral Account” that shall be used solely for the purposes set forth in Section 2.7(d) and Section 2.14(c).

“Canadian Term Loan Commitment” shall mean, with respect to each Canadian Term Loan Lender, the commitment of such Lender to make a Canadian Term Loan hereunder in the amount set forth opposite its name on Annex A-4 hereto, as the same shall be reduced on the Closing Date pursuant to Section 2.14(j) and as may be modified pursuant to Section 9.23(c).  As of the Closing Date and prior to making the Canadian Term Loans, the aggregate amount of the Canadian Term Loan Commitments of the Canadian Term Loan Lenders is US$35,000,000.

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“Canadian Term Loan Conversion” shall have the meaning given such term in Section 9.23(c).

“Canadian Term Loan Lenders” shall mean the Lenders having Canadian Term Loan Commitments or holding Canadian Term Loans.

“Canadian Term Outstandings” shall mean, at any time of determination, an amount equal to (a) the aggregate principal amount of the Canadian Term Loans outstanding at such time minus (b) the amount of cash held in the Canadian Term Loan Collateral Account at such time.

“Capital Expenditures” shall mean, for any period, the aggregate of all expenditures (whether paid in cash and not accrued prior to such period but after the Closing Date or accrued as liabilities during such period, and including that portion of Capital Lease Obligations which is capitalized on the consolidated balance sheet of the Loan Parties and their Subsidiaries) by the Loan Parties and their Subsidiaries during such period that, in conformity with GAAP, are required to be included in or reflected by the property, plant, equipment or intangibles or similar fixed asset accounts reflected in the consolidated balance sheet of the Loan Parties and their Subsidiaries, but excluding expenditures made in connection with the replacement or restoration of assets, to the extent reimbursed or financed from insurance proceeds paid on account of the loss of or the damage to the assets being replaced or restored, or from awards of compensation arising from the taking by condemnation or eminent domain of such assets being replaced.

“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

“Carve-Out” shall have the meaning set forth in Section 2.24.

“Cases” shall mean the U.S. Cases and the Canadian Cases, individually and collectively.

“Cash Flow Forecast” shall have the meaning set forth in Section 4.1(k).

“CCAA” shall mean the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, as heretofore or hereafter amended.

“CCAA Cases” shall mean the cases commenced by the Canadian Loan Parties (other than Surfit-MBI and SLP Finance General Partnership) pursuant to the CCAA.

“CCAA Charges” shall mean the Administration Charge and the Directors’ Charge.

“CCAA DIP Lenders’ Charge” shall have the meaning set forth in Section 2.24.

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“CDOR Rate” shall mean on any day, with respect to a particular term as specified herein, the annual rate of discount or interest which is the arithmetic average of the discount rates for such term applicable to Canadian Dollar bankers’ acceptances identified as such on the Reuters Screen CDOR Page at approximately 10:00 A.M. (Toronto, Ontario time) on such day, or if such day is not a Business Day, then on the immediately preceding Business Day (as adjusted by the Administrative Agent after 10:00 A.M. (Toronto, Ontario time) to reflect any error in any posted rate or in the posted average annual rate).  If the rate does not appear on the Reuters Screen CDOR Page as contemplated above, then the CDOR Rate on any day shall be calculated as the arithmetic average of the annual discount rates for such term applicable to Canadian Dollar bankers’ acceptances of, and as quoted by, the Schedule I Banks, as of 10:00 A.M. (Toronto, Ontario time) on that day, or if that day is not a Business Day, then on the immediately preceding Business Day.

“Change of Control” shall mean (x) with respect to the Parent (i) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the Closing Date), of shares representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Parent; or (ii) the occupation of a majority of the seats (other than vacant seats) on the board of directors of the Parent, after the Filing Date, by Persons who were neither (a) nominated by the board of directors of the Parent nor (b) appointed by the directors so nominated, (y) the Parent shall cease to own, directly or indirectly, beneficially and of record, 100% of the issued and outstanding capital stock of the U.S. Borrower or any other Loan Party (or, in the case of Calpine, 90%), or (z) the U.S. Borrower shall cease to own, directly or indirectly, beneficially and of record, 100% of the issued and outstanding capital stock of the Canadian Borrower.

“Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are U.S. Revolving Loans, Canadian Revolving Loans, U.S. Term Loans, or Canadian Term Loans, and, when used in reference to any Commitment, refers to whether such Commitment is a U.S. Revolving Commitment, Canadian Revolving Commitment, U.S. Term Loan Commitment, or Canadian Term Loan Commitment.

“Closing Date” shall mean the date on which this Agreement has been executed and the conditions precedent to the making of the initial Loans set forth in Section 4.1 have been satisfied or waived, which date shall occur as promptly as is practicable after the date of this Agreement, but in no event later than five (5) days following entry of the Interim Order.

“Closing Date Lender” shall have the meaning set forth in Section 9.3.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Co-Lead Arrangers” shall mean X.X. Xxxxxx Securities Inc. and Deutsche Bank Securities Inc.

“Collateral” shall mean all of the real, personal and mixed property (including equity interests) in which Liens are purported to be granted pursuant to the Orders or Collateral Documents.

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 “Collateral Accounts” shall mean collectively, the Canadian Letter of Credit Account, the Letter of Credit Account, the Canadian Term Loan Collateral Account and the U.S. Term Loan Collateral Account.

“Collateral Agent” shall mean JPMorgan Chase Bank, N.A., in its capacity as collateral agent for the Lenders hereunder and the other Secured Parties.

“Collateral Documents” shall mean, collectively, the Security Agreements and any other documents granting a Lien upon the Collateral as security for payment of any of the Secured Obligations.

“Commercial LC Exposure” shall mean, at any time, the sum of (a) the aggregate undrawn amount of all outstanding commercial Letters of Credit at such time plus (b) the aggregate amount of all disbursements relating to commercial Letters of Credit that have not yet been reimbursed by or on behalf of the Borrowers at such time.  The Commercial LC Exposure of any Revolving Lender at any time shall be its Applicable Percentage of the total Commercial LC Exposure at such time.

“Commitment” shall mean each of, and “Commitments” shall mean, collectively, the Canadian Revolving Commitments, the U.S. Revolving Commitments, the U.S. Term Loan Commitments and the Canadian Term Loan Commitments, and, with respect to each Canadian Revolving Lender, U.S. Revolving Lender, U.S. Term Loan Lender or Canadian Term Loan Lender, as applicable, the Commitment of each such Lender hereunder in the amount set forth opposite its name on Annex X-0, Xxxxx X-0, Xxxxx X-0 or Annex A-4 hereto or as may subsequently be set forth in the Register from time to time, as the same may be reduced from time to time pursuant to this Agreement.

“Commitment Fee” shall have the meaning set forth in Section 2.21.

“Commitment Fee Percentage” shall mean 1.0% per annum.

“Commitment Letter” shall mean that certain Commitment Letter dated January 6, 2009 among the Administrative Agent, X.X. Xxxxxx Securities Inc., Deutsche Bank Securities Inc., Deutsche Bank Trust Company Americas and the Parent on behalf of itself and the other Loan Parties.

“Concentration Account” shall mean the blocked concentration account established by the U.S. Borrower pursuant to Section 5.7 and designated as the “Smurfit-Stone Concentration Account” with JPMCB.

“Consenting Lenders” shall have the meaning set forth in Section 9.10(b).

“Consolidated EBITDA” shall mean, for any period, all as determined in accordance with GAAP, the Consolidated Net Income of the Loan Parties and their Subsidiaries for such period, plus, without duplication and to the extent deducted in determining Consolidated Net Income for such period, (i) all federal, state, provincial, local and foreign income taxes, (ii) Consolidated Interest Expense, (iii) depreciation, depletion, amortization of intangibles and other non-cash charges or non-cash losses deducted in determining such Consolidated Net

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Income, (iv) any restructuring charges in an amount not to exceed US$25,000,000 in the aggregate during any twelve (12) month period (“restructuring charges”), (v) “Chapter 11/CCAA expenses” (or “administrative costs reflecting Chapter 11/CCAA expenses”, inclusive of professional fees), (vi) non-cash pension expenses, as shown on the Loan Parties’ consolidated statement of income for such period, and (vii) any Downtime Credit, minus, without duplication and to the extent included in determining such Consolidated Net Income for such period, (i) any non-cash income or non-cash gains, (ii) cash contributions to fund pension plan liabilities and (iii) cash expenditures pertaining to non-cash charges or non-cash losses that were added back in the calculation of Consolidated EBITDA hereunder for a prior period.  The classification of items as “restructuring charges” or “Chapter 11/CCAA expenses” for purposes of determining Consolidated EBITDA shall be made by the Loan Parties in a manner consistent with the allocations in the Budget and the Cash Flow Forecast delivered to the Administrative Agent on or prior to the Closing Date.

“Consolidated Interest Expense” means, with reference to any period, total interest expense (including that attributable to Capital Lease Obligations) of the Parent and its Subsidiaries for such period with respect to all outstanding Indebtedness of the Parent and its Subsidiaries (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing), calculated on a consolidated basis for the Parent and its Subsidiaries for such period in accordance with GAAP.  For purposes of the foregoing, interest expense shall be determined after giving effect to any net payments made or received by the Parent and its Subsidiaries with respect to Swap Agreements, but excluding any gain or loss recognized under GAAP that results from the xxxx-to-market valuation of any Swap Agreement.

“Consolidated Net Income” means, for any period, the consolidated net income (or loss) of the Parent and its Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with the Parent or any of its Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary) in which the Parent or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Parent or such Subsidiary in the form of dividends or similar distributions, (c) the undistributed earnings of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any contractual obligation (other than under any Loan Document) or Requirement of Law applicable to such Subsidiary and (d) any gain (or loss) from the sale or other disposition of any asset occurring outside of the ordinary course of business of the Loan Parties.

“Contract Period” shall mean the term of a Discount Rate Loan selected by the Canadian Borrower in accordance with Section 2.7 and Section 2.13 commencing on the date of the Borrowing of such Discount Rate Loan, any rollover date and the date on which any Canadian Prime Rate Loans are refinanced with Discount Rate Loans pursuant to Section 2.13, as applicable, and expiring on a Business Day which shall be either one month, three months, or, with the consent of all of the applicable Canadian Lenders, six months later; provided, that no Contract Period shall extend beyond the Maturity Date.  Notwithstanding the foregoing, whenever the last day of any Contract Period would otherwise occur on a day which is not a

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Business Day, the last day of such Contract Period shall occur on the next succeeding Business Day.

“Converting Lender” shall mean, each of JPMCB, JPMorgan Chase Bank, N.A., Toronto Branch and Deutsche Bank Trust Company Americas.

“Credit Exposure” shall mean as to any Lender at any time, the sum of (a) such Lender’s Revolving Loans at such time, plus (b) such Lender’s LC Exposure plus (c) an amount equal to the aggregate principal amount of its Term Loans outstanding at such time.

“Credit Facility” shall mean a Class of Commitments and extensions of credit thereunder.  For purposes of this Agreement, each of the following comprises a separate Credit Facility:  (a) the U.S. Term Loans, (b) the Canadian Term Loans, (c) the U.S. Revolving Commitments, the U.S. Revolving Loans and the U.S. Revolving Facility Letters of Credit, and (d) the Canadian Revolving Commitments, the Canadian Revolving Loans and the Canadian Revolving Facility Letters of Credit.

“Default” shall have the meaning given such term in Section 2.24.

“Defaulting Lender” shall mean any Lender, as determined by the Applicable Agent, that has (a) failed to fund any portion of its Loans or participations in Letters of Credit within three (3) Business Days of the date required to be funded by it hereunder, (b) notified any Borrower, the Applicable Agent, any Fronting Bank or any Lender in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or under other agreements in which it commits to extend credit, (c) failed, within three (3) Business Days after request by the Applicable Agent, to confirm that it will comply with the terms of this Agreement relating to its obligations to fund prospective Loans and participations in then outstanding Letters of Credit, (d) otherwise failed to pay over to the Applicable Agent or any other Lender any other amount required to be paid by it hereunder within three (3) Business Days of the date when due, unless the subject of a good faith dispute, or (e) (i) become or is insolvent or has a parent company that has become or is insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment.

“Dilution Factors” shall mean, without duplication, with respect to any period, the aggregate amount of all deductions, credit memos, returns, adjustments, allowances, bad debt write-offs and other non-cash credits which are recorded to reduce accounts receivable in a manner consistent with current and historical accounting practices of the Loan Parties.

“Dilution Ratio” shall mean, at any date, the amount (expressed as a percentage) equal to (a) the aggregate amount of the applicable Dilution Factors for the twelve (12) most

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recently ended fiscal months divided by (b) total gross sales for the twelve (12) most recently ended fiscal months.

“Dilution Reserve” shall mean, at any date, (i) the amount by which the Dilution Ratio exceeds five percent (5%) multiplied by (ii) the Eligible Accounts on such date.

“Directors’ Charge” shall have the meaning given such term in Section 2.24.

“Discount Rate” shall mean with respect to a Discount Rate Loan: (a) made by a Canadian Revolving Lender which is a Schedule I Bank, the greater of (x) 3.5% and (y) the CDOR Rate, and (b) made by a Canadian Revolving Lender which is not a Schedule I Bank, the greater of (x) 3.5% and (y) the CDOR Rate plus 10 basis points per annum.

“Discount Rate Loan” shall mean any Loan bearing interest at a rate determined by reference to the Discount Rate in accordance with the provisions of ARTICLE 2.

“Dollars” and “US$” shall mean lawful money of the United States of America.

“Domestic Subsidiary” shall mean any Subsidiary of the U.S. Borrower organized under the laws of the United States or any political subdivision thereof.

“Downtime Credit” shall mean a credit for production downtime, if any, in excess of downtime identified in the Budget delivered on or prior to the Closing Date, in an amount equal to US$2,500,000 for every 10,000 tons of production downtime in excess of downtime identified in the Budget taken in any month ending on or prior to July 31, 2009 (other than, in any event, downtime associated with maintenance activity in the ordinary course of business), provided that the cumulative amount of the Downtime Credit during all periods shall not exceed US$20,000,000.  In the event the amount of production downtime in excess of downtime identified in the Budget is more or less than 10,000 tons, the Downtime Credit for such month shall be prorated based upon the actual number of tons of production downtime in excess of the downtime identified in the Budget (but in any event not to exceed the US$20,000,000 cap set forth above).

“Effective Date” shall mean the date identified as the effective date of a Reorganization Plan of the Loan Parties that is confirmed or sanctioned pursuant to an order of the Bankruptcy Court or Canadian Court, as the case may be, in the Cases.

“Eighteen Month Facility Extension Option” shall have the meaning given such term in Section 2.31.

“Eligible Accounts” means, at any time, the Accounts of a Loan Party which the Applicable Agent determines in its Permitted Discretion are eligible as the basis for the extension of Loans and the issuance of Letters of Credit hereunder.  Without limiting the Applicable Agent’s discretion provided herein, Eligible Accounts shall not include any Account:

(a)           which is not subject to a first priority perfected Lien in favor of the Applicable Agent for the benefit of the Secured Parties subject only to (i) the CCAA Charges and (ii) an unregistered Lien in respect of Priority Payables that are not yet due and payable;

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(b)           which is subject to any Lien other than (i) a Lien in favor of the Applicable Agent for the benefit of the Secured Parties, (ii) a Lien (if any) permitted by the Loan Documents which does not have priority over the Lien in favor of the Applicable Agent for the benefit of the Secured Parties, (iii) a Lien contemplated by clause (iv) of the definition of Permitted Liens, and (iv) an unregistered Lien in respect of Priority Payables that are not yet due and payable;

(c)           which (i) is unpaid more than 90 days after the date of the original invoice therefor, or (ii) has been written off the books of the Loan Party or otherwise designated as uncollectible (in determining the aggregate amount from the same Account Debtor that is unpaid hereunder there shall be excluded the amount of any net credit balances relating to Accounts due from an Account Debtor which are unpaid more than 90 days from the date of invoice);

(d)           which is owing by an Account Debtor for which more than 50% of the Accounts owing from such Account Debtor and its Affiliates are ineligible hereunder;

(e)           which is owing by an Account Debtor to the extent the aggregate amount of Accounts owing from such Account Debtor and its Affiliates to the Loan Parties exceeds 10% of the aggregate amount of Eligible Accounts of the Loan Parties;

(f)            which, for any Account Debtor, exceeds the applicable credit limit, if any, determined by the Loan Parties, to the extent of such excess, as determined in a manner mutually acceptable to the Loan Parties and the Applicable Agent;

(g)           with respect to which any covenant, representation, or warranty contained in this Agreement or in the Collateral Documents has been breached or is not true in any material respect;

(h)           which (i) does not arise from the sale of goods or performance of services in the ordinary course of business, (ii) is not evidenced by an invoice or other documentation satisfactory to the Applicable Agent which has been sent to the Account Debtor, (iii) represents a progress billing, (iv) is contingent upon any Loan Party’s completion of any further performance, (v) represents a sale on a xxxx-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment, cash-on-delivery or any other repurchase or return basis or (vi) relates to payments of interest, in each case determined in a manner mutually acceptable to the Loan Parties and the Applicable Agent;

(i)            for which the goods giving rise to such Account have not been shipped to the Account Debtor or for which the services giving rise to such Account have not been performed by a Loan Party or if such Account was invoiced more than once, in each case determined in a manner mutually acceptable to the Loan Parties and the Applicable Agent;

(j)            which is owed by an Account Debtor which has (i) applied for, suffered, or consented to the appointment of any receiver, custodian, trustee, or liquidator of its assets, (ii) has had possession of all or a material part of its property taken by any receiver, custodian, trustee or liquidator, (iii) filed, or had filed against it, any request or petition for liquidation, reorganization, arrangement, adjustment of debts, adjudication as bankrupt, winding-up, or voluntary or involuntary case under any state, provincial or federal bankruptcy laws, (iv) has

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admitted in writing its inability, or is generally unable to, pay its debts as they become due, (v) become insolvent, or (vi) ceased operation of its business;

(k)           which is owed by any Account Debtor which has sold all or a substantially all of its assets;

(l)            which is owed by an Account Debtor which (i) does not maintain its chief executive office or have material business operations in the U.S. or Canada or (ii) is not organized and existing under applicable law of the U.S. or Canada or, in either case any political subdivision thereof, unless, in either case, such Account is backed by a Letter of Credit acceptable to the Applicable Agent which is in the possession of, has been assigned to and is directly drawable by, the Applicable Agent;

(m)          which is owed in any currency other than Dollars or Canadian Dollars;

(n)           (A) with respect to the U.S. Borrowing Base, which is owed by (i) the government (or any department, agency, public corporation, or instrumentality thereof) of any country other than the U.S. unless such Account is backed by a Letter of Credit acceptable to the Applicable Agent which is in the possession of the Applicable Agent, or (ii) the government of the U.S., or any department, agency, public corporation, or instrumentality thereof, unless the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C. § 3727 et seq. and 41 U.S.C. § 15 et seq.), and any other steps necessary to perfect the Lien of the Applicable Agent for the benefit of the Secured Parties in such Account have been complied with to the Applicable Agent’s satisfaction; and (B) with respect to the Canadian Borrowing Base, which is owed by (i) the government (or any department, agency, public corporation, or instrumentality thereof) of any country other than Canada unless such Account is backed by a Letter of Credit acceptable to the Applicable Agent which is in the possession of the Applicable Agent, or (ii) the government of Canada, or any department, agency, public corporation, or instrumentality thereof, unless the Financial Administration Act (Canada) or similar provincial or territorial legislation or municipal ordinance of similar purpose, in each case as amended, and any other steps necessary to perfect the Lien of the Applicable Agent for the benefit of the Secured Parties in such Account have been complied with to the Applicable Agent’s satisfaction;

(o)           which is owed by any Affiliate, employee, officer, director, agent, holder of more than 2% of the issued and outstanding capital stock of the Parent or any stockholder of any other Loan Party;

(p)           which is owed by an Account Debtor or any Affiliate of such Account Debtor to which any Loan Party is indebted, but only to the extent of such indebtedness or is subject to any security, deposit, progress payment, retainage or other similar advance made by or for the benefit of an Account Debtor, in each case to the extent thereof;

(q)           which is subject to any counterclaim, deduction, defense, setoff or dispute but only to the extent of any such counterclaim, deduction, defense, setoff or dispute;

(r)            which is evidenced by any promissory note, chattel paper, or instrument or subject to a payment plan;

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(s)           with respect to which such Loan Party has made any agreement with the Account Debtor for any reduction thereof, other than discounts and adjustments given in the ordinary course of business, or any Account which was partially paid and such Loan Party created a new receivable for the unpaid portion of such Account, or any unpaid portion of any partially paid Account to the extent of such unpaid portion;

(t)            which does not comply in all material respects with the requirements of all applicable laws and regulations, whether federal, state, provincial or local, including without limitation the Federal Consumer Credit Protection Act, the Federal Truth in Lending Act and Regulation Z of the Board;

(u)           which is for goods that have been sold under a purchase order or pursuant to the terms of a contract or other agreement or understanding (written or oral) that indicates or purports that any Person other than such Loan Party has or has had an ownership interest in such goods, or which indicates any party other than such Loan Party as payee or remittance party, in each case determined in a manner mutually acceptable to the Loan Parties and the Applicable Agent; or

(v)           which was created on cash on delivery terms.

In the event that an Account which was previously an Eligible Account ceases to be an Eligible Account hereunder, such Loan Party shall notify the Applicable Agent thereof on and at the time of submission to the Applicable Agent of the next Borrowing Base Certificate.  Except as otherwise set forth above, the amount of an Eligible Account shall be determined based on the face amount of such Account; provided that the face amount of an Account may, in the Applicable Agent’s Permitted Discretion, be reduced by, without duplication, to the extent not reflected in such face amount, (i) the amount of all accrued and actual discounts, claims, credits or credits pending, promotional program allowances, price adjustments, finance charges or other allowances (including any amount that such Loan Party may be obligated to rebate to an Account Debtor pursuant to the terms of any agreement or understanding (written or oral)) and (ii) the aggregate amount of all cash received in respect of such Account but not yet applied by such Loan Party to reduce the amount of such Account.

“Eligible Equipment” means the equipment owned by a Loan Party located at the Loan Parties’ facilities described on Schedule 1.1, as updated from time to time with the consent of the Administrative Agent, and meeting each of the following requirements:

(a)           such Loan Party has good title to such equipment;

(b)           such Loan Party has the right to subject such equipment to a Lien in favor of the Applicable Agent for the benefit of the Secured Parties; such equipment is subject to a first priority perfected Lien in favor of the Applicable Agent for the benefit of the Secured Parties and is free and clear of all other Liens of any nature whatsoever (except for (i) Permitted Liens which do not have priority over the Lien in favor of the Applicable Agent for the benefit of the Secured Parties, (ii) unregistered Liens in respect of Priority Payables that are not yet due and payable, (iii) the CCAA Charges and (iv) Liens permitted by clause (iv) of the definition of Permitted Liens);

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(c)           the full purchase price for such equipment has been paid by such Loan Party;

(d)           such equipment is located on premises (i) owned by such Loan Party, which premises are subject to a first priority perfected Lien in favor of the Applicable Agent for the benefit of the Secured Parties, or (ii) leased by such Loan Party where (x) the lessor has delivered to the Applicable Agent a Landlord Lien Waiver or (y) a Reserve for rent, charges, and other amounts due or to become due with respect to such facility has been established by the Applicable Agent in its Permitted Discretion;

(e)           such equipment is in good working order and condition (ordinary wear and tear excepted) and is used or held for use by such Loan Party in the ordinary course of business of the Loan Party;

(f)            such equipment is not subject to any agreement which restricts the ability of such Loan Party to use, sell, transport or dispose of such equipment or which restricts the Applicable Agent’s ability to take possession of, sell or otherwise dispose of such equipment; and

(g)           such equipment does not constitute “fixtures” under the applicable laws of the jurisdiction in which such equipment is located.

“Eligible Inventory”  means, at any time, the Inventory of a Loan Party which the Applicable Agent determines in its Permitted Discretion is eligible as the basis for the extension of Loans and the issuance of Letters of Credit hereunder.  Without limiting the Applicable Agent’s discretion provided herein, Eligible Inventory shall not include any Inventory:

(a)           which is not subject to a first priority perfected Lien in favor of the Applicable Agent for the benefit of the Secured Parties subject only to (i) the CCAA Charges and (ii) an unregistered Lien in respect of Priority Payables that are not yet due and payable;

(b)           which is subject to any Lien other than (i) a Lien in favor of the Applicable Agent for the benefit of the Secured Parties, (ii) a Lien (if any) permitted by the Loan Documents which does not have priority over the Lien in favor of the Applicable Agent for the benefit of the Secured Parties, (iii) a Lien contemplated by clause (iv) of the definition of Permitted Liens, and (iv) an unregistered Lien in respect of Priority Payables that are not yet due and payable;

(c)           which is, in the Applicable Agent’s opinion, slow moving, obsolete, unmerchantable, defective, used, unfit for sale, not salable at prices approximating at least the cost of such Inventory in the ordinary course of business or unacceptable due to age, type, category or quantity;

(d)           with respect to which any covenant, representation, or warranty contained in this Agreement or the Collateral Documents been breached or is not true in any material respect and which does not conform in any material respect to all standards imposed by any Governmental Authority;

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(e)           in which any Person other than such Loan Party shall (i) have any direct or indirect ownership, interest or title to such Inventory or (ii) be indicated on any purchase order or invoice with respect to such Inventory as having or purporting to have an interest therein;

(f)            which is not Work-in-Process, Raw Materials or Finished Goods or which constitutes spare or replacement parts, subassemblies, packaging supplies and shipping material, manufacturing supplies, samples, prototypes, displays or display items, xxxx-and-hold goods, goods that are returned or marked for return, repossessed goods, defective or damaged goods, goods held on consignment, or goods which are not of a type held for sale in the ordinary course of business, including, but not limited to, fuels, chemicals, starches, ink and adhesives;

(g)           which is not located in the United States or Canada or is in transit (other than between locations in the United States or Canada controlled by Loan Parties, to the extent included in current perpetual inventory reports of any Loan Party);

(h)           which is located in any location leased by such Loan Party unless (i) the lessor has delivered to the Applicable Agent a Landlord Lien Waiver or (ii) a Reserve for rent, charges, and other amounts due or to become due with respect to such facility has been established by the Applicable Agent in its Permitted Discretion;

(i)            which is located in any third party warehouse or is in the possession of a bailee (other than a third party processor) and is not evidenced by a document (other than bills of lading issued with respect to Inventory in transit between locations in the United States or Canada controlled by Loan Parties), unless (i) such warehouseman or bailee has delivered to the Applicable Agent a Landlord Lien Waiver and such other documentation as the Applicable Agent may require or (ii) an appropriate Reserve has been established by the Applicable Agent in its Permitted Discretion;

(j)            which is being processed offsite at a third party location or outside processor, or is in-transit to or from said third party location or outside processor;

(k)           which is a discontinued product or component thereof;

(l)            which is the subject of a consignment by such Loan Party as consignor;

(m)          which contains or bears any intellectual property rights licensed to such Loan Party unless the Applicable Agent is satisfied that it may sell or otherwise dispose of such Inventory without (i) infringing the rights of such licensor, (ii) violating any contract with such licensor, or (iii) incurring any liability with respect to payment of royalties other than royalties incurred pursuant to sale of such Inventory under the current licensing agreement;

(n)           which is not reflected in a current inventory report of such Loan Party (unless such Inventory is reflected in a report to the Applicable Agent as “in transit” Inventory);

(o)           for which reclamation rights have been asserted by the seller; or

(p)           any portion of the cost of such Inventory is attributable to intercompany profit between any Loan Party and any of its Affiliates (but only to the extent of such portion).

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In the event that Inventory which was previously Eligible Inventory ceases to be Eligible Inventory hereunder, such Loan Party shall notify the Applicable Agent thereof on and at the time of submission to the Applicable Agent of the next Borrowing Base Certificate.

“Eligible Real Property” means the real property (including fixtures thereto) listed on Schedule 1.2, as updated from time to time with the consent of the Administrative Agent (such consent not to be unreasonably withheld), owned by a Loan Party (i) that is acceptable in the exclusive discretion of the Applicable Agent for inclusion in the U.S. Borrowing Base or Canadian Borrowing Base, as the case may be, (ii) in respect of which an appraisal report has been delivered to the Applicable Agent in form, scope and substance reasonably satisfactory to the Applicable Agent, (iii) in respect of which the Applicable Agent is satisfied that all actions necessary or desirable in order to create perfected first priority Lien (subject only to (i) the CCAA Charges and (ii) an unregistered Lien in respect of Priority Payables that are not yet due and payable) on such real property have been taken, including, the filing and recording of Collateral Documents, (iv) in respect of which an environmental assessment report has been completed and delivered to the Applicable Agent in form and substance satisfactory to such Applicable Agent and which does not indicate any material environmental liability, or material non-compliance with any Environmental Law (which liability or non-compliance was not previously disclosed to Lenders), (v) which is adequately protected by fully-paid valid title insurance with endorsements and in amounts reasonably acceptable to the Applicable Agent, insuring that the Applicable Agent, for the benefit of the Secured Parties, shall have a perfected first priority Lien (subject only to (i) the CCAA Charges and (ii) an unregistered Lien in respect of Priority Payables that are not yet due and payable) on such real property, evidence of which shall have been provided in form and substance reasonably satisfactory to the Applicable Agent, and (vi) if required by the Applicable Agent: (A) an ALTA survey has been delivered for which all necessary fees have been paid and which is dated no more than 30 days prior to the date on which the applicable Collateral Document is recorded, certified to the Applicable Agent and the issuer of the title insurance policy in a manner reasonably satisfactory to the Applicable Agent by a land surveyor duly registered and licensed in the state or province in which such Eligible Real Property is located and reasonably acceptable to the Applicable Agent, and shows all buildings and other improvements, any offsite improvements, the location of any easements, parking spaces, rights of way, building setback lines and other dimensional regulations and the absence of encroachments, either by such improvements or on to such property, and other defects, other than encroachments and other defects reasonably acceptable to the Applicable Agent; and (B) such Loan Party shall have used its reasonable best efforts to obtain such consents, agreements and confirmations of lessors and third parties as the Applicable Agent may deem necessary or desirable, together with evidence that all other actions that the Applicable Agent may deem necessary or desirable in order to create perfected first priority Liens (subject only to (i) the CCAA Charges and (ii) an unregistered Lien in respect of Priority Payables that are not yet due and payable) on the property described in the Collateral Document have been taken.

“Environmental Laws” shall mean all local, state, federal, provincial and foreign laws, statutes, ordinances, orders, rules, regulations, or binding policies or decrees relating to (i) pollution or protection of the environment, including, without limitation, those relating to protection or rehabilitation of the land, water (surface or subsurface water) or air, or fines, injunctions, penalties, damages, contribution, cost recovery compensation, losses, injuries,

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investigations or remedial work resulting from the presence, release or threatened release of Hazardous Waste or Hazardous Substances, (ii) the generation, use, storage, transportation or disposal of Hazardous Waste or Hazardous Substance, or (iii) occupational safety and health, industrial hygiene or protection of wetlands, in any manner applicable to the Loan Parties or any of their respective properties, and any analogous future local, state, federal, provincial and foreign laws, statutes, ordinances, orders, rules, regulations, or binding policies or decrees, each as in effect as of the date of determination.

“Environmental Lien” shall mean a Lien in favor of any Governmental Authority for (i) any liability under federal, provincial or state Environmental Laws, or (ii) damages arising from or costs incurred by such Governmental Authority in response to a release or threatened release of a Hazardous Substance or Hazardous Waste.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) which is a member of a group of which any of the Loan Parties is a member and which is under common control within the meaning of Section 414(b) or (c) of the Code and the regulations promulgated and rulings issued thereunder.

“Eurocurrency Liabilities” shall have the meaning assigned thereto in Regulation D issued by the Board, as in effect from time to time.

“Eurodollar Borrowing” shall mean a Borrowing comprised of Eurodollar Loans.

“Eurodollar Loan” shall mean any Loan bearing interest at a rate determined by reference to the Adjusted LIBO Rate in accordance with the provisions of ARTICLE 2.

“Event of Default” shall have the meaning given such term in ARTICLE 7.

“Excess Availability” shall mean, on any date of determination, (x) the lesser of (i) the sum of (A) the Total Revolving Commitment plus (B) Canadian Term Outstandings plus U.S. Term Outstandings and (ii) the sum of (A) the U.S. Borrowing Base plus (B) the Canadian Borrowing Base minus (y) the Total U.S. Outstandings minus (z) the Total Canadian Outstandings.

“Exchange Rate” shall mean, on any day, (a) for purposes of determining the U.S. Dollar Equivalent, the rate at which Canadian Dollars may be exchanged into Dollars and (b) for purposes of determining the Canadian Dollar Equivalent, the rate at which Dollars may be exchanged into Canadian Dollars, in each case as quoted by the Bank of Canada for Canadian Dollars (or, if not so quoted, the spot rate of exchange quoted for wholesale transactions made by the Administrative Agent in Toronto, Ontario) at 12:00 Noon, Toronto time, on such day; provided, that if at the time of any such determination, for any reason, no such spot rate is being quoted, the Administrative Agent may use any reasonable method it deems applicable to determine such rate, and such determination shall be conclusive absent manifest error.

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“Facilities” shall mean any and all real property (including, without limitation, all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by the Loan Parties (but only as to portions of buildings actually leased or used) or any of their respective predecessors or any of their respective Affiliates that are directly or indirectly controlled by the Loan Parties.

“Fair Market Value” shall mean the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts determined in a manner acceptable to the Applicable Agent by an appraiser acceptable to the Applicable Agent.

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“Fees” shall collectively mean the Commitment Fees, Letter of Credit Fees and other fees referred to in Section 2.20, Section 2.21, Section 2.22, Section 2.30 and Section 2.31.

“Fifteen Month Facility Extension Option” shall have the meaning given such term in Section 2.30.

“Filing Date” shall mean January 26, 2009.

“Final Order” shall have the meaning set forth in Section 4.2(d).

“Financial Officer” shall mean the Chief Financial Officer, Chief Accounting Officer, Controller or Treasurer of a Loan Party.

“Finished Goods” shall mean completed goods which require no additional processing or manufacturing to be sold to third party customers by the Loan Parties in the ordinary course of business.

“Foreign Subsidiary” shall mean any Subsidiary of the Parent that is not organized under the laws of the United States of America.

“Fronting Bank” shall mean JPMCB or such other commercial bank as may agree with JPMCB to act in such capacity and shall be reasonably satisfactory to the Loan Parties and the Administrative Agent.

“GAAP” shall mean accounting principles generally accepted in the United States and applied in accordance with Section 1.3.

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“Governmental Authority” shall mean the government of the United States of America or Canada, any other nation or any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Guaranteed Obligations” shall have the meaning set forth in Section 10.2.

“Guarantor” shall mean each of the Borrowers, the U.S. Guarantors and the Canadian Guarantors; provided that no Foreign Subsidiary (other than the Canadian Borrower) shall, or shall be deemed to, guarantee any Secured Obligations of any entity organized under the laws of the United States nor shall it have any obligations with respect to any such amounts.

“Guaranty” shall mean ARTICLE 10 of this Agreement.

“Hazardous Substances” shall mean, but is not limited to, any pollutant, contaminant, toxic substance, hazardous material, dangerous good, asbestos, urea formaldehyde, PCB or non-hazardous petroleum products or any other substance defined in or regulated by any Environmental Laws as a hazardous substance.

“Hazardous Waste” shall mean any Hazardous Substance that is a waste, by-product, residual material or recyclable material, or any other substance which, in each case, is defined in or regulated by any Environmental Laws as a hazardous waste.

“Indebtedness” shall mean, at any time and with respect to any Person:  (i) all indebtedness of such Person for borrowed money; (ii) all indebtedness of such Person for the deferred purchase price of property or services (other than property, including inventory, and services purchased, and trade accounts payable, accrued expenses and deferred compensation items arising, in the ordinary course of business); (iii) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments; (iv) all indebtedness of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property); (v) all obligations of such Person under leases which have been or should be, in accordance with GAAP, recorded as Capital Lease Obligations, to the extent required to be so recorded; (vi) all reimbursement, payment or similar obligations of such Person, contingent or otherwise, under acceptance, letter of credit or similar facilities; (vii) all net obligations of such Person in respect of Swap Agreements (such net obligations to be equal at any time to the termination value of such Swap Agreements or other arrangements that would be payable by or to such Person at such time); (viii) all indebtedness referred to in clauses (i) through (vii) above guaranteed directly or indirectly by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (a) to pay or purchase such indebtedness or to advance or supply funds for the payment or purchase of such indebtedness, (b) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such indebtedness or to assure the holder of such indebtedness against loss in respect of such indebtedness, (c) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is

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received or such services are rendered) or (d) otherwise to assure a creditor against loss in respect of such indebtedness; and (ix) all indebtedness referred to in clauses (i) through (viii) above secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such indebtedness.

“Indemnified Party” shall have the meaning given such term in Section 9.6.

“Initial Order” shall mean an order of the Canadian Court in the Canadian Cases in substantially the form of Exhibit A-2, or such other form as is satisfactory to the Administrative Agent in its exclusive discretion, entered in accordance with the terms and conditions of Section 4.1, as such order may be amended or restated to effect the consolidation of the Recognition Cases and the CCAA Cases, and as such order may be further amended or restated with the express written consent of the Administrative Agent.

“Insufficiency” shall mean, with respect to any Plan, the amount, if any, of its unfunded benefit liabilities within the meaning of Section 4001(a)(18) of ERISA.

“Intercompany Indebtedness” shall mean any claim of an Affiliate of a Loan Party against any other Affiliate of a Loan Party, any claim of a Loan Party against any of its Affiliates, and any claim of any Affiliate of a Loan Party against a Loan Party and shall include the face amount of Letters of Credit issued for the account of Loan Parties other than the Borrowers.

“Interest Payment Date” shall mean (i) as to any Eurodollar Loan and any Discount Rate Loan, the last day of each consecutive thirty (30) day period running from the commencement of the applicable Interest Period or Contract Period, and (ii) as to all ABR Loans and Canadian Prime Rate Loans, the last calendar day of each month and the date on which any ABR Loans are refinanced with Eurodollar Loans or Canadian Prime Rate Loans are refinanced with Discount Rate Loans pursuant to Section 2.13.

“Interest Period” shall mean, as to any Borrowing of Eurodollar Loans, the period commencing on the date of such Borrowing (including as a result of a refinancing of ABR Loans) or on the last day of the preceding Interest Period applicable to such Borrowing and ending on the numerically corresponding day (or if there is no corresponding day, the last day) in the calendar month that is one, three or six months thereafter, as the Borrowers may elect in the related notice delivered pursuant to Section 2.7(b) or Section 2.13; provided, however, that (i) if any Interest Period would end on a day which shall not be a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (ii) no Interest Period shall end later than the Maturity Date.

“Interim Canadian Revolving Commitment” shall have the meaning set forth in Section 2.3(a).

“Interim U.S. Revolving Commitment” shall have the meaning set forth in Section 2.2(a).

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“Interim Order” shall mean, individually and collectively, the Initial Order and the U.S. Interim Order.

“Interim Period” shall have the meaning set forth in Section 2.2(a).

“Inventory” shall mean all Raw Materials, Work-in-Process and Finished Goods owned, held or generated by the Loan Parties in the normal course of business.

“Inventory Reserves” shall mean reserves against Inventory equal to the sum of the following:

(a)           a reserve for shrink, or discrepancies that arise pertaining to inventory quantities on hand between the Loan Parties’ perpetual accounting system, and physical counts of the inventory which will be determined by the Administrative Agent in its Permitted Discretion with the variance expressed as a percentage of Inventory; and

(b)           a reserve for Inventory which is designated to be returned to vendor or which is recognized as damaged or off quality or not to customer specifications by a Loan Party; and

(c)           a revaluation reserve whereby capitalized favorable variances shall be deducted from Eligible Inventory and unfavorable variances shall not be added to Eligible Inventory; and

(d)           a lower of the cost or market reserve for any differences between a Loan Party’s actual cost to produce versus its selling price to third parties, determined on a product line basis; and

(e)           any other reserve established by the Applicable Agent in its Permitted Discretion, from time to time.

“Investment Accounts” shall mean, individually or collectively, the Canadian Investment Account and the U.S. Investment Account.

“Investments” shall have the meaning given such term in Section 6.11.

“ITA” shall mean the Income Tax Act (Canada), as amended, and any successor thereto, and any regulations promulgated thereunder.

“JPMCB” shall mean JPMorgan Chase Bank, N.A., a national banking association.

“Judgment Currency” and “Judgment Currency Conversion Date” shall have the meanings set forth in Section 9.20.

“Landlord Lien Waiver” shall mean a written agreement in such form as is reasonably acceptable to the Administrative Agent, pursuant to which a Person shall waive or subordinate its rights and claims as landlord in any Collateral of the Loan Parties for unpaid

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rents, grant access to the Administrative Agent for the repossession and sale of such Collateral and make other agreements relative thereto.

“LC Exposure” shall mean the sum of the Commercial LC Exposure and the Standby LC Exposure.  The LC Exposure of any Revolving Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time.

“LC Reserve Account” shall have the meaning set forth in Section 11.2.

“Lenders” shall mean the Canadian Lenders and the U.S. Lenders.

“Lender Affiliate” shall mean, (i) with respect to any Lender, (a) an Affiliate of such Lender or (b) any entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in loans and similar extensions of credit in the ordinary course of its business and is administered or managed by such Lender or an Affiliate of such Lender and (ii) with respect to any Lender that is a fund which invests in loans and similar extensions of credit, any other fund that invests in loans and similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

“Letters of Credit” shall mean the Canadian Revolving Facility Letters of Credit and the U.S. Revolving Facility Letters of Credit.

“Letter of Credit Account” shall mean the non-interest bearing account established by the U.S. Borrower under the sole and exclusive control of the Administrative Agent maintained at the office of the Administrative Agent at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 designated as the “Smurfit-Stone U.S. Letter of Credit Account” that shall be used solely for the purposes set forth in Section 2.4(c) and Section 2.14.

“Letter of Credit Fees” shall mean the fees payable in respect of Letters of Credit pursuant to Section 2.22.

“Letter of Credit Outstandings” shall mean, at any time, the sum of (i) the U.S. Letter of Credit Outstandings plus (ii) the Canadian Letter of Credit Outstandings.

“Lien” shall mean (i) any mortgage, deed of trust, pledge, security interest, encumbrance, lien, assignment for security, hypothecation, prior claim (within the meaning of the Civil Code of Quebec), encumbrance or charge of any kind whatsoever (including any conditional sale or other title retention agreement or any lease in the nature thereof), (ii) in the case of securities, any purchaser option, call or similar right of a third party with respect to such securities, and (iii) any other arrangement having the effect of providing security.

“Loan” shall mean each Canadian Revolving Loan, U.S. Revolving Loan, Canadian Term Loan, and U.S. Term Loan.

“Loan Documents” shall mean this Agreement, the Letters of Credit, any Letter of Credit applications, the Collateral Documents and any other instrument or agreement executed and delivered in connection herewith.

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“Loan Party” and “Loan Parties” shall mean the U.S. Borrower, the Canadian Borrower, the Parent, the other U.S. Guarantors and the Canadian Guarantors.

“Loan Party Joinder Agreement” shall have the meaning give such term in Section 5.11.

“Material Adverse Effect” shall mean (i) a material adverse effect upon the business, operations, assets, properties or financial condition of the Parent and its consolidated Subsidiaries, taken as a whole, (ii) the material impairment of the ability of any Loan Party to perform its Obligations or (iii) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of a Loan Document to which it is a party.

“Maturity Date” shall mean January 28, 2010; provided, that upon the effectiveness of the Fifteen Month Facility Extension Option, the Maturity Date shall be extended to April 28, 2010; provided, further that upon the effectiveness of the Eighteen Month Facility Extension Option, the Maturity Date shall be extended to July 28, 2010.

“Maximum Liability” shall have the meaning given such term in Section 10.11.

“Minority Lenders” shall have the meaning given such term in Section 9.10(b).

“Moody’s” shall mean Xxxxx’x Investors Service, Inc. or any successor to the rating agency business thereof.

“Multiemployer Plan” shall mean a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which any Loan Party or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions.

“Multiple Employer Plan” shall mean a Single Employer Plan, which (i) is maintained for employees of a Loan Party or an ERISA Affiliate and at least one Person other than such Loan Party and its ERISA Affiliates or (ii) was so maintained and in respect of which a Loan Party or an ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such Plan has been or were to be terminated.

“Net Orderly Liquidation Value” shall mean, with respect to machinery, equipment or Inventory of any Person, the orderly liquidation value thereof as determined in a manner acceptable to the Applicable Agent by an appraiser acceptable to the Applicable Agent, net of all costs of liquidation thereof.

“Net Orderly Liquidation Value In Place” shall mean, with respect to machinery, equipment, Inventory or real estate of any Person, the orderly liquidation value thereof when such assets are being purchased in place to remain in operation in “as is” condition, taking advantage of all leasehold and site improvements designed to facilitate such assets’ operation, as determined in a manner acceptable to the Applicable Agent by an appraiser acceptable to the Applicable Agent, net of all costs of liquidation thereof.

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“Net Proceeds” means, with respect to any event, (a) the cash proceeds received in respect of such event including (i) any cash received in respect of any non-cash proceeds (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but excluding any interest payments), but only as and when received, (ii) in the case of a casualty, insurance proceeds and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments, net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid to third parties (other than Affiliates) in connection with such event, (ii) in the case of a sale, transfer or other disposition of an asset that is subject to a Non-Primed Lien (including pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar proceeding), the amount of all payments required to be made as a result of such event to repay such Non-Primed Liens and (iii) the amount of all taxes paid (or reasonably estimated to be payable) and the amount of any reserves established to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next succeeding year and that are directly attributable to such event (as determined reasonably and in good faith by a Financial Officer).

“Non-Paying Guarantor” shall have the meaning set forth in Section 10.12.

“Non-Primed Liens” shall mean those Liens securing: (i) certain pre-petition claims of warehousemen, shippers, Permitted Liens and other classes of claimants acceptable to the Administrative Agent against the Loan Parties that in each case: (x) are senior in priority to the Pre-Petition Credit Agreement Liens; and (y) are set forth on Schedule 2.24; and (ii) the Calpine Debt.

“Obligation Currency” shall have the meaning set forth in Section 9.20.

“Obligations” shall mean all unpaid principal of and accrued and unpaid interest on the Loans, the reimbursement of all amounts drawn on Letters of Credit, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations of the Loan Parties to the Lenders or to any Lender, any Agent, any Fronting Bank or any indemnified party arising under the Loan Documents.

“Obligated Party” shall have the meaning set forth in Section 10.3.

“Orders” shall mean, collectively, (i) the Interim Order and (ii) the Final Order.

“Organizational Documents” shall mean (i) with respect to any corporation, its certificate or articles of incorporation, as amended, and its by-laws, as amended, (ii) with respect to any limited partnership, its certificate of limited partnership or formation, as amended, and its partnership agreement, as amended, (iii) with respect to any general partnership, its partnership agreement, as amended, (iv) with respect to any limited liability company, its certificate of formation or articles of organization, as amended, and its operating agreement, as amended, and (v) with respect to any unlimited liability company, its certificate of formation, as amended, and its memorandum and articles of association, as amended.  In the event any term or condition of this Agreement or any other Loan Document requires any Organizational Document to be certified by a secretary of state or similar governmental official, the reference to any such

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“Organizational Document” shall only be to a document of a type customarily certified by such governmental official.

“Other Taxes” shall have the meaning given such term in Section 2.19(b).

“Parent” shall have the meaning set forth in the Introduction.

“Participant” shall have the meaning set forth in Section 9.3.

“Patriot Act” shall have the meaning given such term in Section 9.19.

“Paying Guarantor” shall have the meaning set forth in Section 10.12.

“PBGC” shall mean the Pension Benefit Guaranty Corporation, or any successor agency or entity performing substantially the same functions.

“Pension Plan” shall mean a defined benefit pension (as defined in Section 414(j) of the Code and Section 3(35) of ERISA) which meets and is subject to the requirements of Section 401(a) of the Code.

“Permitted Discretion” shall mean a determination made in good faith and in the exercise of reasonable (from the perspective of a secured asset-based lender) business judgment, following either (x) consultation with the Borrowers or (y) two (2) Business Days’ advance notice to the Borrowers.

“Permitted Investments” shall mean (i) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America) or Canada (or by any agency thereof to the extent such obligations are backed by the full faith and credit of Canada), in each case maturing within one year from the date of acquisition thereof, (ii) without limiting the provisions of paragraph (iv) below, investments in commercial paper maturing within 270 days from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody’s, (iii) investments in certificates of deposit, banker’s acceptances and time deposits (including Eurodollar time deposits) maturing within six months from the date of acquisition thereof issued or guaranteed by or placed with (a) any domestic office of the Administrative Agent or the bank with whom the Loan Parties maintain their cash management system, provided, that if such bank is not a Lender hereunder, such bank shall have entered into an agreement with the Administrative Agent pursuant to which such bank shall have waived all rights of setoff and confirmed that such bank does not have, nor shall it claim, a security interest therein or (b) any domestic office of any other commercial bank of recognized standing organized under the laws of the United States of America or any State thereof that has a combined capital and surplus and undivided profits of not less than US$500,000,000 and is the principal banking Subsidiary of a bank holding company having a long-term unsecured debt rating of at least “A” or the equivalent thereof from S&P or at least “A2” or the equivalent thereof from Moody’s, (iv) investments in commercial paper maturing within six months from the date of acquisition thereof and issued by (a) the holding company of the Administrative Agent or (b) the holding company of any other commercial bank of recognized standing

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organized under the laws of the United States of America or any State thereof that has (1) a combined capital and surplus in excess of US$500,000,000 and (2) commercial paper rated at the highest credit rating obtainable from S&P or from Moody’s, (v) investments in fully collateralized repurchase agreements with a term of not more than thirty (30) days for underlying securities of the types described in clause (i) above entered into with any office of a bank or trust company meeting the qualifications specified in clause (iii) above, (vi) investments in money market funds substantially all the assets of which are comprised of securities of the types described in clauses (i) through (v) above, and (vii) to the extent owned by the Loan Parties on the Filing Date, investments in joint ventures as disclosed in Schedule 6.11 or in the capital stock of any direct or indirect Subsidiary of the Loan Parties as disclosed in Schedule 3.5.

“Permitted Liens” shall mean (i) Liens set forth on Schedule 3.6, (ii) Liens in favor of the Agents on behalf of the Secured Parties, (iii) the CCAA Charges, (iv) Liens imposed by law (other than Environmental Liens and any Lien imposed under ERISA) for taxes, assessments or charges of any Governmental Authority for claims not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP; (v) Liens (other than any Lien imposed under ERISA) incurred or deposits made in connection with workers’ compensation, unemployment insurance and other types of social security benefits or to secure the performance of tenders, bids, leases, contracts (other than for the repayment of Indebtedness), statutory obligations and other similar obligations incurred in the ordinary course of business; (vi) non-material Liens of landlords and Liens of statutory carriers, warehousemen, mechanics, materialmen and other Liens (other than Environmental Liens and any Lien imposed under ERISA) in existence on the Filing Date or thereafter imposed by law and created in the ordinary course of business; (vii) deposits to secure the performance of tenders, bids, and other contracts, other than for the payment of borrowed money, arising in the ordinary course of business; (viii) easements (including, without limitation, reciprocal easement agreements and utility agreements), all applicable development, subdivision, use and site plan agreements, or similar agreements, rights-of-way, covenants, consents, reservations, encroachments, variations and zoning and other restrictions, charges or encumbrances (whether or not recorded) and interest of ground lessors, which do not materially interfere with the ordinary conduct of the business of any Loan Party, and which do not materially detract from the value of the property to which they attach or materially impair the use thereof to any Loan Party; (ix) purchase money Liens (including Capital Lease Obligations) upon or in any property acquired or held in the ordinary course of business to secure the purchase price of such property or to secure Indebtedness permitted by Section 6.3(iii) solely for the purpose of financing the acquisition of such property; (x) Liens created in connection with extensions, renewals or replacements, including replacement Liens granted by the Bankruptcy Court, of any Lien referred to in clauses (i) through (ix) above, provided that the principal amount of the obligation secured thereby is not increased and that any such extension, renewal or replacement is limited to the property originally encumbered thereby; (xi) pre-petition Liens granted pursuant to the Pre-Petition Credit Agreement or the Security Documents (as defined therein) by the Loan Parties party to the Pre-Petition Credit Agreement for the benefit of the Secured Parties (as defined in such Security Documents); (xii) Liens junior to the senior liens contemplated hereby that are granted by any of the Orders pursuant to 11 U.S.C. §364(d)(1) as adequate protection to the Primed Parties, provided that the Orders provide that the holders of such junior liens shall not be permitted to take any action to enforce their rights with respect to such junior liens as long as any amounts are

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outstanding under this Agreement or the Lenders have any Commitment hereunder; (xiii) Liens on assets of Foreign Subsidiaries (other than the Canadian Loan Parties) securing Indebtedness permitted by Section 6.3(vi); (xiv) Liens arising from the granting of a license to enter into or use any asset of a Loan Party in the ordinary course of business of such Loan Party that does not interfere in any material respect with the use or application by such Loan Party of the asset subject to such license; (xv) Liens arising by operation of law on insurance policies and proceeds thereof to secure premiums thereunder; (xvi) Liens arising out of judgments or awards in respect of which an appeal or proceeding for review is being diligently prosecuted, provided that (x) a stay of execution pending such appear or proceeding for review has been obtained, (y) full provision for the payment of the indebtedness secured by such Lien has been made on the books of such Person if and to the extent required by GAAP, and (z) an Event of Default under Section 7.1 shall not have occurred as a result of the incurrence of such Lien; (xvii) Liens consisting of cash deposits in an amount not to exceed US$10,000,000 with swap counterparties as may be required pursuant to the terms of Swap Agreements permitted by Section 6.16; (xviii) Liens granted by Calpine to secure the Calpine Debt; (xix) rights of collecting banks or other financial institutions having a right of setoff, revocation, refund or chargeback with respect to money or instruments on deposit with or in the possession of such financial institution; (xx) Liens with respect to a court ordered administration charge in the Canadian Cases, junior to the CCAA DIP Lenders Charge, in an aggregate amount not in excess of US$4,000,000 for the payment of (a) allowed and unpaid professional fees and disbursements incurred by professionals retained by the Canadian Loan Parties and (b) allowed and unpaid professional fees and disbursements of the monitor in the Canadian Cases including allowed and unpaid legal fees and expenses of its counsel (and including any allowed and unpaid professional fees and disbursements incurred by the parties referred to in (a) and (b), prior to the occurrence of such Event of Default); and (xxi) other Liens securing Indebtedness in an aggregate amount outstanding at any time not in excess of US$1,000,000.

“Person” shall mean any natural person, corporation, partnership, trust, joint venture, association, company, estate, unincorporated organization or government or any agency or political subdivision thereof.

“Plan” shall mean a Single Employer Plan or a Multiemployer Plan.

“Prepayment Event” means (a) any Asset Sale; or (b) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of any Loan Party.

“Pre-Petition Agent” shall have the meaning set forth in Section 2.24.

“Pre-Petition Credit Agreement” shall mean that certain Credit Agreement dated as of November 1, 2004, as amended, supplemented or otherwise modified prior to the Filing Date, among the Borrowers, as borrowers, the Parent and certain of the other Loan Parties, as guarantors, the banks and other financial institutions from time to time parties thereto, and Deutsche Bank Trust Company Americas, as administrative agent.

“Pre-Petition Debt” shall have the meaning set forth in Section 2.24.

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“Pre-Petition Payment” shall mean a payment (by way of adequate protection or otherwise) of principal or interest or otherwise on account of any pre-petition/pre-filing Indebtedness or trade payables or other pre-petition/pre-filing claims against the Loan Parties, including, without limitation, reclamation claims and materialmen’s liens.

“Pre-Petition Secured Lenders” shall have the meaning set forth in Section 2.24.

“Primed Liens” shall have the meaning set forth in Section 2.24.

“Primed Parties” shall mean the parties who hold Primed Liens.

“Priority Payables” means, with respect to any Person, any amount payable by such Person (i) solely to the extent that it is owing and is secured by a Lien which ranks or is capable of ranking prior to or pari passu with the Liens created by the Collateral Documents, including amounts which are past due and owing for wages, vacation pay, severance pay, employee deductions, sales tax, excise tax, Tax payable pursuant to Part IX of the Excise Tax Act (Canada) (net of GST input credits), income tax, workers compensation, government royalties, pension fund obligations and overdue Taxes and (ii) is not being contested by such Person in good faith by appropriate proceedings promptly instituted and diligently conducted in a manner that stays enforcement of such Lien and with respect to whom such Person has established a cash reserve on its books for the full amount thereof.

“Quebec Security Agreements” shall mean any (i) Deed of Hypothec and Issue of Bonds made by any Canadian Loan Party in favor of the Applicable Agent, as fondé de pouvoir under Article 2692 of the Civil Code of Quebec, to be executed before a notary of the Province of Quebec, (ii) bond issued by any Canadian Loan Party pursuant to such Deed of Hypothec and Issue of Bonds, and (iii) pledge agreement to be granted by any Canadian Loan Party in respect of any bond issued under such Deed of Hypothec and Issue of Bonds.

“Raw Materials” shall mean any items or materials used or consumed in the manufacture of goods to be sold by the Loan Parties in the ordinary course of business.

“Receivables Securitization Entities” shall mean Stone Receivables Corporation and SSCE Funding, LLC.

“Receivables Securitization Programs” shall mean the Canadian Receivables Securitization Program and the U.S. Receivables Securitization Program.

“Receivables Securitization Termination Date” means the date on which each of the Receivables Securitization Programs are terminated in accordance with the requirements of Section 5.13, as determined by the Administrative Agent in its exclusive discretion.

“Recognition Cases” shall mean the recognition proceedings commenced by the Canadian Loan Parties pursuant to the Bankruptcy and Insolvency Act (Canada) of the U.S. Cases with respect to Smurfit-MBI and SLP Finance General Partnership.

“Register” shall have the meaning set forth in Section 9.3.

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“Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“Release” shall mean the disposing, discharging, injecting, spilling, pumping, leaking, leaching, dumping, emitting, escaping, emptying, pouring, seeping or migrating of any Hazardous Substance or Hazardous Waste into or upon any land or water or air, or otherwise entering into the environment.

“Rent Reserve” with respect to any leased location where any Collateral subject to Liens arising by operation of law is located, a reserve for rent at such location in an amount established in the Applicable Agent’s Permitted Discretion.

“Reorganization Plan” shall mean a bankruptcy plan of reorganization or a CCAA plan or arrangement in any of the Cases.

“Required Lenders” shall mean, at any time, Lenders having aggregate Total Canadian Outstandings, Total U.S. Outstandings and unused Commitments representing more than 50% of the aggregate Total Canadian Outstandings, Total U.S. Outstandings and unused Commitments at such time.

“Requirement of Law” means, as to any Person, the Organizational Documents or other governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Reserves” means Dilution Reserves, Inventory Reserves, Rent Reserves and any other reserves established by the Applicable Agent in its Permitted Discretion (including, without limitation, reserves for accrued and unpaid interest on the Secured Obligations, Banking Services Reserves, reserves for consignee’s, warehousemen’s and bailee’s charges, reserves for Swap Obligations, reserves for environmental liabilities of any Loan Party, reserves for contingent liabilities of any Loan Party, reserves for uninsured losses of any Loan Party, reserves for uninsured, underinsured, un-indemnified or under-indemnified liabilities or potential liabilities with respect to any litigation, reserves for cash held in deposit accounts of Smurfit-Stone Puerto Rico, Inc. during such times as cash dominion is in effect under Section 5.7 and reserves for taxes, fees, assessments, and other governmental charges) with respect to the Collateral or any Loan Party, with regard to the Canadian Borrowing Base, reserves for Priority Payables outstanding on or after the Effective Date that may affect the collectability of such accounts or the saleability of such inventory and that have not already been taken into account in the calculation of the applicable Borrowing Base to the extent such Priority Payables do not constitute amounts otherwise secured by the Directors’ Charge.

“Reset Date” shall have the meaning set forth in Section 1.4.

“Revolving Commitment” shall mean the Canadian Revolving Commitment and the U.S. Revolving Commitment.

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“Revolving Loans” shall mean, individually or collectively, U.S. Revolving Loans and Canadian Revolving Loans.

“S&P” shall mean Standard & Poor’s Rating Services, a division of The XxXxxx-Xxxx Companies, Inc., or any successor to the rating agency business thereof.

“Schedule I Banks” shall mean the banks listed in Schedule I of the Bank Act (Canada) having equity of more than C$8,000,000,000.

“Secured Obligations” means the Canadian Secured Obligations and the U.S. Secured Obligations.

“Secured Parties” means the Agents, the Lenders, the Fronting Banks and all of the Lenders and the Affiliates of the Lenders to whom Banking Service Obligations or Swap Obligations are owed.

“Security Agreements” means, collectively, the Security and Pledge Agreement and the Canadian Security Agreement, and “Security Agreement” means any one of them.

“Security and Pledge Agreement” shall have the meaning given such term in Section 4.1(c).

“Single Employer Plan” shall mean a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (i) is maintained for employees of a Loan Party or an ERISA Affiliate or (ii) was so maintained and in respect of which a Loan Party could have liability under Section 4069 of ERISA in the event such Plan has been or were to be terminated.

“Standby LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding standby Letters of Credit at such time plus (b) the aggregate amount of all disbursements relating to standby Letters of Credit that have not yet been reimbursed by or on behalf of the Borrowers at such time.  The Standby LC Exposure of any Revolving Lender at any time shall be its Applicable Percentage of the total Standby LC Exposure at such time.

“Statutory Reserve Rate” shall mean on any date the percentage (expressed as a decimal) established by the Board and any other banking authority which is the then stated maximum rate for all reserves (including but not limited to any emergency, supplemental or other marginal reserve requirements) applicable to any member bank of the Federal Reserve System in respect of Eurocurrency Liabilities (or any successor category of liabilities under Regulation D issued by the Board, as in effect from time to time).  Such reserve percentages shall include, without limitation, those imposed pursuant to said Regulation.  The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in such percentage.

“Subsidiary” shall mean, with respect to any Person (herein referred to as the “parent”), any corporation, association or other business entity (whether now existing or hereafter organized) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power for the election of directors is, at the

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time as of which any determination is being made, owned or controlled by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

“Super-majority Lenders” shall mean, at any time, Lenders having aggregate Total Canadian Outstandings, Total U.S. Outstandings and unused Commitments representing at least 66-2/3% of the aggregate Total Canadian Outstandings, Total U.S. Outstandings and unused Commitments at such time.

“Superpriority Claim” shall mean a claim against any U.S. Loan Party in any of the U.S. Cases which is a superpriority administrative expense claim having priority over any or all administrative expenses of the kind specified in Sections 503(b) or 507(b) of the Bankruptcy Code.

“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions.

“Swap Obligations” of a Person means any and all obligations of such Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any and all Swap Agreements, and (b) any and all cancellations, buy backs, reversals, terminations or assignments of any Swap Agreement transaction, in each case that is permitted by Section 6.16.

“Taxes” shall have the meaning given such term in Section 2.19.

“Term Loans” shall mean, individually or collectively, the U.S. Term Loans and the Canadian Term Loans.

“Term Loan Commitment” shall mean the U.S. Term Loan Commitment and the Canadian Term Loan Commitment.

“Termination Date” shall mean the earliest to occur of (i) the Maturity Date, (ii) the Effective Date, (iii) the forty-fifth (45th) day after the entry of the Interim Order if the Final Order has not been entered prior to such forty-fifth day, and (iv) the acceleration of the Loans and the termination of the Revolving Commitment in accordance with the terms hereof.

“Termination Event” shall mean (i) a “reportable event”, as such term is described in Section 4043 of ERISA and the regulations issued thereunder (other than a “reportable event” not subject to the provision for 30-day notice to the PBGC under Section 4043 of ERISA or such regulations) or an event described in Section 4068 of ERISA excluding events described in Section 4043(c)(9) of ERISA or 29 CFR §§ 2615.21 or 2615.23, or (ii) the withdrawal of any Loan Party or any ERISA Affiliate from a Multiple Employer Plan during a plan year in which it was a “substantial employer”, as such term is defined in Section 4001(a)(2) of ERISA, or the incurrence of liability by any Loan Party or any ERISA Affiliate under Section 4064 of ERISA upon the termination of a Multiple Employer Plan, or

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(iii) providing notice of intent to terminate a Plan pursuant to Section 4041(c) of ERISA or the treatment of a Plan amendment as a termination under Section 4041 of ERISA, or (iv) the institution of proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA, or (v) any other event or condition (other than the commencement of the Cases and the failure to have made any contribution accrued as of the Filing Date but not paid) which would reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the imposition of any liability under Title IV of ERISA (other than for the payment of premiums to the PBGC).

“Total Canadian Outstandings”  shall mean, at any time of determination, the Canadian Revolving Credit Utilization plus the Canadian Term Outstandings.

“Total Revolving Commitment” shall mean, collectively, the Canadian Revolving Commitments and the U.S. Revolving Commitments.

“Total U.S. Outstandings” shall mean, at any time of determination, the U.S. Revolving Credit Utilization plus the U.S. Term Outstandings.

“Transferee” shall have the meaning given such term in Section 2.19.

“Type” when used in respect of any Loan or Borrowing shall refer to the Rate of interest by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined.  For purposes hereof, “Rate” shall mean the Canadian Prime Rate, the Discount Rate, the Adjusted LIBO Rate and the Alternate Base Rate.

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or any other state the laws of which are required to be applied in connection with the issue of perfection of security interests. In addition, “UCC” means with respect to the Canadian Loan Parties or any Collateral of the Canadian Loan Parties subject thereto, the Personal Property Security Act (the “PPSA”) or similar legislation as from time to time in effect in the Province of Ontario or any other jurisdiction the laws of which are required to be applied in connection with the issue of perfection of security interests including, without limitation, the Civil Code of Quebec.

“Unfunded Current Liability” shall mean, with respect to any Pension Plan, the amount, if any, by which the actuarial present value of the accumulated plan benefits under such Pension Plan as of the close of its most recent plan year exceeds the fair market value of the assets allocable thereto, each determined in accordance with Statement of Financial Accounting Standards No. 35, based upon the actuarial assumptions used by such Pension Plan’s actuary in the most recent annual valuation of such Pension Plan.

“Unused Revolving Commitment” shall mean, at any time, (i) the Total Revolving Commitment less (ii) the sum of (a) the Canadian Revolving Credit Utilization and (b) the U.S. Revolving Credit Utilization.

“U.S. Borrower” shall have the meaning set forth in the Introduction.

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“U.S. Borrowing Base” shall mean, at the time of any determination, an amount equal to the sum, without duplication, of (a) 85% of Eligible Accounts of the U.S. Loan Parties at such time plus (b) the lesser of (i) 65% of Eligible Inventory of the U.S. Loan Parties at such time and (ii) 85% of the Net Orderly Liquidation Value of Eligible Inventory of the U.S. Loan Parties at such time (in each case with respect to clauses (i) and (ii) with any Eligible Inventory to be valued at the lower of cost (determined on a first-in, first-out basis) or market), plus (c) the U.S. PP&E Component, minus (d) the Reserves at such time, minus (e) the Carve-Out.  The U.S. Borrowing Base at any time shall be determined by reference to the most recent Borrowing Base Certificate delivered to the Administrative Agent pursuant to Section 5.8 of this Agreement.

“U.S. Cases” shall mean the cases under the Bankruptcy Code of the Loan Parties.

“U.S. Conversion Notice” shall have the meaning given such term in Section 9.23(a).

“U.S. Dollar Equivalent” shall mean, on any date of determination, with respect to any amount in Canadian Dollars, the equivalent in Dollars of such amount determined by the Administrative Agent using the Exchange Rate in effect on such date of determination.

“U.S. Guaranteed Obligations” shall have the meaning set forth in Section 10.1.

“U.S. Guarantor” and “U.S. Guarantors” means, individually or collectively, the Parent and each of the Domestic Subsidiaries party to this Agreement.  As of the Closing Date, the U.S. Guarantors are the Parent, Calpine, Cameo Container Corporation, an Illinois corporation, Xxx 00X Xxxxxxxxxxxxx Xxxxxxxxxxx, a Missouri corporation, Atlanta & Saint Xxxxxxx Bay Railway Company, a Florida corporation, Stone International Services Corporation, a Delaware corporation, Stone Global, Inc., a Delaware corporation, Stone Connecticut Paperboard Properties, Inc., a Delaware corporation, Smurfit-Stone Puerto Rico, Inc., a Puerto Rico corporation, Smurfit Newsprint Corporation, a Delaware corporation, SLP Finance I, Inc., a Delaware corporation, and SLP Finance II, Inc., a Delaware corporation, each of which is a debtor and debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code, and, after the Closing Date, shall include each subsequently organized Domestic Subsidiary and each direct parent thereof.

“U.S. Interim Order” shall mean an order of the Bankruptcy Court in the U.S. Cases in substantially the form of Exhibit A-1, or such other form as is satisfactory to the Administrative Agent in its exclusive discretion, entered in accordance with the terms and conditions of Section 4.1, as such order may be amended, supplemented or restated with the express written consent of the Administrative Agent in its exclusive discretion.

“U.S. Investment Account” shall mean the account established by the U.S. Borrower pursuant to Section 2.7(c) and designated as the “Smurfit-Stone Investment Account” with JPMCB.

“U.S. Lender” means, as of any date of determination, a Person constituting a U.S. Term Loan Lender or U.S. Revolving Lender.

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“U.S. Letter of Credit Outstandings” shall mean, at any time of determination, the sum of (a) the aggregate undrawn amount of all outstanding U.S. Revolving Facility Letters of Credit and (b) the aggregate amount that has been drawn under any U.S. Revolving Facility Letter of Credit and has not been reimbursed by the U.S. Borrower or another Loan Party at such time.  The U.S. Letter of Credit Outstandings of any U.S. Revolving Lender at any time shall equal its Applicable Percentage of the aggregate U.S. Letter of Credit Outstandings at such time.

“U.S. Loan Party” and “U.S. Loan Parties” shall mean, individually or collectively, the U.S. Borrower, the Parent and the other U.S. Guarantors.

“U.S. Loans” shall mean the U.S. Revolving Loans and the U.S. Term Loans.

“U.S. PP&E Component” shall mean the lesser of (x) (i) during the period commencing with the Closing Date until the twelve (12) month anniversary of the Closing Date, US$150,000,000, (ii) during the period commencing with the twelve (12) month anniversary of the Closing Date until the fifteen (15) month anniversary of the Closing Date, US$100,000,000, and (iii) on the fifteen (15) month anniversary of the Closing Date and thereafter, US$75,000,000, in each case minus the Canadian PP&E Component at such time, and (y) the greater of (A) (i) 50% of the Net Orderly Liquidation Value of Eligible Equipment of the U.S. Loan Parties at such time plus (ii) 50% of the Fair Market Value of Eligible Real Property of the U.S. Loan Parties at such time (as set forth in the most recent third party real estate appraisal in form and substance satisfactory to the Administrative Agent), and (B) 20% of the Net Orderly Liquidation Value In Place of (i) Eligible Equipment of the U.S. Loan Parties at such time and (ii) Eligible Real Property of the U.S. Loan Parties at such time.  Notwithstanding the foregoing sentence, until the earlier of (x) such time as appraisals satisfactory to the Administrative Agent are completed pursuant to Section 5.6 and (y) May 28, 2009, or such later date as the Administrative Agent may approve in its exclusive discretion, the U.S. PP&E Component shall be US$150,000,000 minus the Canadian PP&E Component.

“U.S. Receivables Securitization Program” shall mean (a) that certain Master Indenture, dated as of November 23, 2004, between SSCE Funding, LLC (as used in this definition, the “Securitization Issuer”) and Deutsche Bank Trust Company Americas, as Indenture Trustee (as used in this Section and in such capacity, the “Securitization Trustee”) and (b) that certain Series 2004-1 Indenture Supplement to Master Indenture, dated as of November 23, 2004, between the Securitization Issuer and the Securitization Trustee, in each case, as amended, restated, modified or waived from time to time.

“U.S. Revolving Commitment” shall mean, with respect to each U.S. Revolving Lender, the commitment of such Lender to make U.S. Revolving Loans hereunder and to acquire participations in U.S. Revolving Facility Letters of Credit in the amount set forth opposite its name on Annex A-2 hereto or as may subsequently be set forth in the Register from time to time, as the same may be reduced from time to time pursuant to the terms of this Agreement.  As of the Closing Date, the aggregate amount of the U.S. Revolving Commitments of the U.S. Revolving Lenders is US$250,000,000.

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“U.S. Revolving Credit Utilization” shall mean, at any time of determination, the sum of (a) the aggregate principal amount of U.S. Revolving Loans outstanding at such time and (b) the U.S. Letter of Credit Outstandings at such time.

“U.S. Revolving Facility Letters of Credit” shall mean any irrevocable letter of credit issued pursuant to Section 2.4 for the account of the U.S. Borrower or a Domestic Subsidiary by a Fronting Bank pursuant to the terms and conditions of ARTICLE 2, which letter of credit shall be (i) a standby or import documentary letter of credit, (ii) issued for purposes that are consistent with the ordinary course of business of the Loan Parties or for such other purposes as are acceptable to the Administrative Agent, (iii) denominated in Dollars and (iv) otherwise in such form as may be approved from time to time by the Administrative Agent and the applicable Fronting Bank.

“U.S. Revolving Lenders” shall mean the Lenders having U.S. Revolving Commitments or holding U.S. Revolving Loans.

“U.S. Revolving Loan” means a revolving loan to the U.S. Borrower or the Canadian Borrower made pursuant to Section 2.1(b)(i) in Dollars.

“U.S. Secured Obligations” means (a) all Obligations owing by any U.S. Loan Party, (b) all Banking Services Obligations owing by any U.S. Loan Party, (c) Swap Obligations owing by any U.S. Loan Party to one or more U.S. Lenders or their respective Affiliates; provided that at or prior to the time that any transaction relating to a Swap Obligation is executed, the U.S. Lender or an Affiliate thereof party thereto (other than JPMCB) shall have delivered written notice to the Administrative Agent that such a transaction has been entered into and that it constitutes a U.S. Secured Obligation entitled to the benefits of the Collateral Documents, and (d) all obligations owing by the Canadian Borrower in respect of its guaranty of Obligations of the U.S. Borrower.

“U.S. Term Loans” means the term loans to the U.S. Borrower made pursuant to Section 2.1(a)(i) (or made to the U.S. Borrower pursuant to Section 9.23(a))in Dollars.

“U.S. Term Loan Collateral Account” shall mean the account established by the U.S. Borrower under the sole and exclusive control of the Administrative Agent maintained at the office of the Administrative Agent at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 designated as the “Smurfit-Stone U.S. Term Loan Collateral Account” that shall be used solely for the purposes set forth in Section 2.7(c) and Section 2.14(a) and shall include any separate investment product linked to such account mutually acceptable to the U.S. Borrower and the Administrative Agent in accordance with Section 6.11.

“U.S. Term Loan Commitment” shall mean, with respect to each U.S. Term Loan Lender, the commitment of such Lender to make a U.S. Term Loan hereunder in the amount set forth opposite its name on Annex A-3 hereto, as the same shall be reduced on the Closing Date pursuant to Section 2.14(j) and as may be modified pursuant to Section 9.23(a).  As of the Closing Date and prior to making the U.S. Term Loans, the aggregate amount of the U.S. Term Loan Commitments of the U.S. Term Loan Lenders is US$400,000,000.

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 “U.S. Term Loan Conversion” shall have the meaning given such term in Section 9.23(a).

“U.S. Term Loan Lenders” shall mean the Lenders having U.S. Term Loan Commitments or holding the U.S. Term Loans.

“U.S. Term Outstandings” shall mean, at any time of determination, an amount equal to (a) the aggregate principal amount of U.S. Term Loans outstanding at such time minus (b) the amount of cash held in the U.S. Term Loan Collateral Account at such time.

“Withdrawal Liability” shall have the meaning given such term under Part I of Subtitle E of Title IV of ERISA.

“Work-in-Process” shall mean Inventory which consists of work-in-process including, without limitation, materials other than Raw Materials, Finished Goods or saleable products, title to which and sole ownership of which is vested in a Loan Party.

Section 1.2             Terms Generally.  The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

Section 1.3             Accounting Terms; GAAP.  Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Loan Parties notify the Administrative Agent that the Loan Parties request an amendment to any provision hereof to eliminate the effect of any change occurring after the Closing Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Loan Parties that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

Section 1.4             Exchange Rate Calculations.  On each Calculation Date, the Administrative Agent shall (a) determine the Exchange Rate as of such Calculation Date in

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respect of Canadian Dollars (and any other currency for which an Exchange Rate is required) and (b) give notice thereof to the applicable Borrower, and with respect to each Lender, to any Lender that shall have requested such information. The Exchange Rate so determined shall become effective on the first Business Day immediately following the relevant Calculation Date (each, a “Reset Date”) and shall remain effective until the next succeeding Reset Date, and shall for all purposes of this Agreement (other than Section 2.13, Section 9.20, Section 11.3 and any other provision expressly requiring the use of a current Exchange Rate) be the Exchange Rate employed in converting amounts between Dollars, on the one hand, and any other applicable currency on the other hand; provided that, for purposes of determining any Borrowing Base, the relevant Exchange Rate shall be determined by the applicable Borrower at the time that the relevant Borrowing Base Certificate is prepared and shall be set forth in such Borrowing Base Certificate. Notwithstanding the foregoing, for purposes of determining compliance by the Loan Parties with the limitations on Indebtedness, Indebtedness secured by Liens, loans, advances, investments, guarantees and payments contained in ARTICLE 6, compliance will be determined based on the U.S. Dollar Equivalent amount of the Indebtedness, Liens, Loans, advances, investments, guarantees and payments denominated in currencies other than Dollars subject to such provisions on the date of incurrence or payment thereof, and Borrowers will not be deemed to be in violation of such covenants solely as a result of subsequent changes in the Exchange Rate which cause the U.S. Dollar Equivalent amount of such obligations or payments to exceed such limitations.

Section 1.5             Québec Matters.  For purposes of any assets, liabilities or entities located in the Province of Québec and for all other purposes pursuant to which the interpretation or construction of this Agreement may be subject to the laws of the Province of Québec or a court or tribunal exercising jurisdiction in the Province of Québec, (a) “personal property” shall include “movable property”, (b) “real property” or “real estate” shall include “immovable property”, (c) “tangible property” shall include “corporeal property”, (d) “intangible property” shall include “incorporeal property”, (e) “security interest”, “mortgage” and “lien” shall include a “hypothec”, “right of retention”, “prior claim” and a resolutory clause, (f) all references to filing, perfection, priority, registering or recording under the Uniform Commercial Code or a Personal Property Security Act shall include publication under the Civil Code of Québec, (g) all references to “perfection” of or “perfected” liens or security interest shall include a reference to an “opposable” or “set up” lien or security interest as against third parties, (h) any “right of offset”, “right of setoff” or similar expression shall include a “right of compensation”, (i) “goods” shall include “corporeal movable property” other than chattel paper, documents of title, instruments, money and securities, (j) an “agent” shall include a “mandatary”, (k) “construction liens” shall include “legal hypothecs” contemplated under Article 2724(2) of the Civil Code of Québec; (l) “joint and several” shall include “solidary”; (m) “gross negligence or willful misconduct” shall be deemed to be “intentional or gross fault”; (n) “beneficial ownership” shall include “ownership on behalf of another as mandatary”; (o) “easement” shall include “servitude”; (p) “priority” shall include “prior claim”; (q) “survey” shall include “certificate of location and plan”; (r) “state” shall include “province”; (s) “fee simple title” shall include “absolute ownership”; (t) “accounts” shall include “claims”.  The parties hereto confirm that it is their wish that this Agreement and any other document executed in connection with the transactions contemplated herein be drawn up in the English language only and that all other documents contemplated thereunder or relating thereto, including notices, may also be drawn up

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in the English language only.  Les parties aux présentes confirment que c’est leur volonté que cette convention et les autres documents de crédit soient rédigés en langue anglaise seulement et que tous les documents, y compris tous avis, envisagés par cette convention et les autres documents peuvent être rédigés en langue anglaise seulement.

ARTICLE 2.    AMOUNT AND TERMS OF CREDIT.

Section 2.1 Commitment of the Lenders.

(a) Subject to the terms and subject to the conditions herein set forth,

(i) each U.S. Term Loan Lender agrees to make to the U.S. Borrower on the Closing Date a U.S. Term Loan in Dollars in a principal amount equal to its U.S. Term Loan Commitment; and

(ii) each Canadian Term Loan Lender agrees to make to the Canadian Borrower on the Closing Date a Canadian Term Loan in Dollars in a principal amount equal to its Canadian Term Loan Commitment.

Amounts paid or repaid in respect of Term Loans may not be reborrowed.

(b) Subject to the terms and subject to the conditions herein set forth,

(i) each U.S. Revolving Lender agrees to make to the U.S. Borrower or the Canadian Borrower at any time and from time to time during the period commencing on the Closing Date and ending on the Termination Date (or the earlier date of termination of the U.S. Revolving Commitment) U.S. Revolving Loans in Dollars in an aggregate principal amount not to exceed, when added to such Lender’s Applicable Percentage of the then aggregate U.S. Revolving Credit Utilization, the U.S. Revolving Commitment of such Lender, and

(ii) each Canadian Revolving Lender agrees to make to the U.S. Borrower or the Canadian Borrower at any time and from time to time during the period commencing on the Closing Date and ending on the Termination Date (or the earlier date of termination of the Canadian Revolving Commitment) Canadian Revolving Loans in Dollars or Canadian Dollars in an aggregate principal amount not to exceed, when added to such Lender’s Applicable Percentage of the then aggregate Canadian Revolving Credit Utilization, the Canadian Revolving Commitment of such Lender.

Subject to the terms and conditions set forth herein, Revolving Loans may be repaid and reborrowed.

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(c)           Each Borrowing shall be made by the Lenders pro rata in accordance with their respective applicable Commitments; provided, however, that the failure of any Lender to make any Loan shall not in itself relieve the other Lenders of their obligations to lend.

Section 2.2 Availability of U.S. Loans.

(a) During the period commencing on the Closing Date and ending on the date the Bankruptcy Court and Canadian Court (if applicable), as the case may be, enters the Final Order (such period being referred to as the “Interim Period”), US$100,000,000 of the U.S. Revolving Commitment (the “Interim U.S. Revolving Commitment”) shall be available to the U.S. Borrower and the Canadian Borrower (subject to compliance with the U.S. Borrowing Base and the terms, conditions and covenants described in this Agreement).

(b) On the first Business Day after the expiration of the Interim Period, the entire U.S. Revolving Commitment shall be available to the U.S. Borrower and the Canadian Borrower (subject to compliance with the U.S. Borrowing Base and the terms, conditions and covenants in this Agreement).

(c) Notwithstanding any other provision of this Agreement to the contrary, (i) Total U.S. Outstandings shall not at any time exceed the U.S. Borrowing Base and (ii) U.S. Revolving Credit Utilization shall not at any time exceed (x) prior to the expiration of the Interim Period, the Interim U.S. Revolving Commitment, and (y) from and after the expiration of the Interim Period, the U.S. Revolving Commitment (as such U.S. Revolving Commitment may be reduced from time to time pursuant to the terms of this Agreement), and no Loan shall be made or Letter of Credit issued in violation of the foregoing.

Section 2.3 Availability of Canadian Loans.

(a) During the Interim Period, US$15,000,000 (or the Canadian Dollar Equivalent thereof) of the Canadian Revolving Commitment (the “Interim Canadian Revolving Commitment”) shall be available to the Canadian Borrower and the U.S. Borrower (subject to compliance with the Canadian Borrowing Base and the terms, conditions and covenants described in this Agreement).

(b) On the first Business Day after the expiration of the Interim Period, the entire Canadian Revolving Commitment shall be available to the Canadian Borrower and the U.S. Borrower (subject to compliance with the Canadian Borrowing Base and the terms, conditions and covenants in this Agreement).

(c) Notwithstanding any other provision of this Agreement to the contrary, (i) Total Canadian Outstandings shall not at any time exceed the Canadian Borrowing Base and (ii) Canadian Revolving Credit Utilization shall not at any time exceed (x) prior to the expiration of the Interim Period, the Interim Canadian Revolving Commitment, and (y) from and after the expiration of the Interim Period, the Canadian Revolving Commitment (as such Canadian Revolving Commitment may be reduced from time to time pursuant to the terms of this Agreement), and no Loan shall be made or Letter of Credit issued in violation of the foregoing.

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Section 2.4 Letters of Credit.

(a) Upon the terms and subject to the conditions herein set forth, the U.S. Borrower may request a Fronting Bank, at any time and from time to time after the Closing Date and prior to the Termination Date, to issue, and, subject to the terms and conditions contained herein, such Fronting Bank shall issue, for the account of the U.S. Borrower or a Domestic Subsidiary, as the case may be, one or more U.S. Revolving Facility Letters of Credit in a form reasonably acceptable to the Administrative Agent and such Fronting Bank in support of obligations of the U.S. Borrower or a Domestic Subsidiary of the U.S. Borrower, as the case may be, provided that no Letter of Credit shall be issued if after giving effect to such issuance (i) the aggregate U.S. Letter of Credit Outstandings would exceed US$35,000,000, (ii) the Total U.S. Outstandings would exceed the U.S. Borrowing Base or (iii) the U.S. Revolving Credit Utilization would exceed (x) prior to the expiration of the Interim Period, the Interim U.S. Revolving Commitment and (y) from and after the expiration of the Interim Period, the U.S. Revolving Commitment (as such U.S. Revolving Commitment may be reduced from time to time pursuant to the terms of this Agreement).  In connection with a request for a U.S. Revolving Facility Letter of Credit, the U.S. Borrower shall execute and deliver a form of letter of credit application or other agreement to such Fronting Bank in a form reasonably acceptable to the Administrative Agent and such Fronting Bank.  In the event of any inconsistency between the terms and conditions set forth herein and the terms and conditions of any form of letter of credit application or other agreement submitted by the U.S. Borrower to, or entered into by the U.S. Borrower with, any Fronting Bank relating to any U.S. Revolving Facility Letter of Credit, the terms and conditions of this Agreement shall control.

(b) Upon the terms and subject to the conditions herein set forth, the Canadian Borrower may request a Fronting Bank, at any time and from time to time after the Closing Date and prior to the Termination Date, to issue, and, subject to the terms and conditions contained herein, such Fronting Bank shall issue, in Dollars or Canadian Dollars, for the account of the Canadian Borrower or a Canadian Subsidiary one or more Canadian Revolving Facility Letters of Credit in a form reasonably acceptable to the Applicable Agent and such Fronting Bank in support of obligations of the Canadian Borrower or a Canadian Subsidiary, provided that no Letter of Credit shall be issued if after giving effect to such issuance (i) the aggregate Canadian Letter of Credit Outstandings would exceed US$10,000,000 (or the Canadian Dollar Equivalent thereof), (ii) the Total Canadian Outstandings would exceed the Canadian Borrowing Base or (iii) the Canadian Revolving Credit Utilization would exceed (x) prior to the expiration of the Interim Period, the Interim Canadian Revolving Commitment and (y) from and after the expiration of the Interim Period, the Canadian Revolving Commitment (as such Canadian Revolving Commitment may be reduced from time to time pursuant to the terms of this Agreement).   In connection with a request for a Canadian Revolving Facility Letter of Credit, the Canadian Borrower shall execute and deliver a form of letter of credit application or other agreement to such Fronting Bank in a form reasonably acceptable to the Applicable Agent and such Fronting Bank.  In the event of any inconsistency between the terms and conditions set forth herein and the terms and conditions of any form of letter of credit application or other agreement submitted by the Canadian Borrower to, or entered into by the Canadian Borrower with, any Fronting Bank relating to any Canadian Revolving Facility Letter of Credit, the terms and conditions of this Agreement shall control.

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(c) No Letter of Credit shall expire later than twelve (12) months after the issuance thereof, provided that if the Termination Date shall occur prior to the expiration of any Letter of Credit, the Borrowers shall, at or prior to the Termination Date, except as the Applicable Agent may otherwise agree in writing, (i) cause all Letters of Credit which expire after the Termination Date to be returned to the applicable Fronting Bank undrawn and marked “canceled” and each such Letter of Credit accompanied by written consent of the beneficiary on its letterhead signed by an authorized signatory consenting to such cancellation or (ii) if the Borrowers are unable to do so in whole or in part, either (x) provide a “back-to-back” letter of credit to one or more Fronting Banks in a form satisfactory to such Fronting Bank and the Applicable Agent (in their exclusive discretion), issued by a bank satisfactory to such Fronting Bank and the Applicable Agent (in their exclusive discretion), in an amount equal to the greater of (A) an amount, as determined by such Fronting Bank and the Applicable Agent, equal to the face amount of all outstanding Letters of Credit issued by such Fronting Bank plus the sum of all projected contractual obligations to the Applicable Agent, such Fronting Bank and the Lenders of the Borrowers thereunder through the expiration date(s) of such Letters of Credit, and (B) 105% of the then Letter of Credit Outstandings with respect to Letters of Credit issued by such Fronting Bank or (y) solely with respect to Letters of Credit scheduled to expire on or before the date that is ninety (90) days after the Termination Date, deposit cash in the Letter of Credit Account or Canadian Letter of Credit Account, as the case may be, in an amount which, together with any amounts then held in the Letter of Credit Account or the Canadian Letter of Credit Account, as the case may be, is equal to the greater of (A) an amount, as determined by the Fronting Banks and the Applicable Agent, equal to the face amount of all outstanding Letters of Credit plus the sum of all projected contractual obligations to the Applicable Agent, the Fronting Banks and the Lenders of the Borrowers thereunder through the expiration date(s) of such Letters of Credit, and (B) 105% of the then Letter of Credit Outstandings as collateral security for the Borrowers’ reimbursement obligations in connection therewith, such cash to be remitted to the Borrowers upon the expiration, cancellation or other termination or satisfaction of such reimbursement obligations.

(d) The Borrowers shall pay to each Fronting Bank, in addition to such other fees and charges as are specifically provided for in Section 2.22 hereof, such fees and charges in connection with the issuance and processing of the Letters of Credit issued by such Fronting Bank as are customarily imposed by such Fronting Bank from time to time in connection with letter of credit transactions.

(e) Drafts drawn under each Letter of Credit (i) shall be reimbursed by the applicable Borrower in the same currency as which such draw was paid on the Business Day immediately following the day such Borrower received notice from the applicable Fronting Bank that payment of such draft will be made, provided, that if such Borrower shall have received such notice thereof prior to 10:00 a.m., New York time, on the date such draft was drawn, such Borrower shall effect reimbursement on the same Business Day as such Borrower received notice thereof, and, (ii)(A) with respect to Letters of Credit denominated in Dollars, shall bear interest from the date of draw until the first Business Day following the date of draw at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin and thereafter until reimbursed in full at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin plus 2.0%, and (B) with respect to Letters of Credit denominated in Canadian Dollars, shall bear interest from the date of draw until the first Business Day following the date of draw at

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a rate per annum equal to the Canadian Prime Rate plus the Applicable Margin and thereafter until reimbursed in full at a rate per annum equal to the Canadian Prime Rate plus the Applicable Margin plus 2.0% (computed on the basis of the actual number of days elapsed over a year of 360 days).  In the case of drafts drawn on any U.S. Revolving Facility Letter of Credit, the U.S. Borrower shall effect such reimbursement (x) if such draw occurs prior to the Termination Date (or the earlier date of termination of the U.S. Revolving Commitment), in cash or through a Borrowing of U.S. Revolving Loans without the satisfaction of the conditions precedent set forth in Section 4.2 or (y) if such draw occurs on or after the Termination Date (or the earlier date of termination of the U.S. Revolving Commitment), in cash.  Each U.S. Revolving Lender agrees to make the U.S. Revolving Loans described in clause (x) of the preceding sentence notwithstanding a failure to satisfy the applicable lending conditions thereto or the provisions of Section 2.33.  In the case of drafts drawn on any Canadian Revolving Facility Letter of Credit, the Canadian Borrower shall effect such reimbursement (x) if such draw occurs prior to the Termination Date (or the earlier date of termination of the Canadian Revolving Commitment), in cash or through a Borrowing of Canadian Revolving Loans without the satisfaction of the conditions precedent set forth in Section 4.2 or (y) if such draw occurs on or after the Termination Date (or the earlier date of termination of the Canadian Revolving Commitment), in cash.  Each Canadian Revolving Lender agrees to make the Canadian Revolving Loans described in clause (x) of the preceding sentence notwithstanding a failure to satisfy the applicable lending conditions thereto or the provisions of Section 2.33.

(f) Immediately upon the issuance of any Letter of Credit by any Fronting Bank, such Fronting Bank shall be deemed to have sold to each Canadian Revolving Lender or U.S. Revolving Lender, as the case may be, other than such Fronting Bank, and each such other Lender shall be deemed unconditionally and irrevocably to have purchased from such Fronting Bank, without recourse or warranty, an undivided interest and participation, to the extent of such Lender’s Applicable Percentage, in such Letter of Credit, each drawing thereunder and the obligations of the Borrowers under this Agreement with respect thereto.  Upon any change in the Commitments pursuant to Section 2.11, Section 2.14, Section 2.15, Section 9.3 or ARTICLE 11, it is hereby agreed that with respect to all Letter of Credit Outstandings, there shall be an automatic adjustment to the participations hereby created to reflect the new Applicable Percentages of the assigning and assignee Lenders.  Any action taken or omitted by a Fronting Bank under or in connection with a Letter of Credit, if taken or omitted in the absence of gross negligence or willful misconduct, shall not create for such Fronting Bank any resulting liability to any other Lender.

(g) In the event that a Fronting Bank makes any payment under any U.S. Revolving Facility Letter of Credit and the U.S. Borrower shall not have reimbursed such amount in full to such Fronting Bank pursuant to this Section, the applicable Fronting Bank shall promptly notify the Administrative Agent, which shall promptly notify each U.S. Revolving Lender of such failure, and each U.S. Revolving Lender shall promptly and unconditionally pay to the Administrative Agent for the account of the applicable Fronting Bank the amount of such Lender’s Applicable Percentage of such unreimbursed payment in Dollars and in same day funds.  In the event that a Fronting Bank makes any payment under any Canadian Revolving Facility Letter of Credit and the Canadian Borrower shall not have reimbursed such amount in full to such Fronting Bank pursuant to this Section, the applicable Fronting Bank shall promptly notify the Canadian Administrative Agent, which shall promptly notify each Canadian Revolving

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Lender of such failure, and each Canadian Revolving Lender shall promptly and unconditionally pay to the Canadian Administrative Agent for the account of the applicable Fronting Bank the amount of such Lender’s Applicable Percentage of such unreimbursed payment in Dollars (or in respect of a Canadian Revolving Facility Letter of Credit denominated in Canadian Dollars, in Canadian Dollars) and in same day funds.  If the applicable Fronting Bank so notifies the Applicable Agent, and the Applicable Agent so notifies the U.S. Revolving Lenders or the Canadian Revolving Lenders, as the case may be, prior to 11:00 a.m. (New York City time) on any Business Day, such Lenders shall make available to the applicable Fronting Bank such Lender’s Applicable Percentage of the amount of such payment on such Business Day in same day funds.  If and to the extent such Lender shall not have so made its Applicable Percentage of the amount of such payment available to the applicable Fronting Bank, such Lender agrees to pay to such Fronting Bank, forthwith on demand such amount, together with interest thereon, for each day from such date until the date such amount is paid to the Applicable Agent for the account of such Fronting Bank at the Federal Funds Effective Rate.  The failure of any Lender to make available to the applicable Fronting Bank its Applicable Percentage of any payment under any Letter of Credit shall not relieve any other Lender of its obligation hereunder to make available to the applicable Fronting Bank its Applicable Percentage of any payment under any Letter of Credit on the date required, as specified above, but no Lender shall be responsible for the failure of any other Lender to make available to such Fronting Bank such other Lender’s Applicable Percentage of any such payment.  Whenever a Fronting Bank receives a payment of a reimbursement obligation as to which it has received any payments from the Lenders pursuant to this paragraph, such Fronting Bank shall pay to each Lender which has paid its Applicable Percentage thereof, in Dollars or Canadian Dollars, as applicable, and in same day funds, an amount equal to such Lender’s Applicable Percentage thereof.

(h) Unless otherwise requested by the Applicable Agent, each Fronting Bank shall report in writing to the Applicable Agent (i) on the first Business Day of each week, the daily activity (set forth by day) in respect of Letters of Credit during the immediately preceding week, including all issuances, extensions, amendments and renewals, all expirations and cancellations and all disbursements and reimbursements, (ii) on or prior to each Business Day on which such Fronting Bank expects to issue, amend, renew or extend any Letter of Credit, the date of such issuance, amendment, renewal or extension and the aggregate face amount of the Letters of Credit to be issued, amended, renewed or extended by it and outstanding after giving effect to such issuance, amendment, renewal or extension (and whether the amount thereof changed), it being understood that such Fronting Bank shall not permit any issuance, renewal, extension or amendment resulting in an increase in the amount of a Letter of Credit to occur without first obtaining written confirmation from the Applicable Agent that it is then permitted under this Agreement, (iii) on each Business Day on which such Fronting Bank makes any payment under any Letter of Credit, the date of such payment and the amount and currency of such payment, (iv) on any Business Day on which a Borrower fails to reimburse a payment under a Letter of Credit required to be reimbursed to such Fronting Bank on such day, the date of such failure, the applicable Borrower and the amount and currency of such Letter of Credit payment and (v) on any other Business Day, such other information as the Applicable Agent shall reasonably request.

Section 2.5 Issuance.  Whenever a Borrower desires a Fronting Bank to issue a Letter of Credit, it shall give to such Fronting Bank and the Applicable Agent at least three (3) Business

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Days’ prior written (including facsimile communication) notice (or such shorter period as may be agreed upon by the Applicable Agent, the Borrowers and such Fronting Bank) specifying the date on which the proposed Letter of Credit is to be issued (which shall be a Business Day), the stated amount and currency of the Letter of Credit so requested, the expiration date of such Letter of Credit and the name and address of the beneficiary thereof.

Section 2.6 Nature of Letter of Credit Obligations Absolute.  The obligations of the Borrowers to reimburse the Lenders and Fronting Banks for drawings made under any Letter of Credit shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including, without limitation:  (i) any lack of validity or enforceability of any Letter of Credit; (ii) the existence of any claim, setoff, defense or other right which any Borrower may have at any time against a beneficiary of any Letter of Credit or against any of the Lenders or Fronting Banks, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction; (iii) any draft, demand, certificate or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) payment by a Fronting Bank of any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit; (v) any other circumstance or happening whatsoever, which is similar to any of the foregoing; or (vi) the fact that any Event of Default shall have occurred and be continuing; provided, that such circumstance or event shall not have been the result of the gross negligence or willful misconduct of the applicable Fronting Bank.

Section 2.7 Making of Loans and Disbursements.

(a) Except as contemplated by Section 2.12, Loans denominated in Dollars shall be either ABR Loans or Eurodollar Loans and Loans denominated in Canadian Dollars shall be either Canadian Prime Rate Loans or Discount Rate Loans, in each case as the Borrowers may request subject to and in accordance with this Section, provided that all Loans made pursuant to the same Borrowing shall, unless otherwise specifically provided herein, be Loans of the same Type and in the same currency.  Each Lender may fulfill its Commitment with respect to any Eurodollar Loan or ABR Loan by causing any lending office of such Lender to make such Loan; provided that any such use of a lending office shall not affect the obligation of the applicable Borrower to repay such Loan in accordance with the terms of this Agreement.  Each Lender shall, subject to its overall policy considerations, use reasonable efforts (but shall not be obligated) to select a lending office which will not result in the payment of increased costs by the Borrowers pursuant to Section 2.16 or Section 2.19, provided that a Lender’s selection of a lending office shall have no effect on the obligations of any Loan Party pursuant to Section 2.16 or Section 2.19.  Subject to the other provisions of this Section and the provisions of Section 2.13, Borrowings of Loans of more than one Type may be incurred at the same time, provided that no more than ten (10) Borrowings of Eurodollar Loans and Discount Rate Loans may be outstanding at any time.

(b) The applicable Borrower shall give the Applicable Agent (with a simultaneous copy to the Administrative Agent if the Administrative Agent is not the Applicable Agent) prior written, facsimile or telephonic (confirmed promptly in writing) notice of each Borrowing of Revolving Loans hereunder of at least three (3) Business Days prior to a

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Borrowing of Eurodollar Loans and Discount Rate Loans and, to the extent practical, one (1) Business Day for ABR Loans and Canadian Prime Rate Loans, otherwise such ABR Loans and Canadian Prime Rate Loans may be borrowed on the Business Day on which such Borrower gives such notice; such notice shall be irrevocable and shall specify the following information:

(i) the Borrower requesting such Borrowing;

(ii) the Type (e.g., Discount Rate, Canadian Prime Rate, Eurodollar or ABR) of such Borrowing;

(iii) the Class (e.g., Canadian Revolving Loan or U.S. Revolving Loan) of such Borrowing;

(iv) the amount and currency of such Borrowing (which shall not (A) in the case of Dollar-denominated Revolving Loans, be less than US$1,000,000 or any integral multiple of US$1,000,000 in excess of such minimum amount, or (B) in the case of Canadian Dollar-denominated Revolving Loans, be less than C$1,000,000 or any integral multiple of C$1,000,000 in excess of such minimum amount);

(v) the date of such Borrowing (which shall be a Business Day);

(vi) in the case of a Eurodollar Loan, the Interest Period with respect thereto;

(vii) in the case of a Discount Rate Loan, the Contract Period with respect thereto; and

(viii) the number and location of the account to which funds are to be disbursed.

Such notice, to be effective, must be received by the Applicable Agent (and the Administrative Agent if the Administrative Agent is not the Applicable Agent) not later than 10:00 a.m., New York City time, on the third (3rd) Business Day preceding the date on which such Borrowing is to be made in the case of Eurodollar Loans or Discount Rate Loans and not later than 12:00 Noon, New York City time, on the same Business Day as the date of such Borrowing in the case of ABR Loans and Canadian Prime Rate Loans.  If no election is made as to the Type of a U.S. Revolving Loan or Canadian Revolving Loan denominated in Dollars, such notice shall be deemed a request for Borrowing of ABR Loans.  If no election is made as to the Type of a Canadian Revolving Loan denominated in Canadian Dollars, such notice shall be deemed a request for Borrowing of Canadian Prime Rate Loans.  If the Borrowing is a request for a Eurodollar Loan and no election is made as to the Interest Period, such notice shall be deemed to have requested an Interest Period of one month’s duration.  If the Borrowing is a request for a Discount Rate Loan and no election is made as to the Contract Period, such notice shall be deemed to have requested a Contract Period of one month’s duration.  If no election is made as to the currency of a Loan, such notice shall be deemed a request for Borrowing of Dollars.  The Applicable Agent shall promptly notify each Revolving Lender of its Applicable Percentage of

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such Borrowing, the date of such Borrowing, the Type and Class of Borrowing or Loans being requested, the Interest Period or Interest Periods applicable thereto and the Contract Period or Contract Periods applicable thereto, as appropriate.  On the Borrowing date specified in such notice, each Revolving Lender shall make its share of Borrowings of ABR Rate Loans or Canadian Prime Rate Loans available to the Applicable Agent at its office most recently designated for such purpose in a notice to the Lenders, no later than 3:00 p.m., New York City time, and its share of Borrowings of Eurodollar Loans or Discount Rate Loans available at the office of the Applicable Agent at its office most recently designated for such purpose in a notice to the Lenders, no later than no later than 1:00 p.m., New York City time, in each case in immediately available funds.  Upon receipt of the funds made available by the Lenders to fund any Borrowing hereunder, the Applicable Agent shall disburse such funds in the manner specified in the notice of Borrowing delivered by the Borrowers.

(c)           The U.S. Borrower shall borrow the entire principal amount of the U.S. Term Loans on the Closing Date and the proceeds of such Borrowing shall be disbursed as follows: (x) an amount equal to the excess of the U.S. Term Loans over the then current U.S. Borrowing Base shall be deposited in the U.S. Term Loan Collateral Account, (y) the amount requested by the U.S. Borrower to be used in amounts and for purposes consistent with the Budget delivered to the Administrative Agent on or prior to the Closing Date shall be disbursed to the U.S. Borrower and (z) the remainder of such Borrowing shall be deposited in the U.S. Investment Account.  The U.S. Borrower shall give the Administrative Agent at least three (3) Business Days’ prior written, facsimile or telephonic (confirmed promptly in writing) notice that it is borrowing the U.S. Term Loans on the Closing Date; such notice shall specify the following information:

(i) the Type (e.g., Eurodollar or ABR ) of such Borrowing;

(ii) in the case of a Eurodollar Loan, the Interest Period with respect thereto;

(iii) the amount of such Borrowing to be deposited in the U.S. Term Loan Collateral Account pursuant to clause (x) of the first sentence of this Section 2.7(c);

(iv) the amount of such Borrowing to be disbursed to the U.S. Borrower pursuant to clause (y) of the first sentence of this Section 2.7(c);

(v) the amount of such Borrowing to be deposited in the U.S. Investment Account pursuant to clause (z) of the first sentence of this Section 2.7(c); and

(vi) such other instructions as the Administrative Agent may require.

If no election is made as to the Type of Loan, such notice shall be deemed a request for Borrowing of ABR Loans.  If the Borrowing is a request for a Eurodollar Loan and no election is made as to the Interest Period, such notice shall be deemed to have requested an Interest Period of one month’s duration.  The Administrative Agent shall promptly notify each U.S. Term Loan

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Lender of its Applicable Percentage of such Borrowing, the Type of Borrowing being requested and the Interest Period or Interest Periods applicable thereto, as appropriate.  On the Closing Date, each U.S. Term Loan Lender shall make its share of the U.S. Term Loans available to the Administrative Agent at its office most recently designated for such purpose in a notice to the Lenders, no later than 12:00 Noon, New York City time, in immediately available funds.  Upon receipt of the funds made available by the U.S. Term Loan Lenders to fund the U.S. Term Loans hereunder, the Administrative Agent shall disburse such funds in the manner specified in the notice of Borrowing delivered by the U.S. Borrower.  After the Closing Date, one (1) Business Day after the Administrative Agent’s receipt of (i) a Borrowing Base Certificate demonstrating to the Administrative Agent’s satisfaction that the then U.S. Borrowing Base exceeds the amount of the Total U.S. Outstandings, (ii) such written disbursement instructions as the Administrative Agent may require and (iii) a certification from a Financial Officer of the U.S. Borrower that no Default or Event of Default has occurred and is continuing, the Administrative Agent shall disburse an amount not to exceed the amount by which the U.S. Borrowing Base exceeds the Total U.S. Outstandings from the U.S. Term Loan Collateral Account (including amounts deposited therein pursuant to this paragraph (c) or Section 2.14(a)) to the U.S. Investment Account.  Upon the Administrative Agent’s receipt from the U.S. Borrower of such written disbursement instructions as the Administrative Agent may require, the Administrative Agent shall permit the U.S. Borrower to withdraw from the U.S. Investment Account such amount as the U.S. Borrower shall request.  If, as of the end of the third (3rd) Business Day following any such withdrawal, the Available Cash (excluding amounts on deposit in the Investment Accounts) shall exceed US$50,000,000, the U.S. Borrower shall make a deposit to the U.S. Investment Account on the following Business Day in an amount which, when aggregated with the amount deposited in the Canadian Investment Account on such day, shall be equal to such excess. The U.S. Investment Account shall be closed and the cash deposited therein shall be disbursed to the U.S. Borrower on the earlier of (x) the Receivables Securitization Termination Date and (y) sixty (60) days after the Closing Date.

(d)           The Canadian Borrower shall borrow the entire principal amount of the Canadian Term Loans on the Closing Date and the proceeds of such Borrowing shall be disbursed as follows: (x) an amount equal to the excess of the Canadian Term Loans over the then current Canadian Borrowing Base shall be deposited in the Canadian Term Loan Collateral Account, (y) the amount requested by the Canadian Borrower to be used in amounts and for purposes consistent with the Budget delivered to the Administrative Agent on or prior to the Closing Date shall be disbursed to the Canadian Borrower and (z) the remainder of such Borrowing shall be deposited in the Canadian Investment Account.  The Canadian Borrower shall give the Canadian Administrative Agent at least three (3) Business Days’ prior written, facsimile or telephonic (confirmed promptly in writing) notice that it is borrowing the Canadian Term Loans on the Closing Date; such notice shall specify the following information:

(i) the Type (e.g., Eurodollar or ABR ) of such Borrowing;

(ii) in the case of a Eurodollar Loan, the Interest Period with respect thereto;

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(iii) the amount of such Borrowing to be deposited in the Canadian Term Loan Collateral Account pursuant to clause (x) of the first sentence of this Section 2.7(d);

(iv) the amount of such Borrowing to be disbursed to the Canadian Borrower pursuant to clause (y) of the first sentence of this Section 2.7(d);

(v) the amount of such Borrowing to be deposited in the Canadian Investment Account pursuant to clause (z) of the first sentence of this Section 2.7(d); and

(vi) such other instructions as the Canadian Administrative Agent may require.

If no election is made as to the Type of Loan, such notice shall be deemed a request for Borrowing of ABR Loans.  If the Borrowing is a request for a Eurodollar Loan and no election is made as to the Interest Period, such notice shall be deemed to have requested an Interest Period of one month’s duration.  The Canadian Administrative Agent shall promptly notify each Canadian Term Loan Lender of its Applicable Percentage of such Borrowing, the Type of Borrowing being requested and the Interest Period or Interest Periods applicable thereto, as appropriate.  On the Closing Date, each Canadian Term Loan Lender shall make its share of the Canadian Term Loans available to the Canadian Administrative Agent at its office most recently designated for such purpose in a notice to the Lenders, no later than 12:00 Noon, New York City time, in immediately available funds.  Upon receipt of the funds made available by the Canadian Term Loan Lenders to fund the Canadian Term Loans hereunder, the Canadian Administrative Agent shall disburse such funds in the manner specified in the notice of Borrowing delivered by the Canadian Borrower.  After the Closing Date, one (1) Business Day after the Canadian Administrative Agent’s receipt of (i) a Borrowing Base Certificate demonstrating to the Canadian Administrative Agent’s satisfaction that the then Canadian Borrowing Base exceeds the amount of the Total Canadian Outstandings, (ii) such written disbursement instructions as the Canadian Administrative Agent may require and (iii) a certification from a Financial Officer of the Canadian Borrower that no Default or Event of Default has occurred and is continuing, the Canadian Administrative Agent shall disburse an amount not to exceed the amount by which the Canadian Borrowing Base exceeds the Total Canadian Outstandings from the Canadian Term Loan Collateral Account (including amounts deposited therein pursuant to this paragraph (d) or Section 2.14(c)) to the Canadian Investment Account.  Upon the Canadian Administrative Agent’s receipt from the Canadian Borrower of such written disbursement instructions as the Canadian Administrative Agent may require, the Canadian Administrative Agent shall permit the Canadian Borrower to withdraw from the Canadian Investment Account such amount as the Canadian Borrower shall request.  If, as of the end of the third (3rd) Business Day following any such withdrawal, the Available Cash (excluding amounts on deposit in the Investment Accounts) shall exceed US$50,000,000, the Canadian Borrower shall make a deposit to the Canadian Investment Account on the following Business Day in an amount which, when aggregated with the amount deposited in the U.S. Investment Account on such day, shall be equal to such excess.  The Canadian Investment Account shall be closed and the cash deposited therein shall be

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disbursed to the Canadian Borrower on the earlier of (x) the Receivables Securitization Termination Date and (y) sixty (60) days after the Closing Date.

(e) Unless the Applicable Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Applicable Agent such Lender’s share of such Borrowing, the Applicable Agent may assume that such Lender has made such share available on such date in accordance with this Section and may, in reliance upon such assumption, make available to the applicable Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Applicable Agent, then the applicable Lender and the applicable Borrower severally agree to pay to the Applicable Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the applicable Borrower to but excluding the date of payment to the Applicable Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Applicable Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans or Canadian Prime Rate Loans, as the case may be.  If such Lender pays such amount to the Applicable Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.

Section 2.8 Repayment of Loans and Unreimbursed Draws; Evidence of Debt

(a) The U.S. Borrower hereby unconditionally promises to pay to (i) the Administrative Agent for the account of each U.S. Revolving Lender the then unpaid principal amount of each U.S. Revolving Loan obtained by the U.S. Borrower and each unreimbursed draw under all U.S. Revolving Facility Letters of Credit as set forth herein; (ii) the Administrative Agent for the account of each U.S. Term Loan Lender the then unpaid principal amount of each U.S. Term Loan as set forth herein; and (iii) the Canadian Administrative Agent for the account of each Canadian Revolving Lender the then unpaid principal amount of each Canadian Revolving Loan obtained by the U.S. Borrower.

(b) The Canadian Borrower hereby unconditionally promises to pay to (i) the Administrative Agent for the account of each U.S. Revolving Lender the then unpaid principal amount of each U.S. Revolving Loan obtained by the Canadian Borrower; (ii) the Canadian Administrative Agent for the account of each Canadian Revolving Lender the then unpaid principal amount of each Canadian Revolving Loan obtained by the Canadian Borrower and each unreimbursed draw under all Canadian Revolving Facility Letters of Credit as set forth herein; and (iii) the Canadian Administrative Agent for the account of each Canadian Term Loan Lender the unpaid principal amount of each Canadian Term Loan.

(c) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Obligations of the Borrowers to such Lender resulting from each Loan made by such Lender or participation in each Letter of Credit in which such Lender is participating, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

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(d) The Applicable Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Type and Class thereof and the Interest Period or Contract Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the U.S. Borrower or the Canadian Borrower, as the case may be, to each Lender hereunder, (iii) the amount of Term Loans on deposit in the respective Collateral Accounts and all disbursements from deposits to such accounts and (iv) the amount of any sum received by the Applicable Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(e) The entries made in the accounts maintained pursuant to paragraph (c) or (d) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Applicable Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Loan Parties to repay the Loans and draws under Letters of Credit in accordance with the terms of this Agreement.

(f) Any Lender may request that Loans made by it be evidenced by a promissory note.  In such event, the Borrowers shall execute and deliver to such Lender a promissory note or notes payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) in a form furnished by the Administrative Agent.  Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.3) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

Section 2.9 Interest on Loans

(a) Subject to the provisions of Section 2.10, each ABR Loan shall bear interest (computed, for ABR Loans wherein the Alternate Base Rate is determined by reference to the Adjusted LIBO Rate or the Federal Funds Effective Rate, on the basis of the actual number of days elapsed over a year of 360 days, and otherwise computed on the basis of the actual number of days elapsed over a year of 365 days) at a rate per annum equal to the Applicable Margin plus the Alternate Base Rate.

(b) Subject to the provisions of Section 2.10, each Eurodollar Loan shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal, during each Interest Period applicable thereto, to the Applicable Margin plus the Adjusted LIBO Rate for such Interest Period in effect for such Borrowing.

(c) Subject to the provisions of Section 2.10, each Canadian Prime Rate Loan shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365 days) at a rate per annum equal to the Applicable Margin plus the Canadian Prime Rate.

(d) Subject to the provisions of Section 2.10, each Discount Rate Loan shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365 days) at a rate per annum equal, during each Contract Period applicable thereto, to the Applicable Margin plus the Discount Rate for such Contract Period in effect for such Borrowing.

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(e) Accrued interest on all Loans shall be payable in arrears on each Interest Payment Date applicable thereto, at maturity (whether by acceleration or otherwise), after such maturity on demand and (with respect to Eurodollar Loans and Discount Rate Loans) upon any repayment or prepayment thereof (on the amount prepaid).

(f) For the purposes of the Interest Act (Canada) and disclosure thereunder, whenever any interest or any fee to be paid hereunder or in connection herewith is to be calculated on the basis of a 360-day or 365-day year, the yearly rate of interest to which the rate used in such calculation is equivalent is the rate so used multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by 360 or 365, as applicable.  The rates of interest under this Agreement are nominal rates, and not effective rates or yields.  The principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement.

(g) Any provision of this Agreement that would oblige a Canadian Loan Party to pay any fine, penalty or rate of interest on any arrears of principal or interest secured by a mortgage on real property or hypothec on immovables that has the effect of increasing the charge on arrears beyond the rate of interest payable on principal money not in arrears shall not apply to such Canadian Loan Party, which shall be required to pay interest on money in arrears at the same rate of interest payable on principal money not in arrears.

(h) If any provision of this Agreement would oblige a Canadian Loan Party to make any payment of interest or other amount payable to any Secured Party in an amount or calculated at a rate which would be prohibited by law or would result in a receipt by that Secured Party of “interest” at a “criminal rate” (as such terms are construed under the Criminal Code (Canada)), then, notwithstanding such provision, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by applicable law or so result in a receipt by that Secured Party of “interest” at a “criminal rate”, such adjustment to be effected, to the extent necessary (but only to the extent necessary), as follows:

(i) first, by reducing the amount or rate of interest; and

(ii) thereafter, by reducing any fees, commissions, costs, expenses, premiums and other amounts required to be paid which would constitute interest for purposes of section 347 of the Criminal Code (Canada).

Section 2.10 Default Interest.  Upon the occurrence and during the continuance of an Event of Default, the principal amount of all Loans outstanding and, to the extent permitted by applicable law, any interest payments on the Loans or any fees or other amounts owed hereunder, shall thereafter bear interest payable on demand at a rate that is 2% per annum in excess of the interest rate otherwise payable hereunder with respect to the applicable Loans (or, (x) in the case of any such fees and other amounts owed by the U.S. Loan Parties, at a rate which is 2% per annum in excess of the interest rate otherwise payable hereunder for ABR Loans that are U.S. Revolving Loans and (y) in the case of any such fees and other amounts owed by the Canadian Loan Parties, at a rate which is 2% per annum in excess of the interest rate otherwise

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payable hereunder for Canadian Prime Rate Loans that are Canadian Revolving Loans); provided, in the case of Eurodollar Loans and Discount Rate Loans, upon the expiration of the Interest Period or Contract Period, as the case may be, in effect at the time any such increase in interest rate is effective, if an Event of Default shall then be continuing, such Eurodollar Loans and Discount Rate Loans shall thereupon become ABR Loans and Canadian Prime Rate Loans, respectively, and shall thereafter bear interest payable upon demand at a rate which is 2% per annum in excess of the interest rate otherwise payable hereunder for ABR Loans and Canadian Prime Rate Loans, as the case may be.  Payment or acceptance of the increase rates of interest provided in this Section 2.10 is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of the Agents or any Lender.

Section 2.11 Optional Termination or Reduction of Commitment.  Upon at least three (3) Business Days’ prior written notice to the Applicable Agent (and the Administrative Agent if the Administrative Agent is not the Applicable Agent), (i) the U.S. Borrower may at any time in whole permanently terminate, or from time to time in part permanently reduce, the U.S. Revolving Commitment and (ii) the Canadian Borrower may at any time in whole permanently terminate, or from time to time in part permanently reduce, the Canadian Revolving Commitment.  Each such reduction or termination, as applicable, of such Commitment shall be in the principal amount of US$1,000,000 or any integral multiple of US$1,000,000 in excess thereof.  The U.S. Borrower shall not be permitted to terminate or reduce the U.S. Revolving Commitment if, as a result of such termination or reduction, the U.S. Revolving Credit Utilization would exceed the aggregate U.S. Revolving Commitment.  The Canadian Borrower shall not be permitted to terminate or reduce the Canadian Revolving Commitment if, as a result of such termination or reduction, the Canadian Revolving Credit Utilization would exceed the aggregate Canadian Revolving Commitment.  Any reduction or termination, as applicable, pursuant to this Section shall be applied pro rata to reduce the applicable Revolving Commitment of each applicable Lender until such Revolving Commitment is zero.  Simultaneously with each reduction or termination, as applicable, of any Revolving Commitment, the applicable Borrower shall pay to the Applicable Agent for the account of each applicable Lender the Commitment Fee accrued on the amount of the Revolving Commitment of such Lender so terminated or reduced to but excluding the date of such termination or reduction.

Section 2.12 Alternate Rate of Interest.

(a) If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

(i) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period; or

(ii) the Administrative Agent is advised by the Required Lenders of the applicable Class that the Eurodollar Rate for such Interest Period will not adequately and fairly reflect the cost to such

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Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrowers and the Lenders by telephone or facsimile as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrowers and the Lenders that the circumstances giving rise to such notice no longer exist, any request by the Borrowers for a Borrowing of Eurodollar Loans (including pursuant to a refinancing with Eurodollar Loans) pursuant to Section 2.7 or Section 2.13 shall be deemed a request for a Borrowing of ABR Loans.

(b) If prior to the commencement of any Contract Period for a Borrowing comprised of a Discount Rate Loan:

(i) the Canadian Administrative Agent determines (which determination shall be conclusive manifest error) that adequate and reasonable means do not exist for ascertaining the Discount Rate for such Contract Period, or

(ii) the Canadian Administrative Agent is advised by the Required Lenders of the applicable Class that the Discount Rate for such Contract Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Contract Period,

then the Canadian Administrative Agent shall give notice thereof to the Borrowers and the Lenders by telephone or facsimile as promptly as practical thereafter and, until the Canadian Administrative Agent notifies the Borrowers and the Lenders that the circumstances giving rise to such notice no longer exists, any request by the Borrowers for a Borrowing of Discount Rate Loans (including pursuant to a refinancing with Discount Rate Loans) pursuant to Section 2.7 or Section 2.13 shall be deemed a request for a Borrowing of Canadian Prime Rate Loans.

Section 2.13 Refinancing of Loans.  The Borrowers shall have the right, at any time, on three (3) Business Days’ prior irrevocable notice to the Applicable Agent (and the Administrative Agent if the Administrative Agent is not the Applicable Agent) (which notice, to be effective, must be received by the Applicable Agent not later than 1:00 p.m., New York City time, on the third Business Day preceding the date of any refinancing), (x) to refinance any outstanding Borrowing or Borrowings of Loans of one Type (or a portion thereof) with a Borrowing of Loans of the other Type or (y) to continue an outstanding Borrowing of Eurodollar Loans for an additional Interest Period or to continue an outstanding Borrowing of Discount Rate Loans for an additional Contract Period, subject to the following:

(a) as a condition to the refinancing of ABR Loans with Eurodollar Loans and to the continuation of Eurodollar Loans for an additional Interest Period, no Event of Default shall have occurred and be continuing at the time of such refinancing;

(b) as a condition to the refinancing of Canadian Prime Rate Loans with Discount Rate Loans and to the continuation of Discount Rate Loans for an additional Contract

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Period, no Event of Default shall have occurred and be continuing at the time of such refinancing;

(c) if less than a full Borrowing of Loans shall be refinanced, such refinancing shall be made pro rata among the applicable Lenders in accordance with the respective principal amounts of the Loans comprising such Borrowing held by such Lenders immediately prior to such refinancing;

(d) the aggregate principal amount of Loans being refinanced shall be at least (i) in the case of Dollar-denominated Loans, US$1,000,000 or any integral multiple of US$1,000,000 in excess thereof, or (ii) in the case of Canadian Dollar-denominated Loans, C$1,000,000 or any integral multiple of C$1,000,000 in excess thereof, provided that no partial refinancing of a Borrowing of Eurodollar Loans or Discount Rate Loans as the case may be, shall result in the Eurodollar Loans or Discount Rate Loans as the case may be, remaining outstanding pursuant to such Borrowing being less than US$1,000,000 or C$1,000,000, respectively, in aggregate principal amount;

(e) each Lender shall effect each refinancing by applying the proceeds of its new Canadian Prime Rate Loan, Discount Rate Loan, Eurodollar Loan or ABR Loan, as the case may be, to its Loan being refinanced;

(f) the Interest Period with respect to a Borrowing of Eurodollar Loans effected by a refinancing or in respect to the Borrowing of Eurodollar Loans being continued as Eurodollar Loans shall commence on the date of refinancing or the expiration of the current Interest Period applicable to such continuing Borrowing, as the case may be;

(g) a Borrowing of Eurodollar Loans may be refinanced only on the last day of an Interest Period applicable thereto;

(h) each request for a refinancing with a Borrowing of Eurodollar Loans which fails to state an applicable Interest Period shall be deemed to be a request for an Interest Period of one month;

(i) the Contract Period with respect to a Borrowing of Discount Rate Loans effected by a refinancing or in respect to the Borrowing of Discount Rate Loans being continued as Discount Rate Loans shall commence on the date of refinancing or the expiration of the current Contract Period applicable to such continuing Borrowing, as the case may be;

(j) a Borrowing of Discount Rate Loans may be refinanced only on the last day of a Contract Period applicable thereto; and

(k) each request for a refinancing with a Borrowing of Discount Rate Loans which fails to state an applicable Contract Period shall be deemed to be a request for a Contract Period of one month.

In the event that the U.S. Borrower or Canadian Borrower, as applicable, shall not give notice to refinance any Borrowing of Eurodollar Loans, or to continue such Borrowing as Eurodollar Loans, or shall not be entitled to refinance or continue such Borrowing as Eurodollar Loans, in

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each case as provided above, such Borrowing shall automatically be refinanced with a Borrowing of ABR Loans at the expiration of the then-current Interest Period.  In the event that the Canadian Borrower shall not give notice to refinance any Borrowing of Discount Rate Loans, or to continue such Borrowing as Discount Rate Loans, or shall not be entitled to refinance or continue such Borrowing as Discount Rate Loans, in each case as provided above, such Borrowing shall automatically be refinanced with a Borrowing of Canadian Prime Rate Loans at the expiration of the then-current Contract Period.  The Applicable Agent shall, after it receives notice from the U.S. Borrower or Canadian Borrower, as applicable, promptly give each Lender notice of any refinancing, in whole or part, of any Loan made by such Lender.

(l) Notwithstanding anything to the contrary contained herein:

(i) all Loans denominated in Dollars shall be repaid in Dollars;

(ii) all Loans denominated in Canadian Dollars shall be repaid in Canadian Dollars;

(iii) Loans denominated in Dollars may only be ABR Loans or Eurodollar Loans; and

(iv) Loans denominated in Canadian Dollars may only be Canadian Prime Rate Loans or Discount Rate Loans.

All Borrowings, refinancings, continuations and conversions, as applicable, of Loans shall be consistent with the foregoing.

Section 2.14 Mandatory Prepayment; Commitment Termination

(a) If at any time the Total U.S. Outstandings exceeds the U.S. Borrowing Base, within one (1) Business Day (i) the Borrowers will prepay the U.S. Revolving Loans in an amount necessary to cause the Total U.S. Outstandings to be equal to or less than the U.S. Borrowing Base, (ii) after giving effect to the prepayment in full of the U.S. Revolving Loans, the U.S. Borrower will deposit into the Letter of Credit Account an amount equal to 105% of the amount by which the aggregate U.S. Letter of Credit Outstandings (net of the amount of cash held in the Letter of Credit Account) so exceeds the U.S. Borrowing Base, and (iii) after giving effect to the prepayment in full of the U.S. Revolving Loans and the cash collateralization of the U.S. Letter of Credit Outstandings, the U.S. Borrower will (x) deposit into the U.S. Term Loan Collateral Account an amount equal to the amount by which the U.S. Term Outstandings exceeds the U.S. Borrowing Base or (y) prepay the U.S. Term Loans in an amount equal to the amount by which the U.S. Term Outstandings exceeds the U.S. Borrowing Base.

(b) If at any time the U.S. Revolving Credit Utilization exceeds (A) prior to the expiration of the Interim Period, the Interim U.S. Revolving Commitment, or (B) from and after the expiration of the Interim Period, the U.S. Revolving Commitment, within one (1) Business Day (i) the Borrowers will prepay the U.S. Revolving Loans in an amount necessary to cause the aggregate principal amount of the U.S. Revolving Credit Utilization, including unreimbursed draws, to be equal to or less than (A) prior to the expiration of the Interim Period, the Interim U.S. Revolving Commitment, or (B) from and after the expiration of the Interim

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Period, the U.S. Revolving Commitment and (ii) if, after giving effect to the prepayment in full of the U.S. Revolving Loans, the aggregate U.S. Letter of Credit Outstandings exceeds (A) prior to the expiration of the Interim Period, the Interim U.S. Revolving Commitment, or (B) from and after the expiration of the Interim Period, the U.S. Revolving Commitment, the U.S. Borrower will deposit into the Letter of Credit Account an amount equal to 105% of the amount by which the aggregate U.S. Letter of Credit Outstandings (net of the amount of cash held in the Letter of Credit Account) so exceeds (A) prior to the expiration of the Interim Period, the Interim U.S. Revolving Commitment, or (B) from and after the expiration of the Interim Period, the U.S. Revolving Commitment.

(c) If at any time the Total Canadian Outstandings exceeds the Canadian Borrowing Base, within one (1) Business Day (i) the Borrowers will prepay the Canadian Revolving Loans in an amount necessary to cause the Total Canadian Outstandings to be equal to or less than the Canadian Borrowing Base, (ii) after giving effect to the prepayment in full of the Canadian Revolving Loans, the Canadian Borrower will deposit into the Canadian Letter of Credit Account an amount equal to 105% of the amount by which the aggregate Canadian Letter of Credit Outstandings (net of the amount of cash held in the Canadian Letter of Credit Account) so exceeds the Canadian Borrowing Base, and (iii) after giving effect to the prepayment in full of the Canadian Revolving Loans and the cash collateralization of the Canadian Letter of Credit Outstandings, the Canadian Borrower will (x) deposit into the Canadian Term Loan Collateral Account an amount equal to the amount by which the Canadian Term Outstandings exceeds the Canadian Borrowing Base or (y) prepay the Canadian Term Loans in an amount equal to or the amount by which the Canadian Term Outstandings exceeds the Canadian Borrowing Base.

(d) If at any time the Canadian Revolving Credit Utilization exceeds (A) prior to the expiration of the Interim Period, the Interim Canadian Revolving Commitment, or (B) from and after the expiration of the Interim Period, the Canadian Revolving Commitment, within one (1) Business Day (i) the Borrowers will prepay the Canadian Revolving Loans in an amount necessary to cause the aggregate principal amount of the Canadian Revolving Credit Utilization, including unreimbursed draws, to be equal to or less than (A) prior to the expiration of the Interim Period, the Interim Canadian Revolving Commitment, or (B) from and after the expiration of the Interim Period, the Canadian Revolving Commitment and (ii) if, after giving effect to the prepayment in full of the Canadian Revolving Loans, the aggregate Canadian Letter of Credit Outstandings exceeds (A) prior to the expiration of the Interim Period, the Interim Canadian Revolving Commitment, or (B) from and after the expiration of the Interim Period, the Canadian Revolving Commitment, the Canadian Borrower will deposit into the Canadian Letter of Credit Account an amount equal to 105% of the amount by which the aggregate Canadian Letter of Credit Outstandings (net of the amount of cash held in the Canadian Letter of Credit Account) so exceeds (A) prior to the expiration of the Interim Period, the Interim Canadian Revolving Commitment, or (B) from and after the expiration of the Interim Period, the Canadian Revolving Commitment.

(e) Upon the receipt of the Net Proceeds by any of the U.S. Loan Parties from any Prepayment Event (including amounts received by a U.S. Loan Party from a Canadian Guarantor pursuant to Section 2.14(g)), the U.S. Loan Parties shall, jointly and severally, apply such Net Proceeds as follows:  first, to repay the then outstanding U.S. Term Loans; second, to repay the then outstanding U.S. Revolving Loans (without a permanent reduction of the U.S.

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Revolving Commitment); third, to repay the then outstanding Canadian Term Loans; fourth, to repay the then outstanding Canadian Revolving Loans (without a permanent reduction of the Canadian Revolving Commitment); fifth, to deposit into the Letter of Credit Account an amount equal to the greater of (i) an amount, as determined by the Fronting Banks and the Administrative Agent, equal to the face amount of all outstanding U.S. Revolving Facility Letters of Credit plus the sum of all projected contractual obligations of the Agents, the Fronting Banks and the Lenders of the U.S. Borrower thereunder through the expiration date(s) of such Letters of Credit and (ii) 105% of the aggregate U.S. Letter of Credit Outstandings (net of the amount of cash held in the Letter of Credit Account); and sixth, to deposit into the Canadian Letter of Credit Account an amount equal to the greater of (i) an amount, as determined by the Fronting Banks and the Canadian Administrative Agent, equal to the face amount of all outstanding Canadian Revolving Facility Letters of Credit plus the sum of all projected contractual obligations of the Agents, the Fronting Banks and the Lenders of the Canadian Borrower thereunder through the expiration date(s) of such Letters of Credit and (ii) 105% of the aggregate Canadian Letter of Credit Outstandings (net of the amount of cash held in the Canadian Letter of Credit Account); provided, however, that if the U.S. Borrower shall deliver to the Administrative Agent a certificate of a Financial Officer to the effect that the U.S. Loan Parties intend to apply the Net Proceeds from a Prepayment Event described in clause (b) of the definition thereof within 180 days after receipt of such Net Proceeds to acquire (or replace or rebuild) real property, equipment or other tangible assets (excluding inventory) to be used in the business of the U.S. Loan Parties, and certifying that no Default or Event of Default has occurred and is continuing, then no prepayment shall be required by this Section (to the extent the U.S. Loan Parties effect such reinvestment within the foregoing 180-day period) so long as such Net Proceeds shall remain deposited in an account with the Applicable Agent until requested by a U.S. Loan Party for use in accordance with such notice.

(f) Upon the receipt of the Net Proceeds by the Canadian Borrower from any Prepayment Event (including amounts received by the Canadian Borrower from a Canadian Guarantor pursuant to Section 2.14(g), with the understanding that no such amount received from a Canadian Guarantor shall be applied in respect of the Canadian Borrower’s guaranty of the U.S. Secured Obligations), the Canadian Borrower shall apply such Net Proceeds as follows:  first, to repay the then outstanding Canadian Term Loans; second, to repay the then outstanding Canadian Revolving Loans made to the Canadian Borrower (without a permanent reduction of the Canadian Revolving Commitment); third, to the extent permitted by applicable law and not otherwise prohibited by an order of the Canadian Court, to repay the then outstanding U.S. Term Loans; fourth, to the extent permitted by applicable law and not otherwise prohibited by an order of the Canadian Court, to repay the then outstanding U.S. Revolving Loans (without a permanent reduction of the U.S. Revolving Commitment); fifth, to the extent permitted by applicable law and not otherwise prohibited by an order of the Canadian Court, to repay the then outstanding Canadian Revolving Loans made to the U.S. Borrower (without a permanent reduction of the Canadian Revolving Commitment); sixth, to deposit into the Canadian Letter of Credit Account an amount equal to the greater of (i) an amount, as determined by the Fronting Banks and the Canadian Administrative Agent, equal to the face amount of all outstanding Canadian Revolving Facility Letters of Credit plus the sum of all projected contractual obligations of the Agents, the Fronting Banks and the Lenders of the Canadian Borrower thereunder through the expiration date(s) of such Letters of Credit and (ii) 105% of the aggregate Canadian Letter of Credit Outstandings (net of the amount of cash held in the Canadian Letter of Credit Account); and

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seventh, to the extent permitted by applicable law and not otherwise prohibited by an order of the Canadian Court, to deposit into the Letter of Credit Account an amount equal to the greater of (i) an amount, as determined by the Fronting Banks and the Administrative Agent, equal to the face amount of all outstanding U.S. Revolving Facility Letters of Credit plus the sum of all projected contractual obligations of the Agents, the Fronting Banks and the Lenders of the U.S. Borrower thereunder through the expiration date(s) of such Letters of Credit and (ii) 105% of the aggregate U.S. Letter of Credit Outstandings (net of the amount of cash held in the Letter of Credit Account); provided, however, that if the Canadian Borrower shall deliver to the Canadian Administrative Agent a certificate of a Financial Officer to the effect that the Canadian Loan Parties intend to apply the Net Proceeds from a Prepayment Event described in clause (b) of the definition thereof within 180 days after receipt of such Net Proceeds to acquire (or replace or rebuild) real property, equipment or other tangible assets (excluding inventory) to be used in the business of the Canadian Loan Parties, and certifying that no Default or Event of Default has occurred and is continuing, then no prepayment shall be required by this Section (to the extent the Canadian Loan Parties effect such reinvestment within the foregoing 180-day period) so long as such Net Proceeds shall remain deposited in an account with the Applicable Agent until requested by a Canadian Loan Party for use in accordance with such notice.

(g) Upon the receipt of the Net Proceeds by any Canadian Guarantor from any Prepayment Event, such Canadian Guarantor shall apply such Net Proceeds as follows:  first, to repay the then outstanding Canadian Term Loans; second, to repay the then outstanding Canadian Revolving Loans made to the Canadian Borrower (without a permanent reduction of the Canadian Revolving Commitment); third, to deposit into the Canadian Letter of Credit Account an amount equal to the greater of (i) an amount, as determined by the Fronting Banks and the Canadian Administrative Agent, equal to the face amount of all outstanding Canadian Revolving Facility Letters of Credit plus the sum of all projected contractual obligations of the Agents, the Fronting Banks and the Lenders of the Canadian Borrower thereunder through the expiration date(s) of such Letters of Credit and (ii) 105% of the aggregate Canadian Letter of Credit Outstandings (net of the amount of cash held in the Canadian Letter of Credit Account); fourth, to repay any outstanding post-petition/post-filing Indebtedness owed by such Canadian Guarantor to a U.S. Loan Party or the Canadian Borrower; and fifth to the extent permitted by applicable law and not otherwise prohibited by any applicable court order to repay any outstanding pre-petition Indebtedness owed by such Canadian Guarantor to a U.S. Loan Party or the Canadian Borrower; provided, however, that if the Canadian Borrower shall deliver to the Canadian Administrative Agent a certificate of a Financial Officer to the effect that the Canadian Guarantors intend to apply the Net Proceeds from a Prepayment Event described in clause (b) of the definition thereof within 180 days after receipt of such Net Proceeds to acquire (or replace or rebuild) real property, equipment or other tangible assets (excluding inventory) to be used in the business of the Canadian Guarantors, and certifying that no Default or Event of Default has occurred and is continuing, then no prepayment shall be required by this Section (to the extent the Canadian Guarantors effect such reinvestment within the foregoing 180-day period) so long as such Net Proceeds shall remain deposited in an account with the Applicable Agent until requested by a Canadian Loan Party for use in accordance with such notice.

(h) If on any date, as a result of fluctuations in the Exchange Rate, the Administrative Agent determines that the aggregate Canadian Revolving Credit Utilization shall have exceeded for more than three (3) consecutive Business Days (x) an amount equal to 105%

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of the total Canadian Revolving Commitments or (y) an amount equal to the Canadian Borrowing Base minus the Canadian Term Loans, the Administrative Agent shall notify the Borrowers of such occurrence and the Borrowers shall on the next succeeding Business Day prepay Canadian Revolving Loans in an amount sufficient to eliminate such excess.

(i) Upon the Termination Date, the Canadian Revolving Commitment and the U.S. Revolving Commitment shall each be terminated in full and the Loan Parties shall pay the Loans in full in cash and, if any Letter of Credit remains outstanding, comply with Section 2.4(c).

(j) The U.S. Term Loan Commitments and the Canadian Term Loan Commitments shall terminate at 5:00 p.m., New York City time, on the Closing Date.

Section 2.15 Optional Prepayment of Loans; Reimbursement of Lenders

(a) The Borrowers shall have the right at any time and from time to time to prepay any Borrowings without penalty (except for any breakage costs associated with Eurodollar Loans and Discount Rate Loans), in whole or in part, (x) with respect to a Borrowing of Eurodollar Loans or Discount Rate Loans, upon at least three (3) Business Days’ prior written, facsimile or telephonic (confirmed promptly in writing) notice to the Applicable Agent (and the Administrative Agent if the Administrative Agent is not the Applicable Agent) and (y) with respect to a Borrowing of ABR Loans or Canadian Prime Rate Loans, upon prior written, facsimile or telephonic (confirmed promptly in writing) notice to the Applicable Agent (and the Administrative Agent if the Administrative Agent is not the Applicable Agent) received no later than 12:00 Noon, New York City time on the date of such prepayment; provided, however, that (i) each such partial prepayment shall be in integral multiples of US$1,000,000 or C$1,000,000, as applicable, or the entire amount of such Borrowing, (ii) no prepayment of a Borrowing of Eurodollar Loans or Discount Rate Loans shall be permitted pursuant to this Section 2.15(a) other than on the last day of an Interest Period or Contract Period applicable thereto unless such prepayment is accompanied by the payment of the amounts described in clause (i) of the first sentence of Section 2.15(b), and (iii) no partial prepayment of a Borrowing of Eurodollar Loans or Discount Rate Loans shall result in the aggregate principal amount of the Eurodollar Loans or Discount Rate Loans remaining outstanding pursuant to such Borrowing being less than US$1,000,000 or C$1,000,000, as applicable.  Each notice of prepayment shall specify the prepayment date, the principal amount of the Borrowing to be prepaid and in the case of a Borrowing of Eurodollar Loans, the Borrowing or Borrowings pursuant to which made, shall be irrevocable and shall commit the U.S. Borrower or Canadian Borrower, as the case may be, to prepay such Loan by the amount and on the date stated therein.  The Applicable Agent shall, promptly after receiving notice from the U.S. Borrower or Canadian Borrower, as the case may be, hereunder, notify each applicable Lender of the principal amount of the Loans held by such Lender which are to be prepaid, the prepayment date and the manner of application of the prepayment.  Subject to Section 2.15(d), such prepayments shall be applied ratably to the Loans included in the prepaid Borrowing.

(b) The Borrowers shall reimburse each Lender on demand for any loss incurred or to be incurred by it in the reemployment of the funds released (i) resulting from any prepayment (for any reason whatsoever, including, without limitation, refinancing with ABR

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Loans or Canadian Prime Rate Loans, as applicable) of any Eurodollar Loan or Discount Rate Loan required or permitted under this Agreement, if such Loan is prepaid other than on the last day of the Interest Period or Contract Period for such Loan or (ii) in the event that after the Borrowers deliver a notice of Borrowing under Section 2.7 in respect of Eurodollar Loans or Discount Rate Loans, such Loans are not made on the first day of the Interest Period or Contract Period specified in such notice of Borrowing for any reason other than a breach by such Lender of its obligations hereunder.  In the case of a Eurodollar Loan, such loss shall be the amount as reasonably determined by such Lender as the excess, if any, of (A) the amount of interest which would have accrued to such Lender on the amount so paid or not borrowed at a rate of interest equal to the Adjusted LIBO Rate for such Loan, for the period from the date of such payment or failure to borrow to the last day (x) in the case of a payment or refinancing with ABR Loans other than on the last day of the Interest Period for such Loan, of the then current Interest Period for such Loan, or (y) in the case of such failure to borrow, of the Interest Period for such Loan which would have commenced on the date of such failure to borrow, over (B) the amount of interest which would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the London interbank market.  Each Lender shall deliver to the U.S. Borrower or Canadian Borrower, as the case may be, from time to time one or more certificates setting forth the amount of such loss as determined by such Lender.

(c)           In the event the U.S. Borrower or Canadian Borrower, as the case may be, fails to prepay any Borrowing on the date specified in any prepayment notice delivered pursuant to Section 2.15(a), the U.S. Borrower or Canadian Borrower, as the case may be, on demand by any Lender shall pay to the Applicable Agent for the account of such Lender any amounts required to compensate such Lender for any loss incurred by such Lender as a result of such failure to prepay, including, without limitation, any loss, cost or expenses incurred by reason of the acquisition of deposits or other funds by such Lender to fulfill deposit obligations incurred in anticipation of such prepayment, but without duplication of any amounts paid under Section 2.15(b).  Each Lender shall deliver to the U.S. Borrower or Canadian Borrower, as the case may be, from time to time one or more certificates setting forth the amount of such loss as determined by such Lender.

(d)           Any proceeds of Collateral (other than Collateral of the Canadian Loan Parties) received by any Agent (i) not constituting either (A) a specific payment of principal, interest, fees or other sum payable under the Loan Documents (which shall be applied as specified by the applicable Borrower), (B) a mandatory prepayment (which shall be applied in accordance with Section 2.14), (C) amounts to be applied from weekly sweeps of Available Cash (which shall be applied in accordance with Section 5.7) or (D) amounts to be applied from the Concentration Account when full cash dominion is in effect (which shall be applied in accordance with Section 2.15(g) and Section 5.7) or (ii) after an Event of Default has occurred and is continuing and the Applicable Agent so elects or the Required Lenders so direct, such funds shall be applied ratably as follows: first, to pay any fees, indemnities, or expense reimbursements then due to the Agents and the Fronting Banks from the U.S. Loan Parties (other than in connection with Banking Services Obligations or Swap Obligations); second, to pay any fees or expense reimbursements then due to the Lenders from the U.S. Loan Parties (other than in connection with Banking Services Obligations or Swap Obligations); third, to pay interest then due and payable on the U.S. Loans ratably; fourth, to prepay principal on the U.S. Loans and

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unreimbursed drafts drawn under U.S. Revolving Facility Letters of Credit ratably, fifth, to pay an amount to the Administrative Agent equal to the greater of (x) an amount, as determined by the Fronting Banks and the Administrative Agent, equal to the face amount of all outstanding U.S. Revolving Facility Letters of Credit plus the sum of all projected contractual obligations to the Agents, the Fronting Banks and the Lenders of the U.S. Borrower thereunder through the expiration date(s) of such Letters of Credit, and (y) 105% of the aggregate U.S. Letter of Credit Outstandings (net of the amount of cash held in the Letter of Credit Account), to be held in the Letter of Credit Account as cash collateral for such Obligations; sixth, to payment of any amounts owing by the U.S. Loan Parties with respect to Banking Services Obligations and Swap Obligations; seventh, to the payment of any other U.S. Secured Obligation due to the Agents or any Lender by the U.S. Loan Parties; eighth, to pay any fees, indemnities, or expense reimbursements then due to the Agents and the Fronting Banks from the Canadian Loan Parties (other than in connection with Banking Services Obligations or Swap Obligations); ninth, to pay any fees or expense reimbursements then due to the Lenders from the Canadian Loan Parties (other than in connection with Banking Services Obligations or Swap Obligations); tenth, to pay interest then due and payable on the Canadian Loans ratably; eleventh, to prepay principal on the Canadian Loans and unreimbursed drafts drawn under Canadian Revolving Facility Letters of Credit ratably, twelfth, to pay an amount to the Canadian Administrative Agent equal to the greater of (x) an amount, as determined by the Fronting Banks and the Canadian Administrative Agent, equal to the face amount of all outstanding Canadian Revolving Facility Letters of Credit plus the sum of all projected contractual obligations to the Agents, the Fronting Banks and the Lenders of the Canadian Borrower thereunder through the expiration date(s) of such Letters of Credit, and (y) 105% of the aggregate Canadian Letter of Credit Outstandings (net of the amount of cash held in the Canadian Letter of Credit Account), to be held in the Canadian Letter of Credit Account as cash collateral for such Obligations; thirteenth, to payment of any amounts owing by the Canadian Loan Parties with respect to Banking Services Obligations and Swap Obligations; and fourteenth, to the payment of any other Canadian Secured Obligation due to the Agents or any Lender by the Canadian Loan Parties.

(e)           Any proceeds of Collateral of the Canadian Loan Parties received by any Agent (i) not constituting either (A) a specific payment of principal, interest, fees or other sum payable under the Loan Documents (which shall be applied as specified by the applicable Borrower), (B) a mandatory prepayment (which shall be applied in accordance with Section 2.14), or (C) amounts to be applied from the Canadian Concentration Account when full cash dominion is in effect (which shall be applied in accordance with Section 2.15(g) and Section 5.7) or (ii) after an Event of Default has occurred and is continuing and the Applicable Agent so elects or the Required Lenders so direct, such funds shall be applied ratably as follows: first, to pay any fees, indemnities, or expense reimbursements then due to the Agents and the Fronting Banks from the Canadian Loan Parties (other than in connection with Banking Services Obligations or Swap Obligations); second, to pay any fees or expense reimbursements then due to the Lenders from the Canadian Loan Parties (other than in connection with Banking Services Obligations or Swap Obligations); third, to pay interest then due and payable on the Loans to the Canadian Borrower ratably; fourth, to prepay principal on the Canadian Loans made to the Canadian Borrower and unreimbursed drafts drawn under Canadian Revolving Facility Letters of Credit ratably, fifth, to pay an amount to the Canadian Administrative Agent equal to the greater of (x) an amount, as determined by the Fronting Banks and the Canadian Administrative Agent, equal to the face amount of all outstanding Canadian Revolving Facility Letters of Credit plus

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the sum of all projected contractual obligations to the Canadian Administrative Agent, the Fronting Banks and the Lenders of the Canadian Borrower thereunder through the expiration date(s) of such Letters of Credit, and (y) 105% of the aggregate Canadian Letter of Credit Outstandings (net of the amount of cash held in the Canadian Letter of Credit Account), to be held in the Canadian Letter of Credit Account as cash collateral for such Obligations; sixth, to payment of any amounts owing with respect to Banking Services Obligations and Swap Obligations owed by any Canadian Loan Party; seventh, to the payment of any other Canadian Secured Obligation due to the Agents or any Lender by the Loan Parties; and eighth, solely with respect to any remaining proceeds of Collateral of the Canadian Borrower, to the extent permitted by applicable law and not otherwise prohibited by any court order, to the payment of any other Secured Obligations in the amounts and in the priorities set forth in Section 2.15(d).

(f)            Notwithstanding anything to the contrary contained in this Agreement, unless so directed by a Borrower, or unless a Default or Event of Default is in existence, neither the Applicable Agent nor any Lender shall apply any payment which it receives to any Eurodollar Loan or Discount Rate Loan of a Class, except (a) on the expiration date of the Interest Period applicable to any such Eurodollar Loan or Contract Period applicable to any such Discount Rate Loan or (b) in the event, and only to the extent, that there are no outstanding ABR Loans or Canadian Prime Rate Loans of the same Class and, in any such event, the Loan Parties shall pay the break funding payment required in accordance with Section 2.15(b). The Agents and the Lenders shall have the continuing and exclusive right to apply and reverse and reapply any and all such proceeds and payments to any portion of the Secured Obligations.

(g)           At all times when full cash dominion is in effect pursuant to Section 5.7, on each Business Day, (i) the Administrative Agent shall apply all funds credited to the Concentration Account the previous Business Day to prepay the U.S. Revolving Loans and (ii) the Canadian Administrative Agent shall apply all funds credited to the Canadian Concentration Account the previous Business Day to prepay the Canadian Revolving Loans.

Section 2.16 Reserve Requirements; Change in Circumstances.

(a)           Notwithstanding any other provision herein, if after the date of this Agreement any change in applicable law or regulation or in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof (whether or not having the force of law) shall change the basis of taxation of payments to any Lender of the principal of or interest on any Eurodollar Loan or Discount Rate Loan made by such Lender or any fees or other amounts payable hereunder (other than changes in respect of Taxes, Other Taxes and taxes imposed on, or measured by, the net income or net profits or franchise taxes of such Lender in each case imposed by the jurisdiction in which such Lender is organized, has its principal office, or in which the applicable lending office for such Loan is located or by any political subdivision or taxing authority therein, or by any other jurisdiction or by any political subdivision or taxing authority therein other than a jurisdiction in which such Lender would not be subject to tax but for the execution and performance of, or receipt of payment and enforcement of rights under, this Agreement or any other Loan Document), or shall impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of or credit extended by such Lender (except any such reserve requirement which is reflected in the Adjusted LIBO Rate) or shall impose on such

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Lender or the applicable interbank market any other condition affecting this Agreement or the Eurodollar Loans or Discount Rate Loans made by such Lender, and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Loan or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise) by an amount deemed by such Lender to be material, then the Borrowers will pay to such Lender in accordance with paragraph (c) below such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

(b)           If any Lender shall have determined that the adoption or effectiveness after the Closing Date of any law, rule, regulation or guideline regarding capital adequacy, or any change in any of the foregoing or in the interpretation or administration of any of the foregoing by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or any lending office of such Lender) or any Lender’s holding company with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Loans made by such Lender pursuant hereto, such Lender’s Commitment hereunder or the issuance of, or participation in, any Letter of Credit by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such adoption, change or compliance (taking into account Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time the Borrowers shall pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

(c)           A certificate of each Lender setting forth such amount or amounts as shall be necessary to compensate such Lender or its holding company as specified in paragraph (a) or (b) above, as the case may be, shall be delivered to the Borrowers and shall be conclusive absent manifest error.  The Borrowers shall pay each Lender the amount shown as due on any such certificate delivered to it within ten (10) days after its receipt of the same.  Any Lender receiving any such payment shall promptly make a refund thereof to the Borrowers if the law, regulation, guideline or change in circumstances giving rise to such payment is subsequently deemed or held to be invalid or inapplicable.

(d)           Except as provided in the next sentence, failure on the part of any Lender to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital with respect to any period shall not constitute a waiver of such Lender’s right to demand compensation with respect to such period or any other period. Notwithstanding anything to the contrary set forth herein, unless a Lender gives notice to a Borrower that it is obligated to pay an amount under this Section 2.16 within 270 days after the increased cost or reduced return giving rise to such a claim is incurred or suffered, then such Lender shall only be entitled to be compensated to the extent that such increased cost or reduced return is incurred or suffered within the 270-day period before such Lender gives such notice to the Borrower; provided that if the circumstances giving rise to such a claim have a retroactive effect, then such 270-day period shall be extended to include the period of such retroactive

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effect.  The protection of this Section shall be available to each Lender regardless of any possible contention of the invalidity or inapplicability of the law, rule, regulation, guideline or other change or condition which shall have occurred or been imposed.

Section 2.17 Change in Legality

(a)           Notwithstanding anything to the contrary contained elsewhere in this Agreement, if (x) any change after the date of this Agreement in any law or regulation or in the interpretation thereof by any Governmental Authority charged with the administration thereof shall make it unlawful for a Lender to make or maintain a Eurodollar Loan or Discount Rate Loan or to give effect to its obligations as contemplated hereby with respect to a Eurodollar Loan or Discount Rate Loan or (y) at any time any Lender determines that the making or continuance of any of its Eurodollar Loans or Discount Rate Loans has become impracticable as a result of a contingency occurring after the Closing Date which adversely affects the applicable interbank market or the position of such Lender in such market, then, by written notice to the Borrowers, such Lender may (i) declare that Eurodollar Loans or Discount Rate Loans will not thereafter be made by such Lender hereunder, whereupon any request by the Borrowers for a (A) Eurodollar Borrowing shall, as to such Lender only, be deemed a request for an ABR Loan unless such declaration shall be subsequently withdrawn and, (B) a Borrowing comprised of Discount Rate Loans shall, as to such Lenders only, be deemed a request for a Canadian Prime Rate Loan unless such declaration shall be subsequently withdrawn; and (ii) require that all outstanding (A) Eurodollar Loans made by it be converted to ABR Loans, in which event all such Eurodollar Loans shall be automatically converted to ABR Loans as of the effective date of such notice as provided in paragraph (b) below, and (B) Discount Rate Loans made by it be converted to Canadian Prime Rate Loans, in which event all such Discount Rate Loans shall be automatically converted to Canadian Prime Rate Loans as of the effective date of such notice as provided in paragraph (b) below.  In the event any Lender shall exercise its rights under clause (i) or (ii) of this paragraph (a), all payments and prepayments of principal which would otherwise have been applied to repay the Eurodollar Loans or Discount Rate Loans, as the case may be, that would have been made by such Lender or the converted Eurodollar Loans or Discount Rate Loans, as the case may be, of such Lender shall instead be applied to repay the ABR Loans or Canadian Prime Rate Loans, as the case may be, made by such Lender in lieu of, or resulting from the conversion of, such Eurodollar Loans or Discount Rate Loans, as the case may be.

(b)           For purposes of this Section 2.17, a notice to the Borrowers by any Lender pursuant to paragraph (a) above shall be effective, if lawful, and if any Eurodollar Loans or Discount Rate Loans, as the case may be, shall then be outstanding, on the last day of the then-current Interest Period or Contract Period, otherwise, such notice shall be effective on the date of receipt by the Borrowers.

Section 2.18 Pro Rata Treatment, etc.

(a)           All payments and repayments of principal and interest in respect of the Loans (except as expressly provided in Section 2.14, Section 2.15, Section 2.16, Section 2.17 and ARTICLE 11) and all payments of Letter of Credit Fees (other than those payable to a Fronting Bank) for Letters of Credit shall be made pro rata among the applicable Lenders in accordance with their respective applicable Commitments (provided that in the case of Term

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Loans or in the event that such Commitments shall have expired or been terminated, such pro rata allocation shall be based on the respective principal amounts of the outstanding Loans or participations in Letters of Credit).  All payments of Commitment Fees shall be made pro rata among the Lenders in accordance with their Commitments.  All payments by the Borrowers hereunder shall be (i) except as otherwise provided in Section 2.19, net of any tax applicable to the Borrowers and (ii) made in Dollars or Canadian Dollars (as applicable) in immediately available funds, without defense, setoff or counterclaim and free of any restriction or condition, at the office of the Applicable Agent by 12:00 Noon, New York City time, on the date on which such payment shall be due.  Interest in respect of any Loan hereunder shall accrue from and including the date of such Loan to but excluding the date on which such Loan is paid in full or converted to a Loan of a different Type.

(b)           Unless the Applicable Agent shall have received notice from the applicable Borrower prior to the date on which any payment is due to the Applicable Agent for the account of the Lenders or a Fronting Bank hereunder that the Borrower will not make such payment, the Applicable Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or a Fronting Bank, as the case may be, the amount due.  In such event, if the Borrower has not in fact made such payment, then each of the Lenders or a Fronting Bank, as the case may be, severally agrees to repay to the Applicable Agent forthwith on demand the amount so distributed to such Lender or Fronting Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Applicable Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Applicable Agent in accordance with banking industry rules on interbank compensation.

(c)           If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.4(e) or 2.4(g), Section 2.7(b), 2.7(c), 2.7(d) or 2.7(e), Section 2.18(b) or Section 9.6(b), then the Applicable Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Applicable Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

Section 2.19 Taxes

(a)           Except as otherwise provided in this Section 2.19, any and all payments by the Loan Parties hereunder and under any other Loan Document shall be made free and clear of and without deduction for any and all current or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on or measured by the net income or net profit of an Agent, a Fronting Bank or any Lender (or any transferee or assignee thereof, including a participation holder (any such entity being called a “Transferee”)) and franchise taxes, in each case imposed on an Agent, a Fronting Bank or any Lender (or Transferee) by the jurisdiction under the laws of which such Agent, such Fronting Bank or any such Lender (or Transferee) is organized or in which the applicable lending office of any such Lender (or Transferee) or applicable office of such Agent or such Fronting Bank, is located or any political subdivision thereof or by any other jurisdiction or by any political subdivision or taxing authority therein other than a jurisdiction in which such Agent, such Fronting Bank or such Lender (or Transferee) would not be subject to tax but for the execution and performance

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of, the receipt of payment and the enforcement of rights under this Agreement or any other Loan Document (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as “Taxes”).  If the Loan Parties shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to the Lenders (or any Transferee), a Fronting Bank or the Agents, (i) the sum payable shall be increased by the amount necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) such Lender (or Transferee), such Fronting Bank or such Agent (as the case may be) shall receive an amount equal to the sum it would have received had no such deductions been made, (ii) the Loan Parties shall make such deductions and (iii) the Loan Parties shall pay the full amount deducted to the relevant taxing authority or other Governmental Authority in accordance with applicable law.

(b)           In addition, the Loan Parties agree to pay any current or future stamp or documentary taxes or any other excise or property taxes, charges, assessments or similar levies that arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Document (hereinafter referred to as “Other Taxes”).

(c)           The Borrowers will indemnify each Lender (or Transferee), each Fronting Bank and each Agent for the full amount of Taxes and Other Taxes paid by such Lender (or Transferee), such Fronting Bank or such Agent, as the case may be, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted by the relevant taxing authority or other Governmental Authority.  Such indemnification shall be made within thirty (30) days after the date any Lender (or Transferee), any Fronting Bank or any Agent, as the case may be, makes written demand therefor.  If any Lender (or Transferee), Fronting Bank or Agent receives a refund in respect of any Taxes or Other Taxes as to which it has been indemnified by the Loan Parties pursuant to this Section, and in such Lender’s (or Transferee’s), Fronting Bank’s or Agent’s opinion, such refund amount is both reasonably identifiable and quantifiable by it without unacceptable administrative burden, it shall promptly notify the Loan Parties of such refund and shall, within thirty (30) days after receipt of a request by the Loan Parties (or promptly upon receipt, if the Loan Parties have requested application for such refund pursuant hereto), repay such refund to the Loan Parties (to the extent of amounts that have been paid by the Loan Parties under this Section with respect to such refund) plus interest that is received by the Lender (or Transferee), Fronting Bank or such Agent as part of the refund, net of all taxes and out-of-pocket expenses of such Lender (or Transferee), Fronting Bank or such Agent and without additional interest thereon; provided that the Loan Parties, upon the request of such Lender (or Transferee), such Fronting Bank, or such Agent, agree to return such refund (plus penalties, interest or other charges) to such Lender (or Transferee), Fronting Bank or the Administrative Agent in the event such Lender (or Transferee), such Fronting Bank, or such Agent is required to repay such refund.  Nothing contained in this sub-Section (c) shall interfere with the right of any Lender (or Transferee), Fronting Bank or any Agent to arrange its affairs in any manner it thinks fit and, in particular, no Lender (or Transferee), Fronting Bank or Agent shall be under any obligation to claim relief for tax purposes on its corporate profits or otherwise, or to claim such relief in priority to any other claims, reliefs, credits or deductions available to it, or to require any Lender (or Transferee), any Fronting Bank or any Agent to make available any

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of its tax returns (or any other information relating to its taxes that it deems to be confidential) to any Loan Party or any other Person.

(d)           Within thirty (30) days after the date of any payment of Taxes or Other Taxes withheld by the Loan Parties in respect of any payment to any Lender (or Transferee), any Fronting Bank or any Agent, the Loan Parties will furnish to the Administrative Agent, at its address referred to on the signature pages hereof, the original or a certified copy of a receipt evidencing payment thereof or such other evidence of payment as shall be satisfactory to the Agent or the Lender (or Transferee).

(e)           Without prejudice to the survival of any other agreement contained herein, the agreements and obligations contained in this Section shall survive the payment in full of the principal of and interest on all Loans made hereunder.

(f)            Each Lender (and Transferee), each Fronting Bank and each Agent shall on or prior to the Closing Date (in the case of each Lender and Agent listed on the signature pages hereof on the Closing Date) or on or prior to the date of the Assignment and Acceptance pursuant to which it becomes a Lender (in the case of each other Lender), deliver to the Loan Parties and the Administrative Agent such certificates, documents and other evidence, as required by the Code or Treasury Regulations issued pursuant thereto, including, if a United States Person (as such term is defined in Section 7701(a)(30) of the Code), two original copies of (A) Internal Revenue Service Form W-9 (unless such Lender (or Transferee), Fronting Bank or Agent is an “exempt recipient” as defined in Treasury Regulations Section 1.6049-4(c) for which no withholding is required) and, if not a United States Person (as such term is defined in Section 7701(a)(30) of the Code), two original copies of (B) Internal Revenue Service Forms W-8BEN, W-8IMY, or W-8ECI and any other certificate or statement of exemption required by the applicable Treasury Regulations, properly completed and duly executed by such Lender (or Transferee), Fronting Bank or such Agent to establish that such payment is not subject to United States Federal withholding tax under the Code.  In addition, each Lender (and Transferee), each Fronting Bank, and each Agent agrees that from time to time after the Closing Date or the date of the Assignment and Acceptance pursuant to which it becomes a Lender, whenever a lapse in time or change in circumstances renders such forms or other documents obsolete or inaccurate in any material respect, such Lender (and Transferee), such Fronting Bank, or such Agent shall, to the extent permitted under applicable law, promptly deliver to the Loan Parties such replacement forms or other documents or notify the Loan Parties of its inability to deliver any such forms or other documents.  Unless the Loan Parties and the Administrative Agent have received forms or other documents satisfactory to them indicating that such payments hereunder are not subject to United States Federal withholding tax or are subject to such tax at a rate reduced by an applicable tax treaty, the Loan Parties or the Administrative Agent shall withhold taxes from such payments at the applicable statutory rate.

(g)           The Loan Parties shall not be required to pay any additional amounts to any Lender (or Transferee), any Fronting Bank or any Agent in respect of United States Federal withholding tax pursuant to sub-Section(a) above if the obligation to pay such additional amounts would not have arisen but for a failure by such Lender (or Transferee), such Fronting Bank or such Agent to comply with the provisions of sub-Section (f) above.

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(h)           Any Lender (or Transferee), Fronting Bank or Agent claiming any additional amounts payable pursuant to this Section 2.19 shall use reasonable efforts (consistent with legal and regulatory restrictions) to file or deliver to the applicable Loan Party with a copy to the Administrative Agent any certificate or document reasonably requested by the Loan Parties if the making of such delivery or such a filing would avoid the need for or reduce the amount of any such additional amounts that may thereafter accrue and would not, in the sole determination of such Lender (or Transferee), such Fronting Bank or such Agent, be otherwise materially disadvantageous to such Lender (or Transferee), Fronting Bank or such Agent.

(i)            For greater certainty, no failure to provide such information, make such filing or change such lending office shall relieve any Loan Party of any of its obligations hereunder.

Section 2.20 Certain Fees.  The Borrowers shall pay to the Administrative Agent, for the respective accounts of the Administrative Agent and the Lenders, the fees set forth in (i) that certain fee letter dated January 6, 2009 among the Administrative Agent, X.X. Xxxxxx Securities Inc. and the Parent, (ii) that certain fee letter dated January 6, 2009 among the Administrative Agent, the Co-Lead Arrangers, Deutsche Bank Trust Company Americas and the Parent, and (iii) that certain participation fee letter dated January 23, 2009 among the Administrative Agent, the Co-Lead Arrangers, Deutsche Bank Trust Company Americas and the Parent, in each case at the times set forth therein; provided, that if the Canadian Borrower would otherwise pay any of the fees described in this Section 2.20 to the Administrative Agent with respect to any services provided in Canada by the Canadian Administrative Agent or the Canadian Collateral Agent, it shall pay such portion of the fee directly to the Canadian Administrative Agent or the Canadian Collateral Agent, as the case may be.

Section 2.21 Commitment Fee.  The applicable Borrower shall pay to the Applicable Agent on behalf of the U.S. Revolving Lenders and the Canadian Revolving Lenders a commitment fee (the “Commitment Fee”) for the period commencing on the Closing Date and ending on the Termination Date or the earlier date of termination of the Commitments calculated (on the basis of the actual number of days elapsed over a year of 360 days) at a rate equal to the Commitment Fee Percentage on the average daily Unused Revolving Commitment during the preceding quarter.  For the avoidance of doubt, the Commitment Fee shall cease to accrue on any portion of the Unused Revolving Commitment on the date such portion is converted to a U.S. Term Loan pursuant to Section 9.23(a) or to a Canadian Term Loan pursuant to Section 9.23(c).  Such Commitment Fee, to the extent then accrued, shall be payable (x) monthly, in arrears, on the last calendar day of each month, (y) on the Termination Date and (z) as provided in Section 2.11 hereof, upon any reduction or termination in whole or in part of the Total Revolving Commitment.

Section 2.22 Letter of Credit Fees.  The applicable Borrower shall pay with respect to each Letter of Credit (i) to the Applicable Agent on behalf of the U.S. Revolving Lenders and the Canadian Revolving Lenders, as applicable, a fee calculated (from the date issued on the basis of the actual number of days elapsed over a year of 360 days) at a rate equal to the Applicable Margin on the undrawn stated amount thereof, and (ii) to the applicable Fronting Bank such Fronting Bank’s customary fees for issuance, amendments and processing referred to in Section 2.4.  In addition, the applicable Borrower shall pay each Fronting Bank for its account a fronting

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fee in respect of each Letter of Credit issued by such Fronting Bank, for the period from the date issued to and including the date of termination of such Letter of Credit, computed at a rate per annum equal to 0.25%, or, if such Fronting Bank is a bank other than JPMCB, as separately agreed by the Borrowers and such Fronting Bank.  Accrued fees described in clause (i) of the first sentence of this paragraph in respect of each Letter of Credit shall be due and payable monthly in arrears on the last calendar day of each month and on the Termination Date, or such earlier date as the Total Revolving Commitment is terminated.  Accrued fees described in clause (ii) of the first sentence of this paragraph in respect of each Letter of Credit shall be payable at times to be determined by the Fronting Banks, the Borrowers and the Administrative Agent.

Section 2.23 Nature of Fees. All Fees shall be paid on the dates due, in immediately available funds, to the Applicable Agent for the respective accounts of the Applicable Agent and the Lenders, as provided herein and in the letters described in Section 2.20.  Once paid, none of the Fees shall be refundable under any circumstances.

Section 2.24 Priority and Liens

(a)           Each of the Loan Parties hereby covenants and agrees that the Secured Obligations of the Loan Parties hereunder and under the Loan Documents, the U.S. Guaranteed Obligations and the Canadian Guaranteed Obligations of each of the Loan Parties as follows:

(i) With respect to the Secured Obligations of the U.S. Loan Parties and the Canadian Borrower:

(A) in the U.S. Cases pursuant to Section 364(c)(1) of the Bankruptcy Code, such Secured Obligations shall at all times constitute an allowed Superpriority Claim and be payable from and have recourse to all pre-petition and post-petition property of the estates of the U.S. Loan Parties and the Canadian Borrower and all proceeds thereof (including, upon entry of the Final Order, any proceeds of Avoidance Actions), and which Superpriority Claim shall be senior to the Superpriority Claim granted to the Pre-Petition Agent and the Pre-Petition Secured Lenders pursuant to Section 2.24(d) below;

(B) in the U.S. Cases pursuant to Section 364(c)(2) of the Bankruptcy Code, such Secured Obligations shall at all times be secured by a perfected first priority Lien on all unencumbered property of the U.S. Loan Parties and the Canadian Borrower (including, upon entry of the Final Order, any proceeds of Avoidance Actions) and on all cash maintained in any Collateral Account and any investments of the funds contained therein, provided that amounts in the Collateral Accounts shall not be subject to the Carve-Out or the CCAA Charges;

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(C) in the U.S. Cases pursuant to Section 364(c)(3) of the Bankruptcy Code, such Secured Obligations shall be secured by a perfected junior Lien upon all property of the U.S. Loan Parties and the Canadian Borrower that is subject to valid and perfected Liens in existence on the Filing Date or that is subject to valid Liens in existence on the Filing Date that are perfected subsequent to the Filing Date as permitted by Section 546(b) of the Bankruptcy Code (other than certain property that is subject to the existing Liens that secure obligations under the Pre-Petition Credit Agreement, which liens shall be primed by the liens to be granted to the Administrative Agent described in the following clause (D));

(D) in the U.S. Cases pursuant to Section 364(d)(1) of the Bankruptcy Code, such Secured Obligations shall be secured by a perfected first priority, senior priming Lien on all of the property of the U.S. Loan Parties and the Canadian Borrower (including, without limitation, cash, inventory, receivables, rights under license agreements, property, plant and equipment and the residual interest of the U.S. Loan Parties and the Canadian Borrower in any Receivables Securitization Programs) that is subject to the existing liens which secure (1) the obligations of the Loan Parties under or in connection with the Pre-Petition Credit Agreement, and (2) other Liens, obligations or indebtedness of the Loan Parties junior to the Pre-Petition Credit Agreement (collectively, the “Primed Liens”), which Primed Liens shall be primed by and made subject and subordinate to the perfected first priority senior priming Liens to be granted to the Administrative Agent, which senior priming Liens in favor of the Administrative Agent shall also prime any Liens granted after the commencement of the Cases to provide adequate protection Liens in respect of any of the Primed Liens, but shall not prime (1) Non-Primed Liens which secure the Calpine Debt or (2) other Non-Primed Liens solely to the extent such Non-Primed Liens secure claims in an aggregate amount less than or equal to US$60,000,000; and

(E) in the Canadian Cases, pursuant to an order of the Canadian Court, in respect of the Secured Obligations of the Canadian Borrower, such Secured Obligations will be secured by a superpriority charge and senior priming security interest (“CCAA DIP Lenders’ Charge”) over all of the present and future assets of the Canadian Borrower

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with priority over all existing liens and security, including the Primed Liens; and

(ii) With respect to the Canadian Secured Obligations of the Canadian Loan Parties:

(A) in the U.S. Cases pursuant to Section 364(c)(1) of the Bankruptcy Code, such Secured Obligations shall at all times constitute an allowed Superpriority Claim and be payable from and have recourse to all pre-petition and post-petition property of the estates of the Canadian Loan Parties and all proceeds thereof (including, upon entry of the Final Order, any proceeds of Avoidance Actions), and which Superpriority Claim shall be senior to the Superpriority Claim granted to the Pre-Petition Agent and the Pre-Petition Secured Lenders pursuant to Section 2.24(d) below;

(B) in the U.S. Cases pursuant to Section 364(c)(2) of the Bankruptcy Code, such Secured Obligations shall at all times be secured by a perfected first priority Lien on all unencumbered property of the Canadian Loan Parties (including, upon entry of the Final Order, any proceeds of Avoidance Actions) and on all cash maintained in any Collateral Account and any investments of the funds contained therein, provided that amounts in the Collateral Accounts shall not be subject to the Carve-Out or the CCAA Charges;

(C) in the U.S. Cases pursuant to Section 364(c)(3) of the Bankruptcy Code, such Secured Obligations shall be secured by a perfected junior Lien upon all property of the Canadian Loan Parties that is subject to valid and perfected Liens in existence on the Filing Date or that is subject to valid Liens in existence on the Filing Date that are perfected subsequent to the Filing Date as permitted by Section 546(b) of the Bankruptcy Code (other than certain property that is subject to the existing Liens that secure obligations under the Pre-Petition Credit Agreement, which liens shall be primed by the liens to be granted to the Administrative Agent described in the following clause (D));

(D) in the U.S. Cases pursuant to Section 364(d)(1) of the Bankruptcy Code, such Secured Obligations shall be secured by a perfected first priority, senior priming Lien on all of the property of the Canadian Loan Parties (including,

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without limitation, cash, inventory, receivables, rights under license agreements, property, plant and equipment and the residual interest of the Canadian Loan Parties in any Receivables Securitization Programs) that is subject to the Primed Liens, which Primed Liens shall be primed by and made subject and subordinate to the perfected first priority senior priming Liens to be granted to the Administrative Agent, which senior priming Liens in favor of the Administrative Agent shall also prime any Liens granted after the commencement of the Cases to provide adequate protection Liens in respect of any of the Primed Liens, but shall not prime (1) Non-Primed Liens which secure the Calpine Debt or (2) other Non-Primed Liens solely to the extent such Non-Primed Liens secure claims in an aggregate amount less than or equal to US$60,000,000; and

(E) in the Canadian Cases, pursuant to an order of the Canadian Court, such Secured Obligations will be secured by the CCAA DIP Lenders’ Charge over all of the present and future assets of the Canadian Loan Parties with priority over all existing liens and security, including the Primed Liens;

subject in each case only to the following:

(x) with respect to the Cases and assets of the U.S. Loan Parties, (x) in the event of the occurrence and during the continuance of an Event of Default or an event that would constitute an Event of Default with the giving of notice or lapse of time or both (a “Default”), the payment of allowed and unpaid professional fees and disbursements incurred by (A) the U.S. Loan Parties and (B) any statutory committees appointed in the Cases of the U.S. Loan Parties, in an aggregate amount of items (A) and (B) not in excess of the lesser of (I) US$4,000,000 (plus all unpaid professional fees and disbursements reported on the Borrowing Base Certificate delivered immediately prior to the occurrence of such Default or Event of Default, to the extent such fees and expense are subsequently allowed by the Bankruptcy Court), and (II) US$6,500,000, and (y) the payment of fees pursuant to 28 U.S.C. § 1930 and to the Clerk of the Bankruptcy Court ((x) and (y), collectively, the “Carve-Out”);

(y) the CCAA DIP Lenders’ Charge in the assets of the Canadian Loan Parties in the Canadian Cases will be subject to the court ordered administration charge in an aggregate amount not in excess of US$1,000,000 (the “Administration Charge”) for the

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payment of (a) allowed and unpaid professional fees and disbursements incurred by professionals retained by the Canadian Loan Parties and (b) allowed and unpaid professional fees and disbursements of the monitor in the Canadian Cases including allowed and unpaid legal fees and expenses of its counsel (and including any allowed and unpaid professional fees and disbursements incurred by the parties referred to in (a) and (b), prior to the occurrence of such Event of Default); and

(z) the CCAA DIP Lenders’ Charge in the assets of the Canadian Loan Parties in the Canadian Cases will also be subject to the Canadian Court ordered directors charge in an amount not exceeding US$8,600,000 (the “Directors Charge”), securing the Canadian Loan Parties’ obligation to indemnify the officers and directors of the Canadian Loan Parties for personal liability which may arise from non-payment by the Canadian Loan Parties of the following (which shall be separately identified on the most recent Borrowing Base Certificate): (a) all outstanding and future wages, salaries, employee and pension benefits, vacation pay, bonuses and expenses payable on or after the Filing Date, in each case incurred in the ordinary course of business and consistent with existing compensation policies and arrangements; (b) any statutory deemed trust amounts in favour of the Crown in right of Canada or of any Province thereof or any other taxation authority which are required to be deducted from employees’ wages, including, without limitation, amounts in respect of (i) employment insurance, (ii) Canada Pension Plan, (iii) Quebec Pension Plan, and (iv) income taxes; (c) all goods and services or other applicable sales taxes required to be remitted by the Canadian Loan Parties in connection with the sale of goods and services by the Canadian Loan Parties, but only where such sales taxes are accrued or collected after the Filing Date, or where such sales taxes were accrued or collected prior to the Filing Date but are not required to be remitted until on or after the Filing Date; and (d) any amount payable to the Crown in right of Canada or of any Province thereof or any political subdivision thereof or any other taxation authority in respect of municipal realty, municipal business or other taxes, assessments or levies of any nature or kind which are entitled at law to be paid in priority to claims of secured creditors and which are attributable to or in respect of the carrying on of the business by the Canadian Loan Parties;

provided that no portion of the Carve-Out shall be utilized for the payment of professional fees and disbursements incurred in connection with any challenge to the amount, extent, priority, validity, perfection or enforcement of (A) the Indebtedness of the Loan Parties owed to the parties primed by the priming Liens or to the collateral securing such Indebtedness or any other

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action against such parties or (B) the Secured Obligations.  Amounts in the Collateral Accounts shall not be subject to the Carve-Out.  By execution hereof, the Loan Parties hereby consent to the priming Liens referenced in clauses (i)(D) and (ii)(D) above.  Notwithstanding the foregoing, so long as no Default or Event of Default shall have occurred and be continuing, the Loan Parties shall be permitted to pay compensation and reimbursement of expenses allowed and payable under 11 U.S.C. §§ 328, 330 and 331, or as allowed and payable pursuant to orders of the Canadian Court, as the same may be due and payable, and any compensation and expenses previously paid, or accrued but unpaid, prior to the occurrence of such Default or Event of Default shall not reduce the Carve-Out or the Administration Charge.

(b)           As a component of adequate protection, the administrative agents under the Pre-Petition Credit Agreement (collectively, the “Pre-Petition Agent”) shall receive from the applicable Borrowers (i) following the Closing Date, immediate cash payment of all accrued and unpaid interest (including any pre-petition interest) on the obligations of such Borrower under the Pre-Petition Credit Agreement (the “Pre-Petition Debt”) and letter of credit fees at the non-default contract rate applicable on the Filing Date as provided for in the Pre-Petition Credit Agreement, and all other accrued and unpaid fees and disbursements (including, but not limited to, fees and expenses owed to the Pre-Petition Agent and incurred prior to the Filing Date), (ii) current cash payments of all fees and expenses owing by such Borrower payable to the Pre-Petition Agent under the Pre-Petition Credit Agreement, including, but not limited to, the reasonable fees and disbursements of counsel, financial and other consultants for the Pre-Petition Agent (including, but not limited to, such fees and disbursements incurred prior to the Filing Date), and (iii) current cash payments of all accrued but unpaid interest on the Pre-Petition Debt owing by such Borrower, and letter of credit and other fees, in each case at the non-default contract rate applicable on the Filing Date (including LIBOR pricing options) under the Pre-Petition Credit Agreement, provided that, without prejudice to the rights of any other party to contest such assertion, the lenders under the Pre-Petition Credit Agreement (the “Pre-Petition Secured Lenders”) reserve their rights to assert claims for the payment of additional interest calculated at any other applicable rate of interest (including, without limitation, default rates), or on any other basis, provided for in the Pre-Petition Credit Agreement.

(c)           As a further component of adequate protection, to the extent of the diminution in the value of collateral on the Petition Date securing the Pre-Petition Debt, including use of cash collateral, the Pre-Petition Agent and the Pre-Petition Secured Lenders shall be granted junior replacement security interests in and Liens upon all of the property of the U.S. Loan Parties (including, upon entry of the Final Order, any proceeds of Avoidance Actions), which security interests and Liens shall be subject to the Carve-Out and shall be junior to the security interest in and Liens upon the property of the U.S. Loan Parties granted under Section 364(d)(1) of the Bankruptcy Code for the benefit of the Administrative Agent and the Lenders.

(d)           As a further component of adequate protection, the Pre-Petition Agent and the Pre-Petition Secured Lenders shall be granted, subject to the payment of the Carve-Out, a Superpriority Claim in an amount equal to the diminution in the value of collateral on the Filing Date securing the indebtedness under the Pre-Petition Credit Agreement, as provided for in section 507(b) of the Bankruptcy Code, immediately junior to the claims under section 364(c)(1) of the Bankruptcy Code held by the Administrative Agent and the Lenders and payable from all

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property of the U.S. Loan Parties; provided, however, that the Pre-Petition Agent and the Pre-Petition Secured Lenders shall not receive or retain any payments, property or other amounts in respect of the Superpriority Claims under section 507(b) of the Bankruptcy Code unless and until payment in full of all Secured Obligations of the U.S. Loan Parties.

(e)           Subject to the priorities set forth in subsection (a) above and to the Carve-Out, in the case of the U.S. Loan Parties, or the Administration Charge, in the case of the Canadian Loan Parties, as to all real property the title to which is held by a Loan Party, or the possession of which is held by a Loan Party pursuant to leasehold interest, the Loan Parties hereby assign and convey as security, grant a security interest in, hypothecate, mortgage, pledge and set over unto each Applicable Agent, on behalf of the Secured Parties all of the right, title and interest of the Loan Parties, in all of such owned real property and in all such leasehold interests, together in each case with all of the right, title and interest of the Loan Parties in and to all buildings, improvements, and fixtures related thereto, any lease or sublease thereof, all general intangibles relating thereto and all proceeds thereof.  Each Loan Party acknowledges that, pursuant to the Orders, the Liens in favor of the Applicable Agents on behalf of the Secured Parties in all of such real property and leasehold instruments of the Loan Parties shall be perfected without the recordation of any instruments of mortgage or assignment.  The Loan Parties further agree that, upon the request of the Administrative Agent, in the exercise of its business judgment, the Loan Parties shall enter into separate fee mortgages in recordable form with respect to such properties and other Collateral Documents, each on terms satisfactory to the Administrative Agent; provided, however, that no U.S. Loan Party shall be required to pledge in excess of 65% of the capital stock of its direct Foreign Subsidiaries (other than capital stock of the Canadian Borrower) or any of the capital stock of any indirect Foreign Subsidiaries.

(f)            To the extent any Loan Party makes aggregate payments to the Lenders in excess of the aggregate amount of all Loans received by such Loan Party after the commencement of the Cases, then such Loan Party, after the payment in full of all Secured Obligations and the termination of the Revolving Commitment, shall be entitled to a claim under Section 364(c)(1) of the Bankruptcy Code or the Initial Order, as applicable, against each other Loan Party, in such amount as may be determined by the Bankruptcy Court or the Canadian Court taking into account the relative benefits received by each such person, and such claims shall be deemed to be subordinate and junior in all respects to the superpriority claims and charges of the Lenders and the superpriority claims granted as adequate protection to the Primed Parties.

Section 2.25 Use of Cash Collateral.  Notwithstanding anything to the contrary contained herein, neither the U.S. Borrower nor the Canadian Borrower shall be permitted to request a Borrowing under Section 2.7 unless the Loan Parties shall at that time have the use of substantially all cash collateral subject to the Orders for the purposes described in Section 3.10.

Section 2.26 Right of Set-Off.  Subject to the provisions of Section 7.1, upon the occurrence and during the continuance of any Event of Default, each Agent and each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law and without further order of or application to the Bankruptcy Court or the Canadian Court, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other Indebtedness at any time owing by each such Agent and each such Lender to

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or for the credit or the account of any Loan Party against any and all of the Secured Obligations of such Loan Party now or hereafter existing under the Loan Documents, irrespective of whether or not such Agent or such Lender shall have made any demand under any Loan Document and although such obligations may not have been accelerated.  Each Lender and each Agent agrees promptly to notify the Loan Parties after any such set-off and application made by such Lender or by such Agent, as the case may be, provided that the failure to give such notice shall not affect the validity of such set-off and application.  The rights of each Lender and each Agent under this Section are in addition to other rights and remedies which such Lender and such Agent may have upon the occurrence and during the continuance of any Event of Default.

Section 2.27 Security Interest in Collateral Accounts.  The Loan Parties, pursuant to Section 364(c)(2) of the Bankruptcy Code, hereby assign and pledge to the Applicable Agent, for the ratable benefit of the Secured Parties, and hereby grant to the Applicable Agent, for the ratable benefit of the Secured Parties, a first priority security interest, senior to all other Liens, if any, in all of the Loan Parties’ right, title and interest in and to the Collateral Accounts and any investment of the funds contained therein.  Cash held in the Letter of Credit Account or the Canadian Letter of Credit Account shall not be available for use by the Loan Parties, whether pursuant to Section 363 of the Bankruptcy Code or otherwise.

Section 2.28 Payment of Obligations.  Subject to the provisions of Section 7.1, upon the maturity (whether by acceleration or otherwise) of any of the Secured Obligations under this Agreement or any other Loan Documents of the Loan Parties, the Lenders shall be entitled to immediate payment of such Secured Obligations without further application to or order of the Bankruptcy Court or the Canadian Court.  The Borrowers and the U.S. Loan Parties shall be jointly and severally liable for payment of all Secured Obligations under this Agreement or any of the other Loan Documents.  The U.S. Loan Parties and the Canadian Loan Parties shall be jointly and severally liable for payment of all Canadian Guaranteed Obligations under this Agreement or any of the other Loan Documents.

Section 2.29 No Discharge; Survival of Claims.  Each of the Loan Parties agrees that (i) its obligations hereunder shall not be discharged by the entry of an order (w) confirming a Reorganization Plan in any of the Cases under the Bankruptcy Code or under the CCAA, (x) converting any of the U.S. Cases to a case under Chapter 7 of the Bankruptcy Code or any of the Canadian Cases to similar liquidation proceeding in the Canadian Cases, (y) dismissing or terminating any of the Cases, or (z) appointing any trustee in bankruptcy, interim receiver, receiver or receiver-manager or similar officer or agent with respect to the Canadian Loan Parties (and each of the Loan Parties, pursuant to Section 1141(d)(4) of the Bankruptcy Code, hereby waives any such discharge) and (ii) the Superpriority Claims and the CCAA DIP Lenders’ Charge granted to the Agents and the Lenders pursuant to the Orders and described in Section 2.24 shall not be affected in any manner by the entry of an order confirming a Reorganization Plan.

Section 2.30 Fifteen Month Facility Extension Option.  The Borrowers may extend the Maturity Date from January 28, 2010 to April 28, 2010 (the “Fifteen Month Facility Extension Option”) subject to, and the Maturity Date shall be so extended upon satisfaction of, the following conditions precedent:

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(i) the Borrowers shall provide written notice to the Administrative Agent at least thirty (30) days prior to January 28, 2010 of their intention to exercise the Fifteen Month Facility Extension Option;

(ii) the Borrowers shall pay a fee to the Administrative Agent on or before the initial Maturity Date for the account of the Lenders equal to 1.0% of the outstanding principal balance of the Term Loans plus the then aggregate Commitments;

(iii) the Loan Parties shall have filed with the Bankruptcy Court and the Canadian Court a Reorganization Plan providing for the full repayment of the Loans in cash upon consummation thereof;

(iv) as of the initial Maturity Date, (a) Excess Availability plus (b) the Loan Parties’ Available Cash shall be at least US$150,000,000 of which Excess Availability is not less than US$100,000,000 (taking into account the reduction in the U.S. PP&E Component and Canadian PP&E Component to be effective on January 28, 2010); and

(v) no Default or Event of Default shall have occurred and be continuing as of the initial Maturity Date.

The Administrative Agent will notify the Borrowers and the Lenders upon the effectiveness of the Fifteen Month Facility Extension Option.

Section 2.31 Eighteen Month Facility Extension Option.  Following exercise of the Fifteen Month Facility Extension Option, the Borrowers may extend the Maturity Date from April 28, 2010 to July 28, 2010 (the “Eighteen Month Facility Extension Option”) subject to, and the Maturity Date shall be so extended upon satisfaction of, the following conditions precedent:

(i) the Borrowers shall provide written notice to the Administrative Agent at least thirty (30) days prior to April 28, 2010 of their intention to exercise the Eighteen Month Facility Extension Option;

(ii) the Borrowers shall pay a fee to the Administrative Agent on or before April 28, 2010 for the account of the Lenders equal to 1.0% of the outstanding principal balance of the Term Loans plus the then aggregate Commitments;

(iii) Required Lenders shall have approved the extension of the Maturity Date to July 28, 2010;

(iv) the Loan Parties shall not have withdrawn from the Bankruptcy Court or the Canadian Court a Reorganization Plan and confirmation or approval of such Reorganization Plan shall not

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have been denied by the Bankruptcy Court or the Canadian Court, as applicable, at any time prior to April 28, 2010;

(v) as of April 28, 2010, (a) Excess Availability plus (b) the Loan Parties’ Available Cash shall be at least US$150,000,000 of which Excess Availability is not less than US$100,000,000 (taking into account the reduction in the U.S. PP&E Component and Canadian PP&E Component to be effective on April 28, 2010); and

(vi) no Default or Event of Default shall have occurred and be continuing as of April 28, 2010.

The Administrative Agent will notify the Borrowers and the Lenders upon the effectiveness of the Eighteen Month Facility Extension Option.

Section 2.32 Mitigation Obligations; Replacement of Lenders.

(a)           If any Lender requests compensation under Section 2.16, or if the Borrowers are required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.19, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.16 or Section 2.19, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender.  The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

(b)           If any Lender requests compensation under Section 2.16, or if the Borrowers are required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender) pursuant to Section 2.19, or if any Lender becomes a Defaulting Lender, then the Borrowers may, at their sole expense and effort, upon notice to such Lender and the Applicable Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.3), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrowers shall have received the prior written consent of the Applicable Agent (and if a Revolving Commitment is being assigned, the Fronting Banks), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in Letters of Credit, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.16 or payments required to be made pursuant to Section 2.19, such assignment will result in a reduction in such compensation or payments.  A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver

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by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply.

Section 2.33 Defaulting Lenders.  Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

(a)           fees shall cease to accrue on the unfunded portion of the Revolving Commitment of such Defaulting Lender pursuant to Section 2.21;

(b)           the Commitment and Credit Exposure of such Defaulting Lender shall not be included in determining whether all Lenders or the Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 9.10), provided that any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender which affects such Defaulting Lender differently than other affected Lenders shall require the consent of such Defaulting Lender;

(c)           if any LC Exposure exists at the time a Lender becomes a Defaulting Lender then:

(i) all or any part of such LC Exposure which pertains to the U.S. Letter of Credit Outstandings shall be reallocated among the non-Defaulting Lenders having U.S. Revolving Commitments in accordance with their respective Applicable Percentages but only to the extent (x) the sum of all non-Defaulting Lenders’ U.S. Revolving Loans plus such Defaulting Lender’s LC Exposure in respect of U.S. Letter of Credit Outstandings does not exceed the total of all non-Defaulting Lenders’ U.S. Revolving Commitments and (y) the conditions set forth in Section 4.2 are satisfied at such time;

(ii) all or any part of such LC Exposure which pertains to the Canadian Letter of Credit Outstandings shall be reallocated among the non-Defaulting Lenders having Canadian Revolving Commitments in accordance with their respective Applicable Percentages but only to the extent (x) the sum of all non-Defaulting Lenders’ Canadian Revolving Loans plus such Defaulting Lender’s LC Exposure in respect of Canadian Letter of Credit Outstandings does not exceed the total of all non-Defaulting Lenders’ Canadian Revolving Commitments and (y) the conditions set forth in Section 4.2 are satisfied at such time

(iii) if the reallocation described in clauses (i) or (ii) above cannot, or can only partially, be effected, neither the Fronting Banks nor any Lender shall have any obligation to issue new Letters of Credit under this Agreement unless the Borrowers shall have cash collateralized such Defaulting Lender’s LC Exposure (after giving

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effect to any partial reallocation pursuant to clauses (i) and (ii) above) in accordance with the procedures set forth in Section 2.4(c) for so long as such LC Exposure is outstanding;

(iv) if the Borrowers cash collateralize any portion of such Defaulting Lender’s LC Exposure pursuant to Section 2.33(c), the Borrowers shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.21 with respect to such Defaulting Lender’s LC Exposure during the period such Defaulting Lender’s LC Exposure is cash collateralized;

(v) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to Section 2.33(c), then the fees payable to the Lenders pursuant to Section 2.21 shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable Percentages; or

(vi) if any Defaulting Lender’s LC Exposure is neither cash collateralized nor reallocated pursuant to Section 2.33(c), then, without prejudice to any rights or remedies of any Fronting Bank or any Lender hereunder, all letter of credit fees payable under Section 2.22 with respect to such Defaulting Lender’s LC Exposure shall be payable to such Fronting Bank until such LC Exposure is cash collateralized or reallocated;

(d)           so long as any Lender is a Defaulting Lender, no Fronting Bank shall be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure will be 100% covered by the Commitments of the non-Defaulting Lenders or cash collateral will be provided by the Borrowers in accordance with Section 2.33(c), and participating interests in any such newly issued or increased Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.33(c)(i) (and Defaulting Lenders shall not participate therein); and

(e)           any amount payable to such Defaulting Lender hereunder (whether on account of principal, interest, fees or otherwise and including any amount that would otherwise be payable to such Defaulting Lender pursuant to Section 2.26 but excluding Section 2.32(b)) shall, in lieu of being distributed to such Defaulting Lender, be retained by the Applicable Agent in a segregated account and, subject to any applicable requirements of law, be applied at such time or times as may be determined by the Applicable Agent (i) first, to the payment of any amounts owing by such Defaulting Lender to the Applicable Agent hereunder, (ii) second, pro rata, to the payment of any amounts owing by such Defaulting Lender to any Fronting Bank hereunder, (iii) third, if so determined by the Applicable Agent or requested by a Fronting Bank, to be held in such account as cash collateral for future funding obligations of the Defaulting Lender of any participating interest in any Letter of Credit, (iv) fourth, to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Applicable Agent, (v) fifth, if so determined by the Applicable Agent and the Borrowers, held in such account as cash collateral for future funding obligations of the Defaulting Lender of any Loans under this Agreement, (vi) sixth, to the

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payment of any amounts owing to the Lenders or a Fronting Bank as a result of any judgment of a court of competent jurisdiction obtained by any Lender or such Fronting Bank against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement, (vii) seventh, to the payment of any amounts owing to the Borrowers as a result of any judgment of a court of competent jurisdiction obtained by the Borrowers against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement, and (viii) eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if such payment is (x) a prepayment of the principal amount of any Loans or reimbursement obligations in respect of Letter of Credit disbursements for which a Defaulting Lender has funded its participation obligations and (y) made at a time when the conditions set forth in Section 4.2 are satisfied, such payment shall be applied solely to prepay the Loans of, and reimbursement obligations owed to, all non-Defaulting Lenders pro rata prior to being applied to the prepayment of any Loans, or reimbursement obligations owed to, any Defaulting Lender.

In the event that the Applicable Agent, the Borrowers and each Fronting Bank each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the LC Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Revolving Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders as the Applicable Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage.

ARTICLE 3.      REPRESENTATIONS AND WARRANTIES

In order to induce the Lenders to make Loans and issue or participate in Letters of Credit hereunder, the Loan Parties, jointly and severally, represent and warrant as follows:

Section 3.1 Organization and Authority.  Each of the Loan Parties and its respective Subsidiaries (i) is duly organized, validly existing and in good standing under the law of its jurisdiction of organization; (ii) is duly qualified to do business and in good standing in each jurisdiction in which the failure to so qualify would have a Material Adverse Effect; (iii) subject to the entry of the Orders (as applicable), has the requisite power and authority to effect the transactions contemplated hereby, and by the other Loan Documents to which it is a party, and (iv) subject to the entry by the Bankruptcy Court or the Canadian Court, as applicable, of the Orders, has all requisite power and authority and the legal right to own and operate its properties, and to conduct its business as now or currently proposed to be conducted.

Section 3.2 Due Execution.  Upon the entry by the Bankruptcy Court and the Canadian Court, as applicable, of the Orders, the execution, delivery and performance by each of the Loan Parties of each of the Loan Documents to which it is a party, including, without limitation, the grant of the Liens by each of the Loan Parties hereunder and under the Collateral Documents, (i) are within the respective powers of each of the Loan Parties, have been duly authorized by all necessary action, including the consent of shareholders, partners or members, where required, and do not (A) contravene the Organizational Documents of any of the Loan Parties, (B) violate any Requirement of Law that could reasonably be expected to result in a Material Adverse Effect, (C) conflict with or result in a breach of, or constitute a default under,

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any indenture, mortgage or deed of trust entered into after the Filing Date or any material lease, agreement or other instrument entered into after the Filing Date binding on the Loan Parties or any of their respective properties, or (D) result in or require the creation or imposition of any Lien under any document described in clause (C) upon any of the property of any of the Loan Parties other than Liens granted pursuant to this Agreement and the Collateral Documents; and (ii) do not require the consent, authorization by or approval of or notice to or filing or registration with any Governmental Authority other than the entry of the Interim Order (or the Final Order, as applicable).  Except for the entry of the Interim Order (or the Final Order, as applicable), no authorization, approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body is required for the perfection of the security interests or the exercise by the Agents or the Lenders of their respective rights and remedies under the Loan Documents.  Upon the entry by the Bankruptcy Court and the Canadian Court, as applicable, of the Orders, this Agreement shall have been duly executed and delivered by each of the Loan Parties.  Upon the entry by the Bankruptcy Court and the Canadian Court, as applicable, of the Orders, this Agreement, and each of the other Loan Documents to which the Loan Parties are or will be a party, when delivered hereunder or thereunder, will be, a legal, valid and binding obligation of each Loan Party, enforceable against the Loan Parties in accordance with its terms and the Orders subject to general principles of equity.

Section 3.3 Statements Made.  The information that has been delivered in writing by any of the Loan Parties to the Agents, the Bankruptcy Court or the Canadian Court (other than projections and information of a general economic nature) taken as a whole, as of the date such information was so furnished, does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, taken as a whole, not materially misleading; and, to the extent that any such information constitutes projections, such projections were prepared in good faith on the basis of assumptions, methods, data, tests and information believed by the Loan Parties to be reasonable at the time such projections were furnished.  All representations and warranties, as made or deemed made as of a particular time, shall survive execution of each of the Loan Documents and the making of each Loan or issuance of each Letter of Credit, and may be relied upon by the Agents and the Lenders as being true and correct as of the date when made or deemed made until all of the Loan Parties’ Obligations are fully and indefeasibly paid.

Section 3.4 Financial Statements.  The Loan Parties have furnished the Lenders with copies of the audited consolidated financial statements and schedules of the Parent and its consolidated Subsidiaries for the fiscal year ended December 31, 2007 and the unaudited financial statements for each succeeding fiscal quarter thereafter through and including the fiscal quarter ending September 30, 2008.  Such financial statements present fairly in all material respects the financial condition and results of operations of the Parent and its consolidated Subsidiaries on a consolidated basis as of such dates and for such periods, except, in the case of unaudited financial statements, for the absence of footnote disclosure and for normal year-end audit adjustments; such balance sheets and the notes thereto disclose all liabilities, direct or contingent, of the Loan Parties and their Subsidiaries as of the dates thereof required to be disclosed by GAAP and such financial statements were prepared in a manner consistent with GAAP.  Since the fiscal year ended December 31, 2007, and the fiscal quarter ended September 30, 2008, there has been no event or condition that has had, or could reasonably be expected to

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have, a Material Adverse Effect other than those which customarily occur as a result of events and circumstances leading up to and following the commencement the Cases.

Section 3.5 Ownership.  Each of the Persons listed on Schedule 3.5 is a direct or indirect Subsidiary of the Parent and Schedule 3.5 correctly sets forth the ownership interest of each of the Loan Parties in their respective Subsidiaries, in each case as of the Closing Date, and the jurisdiction of organization of each Subsidiary.  None of the Loan Parties owns any other Subsidiaries, whether directly or indirectly, other than as set forth on Schedule 3.5, as may be updated by the Loan Parties from time to time.  The Loan Parties have valid title to all assets included from time to time in the Canadian PP&E Component and the U.S. PP&E Component and to all other material properties and possessions under lease.

Section 3.6 Liens.  There are no Liens of any nature whatsoever on any assets of any of the Loan Parties or their Subsidiaries other than Permitted Liens.  Except as set forth on Schedule 3.6, none of the Loan Parties is a party to any contract, agreement, lease or instrument the performance of which, either unconditionally or upon the happening of an event, will result in or require the creation of a Lien on any assets of any Loan Party or any of their Subsidiaries or otherwise result in a violation of this Agreement other than the Liens granted to the Applicable Agents (for the benefit of the Secured Parties) as provided for in this Agreement.  The aggregate amount of claims secured by the Non-Primed Liens, other than the Calpine Debt, does not exceed US$60,000,000.

Section 3.7 Compliance with Law.

(a)           The operations of the Loan Parties and their Subsidiaries comply in all material respects with all Environmental Laws; (i) except as set forth on Schedule 3.7, to the knowledge of the Loan Parties, none of the operations of the Loan Parties or their Subsidiaries is the subject of any Governmental Authority investigation evaluating whether any violation of Environmental Laws has occurred or remedial action involving a material expenditure by the Loan Parties is needed to respond to the presence or release of any Hazardous Waste or Hazardous Substance in or into the environment which, in each case, would be reasonably likely to result in a Material Adverse Effect; and (ii) the Loan Parties and their Subsidiaries do not have any contingent liability in connection with any violation of Environmental Laws or release of any Hazardous Waste or Hazardous Substance into the environment that is reasonably likely to result in a Material Adverse Effect.

(b)           None of the Loan Parties or their Subsidiaries is in violation of any law, rule or regulation, or in default with respect to any judgment, writ, injunction or decree of any Governmental Authority the violation of which, or a default with respect to which, would have a Material Adverse Effect.

Section 3.8 Insurance.  All policies of insurance of any kind or nature owned by or issued to the Loan Parties and their Subsidiaries, including, without limitation, policies of life, fire, theft, product liability, public liability, property damage, other casualty, employee fidelity, workers’ compensation, employee health and welfare, title, property and liability insurance, are in full force and effect and are of a nature and provide such coverage as (i) is customarily carried

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by companies of the size and character of the Loan Parties and their Subsidiaries or (ii) was carried by the Loan Parties and their Subsidiaries prior to commencement of the Cases.

Section 3.9 The Orders.  On the date of the making of the initial Loans or the issuance of the initial Letters of Credit hereunder, whichever first occurs, the Interim Order will have been entered and will not have been stayed, amended, vacated, reversed or rescinded except as approved by the Administrative Agent, in its exclusive discretion in writing.  On the date of the making of any Loan or the issuance of any Letter of Credit, the Interim Order (or the Final Order, as applicable), shall have been entered and shall not have been amended, stayed, vacated or rescinded except as approved in writing by the Administrative Agent, in its exclusive discretion.  Upon the maturity (whether by the acceleration or otherwise) of any of the obligations of the Loan Parties hereunder and under the other Loan Documents, the Lenders shall, subject to the provisions of Section 7.1 and the Orders, be entitled to immediate payment of such obligations, and to enforce the remedies provided for hereunder, without further application to or order by the Bankruptcy Court or the Canadian Court.

Section 3.10 Use of Proceeds.  The proceeds of the Loans will be used for (i) working capital, Letters of Credit and Capital Expenditures; (ii) other general corporate purposes of the Loan Parties (including intercompany loans to the extent permitted by this Agreement); (iii) for the refinancing in full of the Indebtedness outstanding under the Receivables Securitization Programs; (iv) payment of any related transaction costs, fees and expenses; and (v) the costs of administration of the Cases.  The Letters of Credit will be issued for purposes consistent with the ordinary course of business of the Loan Parties, as determined by the Loan Parties in their reasonable judgment, or for such other purposes as are acceptable to the Administrative Agent.  The proceeds of Loans may not be used in connection with the investigation (including discovery proceedings), initiation or prosecution of any claims, causes or action, adversary proceedings or other litigation against the Lenders or the Administrative Agent; provided, however, that no more than US$100,000 of the proceeds of the Loans or the Collateral may be used by any statutory committee of unsecured creditors to investigate, and by the monitor in the Canadian Cases to review, the pre-petition liens and claims of the Pre-Petition Agent and the Pre-Petition Lenders.

Section 3.11 Litigation.  There are no unstayed actions, suits or proceedings pending or, to the knowledge of the Loan Parties threatened, against or affecting any Loan Party or any of their respective Subsidiaries or any of their respective properties, before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that are reasonably likely to have a Material Adverse Effect.

Section 3.12 Intellectual Property. Set forth on Schedule 3.12 hereto is a complete and accurate list of all registered patents, trademarks, trade names, service marks and copyrights, and all applications therefor and licenses thereof, of each Loan Party or any of their Subsidiaries, showing as of the Closing Date the jurisdiction in which registered, the registration number, the date of registration and the expiration date.

Section 3.13 Taxes.  Except to the extent permitted by Section 5.4 hereof, each Loan Party has filed or caused to be filed all federal, state, provincial, regional and other material tax returns, reports, elections and filings or other documents that are required to be filed and has paid

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all taxes, fees, levies, withholdings or charges shown to be due and payable on said returns or on any assessments made against it or any of its property and all other material taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves, if any, in conformity with GAAP have been provided on the books of such Loan Party); other than deemed trusts and statutory liens and charges in favor of a Governmental Authority in respect of amounts accrued but not yet due in the usual and ordinary course of the business of the Loan Party, no material tax Lien has been filed, and, to the knowledge of the Loan Parties, no material claim is being asserted, with respect to any such tax, fee or other charge (other than a claim the amount or validity of which is being contested in good faith by the Loan Party and with respect to which reserves, if any, in conformity with GAAP have been provided on the books of such Loan Party), and for greater certainty taxes includes all taxes, charges, fees, levies, imposts and other assessments, including all income, sales, use, goods and services, harmonized sales, value added, capital, capital gains, alternative, net worth, transfer, profits, withholding, payroll, employer health, excise, real property and personal property taxes, and any other taxes, customs duties, fees, assessments, or similar charges in the nature of a tax, including Canada Pension Plan and provincial pension plan contributions, unemployment insurance payments and workers’ compensation premiums, together with any installments with respect thereto, and any interest, fines and penalties with respect thereto, imposed by any Governmental Authority (including federal, state, provincial, municipal and foreign Governmental Authorities), and whether disputed or not.

Section 3.14 Investment Company Act; Other Regulations.  Neither the Parent nor any other Loan Party is an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.  The Loan Parties are not subject to any organizational or governing document, or any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority that prohibits its ability to incur Indebtedness, other than the Orders.

Section 3.15 ERISA; Employee Matters.

(a)           The Loan Parties and each of their ERISA Affiliates are in substantial compliance with all applicable provisions and requirements of ERISA with respect to each Plan, and have substantially performed all their obligations under each Plan, except to the extent that any non-compliance with ERISA or any such failure to perform would not have a Material Adverse Effect on the Loan Parties or any of their ERISA Affiliates.

(b)           No Termination Event has occurred which has resulted, or is reasonably likely to result, in any liability to the PBGC or to any other Person that would have a Material Adverse Effect.

(c)           Except to the extent required under Section 4980B of the Code or Section 601 of ERISA, none of the Loan Parties maintains or contributes to any employee welfare benefit plan (as defined in Section 3(1) of ERISA) that provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employees of the Loan Parties, except to the extent that the provision of such benefits would not have a Material Adverse Effect.

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(d)           No Pension Plan has an Unfunded Current Liability in an amount that would have a Material Adverse Effect.

(e)           The Canadian Pension Plans are duly registered under the ITA and any other applicable laws which require registration, have been administered in all material respects in accordance with their terms and with the ITA and such other applicable laws, and, to the knowledge of the Canadian Borrower, no event has occurred which could reasonably be expected to cause the loss of such registered status.  The Canadian Benefit Plans have been administered in all material respects in accordance with their terms and applicable laws.

(f)            All material obligations of the Canadian Borrower and the other Canadian Loan Parties required to be performed by the Canadian Borrower or the other Canadian Loan Parties in connection with the Canadian Pension Plans and the funding agreements therefor and the Canadian Benefit Plans have been performed on a timely basis.

(g)           As of the Closing Date, there are no outstanding disputes, investigations, examinations or other legal proceedings concerning the assets of the Canadian Pension Plans or the Canadian Benefit Plans.

(h)           No promises of benefit improvements under the Canadian Pension Plans or the Canadian Benefit Plans have been made, except where such improvement could not reasonably be expected to have a Material Adverse Effect.

(i)            All contributions or premiums required to be made or paid by the Canadian Borrower or any of its Subsidiaries to the Canadian Pension Plans or the Canadian Benefit Plans have been made on a timely basis in accordance with the terms of such plans and all applicable laws.

(j)            To the knowledge of the Canadian Borrower, there have been no improper withdrawals or applications of the assets of the Canadian Pension Plans or the Canadian Benefit Plans.

Section 3.16 Material Subsidiaries.  As of the Filing Date, the only Material Subsidiary (as such term is defined in the Pre-Petition Credit Agreement) of the Parent that is a Domestic Subsidiary is the U.S. Borrower.

Section 3.17 Receivables Securitization Indebtedness.  All indebtedness evidenced by the notes issued pursuant to that certain Series 2004-2 Indenture Supplement to Master Indenture, dated as of November 23, 2004, between SSCE Funding, LLC and Deutsche Bank Trust Company Americas, as Indenture Trustee, as amended, restated, modified or waived from time to time, was indefeasibly paid in full prior to the Filing Date.

ARTICLE 4.   CONDITIONS OF LENDING

Section 4.1 Conditions Precedent to Initial Loans.  The obligation of the Lenders to make the initial Loans or issue Letters of Credit on the Closing Date is subject to the following conditions precedent:

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(a)           Supporting Documents.  The Administrative Agent shall have received for each of the Loan Parties:

(i) Organizational Documents, to the extent applicable, certified as of a recent date prior to the Closing Date by the applicable Governmental Authority;

(ii) signature and incumbency certificates of the officers of such Loan Party executing the Loan Documents to which it is a party, dated as of the Closing Date;

(iii) duly adopted resolutions of the board of directors or similar governing body of each Loan Party approving and authorizing the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party or by which it or its assets may be bound as of the Closing Date, certified as of the Closing Date by its secretary or assistant secretary as being in full force and effect without modification or amendment;

(iv) a good standing certificate or equivalent thereof from the applicable Governmental Authority of each Loan Party’s jurisdiction of incorporation, organization or formation and in each jurisdiction in which it is qualified as a foreign corporation or other entity to do business, each dated a recent date prior to the Closing Date; and

(v) such other documents as the Administrative Agent may reasonably request.

(b) Interim Order.  Not later than five (5) days following the Filing Date, the Administrative Agent and the Lenders shall have received a certified copy of each Interim Order approving the Loan Documents and granting the Superpriority Claim status and senior priming and other Liens described in Section 2.24 and the CCAA DIP Lenders’ Charge, in the case of the Initial Order, which Interim Order (i) shall have been entered upon an application or motion of the applicable Loan Parties, in form and substance satisfactory to the Administrative Agent and the Co-Lead Arrangers and on such prior notice to such parties as may be satisfactory to the Administrative Agent and the Co-Lead Arrangers, (ii) shall authorize extensions of credit in amounts satisfactory to the Administrative Agent and the Co-Lead Arrangers, (iii) shall approve the payment by the Loan Parties of all of the Fees set forth in Section 2.20, Section 2.21 and Section 2.22, (iv) shall be in full force and effect, (v) shall not have been stayed, reversed, modified or amended in any respect without the written consent of the Administrative Agent and the Co-Lead Arrangers, (vi) shall be entered with the consent or non-objection of a preponderance (as determined by the Administrative Agent and the Co-Lead Arrangers in their exclusive discretion) of the secured creditors of any of the Loan Parties under the Pre-Petition Credit Agreement, and (vii) if the Interim Order is the subject of a pending appeal in any respect, neither the making of such Loan nor the issuance of such Letter of Credit nor the performance by any of the Loan Parties of any of their obligations hereunder or under the Loan Documents or

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under any other instrument or agreement referred to herein shall be the subject of a presently effective stay pending appeal.

(c)           Loan Documents.  The Administrative Agent shall have received (i) this Agreement, duly executed and delivered by the Administrative Agent, each Loan Party and each Lender, (ii) the Security and Pledge Agreement in substantially the form of Exhibit B-1 (the “Security and Pledge Agreement”), duly executed by each Loan Party and delivered to the Administrative Agent, (iii) the Canadian Security Agreement in substantially the form of Exhibit B-2, and (iv) each of the other Loan Documents listed on Schedule 4.1 hereto.

(d)           First Day Orders.  All of the “first day orders” entered by the Bankruptcy Court and by the Canadian Court at the time of the commencement of the U.S. Cases, including but not limited to in respect of amounts of critical vendor payments, if any, shall be reasonably satisfactory in form and substance to the Administrative Agent and the Co-Lead Arrangers.

(e)           Opinions of Counsel.  The Administrative Agent and the Lenders shall have received the favorable written opinions of counsel to the Loan Parties, acceptable to the Administrative Agent, substantially in the forms of Exhibit D.

(f)            Payment of Fees.  The Loan Parties shall have paid to the Applicable Agents and the Co-Lead Arrangers the then unpaid balance of all accrued and unpaid Fees due under and pursuant to this Agreement and the letters referred to in Section 2.20, which payments due on the Closing Date may be made with the proceeds of Loans.

(g)           Corporate and Judicial Proceedings.  All corporate and judicial proceedings and all instruments and agreements in connection with the transactions among the Loan Parties, the Administrative Agent and the Lenders contemplated by this Agreement shall be satisfactory in form and substance to the Administrative Agent in its exclusive discretion, and the Administrative Agent shall have received all information and copies of all documents and papers, including records of corporate and judicial proceedings, which the Administrative Agent may have requested in connection therewith, such documents and papers where appropriate to be certified by proper corporate, governmental or judicial authorities.

(h)           Information.  The Administrative Agent and the Lenders shall have received all information required by the Patriot Act or any other “know-your-customer” or anti-money laundering rules and regulations and such other information (financial or otherwise) as may be reasonably requested by the Administrative Agent and shall have discussed such information with the Loan Parties’ management and shall be satisfied with the nature and substance of such discussions.

(i)            Availability.  The sum of (i) Excess Availability plus (ii) aggregate amounts on deposit in the Investment Accounts, after giving effect to the Loans and disbursements to be made on the Closing Date, shall be at least US$150,000,000.

(j)            Budget.  The Administrative Agent and the Lenders shall have received a forecast on a consolidated basis of the Loan Parties’ income statement, balance sheet and cash flows for each month of fiscal years 2009 and 2010, including information consolidated solely as to the U.S. Loan Parties and solely as to the Canadian Loan Parties and the material assumptions

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on which such forecasts were based, and setting forth the anticipated disbursements and uses of the Commitments, in form and substance satisfactory to the Administrative Agent and the Co-Lead Arrangers (as updated from time to time pursuant to Section 5.1(f), the “Budget”).

(k)           Cash Flow Forecast.  The Administrative Agent and the Lenders shall have received a forecast of sources and uses of cash by the U.S. Loan Parties and the Canadian Loan Parties on a weekly basis covering the 13 calendar weeks succeeding the Filing Date, in form and substance satisfactory to the Administrative Agent and the Co-Lead Arrangers (as updated from time to time pursuant to Section 5.1(e), the “Cash Flow Forecast”).

(l)            Compliance with Laws.  The Loan Parties shall have granted the Administrative Agent access to and the right to inspect all reports, audits and other internal information of the Loan Parties relating to environmental and employee health and safety matters and any third party verification of certain matters relating to compliance with applicable laws and regulations requested by the Administrative Agent and the Administrative Agent shall be reasonably satisfied that the Loan Parties are in compliance in all material respects with all applicable Environmental Laws and be satisfied with the reasonably estimated costs of maintaining compliance.

(m)          Lien Searches.  The Administrative Agent shall have received lien searches conducted in the jurisdictions in which the Loan Parties are organized or conduct business, satisfactory to the Administrative Agent (dated as of a date reasonably satisfactory to the Administrative Agent), reflecting the absence of Liens and encumbrances on the assets of the Loan Parties other than Permitted Liens.

(n)           Securitization Documents.  The Administrative Agent shall have received the most recent reports prepared by the Loan Parties in respect of the Receivables Securitization Programs satisfactory in form and substance to the Administrative Agent in its exclusive discretion.

(o)           Field Examinations.  The Administrative Agent shall have received field examinations of the Loan Parties’ accounts receivable, inventory and equipment and appraisals of all or such portions of the Loan Parties’ assets the Administrative Agent may deem appropriate, which field examinations and appraisals shall be satisfactory in form and substance to the Administrative Agent.

(p)           Evidence of Insurance.  The Administrative Agent shall have received evidence of insurance policies for the Loan Parties and their Subsidiaries satisfactory in form and substance to the Administrative Agent.

(q)           Closing Documents.  The Administrative Agent shall have received all documents required by this Agreement satisfactory in form and substance to the Administrative Agent and the Co-Lead Arrangers.

(r)            Other Conditions.  Such other conditions as are satisfactory to the Administrative Agent.

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Section 4.2             Conditions Precedent to Each Loan and Each Letter of Credit.  The obligation of the Lenders to make each Loan and of each Fronting Bank to issue, amend, renew or extend any Letter of Credit, is subject to the following conditions precedent:

(a)           Notice.  The Applicable Agent (and to the Administrative Agent if it is not the Applicable Agent) shall have received a notice with respect to each Borrowing or the issuance of each Letter of Credit, as the case may be, as required by ARTICLE 2.

(b)           Representations and Warranties.  All representations and warranties contained in this Agreement and the other Loan Documents shall be true and correct in all material respects on and as of the date of each Borrowing or the issuance of each Letter of Credit hereunder with the same effect as if made on and as of such date except to the extent such representations and warranties expressly relate to an earlier date.

(c)           No Default.  On the date of each Borrowing or the issuance of each Letter of Credit hereunder, no Default or Event of Default shall have occurred and be continuing.

(d)           Orders.  The Interim Order shall be in full force and effect and shall not have been stayed, reversed, modified or amended in any respect without the prior written consent of the Administrative Agent, provided that at the time of the making of any Loan or the issuance of any Letter of Credit the aggregate amount of either of which, when added to the sum of the principal amount of all Loans then outstanding and the Letter of Credit Outstandings, would exceed the amount authorized by the Interim Order (collectively, the “Additional Credit”), the Administrative Agent and each of the Lenders shall have received a certified copy of the order of the Bankruptcy Court and an order of the Canadian Court if deemed necessary in the Administrative Agent’s exclusive discretion approving continued lending (collectively, the “Final Order”) in substantially the form set forth on Exhibit A-3 or such other form as may be agreed by the Administrative Agent and the Loan Parties, which, in any event, shall have been entered by the Bankruptcy Court (and Canadian Court, as applicable) no later than forty-five (45) days after the entry of the Interim Order, and at the time of the extension of any Additional Credit the Final Order shall be in full force and effect, and shall not have been stayed, reversed, modified or amended in any respect without the prior written consent of the Administrative Agent; and, if either the Interim Order or the Final Order is the subject of a pending appeal in any respect, neither the making of the Loans nor the issuance of any Letter of Credit nor the performance by any of the Loan Parties of any of their obligations under any of the Loan Documents or under any other instrument or agreement referred to herein shall be the subject of a presently effective stay pending appeal.

(e)           Payment of Fees and Expenses.  The Loan Parties shall have paid to the Applicable Agent the then unpaid balance of all accrued and unpaid Fees and expenses then due and payable under and pursuant to this Agreement and the letters referred to in Section 2.20.

(f)            Borrowing Base Certificate.  The Administrative Agent shall have received a Borrowing Base Certificate in accordance with Section 5.8 dated no more than seven (7) days prior to each Borrowing or the issuance of each Letter of Credit, which Borrowing Base Certificate shall include supporting schedules as required by the Administrative Agent.

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(g)           Other Conditions.  Such other conditions as are satisfactory to the Administrative Agent.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Loan Parties on the date thereof that the conditions specified above have been satisfied or waived.

ARTICLE 5. AFFIRMATIVE COVENANTS

From the Closing Date and for so long as any Commitment shall be in effect or any Letter of Credit shall remain outstanding (in a face amount in excess of the amount of cash then held in the Letter of Credit Account and the Canadian Letter of Credit Account, or in excess of the face amount of back-to-back letters of credit delivered, in each case pursuant to Section 2.4(c)), or any amount shall remain outstanding or unpaid under this Agreement, each of the Loan Parties and their respective Subsidiaries agree that, unless the Required Lenders shall otherwise consent in writing:

Section 5.1             Financial Statements, Reports, etc.  The Loan Parties will, and will cause their Subsidiaries to, deliver to the Administrative Agent and each of the Lenders:

(a)           within seventy-five (75) days after the end of each fiscal year, (i) consolidated balance sheets and related statements of income, stockholders’ equity, and cash flows, showing the financial condition of the Loan Parties and their Subsidiaries as of the close of such fiscal year and the results of their respective operations during such year, the consolidated statements to be audited for the Loan Parties and their respective Subsidiaries by their current independent auditors or other independent public accountants of recognized national standing and accompanied by an opinion of such accountants (which shall not be qualified other than with respect to the Cases) and (ii) such statements consolidated solely as to U.S. Loan Parties and consolidated solely as to Canadian Loan Parties (on an unaudited basis and without footnotes), in each case to be certified by a Financial Officer of Parent to the effect that such consolidated financial statements fairly present in all material respects, the financial condition and results of operations of the Loan Parties and their Subsidiaries on a consolidated basis in accordance with GAAP;

(b)           within forty-five (45) days after the end of the first three fiscal quarters of each fiscal year of the Loan Parties, and within seventy-five (75) days after the end of the fourth fiscal quarter of each fiscal year, (i) consolidated balance sheets and related statements of income, stockholders’ equity and cash flows, showing the financial condition of the Loan Parties and their Subsidiaries on a consolidated basis, in each case as of the close of such fiscal quarter and the results of their operations during such fiscal quarter and the then elapsed portion of the fiscal year, and (ii) such statements consolidated solely as to U.S. Loan Parties and consolidated solely as to Canadian Loan Parties, in each case certified by a Financial Officer of the Parent as fairly presenting in all material respects, the financial condition and results of operations of the Loan Parties and their Subsidiaries on a consolidated basis in accordance with GAAP, subject to normal year-end audit adjustments and the absence of footnotes;

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(c)           within twenty-five (25) days after the end of each fiscal month (forty-five (45) days after the end of the fiscal month ended January 31, 2009), (i) unaudited monthly consolidated balance sheets and related statements of income and cash flows of the Loan Parties and their Subsidiaries (including the amount of Available Cash balances at the end of each such fiscal month), and (ii) such statements consolidated solely as to U.S. Loan Parties and consolidated solely as to Canadian Loan Parties, in each case in form and scope satisfactory to the Administrative Agent and showing the results of the Loan Parties’ and their Subsidiaries’ operations during such fiscal month and the then elapsed portion of the fiscal year, which shall include a summary of the results of the Loan Parties’ business operations for the preceding month as compared to the corresponding period in the Budget, including a discussion of significant variances, which summary shall describe the results of the Loan Parties and their respective Subsidiaries on a consolidated basis;

(d)           (i) concurrently with any delivery of financial statements under (a), (b) or (c) above as applicable, a certificate of a Financial Officer of the Parent on behalf of each of the Loan Parties in the form of Exhibit G (A) certifying that no Event of Default or Default has occurred, or, if such an Event of Default or Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto and (B) setting forth computations in reasonable detail satisfactory to the Administrative Agent demonstrating compliance with the provisions of Section 6.3, Section 6.4, Section 6.5, Section 6.6, Section 6.11, and Section 6.12 and (ii) accompanying the audited consolidated financial statements delivered under (a)(i) above a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Default (which certificate may be limited to the extent required by accounting rules or guidelines);

(e)           on the last Business Day of each week, (i) an updated Cash Flow Forecast covering the next succeeding thirteen (13) calendar weeks, and (ii) and a report comparing the preceding week’s actual sources and uses of cash by the Loan Parties to each Cash Flow Forecast for such week, in each case in form and substance satisfactory to the Administrative Agent in its exclusive discretion;

(f)            no later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Loan Parties, and within seventy-five (75) days from the end of the last fiscal quarter of each fiscal year of the Loan Parties, an update of the Budget satisfactory in form and substance to the Administrative Agent in its exclusive discretion, and Loan Parties shall be available to discuss such updated Budget with the Administrative Agent upon the Administrative Agent’s reasonable request;

(g)           promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by any Loan Party with the Securities and Exchange Commission, or any governmental authority succeeding to any of or all the functions of said commission, or with any national or provincial securities commission or exchange, as the case may be;

(h)           as soon as available and in any event (A) within thirty (30) days after any Loan Party, or any of their ERISA Affiliates knows or has reason to know that any Termination

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Event described in clause (i) of the definition of Termination Event with respect to any Single Employer Plan of any of the Loan Parties or such ERISA Affiliate has occurred and (B) within ten (10) days after any of the Loan Parties or any of their ERISA Affiliates knows or has reason to know that any other Termination Event with respect to any such Plan has occurred, a statement of a Financial Officer of such Loan Party describing such Termination Event and the action, if any, which such Loan Party or such ERISA Affiliate proposes to take with respect thereto;

(i)            promptly and in any event within ten (10) days after receipt thereof by any of the Loan Parties or any of their ERISA Affiliates from the PBGC copies of each notice received by such Loan Party or any such ERISA Affiliate of the PBGC’s intention to terminate any Single Employer Plan of such Loan Party or such ERISA Affiliate or to have a trustee appointed to administer any such Plan;

(j)            if requested by the Administrative Agent, promptly and in any event within thirty (30) days after the filing thereof with the Internal Revenue Service, copies of each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) with respect to each Single Employer Plan of any of the Loan Parties or any of their ERISA Affiliates;

(k)           within ten (10) days after notice is given or required to be given to the PBGC under Section 302(f)(4)(A) of ERISA of the failure of any of the Loan Parties or any of their ERISA Affiliates to make timely payments to a Plan, a copy of any such notice filed and a statement of a Financial Officer of such Loan Party setting forth (A) sufficient information necessary to determine the amount of the Lien under Section 302(f)(3), (B) the reason for the failure to make the required payments and (C) the action, if any, which the Loan Parties or any of their ERISA Affiliates proposed to take with respect thereto;

(l)            promptly and in any event within ten (10) days after receipt thereof by any of the Loan Parties or any ERISA Affiliate from a Multiemployer Plan sponsor, a copy of each notice received by such Loan Party or any ERISA Affiliate concerning (A) the imposition of Withdrawal Liability by a Multiemployer Plan, (B) the determination that a Multiemployer Plan is, or is expected to be, in reorganization within the meaning of Title IV of ERISA, (C) the termination of a Multiemployer Plan within the meaning of Title IV of ERISA, or (D) the amount of liability incurred, or which may be incurred, by the Loan Parties or any ERISA Affiliate in connection with any event described in clause (A), (B) or (C) above;

(m)          promptly and in any event within ten (10) days after receipt thereof by any of the Canadian Loan Parties (A) copies of each annual and other return, report, or valuation with respect to each registered pension plan as filed with any applicable Governmental Authority, (B) copies of any direction, order, notice, ruling or opinion received from any applicable Governmental Authority with respect to any registered pension plan, and (C) notice of any increases having a cost to one or more of the Canadian Loan Parties in excess of US$5,000,000 per annum in the aggregate, in the benefits of any existing pension plan or employee benefit plan or the establishment of any new pension plan or employee benefit plan or the commencement of contributions to any such plan to which any Canadian Loan Party was not previously contributing;

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(n)           within twenty-five (25) days after the end of each fiscal month, a schedule detailing the balance of all accrued but unpaid Priority Payables;

(o)           promptly, from time to time, such other information (including, without limitation, projections) regarding the operations, business affairs and financial condition of any Loan Party or any of its Subsidiaries, or compliance with the terms of any material loan or financing agreement, as the Administrative Agent, at the request of any Lender, may reasonably request;

(p)           promptly after the same is available, copies of all pleadings, motions, applications, judicial information, financial information and other documents filed in the Cases by or on behalf of any of the Loan Parties with the Bankruptcy Court or the Canadian Court, or distributed by or on behalf of any of the Loan Parties to any monitor or official committee appointed in any of the Cases, providing copies of same to counsel for the Administrative Agent;

(q)           promptly and in any event within thirty (30) days after any Canadian Loan Party becomes aware or has reason to become aware of any event which may give rise to the full termination of any Canadian Pension Plan or partial termination of any Canadian Pension Plan which could reasonably be expected to have a Material Adverse Effect, a statement of a Financial Officer of such Loan Party describing such event and the action, if any, which such Loan Party proposes to take with respect thereto; and

(r)            within ten (10) days after the failure of any of the Canadian Loan Parties to make current service contributions to any Canadian Pension Plan, a copy of any such notice filed and a statement of a Financial Officer of such Loan Party setting forth (A) sufficient information necessary to determine the amount of any corresponding Lien, (B) the reason for the failure to make the required payments and (C) the action, if any, which the Loan Parties propose to take with respect thereto.

Section 5.2             Existence.  The Loan Parties will, and will cause their Subsidiaries to,  preserve and maintain in full force and effect all governmental rights, privileges, qualifications, permits, licenses and franchises necessary or desirable in the normal conduct of their businesses except (i) (A) if in the reasonable business judgment of such Loan Party it is in its best economic interest not to preserve and maintain such rights, privileges, qualifications, permits, licenses and franchises, and (B) such failure to preserve the same could not, in the aggregate, reasonably be expected to have a Material Adverse Effect, and (ii) as otherwise permitted in connection with sales of assets permitted by Section 6.12.

Section 5.3             Insurance.  The Loan Parties will, and will cause their Subsidiaries to:  (a) keep their insurable properties insured at all times, against such risks, including fire and other risks insured against by extended coverage, as is customary with companies of the same or similar size in the same or similar businesses; and maintain in full force and effect public liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with the use of any properties owned, occupied or controlled by any Loan Party in such amounts and with such deductibles as are customary with companies of the same or similar size in the same or similar businesses and in the same geographic area, with financially sound and responsible insurance companies; and (b) maintain such other insurance or self

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insurance as may be required by law, with financially sound and responsible insurance companies.

Section 5.4             Obligations and Taxes.  Except with the express written consent of the Administrative Agent in each instance, each Loan Party will pay all its material obligations arising after the Filing Date promptly and in accordance with their terms and pay and discharge promptly all material taxes, assessments, governmental charges, levies, fees, imposts and withholding obligations imposed upon it or upon its income or profits or in respect of its property arising after the Filing Date, before the same shall become in default, as well as all material lawful claims for labor, materials and supplies or otherwise arising after the Filing Date which, if unpaid, would become a Lien or charge upon such properties or any part thereof; provided, however, that no Loan Party shall be required to pay and discharge or to cause to be paid and discharged any such obligation, tax, assessment, charge, levy, fees, imposts and withholding obligations or claim so long as the validity or amount thereof shall be contested in good faith by appropriate proceedings (if the Loan Parties shall have set aside on their books adequate reserves therefor).

Section 5.5 Notice of Event of Default, etc.  The Loan Parties will promptly give to the Administrative Agent notice in writing of:

(i) any Default or Event of Default; and

(ii) any litigation, proceedings or material investigations which may exist at any time between any Loan Party and any Governmental Authority.

Section 5.6             Access to Books and Records; Collateral Reviews and Appraisals.

(a)           The Loan Parties will, and will cause their Subsidiaries to, maintain or cause to be maintained at all times true and complete books and records in accordance with GAAP of the financial operations of the Loan Parties and their respective Subsidiaries; and provide the Administrative Agent and its representatives access to all such books and records during regular business hours, in order that the Administrative Agent may examine and make abstracts from such books, accounts, records and other papers for the purpose of verifying the accuracy of the various reports delivered by the Loan Parties to the Administrative Agent or the Lenders pursuant to this Agreement or for otherwise ascertaining compliance with this Agreement, all at such reasonable times and as often as reasonably requested and in any event no less frequently than two (2) times during any calendar year and, so long as no Default or Event of Default shall have occurred and be continuing, no more than four (4) times during any calendar year.  The Loan Parties will permit (and will cause their Subsidiaries to permit) any representatives designated by the Administrative Agent to discuss their affairs, finances and condition with their officers and independent accountants, all at such reasonable times and as often as reasonably requested.

(b)           The Loan Parties will, and will cause their Subsidiaries to, permit any representatives designated by the Administrative Agent (including any consultants, accountants, lawyers and appraisers retained by the Administrative Agent) to conduct evaluations and

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appraisals of the Loan Parties’ computation of the Borrowing Bases and the assets included in the Borrowing Bases and such other assets and properties of the Loan Parties or their Subsidiaries as the Administrative Agent or Required Lenders may require, all at such reasonable times and as often as reasonably requested and in any event no less frequently than two (2) times during any calendar year and, so long as no Default or Event of Default shall have occurred and be continuing, no more than four (4) times during any calendar year.  The Loan Parties shall pay the reasonable fees (including reasonable and customary internally allocated fees of employees of the Administrative Agent as to which invoices have been furnished) and expenses of any such representatives retained by the Administrative Agent as to which invoices have been furnished to conduct any such evaluation or appraisal, including the reasonable fees and expenses associated with collateral monitoring services performed by the ABL Portfolio Management Group of the Administrative Agent.  To the extent required by the Administrative Agent in its Permitted Discretion as a result of any such evaluation, appraisal or monitoring, the Loan Parties also agree to modify or adjust the computation of the Borrowing Bases (which may include maintaining additional reserves, modifying the advance rates or modifying the eligibility criteria for the components of the Borrowing Bases).

(c)           In the event that historical accounting practices, systems or reserves relating to the components of the Borrowing Bases are modified in a manner that is adverse to the Lenders in any material respect, the Loan Parties will agree to maintain such additional reserves (for purposes of computing the Borrowing Bases) in respect to the components of the Borrowing Bases and make such other adjustments to its parameters for including the components of the Borrowing Bases as the Administrative Agent shall reasonably require based upon such modifications.

(d)           The Loan Parties will, and will cause their Subsidiaries to, grant the Administrative Agent access to and the right to inspect all reports, audits and other internal information of the Loan Parties relating to environmental matters upon reasonable notice, and obtain any third party verification of matters relating to compliance with Environmental Laws reasonably requested by the Administrative Agent at any time and from time to time.

Section 5.7             Maintenance of Concentration Account; Cash Dominion.

(a)           Within sixty (60) days of the Closing Date (or such later date as the Administrative Agent may approve in its exclusive discretion), the U.S. Loan Parties will, and will cause their Domestic Subsidiaries to, maintain with the Administrative Agent an account or accounts to be used by the U.S. Loan Parties as their principal domestic concentration or sweep account(s) into which shall be deposited the available balances from the collection accounts of the U.S. Loan Parties (other than Calpine or Smurfit-Stone Puerto Rico, Inc.) at the end of each Business Day (as contemplated by Article 7 of the Security and Pledge Agreement), net of disbursements paid in the ordinary course of business during such Business Day and all of the U.S. Loan Parties’ and their Domestic Subsidiaries’ accounts shall be subject to a cash management system satisfactory to the Administrative Agent in its exclusive discretion, including from and after such sixtieth (60th) day, (i) weekly sweeps of Available Cash in excess of US$50,000,000, such cash to be applied to outstanding U.S. Revolving Loans (without a permanent reduction of the U.S. Revolving Commitment), and (ii) full cash dominion, including daily cash sweeps (other than cash of Calpine and other than with respect to up to $2,000,000

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held in deposit accounts of Smurfit-Stone Puerto Rico, Inc.) to the Concentration Account if Excess Availability is less than US$150,000,000 for three consecutive days, such cash to be applied to outstanding U.S. Revolving Loans (without a permanent reduction of the U.S. Revolving Commitment).  The obligation of the U.S. Loan Parties to comply with clause (ii) of the preceding sentence shall continue until Excess Availability has exceeded US$150,000,000 for sixty (60) consecutive days.  Upon the occurrence of an Event of Default, all of the collections and account balances of the U.S. Loan Parties and their Domestic Subsidiaries (other than Calpine) shall be swept on a daily basis into the Concentration Account.

(b)           Within sixty (60) days of the Closing Date (or such later date as the Administrative Agent may approve in its exclusive discretion), the Canadian Loan Parties will, and will cause their Canadian Subsidiaries to, maintain with JPMorgan Chase Bank, N.A., Toronto Branch, or a bank acceptable to the Canadian Administrative Agent, an account or accounts to be used by the Canadian Loan Parties as their principal domestic concentration or sweep account(s) into which shall be deposited the available balances from the collection accounts of the Canadian Loan Parties at the end of each Business Day (as contemplated by the Canadian Security Agreement), net of disbursements paid in the ordinary course of business during such Business Day and all of the Canadian Loan Parties’ and their Canadian Subsidiaries’ accounts shall be subject to a cash management system satisfactory to the Canadian Administrative Agent in its exclusive discretion, including from and after such sixtieth (60th) day, full cash dominion, including daily cash sweeps to the Canadian Concentration Account if Excess Availability is less than US$150,000,000 for three consecutive days, such cash to be applied to outstanding Canadian Revolving Loans (without a permanent reduction of the Canadian Revolving Commitment).  The obligation of the Canadian Loan Parties to remain in full cash dominion shall continue until Excess Availability has exceeded US$150,000,000 for sixty (60) consecutive days.  Upon the occurrence of an Event of Default, all of the collections and account balances of the Canadian Loan Parties and their Canadian Subsidiaries shall be swept on a daily basis into the Canadian Concentration Account.

Section 5.8             Borrowing Base Certificate.  The Loan Parties will furnish to the Administrative Agent, no later than (i) the last Business Day of each week with respect to the immediately preceding week, a completed Borrowing Base Certificate showing the Borrowing Bases, each as of the close of business on the last day of such period, (ii) fifteen (15) days following the last day of the immediately preceding fiscal month, a completed Borrowing Base Certificate showing the Borrowing Bases, each as of the close of business on the last day of such period, (iii) if requested by the Administrative Agent at any other time when the Excess Availability is less than 20% of the Total Revolving Commitment, as soon as reasonably available but in no event later than three (3) Business Days after such request and (iv) at such other times as the Loan Parties may elect, a completed Borrowing Base Certificate showing the Borrowing Bases, each as of the date so requested, in each case with the information supporting the Borrowing Base calculations required by Exhibit C-1 and Exhibit C-2 hereto, including the information set forth on the schedule of reporting requirements attached thereto (in each case, as modified from time to time by the Administrative Agent in its Permitted Discretion), all delivered electronically in a file reasonably acceptable to the Administrative Agent; provided that until the Receivables Securitization Termination Date, the Loan Parties will deliver daily and monthly (by the 15th day of each month with respect to the immediately preceding fiscal month) Borrowing Base Certificates.

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Section 5.9             Compliance with Laws.  Comply with requirements of all applicable laws, rules, regulations and orders of any Governmental Authority (including, without limitation, ERISA), except to the extent that failure to comply herewith could not, in the aggregate, have a Material Adverse Effect.

Section 5.10           Environmental Laws.

(a)           Exercise all reasonable due diligence in order to comply in all material respects, and cause (i) all tenants under any leases or occupancy agreements affecting any portion of the Facilities and (ii) all other Persons on or occupying such property under the control of any Loan Party, to comply in all material respects with all Environmental Laws.

(b)           Promptly take any and all necessary remedial action in connection with the presence, storage, use, disposal, transportation or release of any Hazardous Waste or Hazardous Substance on or under any Facility required to comply with all applicable Environmental Laws and Governmental Authorizations unless the failure to so comply could not reasonably be expected to have a Material Adverse Effect and (ii) in the event the Loan Parties take any remedial action with respect to any Hazardous Waste or Hazardous Substance on or under any Facility, conduct and complete such remedial action in material compliance with all applicable Environmental Laws and in accordance with the policies, orders and directives of any applicable Governmental Authorities except when, and only to the extent that, the Loan Parties’ liability for such presence, storage, use, disposal, transportation or release of any such Hazardous Waste or Hazardous Substance is being contested in good faith by the Loan Parties.

Section 5.11           Additional Collateral; Further Assurances.

(a)           The U.S. Borrower and each other U.S. Loan Party shall cause each of its Domestic Subsidiaries formed or acquired after the Closing Date in accordance with the terms of this Agreement to become a U.S. Guarantor, and the Canadian Borrower and each other Canadian Loan Party shall cause each Canadian Subsidiary formed or acquired after the Closing Date to become a Canadian Guarantor, in each case, by executing the Loan Party Joinder Agreement set forth as Exhibit F hereto (the “Loan Party Joinder Agreement”) on or before the twentieth (20th) day following the date of such acquisition or formation. Upon execution and delivery thereof, each such Person (i) shall automatically become a Guarantor hereunder and thereupon shall have all of the rights, benefits, duties, and obligations in such capacity under the Loan Documents and (ii) will grant Liens to the Applicable Agent, for the benefit of the Applicable Agent and the Secured Parties, in any property of such Loan Party which constitutes Collateral.

(b)           Without limiting the foregoing, each Loan Party will, and will cause each Subsidiary to, execute and deliver, or cause to be executed and delivered, to the Applicable Agent such documents, agreements and instruments, and will take or cause to be taken such further actions (including the filing and recording of financing statements and other documents and such other actions or deliveries of the type required by Section 4.1, as applicable), which may be required by law or which the Applicable Agent may, from time to time, reasonably request to carry out the terms and conditions of this Agreement and the other Loan Documents

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and to ensure perfection and priority of the Liens created or intended to be created by the Collateral Documents, all at the expense of the Loan Parties.

(c)           Each Loan Party will, and will cause each Subsidiary to, execute and deliver, or cause to be executed and delivered, to the Administrative Agent such documents, agreements and instruments, and will take or cause to be taken such further actions, which may be required by law or which the Administrative Agent may, from time to time, reasonably request to carry out the terms and conditions of this Agreement and the other Loan Documents, all at the expense of the Loan Parties.

Section 5.12           Material Contracts.  Each Loan Party will, and will cause their Subsidiaries to, preserve and maintain in full force and effect all contracts necessary or desirable in the normal conduct of their businesses except where failure to preserve the same could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 5.13           Receivables Securitization Programs.  On or before April 1, 2009 or such later date as the Administrative Agent may approve in writing in its exclusive discretion, each Loan Party will, and will cause their Subsidiaries to, (a) terminate the Receivables Securitization Programs, repay all Indebtedness outstanding thereunder, and provide evidence of such termination and payment in full, as applicable, satisfactory to the Administrative Agent in its exclusive discretion, (b) with respect to each Receivables Securitization Entity, either (i) transfer all Accounts or other assets owned by such Receivables Securitization Entity to a U.S. Loan Party free and clear of all Liens (other than Liens in favor of the Agents on behalf of the Secured Parties and Liens in favor of the Pre-Petition Agent on behalf of the Pre-Petition Secured Lenders and other Permitted Liens that do not have priority over the Lien in favor of the Applicable Agent for the benefit of the Secured Parties), or (ii) merge such Receivables Securitization Entity with and into a U.S. Loan Party, with such U.S. Loan Party being the surviving entity of such merger, in each case, on terms satisfactory to the Administrative Agent in its exclusive discretion, and (c) cause Smurfit-MBI, an Ontario limited partnership, to acquire all of the interests of Computershare Trust Company of Canada, in its capacity as trustee of King Street Funding Trust, in all outstanding Accounts and other related assets that were purchased by Computershare Trust Company of Canada, in its capacity as trustee of King Street Funding Trust, from Smurfit-MBI, and such Accounts and other related assets shall be acquired by Smurfit-MBI free and clear of all Liens (other than Liens in favor of the Agents on behalf of the Secured Parties and Liens in favor of the Pre-Petition Agent on behalf of the Pre-Petition Secured Lenders and other Permitted Liens that do not have priority over the Lien in favor of the Applicable Agent for the benefit of the Secured Parties), on terms satisfactory to the Administrative Agent in its exclusive discretion.

Section 5.14           Restructuring Advisors.  Retain PriceWaterhouse Coopers and Lazard Ltd. or such other third party financial restructuring advisors as are reasonably satisfactory to the Administrative Agent in its Permitted Discretion.

Section 5.15           Public Rating.   Obtain a rating from S&P and Xxxxx’x on the Loans no later than ninety (90) days after the Closing Date.

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Section 5.16           Use of Proceeds.

(a)           The proceeds of the Loans and the Letters of Credit (including disbursements from the U.S. Investment Account, Canadian Investment Account, U.S. Term Loan Collateral Account or the Canadian Term Loan Collateral Account) will be used only in accordance with the purposes set forth in Section 3.10, and such use or uses shall be substantially consistent with the Budget, as updated from time to time.

(b)           No part of the proceeds of any Loan and no Letter of Credit will be used, whether directly or indirectly, for any purpose that constitutes a violation of any of the regulations of the Board, including Regulations T, U and X.

ARTICLE 6. NEGATIVE COVENANTS

From the Closing Date and for so long as any Commitment shall be in effect or any Letter of Credit shall remain outstanding (in a face amount in excess of the amount of cash then held in the Letter of Credit Account, or in excess of the face amount of back-to-back letters of credit delivered, in each case pursuant to Section 2.4(c)) or any amount shall remain outstanding or unpaid under this Agreement, unless the Required Lenders shall otherwise consent in writing:

Section 6.1             Liens.  Each of the Loan Parties will not (and will not apply to the Bankruptcy Court or the Canadian Court for authority to), and will cause their Subsidiaries not to, incur, create, assume or suffer to exist any Lien or encumbrance on any asset of the Loan Parties now owned or hereafter acquired by any Loan Party other than Permitted Liens.

Section 6.2             Merger, etc.  Each of the Loan Parties will not (and will not apply to the Bankruptcy Court or the Canadian Court for authority to), and will cause their Subsidiaries not to, consolidate, amalgamate, wind-up or merge with or into another Person, except that, if at the time thereof and immediately after giving effect thereto no Default or Event of Default shall have occurred and be continuing (i) any Foreign Subsidiary (other than a Loan Party) may merge with any other Foreign Subsidiary (other than a Loan Party) and (ii) any Receivables Securitization Entity may merge into a U.S. Loan Party in a transaction in which the U.S. Loan Party is the surviving entity.

Section 6.3             Indebtedness.  Each of the Loan Parties will not (and will not apply to the Bankruptcy Court or the Canadian Court for authority to), and will cause their Subsidiaries not to, contract, create, incur, assume or suffer to exist any Indebtedness, except for (i) the Secured Obligations; (ii) Indebtedness incurred prior to the Filing Date (including existing Capital Lease Obligations) of the Loan Parties, including the Indebtedness listed on Schedule 6.3; (iii) Indebtedness incurred subsequent to the Filing Date secured by purchase money Liens and Capital Lease Obligations in an aggregate amount not in excess of US$10,000,000 to the extent permitted by Section 6.4; (iv) Indebtedness allowed under Section 6.7; (v) other unsecured Indebtedness incurred subsequent to the Filing Date in an aggregate amount not to exceed US$5,000,000; (vi) Indebtedness of Foreign Subsidiaries (other than Canadian Loan Parties) in an aggregate amount not to exceed US$20,000,000 outstanding at any time, provided that such Indebtedness is non-recourse to all of the Loan Parties; (vii) Indebtedness permitted by Section 6.11; and (vii) Indebtedness permitted by Section 6.16; and (viii) Indebtedness incurred to pay annual premiums for property and casualty insurance policies maintained by the Parent or any Subsidiary not exceeding in an aggregate amount at any time outstanding US$10,000,000.

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Section 6.4             Capital Expenditures.  Each of the Loan Parties will not (and will not apply to the Bankruptcy Court or the Canadian Court for authority to), and will cause each of their respective Subsidiaries not to, make Capital Expenditures during the periods set forth below, in an aggregate amount (calculated on a consolidated basis) in excess of the amount specified opposite such period:

Period		Maximum Capital Expenditures
February 1, 2009 to March 31, 2009		US$45,000,000
February 1, 2009 to June 30, 2009		US$90,000,000
February 1, 2009 to September 30, 2009		US$155,000,000
February 1, 2009 to December 31, 2009		US$205,000,000
12-month period ended March 31, 2010		US$220,000,000
12-month period ended June 30, 2010		US$220,000,000

Section 6.5             EBITDA.

(a)           As of the end of each fiscal month of the Loan Parties, commencing with the fiscal month ending February 28, 2009, the Loan Parties will not permit Consolidated EBITDA for any two (2) consecutive calendar months to be negative (with each month measured separately and without giving effect to any Downtime Credit).

(b)           As of the end of each fiscal period of the Loan Parties, commencing with the fiscal month ending February 28, 2009, the Loan Parties will not permit Consolidated EBITDA for (i) each fiscal period beginning on February 1, 2009 and ending on a date set forth below on or before December 31, 2009, to be less than the respective amounts specified opposite such fiscal period, and (ii) for each twelve-month period ending on a date set forth below after December 31, 2009, to be less than the respective amounts specified opposite such period:

Period Ending		Cumulative Consolidated EBITDA
February 28, 2009		US$17,900,000
March 31, 2009		US$40,600,000
April 30, 2009		US$59,000,000
May 31, 2009		US$82,300,000
June 30, 2009		US$112,900,000
July 31, 2009		US$144,300,000
August 31, 2009		US$188,200,000
September 30, 2009		US$221,200,000
October 31, 2009		US$261,000,000
November 30, 2009		US$288,000,000
December 31, 2009		US$314,400,000
January 31, 2010		US$344,100,000
February 28, 2010		US$349,400,000
March 31, 2010		US$355,400,000
April 30, 2010		US$357,300,000
May 31, 2010		US$361,100,000
June 30, 2010		US$366,100,000

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Section 6.6             Minimum Liquidity.  The Loan Parties will not permit the sum of Excess Availability plus Available Cash held by the Loan Parties to be less than US$50,000,000 for any period of three (3) consecutive days, provided that such amount shall not be less than US$30,000,000 on any day.

Section 6.7             Guarantees and Other Liabilities.  Each of the Loan Parties will not (and will not apply to the Bankruptcy Court or the Canadian Court for authority to), and will cause their Subsidiaries not to, purchase or repurchase (or agree, contingently or otherwise, so to do) the Indebtedness of, or assume, guarantee (directly or indirectly or by an instrument having the effect of assuring another’s payment or performance of any obligation or capability of so doing, or otherwise), endorse or otherwise become liable, directly or indirectly, for the obligations, stock or dividends of any Person, except (i) for any guaranty of Indebtedness or other obligations (or otherwise becoming liable for any of the obligations) of any of the Loan Parties in the ordinary course of business and consistent with the past business practices with trade vendors if such Indebtedness or the obligations are permitted by this Agreement, (ii) by endorsement of negotiable instruments for deposit or collection in the ordinary course of business, and (iii) any guaranty of Indebtedness of a Foreign Subsidiary that is not a Loan Party by another Foreign Subsidiary that is not a Loan Party.

Section 6.8             Chapter 11/CCAA Claims.  Each of the Loan Parties will not (and will not apply to the Bankruptcy Court or the Canadian Court for authority to), and will cause their Subsidiaries not to, incur, create, assume, suffer to exist or permit (i) any other Superpriority Claim which is pari passu with or senior to the claims of the Administrative Agent and the Lenders against the Loan Parties hereunder, except for the Carve-Out or (ii) any court ordered superpriority charge which is pari passu with or senior to the CCAA DIP Lenders’ Charge against the Canadian Loan Parties, except for the CCAA Charges.

Section 6.9             Dividends; Capital Stock.  Each of the Loan Parties will not (and will not apply to the Bankruptcy Court or the Canadian Court for authority to), and will cause their Subsidiaries not to, declare or pay, directly or indirectly, any dividends or make any other distribution or payment, whether in cash, property, securities or a combination thereof, with respect to (whether by reduction of capital or otherwise) any shares of capital stock (or any options, warrants, rights or other equity securities or agreements relating to any capital stock), or set apart any sum for the aforesaid purposes on anything other than an arm’s-length basis, except for dividends or distributions paid in cash by a Subsidiary to a Loan Party or any other Person that owns capital stock or other equity interests in such Subsidiary, ratably according to their respective holdings of the type of capital stock or other equity interests in respect of which such dividend or distribution is being made.

Section 6.10           Transactions with Affiliates.  Each of the Loan Parties will not (and will not apply to the Bankruptcy Court or the Canadian Court for authority to), and will cause their Subsidiaries not to, sell or transfer any property or assets to, or otherwise engage in or permit to exist any other material transactions with, any of its Affiliates (other than transactions (i) among Loan Parties or (ii) among Subsidiaries that are not Loan Parties) other than in the ordinary course of the Loan Parties’ businesses in good faith and at commercially reasonable prices and

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on commercially reasonable terms and conditions not less favorable to the Loan Parties than could be obtained on an arm’s-length basis from a non-Affiliate.

Section 6.11           Investments, Loans and Advances.  Each of the Loan Parties will not (and will not apply to the Bankruptcy Court or the Canadian Court for authority to), and will cause their Subsidiaries not to, purchase, hold or acquire any capital stock, evidences of Indebtedness or other securities of, make or permit to exist any loans or advances to, or make or permit to exist any investment in, any other Person (all of the foregoing, “Investments”), except for (i) Investments by U.S. Loan Parties in the Canadian Borrower or in the U.S. Loan Parties other than Calpine; (ii) Investments by Canadian Loan Parties in U.S. Loan Parties other than Calpine; (iii) Permitted Investments; (iv) Indebtedness owed by any Foreign Subsidiaries (other than the Canadian Loan Parties) in an aggregate amount not to exceed US$5,000,000 outstanding at any time; (v) Indebtedness owing, or to be owed by the Canadian Loan Parties (other than the Canadian Borrower) to the U.S. Loan Parties other than Calpine in an aggregate amount not to exceed US$10,000,000 outstanding at any time; (vi) Indebtedness owed by the Canadian Guarantors to the Canadian Borrower in an aggregate amount not to exceed at any time the lesser of (a) Total Canadian Outstandings and (b) the Canadian Borrowing Base; (vii) Indebtedness owed by the Canadian Borrower to the U.S. Loan Parties other than Calpine; (viii) Investments listed on Schedule 6.11; (ix) additional investments in Foreign Subsidiaries (other than Loan Parties) and in joint ventures listed on Schedule 6.11 in an aggregate amount not to exceed US$5,000,000, plus up to an additional US$20,000,000 to the extent not distributed to Foreign Subsidiaries in the thirty (30) days prior to the Filing Date; (x) additional investments in Calpine in an aggregate amount not to exceed US$10,000,000; (xi) Investments consisting of securities or notes received in settlement of accounts receivable incurred in the ordinary course of business from a customer that such Loan Party has reasonably determined is unable to make cash payments in accordance with the terms of such account receivable; (xii) Investments by Foreign Subsidiaries (other than Canadian Subsidiaries) in other Foreign Subsidiaries (other than Canadian Subsidiaries); and (xiii) other Investments in an aggregate amount not to exceed US$1,000,000.  Each of the Loan Parties will not (and will not apply to the Bankruptcy Court or the Canadian Court for authority to), and will cause their Subsidiaries not to, invest amounts on deposit in the U.S. Term Loan Collateral Account or the U.S. Investment Account in any investment product other than Permitted Investments described in clauses (i) through (vi) of the definition thereof.

Section 6.12           Disposition of Assets.  Except as may be authorized by orders of the Bankruptcy Court or the Canadian Court, as applicable, and on terms and conditions acceptable to the Administrative Agent, each of the Loan Parties will not, and will cause their Subsidiaries not to, sell or otherwise dispose of any assets (including, without limitation, the capital stock of any Subsidiary of the Loan Parties) except for (i) sales of Inventory in the ordinary course of business, (ii) sales of surplus assets of the Loan Parties no longer used in the Loan Parties’ business operations, (iii) sales of assets listed on Schedule 6.12, (iv) sales and other dispositions from one Loan Party to another Loan Party, provided, that any such sales or dispositions shall be in the ordinary course of such Loan Parties’ business, made in good faith, at commercially reasonable prices and on commercially reasonable terms and conditions, unless such transactions are between (A) U.S. Loan Parties and the Canadian Borrower or (B) Canadian Guarantors, (v) sales and other dispositions from one Foreign Subsidiary (other than Canadian Subsidiaries) to

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another Foreign Subsidiary (other than Canadian Subsidiaries), and (vi) sales of assets having a fair market value not in excess of US$25,000,000 in the aggregate.

Section 6.13           Nature of Business.  Each of the Loan Parties will not (and will not apply to the Bankruptcy Court or the Canadian Court for authority to), and will cause their Subsidiaries not to, modify or alter in any material manner the nature and type of its business as conducted at or prior to the Filing Date or the manner in which such business is conducted (except as required by the Bankruptcy Code or CCAA).

Section 6.14           Restrictive Agreements among Loan Parties.  Each of the Loan Parties will not (and will not apply to the Bankruptcy Court or the Canadian Court for authority to), and will cause their Subsidiaries not to, except for this Agreement or to the extent existing on the Filing Date and disclosed on Schedule 6.14, permit, place or agree to permit or place any restrictions on the payment of dividends or other distributions among the Loan Parties or their Subsidiaries or Affiliates or the making of advances or any other cash payments among the Loan Parties or their Subsidiaries or Affiliates.

Section 6.15           Right of Subrogation among Loan Parties.  Each of the Loan Parties will not (and will not apply to the Bankruptcy Court or the Canadian Court for authority to), and will cause their Subsidiaries not to, assert any right of subrogation against any other Loan Party until all Borrowings and all Letters of Credit are paid in full and the Commitments are terminated.

Section 6.16           Derivative Agreements.  Each of the Loan Parties will not (and will not apply to the Bankruptcy Court or the Canadian Court for authority to), and will cause their Subsidiaries not to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate risks to which any Loan Party or any Subsidiary has actual exposure (other than those in respect of capital stock of any Person), and (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of any Loan Party or any Subsidiary, provided that in each case such Swap Agreements may only be entered into in the ordinary course of the Loan Parties’ business, consistent with past practices.

Section 6.17           Reorganization Plan.  The Loan Parties will not (and will not apply to the Bankruptcy Court or the Canadian Court for authority to), file any Reorganization Plan that does not provide for the repayment in full in cash on the effective date thereof of all outstanding Secured Obligations.

ARTICLE 7. EVENTS OF DEFAULT

Section 7.1             Events of Default.  In the case of the happening of any of the following events and the continuance thereof beyond the applicable period of grace (if any) set forth below (each, an “Event of Default”):

(a)           any representation or warranty made by any Loan Party in this Agreement or in any Loan Document or in connection with this Agreement or the credit extensions hereunder or any statement or representation made in any report, financial statement, certificate

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or other document furnished by any Loan Party to the Lenders under or in connection with this Agreement, shall prove to have been false or misleading in any material respect when made or delivered; or

(b)           default shall be made in the payment of any principal of the Loans or any reimbursement obligation or cash collateralization in respect of Letters of Credit, when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise; or

(c)           default shall be made in the payment of any fees or interest on the Loans or other amounts payable by the Loan Parties hereunder (other than any amounts referred to in clause (b) of this Section), when and as the same shall become due and payable, and such failure shall continue unremedied for more than one (1) Business Day; or

(d)           default shall be made by any Loan Party, or any of their respective Subsidiaries, in the due observance or performance of any covenants, conditions or agreements contained in ARTICLE 6 hereof; or

(e)           default shall be made by any Loan Party, or any of their respective Subsidiaries, in the due observance or performance of any covenant, condition or agreement (other than the covenants, conditions or agreements contained in ARTICLE 6 hereof) to be observed or performed pursuant to the terms of this Agreement or any of the other Loan Documents and such default shall continue unremedied for more than ten (10) days following the earlier of (i) notice of such breach by the Administrative Agent or any Lender or (ii) any Loan Party having knowledge of such breach; or

(f)            any of the Cases shall be dismissed or converted to a case under Chapter 7 of the Bankruptcy Code, or any Loan Party shall file a motion or other pleading seeking the dismissal of any of the Cases under Section 1112 of the Bankruptcy Code or otherwise; a trustee under Chapter 7 or Chapter 11 of the Bankruptcy Code, a responsible officer or an examiner with enlarged powers relating to the operation of the business (powers beyond those set forth in Section 1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of the Bankruptcy Code shall be appointed in any of the Cases and the order appointing such trustee, responsible officer or examiner shall not be reversed or vacated within thirty (30) days after the entry thereof; or a trustee in bankruptcy, receiver, interim receiver, receiver and manager or official with similar powers shall be appointed with respect to any Canadian Loan Party or its assets; or an application shall be filed by any Loan Party for the approval of any other Superpriority Claim (other than the Carve-Out) in any of the Cases which is pari passu with or senior to the claims of the Administrative Agent and the Lenders against any Loan Party hereunder, or there shall arise or be granted any such pari passu or senior Superpriority Claim without the consent of the Administrative Agent in its exclusive discretion (provided that the Administrative Agent’s discretion with respect to the foregoing claims shall be limited to claims for less than $1,000,000); or the Bankruptcy Court shall enter an order terminating the use of cash collateral for the purposes described in Section 3.10; or a motion shall be filed by any Loan Party in any of the Canadian Cases for the approval of any other superpriority charge other than the CCAA Charges against any of the Canadian Loan Parties, or there shall arise any such pari passu or senior charge without the consent of the Administrative Agent in its exclusive discretion

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(provided that the Administrative Agent’s discretion with respect to the foregoing claims shall be limited to claims for less than $1,000,000); or

(g)           the Bankruptcy Court or the Canadian Court shall enter an order or orders granting relief from the automatic stay applicable under Section 362 of the Bankruptcy Code or the stay in the Initial Order, as applicable, to the holder or holders of any security interest to permit foreclosure or enforcement of any kind (or the granting of a deed in lieu of foreclosure or the like) on any assets of any of the Loan Parties which have a value in excess of US$5,000,000 in the aggregate; or

(h)           a Change of Control shall occur; or

(i)            the Loan Parties shall fail to deliver any certified Borrowing Base Certificate when due and such default shall continue unremedied for more than (i) one (1) Business Day with respect to a daily Borrowing Base Certificate, (ii) three (3) Business Days with respect to a weekly Borrowing Base Certificate and (iii) five (5) Business Days with respect to a monthly Borrowing Base Certificate; or

(j)            any Loan Document shall not be for any reason, or any of the Loan Parties shall so assert in a pleading filed in any court, in full force and effect and enforceable in all material respects in accordance with its terms; or

(k)           an order of the Bankruptcy Court or the Canadian Court shall be entered reversing, amending, supplementing, staying for a period in excess of ten (10) days, vacating or otherwise modifying any of the Orders without the prior written consent of the Administrative Agent; or

(l)            any judgment or order as to a post-petition liability or debt for the payment of money in excess of US$1,000,000 shall be rendered against any of the Loan Parties or any of their Subsidiaries and such judgment shall remain undischarged and there shall be any period of thirty (30) consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

(m)          any non-monetary judgment or order with respect to a post-petition event shall be rendered against any Loan Party, or any of their respective Subsidiaries, which does or would reasonably be expected to cause a Material Adverse Effect; or

(n)           the Loan Parties or any of their Subsidiaries shall make any Pre-Petition Payment (whether by way of adequate protection or otherwise) of principal or interest or otherwise on account of any pre-petition Indebtedness or payables (including, without limitation, reclamation claims) other than Pre-Petition Payments authorized by the Bankruptcy Court or Canadian Court in respect of (i) accrued payroll and related employee benefit expenses as of the Filing Date, (ii) reclamation claims in such amounts as determined by the Loan Parties and agreed to by the Administrative Agent; (iii) materialmen’s, shippers, warehousemen’s and other similar liens and certain other pre-petition claims permitted by the Administrative Agent and authorized by the Bankruptcy Court or Canadian Court in an aggregate amount not to exceed $46,000,000, (iv) the payment of current interest and letter of credit fees (and the payment of all interest and fees that are accrued and unpaid as of the Filing Date) at the applicable non-default

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rates provided for pursuant to the Pre-Petition Credit Agreement, all as described in the Loan Parties’ “Motion for an Order (I) Authorizing Debtors to Obtain Post-Petition Financing; (II) Granting Liens, Including Priming Liens, and Superpriority Claims Pursuant to 11 U.S.C. § 364; (III) Authorizing Use of Proceeds to Effectuate Payout of Securitization Facilities (IV) Authorizing Use of Cash Collateral Pursuant to 11 U.S.C. § 363; (V) Granting Adequate Protection Pursuant to 11 U.S.C. §§ 363 and 364; and (VI) Scheduling a Final Hearing,” and as authorized by the Orders, (v) payments in respect of prepetition claims of taxing authorities in an aggregate amount not to exceed $23,100,000 as described in the Loan Parties’ “Motion for an Order Authorizing the Payment of Prepetition Sales, Use, Property, and Other Taxes and Governmental Charges;” (vi) the payment of pre-petition claims to certain critical vendors in an aggregate amount not to exceed $60,000,00 as described in the Loan Parties’ “Motion for an Order Authorizing the Payment of Prepetition Claims of Certain Critical Vendors;” (vii) the payment of certain pre-petition obligations owed to customers and brokers in an aggregate amount not to exceed $23,000,000 as described in the Loan Parties’ “Motion for an Order Authorizing the Debtors to Honor Certain Prepetition Obligations to Customers and Brokers and to Otherwise Continue Prepetition Customer and Broker Programs and Practices in the Ordinary Course of Business;” (viii) payment of pre-petition obligations in respect of insurance programs in an aggregate amount not to exceed $7,000,000 as described in the Loan Parties’ “Motion for an Order Authorizing the Debtors to (I) Make Installment Payments Under Prepetition Insurance Premium Financing Agreements, (II) Continue Prepetition Insurance Programs in the Ordinary Course of Business, and (III) Pay All Prepetition Obligations in Respect Thereof;” or (ix) such other orders which are satisfactory in form and substance to the Administrative Agent; or

(o)           any Termination Event described in clauses (iii) or (iv) of the definition of such term shall have occurred and shall continue unremedied for more than ten (10) days and the sum (determined as of the date of occurrence of such Termination Event) of the Insufficiency of the Plan in respect of which such Termination Event shall have occurred and be continuing and the Insufficiency of any and all other Plans with respect to which such a Termination Event (described in such clauses (iii) or (iv)) shall have occurred and then exist is equal to or greater than US$1,000,000; or

(p)           (i) any Loan Party or any ERISA Affiliate thereof shall have been notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to such Multiemployer Plan, (ii) such Loan Party or such ERISA Affiliate does not have reasonable grounds to contest such Withdrawal Liability and is not in fact contesting such Withdrawal Liability in a timely and appropriate manner, and (iii) the amount of such Withdrawal Liability specified in such notice, when aggregated with all other amounts required to be paid to Multiemployer Plans in connection with Withdrawal Liabilities (determined as of the date of such notification), exceeds US$1,000,000 allocable to post-petition obligations or requires payments exceeding US$100,000 per annum in excess of the annual payments made with respect to such Multiemployer Plans by such Loan Party or such ERISA Affiliate for the plan year immediately preceding the plan year in which such notification is received; or

(q)           any Loan Party or any ERISA Affiliate thereof shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA, if as a result of such reorganization or termination the aggregate annual contributions of such Loan Party and its ERISA Affiliates to

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all Multiemployer Plans that are then in reorganization or being terminated have been or will be increased over the amounts contributed to such Multiemployer Plans for the plan years that include the Closing Date by an amount exceeding US$1,000,000; or

(r)            any Loan Party or any ERISA Affiliate thereof shall have committed a failure described in Section 302(f)(1) of ERISA (other than the failure to make any contribution accrued and unpaid as of the Filing Date) and the amount determined under Section 302(f)(3) of ERISA is equal to or greater than US$1,000,000; or

(s)           any Loan Party shall have failed to make current service contributions to a Canadian Pension Plan (other than the failure to make any contribution accrued and unpaid as of the Filing Date); or

(t)            it shall be determined (whether by the Bankruptcy Court, the Canadian Court or by any other judicial or administrative forum) that any Loan Party is liable for the payment of claims arising out of any failure to comply (or to have complied) with applicable Environmental Laws the payment of which will have a Material Adverse Effect and the enforcement thereof shall not have been stayed;

then, and in every such event and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders, shall, take one or more of the following actions without further order of or application to the Bankruptcy Court or the Canadian Court, provided that with respect to item (iv) below and the enforcement of liens or other remedies with respect to collateral referred to in item (v) below, the Administrative Agent shall provide the Borrowers (with a copy to counsel for the Official Creditors’ Committee appointed in any of the U.S. Cases, to the United States Trustee for the Bankruptcy Court’s District, and to any monitor in the Canadian Cases) with five (5) business days’ prior written notice (the “Default Notice”), and, solely to the extent required in the Canadian Cases, with leave of the Canadian Court:  (i) terminate forthwith the Commitments; (ii) declare the Loans then outstanding to be forthwith due and payable, whereupon the principal of the Loans together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Loan Parties accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Loan Parties, anything contained herein or in any other Loan Document to the contrary notwithstanding; (iii) require the Loan Parties upon demand to forthwith deposit in the Letter of Credit Account or Canadian Letter of Credit Account, as the case may be, cash in an amount, taken together with any amounts then held in the Letter of Credit Account or Canadian Letter of Credit Account, as the case may be, is equal to the greater of (A) an amount, as determined by the Fronting Banks and the Applicable Agents, equal to the face amount of all outstanding Letters of Credit issued by the Fronting Banks plus the sum of all projected contractual obligations to the Applicable Agents, the Fronting Banks and the Lenders of the Borrowers thereunder through the expiration date(s) of such Letters of Credit, and (B) 105% of the aggregate Letter of Credit Outstandings issued by the Fronting Banks (and to the extent the Loan Parties shall fail to furnish such funds as demanded by the Administrative Agent, the Administrative Agent shall be authorized to debit the accounts of the Loan Parties maintained with the Administrative Agent in such amount five (5) Business Days after the giving of the Default Notice (the “Default Notice Period”)); (iv) set-off amounts in any Collateral Account or

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any other accounts maintained with the Administrative Agent or any other Lender or their Affiliates and apply such amounts to the obligations of the Loan Parties hereunder and in the other Loan Documents; or (v) exercise any and all remedies (including, without limitation, with respect to the Liens in favor of the Agents and the Secured Parties) under the Loan Documents and under applicable law available to the Administrative Agent and the Lenders.

ARTICLE 8. THE AGENTS

Section 8.1             Administration.  The general administration of the Loan Documents shall be performed by the Administrative Agent.  Each Lender hereby irrevocably authorizes each Agent, at its discretion, to take or refrain from taking such actions as agent on its behalf and to exercise or refrain from exercising such powers under the Loan Documents as are delegated by the terms hereof or thereof, as appropriate, together with all powers reasonably incidental thereto (including the release of Collateral in connection with any transaction that is expressly permitted by the Loan Documents).  The Agents shall not have any duties or responsibilities except as set forth in this Agreement and the remaining Loan Documents.

Section 8.2             Advances and Payments.  On the date of each Loan, the Applicable Agent shall be authorized (but not obligated) to advance, for the account of each of the Lenders, the amount of the Loan to be made by it in accordance with its Commitment hereunder.  Should the Applicable Agent do so, each of the Lenders agrees forthwith to reimburse such Agent in immediately available funds for the amount so advanced on its behalf by such Agent, together with interest at the Federal Funds Effective Rate if not so reimbursed on the date due from and including such date but not including the date of reimbursement.

Section 8.3             Sharing of Setoffs.

(a)           Each U.S. Lender agrees that if it shall, through the exercise of a right of banker’s lien, setoff or counterclaim against the U.S. Loan Parties and the Canadian Borrower, including, but not limited to, a secured claim or other security or interest arising from, or in lieu of, such secured claim and received by such U.S. Lender under any applicable bankruptcy, insolvency or other similar law, or otherwise, obtain payment in respect of its U.S. Loans as a result of which the unpaid portion of its U.S. Loans is proportionately less than the unpaid portion of the U.S. Loans of any other U.S. Lender (a) it shall promptly purchase at par (and shall be deemed to have thereupon purchased) from such other U.S. Lender a participation in the U.S. Loans of such other U.S. Lender, so that the aggregate unpaid principal amount of each U.S. Lender’s U.S. Loans and its participation in U.S. Loans of the other U.S. Lenders shall be in the same proportion to the aggregate unpaid principal amount of all U.S. Loans then outstanding as the principal amount of its U.S. Loans prior to the obtaining of such payment was to the principal amount of all U.S. Loans outstanding prior to the obtaining of such payment and (b) such other adjustments shall be made from time to time as shall be equitable to ensure that the U.S. Lenders share such payment pro-rata, provided that if any such non-pro-rata payment is thereafter recovered or otherwise set aside such purchase of participations shall be rescinded (without interest).  Each of the U.S. Loan Parties expressly consents to the foregoing arrangements and agrees that any U.S. Lender holding (or deemed to be holding) a participation in a U.S. Loan may exercise any and all rights of banker’s lien, setoff (in each case, subject to the same notice requirements as pertain to clause (iv) of the remedial provisions of Section 7.1)

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or counterclaim with respect to any and all moneys owing by the U.S. Loan Parties to such U.S. Lender as fully as if such U.S. Lender held a promissory note and was the original obligee thereon, in the amount of such participation.

(b)           Each Canadian Lender agrees that if it shall, through the exercise of a right of banker’s lien, setoff or counterclaim against the Canadian Loan Parties and the U.S. Borrower, including, but not limited to, a secured claim or other security or interest arising from, or in lieu of, such secured claim and received by such Canadian Lender under any applicable bankruptcy, insolvency or other similar law, or otherwise, obtain payment in respect of its Canadian Loans as a result of which the unpaid portion of its Canadian Loans is proportionately less than the unpaid portion of the Canadian Loans of any other Canadian Lender (a) it shall promptly purchase at par (and shall be deemed to have thereupon purchased) from such other Canadian Lender a participation in the Canadian Loans of such other Canadian Lender, so that the aggregate unpaid principal amount of each Canadian Lender’s Canadian Loans and its participation in Canadian Loans of the other Canadian Lenders shall be in the same proportion to the aggregate unpaid principal amount of all Canadian Loans then outstanding as the principal amount of its Canadian Loans prior to the obtaining of such payment was to the principal amount of all Canadian Loans outstanding prior to the obtaining of such payment and (b) such other adjustments shall be made from time to time as shall be equitable to ensure that the Canadian Lenders share such payment pro-rata, provided that if any such non-pro-rata payment is thereafter recovered or otherwise set aside such purchase of participations shall be rescinded (without interest).  Each of the Canadian Loan Parties expressly consents to the foregoing arrangements and agrees that any Canadian Lender holding (or deemed to be holding) a participation in a Canadian Loan may exercise any and all rights of banker’s lien, setoff (in each case, subject to the same notice requirements as pertain to clause (iv) of the remedial provisions of Section 7.1) or counterclaim with respect to any and all moneys owing by the Canadian Loan Parties to such Canadian Lender as fully as if such Canadian Lender held a promissory note and was the original obligee thereon, in the amount of such participation.

Section 8.4             Agreement of Required Lenders.  Upon any occasion requiring or permitting an approval, consent, waiver, election or other action on the part of the Required Lenders, action shall be taken by the Agents for and on behalf or for the benefit of all Lenders upon the direction of the Required Lenders, and any such action shall be binding on all Lenders.  No amendment, modification, consent, or waiver shall be effective except in accordance with the provisions of Section 9.10.

Section 8.5             Liability of Agents.

(a)           Each Agent, when acting on behalf of the Lenders, may execute any of its respective duties under this Agreement by or through any of its respective officers, agents, and employees, and neither the Agents nor their directors, officers, agents, employees or Affiliates shall be liable to the Lenders or any of them for any action taken or omitted to be taken in good faith, or be responsible to the Lenders or to any of them for the consequences of any oversight or error of judgment, or for any loss, unless the same shall happen through its gross negligence or willful misconduct.  The Agents and their respective directors, officers, agents, employees and Affiliates shall in no event be liable to the Lenders or to any of them for any action taken or omitted to be taken by them pursuant to instructions received by them from the Required

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Lenders or in reliance upon the advice of counsel selected by it.  Without limiting the foregoing, neither the Agents, nor any of their respective directors, officers, employees, agents or Affiliates shall be responsible to any Lender for the due execution, validity, genuineness, effectiveness, sufficiency, or enforceability of, or for any statement, warranty, or representation in, this Agreement, any Loan Document or any related agreement, document or order, or shall be required to ascertain or to make any inquiry concerning the performance or observance by the Loan Parties of any of the terms, conditions, covenants, or agreements of this Agreement or any of the Loan Documents.

(b)           Neither the Agents nor any of their respective directors, officers, employees, agents or Affiliates shall have any responsibility to the Loan Parties on account of the failure or delay in performance or breach by any Lender or by the Loan Parties of any of their obligations under this Agreement or any of the Loan Documents or in connection herewith or therewith.

(c)           The Agents, in their capacity as Agents hereunder, shall be entitled to rely on any communication, instrument, or document reasonably believed by such person to be genuine or correct and to have been signed or sent by a person or persons believed by such person to be the proper person or persons, and such person shall be entitled to rely on advice of legal counsel, independent public accountants, and other professional advisers and experts selected by such person.

Section 8.6             Reimbursement and Indemnification.  Each Lender agrees (i) to reimburse (x) the Agents for such Lender’s Applicable Percentage of any expenses and fees incurred for the benefit of the Lenders under this Agreement and any of the Loan Documents, including, without limitation, counsel fees and compensation of agents and employees paid for services rendered on behalf of the Lenders, and any other expense incurred in connection with the operations or enforcement thereof not reimbursed by the Loan Parties and (y) the Agents for such Lender’s Applicable Percentage of any expenses of the Agents incurred for the benefit of the Lenders that the Loan Parties have agreed to reimburse pursuant to Section 9.5 and has failed to so reimburse and (ii) to indemnify and hold harmless the Agents and any of their directors, officers, employees, agents or Affiliates, on demand, in the amount of its proportionate share, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against it or any of them in any way relating to or arising out of this Agreement or any of the Loan Documents or any action taken or omitted by it or any of them under this Agreement or any of the Loan Documents to the extent not reimbursed by the Loan Parties (except such as shall result from their respective gross negligence or willful misconduct).

Section 8.7             Rights of Agents.  It is understood and agreed that the Agents shall have the same rights and powers hereunder (including the right to give such instructions) as the other Lenders and may exercise such rights and powers, as well as its rights and powers under other agreements and instruments to which it is or may be party, and engage in other transactions with any Loan Party, as though it were not an Agent hereunder.

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Section 8.8 Other Duties, etc.  Anything herein to the contrary notwithstanding, none of the Joint Bookrunners, lead arrangers, syndication agents, or documentation agents shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as an Agent, a Lender or Fronting Bank hereunder.

Section 8.9 Independent Lenders.  Each Lender acknowledges that it has decided to enter into this Agreement and to make the Loans hereunder based on its own analysis of the transactions contemplated hereby and of the creditworthiness of the Loan Parties and agrees that the Agents shall bear no responsibility therefor.

Section 8.10 Notice of Transfer.  The Administrative Agent may deem and treat a Lender party to this Agreement as the owner of such Lender’s portion of the Loans for all purposes, unless and until a written notice of the assignment or transfer thereof executed by such Lender shall have been received by the Administrative Agent.

Section 8.11 Successor Agents.  Each Agent may resign at any time by giving written notice thereof to the Lenders and the Loan Parties.  Upon any such resignation, the Required Lenders shall have the right to appoint a successor Agent, which shall be reasonably satisfactory to the Loan Parties.  If no successor Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment, within thirty (30) days after the retiring Agent’s giving of notice of resignation, the retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of a least US$100,000,000, which shall be reasonably satisfactory to the Loan Parties.  Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement.  After any retiring Agent’s resignation hereunder as Agent, the provisions of this ARTICLE 8 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.

Section 8.12 Quebec Security.

(a) For greater certainty, and without limiting the powers of any Agent, each of the Agents, the Lenders and the Fronting Banks, for themselves, and each Lender for each of its Affiliates, hereby irrevocably constitutes JPMorgan Chase Bank, N.A., Toronto Branch as the holder of an irrevocable power of attorney (fondé de pouvoir within the meaning of Article 2692 of the Civil Code of Québec) in order to hold hypothecs and security granted by any Loan Party on property pursuant to the laws of the Province of Québec in order to secure obligations of any Loan Party under any bond, debenture or similar title of indebtedness, issued by any Loan Party, and hereby agrees that JPMorgan Chase Bank, N.A., Toronto Branch may act as the bondholder and mandatary (i.e. agent) with respect to any bond, debenture or similar title of indebtedness that may be issued by any Loan Party and pledged in favour of JPMorgan Chase Bank, N.A., Toronto Branch, for the benefit of the Secured Parties. The execution by JPMorgan Chase Bank, N.A., Toronto Branch, acting as fondé de pouvoir, bondholder and mandatary, prior to the execution of this Agreement of any deeds of hypothec or other security documents is hereby ratified and confirmed.

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(b) Notwithstanding the provisions of Section 32 of An Act respecting the special powers of legal persons (Québec), JPMorgan Chase Bank, N.A., Toronto Branch may acquire and be the holder of any bond, debenture or similar title of indebtedness issued by any Loan Party (i.e. the fondé de pouvoir may acquire and hold the first bond, debenture or similar title of indebtedness issued under any deed of hypothec by any Loan Party).

(c) The constitution of JPMorgan Chase Bank, N.A., Toronto Branch as fondé de pouvoir, and as bondholder and mandatary with respect to any bond, debenture, or similar title of indebtedness that may be issued and pledged from time to time to JPMorgan Chase Bank, N.A., Toronto Branch for the benefit of the Secured Parties, shall be deemed to have been ratified and confirmed by each Person accepting an assignment of, a participation in or an arrangement in respect of, all or any portion of any Secured Parties’ rights and obligations under this Agreement by the execution of an assignment, including an Assignment and Acceptance, or other agreement pursuant to which it becomes such assignee or participant, and by each successor Agent by the execution of an Assignment and Acceptance or other agreement, or by the compliance with other formalities, as the case may be, pursuant to which it becomes a successor Agent under this Agreement.

(d) JPMorgan Chase Bank, N.A., Toronto Branch acting as fondé de pouvoir, bondholder or mandatary shall have the same rights, powers, immunities, indemnities and exclusions from liability as are prescribed in favour of the Agents in this Agreement, which shall apply mutatis mutandis to JPMorgan Chase Bank, N.A., Toronto Branch, acting as fondé de pouvoir, bondholder or mandatary.

ARTICLE 9.       MISCELLANEOUS

Section 9.1 Notices.

(a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(i) if to the Loan Parties, to Smurfit-Stone Container Corporation at Xxx XxxxXxxxx Xxxxx, 00xx Xxxxx, Xx. Xxxxx, XX 00000, Attention of Chief Financial Officer (Fax No. (000) 000-0000);

(ii) if to the Administrative Agent or the Collateral Agent, to JPMorgan Chase Bank, Loan and Agency Services Group, 0000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxx 00000, Attention of Xxxxxxxxx Xxx (Telecopy No. 713-427-6307) and Xxxxxx Xxxxxxxxx (Telecopy No. 713-427-6307), with a copy to JPMorgan Chase Bank, N.A., 000 Xxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000, Attention of Xxx Xxxxxxxxx (Telecopy No. 212-622-4556);

(iii) if to the Canadian Administrative Agent or the Canadian Collateral Agent, to JPMorgan Chase Bank, N.A., Toronto Branch 000 Xxx

000

Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx X0X 0X0, Attention of Xxxxxx Xxxxxxxx (Telecopy No. 000-000-0000);

(iv) if to JPMCB, as Fronting Bank with respect to any U.S. Revolving Facility Letter of Credit, to it at JPMorgan Chase Bank, N.A., 000 Xxxxx Xxxxxxxxx Plaza, L/C Department, Mail code: IL1-0236, Xxxxxxx, XX 00000, Attention of Xxxxx Xxxxxxxxx (Telephone: 000-000-0000) and Xxxxxxx Xxxx (Telephone: 000-000-0000) Fax: 000-000-0000, with a copy to JPMorgan Chase Bank, N.A., 000 Xxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000, Attention of Xxx Xxxxxxxxx (Telecopy No. 212-622-4556); and

(v) if to JPMCB, as Fronting Bank with respect to any Canadian Revolving Facility Letter of Credit, to it at JPMorgan Chase Bank, N.A., Toronto Branch L/C Department, 000 Xxx Xxxxxx, Xxxxx 00 Xxxxxxx, X0X 0X0, Xxxxxx, Attention of Xxxxxxxx XxXxxxxxxx (Telephone: 000-000-0000; Fax: 000-000-0000), with a copy to JPMorgan Chase Bank, N.A., 000 Xxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000, Attention of Xxx Xxxxxxxxx (Telecopy No. 212-622-4556); and

(vi) if to any Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

(b) Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to ARTICLE 2 unless otherwise agreed by the Administrative Agent and the applicable Lender.  The Administrative Agent or the Loan Parties may, in their respective discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by them; provided that approval of such procedures may be limited to particular notices or communications.

(c) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto.  All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

Section 9.2 Survival of Agreement, Representations and Warranties, etc.  All warranties, representations and covenants made by any Loan Party herein or in any certificate or other instrument delivered by it or on its behalf in connection with this Agreement shall be considered to have been relied upon by the Lenders and shall survive the making of the Loans herein contemplated regardless of any investigation made by any Lender or on its behalf and shall continue in full force and effect so long as any amount due or to become due hereunder is outstanding and unpaid and so long as the Commitments have not been terminated.  All statements in any such certificate or other instrument shall constitute representations and warranties by the Loan Parties hereunder with respect to the Loan Parties.

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Section 9.3 Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of a Fronting Bank that issues any Letter of Credit), except that (i) the Borrowers may not assign or otherwise transfer any of their rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrowers without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of a Fronting Bank that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Fronting Bank(s) and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)

(i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees (other than a Loan Party or an Affiliate of a Loan Party) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld) of:

(A) the Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment of all or any portion of a Term Loan to a Lender, an Affiliate of a Lender or an Approved Fund; and

(B) each Fronting Bank, provided that no consent of any Fronting Bank shall be required for an assignment of all or any portion of a Term Loan.

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $1,000,000 unless the Administrative Agent otherwise consents;

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(B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement, provided that this clause shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of one Class of Commitments or Loans;

(C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500;

(D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire in which the assignee designates one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Loan Parties and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws;

(E) no such assignment shall be made to a Loan Party or any Affiliate of a Loan Party; and

(F) with the exception of assignments from the Converting Lenders necessary to effect further allocations of the Commitments and the Loans, and except as directed by the Administrative Agent pursuant to Section 9.3(e), no such assignments shall be made prior to the earlier of (I) the date the Bankruptcy Court enters the Final Order or (II) the date the Administrative Agent declares in writing the syndication of the Commitments to be complete.

For the purposes of this Section 9.3(b), the term “Approved Fund” has the following meaning:

“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment and Acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a

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Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Section 2.15, Section 2.16, Section 2.19, Section 9.5, Section 9.6).  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.3 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

(iv) The Administrative Agent, acting for this purpose as an agent of the Borrowers, shall maintain at one of its offices a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and payments made by the Fronting Bank(s) pursuant to a Letter of Credit owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the Borrowers, the Administrative Agent, the Fronting Bank(s) and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrowers, the Fronting Bank(s) and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(v) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it under this Agreement, the Administrative Agent shall have no obligation to accept such Assignment and Acceptance and record the information therein in the Register unless and until such payment shall have been made in full, together with all accrued interest thereon.  No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

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(c) Any Lender may, without the consent of the Borrowers, the Administrative Agent, or the Fronting Banks, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrowers, the Administrative Agent, the Fronting Bank(s) and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.10(a) that affects such Participant.  The Loan Parties agree that each Participant shall be entitled to the benefits of Section 2.15, Section 2.16 and Section 2.19 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 2.26 as though it were a Lender, provided such Participant agrees to be subject to Section 8.3 as though it were a Lender.

(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(e) Each Lender having a Commitment on the Closing Date (a “Closing Date Lender”), hereby agrees to execute and deliver, at any time and from time to time on or prior to the date the Bankruptcy Court enters the Final Order, such Assignments and Acceptances as the Administrative Agent may direct in order to effect secondary allocations of the Commitments to other Persons who shall become Lenders hereunder.  The Closing Date Lenders shall effect such assignments with the payment of a corresponding amount of fees to market as the Administrative Agent may direct, but which fees, as paid by a Closing Date Lender, shall be no greater than the amount of fees to market received by such Closing Date Lender in connection with such Closing Date Lender’s initial Commitments under this Agreement.

Section 9.4 Confidentiality.  Each Agent, the Fronting Banks and each of the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential in accordance herewith), (b) to the extent requested by any regulatory authority, (c) to the extent required by Requirement of Laws or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating

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to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or participant in, or any prospective assignee of or participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Loan Parties and their obligations, (g) with the consent of the Borrowers or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to any Agent, any Fronting Bank or any Lender on a non-confidential basis from a source other than the Borrowers. For the purposes of this Section, “Information” means all information received from the Borrowers or any of their Subsidiaries relating to the Borrowers or any of their Subsidiaries or any of their respective businesses, other than any such information that is available to any Agent, any Fronting Bank or any Lender on a non-confidential basis and not known by such Person to be in contravention of any applicable confidentiality or similar provision prior to disclosure by the Borrowers. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

EACH AGENT, EACH FRONTING BANK AND EACH OF THE LENDERS ACKNOWLEDGES THAT INFORMATION FURNISHED TO IT MAY INCLUDE MATERIAL NON-PUBLIC INFORMATION CONCERNING ANY OF THE LOAN PARTIES OR THEIR SUBSIDIARIES AND THEIR RESPECTIVE RELATED PARTIES OR THEIR RESPECTIVE SECURITIES, AND CONFIRMS THAT IT HAS DEVELOPED COMPLIANCE PROCEDURES REGARDING THE USE OF MATERIAL NON-PUBLIC INFORMATION AND THAT IT WILL HANDLE SUCH MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH THOSE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

ALL INFORMATION, INCLUDING REQUESTS FOR WAIVERS AND AMENDMENTS, FURNISHED BY THE LOAN PARTIES OR THE AGENTS PURSUANT TO, OR IN THE COURSE OF ADMINISTERING, THIS AGREEMENT WILL BE SYNDICATE-LEVEL INFORMATION, WHICH MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION ABOUT THE LOAN PARTIES AND THEIR RELATED PARTIES OR THEIR RESPECTIVE SECURITIES.  ACCORDINGLY, EACH LENDER REPRESENTS TO THE LOAN PARTIES AND THE AGENTS THAT IT HAS IDENTIFIED IN ITS ADMINISTRATIVE QUESTIONNAIRE A CREDIT CONTACT WHO MAY RECEIVE INFORMATION THAT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE PROCEDURES AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.

Section 9.5 Expenses.  Whether or not the transactions hereby contemplated shall be consummated, the Loan Parties’ agree to pay all reasonable expenses incurred by each Agent and the Co-Lead Arrangers (including, without limitation, the reasonable fees and disbursements of Xxxxx Xxxx LLP, counsel for the Administrative Agent, any other local counsel that such Agent shall retain (including Canadian and Delaware counsel) and any internal or third-party

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appraisers, consultants and auditors advising such Agent and the Co-Lead Arrangers and their counsel) in connection with the preparation, execution, delivery and administration of this Agreement and the other Loan Documents, the making of the Loans and the issuance of the Letters of Credit, the perfection of the Liens contemplated hereby, the syndication of the transactions contemplated hereby, the costs, fees and expenses of each Agent and the Co-Lead Arrangers in connection with the initial and periodic collateral reviews and appraisals, field audits, monitoring of assets (including collateral monitoring fees of or incurred by the Administrative Agent) and publicity expenses, and, following the occurrence of an Event of Default, all expenses incurred by the Lenders and each Agent in the enforcement or protection of the rights of any one or more of the Lenders or such Agent in connection with this Agreement or the other Loan Documents, including but not limited to the fees and disbursements of any counsel for the Lenders or such Agent.  Such payments by the Loan Parties shall be made upon delivery of a statement setting forth such costs and expenses.  Whether or not the transactions hereby contemplated shall be consummated, the Loan Parties agree to reimburse the Administrative Agent and the Co-Lead Arrangers for the expenses set forth in the Commitment Letter and the reimbursement provisions thereof are hereby incorporated herein by reference.  The obligations of the Loan Parties under this Section shall survive the termination of this Agreement or the payment of the Loans.

Section 9.6 Indemnity.

(a) Each of the Loan Parties agree to indemnify and hold harmless each Agent, the Co-Lead Arrangers and the Lenders and their directors, officers, employees, trustees, advisors, agents and Affiliates (each an “Indemnified Party”) from and against any and all expenses, losses, claims, damages and liabilities incurred by such Indemnified Party arising out of claims made by any Person in any way relating to the transactions contemplated hereby, but excluding therefrom all expenses, losses, claims, damages, and liabilities to the extent that they are determined by the final judgment of a court of competent jurisdiction to have resulted from (i) the willful misconduct or gross negligence of such Indemnified Party or (ii) an action commenced by such Indemnified Party against a Loan Party and which action results in a final judgment in favor of such Loan Party.  The obligations of the Loan Parties under this Section shall survive the termination of this Agreement and the payment of the Loans.

(b) To the extent that a Borrower fails to pay any amount required to be paid by it to the Applicable Agent or a Fronting Bank under Section 9.5 or paragraph (a) of this Section, each Lender severally agrees to pay to the Applicable Agent or the Fronting Bank, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Applicable Agent or the Fronting Bank in its capacity as such.

(c) To the extent permitted by applicable law, no Loan Party, Agent or any of the Lenders shall assert, and each Loan Party, Agent and Lender hereby waives, any claim against any other Loan Party, Agent or any Lender, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument

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contemplated hereby, any Loan or Letter of Credit or the use of the proceeds thereof except to the extent such damages would otherwise be subject to indemnity hereunder.

Section 9.7 Choice of Law.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL, UNLESS OTHERWISE SPECIFIED THEREIN, IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE AND THE BANKRUPTCY CODE.

Section 9.8 No Waiver.  No failure on the part of any Agent or any of the Lenders to exercise, and no delay in exercising, any right, power or remedy hereunder or any of the other Loan Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law.

Section 9.9 Extension of Maturity.  Should any payment of principal of or interest or any other amount due hereunder become due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day and, in the case of principal, interest shall be payable thereon at the rate herein specified during such extension.

Section 9.10 Amendments, etc.

(a) No modification, amendment or waiver of any provision of this Agreement, the Security and Pledge Agreement or any other Loan Document, and no consent to any departure by the Loan Parties therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given; provided, however, that no such modification or amendment shall without the written consent of each Lender affected thereby (x) increase the Commitment of such Lender (it being understood that a waiver of an Event of Default shall not constitute an increase in the Commitment of a Lender), or (y) reduce the principal amount of any Loan (or any unreimbursed Letter of Credit) or the rate of interest payable thereon, or extend any date for the payment of interest, principal or fees hereunder or reduce any Fees payable hereunder or extend the final maturity of the Loan Parties’ obligations hereunder (subject to Section 2.30 and Section 2.31); and, provided, further, that no such modification or amendment shall without the written consent of (A) all of the Lenders (i) amend or modify any provision of this Agreement which provides for the unanimous consent or approval of the Lenders or the consent or approval of each affected Lender, (ii) amend this Section 9.10 or the definition of Required Lenders or Super-majority Lenders, (iii) amend or modify the Superpriority Claim status of the Lenders contemplated by Section 2.24, (iv) increase the Total Revolving Commitment by an amount in excess of US$100,000,000, (v) release all or substantially all of the Collateral from the Liens created hereunder and under the other Loan Documents or (B) the Super-majority Lenders (i) release any material portion (but less than all or substantially all) of the Collateral from the Liens created hereunder and under the other Loan Documents (other than with respect to asset sales permitted under Section 6.12), (ii) release any Loan Party from its joint and several obligations under ARTICLE 10, (iii) alter the eligibility

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standards or amend any of the component definitions used in determining the Borrowing Bases in a manner which would increase the amount of the Borrowing Bases, (iv) increase the Total Revolving Commitment by an amount up to US$100,000,000, (v) increase the advance rates in calculation of the Borrowing Bases, (vi) change Section 7.1(f) or (vii) change Section 2.33.  No such amendment or modification may adversely affect the rights and obligations of the Agents or any Fronting Bank hereunder without its prior written consent.  No notice to or demand on any Loan Party shall entitle any Loan Party to any other or further notice or demand in the same, similar or other circumstances.  Each assignee under Section 9.3 shall be bound by any amendment, modification, waiver, or consent authorized as provided herein, and any consent by a Lender shall bind any Person subsequently acquiring an interest on the Loans held by such Lender.  No amendment to this Agreement shall be effective against any Loan Party unless in writing and signed by such Loan Party.  The Administrative Agent shall provide written notice to the monitor in the Canadian Cases promptly following any request from the Canadian Loan Parties pursuant to this Agreement or any of the other Loan Documents for the consent of the Lenders to release any material portion of or all or substantially all of the Collateral from the Liens in favor of the Agents on behalf of the Secured Parties or for the release of the proceeds of such Collateral from such Liens.

(b) Notwithstanding anything to the contrary contained in Section 9.10(a), in the event that any Loan Party requests that this Agreement be modified or amended in a manner which would require the unanimous consent of all of the Lenders or the consent of the Super-majority Lenders and such modification or amendment is agreed to by the Consenting Lenders (as hereinafter defined), then with the consent of the Loan Parties and the Consenting Lenders, the Loan Parties and the Consenting Lenders shall be permitted to amend the Agreement without the consent of the Lender or Lenders which did not agree to the modification or amendment requested by such Loan Party (such Lender or Lenders, collectively the “Minority Lenders”) to provide for (w) the termination of the Commitment of each of the Minority Lenders, (x) the addition to this Agreement of one or more other financial institutions (each of which shall be an Eligible Assignee), or an increase in the Revolving Commitment of one or more of the Consenting Lenders, so that the Total Revolving Commitment after giving effect to such amendment shall be in the same amount as the Total Revolving Commitment immediately before giving effect to such amendment, (y) if any Loans are outstanding at the time of such amendment, the making of such additional Loans by such new financial institutions or Consenting Lender or Lenders, as the case may be, as may be necessary to repay in full the outstanding Loans of the Minority Lenders immediately before giving effect to such amendment and (z) such other modifications to this Agreement as may be appropriate.  As used herein, the term “Consenting Lenders” shall mean, at any time, Lenders having aggregate Total Canadian Outstandings, Total U.S. Outstandings and unused Commitments representing more than 66-2/3% of the aggregate Total Canadian Outstandings, Total U.S. Outstandings and unused Commitments at such time.

Section 9.11 Severability.  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

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Section 9.12 Headings. Section headings used herein are for convenience only and are not to affect the construction of or be taken into consideration in interpreting this Agreement.

Section 9.13 Execution in Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same instrument.

Section 9.14 Prior Agreements; Inconsistencies.  This Agreement represents the entire agreement of the parties with regard to the subject matter hereof and the terms of any letters and other documentation entered into between any Loan Party and any Lender or the Administrative Agent prior to the execution of this Agreement which relate to Loans to be made hereunder shall be replaced by the terms of this Agreement (except as otherwise expressly provided herein with respect to the Commitment Letter and the fee letter referred to therein, including without limitation the provisions of Section 2.20).  In the event of any conflicts between the express provisions of this Agreement and the Orders, the provisions of the Orders shall control to the extent of any such inconsistency.  In the event of any conflicts between the express provisions of this Agreement and the Security Agreement, the provisions of this Agreement shall control to the extent of any such inconsistency.

Section 9.15 Further Assurances.  Whenever and so often as reasonably requested by an Agent, the Loan Parties will promptly execute and deliver or cause to be executed and delivered all such other and further instruments, documents or assurances, and promptly do or cause to be done all such other and further things as may be necessary and reasonably required in order to further and more fully vest in the Agents all rights, interests, powers, benefits, privileges and advantages conferred or intended to be conferred by this Agreement and the other Loan Documents.

Section 9.16 Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.

Section 9.17 Subordination of Intercompany Indebtedness.  Each of the Loan Parties agree that any and all Intercompany Indebtedness owed to any Loan Party shall be subordinate and subject in right of payment to the prior payment, in full and in cash, of all Secured Obligations.  Notwithstanding any right of any Loan Party to ask, demand, xxx for, take or receive any payment in respect of any Intercompany Indebtedness owed to any Loan Party, any and all rights, liens and security interests of any Loan Party, whether now or hereafter arising and howsoever existing, in any assets of any other Subsidiary of Parent (whether constituting part of the Collateral given to the Agents for the benefit of the Secured Parties to secure payment of all or any part of the Secured Obligations or otherwise) shall be and are subordinated to the rights of the Agents and the Secured Parties in those assets.  No Loan Party shall have any right to possession of any such asset or to foreclose upon any such asset, whether by judicial action or otherwise, unless and until all of the Secured Obligations (other than unasserted contingent indemnity obligations) shall have been fully paid and satisfied and all financing arrangements among the Loan Parties and the Lenders have been terminated.  So long as any Event of Default shall have occurred and be continuing, then, any payment or distribution of any kind or

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character, either in cash, securities or other property, which shall be payable or deliverable upon or with respect to any Intercompany Indebtedness owed by any Loan Party shall be paid or delivered directly to the Administrative Agent for application on any of the Secured Obligations, due or to become due, until such Secured Obligations (other than contingent indemnity obligations) shall have first been fully paid and satisfied.  Each of the Loan Parties irrevocably authorize and empower the Administrative Agent to demand, xxx for, collect and receive every such payment or distribution and give acquittance therefor and to make and present for and on behalf of any Loan Party such proofs of claim and take such other action, in the Administrative Agent’s own name or in the name of the applicable Loan Party or otherwise, as the Administrative Agent may deem necessary or advisable for the enforcement of this Section 9.17.  The Administrative Agent may vote such proofs of claim in any such proceeding, receive and collect any and all dividends or other payments or disbursements made thereon in whatever form the same may be paid or issued and apply the same on account of any of the Secured Obligations.  Should any payment, distribution, security or instrument or proceeds thereof be received by any Loan Party upon or with respect to the Intercompany Indebtedness at any time an Event of Default shall have occurred and be continuing and prior to the satisfaction of all of the Secured Obligations and the termination of all financing arrangements among the Loan Parties and the Lenders, the applicable Loan Party shall receive and hold the same in trust, as trustee, for the benefit of the Lenders and shall so long as any Event of Default shall have occurred and be continuing promptly deliver the same to the Administrative Agent, for the benefit of the Lenders, in precisely the form received (except for the endorsement or assignment of the applicable Loan Party where necessary), for application to any of the Secured Obligations, due or not due, and, until so delivered, the same shall be held in trust by the applicable Loan Party as the property of the Lenders.  If any Loan Party fails to make any such endorsement or assignment to the Administrative Agent, the Administrative Agent or any of its officers or employees are irrevocably authorized to make the same.  So long as any Event of Default shall have occurred and be continuing, the Loan Parties agree that until the Secured Obligations have been paid in full (in cash) and satisfied and all financing arrangements among the Loan Parties and the Lenders have been terminated, the Loan Parties will neither assign nor transfer to any Person (other than the Administrative Agent) any claim the Loan Parties have or may have against any other Subsidiary of the Parent.

Section 9.18 Certain Post Closing Matters.

(a) Notwithstanding anything to the contrary contained in this Agreement, within the time periods set forth below or such later date to which the Administrative Agent may, in its exclusive discretion, agree in writing, the Loan Parties shall deliver to the Administrative Agent:

(i) within ninety (90) days after the Closing Date, mortgages in favor of the Applicable Agent and in form and substance reasonably satisfactory to the Administrative Agent on such Eligible Real Property of the Loan Parties as may then constitute all or any part of the U.S. PP&E Component or the Canadian PP&E Component, together with such updated title commitments and related real estate due diligence materials as the Administrative Agent may request in accordance with the definition of Eligible Real Property;

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(ii) within sixty (60) days after the Closing Date, account control agreements in favor of the Applicable Agent and in form and substance reasonably satisfactory to the Administrative Agent on deposit accounts and securities accounts of the Loan Parties maintained with any institution other than such Applicable Agent;

(iii) within ten (10) days after the Closing Date, the form of Final Order, in form and substance satisfactory to the Administrative Agent in is exclusive discretion, which shall be attached hereto as Exhibit A-3, delivery of which was temporarily waived by the Lenders for the purposes of effectuating the Closing Date;

(iv) within three (3) Business Days after the Bankruptcy Court enters the U.S. Interim Order, orders shall have been made in the Recognition Cases recognizing the U.S. Cases of Smurfit-MBI and SLP Finance General Partnership and granting charges over the assets of each of Smurfit-MBI and SLP Finance General Partnership and otherwise in form satisfactory to the Administrative Agent, which orders shall be in full force and effect and shall not have been stayed, reversed, modified, or amended in any respect without the prior written consent of the Administrative Agent;

(v) within fifteen (15) days after the Closing Date, certificates representing ownership interests in Pledged Collateral (as defined in the Security and Pledge Agreement) that are required to be delivered to the Administrative Agent pursuant to the Security and Pledge Agreement, together with an update to Exhibit E to the Security and Pledge Agreement providing the information contemplated by but not included on such Exhibit E as of the Closing Date;

(vi) within thirty (30) days after the Closing Date, the Organizational Documents and certificate of good standing or similar certificate for Smurfit-Stone Puerto Rico, Inc.;

(vii) within ninety (90) days after the Closing Date, (A) a mortgage granted by MBI Limited/Limitée, in its capacity as general partner of Smurfit-MBI, in favour of the Canadian Collateral Agent in respect of the property municipally known as 0000 Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxx, and (B) a deed of hypothec and issue of bonds by the Canadian Borrower in favour of the Canadian Collateral Agent, as fondé de pouvoir, in respect of the property municipally known as 00000 Xxxxxxxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxxxxx, and such other documents related thereto, in each case in form and substance reasonably satisfactory to the Canadian Administrative Agent, together with such title insurance policies and related real

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estate due diligence materials and other materials as the Canadian Administrative Agent may request;

(viii) within fifteen (15) days after the Closing Date, (A) Pledged Security Certificates (as defined in the Canadian Security Agreement) required to be delivered to the Canadian Collateral Agent pursuant to the Canadian Security Agreement and other materials as may be required to provide the Canadian Collateral Agent with control over such Pledged Security Certificates, and (B) each Instrument evidencing obligations owing to any Canadian Loan Party in a principal amount in excess of $1,000,000 included in or related to the Collateral (as defined in the Canadian Security Agreement) endorsed and/or accompanied by such instruments of assignment and transfer in such form and substance as the Canadian Collateral Agent may reasonably request pursuant to the Canadian Security Agreement, together with an update to Schedule A of the Canadian Security Agreement providing the information contemplated by but not included on such Schedule A as of the Closing Date;

(ix) within one (1) day after the Closing Date, copies certified by the Secretary of State of the State of Delaware of (x) the Certificate of Merger of SSCE Funding, LLC with and into Stone Receivables LLC and (y) the Certificate of Merger of Stone Receivables LLC with and into Smurfit-Stone Container Enterprises, Inc.;

(x) within three (3) Business Days after the Closing Date, the Termination and Reassignment Agreement with respect to the termination of the Canadian Receivables Securitization Program in form and substance reasonably satisfactory to the Administrative Agent;

(xi) within three (3) Business Days after the Closing Date, the amended and restated Initial Order in form and substance reasonably satisfactory to the Administrative Agent; and

(xii) on or before the date the Bankruptcy Court enters the Final Order, a cross border protocol with respect to proceedings in the Cases before the Canadian Court and the Bankruptcy Court in form and substance reasonably satisfactory to the Administrative Agent.

(b) All conditions precedent and representations contained in the Loan Documents shall be deemed modified to the extent necessary to effect the foregoing (and to permit the taking of the actions described above within the time periods required above); provided, that to the extent any representation and warranty would not be true because the foregoing actions were not taken on the Closing Date, the respective representation and warranty shall be required to be true and correct at the time the respective action is taken in accordance

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with the foregoing provisions of this Section 9.18.  The acceptance of the benefits of the making of each Loan and the issuance of each Letter of Credit shall constitute a representation, warranty and covenant by the Loan Parties to each of the Lenders that the actions required pursuant to this Section 9.18 will be taken within the relevant time periods referred to in this Section 9.18 and that, at such time, all representations and warranties contained in this Agreement shall then be true and correct without any modification pursuant to this Section 9.18.

Section 9.19 USA Patriot Act.  Each Lender hereby notifies the Loan Parties that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of the Loan Parties and other information that will allow such Lender to identify the Loan Parties in accordance with the Patriot Act.

Section 9.20 Judgment Currency. (a) Except as otherwise provided in Section 11.3, the Loan Parties’ obligations hereunder and under the other Loan Documents to make payments in Dollars or in Canadian Dollars (the “Obligation Currency”) shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than the Obligation Currency, except to the extent that such tender or recovery results in the effective receipt by the Applicable Agent, the applicable Fronting Bank or the applicable Lender of the full amount of the Obligation Currency expressed to be payable to the Applicable Agent, the applicable Fronting Bank or the applicable Lender under this Agreement or the other Loan Documents.  If, for the purpose of obtaining or enforcing judgment against any Loan Party in any court or in any jurisdiction, it becomes necessary to convert into or from any currency other than the Obligation Currency (such other currency being hereinafter referred to as the “Judgment Currency”) an amount due in the Obligation Currency, the conversion shall be made, at the Exchange Rate, in the case of Canadian Dollars or Dollars, and, in the case of other currencies, the rate of exchange (as quoted by the Administrative Agent or if the Administrative Agent does not quote a rate of exchange on such currency, by a known dealer in such currency designated by the Administrative Agent) determined, in each case, as of the date immediately preceding the day on which the judgment is given (such Business Day being hereinafter referred to as the “Judgment Currency Conversion Date”).

(b) If there is a change in the rate of exchange prevailing between the Judgment Currency Conversion Date and the date of actual payment of the amount due, the Loan Parties covenant and agree to pay, or cause to be paid, such additional amounts, if any (but in any event not a lesser amount), as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial award at the rate of exchange prevailing on the Judgment Currency Conversion Date.

(c) For purposes of determining the amount of any payment in the Obligation Currency under this Section 9.20, the rate of exchange used shall take into account any premium and costs payable in connection with the purchase of the Obligation Currency.

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Section 9.21 Several Obligations; Nonreliance; Violation of Law. The respective obligations of the Lenders hereunder are several and not joint and the failure of any Lender to make any Loan or perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. Each Lender hereby represents that it is not relying on or looking to any margin stock for the repayment of the Borrowings provided for herein. Anything contained in this Agreement to the contrary notwithstanding, neither any Fronting Bank nor any Lender shall be obligated to extend credit to the Borrowers in violation of any Requirement of Law.

Section 9.22 Canadian Anti-Money Laundering Legislation.

(a) Each of the Canadian Loan Parties acknowledges that, pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) and other applicable anti-money laundering, anti-terrorist financing, government sanction and “know your client” laws, whether within Canada or elsewhere (collectively, including any guidelines or orders thereunder, “AML Legislation”), the Applicable Agent and the Lenders may be required to obtain, verify and record information regarding such Canadian Loan Party, its directors, authorized signing officers, direct or indirect shareholders or other Persons in control of such Canadian Loan Party, and the transactions contemplated hereby. Each of the Canadian Loan Parties shall promptly provide all such information, including supporting documentation and other evidence, as may be reasonably requested by any Lender or the Applicable Agent, or any prospective assign or participant of a Lender or the Applicable Agent, in order to comply with any applicable AML Legislation, whether now or hereafter in existence.

(b) If the Applicable Agent has ascertained the identity of any Canadian Loan Party or any authorized signatories of such Canadian Loan Party for the purposes of applicable AML Legislation, then the Applicable Agent:

(i) shall be deemed to have done so as an agent for each Lender, and this Agreement shall constitute a “written agreement” in such regard between each Lender and such Applicable Agent within the meaning of applicable AML Legislation; and

(ii) shall provide to each Lender copies of all information obtained in such regard without any representation or warranty as to its accuracy or completeness.

Notwithstanding the preceding sentence and except as may otherwise be agreed in writing, each of the Lenders agrees that the Applicable Agent has no obligation to ascertain the identity of any Canadian Loan Party or any authorized signatories of such Canadian Loan Party on behalf of any Lender, or to confirm the completeness or accuracy of any information it obtains from such Canadian Loan Party or any such authorized signatory in doing so.

Section 9.23 Conversion.

(a) In connection with the completion of syndication efforts, on a date designated by the Administrative Agent on not less than one (1) Business Days notice to the U.S.

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Borrower, the Converting Lenders and Bank of America, N.A., and which date shall be no later than the later of (i) the date the Bankruptcy Court enters the Final Order and (ii) forty (40) days after the Closing Date (the “Conversion Date”), to the extent the percentage obtained by dividing the U.S. Revolving Commitment of a Converting Lender on the Closing Date by the aggregate Commitments of such Converting Lender on the Closing Date (immediately prior to the initial funding of the Term Loans) is greater than 33.333%, the Converting Lenders may elect to decrease their U.S. Revolving Commitments by an amount to be specified by each such Converting Lender and increase their outstanding U.S. Term Loans by the amount of such decrease (each, a “U.S. Term Loan Conversion”), provided, that the amount of a U.S. Term Loan Conversion by a Converting Lender shall not result in the percentage obtained by dividing the U.S. Revolving Commitment of a Converting Lender (after giving effect to such U.S. Term Loan Conversion) by the aggregate Revolving Commitments and Term Loans of such Converting Lender at the time of such conversion (after giving effect to any assignments by such Converting Lender after the Closing Date and on or prior to such date, the “U.S. Revolving Credit Hold Percentage”) to be less than 33.333%; provided, further, that no U.S. Term Loan Conversion shall result in the U.S. Revolving Credit Utilization to be greater than the Interim U.S. Revolving Commitment (after giving effect to such conversion); and provided, further, that if the U.S. Revolving Credit Hold Percentage of the Converting Lenders is less than the percentage obtained by dividing the U.S. Revolving Commitment of Bank of America, N.A. by the aggregate Revolving Commitments and Term Loans of Bank of America, N.A. at the time of such conversion, Bank of America, N.A. shall be deemed to be a Converting Lender and may decrease such amount of its U.S. Revolving Commitment (and thereby increase its outstanding U.S. Term Loans by such amount) as may be necessary to reduce its U.S. Revolving Credit Hold Percentage to not less than the U.S. Revolving Credit Hold Percentage of the other Converting Lenders.  To effect a U.S. Term Loan Conversion, a Converting Lender shall provide written notice (a “U.S. Conversion Notice”) to the U.S. Borrower, the other Converting Lenders and the Administrative Agent on or prior to the Conversion Date setting forth the percentage of such Converting Lender’s U.S. Revolving Commitment that will be converted to a U.S. Term Loan.  On the date of the Administrative Agent’s delivery of notice regarding the establishment of the Conversion Date, JPMCB and Deutsche Bank Trust Company Americas shall advise Bank of America, N.A. of the U.S. Revolving Credit Hold Percentage.  Each U.S. Conversion Notice received by the Administrative Agent shall be irrevocable.

(b) Subject to the limitations set forth in Section 9.23(a) above, on the conversion date specified by a Converting Lender in its U.S. Conversion Notice:

(i) such Converting Lender shall make an amount available to the Administrative Agent at its office most recently designated for such purpose, no later than 12:00 Noon, New York City time, in U.S. Dollars and in immediately available funds, equal to (A) the percentage of such Converting Lender’s U.S. Revolving Commitment that will be converted to a U.S. Term Loan multiplied by (B) the difference between (x) the U.S. Revolving Commitment of such Converting Lender on such date (as determined immediately prior to any U.S. Term Loan Conversions on such date), minus (y) the aggregate outstanding U.S. Revolving Loans of such Converting Lender on such date (prior to giving

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effect to any conversion of U.S. Revolving Loans to U.S. Term Loans as provided in clause (ii)(y) below); provided, that, if the foregoing amount is zero, the Converting Lender shall not be required to make any amount available to the Administrative Agent;

(ii) upon the Administrative Agent’s receipt of funds pursuant to clause (i) above, if applicable, (x) the Administrative Agent shall deposit such funds in the U.S. Term Loan Collateral Account and such funds shall be deemed to be an outstanding U.S. Term Loan (subject to disbursement to the U.S. Borrower as provided in Section 2.7(c)), (y) an amount equal to (A) the percentage of such Converting Lender’s U.S. Revolving Commitment that will be converted to a U.S. Term Loan multiplied by (B) the aggregate outstanding U.S. Revolving Loans of such Converting Lender on such date (prior to giving effect to any conversion of U.S. Revolving Loans to U.S. Term Loans as provided in this clause (y)) shall be deemed to be an outstanding U.S. Term Loan and shall cease to be a U.S. Revolving Loan, and (z) the U.S. Revolving Commitment of such Converting Lender shall be reduced permanently in an amount equal to the amount of such Converting Lender’s U.S. Revolving Commitment that was converted to a U.S. Term Loan;

(iii) each U.S. Term Loan made pursuant to clause (i) above or deemed to be made pursuant to clause (ii) above shall be an ABR Loan (which ABR Loan may be converted in accordance with the terms of this Agreement); and

(iv) each U.S. Revolving Lender’s undivided interest and participation in each U.S. Revolving Facility Letter of Credit pursuant to Section 2.4(f) shall be adjusted to account for the reduction in the aggregate U.S. Revolving Commitment.

(c) In connection with the completion of syndication efforts, on the Conversion Date, to the extent the percentage obtained by dividing the Canadian Revolving Commitment of a Converting Lender on the Closing Date by the aggregate Commitments of such Converting Lender on the Closing Date (immediately prior to the initial funding of the Term Loans) is greater than 8.666%, the Converting Lenders may elect to decrease their Canadian Revolving Commitments by an amount to be specified by each such Converting Lender and increase their outstanding Canadian Term Loans by the amount of such decrease (each, a “Canadian Term Loan Conversion”), provided, that the amount of a Canadian Term Loan Conversion by a Converting Lender shall not result in the percentage obtained by dividing the Canadian Revolving Commitment of a Converting Lender (after giving effect to such Canadian Term Loan Conversion) by the aggregate Revolving Commitments and Term Loans of such Converting Lender at the time of such conversion (after giving effect to any assignments by such Converting Lender after the Closing Date and on or prior to such date, the “Canadian

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Revolving Credit Hold Percentage”) to be less than 8.666%; provided, further, that no Canadian Term Loan Conversion shall result in the Canadian Revolving Credit Utilization to be greater than the Interim Canadian Revolving Commitment (after giving effect to such conversion); and provided, further, that if the Canadian Revolving Credit Hold Percentage of the Converting Lenders is less than the percentage obtained by dividing the Canadian Revolving Commitment of Bank of America, N.A., Canada Branch, by the aggregate Revolving Commitments and Term Loans of Bank of America, N.A., Canada Branch, at the time of such conversion, Bank of America, N.A., Canada Branch, shall be deemed to be a Converting Lender and may decrease such amount of its Canadian Revolving Commitment (and thereby increase its outstanding Canadian Term Loans by such amount) as may be necessary to reduce its Canadian Revolving Credit Hold Percentage to not less than the Canadian Revolving Credit Hold Percentage of the other Converting Lenders.  To effect a Canadian Term Loan Conversion, a Converting Lender shall provide written notice (a “Canadian Conversion Notice”) to the Canadian Borrower, the other Converting Lenders and the Canadian Administrative Agent on or prior to the Conversion Date setting forth the percentage of such Converting Lender’s Canadian Revolving Commitment that will be converted to a Canadian Term Loan.  On the date of the Administrative Agent’s delivery of notice regarding the establishment of the Conversion Date, JPMCB and Deutsche Bank Trust Company Americas shall advise Bank of America, N.A., Canada Branch, of the Canadian Revolving Credit Hold Percentage.  Each Canadian Conversion Notice received by the Canadian Administrative Agent shall be irrevocable.

(d) Subject to the limitations set forth in Section 9.23(c) above, on the conversion date specified by a Converting Lender in its Canadian Conversion Notice:

(i) such Converting Lender shall make an amount available to the Canadian Administrative Agent at its office most recently designated for such purpose, no later than 12:00 Noon, New York City time, in U.S. Dollars and in immediately available funds, equal to (A) the percentage of such Converting Lender’s Canadian Revolving Commitment that will be converted to a Canadian Term Loan multiplied by (B) the difference between (x) the Canadian Revolving Commitment of such Converting Lender on such date (as determined immediately prior to any Canadian Term Loan Conversions on such date), minus (y) the aggregate outstanding Canadian Revolving Loans of such Converting Lender on such date (prior to giving effect to any conversion of Canadian Revolving Loans to Canadian Term Loans as provided in clause (ii)(y) below); provided, that, if the foregoing amount is zero, the Converting Lender shall not be required to make any amount available to the Canadian Administrative Agent;

(ii) upon the Canadian Administrative Agent’s receipt of funds pursuant to clause (i) above, if applicable, (x) the Canadian Administrative Agent shall deposit such funds in the Canadian Term Loan Collateral Account and such funds shall be deemed to be an outstanding Canadian Term Loan (subject to disbursement to the Canadian Borrower as provided in Section 2.7(d)), (y) an

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amount equal to (A) the percentage of such Converting Lender’s Canadian Revolving Commitment that will be converted to a Canadian Term Loan multiplied by (B) the aggregate outstanding Canadian Revolving Loans of such Converting Lender on such date (prior to giving effect to any conversion of Canadian Revolving Loans to Canadian Term Loans as provided in this clause (y)) shall be deemed to be an outstanding Canadian Term Loan and shall cease to be a Canadian Revolving Loan, and (z) the Canadian Revolving Commitment of such Converting Lender shall be reduced permanently in an amount equal to the amount of such Converting Lender’s Canadian Revolving Commitment that was converted to a Canadian Term Loan;

(iii) each Canadian Term Loan made pursuant to clause (i) above or deemed to be made pursuant to clause (ii) above shall be an ABR Loan (which ABR Loan may be converted in accordance with the terms of this Agreement); and

(iv) each Canadian Revolving Lender’s undivided interest and participation in each Canadian Revolving Facility Letter of Credit pursuant to Section 2.4(f) shall be adjusted to account for the reduction in the aggregate Canadian Revolving Commitment.

ARTICLE 10. GUARANTY

Section 10.1 U.S. Guaranty.  Each of the Borrowers and the U.S. Guarantors, each in its capacity as a Guarantor, hereby agrees that it is jointly and severally liable for, and, as primary obligor and not merely as surety, absolutely and unconditionally guarantees to the Administrative Agent (for the benefit of the Secured Parties) the prompt payment when due, whether at stated maturity, upon acceleration or otherwise, and at all times thereafter, of the Secured Obligations and all costs and expenses including, without limitation, all court costs and attorneys’ and paralegals’ fees (including allocated costs of in-house counsel and paralegals) and expenses paid or incurred by the Secured Parties in endeavoring to collect all or any part of the Secured Obligations from, or in prosecuting any action against, any Borrower, any other Guarantor or any other guarantor of all or any part of the Secured Obligations (such costs and expenses, together with the Secured Obligations, collectively the “U.S. Guaranteed Obligations”).  Each of the Borrowers and the U.S. Guarantors further agrees that the U.S. Guaranteed Obligations may be extended or renewed in whole or in part without notice to or further assent from it, and that it remains bound upon its guarantee notwithstanding any such extension or renewal. All terms of this Guaranty apply to and may be enforced by or on behalf of any domestic or foreign branch or Affiliate of any Lender that extended any portion of the Secured Obligations.

Section 10.2 Canadian Guaranty.  Each of the Canadian Guarantors, each in its capacity as a Guarantor, hereby agrees that it is jointly and severally liable for, and, as primary obligor and not merely as surety, absolutely and unconditionally guarantees to the Canadian Administrative Agent (for the benefit of the Secured Parties) the prompt payment when due,

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whether at stated maturity, upon acceleration or otherwise, and at all times thereafter, of the Canadian Secured Obligations and all costs and expenses including, without limitation, all court costs and attorneys’ and paralegals’ fees (including allocated costs of in-house counsel and paralegals) and expenses paid or incurred by the Secured Parties in endeavoring to collect all or any part of the Canadian Secured Obligations from, or in prosecuting any action against, the Canadian Borrower, any other Canadian Guarantor or any other guarantor of all or any part of the Canadian Secured Obligations (such costs and expenses, together with the Canadian Secured Obligations, collectively the “Canadian Guaranteed Obligations”, and, together with the U.S. Guaranteed Obligations, the “Guaranteed Obligations”). Each of the Canadian Guarantors further agrees that the Canadian Guaranteed Obligations may be extended or renewed in whole or in part without notice to or further assent from it, and that it remains bound upon its guarantee notwithstanding any such extension or renewal. All terms of this Guaranty apply to and may be enforced by or on behalf of any domestic or foreign branch or Affiliate of any Lender that extended any portion of the Canadian Secured Obligations.

Section 10.3 Guaranty of Payment.  This Guaranty is a guaranty of payment and not of collection. Each Guarantor waives any right to require any Secured Party to xxx any Loan Party, any other guarantor, or any other person obligated for all or any part of the Guaranteed Obligations (each, an “Obligated Party”), or otherwise to enforce its payment against any collateral securing all or any part of the Guaranteed Obligations.

Section 10.4 No Discharge or Diminishment of Guaranty.

(a) Except as otherwise provided for herein, the obligations of each Guarantor hereunder are unconditional and absolute and not subject to any reduction, limitation, impairment or termination for any reason (other than the indefeasible payment in full in cash of the Guaranteed Obligations), including:  (i) any claim of waiver, release, extension, renewal, settlement, surrender, alteration, or compromise of any of the Guaranteed Obligations, by operation of law or otherwise; (ii) any change in the corporate existence, structure or ownership of any Loan Party or any other guarantor of or other person liable for any of the Guaranteed Obligations; (iii) any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Obligated Party, or their assets or any resulting release or discharge of any obligation of any Obligated Party; or (iv) the existence of any claim, setoff or other rights which any Guarantor may have at any time against any Obligated Party, the Agents, any Fronting Bank, any Lender, or any other person, whether in connection herewith or in any unrelated transactions.

(b) The obligations of each Guarantor hereunder are not subject to any defense or setoff, counterclaim, recoupment, or termination whatsoever by reason of the invalidity, illegality, or unenforceability of any of the Guaranteed Obligations or otherwise, or any provision of applicable law or regulation purporting to prohibit payment by any Obligated Party, of the Guaranteed Obligations or any part thereof.

(c) Further, the obligations of any Guarantor hereunder are not discharged or impaired or otherwise affected by: (i) the failure of any Secured Party to assert any claim or demand or to enforce any remedy with respect to all or any part of the Guaranteed Obligations; (ii) any waiver or modification of or supplement to any provision of any agreement relating to the Guaranteed Obligations; (iii) any release, non-perfection, or invalidity of any indirect or

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direct security for the obligations of any Loan Party for all or any part of the Guaranteed Obligations or any obligations of any other guarantor of or other person liable for any of the Guaranteed Obligations; (iv) any action or failure to act by any Secured Party with respect to any collateral securing any part of the Guaranteed Obligations; or (v) any default, failure or delay, willful or otherwise, in the payment or performance of any of the Guaranteed Obligations, or any other circumstance, act, omission or delay that might in any manner or to any extent vary the risk of such Guarantor or that would otherwise operate as a discharge of any Guarantor as a matter of law or equity (other than the indefeasible payment in full in cash of the Guaranteed Obligations).

Section 10.5 Defenses Waived.  To the fullest extent permitted by applicable law, each Guarantor hereby waives any defense based on or arising out of any defense of any Borrower or any other Guarantor or the unenforceability of all or any part of the Guaranteed Obligations from any cause, or the cessation from any cause of the liability of any Borrower or any other Guarantor, other than the indefeasible payment in full in cash of the Guaranteed Obligations. Without limiting the generality of the foregoing, each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and, to the fullest extent permitted by law, any notice not provided for herein, as well as any requirement that at any time any action be taken by any person against any Obligated Party, or any other person.  Each Agent may, at its election, foreclose on any Collateral held by it by one or more judicial or nonjudicial sales, accept an assignment of any such Collateral in lieu of foreclosure or otherwise act or fail to act with respect to any collateral securing all or a part of the Guaranteed Obligations, compromise or adjust any part of the Guaranteed Obligations, make any other accommodation with any Obligated Party or exercise any other right or remedy available to it against any Obligated Party, without affecting or impairing in any way the liability of such Guarantor under this Guaranty except to the extent the Guaranteed Obligations have been fully and indefeasibly paid in cash.  To the fullest extent permitted by applicable law, each Guarantor waives any defense arising out of any such election even though that election may operate, pursuant to applicable law, to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Guarantor against any Obligated Party or any security.

Section 10.6 Rights of Subrogation.  No Guarantor will assert any right, claim or cause of action, including, without limitation, a claim of subrogation, contribution or indemnification that it has against any Obligated Party, or any Collateral, until the Guaranteed Obligations have been paid in full and the Commitments have been terminated.

Section 10.7 Reinstatement; Stay of Acceleration.  If at any time any payment of any portion of the Guaranteed Obligations is rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, or reorganization of any Loan Party or otherwise, each Guarantor’s obligations under this Guaranty with respect to that payment shall be reinstated at such time as though the payment had not been made and whether or not any Secured Party is in possession of this Guaranty.  If acceleration of the time for payment of any of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or reorganization of any Loan Party, all such amounts otherwise subject to acceleration under the terms of any agreement relating to the Guaranteed Obligations shall nonetheless be payable by the Guarantors forthwith on demand by the Lender.

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Section 10.8           Information.  Each Guarantor assumes all responsibility for being and keeping itself informed of the Borrowers’ financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks that each Guarantor assumes and incurs under this Guaranty, and agrees that no Secured Party shall have any duty to advise any Guarantor of information known to it regarding those circumstances or risks.

Section 10.9           Termination.  Each Guarantor acknowledges and agrees that this Guaranty is irrevocable until the Guaranteed Obligations have been paid in full and the Commitments have been terminated. The Lenders may continue to make loans or extend credit to the Borrowers based on this Guaranty. Each Guarantor will continue to be liable to the Lenders for any Guaranteed Obligations created, assumed or committed from time to time, and all subsequent renewals, extensions, modifications and amendments with respect to, or substitutions for, all or any part of that Guaranteed Obligations.

Section 10.10         Taxes.  All payments of the Guaranteed Obligations will be made by each Guarantor free and clear of and without deduction for any Taxes in accordance with Section 2.19.

Section 10.11         Maximum Liability.  The provisions of this Guaranty are severable, and in any action or proceeding involving any corporate law of any Governmental Authority, or any state, provincial, regional, federal or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of any Guarantor under this Guaranty would otherwise be held or determined to be avoidable, invalid or unenforceable on account of the amount of such Guarantor’s liability under this Guaranty, then, notwithstanding any other provision of this Guaranty to the contrary, the amount of such liability shall, without any further action by the Guarantors or the Lenders, be automatically limited and reduced to the highest amount that is valid and enforceable as determined in such action or proceeding (such highest amount determined hereunder being the relevant Guarantor’s “Maximum Liability”.  This Section with respect to the Maximum Liability of each Guarantor is intended solely to preserve the rights of the Lenders to the maximum extent not subject to avoidance under applicable law, and no Guarantor nor any other person or entity shall have any right or claim under this Section with respect to such Maximum Liability, except to the extent necessary so that the obligations of any Guarantor hereunder shall not be rendered voidable under applicable law. Each Guarantor agrees that the Guaranteed Obligations may at any time and from time to time exceed the Maximum Liability of each Guarantor without impairing this Guaranty or affecting the rights and remedies of the Lenders hereunder, provided that, nothing in this sentence shall be construed to increase any Guarantor’s obligations hereunder beyond its Maximum Liability.

Section 10.12         Contribution.  In the event any Guarantor (a “Paying Guarantor”) shall make any payment or payments under this Guaranty or shall suffer any loss as a result of any realization upon any collateral granted by it to secure its obligations under this Guaranty, each other Guarantor (each a “Non-Paying Guarantor”) shall contribute to such Paying Guarantor an amount equal to such Non-Paying Guarantor’s “Contribution Percentage” of such payment or payments made, or losses suffered, by such Paying Guarantor.  For purposes of this ARTICLE 10, each Non-Paying Guarantor’s “Contribution Percentage” with respect to any such payment or loss by a Paying Guarantor shall be determined as of the date on which such payment or loss was

144

made by reference to the ratio of (i) such Non-Paying Guarantor’s Maximum Liability as of such date (without giving effect to any right to receive, or obligation to make, any contribution hereunder) or, if such Non-Paying Guarantor’s Maximum Liability has not been determined, the aggregate amount of all monies received by such Non-Paying Guarantor from the Borrowers after the Closing Date (whether by loan, capital infusion or by other means) to (ii) the aggregate Maximum Liability of all Guarantors hereunder (including such Paying Guarantor) as of such date (without giving effect to any right to receive, or obligation to make, any contribution hereunder), or to the extent that a Maximum Liability has not been determined for any Guarantor, the aggregate amount of all monies received by such Guarantors from the Borrowers after the Closing Date (whether by loan, capital infusion or by other means).  Nothing in this provision shall affect any Guarantor’s several liability for the entire amount of the Guaranteed Obligations (up to such Guarantor’s Maximum Liability).  Each of the Guarantors covenants and agrees that its right to receive any contribution under this Guaranty from a Non-Paying Guarantor shall be subordinate and junior in right of payment to the payment in full in cash of the Guaranteed Obligations.  This provision is for the benefit of both the Agents, the Fronting Banks, the Lenders and the Guarantors and may be enforced by any one, or more, or all of them in accordance with the terms hereof.

Section 10.13         Liability Cumulative.  The liability of each Loan Party as a Guarantor under this ARTICLE 10 is in addition to and shall be cumulative with all liabilities of each Loan Party to the Agents, the Fronting Banks and the Lenders under this Agreement and the other Loan Documents to which such Loan Party is a party or in respect of any obligations or liabilities of the other Loan Parties, without any limitation as to amount, unless the instrument or agreement evidencing or creating such other liability specifically provides to the contrary.

ARTICLE 11.                       COLLECTION ALLOCATION MECHANISM

Section 11.1           Implementation of CAM.

(a)           On the Termination Date, the Lenders shall automatically and without further act (and without regard to the provisions of Section 9.3) be deemed to have exchanged interests in the Credit Facilities such that in lieu of the interest of each Lender in each Credit Facility in which it shall participate as of such date (including such Lender’s interest in the Obligations of each Loan Party in respect of each such Credit Facility), such Lender shall hold an interest in every one of the Credit Facilities (including the Obligations of each Loan Party in respect of each such Credit Facility), whether or not such Lender shall previously have participated therein, equal to such Lender’s CAM Percentage thereof.  Each Lender and each Loan Party hereby consents and agrees to the CAM Exchange, and each Lender agrees that the CAM Exchange shall be binding upon its successors and assigns and any Person that acquires a participation in its interests in any Credit Facility.  Each Loan Party agrees from time to time to execute and deliver to the Administrative Agent all instruments and documents as the Administrative Agent shall reasonably request to evidence and confirm the respective interests of the Lenders after giving effect to the CAM Exchange.

(b)           As a result of the CAM Exchange, upon and after the Termination Date, each payment received by the Administrative Agent pursuant to any Loan Document in respect of the Obligations, and each distribution made by the Administrative Agent in respect of the

145

Obligations, shall be distributed to the Lenders pro rata in accordance with their respective CAM Percentages.  Any direct payment received by a Lender upon or after the Termination Date, including by way of setoff, in respect of the Obligations shall be paid over to the Administrative Agent for distribution to the Lenders in accordance herewith.

Section 11.2 Letters of Credit.

(a)           In the event that on the Termination Date any Letter of Credit shall be outstanding and undrawn in whole or in part, or any amount drawn under any such Letter of Credit shall not have been reimbursed by the applicable Borrower or with the proceeds of a Revolving Loan, each Lender having, on such date and prior to giving effect to the CAM Exchange, Letter of Credit Outstandings with respect to such Letter of Credit shall promptly pay over to the Administrative Agent, in immediately available funds, in the case of any undrawn amount, and in Dollars, in the case of any unreimbursed amount, an amount equal to such Lender’s Applicable Percentage of such undrawn face amount or (to the extent it has not already done so) such unreimbursed drawing, as the case may be, together with interest thereon from the Termination Date to the date on which such amount shall be paid to the Administrative Agent at the rate that would be applicable at the time to an ABR Loan in a principal amount equal to such amount.  The Administrative Agent shall establish a separate account or accounts for each Lender (each, an “LC Reserve Account”) for the amounts received with respect to each such Letter of Credit pursuant to the preceding sentence.  The Administrative Agent shall deposit in each Lender’s LC Reserve Account such Lender’s CAM Percentage of the amounts received from the Lenders as provided above.  The Administrative Agent shall have sole dominion and control over each LC Reserve Account, and the amounts deposited in each LC Reserve Account shall be held in such LC Reserve Account until withdrawn as provided in paragraph (b),  (c),  (d)  or (e)  below.  The Administrative Agent shall maintain records enabling it to determine the amounts paid over to it and deposited in the LC Reserve Accounts in respect of each Letter of Credit and the amounts on deposit in respect of each Letter of Credit attributable to each Lender’s CAM Percentage.  The amounts held in each Lender’s LC Reserve Account shall be held as a reserve against the outstanding Letter of Credit Outstandings, shall be the property of such Lender, shall not constitute Loans to or give rise to any claim of or against any Loan Party and shall not give rise to any obligation on the part of either Borrower to pay interest to such Lender, it being agreed that the reimbursement obligations in respect of Letters of Credit shall arise only at such times as drawings are made thereunder, as provided in ARTICLE 2.

(b)           In the event that on or after the Termination Date any drawing shall be made in respect of a Letter of Credit, the Administrative Agent shall, at the request of the applicable Fronting Bank, withdraw from the LC Reserve Account of each Lender any amounts, up to the amount of such Lender’s CAM Percentage of such drawing, deposited in respect of such Letter of Credit and remaining on deposit and deliver such amounts to the applicable Fronting Bank in satisfaction of the reimbursement obligations of the Lenders under Section 2.4(g) (but not of either Borrower under Section 2.4(e)).  In the event any Lender shall default on its obligation to pay over any amount to the Administrative Agent in respect of any Letter of Credit as provided in this Section 11.2, the applicable Fronting Bank shall, in the event of a drawing thereunder, have a claim against such Lender to the same extent as if such Lender had defaulted on its obligations under Section 2.4(g), but shall have no claim against any other Lender in respect of such defaulted amount, notwithstanding the exchange of interests in the

146

applicable Borrower’s reimbursement obligations pursuant Section 11.1.  Each other Lender shall have a claim against such defaulting Lender for any damages sustained by it as a result of such default, including, in the event such Letter of Credit shall expire undrawn, its CAM Percentage of the defaulted amount.

(c)           In the event that after the Termination Date any Letter of Credit shall expire undrawn, the Administrative Agent shall withdraw from the LC Reserve Account of each Lender the amount remaining on deposit therein in respect of such Letter of Credit and distribute such amount to such Lender.

(d)           With the prior written approval of the Administrative Agent and the applicable Fronting Bank (not to be unreasonably withheld), any Lender may withdraw the amount held in its LC Reserve Account in respect of the undrawn amount of any Letter of Credit.  Any Lender making such a withdrawal shall be unconditionally obligated, in the event there shall subsequently be a drawing under such Letter of Credit, to pay over to the Administrative Agent, for the account of the applicable Fronting Bank, on demand, its CAM Percentage of such drawing.

(e)           Pending the withdrawal by any Lender of any amounts from its LC Reserve Account as contemplated by the above paragraphs, the Administrative Agent will, at the direction of such Lender and subject to such rules as the Administrative Agent may prescribe for the avoidance of inconvenience, invest such amounts in Permitted Investments.  Each Lender which has not withdrawn its CAM Percentage of amounts in its LC Reserve Account as provided in paragraph (d)  above shall have the right, at intervals reasonably specified by the Administrative Agent, to withdraw the earnings on investments so made by the Administrative Agent with amounts in its LC Reserve Account and to retain such earnings for its own account.

Section 11.3           Conversion.  In the event the Termination Date shall occur, Obligations owed by the Loan Parties denominated in any currency other than Dollars (other than, for the avoidance of doubt, obligations in respect of undrawn Canadian Revolving Facility Letters of Credit denominated in Canadian Dollars) shall, automatically and with no further act required, be converted to obligations of the same Loan Parties denominated in Dollars.  Such conversion shall be effected based upon the Exchange Rates in effect with respect to the relevant currencies on the Termination Date.  On and after any such conversion, all amounts accruing and owed to any Lender in respect of its Obligations shall accrue and be payable in Dollars at the rates otherwise applicable hereunder (and, in the case of interest on Loans, at the default rate applicable to ABR Loans hereunder).  Notwithstanding the foregoing provisions of this Section 11.3, any Lender may, by notice to the Borrowers and the Administrative Agent prior to the Termination Date, elect not to have the provisions of this Section 11.3 apply with respect to all Obligations owed to such Lender immediately following the Termination Date, and, if such notice is given, all Obligations owed to such Lender immediately following the Termination Date shall remain designated in their original currencies.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and the year first written.

	SMURFIT-STONE CONTAINER ENTERPRISES, INC.
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	000 Xxxxx Xxxxxxxx Xxxxxx
	Xxxxxxx, XX 00000
	FEIN: 00-0000000
	SMURFIT-STONE CONTAINER CANADA INC.
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	630 Xxxx-Xxxxxxxx Blvd. West, Suite 3000
	Xxxxxxxx, XX
	X0X 0X0
	SMURFIT-STONE CONTAINER CORPORATION
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	000 Xxxxx Xxxxxxxx Xxxxxx
	Xxxxxxx, XX 00000
	FEIN: 00-0000000

Signature Page to Credit Agreement

	CALPINE CORRUGATED LLC
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	0000 X. Xxxxxx Xxxxxx
	Xxxxxx, XX 00000
	FEIN: 00-0000000
	CAMEO CONTAINER CORPORATION
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	Six CityPlace Drive
	Creve Coeur, MO 63141
	FEIN: 00-0000000
	XXX 00X XXXXXXXXXXXXX XXXXXXXXXXX
	By:	/s/ Xxxx X. Xxxxxxxx
		/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	Six CityPlace Drive
	Creve Coeur, MO 63141
	FEIN: 00-0000000
	ATLANTA & SAINT XXXXXXX BAY RAILWAY COMPANY
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	Six CityPlace Drive
	Creve Coeur, MO 63141
	FEIN: 00-0000000

Signature Page to Credit Agreement

	STONE INTERNATIONAL SERVICES CORPORATION
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	Six CityPlace Drive
	Creve Coeur, MO 63141
	FEIN: 00-0000000
	STONE GLOBAL, INC.
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	Xxx XxxxXxxxx Xxxxx
	Xxxxx Xxxxx, XX 00000
	FEIN: 00-0000000
	STONE CONNECTICUT PAPERBOARD PROPERTIES, INC.
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	Xxx XxxxXxxxx Xxxxx
	Xxxxx Xxxxx, XX 00000
	FEIN: 00-0000000
	SMURFIT-STONE PUERTO RICO, INC.
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	Xxxxxx Industrial Park
	00 Xxxxxx Xxxxxx
	Xxxxxxxx, Xxxxxx Xxxx 00000
	FEIN: 00-0000000

Signature Page to Credit Agreement

	SMURFIT NEWSPRINT CORPORATION
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	Six CityPlace Drive
	Creve Coeur, MO 63141
	FEIN: 00-0000000
	SLP FINANCE I, INC.
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	Six CityPlace Drive
	Creve Coeur, MO 63141
	FEIN: 00-0000000
	SLP FINANCE II, INC.
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	Six CityPlace Drive
	Creve Coeur, MO 63141
	FEIN: 00-0000000
	SMBI INC.
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	Six CityPlace Drive
	Creve Coeur, MO 63141
	FEIN: 00-0000000

Signature Page to Credit Agreement

	3083527 NOVA SCOTIA COMPANY
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	630 Xxxx-Xxxxxxxx Blvd. West, Suite 3000
	Xxxxxxxx, XX
	X0X 0X0
	MBI LIMITED/LIMITÉE
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	0000 Xxxxxxxxxx Xxxxxx
	Xx. 000
	Xxxxxxxxxxx, XX
	X0X 0X0
	SMURFIT-MBI, by its general partner, MBI Limited/Limitée
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	0000 Xxxxxxxxxx Xxxxxx
	Xx. 000
	Xxxxxxxxxxx, XX
	X0X 0X0
	STONE CONTAINER FINANCE COMPANY OF CANADA II
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
	Xxxxxxx, XX
	X0X 0X0

Signature Page to Credit Agreement

	639647 BRITISH COLUMBIA LTD.
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	0000 Xxxxxxxxxx Xxxxxx
	Xx. 000
	Xxxxxxxxxxx, XX
	X0X 0X0
	B.C. SHIPPER SUPPLIES LTD.
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	0000 Xxxxxxxxxx Xxxxxx
	Xx. 000
	Xxxxxxxxxxx, XX
	X0X 0X0
	SPECIALTY CONTAINERS INC.
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	0000 Xxxxxxxxxx Xxxxxx
	Xx. 000
	Xxxxxxxxxxx, XX
	X0X 0X0
	SLP FINANCE GENERAL PARTNERSHIP, by its general partner, SLP Finance I, Inc.
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	000, Xxxx. Xxxx-Xxxxxxxx Ouest
	Bureau 3000
	Xxxxxxxx, XX
	X0X 0X0

Signature Page to Credit Agreement

	FRANCOBEC COMPANY
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	0000 Xxxxxx xx l’Usine
	La Tuque, QC
	G9X3P8
	605681 N.B. INC.
	By:	/s/ Xxxxxxx X. Xxxxxxxx
	Name:	Xxxxxxx X. Xxxxxxxx
	Title:	Senior Vice President and Chief Financial Officer
	00 Xxxxxxx Xxxx, Xxxxx 0000, Xxxx Xxxxxx Xxx 0000 Xxx X, Xxxxx Xxxx, XX X0X 0X0

Signature Page to Credit Agreement

	LENDERS:
	JPMORGAN CHASE BANK, N.A.
	Individually and as Administrative Agent and Collateral Agent
	By:	/s/ Xxxxx X. Xxxxxx
	Name:	Xxxxx X. Xxxxxx
	Title:	Executive Director
	JPMORGAN CHASE BANK, N.A., TORONTO BRANCH
	as Canadian Administrative Agent and Canadian Collateral Agent
	By:	/s/ Xxxx XxXxxxxx
	Name:	Xxxx XxXxxxxx
	Title:	Executive Director
	DEUTSCHE BANK TRUST COMPANY AMERICAS
	By:	/s/ Xxxx Xxxxxx
	Name:	Xxxx Xxxxxx
	Title:	Director
	By:	/s/ Xxxxxx Xxxxxx
	Name:	Xxxxxx Xxxxxx
	Title:	Director

Signature Page to Credit Agreement

	LENDERS:
	JPMORGAN CHASE BANK, N.A., TORONTO BRANCH
	By:	/s/ Xxxxx X. Xxxxxx
	Name:	Xxxxx X. Xxxxxx
	Title:	Executive Director

	LENDERS:
	BANK OF AMERICA, N.A.
	By:	/s/ Xxxxx Xxxx Strand
	Name:	Xxxxx Xxxx Strand
	Title:	Senior Vice President

	LENDERS:
	BANK OF AMERICA, N.A. (CANADA BRANCH)
	By:	/s/ Xxxxxx Sales xx Xxxxxxx
	Name:	Xxxxxx Sales xx Xxxxxxx
	Title:	Vice President

	LENDERS:
	THE FOOTHILL GROUP, LLC
	By:	/s/ Xxxx Xxxxxxxx
	Name:	Xxxx Xxxxxxxx
	Title:	Vice President

	LENDERS:
	GENERAL ELECTRIC CAPITAL CORPORATION
	By:	/s/ Xxxx Xxxxxxx
	Name:	Xxxx Xxxxxxx
	Title:	Duly Authorized Signatory

	LENDERS:
	THE BANK OF NOVA SCOTIA
	By:	/s/ Xxxxx Xxxxxxx
	Name:	Xxxxx Xxxxxxx
	Title:	Director

Annex A-1

Canadian Revolving Commitment Amounts

LENDER		COMMITMENT
JPMorgan Chase Bank, N.A., Toronto Branch		US$21,350,000.00
Deutsche Bank Trust Company Americas		US$21,350,000.00
Bank of America, N.A., Canada Branch		US$8,000,000.00
The Bank of Nova Scotia		US$5,633,333.33
General Electric Capital Corporation		US$8,666,666.67
Total:		US$65,000,000

Annex A-2

U.S. Revolving Commitment Amounts

LENDER		COMMITMENT
JPMorgan Chase Bank, N.A.		US$71,500,000.00
Deutsche Bank Trust Company Americas		US$71,500,000.00
Bank of America, N.A.		US$52,000,000.00
The Bank of Nova Scotia		US$21,666,666.67
General Electric Capital Corporation		US$33,333,333.33
Total:		US$250,000,000

Annex A-3

U.S. Term Loan Commitment Amounts

LENDER		COMMITMENT
JPMorgan Chase Bank, N.A.		US$106,482,758.62
Deutsche Bank Trust Company Americas		US$106,482,758.62
Bank of America, N.A.		US$34,666,666.67
The Bank of Nova Scotia		US$34,666,666.67
General Electric Capital Corporation		US$53,333,333.33
The Foothill Group, Inc.		US$64,367,816.09
Total:		US$400,000,000

Annex A-4

Canadian Term Loan Commitment Amounts

LENDER		COMMITMENT
JPMorgan Chase Bank, N.A., Toronto Branch		US$8,167,241.38
Deutsche Bank Trust Company Americas		XXx0,000,000.00
Xxxx xx Xxxxxxx, X.X., Xxxxxx Branch		US$5,333,333.33
The Bank of Nova Scotia		US$3,033,333.33
General Electric Capital Corporation		US$4,666,666.67
The Foothill Group, Inc.		US$5,632,183.91
Total:		US$35,000,000

Exhibit X-0

XXXXXX XXXXXX BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

In re: SMURFIT-STONE CONTAINER CORPORATION, et al.,(1) Debtors. Chapter 11 Case No. 09-10235 (BLS) Jointly Administered Ref. Docket No. 14

INTERIM ORDER (I) AUTHORIZING DEBTORS (A) TO OBTAIN POST-PETITION FINANCING PURSUANT TO 11 U.S.C. §§105, 361, 362, 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1) AND 364(e) AND (B) TO UTILIZE CASH COLLATERAL PURSUANT TO 11 U.S.C. §363, (II) AUTHORIZING USE OF PROCEEDS TO EFFECTUATE PAYOUT OF SECURITIZATION FACILITIES, (III) GRANTING ADEQUATE PROTECTION TO PRE-PETITION SECURED PARTIES PURSUANT TO 11 U.S.C. §§ 361, 362, 363 AND 364 AND (IV) SCHEDULING FINAL HEARING PURSUANT TO BANKRUPTCY RULES 4001(B) AND (C)

Upon the motion (the “DIP Motion”), dated January 26, 2009, of Smurfit-Stone Container Corporation (“SSCC”) and its affiliated U.S. debtors (collectively, the “U.S. Debtors”) and Smurfit-Stone Container Canada Inc. (“SSC Canada”) and its affiliated Canadian debtors (collectively, the “Canadian Debtors”), each as debtors and debtors-in-possession (the U.S. Debtors and the Canadian Debtors hereinafter collectively referred to as the “Debtors”), in the above-captioned Chapter 11 cases (collectively, the “Cases”) pursuant to sections 105, 361, 362, 363(c)(2), 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1) and 364(e) of

(1) The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are: Smurfit-Stone Container Corporation (1401), Smurfit-Stone Container Enterprises, Inc. (1256), Calpine Corrugated, LLC (0470), Cameo Container Corporation (5701), Xxx 00X Xxxxxxxxxxxxx Xxxxxxxxxxx (0000), Xxxxxxx & Xxxxx Xxxxxxx Xxx Railway Company (0093), Stone International Services Corporation (9630), Stone Global, Inc. (0806), Stone Connecticut Paperboard Properties, Inc. (8038), Smurfit-Stone Puerto Rico, Inc. (5984), Smurfit Newsprint Corporation (1650), SLP Finance I, Inc. (8169), SLP Finance II, Inc. (3935), SMBI Inc. (2567), Smurfit-Stone Container Canada Inc. (3988), Stone Container Finance Company of Canada II (1587), 3083527 Nova Scotia Company (8836), MBI Limited/Limitée (6565), Smurfit-MBI (1869), 639647 British Columbia Ltd. (7733), B.C. Shipper Supplies Ltd. (7418), Specialty Containers Inc. (6564), SLP Finance General Partnership (TBD), Francobec Company (7735), and 605681 N.B. Inc. (1898).  The Debtors’ corporate headquarters are located at, and the mailing address for each Debtor is, 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000.

title 11 of the United States Code, 11 U.S.C. §§101, et seq. (the “Bankruptcy Code”), and Rules 2002, 4001 and 9014 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), seeking, among other things, entry of an interim order (this “Interim Order”) authorizing the Debtors to:

(i) Obtain credit and incur debt, pursuant to Sections 363, 364(c) and 364(d)(1) of the Bankruptcy Code,

(a) on an interim basis for a period (the “Interim Period”) from the Closing Date through and including the earlier of the entry of a Final Order, as defined below, or March 13, 2009, up to an aggregate principal amount of US$550,000,000 (consisting of a US$400,000,000 U.S. term loan for borrowings by Smurfit-Stone Container Enterprises, Inc. (“SSCE”); a US$35,000,000 Canadian term loan for borrowings by SSC Canada; a US$100,000,000 U.S. revolving loan for borrowings by SSCE and/or SSC Canada; and a US$15,000,000 Canadian revolving loan for borrowings by SSCE and/or SSC Canada; the actual principal amount of any such loans at any time subject to those conditions set forth in the DIP Credit Agreement (as defined below)); all borrowings by SSCE shall be guaranteed by the other U.S. Debtors (other than SMBI Inc.) and SSC Canada and all borrowings by SSC Canada shall be guaranteed by all of the other Debtors, and

(b) upon entry of the Final Order, up to an aggregate committed amount of US$750,000,000 (consisting of a US$400,000,000 U.S. term loan for borrowings by SSCE; a US$35,000,000 Canadian term loan for borrowings by SSC Canada; a US$250,000,000 U.S. revolving loan for borrowings by SSCE and/or SSC Canada; and a US$65,000,000 Canadian revolving loan for borrowings by SSCE and/or SSC Canada; the actual principal amount of any such loans at any time subject to those conditions set forth in the DIP Credit Agreement); all

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borrowings by SSCE shall be guaranteed by the other U.S. Debtors (other than SMBI Inc.) and SSC Canada and all borrowings by SSC Canada shall be guaranteed by all of the other Debtors;

each on terms and conditions more fully described herein, secured by first priority, valid, priming, perfected and enforceable liens (as defined in section 101(37) of the Bankruptcy Code) on property of the Debtors’ estates pursuant to sections 364(c)(2), 364(c)(3) and 364(d)(1) of the Bankruptcy Code, and with priority, as to administrative expenses, as provided in section 364(c)(1) of the Bankruptcy Code, subject to the terms and conditions contained herein;

(ii) (a) Establish a financing arrangement (the “DIP Facility”) pursuant to (I) that certain Credit Agreement (as amended, modified or supplemented in accordance with the terms of this Interim Order, the “DIP Credit Agreement”)(2), substantially in the form attached hereto as Exhibit B, by and between SSCE and SSC Canada (collectively, the “Borrowers”), SSCC, the other Loan Parties party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (the “U.S. DIP Agent”), JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian administrative agent and Canadian collateral agent (“Canadian DIP Agent”, collectively with the U.S. DIP Agent, the “DIP Agents”), and the Lenders party thereto (the “DIP Lenders”, collectively with the DIP Agents, the “DIP Secured Parties”), and (II) all other agreements, documents, notes, certificates, and instruments executed and/or delivered with, to, or in favor of the DIP Secured Parties, including, without limitation, security agreements, pledge agreements, notes, guarantees, mortgages, and Uniform Commercial Code (“UCC”) financing statements and all other related agreements, documents, notes, certificates, and instruments executed and/or delivered in connection therewith or related thereto (collectively,

(2) Capitalized terms used in this Interim Order but not defined herein shall have the meanings ascribed to such terms in the DIP Credit Agreement.

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and together with the DIP Credit Agreement, as may be amended, modified or supplemented and in effect from time to time, the “DIP Financing Agreements”); and (b) incur the “Secured Obligations” under the DIP Credit Agreement ((a) and (b) collectively, the “DIP Obligations”);

(iii) Authorize the use of the proceeds of the DIP Facility (net of any amounts used to pay fees, costs and expenses under the DIP Credit Agreement) in each case in a manner consistent with the terms and conditions of the DIP Credit Agreement, and in a manner substantially consistent with the Budget solely for (a) working capital, Letters of Credit and Capital Expenditures; (b) other general corporate purposes of the Debtors (including intercompany loans to the extent permitted by the DIP Credit Agreement); (c) upon entry of this Interim Order, the refinancing in full or defeasance of Indebtedness outstanding under the Receivables Securitization Programs; (d) payment of any related transaction costs, fees and expenses; and (e) the costs of administration of the Cases.

(iv) Grant, with respect to the DIP Obligations (as defined below) of the U.S. Debtors (other than SMBI, Inc.) and SSC Canada:

(a) pursuant to Section 364(c)(1) of the Bankruptcy Code, an allowed Superpriority Claim payable from and having recourse to all pre-petition and post-petition property of the estates of the U.S. Debtors and SSC Canada and all proceeds thereof;

(b) pursuant to Section 364(c)(2) of the Bankruptcy Code, a perfected first priority Lien on all unencumbered property of the U.S. Debtors and SSC Canada (including, upon entry of the Final Order, any proceeds of Avoidance Actions) and on all cash maintained in any Collateral Account and any investments of the funds contained therein, provided that amounts in the Collateral Accounts shall not be subject to the Carve-Out or the CCAA Charges;

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(c) pursuant to Section 364(c)(3) of the Bankruptcy Code, a perfected junior Lien upon all property of the U.S. Debtors and SSC Canada that is subject to valid and perfected and unavoidable Liens in existence on the Petition Date (as defined below) or that is subject to valid Liens in existence on the Petition Date that are perfected subsequent to the Petition Date as permitted by Section 546(b) of the Bankruptcy Code (other than certain property that is subject to the Primed Liens (as defined below), which Primed Liens shall be primed by the liens to be granted to the U.S. DIP Agent described in the following clause (d));

(d) pursuant to Section 364(d)(1) of the Bankruptcy Code, a perfected first priority, senior priming Lien on all of the property of the U.S. Debtors and SSC Canada (including, without limitation, inventory, receivables, rights under license agreements, property, plant and equipment and the residual interest of the U.S. Debtors and SSC Canada in any Receivables Securitization Programs) that is subject to the Primed Liens, which Primed Liens shall be primed by and made subject and subordinate to the perfected first priority senior priming Liens to be granted to the U.S. DIP Agent, which senior priming Liens in favor of the U.S. DIP Agent shall also prime any Liens granted after the Petition Date to provide adequate protection Liens in respect of any of the Primed Liens, but shall not prime (1) Non-Primed Liens which secure the Calpine Debt or (2) other Non-Primed Liens solely to the extent such Non-Primed Liens secure claims in an aggregate amount less than or equal to US$60,000,000.

(v) Grant, with respect to the DIP Obligations of the Canadian Guarantors, including SMBI, Inc., relative to the Canadian Term Loan and the Canadian Revolving Facility:

(a) pursuant to Section 364(c)(1) of the Bankruptcy Code, an allowed Superpriority Claim and be payable from and have recourse to all pre-petition and post-petition property of the estates of the Canadian Guarantors and all proceeds thereof;

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(b) pursuant to Section 364(c)(2) of the Bankruptcy Code, a perfected first priority Lien on all unencumbered property of the Canadian Guarantors (including, upon entry of the Final Order, any proceeds of Avoidance Actions) and on all cash maintained in any Collateral Account and any investments of the funds contained therein, provided that amounts in the Collateral Accounts shall not be subject to the Carve-Out or the CCAA Charges;

(c) pursuant to Section 364(c)(3) of the Bankruptcy Code, a perfected junior Lien upon all property of the Canadian Guarantors that is subject to valid and perfected and unavoidable Liens in existence on the Petition Date or that is subject to valid Liens in existence on the Petition Date that are perfected subsequent to the Petition Date as permitted by Section 546(b) of the Bankruptcy Code (other than certain property that is subject to the Primed Liens, which Primed Liens shall be primed by the liens to be granted to the U.S. DIP Agent described in the following clause (d));

(d) pursuant to Section 364(d)(1) of the Bankruptcy Code, a perfected first priority, senior priming Lien on all of the property of the Canadian Guarantors (including, without limitation, inventory, receivables, rights under license agreements, property, plant and equipment and the residual interest of the Canadian Guarantors in any Receivables Securitization Programs) that is subject to the Primed Liens, which Primed Liens shall be primed by and made subject and subordinate to the perfected first priority senior priming Liens to be granted to the U.S. DIP Agent, which senior priming Liens in favor of the U.S. DIP Agent shall also prime any Liens granted after the Petition Date to provide adequate protection Liens in respect of any of the Primed Liens, but shall not prime (1) Non-Primed Liens which secure the Calpine Debt or (2) other Non-Primed Liens solely to the extent such Non-Primed Liens secure claims in an aggregate amount less than or equal to US$60,000,000.

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(vi) Authorize the use of “cash collateral” as such term is defined in Section 363 of the Bankruptcy Code (the “Cash Collateral”), in which the Pre-Petition Secured Parties (as defined below) have an interest;

(vii) Grant the Pre-Petition Agents (for the benefit of the Pre-Petition Secured Parties) (each as defined below) Pre-Petition Replacement Liens and Pre-Petition Superpriority Claims (each as defined below), to the extent of any diminution in the value of the Pre-Petition Agents’ interest in the Collateral (as defined below) on the Petition Date, securing the indebtedness under the Pre-Petition Financing Agreements, as defined below, having the priority set forth in this Interim Order, as adequate protection for the granting of the DIP Liens (as defined below) to the U.S. DIP Agent, the use of Cash Collateral, and for the imposition of the automatic stay;

(viii) Vacate and modify the automatic stay imposed by section 362 of the Bankruptcy Code to the extent necessary to implement and effectuate the terms and provisions of the DIP Financing Agreements and this Interim Order;

(ix) Schedule a final hearing (the “Final Hearing”) to consider entry of an order (the “Final Order”) granting the relief requested in the DIP Motion on a final basis and approve the form of notice with respect to the Final Hearing; and

(x) Waive any applicable stay (including under Rule 6004 of the Federal Rules of Bankruptcy Procedure) and provide for immediate effectiveness of this Interim Order.

The Bankruptcy Court having considered the DIP Motion, the Declaration of Xxxxxxx X. Xxxxxxxx, Chief Financial Officer of Smurfit-Stone Container Corporation, in Support of First Day Motions, the exhibits attached thereto, the DIP Facility and the DIP Credit Agreement, and the evidence submitted at the hearing on this Interim Order (the “Interim Hearing”); and in

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accordance with Rules 2002, 4001(b), (c), and (d), and 9014 of the Bankruptcy Rules and the local rules of the Bankruptcy Court, due and proper notice of the DIP Motion and the Interim Hearing having been given; an Interim Hearing having been held and concluded on January 27, 2009; and it appearing that approval of the interim relief requested in the DIP Motion is necessary to avoid immediate and irreparable harm to the Debtors pending the Final Hearing and otherwise is fair and reasonable and in the best interests of the Debtors, their creditors, their estates and their equity holders, and is essential for the continued operation of the Debtors’ business; and it further appearing that, other than pursuant to the DIP Financing Agreements, the Debtors are unable to secure (i) adequate unsecured credit allowable under Bankruptcy Code Section 503(b)(1) as an administrative expense, (ii) credit for money borrowed with priority over any or all administrative expenses of the kind specified in Bankruptcy Code Sections 503(b) or 507(b), (iii) credit for money borrowed secured solely by a Lien on property of the estate that is not otherwise subject to a Lien, or (iv) credit for money borrowed secured by a junior Lien on property of the estate which is subject to a Lien; and, subject to the terms hereof, there is adequate protection of the interests of holders of liens on the property of the estates on which liens are to be granted; and all objections, if any, to the entry of this Interim Order having been withdrawn, resolved or overruled by this Court; and after due deliberation and consideration, and for good and sufficient cause appearing therefor:

BASED UPON THE RECORD ESTABLISHED AT THE INTERIM HEARING, THE COURT HEREBY MAKES THE FOLLOWING FINDINGS OF FACT AND CONCLUSIONS OF LAW:

A. Petition Date.  On January 26, 2009 (the “Petition Date”), the Debtors filed voluntary petitions under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware (the “Court”).  The Debtors have continued in the

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management and operation of their business and property as debtors-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code.  No trustee or examiner has been appointed in the Cases.  In addition, on January 26, 2009 the Canadian Debtors (except Smurfit-MBI and SLP Finance General Partnership) applied for an initial order under the Companies’ Creditors Arrangement Act in the Ontario, Canada Superior Court of Justice.  In addition, Smurfit-MBI and SLP Finance General Partnership intend to seek recognition of their respective Chapter 11 Cases in the Canadian Court and an order granting charges over the assets of each of Smurfit-MBI and SLP Finance General Partnership to secure their respective DIP Obligations, under Section 268 of the Bankruptcy And Insolvency Act.

B. Jurisdiction and Venue.  This Court has jurisdiction over these proceedings, pursuant to 28 U.S.C. §§ 157(b) and 1334, and over the persons and property affected hereby.  Consideration of the DIP Motion constitutes a core proceeding under 28 U.S.C. § 157(b)(2).  Venue for the Cases and proceedings on the DIP Motion is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

C. Notice.  The Interim Hearing is being held pursuant to the authorization of Bankruptcy Rule 4001.  Notice of the Interim Hearing and the emergency relief requested in the DIP Motion has been provided by the Debtors, whether by telecopy, email, overnight courier or hand delivery on January 26, 2009, to certain parties in interest, including:  (i) the Office of the United States Trustee, (ii) the United States Securities and Exchange Commission, (iii) the Office of the United States Attorney for the District of Delaware, (iv) the Internal Revenue Service, (v) the Debtors’ thirty (30) largest unsecured creditors on a consolidated basis, (vi) counsel to the Pre-Petition Agents, (vii) the Pre-Petition Agents, (viii) counsel to the DIP Agents, and (ix) the indenture trustees for the Debtors’ five series of outstanding pre-petition

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senior notes.  Under the circumstances, such notice of the Interim Hearing is due and sufficient notice and complies with Bankruptcy Rule 4001 under the circumstances.

D. Debtors’ Acknowledgements and Agreements.  Without prejudice to the rights of parties in interest as set forth in paragraph 6 below, the Debtors admit, stipulate, acknowledge and agree as follows (collectively, paragraphs D (i) through D (vi) hereof shall be referred to herein as the “Debtors’ Stipulations”):

(i) Pre-Petition Financing Agreements.  Prior to the Petition Date, certain of the Debtors were party to (a) that certain Credit Agreement, dated as of November 1, 2004, by and between the Borrowers, SSCC, as guarantor, the banks and other financial institutions from time to time parties thereto (the “Pre-Petition Lenders”), Deutsche Bank Trust Company Americas, as administrative agent (the “U.S. Pre-Petition Agent”), and Deutsche Bank AG, as Canadian administrative agent (together with the U.S. Pre-Petition Agent, the “Pre-Petition Agents”, and collectively with the Pre-Petition Lenders, the “Pre-Petition Secured Parties”), (b) that certain Guarantee and Collateral Agreement (U.S.), dated as of November 1, 2004, executed by the Borrowers, SSCC and certain subsidiaries of SSCC, in favor of the U.S. Pre-Petition Agent, and (c) all other agreements, documents, notes, certificates, and instruments executed and/or delivered with, to, or in favor of Pre-Petition Secured Parties, including, without limitation, security agreements, guaranties, and UCC financing statements and all other related agreements, documents, notes, certificates, and instruments executed and/or delivered in connection therewith or related thereto (collectively, as amended, modified or supplemented and in effect, the “Pre-Petition Financing Agreements”).

(ii) Pre-Petition Debt Amount.  As of the Petition Date, the Debtors were indebted under the Pre-Petition Financing Agreements (a) on account of Loans (as defined in the Pre-Petition Financing Agreements) made to SSCE, in the approximate aggregate principal amount of not less than approximately US$746,000,000 plus letters of credit in the approximate aggregate stated amount of not less than approximately US$252,800,000, plus, in each case, interest accrued and accruing (at the rates (including, to the extent allowed, the default rate) set forth in the Pre-Petition Financing Agreements), costs, expenses, fees (including attorneys’ fees and legal expenses), other charges (in each case, to the extent reimbursable under the Pre-Petition Financing Agreements) and other obligations, including, without limitation, on account of Swap Agreements (as defined in the Pre-Petition Financing Agreements) with a Pre-Petition Lender or an affiliate thereof, cash management services, overdrafts, and temporary advances, and (b) on account of Loans made to SSC Canada, in the approximate aggregate principal amount of not less than approximately US$366,000,000, plus

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letters of credit in the approximate aggregate stated amount of not less than approximately US$27,000,000, plus, in each case, interest accrued and accruing, costs, expenses, fees (including attorneys’ fees and legal expenses), other charges (in each case, to the extent reimbursable under the Pre-Petition Financing Agreements) and obligations, including, without limitation, Swap Agreements (as defined in the Pre-Petition Financing Agreements) with a Pre-Petition lender or an affiliate thereof, cash management services, overdrafts, and temporary advances (collectively the “Pre-Petition Debt”).  SSCC guaranteed all of the obligations of SSCE (the “Pre-Petition U.S. Obligations”) under the Pre-Petition Financing Agreements.  Certain material subsidiaries of SSC Canada (the “Pre-Petition Canadian Guarantors”), as well as SSCC and SSCE, guaranteed the obligations of SSC Canada (the “Pre-Petition Canadian Obligations”) under the Pre-Petition Credit Agreement .

(iii) Pre-Petition Collateral.  To secure the Pre-Petition Debt, the Debtors granted security interests, mortgages and liens (the “Pre-Petition Liens”) to the Pre-Petition Secured Parties on the personal and real property and the proceeds thereof as described and defined as “Collateral” in the Pre-Petition Financing Agreements (collectively, the “Pre-Petition Collateral”).(3)  The Pre-Petition U.S. Obligations are secured by those Pre-Petition Liens granted by SSCC and SSCE, as well as by the capital stock of SSCE and 65% of the capital stock of SSC Canada.  The Pre-Petition Canadian Obligations are secured by those Pre-Petition Liens granted by SSC Canada and the Pre-Petition Canadian Guarantors, pledges of all of the capital stock of the Pre-Petition Canadian Guarantors, and the liens and stock pledges securing the Pre-Petition U.S. Obligations.  The Pre-Petition Liens have priority over all other liens, except (a) the DIP Liens (as defined below), (b) the Carve Out (as defined below) to which the DIP Liens are subject, and (c) any liens which are valid, properly perfected, unavoidable, and senior to or pari passu with the Pre-Petition Liens (the “Priority Liens”).

(iv) Pre-Petition Liens.  (a) As of the Petition Date, the Debtors believe that (i) the Pre-Petition Liens are valid, binding, enforceable, and perfected first-priority liens, subject only to any Priority Liens and are not subject to avoidance, recharacterization or subordination pursuant to the Bankruptcy Code or applicable non-bankruptcy law, (ii) the Pre-Petition Debt constitutes legal, valid and binding obligations of the Debtors, enforceable in accordance with the terms of the Pre-Petition Financing Agreements (other than in respect of the stay of enforcement arising from section 362 of the Bankruptcy Code), no offsets, defenses or counterclaims to any of the Pre-Petition Debt exists, and no portion of the Pre-Petition Debt is subject to avoidance, recharacterization or subordination pursuant to the Bankruptcy Code or applicable non-bankruptcy law, and (iii) the

(3) The acknowledgment and agreement by the Debtors of the Pre-Petition Debt and the related liens, rights priorities and protections granted to or in favor of the Pre-Petition Secured Parties, as set forth herein and in the Pre-Petition Financing Agreements, shall constitute a proof of claim on behalf of the Pre-Petition Lenders in these Cases in respect of the Pre-Petition Debt.

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Pre-Petition Debt constitutes allowable secured claims, and (b) on the date that this Interim Order is entered, each Debtor has waived, discharged and released the Pre-Petition Secured Parties, together with their affiliates, agents, attorneys, officers, directors and employees, of any right any Debtor may have (x) to challenge or object to the amount, validity, or enforceability of the Pre-Petition Debt, (y) to challenge or object to the validity, enforceability, or non-voidability of the Pre-Petition Liens securing the Pre-Petition Debt, and (z) to bring or pursue any and all claims, counterclaims, objections, challenges, causes of action and/or choses in action against any of the Pre-Petition Parties or arising out of, based upon or related to the Pre-Petition Financing Agreements or otherwise.

(v) Cash Collateral.  The Pre-Petition Secured Parties have a security interest in certain of the Cash Collateral constituting proceeds of Pre-Petition Collateral to secure the Pre-Petition Debt.

(vi) Priming of DIP Facility.  In entering into the DIP Financing Agreements, and as consideration therefor, the Debtors hereby agree that until such time as all DIP Obligations are paid in full in cash (or other arrangements for payment of the DIP Obligations satisfactory to the DIP Agents have been made) and the DIP Financing Agreements are terminated in accordance with the terms thereof, the Debtors shall not in any way prime, seek to prime, or support any other party that seeks to prime the security interests and DIP Liens provided to the DIP Secured Parties under this Interim Order by offering a subsequent lender or a party-in-interest a superior or pari passu lien or claim pursuant to Section 364(d) of the Bankruptcy Code or otherwise.

E. Findings Regarding the Post-Petition Financing.

(i) Need for Post-Petition Financing.  An immediate need exists for the Debtors to obtain funds from the DIP Facility in order to continue operations and to administer and preserve the value of their estates.  The ability of the Debtors to finance their operations, to preserve and maintain the value of the Debtors’ assets and maximize a return for all creditors requires the availability of working capital from the DIP Facility, the absence of which would immediately and irreparably harm the Debtors, their estates, their creditors and equity holders and the possibility for a successful reorganization of the Debtors.

(ii) No Credit Available on More Favorable Terms.  The Debtors have been unable to obtain (a) adequate unsecured credit allowable under Bankruptcy Code section

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503(b)(1) as an administrative expense, (b) credit for money borrowed with priority over any or all administrative expenses of the kind specified in Bankruptcy Code Sections 503(b) or 507(b), (c) credit for money borrowed secured solely by a Lien on property of the estate that is not otherwise subject to a Lien, or (d) credit for money borrowed secured by a junior Lien on property of the estate which is subject to a Lien, in each case, on more favorable terms and conditions than those provided in the DIP Credit Agreement and this Interim Order.  The Debtors are unable to obtain credit for borrowed money without granting to the DIP Secured Parties the DIP Protections (as defined below).

F. Use of Proceeds of the DIP Facility.  Proceeds of the DIP Facility (net of any amounts used to pay fees, costs and expenses under the DIP Financing Agreements) shall be used, in each case in a manner consistent with the terms and conditions of the DIP Financing Agreements, and in a manner substantially consistent with the Budget solely for (i) working capital, Letters of Credit and Capital Expenditures; (ii) other general corporate purposes of the Debtors (including intercompany loans to the extent permitted by the DIP Credit Agreement); (iii) upon entry of this Interim Order, the refinancing in full or defeasance of Indebtedness outstanding under the Receivables Securitization Programs; (iv) payment of any related transaction costs, fees and expenses; and (v) the costs of administration of the Cases; provided, however, that no more than US$100,000 of the proceeds of the Loans or the DIP Collateral may be used by any statutory committee of unsecured creditors to investigate, and by the monitor in the Canadian Cases to review, the Pre-Petition Liens and claims of the Pre-Petition Agents and the Pre-Petition Lenders.

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G. Application of Proceeds of DIP Collateral.  All proceeds of the sale or other disposition of the DIP Collateral (as defined below) shall be applied in accordance with the terms and conditions of the DIP Credit Agreement.

H. Adequate Protection for Pre-Petition Secured Parties.  As a result of the grant of the DIP Liens, subordination to the Carve Out, and the use of Collateral, including Cash Collateral, authorized herein, the Pre-Petition Secured Parties are entitled to receive adequate protection pursuant to sections 361, 362, 363 and 364 of the Bankruptcy Code as set forth herein.

I. Section 552.  In light of the subordination of their liens and superpriority claims to (i) the Carve Out in the case of the DIP Secured Parties, and (ii) the Carve Out and the DIP Liens in the case of the Pre-Petition Secured Parties, the DIP Secured Parties and the Pre-Petition Secured Parties are each entitled to all of the rights and benefits of section 552(b) of the Bankruptcy Code, and the “equities of the case” exception shall not apply.

J. Extension of Financing.  The DIP Secured Parties have indicated a willingness to provide financing to certain of the Debtors in accordance with the DIP Credit Agreement.  Such financing is essential to the Debtors’ estate.  The DIP Secured Parties are good faith financiers.  The DIP Secured Parties’ claims, superpriority claims, security interests and liens and other protections granted pursuant to this Interim Order (and the Final Order) and the DIP Facility will not be affected by any subsequent reversal, modification, vacatur or amendment of this Interim Order or the Final Order or any other order, as provided in section 364(e) of the Bankruptcy Code.

K. Business Judgment and Good Faith Pursuant to Section 364(e).

(i) The terms and conditions of the DIP Facility and the DIP Credit Agreement, and the fees paid and to be paid thereunder, are fair, reasonable, and the best

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available under the circumstances, reflect the Debtors’ exercise of prudent business judgment consistent with their fiduciary duties, and are supported by reasonably equivalent value and consideration;

(ii) the DIP Facility was negotiated in good faith and at arms’ length between the Debtors and the DIP Secured Parties; and

(iii) use of the proceeds to be extended under the DIP Facility will be so extended in good faith, and for valid business purposes and uses, as a consequence of which the DIP Secured Parties are entitled to the protection and benefits of section 364(e) of the Bankruptcy Code.

L. Relief Essential; Best Interest.  The relief requested in the DIP Motion (and as provided in this Interim Order) is necessary, essential, and appropriate for the continued operation of the Debtors’ business and the management and preservation of the Debtors’ assets and personal property.  It is in the best interest of Debtors’ estates that the Debtors be allowed to establish the DIP Facility contemplated by the DIP Credit Agreement.

M. Entry of Interim Order.  For the reasons stated above, the Debtors have requested immediate entry of this Interim Order pursuant to Bankruptcy Rule 4001(c)(2).

NOW, THEREFORE, on the DIP Motion of the Debtors and the record before this Court with respect to the DIP Motion, and with the consent of the Debtors, the Pre-Petition Secured Parties and the DIP Secured Parties to the form and entry of this Interim Order, and good and sufficient cause appearing therefor,

IT IS ORDERED that:

1. Motion Granted.  The DIP Motion is granted in accordance with the terms and conditions set forth in this Interim Order and the DIP Credit Agreement.

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2. DIP Financing Agreements.

(a) Approval of Entry Into DIP Financing Agreements.  The Debtors are expressly and immediately authorized, empowered and directed to execute and deliver the DIP Financing Agreements and to incur and to perform the DIP Obligations in accordance with, and subject to, the terms of this Interim Order and the DIP Financing Agreements, and to execute and deliver all instruments, certificates, agreements and documents which may be required or necessary for the performance by the Debtors under the DIP Facility and the creation and perfection of the DIP Liens described in and provided for by this Interim Order and the DIP Financing Agreements.  The Debtors are hereby authorized and directed to do and perform all acts, pay the principal, interest, fees, expenses and other amounts described in the DIP Credit Agreement and all other DIP Financing Agreements as such become due, including, without limitation, closing fees, administrative fees, commitment fees, letter of credit fees and reasonable attorneys’, financial advisors’ and accountants’ fees and disbursements as provided for in the DIP Credit Agreement, which amounts shall not otherwise be subject to approval of this Court.  Upon execution and delivery, the DIP Financing Agreements shall represent valid and binding obligations of the Debtors enforceable against the Debtors in accordance with their terms.

(b) Authorization to Borrow.  In order to enable them to continue to operate their business, during the Interim Period and subject to the terms and conditions of this Interim Order, the DIP Credit Agreement, the other DIP Financing Agreements, and the Budget, the Debtors are hereby authorized under the DIP Facility to borrow up to an aggregate principal amount of US$550,000,000 (consisting of a US$400,000,000 U.S. term loan for borrowings by SSCE; a US$35,000,000 Canadian term loan for borrowings by SSC Canada; a US$100,000,000 U.S. revolving loan for borrowings by SSCE and/or SSC Canada; and a US$15,000,000

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Canadian revolving loan for borrowings by SSCE and/or SSC Canada), the actual principal amount at any time subject to those conditions set forth in the DIP Credit Agreement, until entry of the Final Order with respect to the DIP Motion and, thereafter, in such amounts as may be permitted by such Final Order; all borrowings by SSCE shall be guaranteed by the other U.S. Debtors (other than SMBI, Inc.) and SSC Canada, and all borrowings by SSC Canada shall be guaranteed by all of the other Debtors.

(c) Application of DIP Proceeds.  The proceeds of the DIP Facility (net of any amounts used to pay fees, costs and expenses under the DIP Credit Agreement) shall be used, in each case in a manner consistent with the terms and conditions of the DIP Financing Agreements, and in a manner substantially consistent with the Budget solely for (i) working capital, Letters of Credit and Capital Expenditures; (ii) other general corporate purposes of the Debtors (including intercompany loans to the extent permitted by the DIP Credit Agreement); (iii) upon entry of this Interim Order, the refinancing in full or defeasance of Indebtedness outstanding under the Receivables Securitization Programs; (iv) payment of any related transaction costs, fees and expenses; and (v) the costs of administration of the Cases; provided, however, that no more than US$100,000 of the proceeds of the Loans or the DIP Collateral may be used by any statutory committee of unsecured creditors to investigate, and by the monitor in the Canadian Cases to review, the Pre-Petition Liens and claims of the Pre-Petition Agent and the Pre-Petition Lenders.

(d) Conditions Precedent.  The DIP Secured Parties shall have no obligation to make any loan or advance under the DIP Credit Agreement during the Interim Period unless the conditions precedent to make such loan under the DIP Credit Agreement have been satisfied in full or waived in accordance with the DIP Credit Agreement.

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(e) Post-Petition Liens.  Effective immediately upon the execution of this Interim Order, the DIP Agents (as provided in the DIP Credit Agreement and for the ratable benefit of the DIP Secured Parties) are hereby granted the following security interests and liens (all property identified in clauses (i)(a), (b) and (c), and (ii)(a), (b) and (c) below being collectively referred to as the “DIP Collateral”); provided, however, that no U.S. Debtor shall be required to pledge in excess of 65% of the capital stock of its direct Foreign Subsidiaries (other than capital stock of SSC Canada) or any of the capital stock of any indirect Foreign Subsidiaries (all such liens and security interests granted to the DIP Agents, as provided in the DIP Credit Agreement and for the ratable benefit of the DIP Secured Parties, pursuant to this Order and the DIP Financing Agreements,  the “DIP Liens”):

(i) With respect to the DIP Obligations of the U.S. Debtors and SSC Canada:

(a) Pursuant to section 364(c)(2) of the Bankruptcy Code, the U.S. DIP Agent is hereby granted (for the ratable benefit of the DIP Secured Parties) a perfected first priority Lien on all unencumbered property of the U.S. Debtors and SSC Canada (including, upon entry of the Final Order, any proceeds of Avoidance Actions) and on all cash maintained in any Collateral Account and any investments of the funds contained therein, provided that amounts in the Collateral Accounts shall not be subject to the Carve Out or the CCAA Charges;

(b) Pursuant to section 364(c)(3) of the Bankruptcy Code, the U.S. DIP Agent (for the ratable of the DIP Secured Parties) is hereby granted a perfected junior Lien upon all property of the U.S. Debtors and SSC Canada that is subject to valid and perfected and unavoidable Liens in existence on the Petition Date or that is subject to valid Liens in existence on the Petition Date that are perfected subsequent to the Petition Date as permitted by Section 546(b) of the Bankruptcy Code (other than certain property that is subject to the Primed Liens, which Primed Liens shall be primed by the liens to be granted to the U.S. DIP Agent described in clause (c) below); and

(c) Pursuant to section 364(d)(1) of the Bankruptcy Code, the U.S. DIP Agent (for the ratable of the DIP Secured Parties) is hereby granted a perfected first priority, senior priming Lien on all property of the U.S. Debtors and SSC Canada (including, without limitation, inventory,

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receivables, rights under license agreements, property, plant and equipment and the residual interest of the U.S. Debtors and SSC Canada in any Receivables Securitization Programs) that is subject to the existing liens which secure (x) the obligations of the Debtors under or in connection with the Pre-Petition Financing Agreement, and (y) other Liens, obligations or indebtedness of the Debtors junior to the Pre-Petition Financing Agreement (collectively, the “Primed Liens”), which Primed Liens shall be primed by and made subject and subordinate to the perfected first priority senior priming Liens to be granted to the U.S. DIP Agent, which senior priming Liens in favor of the U.S. DIP Agent shall also prime any Liens granted after the Petition Date to provide adequate protection Liens in respect of any of the Primed Liens, but shall not prime (1) Non-Primed Liens which secure the Calpine Debt (or any adequate protection liens on the assets of Calpine granted to the holders of the Calpine debt) or (2) other Non-Primed Liens solely to the extent such Non-Primed Liens secure claims in an aggregate amount less than or equal to US$60,000,000 (see attached Exhibit A).

(ii) With respect to the DIP Obligations of the Canadian Guarantors relative to the Canadian Term Loan and the Canadian Revolving Facility:

(a) Pursuant to section 364(c)(2) of the Bankruptcy Code, the Canadian DIP Agent is hereby granted (for the ratable benefit of the DIP Secured Parties) a perfected first priority Lien on all unencumbered property of the Canadian Guarantors (including, upon entry of the Final Order, any proceeds of Avoidance Actions) and on all cash maintained in any Collateral Account and any direct investments of the funds contained therein, provided that amounts in the Collateral Accounts shall not be subject to the Carve Out or the CCAA Charges;

(b) Pursuant to section 364(c)(3) of the Bankruptcy Code, the Canadian DIP Agent (for the ratable of the DIP Secured Parties) is hereby granted a perfected junior Lien upon all property of the Canadian Guarantors that is subject to valid and perfected and unavoidable Liens in existence on the Petition Date or that is subject to valid Liens in existence on the Petition Date that are perfected subsequent to the Petition Date as permitted by Section 546(b) of the Bankruptcy Code (other than certain property that is subject to the Primed Liens, which Primed Liens shall be primed by the liens to be granted to the U.S. DIP Agent described in clause (c) below); and

(c) Pursuant to section 364(d)(1) of the Bankruptcy Code, the Canadian DIP Agent (for the ratable of the DIP Secured Parties) is hereby granted a perfected first priority, senior priming Lien on all property of the Canadian Guarantors (including, without limitation, inventory,

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receivables, rights under license agreements, property, plant and equipment and the residual interest of the Canadian Guarantors in any Receivables Securitization Programs) that is subject to the Primed Liens, which Primed Liens shall be primed by and made subject and subordinate to the perfected first priority senior priming Liens to be granted to the U.S. DIP Agent, which senior priming Liens in favor of the U.S. DIP Agent shall also prime any Liens granted after the Petition Date to provide adequate protection Liens in respect of any of the Primed Liens, but shall not prime (1) Non-Primed Liens which secure the Calpine Debt or (2) other Non-Primed Liens solely to the extent such Non-Primed Liens secure claims in an aggregate amount less than or equal to US$60,000,000.

(f) DIP Lien Priority.  Solely to the extent provided in the Credit Agreement and this Order, the DIP Liens are subject only to the Non-Primed Liens and, in the event of the occurrence and during the continuance of an Event of Default or Default or both, to the Carve Out and the CCAA Charges.  The DIP Liens granted by the U.S. Debtors (other than SMBI, Inc.)  and SSC Canada shall secure all of the DIP Obligations, and the DIP Liens granted by the Canadian Debtors (other than SSC Canada) and SMBI, Inc. shall secure only the DIP Obligations of the Canadian Guarantors relative to the Canadian Term Loan and the Canadian Revolving Facility.  The DIP Liens shall not be made subject to or pari passu with any lien or security interest (other than the Non-Primed Liens) by any court order heretofore or hereafter entered in the Cases and shall be valid and enforceable against any trustee appointed in the Cases, upon the conversion of any of the Cases to a case under Chapter 7 of the Bankruptcy Code or in any other proceedings related to any of the foregoing (any “Successor Cases”), and/or upon the dismissal of any of the Cases.  The DIP Liens shall not be subject to Sections 510, 549, 550 or 551 of the Bankruptcy Code or the “equities of the case” exception of Section 552 of the Bankruptcy Code, or, if approved in the Final Order, Section 506(c) of the Bankruptcy Code.  To avoid any doubt, the liens securing the Pre-Petition Debt are to be subordinated to, and junior to, the liens and claims of the DIP Secured Parties.

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(g) Enforceable Obligations.  The DIP Financing Agreements shall constitute and evidence the valid and binding obligations of the Debtors, which obligations shall be enforceable against the Debtors, their estates and any successors thereto and their creditors, in accordance with their terms.

(h) Protection of DIP Secured Parties and Other Rights.  From and after the Petition Date, the Debtors shall use the proceeds of the extensions of credit under the DIP Facility only for the purposes specifically set forth in the DIP Credit Agreement and this Interim Order and in substantial compliance with the Budget.

(i) Superpriority Administrative Claim Status.

(i) The DIP Obligations of the U.S. Debtors and SSC Canada, pursuant to Section 364(c)(1) of the Bankruptcy Code, shall at all times constitute an allowed Superpriority Claim (the “U.S. DIP Superpriority Claim”) and be payable from and have recourse to all pre-petition and post-petition property of the estates of the U.S. Debtors and SSC Canada and all proceeds thereof, subject to the Carve-Out and, in the case of SSC Canada, the CCAA Charges.

(ii) The DIP Obligations of the Canadian Guarantors relative to the Canadian Term Loan and the Canadian Revolving Facility, pursuant to Section 364(c)(1) of the Bankruptcy Code, shall at all times constitute an allowed Superpriority Claim (the “Canada DIP Superpriority Claim” and, together with the U.S. DIP Superpriority Claim and the DIP Liens, the “DIP Protections”) and be payable from and have recourse to all pre-petition and post-petition property of the estates of the Canadian Guarantors and all proceeds thereof, subject to the CCAA Charges and, in the case of SSC Canada, the Carve-Out.

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(iii) Other than as provided in the Credit Agreement and this Order with respect to the Carve Out and the CCAA Charges, no costs or expenses of administration, including, without limitation, professional fees allowed and payable under Bankruptcy Code sections 328, 330, and 331, or otherwise, that have been or may be incurred in these proceedings, or in any Successor Cases, and no priority claims are, or will be, senior to, prior to or on a parity with the DIP Protections or the DIP Obligations, or with any other claims of the DIP Secured Parties arising hereunder.

3. Authorization to Use Cash Collateral and Proceeds of DIP Financing Agreement.

Pursuant to the terms and conditions of this Interim Order, the DIP Facility and the DIP Credit Agreement, and in a manner substantially consistent with the Budget (as the same may be modified, supplemented or updated from time to time consistent with the terms and conditions of the DIP Credit Agreement), (a) each Debtor is authorized to use the advances under the DIP Credit Agreement from and after the Closing Date, and (b) each Debtor is authorized to use all Cash Collateral of the Pre-Petition Secured Parties, and the Pre-Petition Secured Parties are directed promptly to turn over to the Debtors all Cash Collateral received or held by them, provided that the Pre-Petition Secured Parties are granted adequate protection as hereinafter set forth.  The Debtors’ right to use the advances under the DIP Credit Agreement shall terminate upon notice being provided by the DIP Agents to the Debtors (i) that a DIP Order Event of Default (as defined below) has occurred and is continuing, or (ii) of the termination of the DIP Credit Agreement.  The Debtors’ right to use the Cash Collateral shall terminate upon notice being provided by the DIP Agents to the Debtors (i) that a DIP Order Event of Default (as defined below) has occurred and is continuing, and (ii) of the termination of the DIP Credit

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Agreement.  Nothing in this Interim Order shall authorize the disposition of any assets of the Debtors or their estates outside the ordinary course of business or other proceeds resulting therefrom, except as permitted in the DIP Facility and the DIP Credit Agreement (subject to any required Court approval).

4. Adequate Protection for Pre-Petition Secured Parties.  As adequate protection for the interest of the Pre-Petition Secured Parties in the Pre-Petition Collateral (including Cash Collateral) on account of the granting of the DIP Liens, subordination to the Carve Out, the Debtors’ use of Collateral, including Cash Collateral, and other decline in value arising out of the automatic stay or the Debtors’ use, sale, or lease of the Pre-Petition Collateral, or otherwise, the Pre-Petition Secured Parties shall receive adequate protection as follows:

(a) Pre-Petition Replacement Liens.  Solely to the extent of the diminution of the value of the interest of the Pre-Petition Secured Parties in the Pre-Petition Collateral, the Pre-Petition Secured Parties shall have, subject to the terms and conditions set forth below, pursuant to sections 361, 363(e) and 364(d) of the Bankruptcy Code, junior replacement security interests in and liens upon all of the property of the U.S. Debtors (including, upon entry of the Final Order, any proceeds of Avoidance Actions) (the “Pre-Petition Replacement Liens”) which security interests and liens shall be junior to the DIP Liens, the Priority Liens (but only with respect to property that was encumbered by Priority Liens as of the Petition Date), the Non-Primed Liens which secure the Calpine Debt (or any adequate protection liens on the assets of Calpine granted to the holders of the Calpine debt) and the Carve Out as provided herein.

(b) Pre-Petition Superpriority Claim.  Solely to the extent of the diminution of the value of the interests of the Pre-Petition Secured Parties in the Pre-Petition Collateral, the Pre-Petition Secured Parties shall have, subject to the payment of the Carve Out, an allowed

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superpriority administrative expense claim (the “Pre-Petition Superpriority Claim”) as provided for in section 507(b) of the Bankruptcy Code, immediately junior to the claims under section 364(c)(1) of the Bankruptcy Code held by the U.S. DIP Agent and the DIP Lenders and payable from all property of the U.S. Debtors; provided, however, that the Pre-Petition Agents and the Pre-Petition Secured Parties shall not receive or retain any payments, property or other amounts in respect of the superpriority claims under section 507(b) of the Bankruptcy Code unless and until the DIP Obligations have indefeasibly been paid in cash in full.  The Debtors shall also provide such information, reports, and other information as reasonably requested from time to time by the Pre-Petition Agents.

(c) Adequate Protection Payment.  The Pre-Petition Agents shall receive from the U.S. Debtors or SSC Canada adequate protection in the form of (i) following the closing of the DIP Facility, immediate cash payment of all accrued and unpaid interest (including any pre-petition interest) under the Pre-Petition Credit Agreement and letter of credit fees at the non-default contract rate applicable on the Petition Date as provided for in the Pre-Petition Financing Agreements, and all other accrued and unpaid fees and disbursements (including, but not limited to, fees and expenses owed to the Pre-Petition Agents and incurred prior to the Petition Date), (ii) current cash payments of all fees and expenses payable to the Pre-Petition Agents under the Pre-Petition Financing Agreements, including, but not limited to, the reasonable fees and disbursements of counsel, financial and other consultants for the Pre-Petition Agents (including, but not limited to, such fees and disbursements incurred prior to the Petition Date), and (iii) current cash payments of all accrued but unpaid interest on the Pre-Petition Debt, and letter of credit and other fees, in each case at the non-default contract rate applicable on the Petition Date (including LIBOR pricing options) under the Pre-Petition Financing Agreements,

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provided that, without prejudice to the rights of any other party to contest such assertion, the Pre-Petition Secured Parties reserve their rights to assert claims for the payment of additional interest calculated at any other applicable rate of interest (including, without limitation, default rates), or on any other basis, provided for in the Pre-Petition Financing Agreements (the “Adequate Protection Payments”); provided, however, that SSC Canada’s obligations with respect to the Adequate Protections Payments shall be limited to those amounts relating to the Pre-Petition Canadian Obligations.

5. Post-Petition Lien Perfection.  This Interim Order shall be sufficient and conclusive evidence of the validity, perfection, and priority of the DIP Liens and the Pre-Petition Replacement Liens without the necessity of filing or recording any financing statement, deed of trust, mortgage, or other instrument or document which may otherwise be required under the law of any jurisdiction or the taking of any other action to validate or perfect the DIP Liens and the Pre-Petition Replacement Liens or to entitle the DIP Liens and the Pre-Petition Replacement Liens to the priorities granted herein.  Notwithstanding the foregoing, the DIP Secured Parties and the Pre-Petition Secured Parties (with respect to the Pre-Petition Replacement Liens) may, each in their sole discretion, file such financing statements, mortgages, security agreements, notices of liens and other similar documents, and is hereby granted relief from the automatic stay of section 362 of the Bankruptcy Code in order to do so, and all such financing statements, mortgages, security agreements, notices and other agreements or documents shall be deemed to have been filed or recorded at the time and on the date of the commencement of the Cases.  The Debtors shall execute and deliver to the DIP Secured Parties and the Pre-Petition Secured Parties all such financing statements, mortgages, notices and other documents as the DIP Secured Parties and the Pre-Petition Secured Parties may reasonably request to evidence, confirm,

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validate or perfect, or to insure the contemplated priority of, the DIP Liens and the Pre-Petition Replacement Liens granted pursuant hereto.  The DIP Agents, in their discretion, may file a photocopy of this Interim Order as a financing statement with any recording officer designated to file financing statements or with any registry of deeds or similar office in any jurisdiction in which any Debtor has real or personal property, and in such event, the subject filing or recording officer shall be authorized to file or record such copy of this Interim Order.

6. Reservation of Certain Third Party Rights and Bar of Challenges and Claims.  Nothing in this Interim Order or the DIP Credit Agreement shall prejudice whatever rights any official committee(s) or any other party in interest (other than the Debtors) may have (a) to object to or challenge the findings herein, including, but not limited to, those in relation to (i) the validity, extent, perfection or priority of the mortgage, security interests and liens of the Pre-Petition Secured Parties in and to the Pre-Petition Collateral, or (ii) the validity, allowability, priority, status or amount of the Pre-Petition Debt, or (b) to bring suit against any of the Pre-Petition Secured Parties in connection with or related to the Pre-Petition Debt, or the actions or inactions of any of the Pre-Petition Secured Parties arising out of or related to the Pre-Petition Debt or otherwise; provided, however, that, unless any official committee(s) or any other party in interest obtains the requisite standing to commence, and commences, a contested matter or adversary proceeding raising such objection or challenge, including without limitation any claim against the Pre-Petition Secured Parties in the nature of a setoff, counterclaim or defense to the Pre-Petition Debt (including but not limited to, those under sections 506, 544, 547, 548, 549, 550 and/or 552 of the Bankruptcy Code or by way of suit against any of the Pre-Petition Secured Parties), by the later of (a) 60 days following the appointment of the first official committee of unsecured creditors, or (b) if no official committee of unsecured creditors is appointed, 75 days

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following entry of the Final Order (collectively, (a) and (b) shall be referred to as the “Challenge Period,” and the date that is the next calendar day after the termination of the Challenge Period, in the event that no objection or challenge is raised during the Challenge Period, shall be referred to as the “Challenge Period Termination Date”), upon the Challenge Period Termination Date, any and all such challenges and objections by any party (including, without limitation, any official creditors’ committee(s), any Chapter 11 or Chapter 7 trustee appointed herein or in any Successor Case, and any other party in interest) shall be deemed to be forever waived and barred, and the Pre-Petition Debt shall be deemed to be an allowed claim within the meaning of section 506 of the Bankruptcy Code for all purposes in connection with the Cases and the Debtors’ Stipulations shall be binding on all creditors, interest holders and parties in interest.  To the extent any such objection or complaint is filed, the findings herein shall nonetheless remain binding and preclusive on any official committee and on any other person or entity, except to the extent that such assertions were expressly challenged in such objection or complaint.

7. Carve Out.  Subject to the terms and conditions contained in this paragraph 7, the DIP Liens and DIP Superpriority Claims on the one hand, and the Pre-Petition Liens, the Pre-Petition Replacement Liens and the Pre-Petition Superpriority Claims, on the other, are subordinate only to the Non-Primed Liens and the Priority Liens (but only with respect to property that was encumbered by Priority Liens as of the Petition Date), respectively, and the following: in the event of the occurrence and during the continuance of an Event of Default or a Default or both:

(x) with respect to U.S. Loan Parties and their Cases and assets, (i) the payment of allowed and unpaid professional fees and disbursements incurred by (A) the U.S. Loan Parties and (B) any

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statutory committees appointed in the Cases of the U.S. Loan Parties, in an aggregate amount of items (A) and (B) not in excess of the lesser of (I) US$4,000,000 (plus all unpaid professional fees and disbursements reported on the Borrowing Base Certificate delivered immediately prior to the occurrence of such Default or Event of Default, to the extent such fees and expense are subsequently allowed by the Bankruptcy Court), and (II) US$6,500,000, and (ii) the payment of fees pursuant to 28 U.S.C. § 1930 and to the Clerk of the Bankruptcy Court ((i) and (ii), collectively, the “Carve-Out”);

(y) the CCAA DIP Lenders’ Charge in the assets of the Canadian Loan Parties in the Canadian Cases will be subject to the Canadian Court ordered administration charge in an aggregate amount not in excess of US$1,000,000 (the “Administration Charge”) for the payment of (a) allowed and unpaid professional fees and disbursements incurred by professionals retained by the Canadian Loan Parties and (b) allowed and unpaid professional fees and disbursements of the monitor in the Canadian Cases including allowed and unpaid legal fees and expenses of its counsel (and including any allowed and unpaid professional fees and disbursements incurred by the parties referred to in (a) and (b), prior to the occurrence of such Event of Default); and

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(z) the CCAA DIP Lenders’ Charge in the assets of the Canadian Loan Parties in the Canadian Cases will also be subject to the Canadian Court ordered directors charge in an amount not exceeding US$8,600,000 (the “Directors Charge”, and, together with the Administration Charge, the “CCAA Charges”), securing the Canadian Loan Parties’ obligation to indemnify the officers and directors of the Canadian Loan Parties for personal liability which may arise from non-payment by the Canadian Loan Parties of the following (which shall be separately identified on the most recent Borrowing Base Certificate): (a) all outstanding and future wages, salaries, employee and pension benefits, vacation pay, bonuses and expenses payable on or after the Filing Date, in each case incurred in the ordinary course of business and consistent with existing compensation policies and arrangements; (b) any statutory deemed trust amounts in favour of the Crown in right of Canada or of any Province thereof or any other taxation authority which are required to be deducted from employees’ wages, including, without limitation, amounts in respect of (i) employment insurance, (ii) Canada Pension Plan, (iii) Quebec Pension Plan, and (iv) income taxes; (c) all goods and services or other applicable sales taxes required to be remitted by the Canadian Loan Parties in connection with the sale of goods and services by the Canadian Loan Parties, but only where such sales taxes are accrued or collected after the

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Filing Date, or where such sales taxes were accrued or collected prior to the Filing Date but are not required to be remitted until on or after the Filing Date; and (d) any amount payable to the Crown in right of Canada or of any Province thereof or any political subdivision thereof or any other taxation authority in respect of municipal realty, municipal business or other taxes, assessments or levies of any nature or kind which are entitled at law to be paid in priority to claims of secured creditors and which are attributable to or in respect of the carrying on of the business by the Canadian Loan Parties;

provided that, subject to paragraph 2(c) above, no portion of the Carve-Out or the Administration Charge shall be utilized for the payment of professional fees and disbursements incurred in connection with any challenge to the amount, extent, priority, validity, perfection or enforcement of the Indebtedness of the Loan Parties owed to the parties primed by the priming Liens or to the collateral securing such Indebtedness or any other action against such parties.  Amounts in the Collateral Accounts shall not be subject to the Carve-Out, Administration Charge, or Directors Charge.  Notwithstanding the foregoing, so long as no Default or Event of Default shall have occurred and be continuing, the Loan Parties shall be permitted to pay compensation and reimbursement of expenses allowed and payable under 11 U.S.C. §§ 328, 330 and 331, or as allowed and payable pursuant to orders of the Canadian Court, as the same may be due and payable, and any compensation and expenses previously paid, or accrued but unpaid, prior to the occurrence of such Default or Event of Default shall not reduce the Carve-Out or the Administration Charge.

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8. Payment of Compensation.  Nothing herein shall be construed as consent to the allowance of any professional fees or expenses of any of the Debtors, any official committee or of any person or shall affect the right of the DIP Secured Parties or the Pre-Petition Agents to object to the allowance and payment of such fees and expenses.

9. Section 506(c) Claims.  Subject to entry of the Final Order, as a further condition of the DIP Facility and any obligation of the DIP Secured Parties to make credit extensions pursuant to the DIP Financing Agreements, the Debtors (and any successors thereto or any representatives thereof, including any trustees appointed in the Cases or any Successor Cases (defined below)) shall be deemed to have waived any rights, benefits, or causes of action under section 506(c) of the Bankruptcy Code as they may relate to or be asserted against the DIP Agents, the DIP Secured Parties, the DIP Liens, the Pre-Petition Agents, the Pre-Petition Secured Parties, and the Pre-Petition Liens. Nothing contained in this Interim Order or in the Final Order shall be deemed a consent by the Pre-Petition Secured Parties or the DIP Secured Parties to any charge, lien, assessment or claim against the DIP Collateral or the Pre-Petition Collateral under Section 506(c) of the Bankruptcy Code or otherwise.

10. Collateral Rights.  Unless the DIP Agents have provided their prior written consent or all DIP Obligations have been indefeasibly paid in full in cash (or will be indefeasibly paid in full in cash upon entry of a final, non-appealable order approving indebtedness described in subparagraph (a) below or other arrangements for payment of the DIP Obligations satisfactory to the DIP Agents have been made) and all Commitments have terminated, there shall not be entered in these proceedings, or in any Successor Case, any order which authorizes any of the following:

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(a) the obtaining of credit or the incurring of indebtedness that is secured by a security, mortgage, or collateral interest or other lien on all or any portion of the DIP Collateral and/or entitled to priority administrative status which is superior to or pari passu with those granted pursuant to this Interim Order to the DIP Secured Parties; or

(b) the use of Cash Collateral for any purpose other than to indefeasibly pay in full in cash the DIP Obligations or as otherwise permitted in the DIP Credit Agreement.

11. Proceeds of Subsequent Financing.  Without limiting the provisions and protections of paragraph 10 above, if at any time prior to the indefeasible repayment in full in cash of all DIP Obligations and the termination of the DIP Secured Parties’ obligations to make loans and advances under the DIP Facility (including subsequent to the confirmation of any Chapter 11 plan or plans (the “Plan”) with respect to the Debtors), the Debtors’ estates, any trustee, any examiner with enlarged powers or any responsible officer subsequently appointed, shall obtain credit or incur debt pursuant to Bankruptcy Code Sections 364(b), 364(c) or 364(d) in violation of the DIP Credit Agreement, then all of the cash proceeds derived from such credit or debt and all Cash Collateral shall immediately be turned over to the DIP Agents in reduction of the DIP Obligations.

12. Commitment Termination Date.  All (a) DIP Obligations shall be immediately due and payable, and (b) authority to use the proceeds of the DIP Financing Agreements and to use Cash Collateral shall cease, both on the date that is the earliest to occur of:  (i) the Maturity Date, (ii) the Effective Date, (iii) the forty-fifth (45th) day after the entry of this Order if the Final Order has not been entered prior to such forty-fifth day, and (iv) the acceleration of the Loans and the termination of the Revolving Commitments in accordance with the DIP Credit Agreement (the “Commitment Termination Date”).

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13. Payment from Proceeds of DIP Collateral.  Until the DIP Obligations have been indefeasibly paid in full in cash (or other written arrangements satisfactory to the DIP Agents for payment of the DIP Obligations have been made in the DIP Credit Agreement or otherwise), all products and proceeds of the DIP Collateral shall be (i) remitted to accounts maintained at the DIP Agents in accordance with the Credit Agreement and (ii) applied by the DIP Agents to the outstanding DIP Obligations as and to the extent set forth in DIP Credit Agreement.

14. Disposition of DIP Collateral.  The Debtors shall not sell, transfer, lease, encumber or otherwise dispose of any portion of the DIP Collateral, without the prior written consent of the requisite DIP Secured Parties required under the DIP Credit Agreement (and no such consent shall be implied, from any other action, inaction or acquiescence by the DIP Secured Parties or an order of this Court), except for sales of Inventory in the ordinary course of business or except as otherwise provided for in the DIP Credit Agreement and this Interim Order and approved by the Bankruptcy Court to the extent required under applicable bankruptcy law.

15. Events of Default.  The occurrence of the Commitment Termination Date or, if sooner, the DIP Agents’ furnishing the Debtors with notice of the occurrence of any Event of Default (as defined in the DIP Credit Agreement) shall constitute a “DIP Order Event of Default”.  Unless and until the DIP Obligations are indefeasibly paid in full in cash (or other arrangements for payment of the DIP Obligations satisfactory to the DIP Agents have been made) and all Commitments have irrevocably terminated, all Letters of Credit have been cash collateralized as required by the DIP Credit Agreement, and all DIP Obligations which survive termination have been cash collateralized to the reasonable satisfaction of the DIP Agents, the protections afforded to the Pre-Petition Secured Parties and the DIP Secured Parties pursuant to

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this Interim Order and under the DIP Credit Agreement, and any actions taken pursuant thereto, shall survive the entry of any order confirming a Plan or converting these cases into a Successor Case, and the DIP Liens, the DIP Super-Priority Claim, the Pre-Petition Replacement Liens and the Pre-Petition Superpriority Claim shall continue in these proceedings and in any Successor Case, and such DIP Liens, DIP Super-Priority Claim, Pre-Petition Replacement Liens and the Pre-Petition Superpriority Claim shall maintain their respective priority as provided by this Interim Order.

16. Rights and Remedies Upon DIP Order Event of Default.

(a) Any automatic stay otherwise applicable to the DIP Secured Parties is hereby modified so that (i) after the occurrence of any DIP Order Event of Default and (ii) at any time thereafter during the continuance of such DIP Order Event of Default, upon five (5) business days prior written notice of such occurrence, in each case given to each of the Debtors, counsel to the Debtors, counsel for any creditors’ committee appointed in the Cases, and the U.S. Trustee, the DIP Secured Parties shall be entitled to exercise their rights and remedies in accordance with the DIP Financing Agreements.  Immediately following the giving of notice by the DIP Agents of the occurrence of a DIP Order Event of Default:  (i) the Debtors shall continue to deliver and cause the delivery of the proceeds of DIP Collateral to the DIP Agents as provided in the DIP Credit Agreement and this Interim Order; (ii) the DIP Agents shall continue to apply such proceeds in accordance with the provisions of this Interim Order and of the DIP Credit Agreement; (iii) the Debtors shall have no right to use any of such proceeds, nor any other Cash Collateral other than towards the satisfaction of the DIP Obligations and the Carve Out; and (iv) any obligation otherwise imposed on the DIP Agents or the DIP Secured Parties to provide any loan or advance to the Debtors pursuant to the DIP Facility shall be suspended.  Following the

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giving of written notice by the DIP Agents of the occurrence of a DIP Order Event of Default, the Debtors and any creditors’ committee appointed in the Cases shall be entitled to an emergency hearing before this Court solely for the purpose of contesting whether a DIP Order Event of Default has occurred.  If the Debtors or any such creditors’ committee do not contest the right of the DIP Secured Parties to exercise their remedies based upon whether a DIP Order Event of Default has occurred within such time period, or if the Debtors or any such committee do timely contest the occurrence of a DIP Order Event of Default and the Bankruptcy Court after notice and hearing declines to stay the enforcement thereof, the automatic stay, as to the DIP Secured Parties, shall automatically terminate at the end of such notice period.

(b) Subject to the provisions of paragraph 16(a), upon the occurrence of a DIP Order Event of Default, the DIP Agents and DIP Lenders are authorized to exercise their remedies and proceed under or pursuant to the DIP Financing Agreements.  All proceeds realized from any of the foregoing shall be turned over to the DIP Agents for application to the DIP Obligations under, and in accordance with the provisions of, the DIP Financing Agreements and this Interim Order; provided, however, that, in the event of the liquidation of the Borrowers’ and other Debtors’ estates after the Commitment Termination Date, the amount of the Carve-Out shall be funded into a segregated account exclusively from Cash Collateral received by the DIP Agents subsequent to the Commitment Termination Date prior to the distribution of any such Cash Collateral to any other parties in interest.

(c) The automatic stay imposed under Bankruptcy Code section 362(a) is hereby modified pursuant to the terms of the DIP Credit Agreement as necessary to (1) permit the Debtors to grant the Pre-Petition Replacement Liens and the DIP Liens and to incur all liabilities and obligations to the Pre-Petition Secured Parties and the DIP Secured Parties under

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the DIP Financing Agreements, the DIP Facility and this Interim Order, and (2) authorize the DIP Secured Parties and the Pre-Petition Secured Parties to retain and apply payments hereunder.

(d) Nothing included herein shall prejudice, impair, or otherwise affect Pre-Petition Secured Parties’ or DIP Secured Parties’ rights to seek any other or supplemental relief in respect of the Debtors (including other or additional adequate protection) nor the DIP Agents’ or DIP Lenders’ rights, as provided in the DIP Credit Agreement, to suspend or terminate the making of loans under the DIP Credit Agreement.

17. Proofs of Claim.  The Pre-Petition Secured Parties and the DIP Secured Parties will not be required to file proofs of claim in the Cases or in any Successor Case.

18. Other Rights and Obligations.

(a) Good Faith Under Section 364(e) of the Bankruptcy Code; No Modification or Stay of this Interim Order. Based on the findings set forth in this Interim Order and in accordance with section 364(e) of the Bankruptcy Code, which is applicable to the DIP Facility contemplated by this Interim Order, in the event any or all of the provisions of this Interim Order are hereafter modified, amended or vacated by a subsequent order of this or any other Court, the DIP Secured Parties are entitled to the protections provided in section 364(e) of the Bankruptcy Code and, no such appeal, modification, amendment or vacation shall affect the validity and enforceability of any advances made hereunder or the liens or priority authorized or created hereby.  Notwithstanding any such modification, amendment or vacation, any claim granted to the DIP Secured Parties hereunder arising prior to the effective date of such modification, amendment or vacation of any DIP Protections granted to the DIP Secured Parties shall be governed in all respects by the original provisions of this Interim Order, and the DIP Secured Parties shall be entitled to all of the rights, remedies, privileges and benefits, including

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the DIP Protections granted herein, with respect to any such claim.  Since the loans made pursuant to the DIP Credit Agreement are made in reliance on this Interim Order, the obligations owed the DIP Secured Parties prior to the effective date of any stay, modification or vacation of this Interim Order shall not, as a result of any subsequent order in the Cases or in any Successor Cases, be subordinated, lose their lien priority or superpriority administrative expense claim status, or be deprived of the benefit of the status of the liens and claims granted to the DIP Secured Parties under this Interim Order and/or the DIP Financing Agreements.

(b) Expenses.  As provided in the DIP Financing Agreements, the Debtors will pay all reasonable expenses incurred by each DIP Agent and the Co-Lead Arrangers (including, without limitation, the reasonable fees and disbursements of Xxxxx Xxxx LLP and Xxxxxxxx Xxxxxx & Finger, counsel for the DIP Agent, any other local counsel that such DIP Agent shall retain (including Canadian counsel) and any internal or third-party appraisers, consultants and auditors advising such DIP Agent and the Bookrunners and their counsel) in connection with the preparation, execution, delivery and administration of the DIP Financing Agreements, whether or not the transactions contemplated hereby are consummated.  Payment of such fees shall not be subject to allowance by the Bankruptcy Court.  Professionals for the DIP Secured Parties or Pre-Petition Secured Parties shall not be required to comply with the U.S. Trustee fee guidelines.  Copies of invoices submitted to the Debtors by the professionals for the DIP Secured Parties or the Pre-Petition Secured Parties shall be forwarded by the Debtors to the U.S. Trustee, counsel for any Official Committee of Unsecured Creditors, and such other parties as the Court may direct (but this Court shall resolve any dispute as to the reasonableness of any fees and expenses accrued from and after the date of the Interim Order).

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(c) Binding Effect.  The provisions of this Interim Order shall be binding upon and inure to the benefit of the DIP Secured Parties and the Pre-Petition Secured Parties, the Debtors, and their respective successors and assigns (including any trustee or other fiduciary hereinafter appointed as a legal representative of the Debtors or with respect to the property of the estates of the Debtors) whether in the Cases, in any Successor Cases, or upon dismissal of any such Chapter 11 or Chapter 7 Case.

(d) No Waiver.  The failure of the Pre-Petition Secured Parties and the DIP Secured Parties to seek relief or otherwise exercise their rights and remedies under the DIP Financing Agreements, the DIP Facility, this Interim Order or otherwise, as applicable, shall not constitute a waiver of any of the Pre-Petition Secured Parties’ and the DIP Secured Parties’ rights hereunder, thereunder, or otherwise.  Notwithstanding anything herein, the entry of this Interim Order is without prejudice to, and does not constitute a waiver of, expressly or implicitly, or otherwise impair the Pre-Petition Secured Parties or the DIP Secured Parties under the Bankruptcy Code or under non-bankruptcy law, including without limitation, the rights of the Pre-Petition Secured Parties and the DIP Secured Parties to (i) request conversion of the Cases to cases under Chapter 7, dismissal of the Cases, or the appointment of a trustee in the Cases, or (ii) propose, subject to the provisions of section 1121 of the Bankruptcy Code, a Plan, or (iii) exercise any of the rights, claims or privileges (whether legal, equitable or otherwise) of the DIP Secured Parties or the Pre-Petition Secured Parties.

(e) No Third Party Rights.  Except as explicitly provided for herein, this Interim Order does not create any rights for the benefit of any third party, creditor, equity holder or any direct, indirect, or incidental beneficiary.

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(f) No Marshaling.  Neither the DIP Secured Parties nor the Pre-Petition Secured Parties shall be subject to the equitable doctrine of “marshaling” or any other similar doctrine with respect to any of the DIP Collateral or the Pre-Petition Collateral, as applicable.

(g) Section 552(b).  The DIP Secured Parties and the Pre-Petition Secured Parties shall each be entitled to all of the rights and benefits of section 552(b) of the Bankruptcy Code and the “equities of the case” exception under section 552(b) of the Bankruptcy Code shall not apply to the DIP Secured Parties or the Pre-Petition Secured Parties with respect to proceeds, product, offspring or profits of any of the Pre-Petition Collateral or the DIP Collateral.

(h) Amendment.  The Debtors and the DIP Agents may amend, modify, supplement or waive any provision of the DIP Financing Agreements without further approval of the Court, unless such amendment, modification, supplement or waiver (i) increases the interest rate (other than as a result of the imposition of the default rate), (ii) increases the Commitments of the DIP Lenders under the DIP Financing Agreements, or (iii) changes the maturity date.  Except as otherwise provided herein, no waiver, modification, or amendment of any of the provisions hereof shall be effective unless set forth in writing, signed by on behalf of all the Debtors and the DIP Agents (after having obtained the approval of the DIP Secured Parties as provided in the DIP Financing Agreements) and approved by the Bankruptcy Court.

(i) Survival of Interim Order.  The provisions of this Interim Order and any actions taken pursuant hereto shall survive entry of any order which may be entered (i) confirming any Plan in the Cases, (ii) converting any of the Cases to a case under Chapter 7 of the Bankruptcy Code, or (iii) to the extent authorized by applicable law, dismissing any of the Cases, (iv) withdrawing of the reference of any of the Cases from this Court, or (v) providing for abstention from handling or retaining of jurisdiction of any of the Cases in this Court.  The terms

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and provisions of this Interim Order, including the DIP Protections granted pursuant to this Interim Order and the DIP Financing Agreements and any protections granted the Pre-Petition Secured Parties, shall continue in full force and effect notwithstanding the entry of such order, and such DIP Protections and protections for the Pre-Petition Secured Parties shall maintain their priority as provided by this Interim Order until all the obligations of the Debtors to the DIP Lenders pursuant to the DIP Financing Agreements and the Pre-Petition Debt has been indefeasibly paid in full and discharged (such payment being without prejudice to any terms or provisions contained in the DIP Facility which survive such discharge by their terms).  The DIP Obligations shall not be discharged by the entry of an order confirming a Plan, the Debtors having waived such discharge pursuant to section 1141(d)(4) of the Bankruptcy Code.

(j) Inconsistency.  In the event of any inconsistency between the terms and conditions of the DIP Financing Agreements and of this Interim Order, the provisions of this Interim Order shall govern and control.

(k) Enforceability.  This Interim Order shall constitute findings of fact and conclusions of law pursuant to the Bankruptcy Rule 7052 and shall take effect and be fully enforceable nunc pro tunc to the Petition Date immediately upon execution hereof.

(1) Objections Overruled.  All objections to the DIP Motion, to the extent not withdrawn or resolved, are hereby overruled.

(m) No Waivers or Modification of Interim Order.  The Debtors irrevocably waive any right to seek any modification or extension of this Interim Order without the prior written consent of the DIP Agents and the Pre-Petition Agents and no such consent shall be implied by any other action, inaction or acquiescence of the DIP Agents and the Pre-Petition Agents.

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(n) Waiver of any Applicable Stay.  Any applicable stay (including, without limitation, under Bankruptcy Rule 6004(h)) is hereby waived and shall not apply to this Interim Order.

19. Authorization to Use DIP Financing to Make A Capital Contribution to Stone Receivables LLC in order to Redeem Securitization Notes and Reconvey The Receivables.

(a) SSCE is authorized to use proceeds of advances under the DIP Credit Agreement and Cash Collateral to make a capital contribution to Stone Receivables LLC (“SRC”) in order to consummate the transactions described in this Paragraph 19.  Those proceeds and Cash Collateral shall be utilized by SRC to make a capital contribution to SSCE Funding, LLC (the “Issuer”) for redemption of its Series 2004-1 Notes in accordance with Section 4.10(b) of the Indenture Supplement (as hereinafter defined) and the terms of this Order.

(b) SSCE will make a capital contribution to SRC, and SRC will simultaneously make a capital contribution to the Issuer to provide the Issuer with funds necessary to pay the Redemption Price pursuant to that certain Series 2004-1 Indenture Supplement (the “Indenture Supplement”) to the Master Indenture (the Indenture Supplement and the Master Indenture are together, the “Indenture”), dated as of November 23, 2004, between the Issuer and Deutsche Bank Trust Company Americas as indenture trustee (the “Indenture Trustee”).  To the extent any interest rates are yet to be determined in connection with the Redemption Price and amounts are to be estimated, SSCE shall (I) determine the LIBOR rate at 10.00% per annum (the “Estimated Rate”) for the period from February 17, 2009 to Xxxxx 00, 0000, (XX) enter into a redemption side letter in a form acceptable to SSCE as Debtor, SRC, the Issuer, the Indenture Trustee, and the U.S. DIP Agent (the “Redemption Letter”) and (III) use proceeds of the DIP Credit Agreement and Cash Collateral or any other

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funds available to SSCE to make a capital contribution to SRC, and SRC will simultaneously make a capital contribution to the Issuer to purchase a derivative from a counterparty having short term ratings no lower than P-1 and A-1 from Xxxxx’x Investors Service and Standard & Poor’s Corp., respectively (the “Derivative”) to pay any shortfalls with respect to the Redemption Price to be determined in accordance with the Redemption Letter (hereinafter, the “Shortfall Amount” as it relates solely to Clause (III)). Any such Shortfall Amount shall be paid by the Derivative counterparty to the Trustee. The Issuer shall simultaneously deposit the Redemption Price (after taking into account the Estimated Rate) into the Collection Account for the benefit of the Series 2004-1 Noteholders.  Thereafter, the Indenture Trustee shall make payments to the Series 2004-1 Noteholders in accordance with the Indenture.  (Capitalized terms used in this paragraph and not otherwise defined shall have the meaning provided in the Indenture.)

(c) Upon the satisfaction of the conditions precedent set forth herein and the Redemption Letter (including without limitation, the capital contribution of certain amounts to SRC by SSCE, the capital contributions of certain amounts to the Issuer by SRC, the deposit of an amount equal to the Redemption Price in such Collection Account, the purchase of the Derivative by the Issuer, and the Assignment of the right, title and interest (but not the obligations) of the Derivative to the Trustee and the delivery to the Indenture Trustee of an Opinion of Counsel), (I) the remaining Collateral and all liens, claims, and encumbrances against the remaining Collateral (including, without limitation, any liens and/or security interests granted in respect of the Issuer’s receivables) shall be released in all respects from the Indenture, (II) the Issuer shall merge with and into SRC, with SRC being the survivor of such merger, and (III) immediately thereafter, SRC shall merge with and into SSCE, with SSCE being the survivor of

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such merger (the mergers referred to in Clauses II and III are collectively referred to herein as the “Mergers”).    (Capitalized terms used in this paragraph and not otherwise defined shall have the meaning provided in the Indenture.)

(d) The contemplated Mergers, payments, capital contributions and transfers are for fair and equivalent value and comply with the Indenture and the other referenced documents.

(e) Upon consummation of the Mergers, all assets, including accounts receivable, owned by the Issuer and SRC immediately prior to such Mergers, including the Collateral (as defined in the Indenture), shall become property of the bankruptcy estate of SSCE, and shall be free and clear of all liens, claims and encumbrances, except the DIP Liens and Pre-Petition Adequate Protection Liens in accordance with the terms of this Order and the Final Order.

(f) In accordance with Bankruptcy Rule 6004(h), the authorization to consummate the Mergers and other transactions contemplated herein, including the authorization to use proceeds of advances under the DIP Credit Agreement as capital contributions to purchase the Derivative and to redeem the Series 2004-1 Notes as set forth herein, is not stayed and will become effective immediately upon entry of this Order.

(g) The Indenture Trustee shall be released from, and shall have no liability for, any and all liabilities or claims arising out of the financing and/or redemption of the 2004-1 Notes and the release of Collateral in accordance with this Paragraph 19.

20. Final Hearing.

(a) The Final Hearing to consider entry of the Final Order and final approval of the DIP Facility is scheduled for             , 2009, at            (EST) at the United States

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Bankruptcy Court for the District of Delaware.  If no objections to the relief sought in the Final Hearing are filed and served in accordance with this Interim Order, no Final Hearing may be held, and a separate Final Order may be presented by the Debtors and entered by this Court.

(b) On or before               , 2009 the Debtors shall serve, by United States mail, first-class postage prepaid, notice of the entry of this Interim Order and of the Final Hearing (the “Final Hearing Notice”), together with copies of this Interim Order, the proposed Final Order and the DIP Motion, on the parties having been given notice of the Interim Hearing and to any other party that has filed a request for notices with this Court and to any committee after the same has been appointed, or committee counsel, if the same shall have been appointed.  The Final Hearing Notice shall state that any party in interest objecting to the entry of the proposed Final Order shall file written objections with the Clerk of the Bankruptcy Court no later than             , 2009, which objections shall be served so that the same are received on or before such date by:  (a) counsel for the Debtors, Sidley Austin LLP, Xxx Xxxxx Xxxxxxxx, Xxxxxxx, XX 00000, Attention: Xxxxx X. Xxxxxx; (b) counsel for the DIP Agents, Xxxxx Xxxx LLP, 000 Xxxxx Xxxxxxxx, Xxxxx 0000, Xx. Xxxxx, XX 00000, Attention: Xxxxxxx X. Xxxxxxx; and Xxxxxxxx, Xxxxxx & Finger, 000 Xxxxx Xxxx Xxxxxx, Xxxxxxxxxx, XX 00000, Attention: Xxxx X. Xxxxxxx; (c) counsel for the Pre-Petition Agents, Simpson, Thacher & Xxxxxxxx LLP, 000 Xxxxxxxxx Xxx, Xxx Xxxx, XX 00000, Attention: Xxxxx X. Xxxxxxxx; (d) counsel to any committee; and (e) the U.S. Trustee; and shall be filed with the Clerk of the United States Bankruptcy Court for the District of Delaware, in each case to allow actual receipt of the foregoing no later than                 , 2009, at              (EST).

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(c) Retention of Jurisdiction.  The Bankruptcy Court has and will retain jurisdiction to enforce this Interim Order according to its terms.

Dated:	January 27, 0000
	Xxxxxxxxxx, Xxxxxxxx
		XXXXXXX X. XXXXXXX
		XXXXXX XXXXXX BANKRUPTCY JUDGE

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EXHIBIT A

Non-Primed Liens

Liens that:

(i) are properly perfected, enforceable and in existence as of the Petition Date;

(ii) are senior in priority to the Liens created under the Pre-Petition Credit Agreement;

(iii) fall within any one of the following categories:

a. those Liens securing purchase money indebtedness;

b. mechanics’ Liens, materialmen’s Liens, carriers’ Liens, warehousemen’s Liens and landlord’s Liens arising by operation of law;

c. rights of banks or other financial institutions having a right of setoff, revocation, refund or chargeback with respect to deposits with or in the possession of such bank or financial institution;

d. Liens arising by operation of law on insurance policies and proceeds thereof to secure premiums thereunder;

e. other Liens securing claims of no more than $500,000 on an individual basis and no more than $10,000,000 on an aggregate basis; or

f. other Liens acceptable to the Administrative Agent;  and

(iv) either:

(x) secure claims of no more than $200,000 on an individual basis; or

(y) secure claims that are scheduled by the Debtors on the

Register Of Non-Primed Liens (4).

(4)  The Debtors will prepare and maintain from time to time a comprehensive Register Of Non-Primed Liens.

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REGISTER OF NON-PRIMED LIENS

To the extent parties on this Register have valid liens that otherwise satisfy requirements (i) - (iii) of Schedule 2.24 (to which this Register is appended), such liens are not being primed by the DIP Liens.  However, inclusion on the Register does not constitute an admission by the Debtors that the listed parties have valid liens or that they have valid claims of more than $200,000.

Vendor				Address
1		ALL TRUCK TRANSPORTATION INC		0000 X Xxxxxx Xxxxxxx, XX 00000 XXX
2		Alliance Machine Systems		0000 Xxxx Xxxxxx Xxxxxxx, XX 00000 XXX
3		Alstom		0-X Xxxxx Xx Xxxxxxxx Xxxxxxxx, XX X0x 0x0 Xxxxxx
0		XXX XXXX XXXXXXXX XXX		#000000 Xxxxxxxxxx, XX 00000-0000 XXX
5		BHS Corrugated		0000 Xxxxxx Xxxxx Xxxx Xxxxxxxxx, XX 00000-0000 XXX
6		BLI		#0000 Xxxxx Xxxxxxx, XX 00000-0000 XXX
0		XX XXXXXXXX XXXXXXXXX		#0000 Xxxxxxxxxxx, XX 00000-0000 XXX
8		CN		Box 4254 Station A71206 Xxxxxxx, XX 00000-0000 XXX
9		XXXXXX TRUCKLOAD INC		#953695 Xxxxx Xxxxx, XX 00000-0000 XXX
10		Corrugated Gear & Services		000 X Xxxxx Xxxxxx Xxxxxx, XX 00000 XXX
11		CSX TRANSPORTATION (CSXT)		000 Xxxxx Xx Xx X000 Xxxxxxxxxxxx, XX 00000 XXX
12		CSX TRANSPORTATION (CSXT)		#44053 Xxxxxxxxxxxx, XX 00000-0000 XXX
13		Xxxxxxx Machinery, Inc.		0000 Xxxxxxxx Xxxxxxxx Xxx Xxxxxxx, XX 00000 XXX
14		ENTREPRISES DE TRANSPORT J C G INC		0000 Xxxx Xxxxxx Xxxxx Xxxxxxxx, XX X0x 0x0 Xxxxxx
15		Everest Auto		000 Xxxxxxxxx Xxxxx X Xxxxxx-Xxxxxx, XX X0x 0x0 Xxxxxx
00		Xxxxxx Xxxxxxx, Inc.		0000 Xxxxxxxx Xxxxxxxx Xxx Xxxxxxx, XX 00000 XXX
17		GENERAL LOGISTICS INC		#8013 Xxxxxxxxx, XX 00000 XXX
18		GROUPE XXXXXX INC		000 Xxx. 000, Xxxxxxxxx, Xxxxx X0x 0x0, Xxxxxx
00		Xxxxxx Xxxxxxxxx		#00000 Xxxxx, XX 00000-0000 XXX
20		HUB GROUP		00000 Xxxxxxxx Xxxxxx Xxxxxxx, XX 00000-0000 XXX
21		XXXXXXXX DISTRIBUTION COMPANY		#224 Xxx Xxxxxx, XX 00000 XXX
22		XXXXX XXXXX TRUCKING CO		#535203 Xxxxxxx, XX 00000 XXX
23		K&N Electric		#303 Xxxxxxx, XX 00000 XXX
24		KANSAS CITY SOUTHERN RAILWAY INC		00000 Xxxxxxxx Xxxxxx Xxxxxxx, XX 00000-0000 XXX
25		LILY TRANSPORTATION CORP		000 Xxxxxxxx Xxxxxx Xxxxxxx, XX 00000 XXX
26		MARQUETTE TRANSPORTATION FINANCE IN		Nw 79391450 Xxxxxxxxxxx, XX 00000 XXX
27		XXXXXXX TRANSPORTATION INC		#1148 Xxxxxxx, XX 00000 XXX
28		MEGA GULF COAST LINES INC		0000 Xxxxxxxx XXxxxxx Xxxxx Xxxxxxx, XX 00000 XXX
29		MONTANA RAIL LINK		0000 Xxxxxxxxx Xxxxxx Xxxxxxx, XX 00000 XXX
30		NORFOLK SOUTHERN CORPORATION		#532888 Xxxxxxx, XX 00000-0000 XXX
31		SWIFT TRANSPORTATION CORP		#643991 Xxxxxxxxxx, XX 00000-0000 XXX
00		XXXXX XXXXXXX XXXXXXXX		00000 Xxxxxxxxxxx Xxxxxx Xx Xxxxxxx, XX 00000 XXX
33		UPS FREIGHT		#533238 Xxxxxxx, XX 00000-0000 XXX
34		VHI TRANSPORT INC		0000 Xxx Xxxxxx Xxxxxxx, XX 00000 XXX
35		Voith - Austell, GA		0000 Xxxxxxxxxx Xxxx Xxxxx, XX 00000 XXX
36		Voith Paper Rolls		#410926 Xxxxxxxxxxx, XX 00000 XXX
00		XXXXXXX & XXXXXXX XXXXXXXX		#0000 Xxxxxxxx, XX 00000 XXX
38		WESTERN EXPRESS INC		Dept 54306035 Xxxxxxxxx, XX 00000-0000 XXX
39		WHITE OAK TRANSPORTATION INC		#43512 Xxxxxxxxxx, XX 00000 XXX
40		WORLDWIDE DEDICATED SERVICES INC		00000 Xxxxxxx Xxxxx Xxxxxxx, XX 00000 XXX

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EXHIBIT B

[See Credit Agreement, dated as of January 28, 2009, as previously filed.]

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Exhibit X-0

Xxxxx Xxxx Xx. XX-00-0000-00XX

XXXXXXX
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST

THE HONOURABLE	)	MONDAY, THE 26th
	)
JUSTICE PEPALL	)	DAY OF JANUARY, 2009

IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF THE BANKRUPTCY AND INSOLVENCY ACT, R.S.C. 1985, c. B-3, AS AMENDED

AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF SMURFIT-STONE CONTAINER CANADA INC. AND THE OTHER APPLICANTS LISTED ON SCHEDULE “A”

Applicants

INITIAL ORDER

THIS APPLICATION, made by the Applicants, pursuant to the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the “CCAA”) was heard this day at 000 Xxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx.

ON READING the affidavit of Xxxx Xxxxx sworn January 25, 2009 (the “Xxxxx Affidavit”) and the Exhibits thereto, the first report of Deloitte and Touche Inc. (“Deloitte”) in its capacity as proposed monitor for the Applicants and on hearing the submissions of counsel for the Applicants, the DIP Agent (as defined below) and on reading the consent of Deloitte to act as the Monitor,

SERVICE

1. THIS COURT ORDERS that the time for service of the Notice of Application and the Application Record is hereby abridged so that this Application is properly returnable today and hereby dispenses with further service thereof.

APPLICATION

2. THIS COURT ORDERS AND DECLARES that the Applicants are companies to which the CCAA applies.  Although not Applicants, those partnerships listed on Schedule “B” (the “Partnerships”) shall enjoy the benefits of the protections provided by this Order.

PLAN OF ARRANGEMENT

3. THIS COURT ORDERS that the Applicants shall have the authority to file and may, subject to further order of this Court, file with this Court a plan of compromise or arrangement (hereinafter referred to as the “Plan”) between, inter alia, the Applicants and one or more classes of their secured and/or unsecured creditors as they deem appropriate.

POSSESSION OF PROPERTY AND OPERATIONS

4. THIS COURT ORDERS that the Applicants and Partnerships shall remain in possession and control of their current and future assets, undertakings and properties of every nature and kind whatsoever, and wherever situate including all proceeds thereof (the “Property”).  Subject to further Order of this Court, the Applicants and Partnerships shall continue to carry on business in a manner consistent with the preservation of their business (the “Business”) and Property.  The Applicants and Partnerships shall be authorized and empowered to continue to retain and employ the employees, consultants, agents, experts, accountants, counsel and such other persons (collectively “Assistants”) currently retained or employed by them, with liberty to retain

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such further Assistants as they deem reasonably necessary or desirable in the ordinary course of business or for the carrying out of the terms of this Order.

5. THIS COURT ORDERS that the Applicants and Partnerships shall be entitled to continue to utilize the centralized cash management systems currently in place as described in the Xxxxx Affidavit or replace them with other substantially similar central cash management system(s) (together, the “Cash Management System”) and that any present or future bank providing the Cash Management System shall not be under any obligation whatsoever to inquire into the propriety, validity or legality of any transfer, payment, collection or other action taken under the Cash Management System, or as to the use or application by the Applicants or Partnerships of funds transferred, paid, collected or otherwise dealt with in the Cash Management System, shall be entitled to provide the Cash Management System without any liability in respect thereof to any Person (as hereinafter defined) other than the Applicants and Partnerships, pursuant to the terms of the documentation applicable to the Cash Management System, and shall be, in its capacity as provider of the Cash Management System, an unaffected creditor under the Plan with regard to any claims or expenses it may suffer or incur in connection with the provision of the Cash Management System.   The Monitor shall review and monitor the Cash Management System and report to this Court from time to time.

6. THIS COURT ORDERS that the Applicants and Partnerships shall be entitled but not required to pay the following expenses whether incurred prior to or after this Order:

(a) all outstanding and future wages, salaries, employee and pension benefits and contributions, vacation pay, bonuses and expenses payable on or after the date of this Order, in each case incurred in the ordinary course of business and consistent with existing compensation policies and arrangements;

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(b) the fees and disbursements of any Assistants retained or employed by the Applicants and Partnerships in respect of these proceedings, at their standard rates and charges; and

(c) amounts owing for goods and services actually supplied to the Applicants and Partnerships, or to obtain the release of goods contracted for, prior to the date of this order:

(i) by railways, trucking companies and other carriers and customs brokers, with the consent of the Monitor and the DIP Agent; and

(ii) with the consent of the Monitor and the DIP Agent, up to US$11.6 million by other suppliers if, in the opinion of the Applicants and Partnerships, the supplier is critical to the Business and ongoing operations of the Applicants and/or Partnerships.

7. THIS COURT ORDERS that, except as otherwise provided to the contrary herein, the Applicants and Partnerships shall be entitled but not required to pay all reasonable expenses incurred by them in carrying on the Business in the ordinary course from and after the date of this Order, and in carrying out the provisions of this Order, which expenses shall include, without limitation:

(a) all expenses and capital expenditures reasonably necessary for the preservation of the Property or the Business including, without limitation, payments on account of insurance (including directors and officers insurance), maintenance and security services; and

(b) payment for goods or services actually supplied to the Applicants and Partnerships following the date of this Order.

8. THIS COURT ORDERS that the Applicants and Partnerships shall remit, in accordance with legal requirements, or pay:

(a) any statutory deemed trust amounts in favour of the Crown in right of Canada or of any Province thereof or any other taxation authority which are

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required to be deducted from employees’ wages, including, without limitation, amounts in respect of (i) employment insurance, (ii) Canada Pension Plan, (iii) Quebec Pension Plan, and (iv) income taxes;

(b) all goods and services or other applicable sales taxes (collectively, “Sales Taxes”) required to be remitted by the Applicants and Partnerships in connection with the sale of goods and services by the Applicants and Partnerships, but only where such Sales Taxes are accrued or collected after the date of this Order, or where such Sales Taxes were accrued or collected prior to the date of this Order but not required to be remitted until on or after the date of this Order, and

(c) any amount payable to the Crown in right of Canada or of any Province thereof or any political subdivision thereof or any other taxation authority in respect of municipal realty, municipal business or other taxes, assessments or levies of any nature or kind which are entitled at law to be paid in priority to claims of secured creditors and which are attributable to or in respect of the carrying on of the Business by the Applicants and Partnerships.

9. THIS COURT ORDERS that until such time as an Applicant or Partnership delivers a notice in writing to repudiate a real property lease in accordance with paragraph 11(c) of this Order (a “Notice of Repudiation”), the Applicants and Partnerships shall pay all amounts constituting rent or payable as rent under real property leases (including, for greater certainty, common area maintenance charges, utilities and realty taxes and any other amounts payable to the landlord under the lease) or as otherwise may be negotiated between the Applicants and Partnerships and the relevant landlords from time to time (“Rent”), for the period commencing from and including the date of this Order, twice-monthly in equal payments on the first and fifteenth day of each month, in advance (but not in arrears).  On the date of the first of such payments, any arrears relating to the period commencing from and including the

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date of this Order shall also be paid.  Upon delivery of a Notice of Repudiation, the relevant Applicant or Partnership shall pay all Rent due for the notice period stipulated in paragraph 11(c) of this Order, to the extent that Rent for such period has not already been paid.

10. THIS COURT ORDERS that, except as specifically permitted herein or in the DIP Documents (as defined below), the Applicants and Partnerships are hereby directed, until further Order of this Court: (a) to make no payments of principal, interest thereon or otherwise on account of amounts owing by the Applicants or Partnerships to any of their creditors as of this date; (b) to grant no security interests, trust, liens, charges or encumbrances upon or in respect of any of the Property; and (c) to not grant credit or incur liabilities except in the ordinary course of the Business.

RESTRUCTURING

11. THIS COURT ORDERS that the Applicants and Partnerships shall, subject to such covenants as may be contained in the DIP Documents, have the right to:

(a) permanently or temporarily cease, downsize or shut down any of their business or operations and to dispose of redundant or non-material assets not exceeding $2 million in any one transaction or $25 million in the aggregate, subject to paragraph 11(c), if applicable;

(b) terminate the employment of such of their employees or temporarily lay off such of their employees as the relevant Applicant or Partnership deems appropriate on such terms as may be agreed upon between the relevant Applicant or Partnership and such employee, or failing such agreement, to deal with the consequences thereof in the Plan;

(c) in accordance with paragraphs 12 and 13, vacate, abandon or quit the whole but not part of any leased premises and/or repudiate any real property lease and any ancillary agreements relating to any leased premises, on not less than

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fourteen (14) days notice in writing to the relevant landlord on such terms as may be agreed upon between the relevant Applicant or Partnership and such landlord, or failing such agreement, to deal with the consequences thereof in the Plan;

(d) repudiate such of their arrangements or agreements of any nature whatsoever, whether oral or written, as the Applicants or Partnerships deem appropriate on such terms as may be agreed upon between the relevant Applicant or Partnership and such counter-parties, or failing such agreement, to deal with the consequences thereof in the Plan; and

(e) pursue all avenues of refinancing and offers for material parts of the Business or Property, in whole or part, subject to prior approval of this Court being obtained before any material refinancing or any sale (except as permitted by subparagraph (a), above),

all of the foregoing to permit the Applicants and Partnerships to proceed with an orderly restructuring of the Business (the “Restructuring”).

12. THIS COURT ORDERS that the Applicants and Partnerships shall provide each of the relevant landlords with notice of the relevant Applicant’s or Partnership’s intention to remove any fixtures from any leased premises at least seven (7) days prior to the date of the intended removal.  The relevant landlord shall be entitled to have a representative present in the leased premises to observe such removal and, if the landlord disputes the Applicant’s or Partnership’s entitlement to remove any such fixture under the provisions of the lease, such fixture shall remain on the premises and shall be dealt with as agreed between any applicable secured creditors, such landlord and the relevant Applicant or Partnership, or by further Order of this Court upon application by the relevant Applicant or Partnership on at least two (2) days notice to such landlord and any such secured creditors. If an Applicant or Partnership repudiates the lease governing such leased premises in accordance with paragraph 11(c) of this

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Order, it shall not be required to pay Rent under such lease pending resolution of any such dispute (other than Rent payable for the notice period provided for in paragraph 11(c) of this Order), and the repudiation of the lease shall be without prejudice to the Applicant’s claim to the fixtures in dispute.

13. THIS COURT ORDERS that if a Notice of Repudiation is delivered, then (a) during the notice period prior to the effective time of the repudiation, the landlord may show the affected leased premises to prospective tenants during normal business hours, on giving the relevant Applicant or Partnership and the Monitor 24 hours’ prior written notice, and (b) at the effective time of the repudiation, the relevant landlord shall be entitled to take possession of any such leased premises without waiver of or prejudice to any claims or rights such landlord may have against the Applicant or Partnership in respect of such lease or leased premises and such landlord shall be entitled to notify the Applicant or Partnership of the basis on which it is taking possession and to gain possession of and re-lease such leased premises to any third party or parties on such terms as such landlord considers advisable, provided that nothing herein shall relieve such landlord of its obligation to mitigate any damages claimed in connection therewith.

NO PROCEEDINGS AGAINST THE APPLICANTS OR PARTNERSHIPS OR THE PROPERTY

14. THIS COURT ORDERS that until and including February 25, 2009, or such later date as this Court may order (the “Stay Period”), no proceeding or enforcement process in any court or tribunal (each, a “Proceeding”) shall be commenced or continued against or in respect of the Applicants, the Partnerships or the Monitor, or affecting the Business or the Property, except with the written consent of the applicable Applicant or Partnership, the DIP Agent and the Monitor, or with leave of this Court, and any and all Proceedings currently under way against or in respect of the Applicants, the Partnerships or affecting the Business or the Property are hereby stayed and suspended pending further Order of this Court.

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NO EXERCISE OF RIGHTS OR REMEDIES

15. THIS COURT ORDERS that during the Stay Period, all rights and remedies of any individual, firm, corporation, governmental body or agency, or any other entities (all of the foregoing, collectively being “Persons” and each being a “Person”) against or in respect of the Applicants, the Partnerships or the Monitor, or affecting the Business or the Property, are hereby stayed and suspended except with the written consent of the applicable Applicant or Partnership, the DIP Agent and the Monitor, or leave of this Court, provided that nothing in this Order shall (i) empower the Applicants and Partnerships to carry on any business which the Applicants or Partnerships are not lawfully entitled to carry on, (ii) exempt the Applicants and Partnerships from compliance with statutory or regulatory provisions relating to health, safety or the environment, (iii) prevent the filing of any registration to preserve or perfect a security interest, or (iv) prevent the registration of a claim for lien.

NO INTERFERENCE WITH RIGHTS

16. THIS COURT ORDERS that during the Stay Period, no Person shall discontinue, fail to honour, alter, interfere with, repudiate, terminate or cease to perform any right, renewal right, contract, agreement, licence or permit in favour of or held by the Applicants or Partnerships, except with the written consent of the relevant Applicant or Partnership, the DIP Agent and the Monitor, or leave of this Court.

CONTINUATION OF SERVICES

17. THIS COURT ORDERS that during the Stay Period, all Persons having oral or written agreements with an Applicant or Partnership or statutory or regulatory mandates for the supply of goods and/or services, including without limitation all computer software, communication and other data services, centralized banking services, payroll services, insurance, transportation, services, utility or other services to the Business, an Applicant or Partnership, are hereby restrained until further Order of

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this Court from discontinuing, altering, interfering with or terminating the supply of such goods or services as may be required by the Applicants or Partnerships, and that the Applicants and Partnerships shall be entitled to the continued use of their current premises, telephone numbers, facsimile numbers, internet addresses and domain names, provided in each case that the normal prices or charges for all such goods or services received after the date of this Order are paid by the Applicants and Partnerships in accordance with normal payment practices of the Applicants or Partnerships or such other practices as may be agreed upon by the supplier or service provider and each of the Applicants or Partnerships, the DIP Agent and the Monitor, or as may be ordered by this Court.

NON-DEROGATION OF RIGHTS

18. THIS COURT ORDERS that, notwithstanding anything else contained herein, no creditor of the Applicants and Partnerships shall be under any obligation after the making of this Order to advance or re-advance any monies or otherwise extend any credit to the Applicants and Partnerships.  Nothing in this Order shall derogate from the rights conferred and obligations imposed by the CCAA.

PROCEEDINGS AGAINST DIRECTORS AND OFFICERS

19. THIS COURT ORDERS that during the Stay Period, and except as permitted by subsection 11.5(2) of the CCAA, no Proceeding may be commenced or continued against any of the former, current or future directors or officers of the Applicants with respect to any claim against the directors or officers that arose before the date hereof and that relates to any obligations of the Applicants or Partnerships whereby the directors or officers are alleged under any law to be liable in their capacity as directors or officers for the payment or performance of such obligations, until a compromise or arrangement in respect of the Applicants and Partnerships, if one is filed, is sanctioned by this Court or is refused by the creditors of the Applicants or Partnerships or this Court.

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DIRECTORS’ AND OFFICERS’ INDEMNIFICATION AND CHARGE

20.           THIS COURT ORDERS that the Applicants shall indemnify their directors and officers from all claims, costs, charges and expenses relating to the failure of the Applicants or Partnerships, after the date hereof, to make payments of the nature referred to in subparagraphs 6(a), 8(a), 8(b) and 8(c) of this Order which they sustain or incur by reason of or in relation to their respective capacities as directors and/or officers of the Applicants except to the extent that, with respect to any officer or director, such officer or director has actively participated in the breach of any related fiduciary duties or has been grossly negligent or guilty of wilful misconduct.

21.           THIS COURT ORDERS that the directors and officers of the Applicants shall be entitled to the benefit of and are hereby granted a charge (the “Directors’ Charge”) on the Property, which charge shall not exceed an aggregate amount of $8.6 million, as security for the indemnity provided in paragraph 20 of this Order.  The Directors’ Charge shall have the priority set out in paragraphs 40 and 43 herein.

22.           THIS COURT ORDERS that, notwithstanding any language in any applicable insurance policy to the contrary, (a) no insurer shall be entitled to be subrogated to or claim the benefit of the Directors’ Charge, and (b) the Applicants’ directors and officers shall only be entitled to the benefit of the Directors’ Charge to the extent that they do not have coverage under any directors’ and officers’ insurance policy, or to the extent that such coverage is insufficient to pay amounts indemnified in accordance with paragraph 20 of this Order.

APPOINTMENT OF MONITOR

23.           THIS COURT ORDERS that Deloitte is hereby appointed pursuant to the CCAA as the Monitor, an officer of this Court, to monitor the Property and the Applicants’ and Partnerships’ conduct of the Business with the powers and obligations set out in the CCAA or set forth herein and that the Applicants and Partnerships and

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their shareholders, officers, directors, and Assistants shall advise the Monitor of all material steps taken by the Applicants and Partnerships pursuant to this Order, and shall co-operate fully with the Monitor in the exercise of its powers and discharge of its obligations.

24.           THIS COURT ORDERS that the Monitor, in addition to its prescribed rights and obligations under the CCAA, is hereby directed and empowered to:

(a) monitor the Applicants’ and Partnerships’ receipts and disbursements;

(b) report to this Court at such times and intervals as the Monitor may deem appropriate with respect to matters relating to the Applicants, the Partnerships, Property, the Business, and such other matters as may be relevant to the proceedings herein;

(c) assist the Applicants and Partnerships, to the extent required by the Applicants and Partnerships, in their dissemination, to the DIP Agent and its counsel of financial and other information as agreed to between the Applicants and Partnerships and the DIP Agent which may be used in these proceedings including reporting on a basis to be agreed with the DIP Agent and perform such other duties and exercise such powers as may be contemplated to be performed and exercised by the Monitor under the DIP Documents;

(d) advise the Applicants and Partnerships in their preparation of the Applicants’ and Partnerships’ cash flow statements and reporting required by the DIP Agent, which information shall be reviewed with the Monitor and delivered to the DIP Agent and its counsel in compliance with the DIP Documents, or as otherwise agreed to by the DIP Agent;

(e) advise the Applicants and Partnerships in their development of the Plan and any amendments to the Plan;

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(f) assist the Applicants and Partnerships, to the extent required by the Applicants and Partnerships, with the holding and administering of creditors’ or shareholders’ meetings for voting on the Plan;

(g) have full and complete access to the books, records and management, employees and advisors of the Applicants and the Partnerships and to the Business and the Property to the extent required to perform its duties arising under this Order;

(h) be at liberty to engage independent legal counsel or such other persons as the Monitor deems necessary or advisable respecting the exercise of its powers and performance of its obligations under this Order;

(i) consider, and if deemed advisable by the Monitor, prepare a report and assessment on the Plan; and

(j) perform such other duties as are required by this Order or by this Court from time to time.

25.           THIS COURT ORDERS that the Monitor shall not take possession of the Property and shall take no part whatsoever in the management or supervision of the management of the Business and shall not, by fulfilling its obligations hereunder, be deemed to have taken or maintained possession or control of the Business or Property, or any part thereof.

26.           THIS COURT ORDERS that nothing herein contained shall require the Monitor to occupy or to take control, care, charge, possession or management (separately and/or collectively, “Possession”) of any of the Property that might be environmentally contaminated, might be a pollutant or a contaminant, or might cause or contribute to a spill, discharge, release or deposit of a substance contrary to any federal, provincial or other law respecting the protection, conservation, enhancement, remediation or rehabilitation of the environment or relating to the disposal of waste or other

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contamination including, without limitation, the Canadian Environmental Protection Act, the Ontario Environmental Protection Act, the Ontario Water Resources Act, or the Ontario Occupational Health and Safety Act and regulations thereunder (the “Environmental Legislation”), provided however that nothing herein shall exempt the Monitor from any duty to report or make disclosure imposed by applicable Environmental Legislation.  The Monitor shall not, as a result of this Order or anything done in pursuance of the Monitor’s duties and powers under this Order, be deemed to be in Possession of any of the Property within the meaning of any Environmental Legislation, unless it is actually in possession.

27.           THIS COURT ORDERS that the Monitor shall provide any creditor of an Applicant or Partnership with information provided by the Applicant or Partnership in response to reasonable requests for information made in writing by such creditor addressed to the Monitor.  The Monitor shall not have any responsibility or liability with respect to the information disseminated by it pursuant to this paragraph.  In the case of information that the Monitor has been advised by an Applicant or Partnership is confidential, the Monitor shall not provide such information to creditors unless otherwise directed by this Court or on such terms as the Monitor and the Applicant or Partnership may agree.

28.           THIS COURT ORDERS that, in addition to the rights and protections afforded the Monitor under the CCAA or as an officer of this Court, the Monitor shall incur no liability or obligation as a result of its appointment or the carrying out of the provisions of this Order, save and except for any gross negligence or wilful misconduct on its part.  Nothing in this Order shall derogate from the protections afforded the Monitor by the CCAA or any applicable legislation.

29.           THIS COURT ORDERS that the Monitor, counsel to the Monitor and Canadian counsel to the Applicants and Partnerships shall be paid their reasonable fees and disbursements, in each case at their standard rates and charges, by the Applicants and

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Partnerships as part of the costs of these proceedings.  The Applicants and Partnerships are hereby authorized and directed to pay the accounts of the Monitor, counsel for the Monitor and Canadian counsel for the Applicants and Partnerships on a twice-monthly basis and, in addition, the Applicants and Partnerships are hereby authorized to pay to the Monitor, counsel to the Monitor, and Canadian counsel to the Applicants and Partnerships, retainers in the amounts of $400,000 each, to be held by them as security for payment of their respective fees and disbursements outstanding from time to time.

30.           THIS COURT ORDERS that the Monitor and its legal counsel shall pass their accounts from time to time, and for this purpose the accounts of the Monitor and its legal counsel are hereby referred to a judge of the Commercial List of the Ontario Superior Court of Justice.

31.           THIS COURT ORDERS that the Monitor, Canadian counsel to the Monitor, if any, and the Applicants’ and Partnerships’ Canadian counsel shall be entitled to the benefit of and are hereby granted a charge (the “Administration Charge”) on the Property, which charge shall not exceed an aggregate amount of $5 million,  as security for their professional fees and disbursements incurred at the standard rates and charges of the Monitor and such counsel, both before and after the making of this Order in respect of these proceedings.  The Administration Charge shall have the priority set out in paragraphs 40 and 43 hereof.

DIP FINANCING

32.           THIS COURT ORDERS that the Applicants and Partnerships are hereby authorized and empowered to enter into, obtain and borrow under a credit facility (the “DIP Credit Agreement”) among the Applicants and Partnerships, Smurfit-Stone Container Enterprises, Inc., Smurfit-Stone Container Corporation, the other “Loan Parties” thereto, the “Lenders” party thereto, JPMorgan Chase Bank, N.A. as Administrative Agent and Collateral Agent, and JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent and Canadian Collateral Agent (the

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Canadian Administrative Agent and the Canadian Collateral Agent are, collectively, the “DIP Agent”) substantially in the form attached as Exhibit “A” to the Xxxxx Affidavit (subject to such non-material amendments and modifications as the parties may agree with a copy thereof being provided in advance to the Monitor), provided that borrowings under such credit facility shall not exceed the principal amount of US$350 million unless permitted by further Order of this Court.

33.           THIS COURT ORDERS that the Applicants and Partnerships are hereby authorized and empowered to execute and deliver the DIP Credit Agreement and such commitment letters, fee letters, credit agreements, mortgages, charges, hypothecs and security documents, guarantees and other definitive documents (collectively, the “DIP Documents”), as are contemplated by the DIP Documents or as may be reasonably required by the DIP Agent pursuant to the terms thereof, and the Applicants and Partnerships are hereby authorized and directed to pay and perform all of their indebtedness, interest, fees, liabilities and obligations to the DIP Agent under and pursuant to the DIP Documents as and when the same become due and are to be performed, notwithstanding any other provision of this Order.

34.           THIS COURT ORDERS that the DIP Agent, for and on behalf of the Secured Parties (as defined in the DIP Credit Agreement) (collectively, the “DIP Lenders”) shall be entitled to the benefit of and is hereby granted a charge (the “DIP Lenders Charge”) on the Property, including without limitation the real property listed in Schedule “C” attached hereto, which charge shall not exceed the aggregate amount owed to the DIP Lenders under the DIP Documents.

35.           THIS COURT ORDERS that the DIP Lenders Charge shall have the priority set out in paragraphs 40 and 43 hereof.  The DIP Lenders Charge shall attach to all existing and after-acquired Property, as the case may be, including any lease, license, occupation permit, or other contract, notwithstanding any requirement for the consent of the lessor, licensor, or other party to such contract.

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36.           THIS COURT ORDERS that, notwithstanding any other provision of this Order:

(a) the DIP Agent may take such steps from time to time as it may deem necessary or appropriate to file, register, record or perfect the DIP Lenders Charge or any of the DIP Documents;

(b) upon the occurrence of an event of default under the DIP Documents or the DIP Lenders Charge, the DIP Agent, upon five days notice to the Applicants and Partnerships and the Monitor, may exercise any and all of its rights and remedies on behalf of the DIP Lenders against the Applicants, the Partnerships or the Property under or pursuant to the DIP Documents and the DIP Lenders Charge, including without limitation, to make demand, accelerate payment and give other notices, or to apply to this Court for the appointment of a receiver, receiver and manager or interim receiver, or for a bankruptcy order against the Applicants and Partnerships and for the appointment of a trustee in bankruptcy of the Applicants, and upon the occurrence of an event of default under the terms of the DIP Documents, the DIP Agent shall be immediately entitled to cease making advances to the Applicants and set off and/or consolidate any amounts owing by the DIP Agent to the Applicants against the obligations of the Applicants to the DIP Agent under the DIP Documents or the DIP Lenders Charge, seize and retain proceeds from the sale of the Property and the cash flow of the Applicants and Partnerships to repay amounts owing to the DIP Lenders in accordance with the DIP Documents and the DIP Lenders Charge, as the case may be, but subject to the priorities as set out in paragraphs 40 and 43 of this Order; and

(c) the foregoing rights and remedies of the DIP Agent shall be enforceable against the Applicants and Partnerships and against any trustee in

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bankruptcy, interim receiver, receiver or receiver and manager of the Applicants, the Partnerships or the Property.

37.           THIS COURT ORDERS AND DECLARES that, notwithstanding paragraph 14, but subject to paragraph 36, the DIP Agent and the DIP Lenders shall be treated as unaffected by any stay created in these proceedings and the DIP Agent and the DIP Lenders shall be treated as unaffected in any plan of arrangement or compromise filed by the Applicants under the CCAA, or any proposal filed by the Applicants under the Bankruptcy and Insolvency Act of Canada (the “BIA”), with respect to any advances made under the DIP Documents.

38.           THIS COURT ORDERS that nothing in this Order shall be construed as relieving the Applicants and Partnerships from their obligations to comply with the DIP Documents and in particular the Budget (as defined in the DIP Credit Agreement).

39.           THIS COURT ORDERS that the Applicants and the Partnerships party to the Receivables Agreement are authorized to terminate the Receivables Agreement and enter into and perform their obligations under the Termination and Reassignment Agreement, each as defined in the Xxxxx Affidavit.

VALIDITY AND PRIORITY OF CHARGES CREATED BY THIS ORDER

40.           THIS COURT ORDERS that the priorities of the Directors’ Charge, the Administration Charge and the DIP Lenders Charge, as among them, shall be as follows:

First — Administration Charge (to the extent of $1 million);

Second — Directors’ Charge (to the extent of $8.6 million);

Third — DIP Lenders Charge; and

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Fourth — Administration Charge (for any amount greater than $1 million, to a maximum of $5 million).

41.           THIS COURT ORDERS that any distribution in respect of the DIP Lenders Charge as amongst the beneficiaries thereto shall be governed by the DIP Documents.

42.           THIS COURT ORDERS that the filing, registration or perfection of the Directors’ Charge, the Administration Charge or the DIP Lenders Charge (collectively, the “Charges”) shall not be required, and that the Charges shall be valid and enforceable for all purposes, including as against any right, title or interest filed, registered, recorded or perfected subsequent to the Charges coming into existence, notwithstanding any such failure to file, register, record or perfect.

43.           THIS COURT ORDERS that each of the Directors’ Charge, the Administration Charge and the DIP Lenders Charge (all as constituted and defined herein) shall constitute a charge on the Property and such Charges shall rank in priority to all other security interests, trusts, liens, charges and encumbrances, statutory or otherwise (collectively, “Encumbrances”) in favour of any Person.  The security granted by the DIP Documents charging the Property shall have the same priority as the DIP Lenders Charge.

44.           THIS COURT ORDERS that except as otherwise expressly provided for herein, or as may be approved by this Court, the Applicants and Partnerships shall not grant any Encumbrances over any Property that rank in priority to, or pari passu with, any of the Charges, unless the Applicants and Partnerships also obtain the prior written consent of the Monitor, the DIP Agent and the beneficiaries of the Directors’ Charge and the Administration Charge, or further Order of this Court.

45.           THIS COURT ORDERS that the Directors’ Charge, the Administration Charge, the DIP Documents and the DIP Lenders Charge shall not be rendered invalid or unenforceable and the rights and remedies of the chargees entitled to the benefit of the

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Charges (collectively, the “Chargees”) and/or the DIP Agent thereunder shall not otherwise be limited or impaired in any way by (a) the pendency of these proceedings and the declarations of insolvency made herein; (b) any application(s) for bankruptcy order(s) issued pursuant to BIA, or any bankruptcy order made pursuant to such applications; (c) the filing of any assignments for the general benefit of creditors made pursuant to the BIA; (d) the provisions of any federal or provincial statutes; or (e) any negative covenants, prohibitions or other similar provisions with respect to borrowings, incurring debt or the creation of Encumbrances, contained in any existing loan documents, lease, sublease, offer to lease or other agreement (collectively, an “Agreement”) which binds the Applicants, the Partnerships, or any of them, and notwithstanding any provision to the contrary in any Agreement:

(a) neither the creation of the Charges nor the execution, delivery, perfection, registration or performance of the DIP Documents shall create or be deemed to constitute a breach by any of the Applicants or Partnerships of any Agreement to which it is a party;

(b) none of the Chargees shall have any liability to any Person whatsoever as a result of any breach of any Agreement caused by or resulting from the Applicants and Partnerships entering into the DIP Credit Agreement, the creation of the Charges, or the execution, delivery or performance of the DIP Documents; and

(c) the payments made by the Applicants and the Partnerships pursuant to this Order or the DIP Credit Agreement or the other DIP Documents and the granting of the Charges do not and will not constitute fraudulent preferences, fraudulent conveyances, oppressive conduct, settlements or other challengeable, voidable or reviewable transactions under any applicable law.

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46.           THIS COURT ORDERS that any Charge created by this Order over leases of real property in Canada shall only be a Charge in the relevant Applicant’s or Partnership’s interest in such real property leases.

RECOGNITION

47.           THIS COURT ORDERS AND DECLARES that the Partnerships are entities which are entitled to relief under section 268 of the BIA.

48.           THIS COURT ORDERS AND DECLARES that the proceedings commenced on January 26, 2009 by the Applicants and Partnerships under chapter 11 of title 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “US Bankruptcy Proceedings”) be and hereby are recognized as a “foreign proceeding” as defined by section 267 of the BIA.

SERVICE AND NOTICE

49.           THIS COURT ORDERS that (i) the Applicants and the Partnerships shall give notice to the Monitor concurrently with any request that any of them may submit to the DIP Lenders for release of any of the Collateral from the DIP Liens (each as defined in the DIP Documents) or for the release of proceeds of such Collateral; and (ii) in addition, the DIP Agent shall give notice to the Monitor promptly following any request from the Applicants or the Partnerships pursuant to the DIP Documents for the consent of the Lenders to release all or substantially all of the Collateral from the Liens (each as defined in the DIP Documents), or for the consent of the Supermajority Lenders to release any material part of the Collateral from the Liens or for the release of proceeds of such collateral.

50.           THIS COURT ORDERS that the Applicants and Partnerships shall, within ten (10) business days of the date of entry of this Order, cause a notice to be sent to their known creditors, other than employees and creditors to which the Applicants and Partnerships owe less than $1,000, whether separately or as part of a notice to all such

21

creditors pursuant to the US Bankruptcy Proceedings, at their addresses as they appear on the Applicants’ and Partnerships’ records notifying them of this filing and the address of the Monitor’s website where a copy of this Order is posted, and shall promptly send a copy of this Order to any interested Person who requests a copy.  The Monitor is relieved of its obligation under Section 11(5) of the CCAA to provide a copy of this Order, but may assist the Applicants and Partnerships in sending the notice referred to above.

51.           THIS COURT ORDERS that the Applicants and Partnerships and the Monitor be at liberty to serve any materials and orders in these proceedings, any notices or other correspondence, by forwarding true copies thereof by prepaid ordinary mail, courier, personal delivery or electronic transmission to the Applicants’ and Partnerships’ creditors or other interested parties at their respective addresses as last shown on the records of the Applicants and Partnerships and that any such service or notice by courier, personal delivery or electronic transmission shall be deemed to be received on the next business day following the date of forwarding thereof, or if sent by ordinary mail, on the third business day after mailing.

52.           THIS COURT ORDERS that the Applicants and Partnerships, the Monitor, and any party who has filed a Notice of Appearance may serve any court materials in these proceedings by e-mailing a PDF or other electronic copy of such materials to counsels’ email addresses as recorded on the Service List from time to time, in accordance with the E-filing protocol of the Commercial List to the extent practicable, and the Monitor may post a copy of any or all such materials on its website at xxx.xxxxxxxx.xxx/xx/xxxxxxxxxxxxxxxxxx.

GENERAL

53.           THIS COURT ORDERS that the Applicants or Partnerships or the Monitor may from time to time apply to this Court for advice and directions in the discharge of its powers and duties hereunder.

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54.           THIS COURT ORDERS that nothing in this Order shall prevent the Monitor from acting as an interim receiver, a receiver, a receiver and manager, or a trustee in bankruptcy of the Applicants, the Partnerships, the Business or the Property.

55.           THIS COURT HEREBY REQUESTS the aid and recognition of any court, tribunal, regulatory or administrative body having jurisdiction in Canada or in the United States, to give effect to this Order and to assist the Applicants and Partnerships, the Monitor and their respective agents in carrying out the terms of this Order.  All courts, tribunals, regulatory and administrative bodies are hereby respectfully requested to make such orders and to provide such assistance to the Applicants and Partnerships and to the Monitor, as an officer of this Court, as may be necessary or desirable to give effect to this Order, to grant representative status to the Monitor in any foreign proceeding, or to assist the Applicants and Partnerships and the Monitor and their respective agents in carrying out the terms of this Order.

56.           THIS COURT ORDERS that each of the Applicants and Partnerships and the Monitor be at liberty and is hereby authorized and empowered to apply to any court, tribunal, regulatory or administrative body, wherever located, for the recognition of this Order and for assistance in carrying out the terms of this Order.

57.           THIS COURT ORDERS that any interested party (including the Applicants and Partnerships and the Monitor) may apply to this Court to vary or amend this Order on not less than seven (7) days notice to any other party or parties likely to be affected by the order sought or upon such other notice, if any, as this Court may order.

58.           THIS COURT ORDERS that, (a) notwithstanding paragraph 57, no order shall be made varying, rescinding or otherwise affecting the provisions of this Order with respect to the DIP Documents or the DIP Lenders Charge unless notice of a motion for such order is served on the Applicants and Partnerships, the Monitor and the DIP Agent returnable no later than February 18, 2009; and (b) subject to court order, prior to February 18, 2009, the amounts that can be borrowed by the Canadian Borrower under

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the Canadian Revolving Commitment and the US Revolving Commitment (each as defined in the DIP Credit Agreement) shall be limited to the amounts set out in sections 2.2(a) and 2.3(a) of the DIP Credit Agreement.

59.           THIS COURT ORDERS that this Order and all of its provisions are effective as of 12:01 a.m. Eastern Standard Time on the date of this Order.

60.           THIS COURT ORDERS that leave is reserved to the Applicants and Partnerships to apply for an Amended and Restated Initial Order on January 28, 2009 to seek, inter alia, recognition of any DIP Orders made in the US Bankruptcy Proceedings.

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SCHEDULE “A”

Smurfit-Stone Container Canada Inc.

3083527 Nova Scotia Company

MBI Limited/Limitée

639647 British Columbia Ltd.

B.C. Shipper Supplies Ltd.

Specialty Containers Inc.

605681 N. B. Inc.

Francobec Company

Stone Container Finance Company of Canada II

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SCHEDULE “B”

Smurfit-MBI

SLP Finance General Partnership

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SCHEDULE “C”

Québec Timberlands (approximately 960,000 acres) in Québec

0000 Xxxxxx xx x’Xxxxx, Xx Tuque, Québec

00 Xxxx Xxxxxxxxxx, Xxxxxx, Xxxxxx

00000 Xxxxxxxxxx Xxxxxx Xxxx, Xxxxxxxx, Québec

000 Xxxxx 000 Xxxxxxx-xx-Xxxx, Xxxxxx

000 xxxxxx Xx-Xxxxx, Xxx Xxxxxxxx, Xxxxxx

000 Xxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxxxxx

000 Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx

000 Xxxxxx xx xx Xxxxxxx-xx-Xxxx, Xxxxxx xx Xxxxxxxxx, Haut Saint-Xxxxxxx, Québec

0000 00xx Xxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxx

0000 00xx Xxxxxx, Xxxxxxxx, Xxxxxxx

Foot of Xxxxxxx Xxxxxx, Xxx Xxxxxxxxxxx, Xxxxxxx Xxxxxxxx

0000 Xxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxxxxx

000 Xxxxxxxxx Xxx., Xxxxxxx, Xxxxxxx

000 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxx

000 Xxxxxxxx Xxxx, Xxxx, Xxxxxx, Xxxxxxx

0000 Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxx

0000 Xxxxx Xxxxxx, Xxxxx-Xxxxxxx, Québec

0000 Xxxxxxxxxx Xxx, Xxxx xx Xxxxx-Xxxxx, Xxxxxx

0000, 0xx Xxx Xxxx, Xxxxxx, Xxxxxxxxxxxx

00

Xxxxxxx X-0

XXXXXX XXXXXX BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

In re:		Chapter 11
SMURFIT-STONE CONTAINER CORPORATION, et al.,(1)		Case No. 09-10235 (BLS)
		Jointly Administered
Debtors.
		Ref. Docket Nos. 14 and 58

FINAL ORDER (I) AUTHORIZING DEBTORS (A) TO OBTAIN POST-PETITION FINANCING PURSUANT TO 11 U.S.C. §§105, 361, 362, 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1) AND 364(e) AND (B) TO UTILIZE CASH COLLATERAL PURSUANT TO 11 U.S.C. §363 and (II) GRANTING ADEQUATE PROTECTION TO PRE-PETITION
SECURED PARTIES PURSUANT TO 11 U.S.C. §§ 361, 362, 363 AND 364

Upon the motion (the “DIP Motion”), dated January 26, 2009, of Smurfit-Stone Container Corporation (“SSCC”) and its affiliated U.S. debtors (collectively, the “U.S. Debtors”) and Smurfit-Stone Container Canada Inc. (“SSC Canada”) and its affiliated Canadian debtors (collectively, the “Canadian Debtors”), each as debtors and debtors-in-possession (the U.S. Debtors and the Canadian Debtors hereinafter collectively referred to as the “Debtors”), in the above-captioned Chapter 11 cases (collectively, the “Cases”) pursuant to sections 105, 361, 362, 363(c)(2), 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1) and 364(e) of title 11 of the United States Code, 11 U.S.C. §§101, et seq. (the “Bankruptcy Code”), and Rules

(1) The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are: Smurfit-Stone Container Corporation (1401), Smurfit-Stone Container Enterprises, Inc. (1256), Calpine Corrugated, LLC (0470), Cameo Container Corporation (5701), Xxx 00X Xxxxxxxxxxxxx Xxxxxxxxxxx (0000), Xxxxxxx & Xxxxx Xxxxxxx Xxx Railway Company (0093), Stone International Services Corporation (9630), Stone Global, Inc. (0806), Stone Connecticut Paperboard Properties, Inc. (8038), Smurfit-Stone Puerto Rico, Inc. (5984), Smurfit Newsprint Corporation (1650), SLP Finance I, Inc. (8169), SLP Finance II, Inc. (3935), SMBI Inc. (2567), Smurfit-Stone Container Canada Inc. (3988), Stone Container Finance Company of Canada II (1587), 3083527 Nova Scotia Company (8836), MBI Limited/Limitée (6565), Smurfit-MBI (1869), 639647 British Columbia Ltd. (7733), B.C. Shipper Supplies Ltd. (7418), Specialty Containers Inc. (6564), SLP Finance General Partnership (9525), Francobec Company (7735), and 605681 N.B. Inc. (1898).  The Debtors’ corporate headquarters are located at, and the mailing address for each Debtor is, 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000.

2002, 4001 and 9014 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), seeking, among other things, entry of a final order (this “Final Order”) authorizing the Debtors to:

(i) Obtain credit and incur debt, pursuant to Sections 363, 364(c) and 364(d)(1) of the Bankruptcy Code, on a final basis up to an aggregate committed amount of US$750,000,000 (consisting of a US$400,000,000 term loan facility for borrowings by Smurfit-Stone Container Enterprises, Inc. (“SSCE”); a US$35,000,000 term loan facility for borrowings by SSC Canada; a US$215,000,000 revolving credit facility for borrowings by SSCE and/or SSC Canada; a US$35,000,000 revolving credit and letter of credit facility for borrowings by SSCE and/or SSC Canada; and a US$65,000,000 revolving credit and letter of credit facility available in U.S. dollars or Canadian dollars for borrowings by SSCE and/or SSC Canada; the actual principal amount of any such loans at any time subject to those conditions set forth in the DIP Credit Agreement, including the conversion provisions in Section 9.23 of the DIP Credit Agreement); all borrowings by SSCE shall be guaranteed by the other U.S. Debtors (other than SMBI Inc.) and SSC Canada and all borrowings by SSC Canada shall be guaranteed by all of the other Debtors; each on terms and conditions more fully described herein, secured by first priority, valid, priming, perfected and enforceable liens (as defined in section 101(37) of the Bankruptcy Code) on property of the Debtors’ estates pursuant to sections 364(c)(2), 364(c)(3) and 364(d)(1) of the Bankruptcy Code, and with priority, as to administrative expenses, as provided in section 364(c)(1) of the Bankruptcy Code, subject to the terms and conditions contained herein;

(ii) (a) Establish a financing arrangement (the “DIP Facility”) pursuant to (I) that certain Credit Agreement (as amended, modified or supplemented prior to entry of, and in

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accordance with the terms of, this Final Order, and as hereafter amended, modified or supplemented and in effect from time to time, the “DIP Credit Agreement”)(2), substantially in the form attached hereto as Exhibit B, by and between SSCE and SSC Canada (collectively, the “Borrowers”), SSCC, the other Loan Parties party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (the “U.S. DIP Agent”), JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian administrative agent and Canadian collateral agent (“Canadian DIP Agent”, collectively with the U.S. DIP Agent, the “DIP Agents”), and the Lenders party thereto (the “DIP Lenders”, collectively with the DIP Agents, the “DIP Secured Parties”), and (II) all other agreements, documents, notes, certificates, and instruments executed and/or delivered with, to, or in favor of the DIP Secured Parties, including, without limitation, security agreements, pledge agreements, notes, guarantees, mortgages, and Uniform Commercial Code (“UCC”) financing statements and all other related agreements, documents, notes, certificates, and instruments executed and/or delivered in connection therewith or related thereto (collectively, and together with the DIP Credit Agreement, as may be amended, modified or supplemented and in effect from time to time, the “DIP Financing Agreements”); and (b) incur the “Secured Obligations” under the DIP Credit Agreement ((a) and (b) collectively, the “DIP Obligations”);

(iii) Authorize the use of the proceeds of the DIP Facility (net of any amounts used to pay fees, costs and expenses under the DIP Credit Agreement) in each case in a manner consistent with the terms and conditions of the DIP Credit Agreement, and in a manner substantially consistent with the Budget solely for (a) working capital, Letters of Credit and

(2) Capitalized terms used in this Final Order but not defined herein shall have the meanings ascribed to such terms in the DIP Credit Agreement.

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Capital Expenditures; (b) other general corporate purposes of the Debtors (including intercompany loans to the extent permitted by the DIP Credit Agreement); (c) payment of any related transaction costs, fees and expenses; and (d) the costs of administration of the Cases.

(iv) Grant, with respect to the DIP Obligations (as defined below) of the U.S. Debtors (other than SMBI, Inc.) and SSC Canada:

(a) pursuant to Section 364(c)(1) of the Bankruptcy Code, an allowed Superpriority Claim payable from and having recourse to all pre-petition and post-petition property of the estates of the U.S. Debtors and SSC Canada and all proceeds thereof;

(b) pursuant to Section 364(c)(2) of the Bankruptcy Code, a perfected first priority Lien on all unencumbered property of the U.S. Debtors and SSC Canada (including any proceeds of Avoidance Actions) and on all cash maintained in any Collateral Account and any investments of the funds contained therein, provided that amounts in the Collateral Accounts shall not be subject to the Carve-Out or the CCAA Charges;

(c) pursuant to Section 364(c)(3) of the Bankruptcy Code, a perfected junior Lien upon all property of the U.S. Debtors and SSC Canada that is subject to valid and perfected and unavoidable Liens in existence on the Petition Date (as defined below) or that is subject to valid Liens in existence on the Petition Date that are perfected subsequent to the Petition Date as permitted by Section 546(b) of the Bankruptcy Code (other than certain property that is subject to the Primed Liens (as defined below), which Primed Liens shall be primed by the liens to be granted to the U.S. DIP Agent described in the following clause (d));

(d) pursuant to Section 364(d)(1) of the Bankruptcy Code, a perfected first priority, senior priming Lien on all of the property of the U.S. Debtors and SSC Canada, including all cash and non-cash proceeds of any of said property, (and including, without

4

limitation, inventory, receivables, rights under license agreements, property, plant and equipment and the residual interest of the U.S. Debtors and SSC Canada in any Receivables Securitization Programs) that is subject to the Primed Liens, which Primed Liens shall be primed by and made subject and subordinate to the perfected first priority senior priming Liens to be granted to the U.S. DIP Agent, which senior priming Liens in favor of the U.S. DIP Agent shall also prime any Liens granted after the Petition Date to provide adequate protection Liens in respect of any of the Primed Liens, but shall not prime (1) Non-Primed Liens (which term as used in this Final Order shall include all pre-petition liens and post-petition adequate protection liens on Calpine Property that secure the Calpine Debt) or (2) other Non-Primed Liens solely to the extent such Non-Primed Liens secure claims in an aggregate amount less than or equal to US$60,000,000.

 (v) Grant, with respect to the DIP Obligations of the Canadian Guarantors, including SMBI, Inc., relative to the Canadian Term Loan and the Canadian Revolving Facility:

(a) pursuant to Section 364(c)(1) of the Bankruptcy Code, an allowed Superpriority Claim and be payable from and have recourse to all pre-petition and post-petition property of the estates of the Canadian Guarantors and all proceeds thereof;

(b) pursuant to Section 364(c)(2) of the Bankruptcy Code, a perfected first priority Lien on all unencumbered property of the Canadian Guarantors (including any proceeds of Avoidance Actions) and on all cash maintained in any Collateral Account and any investments of the funds contained therein, provided that amounts in the Collateral Accounts shall not be subject to the Carve-Out or the CCAA Charges;

(c) pursuant to Section 364(c)(3) of the Bankruptcy Code, a perfected junior Lien upon all property of the Canadian Guarantors that is subject to valid and perfected and unavoidable Liens in existence on the Petition Date or that is subject to valid Liens in

5

existence on the Petition Date that are perfected subsequent to the Petition Date as permitted by Section 546(b) of the Bankruptcy Code (other than certain property that is subject to the Primed Liens, which Primed Liens shall be primed by the liens to be granted to the U.S. DIP Agent described in the following clause (d));

(d) pursuant to Section 364(d)(1) of the Bankruptcy Code, a perfected first priority, senior priming Lien on all of the property of the Canadian Guarantors, including all cash and non-cash proceeds of any of said property, (and including, without limitation, inventory, receivables, rights under license agreements, property, plant and equipment and the residual interest of the Canadian Guarantors in any Receivables Securitization Programs) that is subject to the Primed Liens, which Primed Liens shall be primed by and made subject and subordinate to the perfected first priority senior priming Liens to be granted to the U.S. DIP Agent, which senior priming Liens in favor of the U.S. DIP Agent shall also prime any Liens granted after the Petition Date to provide adequate protection Liens in respect of any of the Primed Liens, but shall not prime (1) Non-Primed Liens which secure the Calpine Debt or (2) other Non-Primed Liens solely to the extent such Non-Primed Liens secure claims in an aggregate amount less than or equal to US$60,000,000.

(vi) Authorize the use of “cash collateral” as such term is defined in Section 363 of the Bankruptcy Code (excluding the cash collateral of the estate of Calpine Corrugated LLC (“Calpine”), the “Cash Collateral”), in which the Pre-Petition Secured Parties (as defined below) have an interest;

(vii) Grant the Pre-Petition Agents (for the benefit of the Pre-Petition Secured Parties) (each as defined below) Pre-Petition Replacement Liens and Pre-Petition Superpriority Claims (each as defined below), to the extent of any diminution in the value of the Pre-Petition

6

Agents’ interest in the Collateral (as defined below) on the Petition Date, securing the indebtedness under the Pre-Petition Financing Agreements, as defined below, having the priority set forth in this Final Order, as adequate protection for the granting of the DIP Liens (as defined below) to the U.S. DIP Agent, the use of Cash Collateral, and for the imposition of the automatic stay;

(viii) Vacate and modify the automatic stay imposed by section 362 of the Bankruptcy Code to the extent necessary to implement and effectuate the terms and provisions of the DIP Financing Agreements and this Final Order; and

(ix) Waive any applicable stay (including under Rule 6004 of the Federal Rules of Bankruptcy Procedure) and provide for immediate effectiveness of this Final Order.

The Bankruptcy Court having considered the DIP Motion, the Declaration of Xxxxxxx X. Xxxxxxxx, Chief Financial Officer of Smurfit-Stone Container Corporation, in Support of First Day Motions, the exhibits attached thereto, the DIP Facility and the DIP Credit Agreement, and the evidence submitted at the interim hearing on the DIP Motion held on January 27, 2009 (the “Interim Hearing”) and at the hearing on this Final Order held on February 23, 2009 (the “Final Hearing”); and the Bankruptcy Court having entered on January 27, 2009 an Interim Order (I) Authorizing Debtors (A) to Obtain Post-Petition Financing Pursuant to 11 U.S.C. §§105, 361, 362, 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1) and 364(e) and (B) To Utilize Cash Collateral Pursuant to 11 U.S.C. §363, (II) Authorizing Use of Proceeds to Effectuate Payout of Securitization Facilities, (III) Granting Adequate Protection to Pre-Petition Secured Parties Pursuant to 11 U.S.C. §§ 361, 362, 363 and 364 and (IV) Scheduling Final Hearing Pursuant to Bankruptcy Rules 4001(B) and (C) (the “Interim Order”); and in accordance with Rules 2002, 4001(b), (c), and (d), and 9014 of the Bankruptcy Rules and the local rules of the Bankruptcy

7

Court, due and proper notice of the DIP Motion and the Final Hearing having been given; a Final Hearing having been held and concluded on February 23, 2009; and it appearing that approval of the relief requested in the DIP Motion is necessary to avoid immediate and irreparable harm to the Debtors and otherwise is fair and reasonable and in the best interests of the Debtors, their creditors, their estates and their equity holders, and is essential for the continued operation of the Debtors’ business; and it further appearing that, other than pursuant to the DIP Financing Agreements, the Debtors are unable to secure (i) adequate unsecured credit allowable under Bankruptcy Code Section 503(b)(1) as an administrative expense, (ii) credit for money borrowed with priority over any or all administrative expenses of the kind specified in Bankruptcy Code Sections 503(b) or 507(b), (iii) credit for money borrowed secured solely by a Lien on property of the estate that is not otherwise subject to a Lien, or (iv) credit for money borrowed secured by a junior Lien on property of the estate which is subject to a Lien; and, subject to the terms hereof, there is adequate protection of the interests of holders of liens on the property of the estates on which liens are to be granted; and all objections, if any, to the entry of this Final Order having been withdrawn, resolved or overruled by this Court; and after due deliberation and consideration, and for good and sufficient cause appearing therefor:

BASED UPON THE RECORD ESTABLISHED AT THE INTERIM HEARING AND THE FINAL HEARING, THE COURT HEREBY MAKES THE FOLLOWING FINDINGS OF FACT AND CONCLUSIONS OF LAW:

A. Petition Date.  On January 26, 2009 (the “Petition Date”), the Debtors filed voluntary petitions under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the District of Delaware (the “Court”).  The Debtors have continued in the management and operation of their business and property as debtors-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code.  No trustee or examiner has been appointed in

8

the Cases.  In addition, on January 26, 2009 an initial order was entered in favor of the Canadian Debtors (except Smurfit-MBI and SLP Finance General Partnership) under the Companies’ Creditors Arrangement Act (Canada) in the Ontario Superior Court of Justice.  Furthermore, on January 28, 2009 Smurfit-MBI and SLP Finance General Partnership were granted recognition of their respective Chapter 11 Cases in the Canadian Court and an order was entered granting charges over the assets of each of Smurfit-MBI and SLP Finance General Partnership to secure their respective DIP Obligations, under Section 268 of the Bankruptcy and Insolvency Act (Canada).

B. Jurisdiction and Venue.  This Court has jurisdiction over these proceedings, pursuant to 28 U.S.C. §§ 157(b) and 1334, and over the persons and property affected hereby.  Consideration of the DIP Motion constitutes a core proceeding under 28 U.S.C. § 157(b)(2).  Venue for the Cases and proceedings on the DIP Motion is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

C. Committee Formation.  On February 5, 2009, the United States Trustee for the District of Delaware appointed an official committee of unsecured creditors in the Cases (the “Statutory Committee”).

D. Interim Order.  At the Interim Hearing, the Bankruptcy Court approved the Debtors’ execution, delivery and performance of the DIP Financing Agreements pending the Final Hearing on the DIP Motion.  Pursuant to the Interim Order, the Final Hearing was scheduled for February 23, 2009.

E. Notice.  The Final Hearing is being held pursuant to the authorization of Bankruptcy Rule 4001.  Notice of the Final Hearing and the relief requested in the DIP Motion has been provided by the Debtors, whether by telecopy, email, overnight courier or hand delivery

9

on January 26, 2009, to certain parties in interest, including:  (i) the Office of the United States Trustee, (ii) the United States Securities and Exchange Commission, (iii) the Office of the United States Attorney for the District of Delaware, (iv) the Internal Revenue Service, (v) the Debtors’ thirty (30) largest unsecured creditors on a consolidated basis, (vi) counsel to the Pre-Petition Agents, (vii) the Pre-Petition Agents, (viii) counsel to the DIP Agents, and (ix) the indenture trustees for the Debtors’ five series of outstanding pre-petition senior notes.  Under the circumstances, such notice of the Final Hearing is due and sufficient notice and complies with Bankruptcy Rule 4001 under the circumstances.

F. Debtors’ Acknowledgements and Agreements.  Without prejudice to the rights of parties in interest as set forth in paragraph 6 below, the Debtors admit, stipulate, acknowledge and agree as follows (collectively, paragraphs D (i) through D (vi) hereof shall be referred to herein as the “Debtors’ Stipulations”):

(i) Pre-Petition Financing Agreements.  Prior to the Petition Date, certain of the Debtors were party to (a) that certain Credit Agreement, dated as of November 1, 2004, by and between the Borrowers, SSCC, as guarantor, the banks and other financial institutions from time to time parties thereto (the “Pre-Petition Lenders”), Deutsche Bank Trust Company Americas, as administrative agent (the “U.S. Pre-Petition Agent”), and Deutsche Bank AG, as Canadian administrative agent (together with the U.S. Pre-Petition Agent, the “Pre-Petition Agents”, and collectively with the Pre-Petition Lenders, the “Pre-Petition Secured Parties”), (b) that certain Guarantee and Collateral Agreement (U.S.), dated as of November 1, 2004, executed by the Borrowers, SSCC and certain subsidiaries of SSCC, in favor of the U.S. Pre-Petition Agent, and (c) all other agreements, documents, notes, certificates, and instruments executed and/or delivered with, to, or in favor of Pre-Petition Secured Parties, including, without limitation, security agreements, guaranties, and UCC financing statements and all other related agreements, documents, notes, certificates, and instruments executed and/or delivered in connection therewith or related thereto (collectively, as amended, modified or supplemented and in effect, the “Pre-Petition Financing Agreements”).

(ii) Pre-Petition Debt Amount.  As of the Petition Date, certain of the Debtors were indebted under the Pre-Petition Financing Agreements (a) on account of Loans (as defined in the Pre-Petition Financing Agreements) made to

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SSCE, in the approximate aggregate principal amount of not less than approximately US$746,000,000 plus letters of credit in the approximate aggregate stated amount of not less than approximately US$252,800,000, plus, in each case, interest accrued and accruing (at the rates (including, to the extent allowed, the default rate) set forth in the Pre-Petition Financing Agreements), costs, expenses, fees (including attorneys’ fees and legal expenses), other charges (in each case, to the extent reimbursable under the Pre-Petition Financing Agreements) and other obligations, including, without limitation, on account of Swap Agreements (as defined in the Pre-Petition Financing Agreements) with a Pre-Petition Lender or an affiliate thereof, cash management services, overdrafts, and temporary advances, and (b) on account of Loans made to SSC Canada, in the approximate aggregate principal amount of not less than approximately US$366,000,000, plus letters of credit in the approximate aggregate stated amount of not less than approximately US$27,000,000, plus, in each case, interest accrued and accruing, costs, expenses, fees (including attorneys’ fees and legal expenses), other charges (in each case, to the extent reimbursable under the Pre-Petition Financing Agreements) and obligations, including, without limitation, Swap Agreements (as defined in the Pre-Petition Financing Agreements) with a Pre-Petition lender or an affiliate thereof, cash management services, overdrafts, and temporary advances (collectively the “Pre-Petition Debt”).  SSCC guaranteed all of the obligations of SSCE (the “Pre-Petition U.S. Obligations”) under the Pre-Petition Financing Agreements.  Certain material subsidiaries of SSC Canada (the “Pre-Petition Canadian Guarantors”), as well as SSCC and SSCE, guaranteed the obligations of SSC Canada (the “Pre-Petition Canadian Obligations”) under the Pre-Petition Credit Agreement .

(iii) Pre-Petition Collateral.  To secure the Pre-Petition Debt, certain of the Debtors granted security interests, mortgages and liens (the “Pre-Petition Liens”) to the Pre-Petition Secured Parties on the personal and real property and the proceeds thereof as described and defined as “Collateral” in the Pre-Petition Financing Agreements (collectively, the “Pre-Petition Collateral”).(3)  The Pre-Petition U.S. Obligations are secured by those Pre-Petition Liens granted by SSCC and SSCE, as well as by the capital stock of SSCE and 65% of the capital stock of SSC Canada.  The Pre-Petition Canadian Obligations are secured by those Pre-Petition Liens granted by SSC Canada and the Pre-Petition Canadian Guarantors, pledges of all of the capital stock of the Pre-Petition Canadian Guarantors, and the liens and stock pledges securing the Pre-Petition U.S. Obligations.  The Pre-Petition Liens have priority over all other liens, except (a) the DIP Liens (as defined below), (b) the Carve Out (as defined below) to which the DIP Liens are subject, (c) the liens securing the Calpine Debt, including the liens on the property of the estate of Calpine (the “Calpine Property”) granted to

(3) The acknowledgment and agreement by the Debtors of the Pre-Petition Debt and the related liens, rights priorities and protections granted to or in favor of the Pre-Petition Secured Parties, as set forth herein and in the Pre-Petition Financing Agreements, shall constitute a proof of claim on behalf of the Pre-Petition Lenders in these Cases in respect of the Pre-Petition Debt.

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the holders of the Calpine Debt (the “Calpine Lenders”) pursuant to the Interim Order (I) Authorizing Use of Cash Collateral By Calpine Corrugated, LLC Pursuant to 11 U.S.C. § 363; (II) Granting Adequate Protection to Certain Prepetition Lenders Pursuant to 11 U.S.C. §§ 361 and 363; and (III) Scheduling a Final Hearing and any related final order (the “Calpine Lender Liens”) and (d) any liens which are valid, properly perfected, unavoidable, and senior to or pari passu with the Pre-Petition Liens (the “Priority Liens”).

(iv) Pre-Petition Liens.  (a) As of the Petition Date, the Debtors believe that (i) the Pre-Petition Liens are valid, binding, enforceable, and perfected first-priority liens, subject only to any Priority Liens and are not subject to avoidance, recharacterization or subordination pursuant to the Bankruptcy Code or applicable non-bankruptcy law, (ii) the Pre-Petition Debt constitutes legal, valid and binding obligations of certain of the Debtors, enforceable in accordance with the terms of the Pre-Petition Financing Agreements (other than in respect of the stay of enforcement arising from section 362 of the Bankruptcy Code), no offsets, defenses or counterclaims to any of the Pre-Petition Debt exists, and no portion of the Pre-Petition Debt is subject to avoidance, recharacterization or subordination pursuant to the Bankruptcy Code or applicable non-bankruptcy law, and (iii) the Pre-Petition Debt constitutes allowable secured claims, and (b) on the date that the Interim Order was entered (and confirmed by the entry of this Final Order), each Debtor has waived, discharged and released the Pre-Petition Secured Parties, together with their affiliates, agents, attorneys, officers, directors and employees, of any right any Debtor may have (x) to challenge or object to the amount, validity, or enforceability of the Pre-Petition Debt, (y) to challenge or object to the validity, enforceability, or non-voidability of the Pre-Petition Liens securing the Pre-Petition Debt, and (z) to bring or pursue any and all claims, counterclaims, objections, challenges, causes of action and/or choses in action against any of the Pre-Petition Parties or arising out of, based upon or related to the Pre-Petition Financing Agreements or otherwise.

(v) Cash Collateral.  The Pre-Petition Secured Parties have a security interest in certain of the Cash Collateral constituting proceeds of Pre-Petition Collateral to secure the Pre-Petition Debt.

(vi) Priming of DIP Facility.  In entering into the DIP Financing Agreements, and as consideration therefor, the Debtors hereby agree that until such time as all DIP Obligations are paid in full in cash (or other arrangements for payment of the DIP Obligations satisfactory to the DIP Agents have been made) and the DIP Financing Agreements are terminated in accordance with the terms thereof, except with respect to the Calpine Property, the Debtors shall not in any way prime, seek to prime, or support any other party that seeks to prime the security interests and DIP Liens provided to the DIP Secured Parties under the Interim Order or this Final Order, as applicable, by offering a subsequent lender or a party-in-interest a superior or pari passu lien or claim pursuant to Section 364(d) of the Bankruptcy Code or otherwise.

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G. Findings Regarding the Post-Petition Financing.

(i) Need for Post-Petition Financing.  An immediate need exists for the Debtors to obtain funds from the DIP Facility in order to continue operations and to administer and preserve the value of their estates.  The ability of the Debtors to finance their operations, to preserve and maintain the value of the Debtors’ assets and maximize a return for all creditors requires the availability of working capital from the DIP Facility, the absence of which would immediately and irreparably harm the Debtors, their estates, their creditors and equity holders and the possibility for a successful reorganization of the Debtors.

(ii) No Credit Available on More Favorable Terms.  The Debtors have been unable to obtain (a) adequate unsecured credit allowable under Bankruptcy Code section 503(b)(1) as an administrative expense, (b) credit for money borrowed with priority over any or all administrative expenses of the kind specified in Bankruptcy Code Sections 503(b) or 507(b), (c) credit for money borrowed secured solely by a Lien on property of the estate that is not otherwise subject to a Lien, or (d) credit for money borrowed secured by a junior Lien on property of the estate which is subject to a Lien, in each case, on more favorable terms and conditions than those provided in the DIP Credit Agreement, the Interim Order and this Final Order.  The Debtors are unable to obtain credit for borrowed money without granting to the DIP Secured Parties the DIP Protections (as defined below).

H. Use of Proceeds of the DIP Facility.  Proceeds of the DIP Facility (net of any amounts used to pay fees, costs and expenses under the DIP Financing Agreements) shall be used, in each case in a manner consistent with the terms and conditions of the DIP Financing Agreements, and in a manner substantially consistent with the Budget solely for (i) working capital, Letters of Credit and Capital Expenditures; (ii) other general corporate purposes of the

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Debtors (including intercompany loans to the extent permitted by the DIP Credit Agreement); (iii) payment of any related transaction costs, fees and expenses; and (iv) the costs of administration of the Cases; provided, however, that no more than US$250,000 of the proceeds of the Loans or the DIP Collateral may be used by the Statutory Committee of unsecured creditors to investigate, and by the monitor in the Canadian Cases to review, the Pre-Petition Liens and claims of the Pre-Petition Agents and the Pre-Petition Lenders.  In addition, while the refinancing in full or defeasance of Indebtedness outstanding under the Receivables Securitization Program has been effectuated in accordance with the provisions of the Interim Order, those provisions are hereby incorporated by reference and the completion of all aspects of such refinancing or defeasance are contemplated hereby.

I. Application of Proceeds of DIP Collateral.  All proceeds of the sale or other disposition of the DIP Collateral (as defined below) shall be applied in accordance with the terms and conditions of this Final Order and the DIP Credit Agreement.

J. Adequate Protection for Pre-Petition Secured Parties.  As a result of the grant of the DIP Liens, subordination to the Carve Out, and the use of Collateral, including Cash Collateral, authorized herein, the Pre-Petition Secured Parties are entitled to receive adequate protection pursuant to sections 361, 362, 363 and 364 of the Bankruptcy Code as set forth herein.

K. Section 552.  In light of the subordination of their liens and superpriority claims to (i) the Carve Out in the case of the DIP Secured Parties, and (ii) the Carve Out and the DIP Liens in the case of the Pre-Petition Secured Parties, the DIP Secured Parties and the Pre-Petition Secured Parties are each entitled to all of the rights and benefits of section 552(b) of the Bankruptcy Code, and the “equities of the case” exception shall not apply.

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L. Extension of Financing.  The DIP Secured Parties have indicated a willingness to provide financing to certain of the Debtors in accordance with the DIP Credit Agreement.  Such financing is essential to the Debtors’ estate.  The DIP Secured Parties are good faith financiers.  The DIP Secured Parties’ claims, superpriority claims, security interests and liens and other protections granted pursuant to the Interim Order, this Final Order and the DIP Facility will not be affected by any subsequent reversal, modification, vacatur or amendment of the Interim Order, this Final Order or any other order, as provided in section 364(e) of the Bankruptcy Code.

M. Business Judgment and Good Faith Pursuant to Section 364(e).

(i) The terms and conditions of the DIP Facility and the DIP Credit Agreement, and the fees paid and to be paid thereunder, are fair, reasonable, and the best available under the circumstances, reflect the Debtors’ exercise of prudent business judgment consistent with their fiduciary duties, and are supported by reasonably equivalent value and consideration;

(ii) the DIP Facility was negotiated in good faith and at arms’ length between the Debtors and the DIP Secured Parties; and

(iii) use of the proceeds to be extended under the DIP Facility will be so extended in good faith, and for valid business purposes and uses, as a consequence of which the DIP Secured Parties are entitled to the protection and benefits of section 364(e) of the Bankruptcy Code.

N. Relief Essential; Best Interest.  The relief requested in the DIP Motion (and as provided in the Interim Order and in this Final Order) is necessary, essential, and appropriate for the continued operation of the Debtors’ business and the management and preservation of the

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Debtors’ assets and personal property.  It is in the best interest of Debtors’ estates that the Debtors be allowed to establish the DIP Facility contemplated by the DIP Credit Agreement.

O. Entry of Final Order.  For the reasons stated above, the Debtors have requested immediate entry of this Final Order pursuant to Bankruptcy Rule 4001(c)(2).

NOW, THEREFORE, on the DIP Motion of the Debtors and the record before this Court with respect to the DIP Motion, and with the consent of the Debtors, the Pre-Petition Secured Parties and the DIP Secured Parties to the form and entry of this Final Order, and good and sufficient cause appearing therefor,

IT IS ORDERED that:

1. Motion Granted.  The DIP Motion is granted in accordance with the terms and conditions set forth in this Final Order and the DIP Credit Agreement.

2. DIP Financing Agreements.

(a) Approval of Entry Into DIP Financing Agreements.  The Debtors are expressly and immediately authorized, empowered and directed to execute and deliver the DIP Financing Agreements (to the extent not previously executed or delivered) on a final basis and to incur and to perform the DIP Obligations in accordance with, and subject to, the terms of this Final Order and the DIP Financing Agreements, and to execute and deliver all instruments, certificates, agreements and documents which may be required or necessary for the performance by the Debtors under the DIP Facility and the creation and perfection of the DIP Liens described in and provided for by this Final Order and the DIP Financing Agreements.  The Debtors are hereby authorized and directed to do and perform all acts, pay the principal, interest, fees, expenses and other amounts described in the DIP Credit Agreement and all other DIP Financing Agreements as such become due, including, without limitation, closing fees, administrative fees,

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commitment fees, letter of credit fees and reasonable attorneys’, financial advisors’ and accountants’ fees and disbursements as provided for in the DIP Credit Agreement, which amounts shall not otherwise be subject to approval of this Court.  The DIP Financing Agreements represent valid and binding obligations of the Debtors enforceable against the Debtors in accordance with their terms.

(b) Authorization to Borrow.  In order to enable them to continue to operate their business, subject to the terms and conditions of this Final Order, the DIP Credit Agreement, the other DIP Financing Agreements, and the Budget, the Debtors are hereby authorized under the DIP Facility to borrow up to an aggregate committed amount of US$750,000,000 (consisting of a US$400,000,000 term loan facility for borrowings by SSCE; a US$35,000,000 term loan facility for borrowings by SSC Canada; a US$215,000,000 revolving credit facility for borrowings by SSCE and/or SSC Canada; a US$35,000,000 revolving credit and letter of credit facility for borrowings by SSCE and/or SSC Canada; and a US$65,000,000 revolving credit and letter of credit facility available in U.S. dollars or Canadian dollars for borrowings by SSCE and/or SSC Canada; the actual principal amount of any such loans at any time subject to those conditions set forth in the DIP Credit Agreement, including the conversion provisions in Section 9.23 of the DIP Credit Agreement); all borrowings by SSCE shall be guaranteed by the other U.S. Debtors (other than SMBI Inc.) and SSC Canada and all borrowings by SSC Canada shall be guaranteed by all of the other Debtors; all in accordance with the terms and conditions of the DIP Credit Agreement.

(c) Application of DIP Proceeds.  The proceeds of the DIP Facility (net of any amounts used to pay fees, costs and expenses under the DIP Credit Agreement) shall be used, in each case in a manner consistent with the terms and conditions of the DIP Financing

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Agreements, and in a manner substantially consistent with the Budget solely for (i) working capital, Letters of Credit and Capital Expenditures; (ii) other general corporate purposes of the Debtors (including intercompany loans to the extent permitted by the DIP Credit Agreement); (iii) payment of any related transaction costs, fees and expenses; and (iv) the costs of administration of the Cases; provided, however, that no more than US$250,000 of the proceeds of the Loans or the DIP Collateral may be used by the Statutory Committee of unsecured creditors to investigate, and by the monitor in the Canadian Cases to review, the Pre-Petition Liens and claims of the Pre-Petition Agent and the Pre-Petition Lenders.  Furthermore, all of the provisions of the Interim Order, related to the refinancing in full or defeasance of Indebtedness outstanding under the Receivables Securitization Program are hereby incorporated by reference and the completion of all aspects of such refinancing or defeasance is hereby authorized.

 (d) Conditions Precedent.  The DIP Secured Parties shall have no obligation to make any loan or advance under the DIP Credit Agreement unless the conditions precedent to make such loan under the DIP Credit Agreement have been satisfied in full or waived in accordance with the DIP Credit Agreement.

(e) Post-Petition Liens.  Effective immediately upon the execution of the Interim Order, the DIP Agents (as provided in the DIP Credit Agreement and for the ratable benefit of the DIP Secured Parties) were granted (which grant is hereby ratified, confirmed and approved on a final basis) and upon entry of this Final Order, are hereby granted the following security interests and liens (all property identified in clauses (i)(a), (b) and (c), and (ii)(a), (b) and (c) below (together with all cash and non-cash proceeds of any of said property) being collectively referred to as the “DIP Collateral”); provided, however, that no U.S. Debtor shall be required to pledge in excess of 65% of the capital stock of its direct Foreign Subsidiaries

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(other than capital stock of SSC Canada) or any of the capital stock of any indirect Foreign Subsidiaries (all such liens and security interests granted to the DIP Agents, as provided in the DIP Credit Agreement and for the ratable benefit of the DIP Secured Parties, pursuant to the Interim Order, this Final Order and the DIP Financing Agreements,  the “DIP Liens”):

(i) With respect to the DIP Obligations of the U.S. Debtors and SSC Canada:

(a) Pursuant to section 364(c)(2) of the Bankruptcy Code, the U.S. DIP Agent is hereby granted (for the ratable benefit of the DIP Secured Parties) a perfected first priority Lien on all unencumbered property of the U.S. Debtors and SSC Canada (including any proceeds of Avoidance Actions) and on all cash maintained in any Collateral Account and any investments of the funds contained therein, provided that amounts in the Collateral Accounts shall not be subject to the Carve Out or the CCAA Charges;

(b) Pursuant to section 364(c)(3) of the Bankruptcy Code, the U.S. DIP Agent (for the ratable of the DIP Secured Parties) is hereby granted a perfected junior Lien upon all property of the U.S. Debtors and SSC Canada that is subject to valid and perfected and unavoidable Liens in existence on the Petition Date or that is subject to valid Liens in existence on the Petition Date that are perfected subsequent to the Petition Date as permitted by Section 546(b) of the Bankruptcy Code (other than certain property that is subject to the Primed Liens, which Primed Liens shall be primed by the liens to be granted to the U.S. DIP Agent described in clause (c) below); and

(c) Pursuant to section 364(d)(1) of the Bankruptcy Code, the U.S. DIP Agent (for the ratable of the DIP Secured Parties) is hereby granted a perfected first priority, senior priming Lien on all property of the U.S. Debtors and SSC Canada (including, without limitation, inventory, receivables, rights under license agreements, property, plant and equipment and the residual interest of the U.S. Debtors and SSC Canada in any Receivables Securitization Programs) that is subject to the existing liens which secure (x) the obligations of the Debtors under or in connection with the Pre-Petition Financing Agreement, and (y) other Liens, obligations or indebtedness of the Debtors junior to the Pre-Petition Financing Agreement (collectively, the “Primed Liens”), which Primed Liens shall be primed by and made subject and subordinate to the perfected first priority senior priming Liens to be granted to the U.S. DIP Agent, which senior priming Liens in favor of the U.S. DIP Agent shall also prime any Liens granted after the Petition Date to provide adequate protection Liens in respect of any of the Primed Liens, but shall not prime

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(1) Non-Primed Liens which secure the Calpine Debt (or any adequate protection liens on the assets of Calpine granted to the holders of the Calpine Debt) or (2) other Non-Primed Liens solely to the extent such Non-Primed Liens secure claims in an aggregate amount less than or equal to US$60,000,000 (see attached Exhibit A).

(ii) With respect to the DIP Obligations of the Canadian Guarantors relative to the Canadian Term Loan and the Canadian Revolving Facility:

(a) Pursuant to section 364(c)(2) of the Bankruptcy Code, the Canadian DIP Agent is hereby granted (for the ratable benefit of the DIP Secured Parties) a perfected first priority Lien on all unencumbered property of the Canadian Guarantors (including any proceeds of Avoidance Actions) and on all cash maintained in any Collateral Account and any direct investments of the funds contained therein, provided that amounts in the Collateral Accounts shall not be subject to the Carve Out or the CCAA Charges;

(b) Pursuant to section 364(c)(3) of the Bankruptcy Code, the Canadian DIP Agent (for the ratable of the DIP Secured Parties) is hereby granted a perfected junior Lien upon all property of the Canadian Guarantors that is subject to valid and perfected and unavoidable Liens in existence on the Petition Date or that is subject to valid Liens in existence on the Petition Date that are perfected subsequent to the Petition Date as permitted by Section 546(b) of the Bankruptcy Code (other than certain property that is subject to the Primed Liens, which Primed Liens shall be primed by the liens to be granted to the U.S. DIP Agent described in clause (c) below); and

(c) Pursuant to section 364(d)(1) of the Bankruptcy Code, the Canadian DIP Agent (for the ratable of the DIP Secured Parties) is hereby granted a perfected first priority, senior priming Lien on all property of the Canadian Guarantors (including, without limitation, inventory, receivables, rights under license agreements, property, plant and equipment and the residual interest of the Canadian Guarantors in any Receivables Securitization Programs) that is subject to the Primed Liens, which Primed Liens shall be primed by and made subject and subordinate to the perfected first priority senior priming Liens to be granted to the U.S. DIP Agent, which senior priming Liens in favor of the U.S. DIP Agent shall also prime any Liens granted after the Petition Date to provide adequate protection Liens in respect of any of the Primed Liens, but shall not prime (1) Non-Primed Liens which secure the Calpine Debt or (2) other Non-Primed Liens solely to the extent such Non-Primed Liens secure claims in an aggregate amount less than or equal to US$60,000,000 (see attached Exhibit A).

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Notwithstanding anything to the contrary in the DIP Credit Agreement and this Final Order, the DIP Liens on the Calpine Property shall be junior to the Calpine Lender Liens in the Calpine Property.

(f) DIP Lien Priority.  Solely to the extent provided in the DIP Credit Agreement, the Interim Order and this Final Order, the DIP Liens are subject only to the Non-Primed Liens and, in the event of the occurrence and during the continuance of an Event of Default or Default or both, to the Carve Out and the CCAA Charges.  The DIP Liens granted by the U.S. Debtors (other than SMBI, Inc.) and SSC Canada shall secure all of the DIP Obligations, and the DIP Liens granted by the Canadian Debtors (other than SSC Canada) and SMBI, Inc. shall secure only the DIP Obligations of the Canadian Guarantors relative to the Canadian Term Loan and the Canadian Revolving Facility.  The DIP Liens shall not be made subject to or pari passu with any lien or security interest (other than the Non-Primed Liens) by any court order heretofore or hereafter entered in the Cases and shall be valid and enforceable against any trustee appointed in the Cases, upon the conversion of any of the Cases to a case under Chapter 7 of the Bankruptcy Code or in any other proceedings related to any of the foregoing (any “Successor Cases”), and/or upon the dismissal of any of the Cases.  The DIP Liens shall not be subject to Sections 506(c), 510, 549, 550 or 551 of the Bankruptcy Code or the “equities of the case” exception of Section 552 of the Bankruptcy Code.  To avoid any doubt, the liens securing the Pre-Petition Debt are to be subordinated to, and junior to, the liens and claims of the DIP Secured Parties.

(g) Enforceable Obligations.  The DIP Financing Agreements shall constitute and evidence the valid and binding obligations of the Debtors, which obligations shall be enforceable against the Debtors, their estates and any successors thereto and their creditors, in accordance with their terms.

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(h) Protection of DIP Secured Parties and Other Rights.  From and after the Petition Date, the Debtors shall use the proceeds of the extensions of credit under the DIP Facility only for the purposes specifically set forth in the DIP Credit Agreement, the Interim Order and this Final Order and in substantial compliance with the Budget.

(i) Superpriority Administrative Claim Status.

(i) The DIP Obligations of the U.S. Debtors and SSC Canada, pursuant to Section 364(c)(1) of the Bankruptcy Code, shall at all times constitute an allowed Superpriority Claim (the “U.S. DIP Superpriority Claim”) and be payable from and have recourse to all pre-petition and post-petition property of the estates of the U.S. Debtors and SSC Canada and all proceeds thereof, subject to the Carve-Out and, in the case of SSC Canada, the CCAA Charges, and, in the case of Calpine, any superpriority claim granted to the Calpine Lenders against Calpine.

(ii) The DIP Obligations of the Canadian Guarantors relative to the Canadian Term Loan and the Canadian Revolving Facility, pursuant to Section 364(c)(1) of the Bankruptcy Code, shall at all times constitute an allowed Superpriority Claim (the “Canada DIP Superpriority Claim” and, together with the U.S. DIP Superpriority Claim and the DIP Liens, the “DIP Protections”) and be payable from and have recourse to all pre-petition and post-petition property of the estates of the Canadian Guarantors and all proceeds thereof, subject to the CCAA Charges and, in the case of SSC Canada, the Carve-Out.

(iii) Other than as provided in the DIP Credit Agreement, the Interim Order and this Final Order with respect to the Carve Out, the CCAA Charges and the Calpine Property, no costs or expenses of administration, including, without limitation, professional fees allowed and payable under Bankruptcy Code sections 328, 330, and 331, or otherwise, that have

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been or may be incurred in these proceedings, or in any Successor Cases, and no priority claims are, or will be, senior to, prior to or on a parity with the DIP Protections or the DIP Obligations, or with any other claims of the DIP Secured Parties arising hereunder.

3. Authorization to Use Cash Collateral and Proceeds of DIP Financing Agreement.

Pursuant to the terms and conditions of the Interim Order, this Final Order, the DIP Facility and the DIP Credit Agreement, and in a manner substantially consistent with the Budget (as the same may be modified, supplemented or updated from time to time consistent with the terms and conditions of the DIP Credit Agreement), (a) each Debtor is authorized to use the advances under the DIP Credit Agreement from and after the Closing Date, and (b) each Debtor is authorized to use all Cash Collateral of the Pre-Petition Secured Parties, and the Pre-Petition Secured Parties are directed promptly to turn over to the Debtors all Cash Collateral received or held by them, provided that the Pre-Petition Secured Parties are granted adequate protection as hereinafter set forth.  The Debtors’ right to use the advances under the DIP Credit Agreement shall terminate upon notice being provided by the DIP Agents to the Debtors (i) that a DIP Order Event of Default (as defined below) has occurred and is continuing, or (ii) of the termination of the DIP Credit Agreement.  The Debtors’ right to use the Cash Collateral shall terminate upon notice being provided by the DIP Agents to the Debtors (i) that a DIP Order Event of Default (as defined below) has occurred and is continuing, and (ii) of the termination of the DIP Credit Agreement.  Nothing in this Final Order shall authorize the disposition of any assets of the Debtors or their estates outside the ordinary course of business or other proceeds resulting therefrom, except as permitted in the DIP Credit Agreement (subject to any required Court approval).

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4. Adequate Protection for Pre-Petition Secured Parties.  As adequate protection for the interest of the Pre-Petition Secured Parties in the Pre-Petition Collateral (including Cash Collateral) on account of the granting of the DIP Liens, subordination to the Carve Out, the Debtors’ use of Collateral, including Cash Collateral, and other decline in value arising out of the automatic stay or the Debtors’ use, sale, or lease of the Pre-Petition Collateral, or otherwise, the Pre-Petition Secured Parties shall receive adequate protection as follows:

(a) Pre-Petition Replacement Liens.  Solely to the extent of the diminution of the value of the interest of the Pre-Petition Secured Parties in the Pre-Petition Collateral, the Pre-Petition Secured Parties shall have, subject to the terms and conditions set forth below, pursuant to sections 361, 363(e) and 364(d) of the Bankruptcy Code, junior replacement security interests in and liens upon all of the property of the U.S. Debtors (including any proceeds of Avoidance Actions) (the “Pre-Petition Replacement Liens”) which security interests and liens shall be junior to the DIP Liens, the Priority Liens (but only with respect to property that was encumbered by Priority Liens as of the Petition Date), the Non-Primed Liens which secure the Calpine Debt (or any adequate protection liens on the assets of Calpine granted to the holders of the Calpine debt) and the Carve Out as provided herein.

(b) Pre-Petition Superpriority Claim.  Solely to the extent of the diminution of the value of the interests of the Pre-Petition Secured Parties in the Pre-Petition Collateral, the Pre-Petition Secured Parties shall have, subject to the payment of the Carve Out and to any superpriority claim granted to the Calpine Lenders against Calpine, an allowed superpriority administrative expense claim (the “Pre-Petition Superpriority Claim”) as provided for in section 507(b) of the Bankruptcy Code, immediately junior to the claims under section 364(c)(1) of the Bankruptcy Code held by the U.S. DIP Agent and the DIP Lenders and payable from all

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property of the U.S. Debtors; provided, however, that the Pre-Petition Agents and the Pre-Petition Secured Parties shall not receive or retain any payments, property or other amounts in respect of the superpriority claims under section 507(b) of the Bankruptcy Code unless and until the DIP Obligations have indefeasibly been paid in cash in full.  The Debtors shall also provide such information, reports, and other information as reasonably requested from time to time by the Pre-Petition Agents.

(c) Adequate Protection Payment.  The Pre-Petition Agents shall receive from the U.S. Debtors or SSC Canada adequate protection in the form of (i) immediate cash payment of all accrued and unpaid interest (including any pre-petition interest) under the Pre-Petition Credit Agreement and letter of credit fees at the non-default contract rate applicable on the Petition Date as provided for in the Pre-Petition Financing Agreements, and all other accrued and unpaid fees and disbursements (including, but not limited to, fees and expenses owed to the Pre-Petition Agents and incurred prior to the Petition Date), (ii) current cash payments of all fees and expenses payable to the Pre-Petition Agents under the Pre-Petition Financing Agreements, including, but not limited to, the reasonable fees and disbursements of counsel, financial and other consultants for the Pre-Petition Agents (including, but not limited to, such fees and disbursements incurred prior to the Petition Date), and (iii) current cash payments of all accrued but unpaid interest on the Pre-Petition Debt (including Swap Agreements), and letter of credit and other fees, in each case at the non-default contract rate applicable on the Petition Date (including LIBOR pricing options) under the Pre-Petition Financing Agreements, provided that, without prejudice to the rights of any other party to contest such assertion, the Pre-Petition Secured Parties reserve their rights to assert claims for the payment of additional interest calculated at any other applicable rate of interest (including, without limitation, default rates), or

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on any other basis, provided for in the Pre-Petition Financing Agreements (the “Adequate Protection Payments”); provided, however, that SSC Canada’s obligations with respect to the Adequate Protections Payments shall be limited to those amounts relating to the Pre-Petition Canadian Obligations.

The payment of the fees, expenses and disbursements set forth in this paragraph 4(c) of this Final Order (including professional fees and expenses of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, Capstone Advisory Group, LLC and any other professionals or advisors retained by or on behalf of the Pre-Petition Agents) shall be made within 10 business days after the receipt by the Debtors, the Statutory Committee and the United States Trustee (the “Review Period”) of invoices thereof (the “Invoiced Fees”) (subject in all respects to applicable privilege or work product doctrines) and without the necessity of filing formal fee applications, including such amounts arising before and after the Petition Date; provided, however, that the Debtors, the Statutory Committee and the United States Trustee may preserve their right to dispute the reasonableness of any payment of any portion of the Invoiced Fees by (i) filing with the Court, prior to expiration of the Review Period, an objection and request for a hearing with respect to such objection and (ii) providing notice of the objection and requested hearing to the affected professional.

In the event that it is determined by a final, non-appealable order that any payments received by any of the Pre-Petition Agents and Pre-Petition Lenders as adequate protection could not be applied to post-petition interest, fees and expenses under 506 (b), any such payments may, upon appropriate notice, hearing and order, be recharacterized as payment of principal or subject to such other relief as the Court may order.

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5. Post-Petition Lien Perfection.  The Interim Order and this Final Order shall be sufficient and conclusive evidence of the validity, perfection, and priority of the DIP Liens and the Pre-Petition Replacement Liens without the necessity of filing or recording any financing statement, deed of trust, mortgage, or other instrument or document which may otherwise be required under the law of any jurisdiction or the taking of any other action to validate or perfect the DIP Liens and the Pre-Petition Replacement Liens or to entitle the DIP Liens and the Pre-Petition Replacement Liens to the priorities granted herein.  Notwithstanding the foregoing, the DIP Secured Parties and the Pre-Petition Secured Parties (with respect to the Pre-Petition Replacement Liens) may, each in their sole discretion, file such financing statements, mortgages, security agreements, notices of liens and other similar documents, and is hereby granted relief from the automatic stay of section 362 of the Bankruptcy Code in order to do so, and all such financing statements, mortgages, security agreements, notices and other agreements or documents shall be deemed to have been filed or recorded at the time and on the date of the commencement of the Cases.  The Debtors shall execute and deliver to the DIP Secured Parties and the Pre-Petition Secured Parties all such financing statements, mortgages, notices and other documents as the DIP Secured Parties and the Pre-Petition Secured Parties may reasonably request to evidence, confirm, validate or perfect, or to insure the contemplated priority of, the DIP Liens and the Pre-Petition Replacement Liens granted pursuant hereto.  The DIP Agents, in their discretion, may file a photocopy of this Final Order as a financing statement with any recording officer designated to file financing statements or with any registry of deeds or similar office in any jurisdiction in which any Debtor has real or personal property, and in such event, the subject filing or recording officer shall be authorized to file or record such copy of this Final Order.

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6. Reservation of Certain Third Party Rights and Bar of Challenges and Claims.  Nothing in this Final Order or the DIP Credit Agreement shall prejudice whatever rights the Statutory Committee or any other party in interest (other than the Debtors) may have (a) to object to or challenge the findings herein, including, but not limited to, those in relation to (i) the validity, extent, perfection or priority of the mortgage, security interests and liens of the Pre-Petition Secured Parties in and to the Pre-Petition Collateral, or (ii) the validity, allowability, priority, status or amount of the Pre-Petition Debt, or (b) to bring suit against any of the Pre-Petition Secured Parties in connection with or related to the Pre-Petition Debt, or the actions or inactions of any of the Pre-Petition Secured Parties arising out of or related to the Pre-Petition Debt or otherwise; provided, however, that, unless the Statutory Committee or any other party in interest commences a contested matter or adversary proceeding raising such objection or challenge, or seeks standing to commence a contested matter or adversary proceeding to raise such objection or challenge, including without limitation any claim against the Pre-Petition Secured Parties in the nature of a setoff, counterclaim or defense to the Pre-Petition Debt (including but not limited to, those under sections 506, 544, 547, 548, 549, 550 and/or 552 of the Bankruptcy Code or by way of suit against any of the Pre-Petition Secured Parties), on or before (a) 90 days following the appointment of the Statutory Committee, or (b) such other date that may be agreed to in writing by the Pre-Petition Agent and the Statutory Committee, or (c) a date scheduled pursuant to an order of the Court (the “Challenge Period,” and the date that is the next calendar day after the termination of the Challenge Period, in the event that no objection or challenge is raised during the Challenge Period, shall be referred to as the “Challenge Period Termination Date”), upon the Challenge Period Termination Date, any and all such challenges and objections by any party (including, without limitation, any official creditors’ committee(s),

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any Chapter 11 or Chapter 7 trustee appointed herein or in any Successor Case, and any other party in interest) shall be deemed to be forever waived and barred, and the Pre-Petition Debt shall be deemed to be an allowed claim within the meaning of section 506 of the Bankruptcy Code for all purposes in connection with the Cases and the Debtors’ Stipulations shall be binding on all creditors, interest holders and parties in interest.  To the extent any such objection or complaint is filed, the findings herein shall nonetheless remain binding and preclusive on the Statutory Committee and on any other person or entity, except to the extent that such assertions were expressly challenged in such objection or complaint.  Nothing herein shall be deemed to grant standing to the Statutory Committee or any other party in interest to commence such a contested matter or adversary proceeding.

7. Carve Out.  Subject to the terms and conditions contained in this paragraph 7, the DIP Liens and DIP Superpriority Claims on the one hand, and the Pre-Petition Liens, the Pre-Petition Replacement Liens and the Pre-Petition Superpriority Claims, on the other, are subordinate only to the Non-Primed Liens and the Priority Liens (but only with respect to property that was encumbered by Priority Liens as of the Petition Date), respectively, and the following: in the event of the occurrence and during the continuance of an Event of Default or a Default or both:

(x) with respect to U.S. Loan Parties and their Cases and assets, (i) the payment of all allowed and unpaid professional fees and disbursements incurred by (A) the U.S. Loan Parties and (B) the Statutory Committee appointed in the Cases of the U.S. Loan Parties, including the allowed and unpaid actual and necessary out-of-pocket expense of members of the Statutory Committee

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incurred in the performance of the duties of such committee member, in an aggregate amount of items (A) and (B) not in excess of US$11,000,000 and (ii) the payment of fees pursuant to 28 U.S.C. § 1930 and to the Clerk of the Bankruptcy Court ((i) and (ii), collectively, the “Carve-Out”);

(y) the CCAA DIP Lenders’ Charge in the assets of the Canadian Loan Parties in the Canadian Cases will be subject to the Canadian Court ordered administration charge in an aggregate amount not in excess of US$1,000,000 (the “Administration Charge”) for the payment of (a) allowed and unpaid professional fees and disbursements incurred by professionals retained by the Canadian Loan Parties and (b) allowed and unpaid professional fees and disbursements of the monitor in the Canadian Cases including allowed and unpaid legal fees and expenses of its counsel (and including any allowed and unpaid professional fees and disbursements incurred by the parties referred to in (a) and (b), prior to the occurrence of such Event of Default); and

(z) the CCAA DIP Lenders’ Charge in the assets of the Canadian Loan Parties in the Canadian Cases will also be subject to the Canadian Court ordered directors charge in an amount not exceeding US$8,600,000 (the “Directors Charge”, and, together with the Administration Charge, the “CCAA Charges”), securing the Canadian Loan Parties’ obligation to indemnify the officers

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and directors of the Canadian Loan Parties for personal liability which may arise from non-payment by the Canadian Loan Parties of the following (which shall be separately identified on the most recent Borrowing Base Certificate): (a) all outstanding and future wages, salaries, employee and pension benefits, vacation pay, bonuses and expenses payable on or after the Filing Date, in each case incurred in the ordinary course of business and consistent with existing compensation policies and arrangements; (b) any statutory deemed trust amounts in favour of the Crown in right of Canada or of any Province thereof or any other taxation authority which are required to be deducted from employees’ wages, including, without limitation, amounts in respect of (i) employment insurance, (ii) Canada Pension Plan, (iii) Quebec Pension Plan, and (iv) income taxes; (c) all goods and services or other applicable sales taxes required to be remitted by the Canadian Loan Parties in connection with the sale of goods and services by the Canadian Loan Parties, but only where such sales taxes are accrued or collected after the Filing Date, or where such sales taxes were accrued or collected prior to the Filing Date but are not required to be remitted until on or after the Filing Date; and (d) any amount payable to the Crown in right of Canada or of any Province thereof or any political subdivision thereof or any other taxation authority in respect of municipal realty, municipal business or other taxes, assessments or

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levies of any nature or kind which are entitled at law to be paid in priority to claims of secured creditors and which are attributable to or in respect of the carrying on of the business by the Canadian Loan Parties;

provided that, subject to paragraph 2(c) above, no portion of the Carve-Out or the Administration Charge shall be utilized for the payment of professional fees and disbursements incurred in connection with any challenge to the amount, extent, priority, validity, perfection or enforcement of the Indebtedness of the Loan Parties owed to the parties primed by the priming Liens or to the collateral securing such Indebtedness or any other action against such parties.  Amounts in the Collateral Accounts shall not be subject to the Carve-Out, Administration Charge, or Directors Charge.  Notwithstanding the foregoing, so long as no Default or Event of Default shall have occurred and be continuing, the Loan Parties shall be permitted to pay compensation and reimbursement of expenses allowed and payable under 11 U.S.C. §§ 328, 330 and 331, or as allowed and payable pursuant to orders of the Canadian Court, as the same may be due and payable, and any compensation and expenses previously paid, or accrued but unpaid, prior to the occurrence of such Default or Event of Default shall not reduce the Carve-Out or the Administration Charge.

8. Payment of Compensation.  Nothing herein shall be construed as consent to the allowance of any professional fees or expenses of any of the Debtors, any official committee or of any person or shall affect the right of the DIP Secured Parties or the Pre-Petition Agents to object to the allowance and payment of such fees and expenses.

9. Section 506(c) Claims.  As a further condition of the DIP Facility and any obligation of the DIP Secured Parties to make credit extensions pursuant to the DIP Financing

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Agreements, the Debtors (and any successors thereto or any representatives thereof, including any trustees appointed in the Cases or any Successor Cases (defined below)) shall be deemed to have waived any rights, benefits, or causes of action under section 506(c) of the Bankruptcy Code as they may relate to or be asserted against the DIP Agents, the DIP Secured Parties, the DIP Liens, the Pre-Petition Agents, the Pre-Petition Secured Parties, and the Pre-Petition Liens.  Nothing contained in the Interim Order or in this Final Order shall be deemed a consent by the Pre-Petition Secured Parties or the DIP Secured Parties to any charge, lien, assessment or claim against the DIP Collateral or the Pre-Petition Collateral under Section 506(c) of the Bankruptcy Code or otherwise.

10. Collateral Rights.  Unless the DIP Agents have provided their prior written consent or all DIP Obligations have been indefeasibly paid in full in cash (or will be indefeasibly paid in full in cash upon entry of a final, non-appealable order approving indebtedness described in subparagraph (a) below or other arrangements for payment of the DIP Obligations satisfactory to the DIP Agents have been made) and all Commitments have terminated, there shall not be entered in these proceedings (except with respect to the bankruptcy case of Calpine and the Calpine Property), or in any Successor Case, any order which authorizes any of the following:

(a) the obtaining of credit or the incurring of indebtedness that is secured by a security, mortgage, or collateral interest or other lien on all or any portion of the DIP Collateral and/or entitled to priority administrative status which is superior to or pari passu with those granted pursuant to the Interim Order or this Final Order to the DIP Secured Parties; or

(b) the use of Cash Collateral for any purpose other than to indefeasibly pay in full in cash the DIP Obligations or as otherwise permitted in the DIP Credit Agreement.

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11. Proceeds of Subsequent Financing.  Without limiting the provisions and protections of paragraph 10 above, if at any time prior to the indefeasible repayment in full in cash of all DIP Obligations and the termination of the DIP Secured Parties’ obligations to make loans and advances under the DIP Facility (including subsequent to the confirmation of any Chapter 11 plan or plans (the “Plan”) with respect to the Debtors), the Debtors’ estates, any trustee, any examiner with enlarged powers or any responsible officer subsequently appointed, shall obtain credit or incur debt pursuant to Bankruptcy Code Sections 364(b), 364(c) or 364(d) in violation of the DIP Credit Agreement, then all of the cash proceeds derived from such credit or debt and all Cash Collateral shall immediately be turned over to the DIP Agents in reduction of the DIP Obligations; provided, however, for the avoidance of doubt, that the turn over requirements of this paragraph 11 shall not apply in the bankruptcy case of Calpine with respect to the Calpine Property.

12. Commitment Termination Date.  All (a) DIP Obligations shall be immediately due and payable, and (b) authority to use the proceeds of the DIP Financing Agreements and to use Cash Collateral shall cease, both on the date that is the earliest to occur of:  (i) the Maturity Date, (ii) the Effective Date, and (iii) the acceleration of the Loans and the termination of the Revolving Commitments in accordance with the DIP Credit Agreement (the “Commitment Termination Date”).

13. Payment from Proceeds of DIP Collateral.  Until the DIP Obligations have been indefeasibly paid in full in cash (or other written arrangements satisfactory to the DIP Agents for payment of the DIP Obligations have been made in the DIP Credit Agreement or otherwise), except with respect to the Calpine Property, all products and proceeds of the DIP Collateral shall be (i) remitted to accounts maintained at the DIP Agents in accordance with the

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Credit Agreement and (ii) applied by the DIP Agents to the outstanding DIP Obligations as and to the extent set forth in the DIP Credit Agreement; provided, however, for the avoidance of doubt, that any Non-Primed Liens on DIP Collateral shall attach, to the same extent and priority, to the proceeds of such DIP Collateral that secure such Non-Primed Liens, and nothing herein alters the rights of any holders of Non-Primed Liens with respect to such proceeds from any sale pursuant to section 363 of the Bankruptcy Code of DIP Collateral securing such Non-Primed Liens.

14. Disposition of DIP Collateral.  The Debtors shall not sell, transfer, lease, encumber or otherwise dispose of any portion of the DIP Collateral, without the prior written consent of the requisite DIP Secured Parties required under the DIP Credit Agreement (and no such consent shall be implied, from any other action, inaction or acquiescence by the DIP Secured Parties or an order of this Court), except for the Calpine Property, sales of Inventory in the ordinary course of business or except as otherwise provided for in the DIP Credit Agreement or this Final Order and approved by the Bankruptcy Court to the extent required under applicable bankruptcy law.

15. Events of Default.  The occurrence of the Commitment Termination Date or, if sooner, the DIP Agents’ furnishing the Debtors with notice of the occurrence of any Event of Default (as defined in the DIP Credit Agreement) shall constitute a “DIP Order Event of Default”.  Unless and until the DIP Obligations are indefeasibly paid in full in cash (or other arrangements for payment of the DIP Obligations satisfactory to the DIP Agents have been made) and all Commitments have irrevocably terminated, all Letters of Credit have been cash collateralized as required by the DIP Credit Agreement, and all DIP Obligations which survive termination have been cash collateralized to the reasonable satisfaction of the DIP Agents, the

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protections afforded to the Pre-Petition Secured Parties and the DIP Secured Parties pursuant to the Interim Order, this Final Order and under the DIP Credit Agreement, and any actions taken pursuant thereto, shall survive the entry of any order confirming a Plan or converting these cases into a Successor Case, and the DIP Liens, the DIP Super-Priority Claim, the Pre-Petition Replacement Liens and the Pre-Petition Superpriority Claim shall continue in these proceedings and in any Successor Case, and such DIP Liens, DIP Super-Priority Claim, Pre-Petition Replacement Liens and the Pre-Petition Superpriority Claim shall maintain their respective priority as provided by this Final Order.

16. Rights and Remedies Upon DIP Order Event of Default.

(a) Any automatic stay otherwise applicable to the DIP Secured Parties is hereby modified so that (i) after the occurrence of any DIP Order Event of Default and (ii) at any time thereafter during the continuance of such DIP Order Event of Default, upon five (5) business days prior written notice of such occurrence, in each case given to each of the Debtors, counsel to the Debtors, counsel for the Statutory Committee, and the U.S. Trustee, the DIP Secured Parties shall be entitled to exercise their rights and remedies in accordance with the DIP Financing Agreements.  Immediately following the giving of notice by the DIP Agents of the occurrence of a DIP Order Event of Default:  (i) the Debtors shall continue to deliver and cause the delivery of the proceeds of DIP Collateral to the DIP Agents as provided in the DIP Credit Agreement and this Final Order; (ii) the DIP Agents shall continue to apply such proceeds in accordance with the provisions of this Final Order and of the DIP Credit Agreement; (iii) the Debtors shall have no right to use any of such proceeds, nor any other Cash Collateral other than towards the satisfaction of the DIP Obligations and the Carve Out; and (iv) any obligation otherwise imposed on the DIP Agents or the DIP Secured Parties to provide any loan or advance

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to the Debtors pursuant to the DIP Facility shall be suspended.  Following the giving of written notice by the DIP Agents of the occurrence of a DIP Order Event of Default, the Debtors and the Statutory Committee shall be entitled to an emergency hearing before this Court solely for the purpose of contesting whether a DIP Order Event of Default has occurred.  If the Debtors or the Statutory Committee do not contest the right of the DIP Secured Parties to exercise their remedies based upon whether a DIP Order Event of Default has occurred within such time period, or if the Debtors or the Statutory Committee do timely contest the occurrence of a DIP Order Event of Default and the Bankruptcy Court after notice and hearing declines to stay the enforcement thereof, the automatic stay, as to the DIP Secured Parties, shall automatically terminate at the end of such notice period.

(b) Subject to the provisions of paragraph 16(a), upon the occurrence of a DIP Order Event of Default, the DIP Agents and DIP Lenders are authorized to exercise their remedies and proceed under or pursuant to the DIP Financing Agreements.  All proceeds realized from any of the foregoing shall be turned over to the DIP Agents for application to the DIP Obligations under, and in accordance with the provisions of, the DIP Financing Agreements and this Final Order; provided, however, that, in the event of the liquidation of the Borrowers’ and other Debtors’ estates after the Commitment Termination Date, the amount of the Carve-Out shall be funded into a segregated account exclusively from Cash Collateral received by the DIP Agents subsequent to the Commitment Termination Date prior to the distribution of any such Cash Collateral to any other parties in interest. Any proceeds or property recovered, (unencumbered or otherwise) as the result of an Avoidance Action (“Avoidance Proceeds”) shall be held, subject to the DIP Liens and the Pre-Petition Replacement Liens, in a segregated account and shall not be distributed to creditors of the Debtors until: (i) all DIP Obligations and

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(ii) obligations equal to the amount of the diminution in value of the interest of the Pre-Petition Secured Parties in the Pre-Petition Collateral (the “Primed Obligation”) have been paid in full. The DIP Agents and the Pre-Petition Agents, respectively, shall not seek recovery from any Avoidance Proceeds unless, after (i) making reasonable attempts to have the outstanding DIP Obligations and the Primed Obligation repaid from other collateral subject to the DIP Liens and the Pre-Petition Replacement Liens and (ii) delivering 10 business days advance notice to the Statutory Committee of their intention to seek recovery from any Avoidance Proceeds, any DIP Obligations remain unpaid or the Primed Obligation remains outstanding.

(c) The automatic stay imposed under Bankruptcy Code section 362(a) is hereby modified pursuant to the terms of the DIP Credit Agreement as necessary to (1) permit the Debtors to grant the Pre-Petition Replacement Liens and the DIP Liens and to incur all liabilities and obligations to the Pre-Petition Secured Parties and the DIP Secured Parties under the DIP Financing Agreements, the DIP Facility, the Interim Order and this Final Order, and (2) authorize the DIP Secured Parties and the Pre-Petition Secured Parties to retain and apply payments hereunder.

(d) Nothing included herein shall prejudice, impair, or otherwise affect the Pre-Petition Secured Parties’ or DIP Secured Parties’ rights to seek any other or supplemental relief in respect of the Debtors (including other or additional adequate protection) nor the DIP Agents’ or DIP Lenders’ rights, as provided in the DIP Credit Agreement, to suspend or terminate the making of loans under the DIP Credit Agreement.

17. Proofs of Claim.  The Pre-Petition Secured Parties and the DIP Secured Parties will not be required to file proofs of claim in the Cases or in any Successor Case.

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18. Other Rights and Obligations.

(a) Good Faith Under Section 364(e) of the Bankruptcy Code; No Modification or Stay of this Final Order.  Based on the findings set forth in the Interim Order and this Final Order and in accordance with section 364(e) of the Bankruptcy Code, which is applicable to the DIP Facility contemplated by this Final Order, in the event any or all of the provisions of the Interim Order or this Final Order are hereafter modified, amended or vacated by a subsequent order of this or any other Court, the DIP Secured Parties are entitled to the protections provided in section 364(e) of the Bankruptcy Code and, no such appeal, modification, amendment or vacation shall affect the validity and enforceability of any advances made hereunder or the liens or priority authorized or created hereby.  Notwithstanding any such modification, amendment or vacation, any claim granted to the DIP Secured Parties hereunder arising prior to the effective date of such modification, amendment or vacation of any DIP Protections granted to the DIP Secured Parties shall be governed in all respects by the original provisions of the Interim Order and this Final Order, and the DIP Secured Parties shall be entitled to all of the rights, remedies, privileges and benefits, including the DIP Protections granted herein, with respect to any such claim.  Since the loans made pursuant to the DIP Credit Agreement are made in reliance on the Interim Order and this Final Order, the obligations owed the DIP Secured Parties prior to the effective date of any stay, modification or vacation of the Interim Order or this Final Order shall not, as a result of any subsequent order in the Cases or in any Successor Cases, be subordinated, lose their lien priority or superpriority administrative expense claim status, or be deprived of the benefit of the status of the liens and claims granted to the DIP Secured Parties under the Interim Order, this Final Order and/or the DIP Financing Agreements.

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(b) Expenses.  As provided in the DIP Financing Agreements, the Debtors will pay all reasonable expenses incurred by each DIP Agent and the Co-Lead Arrangers (including, without limitation, the reasonable fees and disbursements of Xxxxx Xxxx LLP and Xxxxxxxx Xxxxxx & Finger, counsel for the DIP Agent, any other local counsel that such DIP Agent shall retain (including Canadian counsel) and any internal or third-party appraisers, consultants and auditors advising such DIP Agent and the Bookrunners and their counsel) in connection with the preparation, execution, delivery and administration of the DIP Financing Agreements, whether or not the transactions contemplated hereby are consummated.  Payment of such fees shall not be subject to allowance by the Bankruptcy Court.  Professionals for the DIP Secured Parties or Pre-Petition Secured Parties shall not be required to comply with the U.S. Trustee fee guidelines.  Copies of invoices submitted to the Debtors by the professionals for the DIP Secured Parties or the Pre-Petition Secured Parties shall be forwarded by the Debtors to the U.S. Trustee, counsel for the Statutory Committee, and such other parties as the Court may direct (but this Court shall resolve any dispute as to the reasonableness of any fees and expenses accrued from and after the date of this Final Order).

(c) Binding Effect.  The provisions of this Final Order shall be binding upon and inure to the benefit of the DIP Secured Parties and the Pre-Petition Secured Parties, the Debtors, and their respective successors and assigns (including any trustee or other fiduciary hereinafter appointed as a legal representative of the Debtors or with respect to the property of the estates of the Debtors) whether in the Cases, in any Successor Cases, or upon dismissal of any such Chapter 11 or Chapter 7 Case.

(d) No Waiver.  The failure of the Pre-Petition Secured Parties and the DIP Secured Parties to seek relief or otherwise exercise their rights and remedies under the DIP

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Financing Agreements, the DIP Facility, this Final Order or otherwise, as applicable, shall not constitute a waiver of any of the Pre-Petition Secured Parties’ and the DIP Secured Parties’ rights hereunder, thereunder, or otherwise.  Notwithstanding anything herein, the entry of this Final Order is without prejudice to, and does not constitute a waiver of, expressly or implicitly, or otherwise impair the Pre-Petition Secured Parties or the DIP Secured Parties under the Bankruptcy Code or under non-bankruptcy law, including without limitation, the rights of the Pre-Petition Secured Parties and the DIP Secured Parties to (i) request conversion of the Cases to cases under Chapter 7, dismissal of the Cases, or the appointment of a trustee in the Cases, or (ii) propose, subject to the provisions of section 1121 of the Bankruptcy Code, a Plan, or (iii) exercise any of the rights, claims or privileges (whether legal, equitable or otherwise) of the DIP Secured Parties or the Pre-Petition Secured Parties.

(e) No Third Party Rights.  Except as explicitly provided for herein, this Final Order does not create any rights for the benefit of any third party, creditor, equity holder or any direct, indirect, or incidental beneficiary.

(f) No Marshaling.  Neither the DIP Secured Parties nor the Pre-Petition Secured Parties shall be subject to the equitable doctrine of “marshaling” or any other similar doctrine with respect to any of the DIP Collateral or the Pre-Petition Collateral, as applicable.

(g) Section 552(b).  The DIP Secured Parties and the Pre-Petition Secured Parties shall each be entitled to all of the rights and benefits of section 552(b) of the Bankruptcy Code and the “equities of the case” exception under section 552(b) of the Bankruptcy Code shall not apply to the DIP Secured Parties or the Pre-Petition Secured Parties with respect to proceeds, product, offspring or profits of any of the Pre-Petition Collateral or the DIP Collateral.

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(h) Amendment.  The Debtors and the DIP Agents may amend, modify, supplement or waive any provision of the DIP Financing Agreements without further notice to or approval of the Court, unless such amendment, modification, supplement or waiver (i) increases the interest rate (other than as a result of the imposition of the default rate), (ii) increases the Commitments of the DIP Lenders under the DIP Financing Agreements, or (iii) changes the maturity date ((i), (ii), and (iii) being collectively referred to herein as a “Material Modification”).  The Debtors shall provide to the Statutory Committee, the U.S. Trustee, and any entity whose rights are directly and adversely affected by a Material Modification five business days advance written notice of each Material Modification. The Debtors shall also provide to the Statutory Committee and the U.S. Trustee such advance notice as is reasonably practicable of all other modifications to the DIP Financing Agreements. Except as otherwise provided herein, no waiver, modification, or amendment of any of the provisions hereof shall be effective unless set forth in writing, signed by or on behalf of all the Debtors and the DIP Agents (after having obtained the approval of the DIP Secured Parties as provided in the DIP Financing Agreements) and approved by the Bankruptcy Court.

(i) Information for the Statutory Committee.  The Debtors shall provide to the Statutory Committee the same financial statements, reports and other information that the Debtors are required to provide to the DIP Agents and the DIP Lenders pursuant to Section 5.1 of the DIP Credit Agreement as and when the Debtors provide such information to the DIP Agents and the DIP Lenders.

(j) Survival of Final Order.  The provisions of this Final Order and any actions taken pursuant hereto shall survive entry of any order which may be entered (i) confirming any Plan in the Cases, (ii) converting any of the Cases to a case under Chapter 7 of

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the Bankruptcy Code, or (iii) to the extent authorized by applicable law, dismissing any of the Cases, (iv) withdrawing of the reference of any of the Cases from this Court, or (v) providing for abstention from handling or retaining of jurisdiction of any of the Cases in this Court.  The terms and provisions of the Interim Order and this Final Order, including the DIP Protections granted pursuant to the Interim Order and this Final Order and the DIP Financing Agreements and any protections granted the Pre-Petition Secured Parties, shall continue in full force and effect notwithstanding the entry of such order, and such DIP Protections and protections for the Pre-Petition Secured Parties shall maintain their priority as provided by the Interim Order and this Final Order until all the obligations of the Debtors to the DIP Lenders pursuant to the DIP Financing Agreements and the Pre-Petition Debt has been indefeasibly paid in full and discharged (such payment being without prejudice to any terms or provisions contained in the DIP Facility which survive such discharge by their terms).  The DIP Obligations shall not be discharged by the entry of an order confirming a Plan, the Debtors having waived such discharge pursuant to section 1141(d)(4) of the Bankruptcy Code.

(k) Inconsistency.  In the event of any inconsistency between the terms and conditions of the DIP Financing Agreements, the Interim Order and this Final Order, the provisions of this Final Order shall govern and control.

(l) Enforceability.  This Final Order shall constitute findings of fact and conclusions of law pursuant to the Bankruptcy Rule 7052 and shall take effect and be fully enforceable nunc pro tunc to the Petition Date immediately upon execution hereof.

(m) Objections Overruled.  All objections to the DIP Motion, to the extent not withdrawn or resolved, are hereby overruled.

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(n) No Waivers or Modification of Final Order.  The Debtors irrevocably waive any right to seek any modification or extension of this Final Order without the prior written consent of the DIP Agents and the Pre-Petition Agents and no such consent shall be implied by any other action, inaction or acquiescence of the DIP Agents and the Pre-Petition Agents.

(o) Waiver of any Applicable Stay.  Any applicable stay (including, without limitation, under Bankruptcy Rule 6004(h)) is hereby waived and shall not apply to this Final Order.

19. Letters of Credit.  At the Debtors’ request, letters of credit outstanding as of the Petition Date under the Pre-Petition Credit Agreement may be extended, amended or renewed with the consent of the issuing bank and the Pre-Petition Agents, provided that all fees and reimbursement obligations in respect thereof shall remain Pre-Petition Debt.

20. Liens of Taxing Authorities.  Any valid and enforceable liens in existence as of the Petition Date held by Xxxxx County, Dallas County, Tarrant County, Xxxxxxx County and El Paso, Texas, and the City of Memphis, Tennessee, on the personal property of the Debtors, which liens secure the payment of ad valoram taxes by the Debtors to such taxing authorities, shall constitute Non-Primed Liens under this Final Order.

21. Retention of Jurisdiction.  The Bankruptcy Court has and will retain jurisdiction to enforce this Final Order according to its terms.

22. Required Lender Consents.  Promptly upon receipt by the DIP Agents of the Required Lenders’ consents necessary to amend the DIP Credit Agreement with respect to the terms of this Final Order, the DIP Agents shall file and serve a notice that the necessary consents have been received.  Solely for purposes of the DIP Credit Agreement, including Section 4.2(d)

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of the DIP Credit Agreement, this Final Order shall be deemed to have been entered by the Court upon the filing of said notice.

SO ORDERED by the Bankruptcy Court this         day of February, 2009.

XXXXXXX X. XXXXXXX

UNITED STATES BANKRUPTCY JUDGE

Entered on Docket:

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EXHIBIT A

Non-Primed Liens

Liens that:

(i) are properly perfected, enforceable and in existence as of the Petition Date;

(ii) are senior in priority to the Liens created under the Pre-Petition Credit Agreement;

(iii) fall within any one of the following categories:

a. those Liens securing purchase money indebtedness;

b. mechanics’ Liens, materialmen’s Liens, carriers’ Liens, warehousemen’s Liens and landlord’s Liens arising by operation of law;

c. rights of banks or other financial institutions having a right of setoff, revocation, refund or chargeback with respect to deposits with or in the possession of such bank or financial institution;

d. Liens arising by operation of law on insurance policies and proceeds thereof to secure premiums thereunder;

e. other Liens securing claims of no more than $500,000 on an individual basis and no more than $10,000,000 on an aggregate basis; or

f. other Liens acceptable to the Administrative Agent;  and

(iv) either:

(x) secure claims of no more than $200,000 on an individual basis; or

(y) secure claims that are scheduled by the Debtors on the Register Of Non-Primed Liens (2).

(2)  The Debtors will prepare and maintain from time to time a comprehensive Register Of Non-Primed Liens.

REGISTER OF NON-PRIMED LIENS

To the extent parties on this Register have valid liens that otherwise satisfy requirements (i) - (iii) of Schedule 2.24 (to which this Register is appended), such liens are not being primed by the DIP Liens.  However, inclusion on the Register does not constitute an admission by the Debtors that the listed parties have valid liens or that they have valid claims of more than $200,000.

Vendor						Address
1		AIG Commerical Equipment Finance			Xxxxxxx X. Xxxxxx and Xxxx X. Xxxxxxxx, Xxxxxxxx Xxxx Lodge & Hutz LLP, The Nemours Building, 0000 Xxxxx Xxxxxx Xxxxxx, X.X. Xxx 0000, Xxxxxxxxxx, XX 00000
2		AirTek Construction, Inc.			Xxxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxxx and Xxxx X. Xxxxxxxxx, Xxxxxx Xxxxxx & Xxxxx, Citizens Bank Center, 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000
3		ALL TRUCK TRANSPORTATION INC			0000 X  Xxxxxx Xxxxxxx, XX 00000 XXX
4		Alliance Machine Systems			0000 Xxxx Xxxxxx Xxxxxxx, XX 00000 XXX
5		Alstom			0-X Xxxxx Xx Xxxxxxxx Xxxxxxxx, XX X0x 0x0 Xxxxxx
0		XXX XXXX XXXXXXXX XXX			#000000 Xxxxxxxxxx, XX 00000-0000 XXX
7		BHS Corrugated			0000 Xxxxxx Xxxxx Xxxx Xxxxxxxxx, XX 00000-0000 XXX
8		BLI			#0000 Xxxxx Xxxxxxx, XX 00000-0000 XXX
0		XX XXXXXXXX XXXXXXXXX			#0000 Xxxxxxxxxxx, XX 00000-0000 XXX
10		CN			Box 4254 Station A71206 Xxxxxxx, XX 00000-0000 XXX
11		XXXXXX TRUCKLOAD INC			#953695 Xxxxx Xxxxx, XX 00000-0000 XXX
12		Corrugated Gear & Services			000 X Xxxxx Xxxxxx Xxxxxx, XX 00000 XXX
13		CSX TRANSPORTATION (CSXT)			000 Xxxxx Xx Xx X000 Xxxxxxxxxxxx, XX 00000 XXX
14		CSX TRANSPORTATION (CSXT)			#44053 Xxxxxxxxxxxx, XX 00000-0000 XXX
00		Xx Xxxx Xxxxxx Financial Services, Inc.			Xxxxxx Xxxxxx Kelbon, Blank Rome LLP, Xxx Xxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000
16		Xxxxxxx Machinery, Inc.			0000 Xxxxxxxx Xxxxxxxx Xxx Xxxxxxx, XX 00000 XXX
17		ENTREPRISES DE TRANSPORT J C G INC			0000 Xxxx Xxxxxx Xxxxx Xxxxxxxx, XX X0x 0x0 Xxxxxx
18		Everest Auto			000 Xxxxxxxxx Xxxxx X Xxxxxx-Xxxxxx, XX X0x 0x0 Xxxxxx
00		Xxxxxx Xxxxxxx, Inc.			0000 Xxxxxxxx Xxxxxxxx Xxx Xxxxxxx, XX 00000 XXX
20		GENERAL LOGISTICS INC			#8013 Xxxxxxxxx, XX 00000 XXX
21		GROUPE XXXXXX INC			000 Xxx. 000, Xxxxxxxxx, Xxxxx X0x 0x0, Xxxxxx
00		Xxxxxx Xxxxxxxxx			#00000 Xxxxx, XX 00000-0000 XXX
23		HUB GROUP			00000 Xxxxxxxx Xxxxxx Xxxxxxx, XX 00000-0000 XXX
24		IES Industrial, Inc. d/b/a Xxxxxx Electric			Xxxxxxx X. Xxxxxxxx, Xxxxxxx Xxxxx Xxxxxxx & Xxxxx, P.C., 0000 Xxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000 and Xxxxxxx X. Xxxxxx, Montgomery, McCracken, Xxxxxx & Xxxxxx, LLP, 0000 X. Xxxxxx Xx., 00xx Xxxxx, Xxxxxxxxxx, XX 00000
25		XXXXXXXX DISTRIBUTION COMPANY			#224 Xxx Xxxxxx, XX 00000 XXX
26		XXXXX XXXXX TRUCKING CO			#535203 Xxxxxxx, XX 00000 XXX
27		K&N Electric			#303 Xxxxxxx, XX 00000 XXX
28		KANSAS CITY SOUTHERN RAILWAY INC			00000 Xxxxxxxx Xxxxxx Xxxxxxx, XX 00000-0000 XXX
29		LILY TRANSPORTATION CORP			000 Xxxxxxxx Xxxxxx Xxxxxxx, XX 00000 XXX
30		MARQUETTE TRANSPORTATION FINANCE IN			Nw 79391450 Xxxxxxxxxxx, XX 00000 XXX
31		XXXXXXX TRANSPORTATION INC			#1148 Xxxxxxx, XX 00000 XXX
32		MEGA GULF COAST LINES INC			0000 Xxxxxxxx XXxxxxx Xxxxx Xxxxxxx, XX 00000 XXX
33		MONTANA RAIL LINK			0000 Xxxxxxxxx Xxxxxx Xxxxxxx, XX 00000 XXX
34		NORFOLK SOUTHERN CORPORATION			#532888 Xxxxxxx, XX 00000-0000 XXX
35		Plum Creek Marketing, Inc.			Xxxx X. Xxxxx, Xx., Cairncross & Hempelmann, P.S., 000 0xx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000-0000
36		SWIFT TRANSPORTATION CORP			#643991 Xxxxxxxxxx, XX 00000-0000 XXX
00		XXXXX XXXXXXX XXXXXXXX			00000 Xxxxxxxxxxx Xxxxxx Xx Xxxxxxx, XX 00000 XXX
38		UPS FREIGHT			#533238 Xxxxxxx, XX 00000-0000 XXX
39		VHI TRANSPORT INC			0000 Xxx Xxxxxx Xxxxxxx, XX 00000 XXX
40		Voith - Austell, GA			0000 Xxxxxxxxxx Xxxx Xxxxx, XX 00000 XXX
41		Voith Paper Rolls			#410926 Xxxxxxxxxxx, XX 00000 XXX
00		XXXXXXX & XXXXXXX XXXXXXXX			#0000 Xxxxxxxx, XX 00000 XXX
43		WESTERN EXPRESS INC			Dept 54306035 Xxxxxxxxx, XX 00000-0000 XXX
44		X.X. Xxxxx & Sons Construction Co.			c/o Xxxxxx Xxxx, Xxxxxxx & Xxx P.C., 0000 Xxxxx Xxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxx, XX 00000
45		WHITE OAK TRANSPORTATION INC			#43512 Xxxxxxxxxx, XX 00000 XXX
46		WORLDWIDE DEDICATED SERVICES INC			00000 Xxxxxxx Xxxxx Xxxxxxx, XX 00000 XXX

EXHIBIT B

[See Credit Agreement, dated as of January 28, 2009, as previously filed.]

Exhibit B-1

EXECUTION VERSION

SECURITY AND PLEDGE AGREEMENT

THIS SECURITY AND PLEDGE AGREEMENT (as it may be amended or modified from time to time, the “Security Agreement”) is entered into as of January 28, 2009  by and among SMURFIT-STONE CONTAINER CORPORATION, a Delaware corporation, each of its U.S. direct or indirect subsidiaries party to the Credit Agreement (as hereinafter defined) (the “Grantors”), each of which Grantors is a debtor and debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code, and JPMorgan Chase Bank, N.A., in its capacity as administrative agent (the “Administrative Agent”) for the lenders party to the Credit Agreement referred to below.

PRELIMINARY STATEMENT

The Grantors, SMURFIT-STONE CONTAINER ENTERPRISES, INC., a Delaware corporation (the “U.S. Borrower”), the Administrative Agent, the other Loan Parties which are party thereto, the Lenders party thereto and JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, as Canadian administrative agent, are entering into a Credit Agreement dated as of even date herewith (as it may be restated, amended or modified from time to time, the “Credit Agreement”).  Each Grantor is entering into this Security Agreement in order to induce the Lenders to enter into and extend credit to the U.S. Borrower and Smurfit-Stone Container Canada Inc., a corporation continued under the Companies Act (Nova Scotia) (the “Canadian Borrower”, together with the U.S. Borrower, collectively, the “Borrowers”) under the Credit Agreement and to secure the Secured Obligations that it has agreed to guarantee pursuant to Article X of the Credit Agreement.

WHEREAS, it is a condition precedent to the making of Loans and the issuance of Letters of Credit that the Grantors shall have granted a security interest, pledge and lien on (x) all cash maintained in the Collateral Accounts pursuant to Section 364(c)(2) of the Bankruptcy Code and (y) certain of the Grantors’ assets and properties and the proceeds thereof pursuant to Sections 364(c)(2), 364(c)(3) and 364(d)(1) of the Bankruptcy Code; and

WHEREAS, the grant of such security interest, pledge and lien has been authorized pursuant to Sections 364(c)(2), 364(c)(3) and 364(d)(1) of the Bankruptcy Code by the Interim Order, and, after the entry thereof, will have been so authorized by the Final Order (collectively, the “Orders”); and

WHEREAS, to supplement the Orders without in any way diminishing or limiting the effect of the Orders or the security interest, pledge and lien granted thereunder, the parties hereto desire to more fully set forth their respective rights in connection with such security interest, pledge and lien; and

WHEREAS, this Agreement has been approved by the Orders;

ACCORDINGLY, the Grantors and the Administrative Agent, on behalf of the Lenders, hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1. Terms Defined in Credit Agreement.  All capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement.

1.2. Terms Defined in UCC.  Terms defined in the UCC which are not otherwise defined in this Security Agreement are used herein as defined in the UCC.

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1.3. Definitions of Certain Terms Used Herein.  As used in this Security Agreement, in addition to the terms defined in the Preliminary Statement, the following terms shall have the following meanings:

“Accounts” shall have the meaning set forth in Article 9 of the UCC.

“Article” means a numbered article of this Security Agreement, unless another document is specifically referenced.

“Chattel Paper” shall have the meaning set forth in Article 9 of the UCC.

“Closing Date” means the date of the Credit Agreement.

“Collateral” shall have the meaning set forth in Article II.

“Collateral Deposit Account” shall have the meaning set forth in Section 7.1(a).

“Collateral Report” means any certificate (including any Borrowing Base Certificate), report or other document delivered by any Grantor to the Administrative Agent or any Lender with respect to the Collateral pursuant to any Loan Document.

“Concentration Account” shall have the meaning set forth in Section 7.1(b).

“Commercial Tort Claims” means the following existing commercial tort claims of the Grantors: (i) a matter filed by the U.S. Borrower in the Circuit Court of King Xxxxxxx County, Virginia against the County of King Xxxxxxx seeking a correction of the Machinery and Tools taxes which were assessed against and paid by the U.S. Borrower for the tax years 2004 through 2007; and (ii) the action styled Smurfit-Stone Container Corporation vs. Southeast Fuels, Inc., filed in the United States District Court, Eastern District of Virginia, Richmond Division on September 19, 2008.

“Control” shall have the meaning set forth in Article 8 or, if applicable, in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.

“Copyrights” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following:  (a) all copyrights, rights and interests in copyrights, works protectable by copyright, copyright registrations, and copyright applications; (b) all renewals of any of the foregoing; (c) all income, royalties, damages, and payments now or hereafter due and/or payable under any of the foregoing, including, without limitation, damages or payments for past or future infringements for any of the foregoing; (d) the right to xxx for past, present, and future infringements of any of the foregoing; and (e) all rights corresponding to any of the foregoing throughout the world.

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

“Deposit Account Control Agreement” means an agreement, in form and substance satisfactory to the Administrative Agent, among any Loan Party, a banking institution holding such Loan Party’s funds, and the Administrative Agent with respect to collection and control of all deposits and balances held in a deposit account maintained by any Loan Party with such banking institution.

“Deposit Accounts” shall have the meaning set forth in Article 9 of the UCC.

“Documents” shall have the meaning set forth in Article 9 of the UCC.

“Equipment” shall have the meaning set forth in Article 9 of the UCC.

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“Event of Default” means an event described in Section 5.1.

“Exhibit” refers to a specific exhibit to this Security Agreement, unless another document is specifically referenced.

“Fixtures” shall have the meaning set forth in Article 9 of the UCC.

“General Intangibles” shall have the meaning set forth in Article 9 of the UCC.

“Goods” shall have the meaning set forth in Article 9 of the UCC.

“Instruments” shall have the meaning set forth in Article 9 of the UCC.

“Inventory” shall have the meaning set forth in Article 9 of the UCC.

“Investment Property” shall have the meaning set forth in Article 9 of the UCC.

“Landlord Lien Waiver” means any landlord waiver or other agreement, in form and substance satisfactory to the Administrative Agent, between the Administrative Agent and any third party (including any bailee, consignee, customs broker, or other similar Person) in possession of any Collateral or any landlord of any Loan Party for any real property where any Collateral is located, as such landlord waiver or other agreement may be amended, restated, or otherwise modified from time to time.

“Lenders” means the lenders party to the Credit Agreement and their successors and assigns.

“Letter-of-Credit Rights” shall have the meaning set forth in Article 9 of the UCC.

“Licenses” means, with respect to any Person, all of such Person’s right, title, and interest in and to (a) any and all licensing agreements or similar arrangements in and to its Patents, Copyrights, or Trademarks, (b) all income, royalties, damages, claims, and payments now or hereafter due or payable under and with respect thereto, including, without limitation, damages and payments for past and future breaches thereof, and (c) all rights to xxx for past, present, and future breaches thereof.

“Lock Boxes” shall have the meaning set forth in Section 7.1(a).

“Lock Box Agreements” shall have the meaning set forth in Section 7.1(a).

“Patents” means, with respect to any Person, all of such Person’s right, title, and interest in and to:  (a) any and all patents and patent applications; (b) all inventions and improvements described and claimed therein; (c) all reissues, divisions, continuations, renewals, extensions, and continuations-in-part thereof; (d) all income, royalties, damages, claims, and payments now or hereafter due or payable under and with respect thereto, including, without limitation, damages and payments for past and future infringements thereof; (e) all rights to xxx for past, present, and future infringements thereof; and (f) all rights corresponding to any of the foregoing throughout the world.

“Pledged Collateral” means all Instruments, Securities and other Investment Property of the Grantors, whether or not physically delivered to the Administrative Agent pursuant to this Security Agreement.

“Receivables” means the Accounts, Chattel Paper, Documents, Investment Property, Instruments and any other rights or claims to receive money which are General Intangibles or which are otherwise included as Collateral.

“Required Secured Parties” means (a) prior to an acceleration of the Secured Obligations under the Credit Agreement, the Required Lenders, (b) after an acceleration of the Secured Obligations under the Credit

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Agreement but prior to the date upon which the Credit Agreement has terminated by its terms and all of the obligations thereunder have been paid in full, Lenders holding in the aggregate at least a majority of the total of the Aggregate Credit Exposure, and (c) after the Credit Agreement has terminated by its terms and all of the Secured Obligations thereunder have been paid in full (whether or not the Secured Obligations under the Credit Agreement were ever accelerated), Lenders holding in the aggregate at least a majority of the aggregate net early termination payments and all other amounts then due and unpaid from any Grantor to the Lenders under Swap Agreement, as determined by the Administrative Agent in its reasonable discretion.

“Section” means a numbered section of this Security Agreement, unless another document is specifically referenced.

“Security” has the meaning set forth in Article 8 of the UCC.

“Stock Rights” means all dividends, instruments or other distributions and any other right or property which the Grantors shall receive or shall become entitled to receive for any reason whatsoever with respect to, in substitution for or in exchange for any capital stock constituting Collateral, any right to receive capital stock and any right to receive earnings, in which the Grantors now have or hereafter acquire any right, issued by an issuer of such capital stock.

“Supporting Obligations” shall have the meaning set forth in Article 9 of the UCC.

“Trademarks” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following:  (a) all trademarks (including service marks), trade names, trade dress, and trade styles and the registrations and applications for registration thereof and the goodwill of the business symbolized by the foregoing; (b) all licenses of the foregoing, whether as licensee or licensor; (c) all renewals of the foregoing; (d) all income, royalties, damages, and payments now or hereafter due or payable with respect thereto, including, without limitation, damages, claims, and payments for past and future infringements thereof; (e) all rights to xxx for past, present, and future infringements of the foregoing, including the right to settle suits involving claims and demands for royalties owing; and (f) all rights corresponding to any of the foregoing throughout the world.

“UCC” means the Uniform Commercial Code, as in effect from time to time, of the State of New York or of any other state the laws of which are required as a result thereof to be applied in connection with the attachment, perfection or priority of, or remedies with respect to, Administrative Agent’s or any Lender’s Lien on any Collateral.

The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms.

ARTICLE II

GRANT OF SECURITY INTEREST

Each Grantor hereby pledges, assigns and grants to the Administrative Agent, on behalf of and for the ratable benefit of the Secured Parties, a security interest in all of its right, title and interest in, to and under all personal property and other assets, whether now owned by or owing to, or hereafter acquired by or arising in favor of such Grantor (including under any trade name or derivations thereof), and whether owned or consigned by or to, or leased from or to, such Grantor, and regardless of where located (all of which will be collectively referred to as the “Collateral”), including:

(i)		all Accounts;
(ii)		all Chattel Paper;
(iii)		all Copyrights, Patents and Trademarks;
(iv)		all Documents;

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(v)		all Equipment;
(vi)		all Fixtures;
(vii)		all General Intangibles;
(viii)		all Goods;
(ix)		all Instruments;
(x)		all Inventory;
(xi)		all Investment Property;
(xii)		all cash or cash equivalents;
(xiii)		all letters of credit, Letter-of-Credit Rights and Supporting Obligations;
(xiv)		all Deposit Accounts with any bank or other financial institution;
(xv)		all Commercial Tort Claims;
(xvi)		and all accessions to, substitutions for and replacements, proceeds (including Stock Rights), insurance proceeds and products of the foregoing, together with all books and records, customer lists, credit files, computer files, programs, printouts and other computer materials and records related thereto and any General Intangibles at any time evidencing or relating to any of the foregoing;

to secure the prompt and complete payment and performance of the Secured Obligations (or, in the case of SMBI Inc., the Canadian Secured Obligations).

Notwithstanding anything contained herein to the contrary, (i) the total amount of shares of capital stock or other ownership interests of any Person pledged pursuant to this Security Agreement that is not incorporated or organized in the United States (other than the shares of capital stock and other ownership interests in the Canadian Borrower) shall in no event exceed sixty-five percent (65%) of the total outstanding shares of capital stock or such other ownership interests thereof, (ii) no grant of a security interest hereunder in intellectual property (including Copyrights, Patents and Trademarks) shall constitute an assignment of such intellectual property, (iii) no security interest in contractual rights shall be granted hereby to the extent and for so long as the grant of a security interest therein pursuant hereto would violate the terms of the agreement under which such contractual rights arise or exist to the extent such prohibition is enforceable under applicable law, (iv) no security interest shall be granted hereby in rights under governmental licenses, authorizations or any other asset of any Grantor, to the extent and for so long as the grant of a security interest therein is prohibited by law, and (v) no security interest shall be granted hereby in any intent-to-use trademark or service xxxx application prior to the filing of a statement or use or amendment to allege use, or any other intellectual property, to the extent that applicable law or regulation prohibits the creation of a security interest or would otherwise result in the loss of rights from the creation of such security interest or from the assignment of such rights upon the occurrence and during the continuance of a Default.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Each Grantor represents and warrants to the Administrative Agent and the Lenders that:

3.1. Title, Perfection and Priority.  As of the Filing Date, such Grantor has good and valid rights in or the power to transfer the Collateral and title to the Collateral with respect to which it has purported to grant a security interest hereunder, free and clear of all Liens except for Liens permitted under Section 4.1(e), and has full power and authority to grant to the Administrative Agent the security interest in such Collateral pursuant hereto.  Upon entry of the Interim Order, the Administrative Agent will have a fully perfected first priority security interest in the Collateral of the Grantor, subject only to Liens permitted under Section 4.1(e).

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3.2. Type and Jurisdiction of Organization, Organizational and Identification Numbers.  The type of entity of such Grantor, its state of organization, the organizational number issued to it by its state of organization and its federal employer identification number are set forth on Exhibit A.

3.3. Principal Location.  Such Grantor’s mailing address and the location of its place of business (if it has only one) or its chief executive office (if it has more than one place of business), are disclosed in Exhibit A; such Grantor has no other places of business except those set forth in Exhibit A.

3.4. Collateral Locations.  As of the Filing Date, all of such Grantor’s locations where Collateral is located are listed on Exhibit A.  As of the Filing Date, all of said locations are owned by such Grantor except for locations (i) which are leased by the Grantor as lessee and designated in Part VII(b) of Exhibit A and (ii) at which Inventory is held in a public warehouse or is otherwise held by a bailee or on consignment as designated in Part VII(c) of Exhibit A.

3.5. Deposit Accounts.  As of the Filing Date, all of such Grantor’s Deposit Accounts are listed on Exhibit B.

3.6. Exact Names.  Such Grantor’s name in which it has executed this Security Agreement is the exact name as it appears in such Grantor’s organizational documents, as amended, as filed with such Grantor’s jurisdiction of organization.  Except as set forth on Exhibit A, such Grantor has not, during the past five years, been known by or used any other corporate or fictitious name, or been a party to any merger or consolidation, or been a party to any acquisition.

3.7. Letter-of-Credit Rights and Chattel Paper.  Exhibit C lists all Letter-of-Credit Rights with respect to each letter of credit in a face amount in excess of $5,000,000 and Chattel Paper in an amount in excess of $1,000,000 of such Grantor as of the Filing Date.  All action by such Grantor necessary or desirable to protect and perfect the Administrative Agent’s Lien on each item listed on Exhibit C (including the delivery of all originals and the placement of a legend on all Chattel Paper as required hereunder) has been duly taken. Upon entry of the Interim Order, the Administrative Agent will have a fully perfected first priority security interest in the Collateral listed on Exhibit C, subject only to Liens permitted under Section 4.1(e).

3.8. Accounts and Chattel Paper.

(a) The names of the obligors, amounts owing, due dates and other material information with respect to its Accounts and Chattel Paper are and will be correctly stated in all records of such Grantor relating thereto and in all invoices and Collateral Reports with respect thereto furnished to the Administrative Agent by such Grantor from time to time.  As of the time when each Account or each item of Chattel Paper arises, such Grantor shall be deemed to have represented and warranted that such Account or Chattel Paper, as the case may be, and all records relating thereto, are genuine and in all material respects what they purport to be.

(b) As of the Filing Date, with respect to its Accounts, except as specifically disclosed on the most recent Collateral Report, (i) all Accounts are Eligible Accounts; (ii) all Accounts represent bona fide sales of Inventory or rendering of services to Account Debtors in the ordinary course of such Grantor’s business and are not evidenced by a judgment, Instrument or Chattel Paper; (iii) there are no setoffs, claims or disputes existing or asserted with respect thereto and such Grantor has not made any agreement with any Account Debtor for any extension of time for the payment thereof, any compromise or settlement for less than the full amount thereof, any release of any Account Debtor from liability therefor, or any deduction therefrom except a discount or allowance allowed by such Grantor in the ordinary course of its business for prompt payment and disclosed to the Administrative Agent; (iv) to such Grantor’s knowledge, there are no facts, events or occurrences which in any way impair the validity or enforceability thereof or could reasonably be expected to reduce the amount payable thereunder as shown on such Grantor’s books and records and any invoices, statements and Collateral Reports with respect thereto; (v) such Grantor has not received any notice of proceedings or actions which are threatened or pending against any Account Debtor which might result in any adverse change in such Account

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Debtor’s financial condition; and (vi) such Grantor has no knowledge that any Account Debtor is unable generally to pay its debts as they become due.

(c) In addition, as of the Filing Date, with respect to all of its Accounts, (i) the amounts shown on all invoices, statements and Collateral Reports with respect thereto are actually and absolutely owing to such Grantor as indicated thereon and are not in any way contingent; and (ii) to such Grantor’s knowledge, all Account Debtors have the capacity to contract.

3.9. Inventory.  As of the Filing Date, with respect to any of its Inventory scheduled or listed on the most recent Collateral Report, (a) such Inventory (other than Inventory in transit) is located at one of such Grantor’s locations set forth on Exhibit A, (b) no Inventory (other than Inventory in transit) is now, or shall at any time or times hereafter be stored at any other location except as permitted by Section 4.1(g), (c) such Grantor has good, indefeasible and merchantable title to such Inventory and such Inventory is not subject to any Lien or security interest or document whatsoever except for the Lien granted to the Administrative Agent, for the benefit of the Administrative Agent and Lenders, and except for Permitted Liens, (d) except as specifically disclosed in the most recent Collateral Report, such Inventory is Eligible Inventory of good and merchantable quality, free from any defects, (e) such Inventory is not subject to any licensing, patent, royalty, trademark, trade name or copyright agreements with any third parties which would require any consent of any third party upon sale or disposition of that Inventory or the payment of any monies to any third party upon such sale or other disposition, (f) such Inventory has been produced in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and all rules, regulations and orders thereunder and (g) the completion of manufacture, sale or other disposition of such Inventory by the Administrative Agent following an Event of Default shall not require the consent of any Person and shall not constitute a breach or default under any contract or agreement to which such Grantor is a party or to which such property is subject.

3.10. Intellectual Property. As of the Filing Date, such Grantor does not have any interest in, or title to, any registered Patent, Trademark or Copyright except as set forth in Schedule 3.12 to the Credit Agreement.  This Security Agreement is effective to create a valid and continuing Lien and security interest in favor of the Administrative Agent on such Grantor’s Patents, Trademarks and Copyrights.  Upon entry of the Interim Order, the Administrative Agent will have a fully perfected first priority security interest in such Grantor’s Patents, Trademarks and Copyrights, subject only to Liens permitted by Section 4.1(e).

3.11. Filing Requirements.  As of the Filing Date, none of its Equipment is covered by any certificate of title, except for vehicles.  None of the Collateral owned by it is of a type for which security interests or liens may be perfected by filing under any federal statute except for Patents, Trademarks and Copyrights held by such Grantor and described in Schedule 3.12 to the Credit Agreement.  The street address of each property on which any Fixtures may be located is set forth in Exhibit D.

3.12. No Financing Statements, Security Agreements.  As of the Filing Date, no financing statement or security agreement describing all or any portion of the Collateral which has not lapsed or been terminated naming such Grantor as debtor has been filed or is of record in any jurisdiction except (a) for financing statements or security agreements naming the Administrative Agent on behalf of the Lenders as the secured party and (b) as permitted by Section 4.1(e).

3.13. Pledged Collateral.

(a) As of the Filing Date, Exhihbit E sets forth a complete and accurate list of all Pledged Collateral owned by such Grantor.  Such Grantor, is the direct, sole beneficial owner and sole holder of record of the Pledged Collateral listed on Exhihbit E as being owned by it, free and clear of any Liens, except for Liens permitted under Section 4.1(e).  Such Grantor further represents and warrants that (i) all Pledged Collateral owned by it constituting capital stock has been (to the extent such concepts are relevant with respect to such Pledged Collateral) duly authorized, validly issued, are fully paid and non-assessable, (ii) with respect to any certificates delivered to the Administrative Agent representing capital stock, either such certificates are

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Securities as defined in Article 8 of the UCC as a result of actions by the issuer or otherwise, or, if such certificates are not Securities, such Grantor has so informed the Administrative Agent so that the Administrative Agent may take steps to perfect its security interest therein as a General Intangible, (iii) all such Pledged Collateral held by a securities intermediary is (or, within 60 days of the Filing Date, will be) covered by a control agreement among such Grantor, the securities intermediary and the Administrative Agent pursuant to which the Administrative Agent has Control, (iv) all Pledged Collateral which represents Indebtedness owed to such Grantor by another Grantor or Subsidiary has been duly authorized, authenticated or issued and delivered by the issuer of such Indebtedness, is the legal, valid and binding obligation of such issuer and such issuer is not in default thereunder and (v) to such Grantor’s knowledge, all Pledged Collateral which represents Indebtedness owed to such Grantor (other than Indebtedness covered by item (iv) above) has been duly authorized, authenticated or issued and delivered by the issuer of such Indebtedness, is the legal, valid and binding obligation of such issuer and such issuer is not in default thereunder.

(b) In addition, (i) none of the Pledged Collateral owned by it has been issued or transferred in violation of the securities registration, securities disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject, (ii) except as set forth on Exhihbit E, there are existing no options, warrants, calls or commitments of any character whatsoever relating to such Pledged Collateral or which obligate the issuer of any capital stock included in the Pledged Collateral to issue additional capital stock, and (iii) no consent, approval, authorization, or other action by, and no giving of notice, filing with, any governmental authority or any other Person, other than the Bankruptcy Court in connection with the Orders, is required for the pledge by such Grantor of such Pledged Collateral pursuant to this Security Agreement or for the execution, delivery and performance of this Security Agreement by such Grantor, or for the exercise by the Administrative Agent of the voting or other rights provided for in this Security Agreement or for the remedies in respect of the Pledged Collateral pursuant to this Security Agreement, except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally.

(c) Except as set forth in Exhihbit E, such Grantor owns 100% of the issued and outstanding capital stock which constitute Pledged Collateral owned by it and, to such Grantor’s knowledge, none of the Pledged Collateral which represents Indebtedness owed to such Grantor is subordinated in right of payment to other Indebtedness or subject to the terms of an indenture.

3.14. Bankruptcy Court.  Upon the entry by the Bankruptcy Court and the Canadian Court, as applicable, of the Orders, this Security Agreement shall have been duly executed and delivered by the Grantors.  Upon the entry by the Bankruptcy Court and the Canadian Court, as applicable, of the Orders this Security Agreement when delivered hereunder or thereunder, will be, a legal, valid and binding obligation of each Grantor, enforceable against the Grantors in accordance with its terms and the Orders.

ARTICLE IV

COVENANTS

From the date of this Security Agreement, and thereafter until this Security Agreement is terminated, each Grantor agrees that:

4.1. General.

(a) Collateral Records.  Such Grantor will maintain complete and accurate books and records with respect to the Collateral owned by it.

(b) Authorization to File Financing Statements; Ratification.  Such Grantor hereby authorizes the Administrative Agent to file, without further order of the Bankruptcy Court or the Canadian Court, and if requested will deliver to the Administrative Agent, all financing statements and other documents and take such other actions as may from time to time be requested by the Administrative Agent in order to maintain a first perfected security interest in and, if applicable, Control of, the Collateral owned by such Grantor.  Any financing statement filed by the Administrative Agent may be filed in any filing office in any

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UCC jurisdiction and may (i) indicate such Grantor’s Collateral (1) as all assets of the Grantor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC or such jurisdiction, or (2) by any other description which reasonably approximates the description contained in this Security Agreement, and (ii) contain any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including (A) whether such Grantor is an organization, the type of organization and any organization identification number issued to such Grantor, and (B) in the case of a financing statement filed as a fixture filing or indicating such Grantor’s Collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates.  Such Grantor also agrees to furnish any such information to the Administrative Agent promptly upon request.  Such Grantor also ratifies its authorization for the Administrative Agent to have filed in any UCC jurisdiction any initial financing statements or amendments thereto if filed prior to the date hereof.

(c) Further Assurances.  Such Grantor will, if so requested by the Administrative Agent (and without further order of the Bankruptcy Court or the Canadian Court), furnish to the Administrative Agent, as often as the Administrative Agent requests in its Permitted Discretion, statements and schedules further identifying and describing the Collateral owned by it and such other reports and information in connection with its Collateral as the Administrative Agent may reasonably request, all in such detail as the Administrative Agent may specify.  Such Grantor also agrees to take any and all actions necessary to defend title to the Collateral against all persons and to defend the security interest of the Administrative Agent in its Collateral and the priority thereof against any Lien not expressly permitted hereunder.

(d) Disposition of Collateral.  Such Grantor will not sell, lease or otherwise dispose of the Collateral owned by it except for dispositions specifically permitted pursuant to Section 6.12 of the Credit Agreement.

(e) Liens.  Such Grantor will not create, incur, or suffer to exist any Lien on the Collateral owned by it except (i) the security interest created by this Security Agreement, and (ii) other Permitted Liens.

(f) Other Financing Statements.  Such Grantor will not authorize the filing of any financing statement naming it as debtor covering all or any portion of the Collateral owned by it, except as permitted by Section 4.1(e).  Such Grantor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement without the prior written consent of the Administrative Agent, subject to such Grantor’s rights under Section 9-509(d)(2) of the UCC.

(g) Locations. Such Grantor will not maintain any Collateral owned by it at any location other than those locations listed on Exhibit A, provided that such Grantor may amend Exhibit A to change, or add to, such locations after giving the Administrative Agent 30 days prior written notice (provided further that such Grantor shall exercise commercially reasonable efforts to obtain a Landlord Lien Waiver for each such location which is not owned by such Grantor if more than $100,000 of Collateral is maintained at such location).

(h) Compliance with Terms.  Such Grantor will perform and comply in all material respects with all obligations in respect of the Collateral owned by it and all agreements to which it is a party or by which it is bound relating to such Collateral.

4.2. Receivables.

(a) Certain Agreements on Receivables.  Such Grantor will not make or agree to make any discount, credit, rebate or other reduction in the original amount owing on a Receivable or accept in satisfaction of a Receivable less than the original amount thereof, except that, prior to the occurrence of an Event of Default, such Grantor may reduce the amount of Accounts arising from the sale of Inventory in accordance with its present policies and in the ordinary course of business.

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(b) Collection of Receivables.  Except as otherwise provided in this Security Agreement, such Grantor will collect and enforce, at such Grantor’s sole expense, all amounts due or hereafter due to such Grantor under the Receivables owned by it.

(c) Delivery of Invoices.  At any time when an Event of Default exists, such Grantor will deliver to the Administrative Agent immediately upon its request duplicate invoices with respect to each Account owned by it bearing such language of assignment as the Administrative Agent shall specify.

(d) Disclosure of Material Reductions in Receivables.  Such Grantor, promptly upon obtaining knowledge of any event, circumstance or change that has occurred since the most recent date on which a Borrowing Base Certificate was required to be delivered pursuant to Section 5.8 of the Credit Agreement that could materially reduce the aggregate amount of Eligible Accounts or result in a material portion of the Eligible Accounts ceasing to be Eligible Accounts, shall promptly disclose such fact to the Administrative Agent in writing.

(e) Electronic Chattel Paper.  Such Grantor shall take all steps necessary to grant the Administrative Agent Control of all electronic chattel paper in accordance with the UCC and all “transferable records” as defined in each of the Uniform Electronic Transactions Act and the Electronic Signatures in Global and National Commerce Act.

4.3. Inventory and Equipment.

(a) Maintenance of Goods.  Such Grantor will do all things necessary to maintain, preserve, protect and keep its Inventory and the Equipment in good repair and working and saleable condition, except for damaged or defective goods arising in the ordinary course of such Grantor’s business and except for ordinary wear and tear in respect of the Equipment.

(b) Returned Inventory.  If an Account Debtor returns any Inventory to such Grantor when no Event of Default exists, then such Grantor shall promptly determine the reason for such return and shall issue a credit memorandum to the Account Debtor in the appropriate amount.  Such Grantor shall promptly report to the Administrative Agent any return involving an amount in excess of $500,000.  Each such report shall indicate the reasons for the returns and the locations and condition of the returned Inventory.  In the event any Account Debtor returns Inventory to such Grantor when an Event of Default exists, such Grantor, upon the request of the Administrative Agent, shall: (i) hold the returned Inventory in trust for the Administrative Agent; (ii) segregate all returned Inventory from all of its other property; (iii) dispose of the returned Inventory solely according to the Administrative Agent’s written instructions; and (iv) not issue any credits or allowances with respect thereto without the Administrative Agent’s prior written consent.  All returned Inventory shall be subject to the Administrative Agent’s Liens thereon.  Whenever any Inventory is returned, the related Account shall be deemed ineligible to the extent of the amount owing by the Account Debtor with respect to such returned Inventory and such returned Inventory shall not be Eligible Inventory.

(c) Inventory Count.  Such Grantor will conduct a physical count of its Inventory at least once per fiscal year, and after and during the continuation of an Event of Default, at such other times as the Administrative Agent requests. Such Grantor, at its own expense, shall deliver to the Administrative Agent the results of each physical verification, which such Grantor has made, or has caused any other Person to make on its behalf, of all or any portion of its Inventory.

(d) Equipment.  Such Grantor shall promptly inform the Administrative Agent of any additions to or deletions from its Equipment which individually exceed $5,000,000.  Such Grantor shall not permit any Equipment to become a fixture with respect to real property or to become an accession with respect to other personal property with respect to which real or personal property the Administrative Agent does not have a Lien of the same priority as the Lien on such Equipment prior thereto.  Such Grantor will not, without the Administrative Agent’s prior written consent, alter or remove any identifying symbol or number on any of such Grantor’s Equipment constituting Eligible Equipment.

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(e) Titled Vehicles.  Upon the Administrative Agent’s request, such Grantor will provide to the Administrative Agent a schedule of all vehicles owned by such Grantor that are covered by a certificate of title and deliver to the Administrative Agent, upon request, the original of any vehicle title certificate and provide and/or file all other documents or instruments necessary to have the Lien of the Administrative Agent noted on any such certificate or with the appropriate state office.

4.4. Delivery of Instruments, Securities, Chattel Paper and Documents. Such Grantor will (a) deliver to the Administrative Agent immediately upon execution of this Security Agreement the originals of each item of Chattel Paper in an amount in excess of $1,000,000, each certificated Security having a face or fair market value in excess of $1,000,000 and each Instrument in a principal amount in excess of $1,000,000 owned by it (if any then exist), (b) hold in trust for the Administrative Agent upon receipt and immediately thereafter deliver to the Administrative Agent any such Chattel Paper, Securities and Instruments, (c) upon the Administrative Agent’s request, deliver to the Administrative Agent (and thereafter hold in trust for the Administrative Agent upon receipt and immediately deliver to the Administrative Agent) any Document evidencing or constituting Collateral having a value in excess of $1,000,000 and (d) upon the Administrative Agent’s request, deliver to the Administrative Agent a duly executed amendment to this Security Agreement, in the form of Exhihbit F hereto (the “Amendment”), pursuant to which such Grantor will pledge such additional Collateral.  Such Grantor hereby authorizes the Administrative Agent to attach each Amendment to this Security Agreement and agrees that all additional Collateral owned by it set forth in such Amendments shall be considered to be part of the Collateral.

4.5. Uncertificated Pledged Collateral. Such Grantor will permit the Administrative Agent from time to time to cause the appropriate issuers (and, if held with a securities intermediary, such securities intermediary) of uncertificated securities or other types of Pledged Collateral owned by it not represented by certificates to xxxx their books and records with the numbers and face amounts of all such uncertificated securities or other types of Pledged Collateral not represented by certificates and all rollovers and replacements therefor to reflect the Lien of the Administrative Agent granted pursuant to this Security Agreement.  With respect to any Pledged Collateral owned by it, promptly, upon request of the Administrative Agent, such Grantor will take any actions necessary to cause (a) the issuers of uncertificated securities which are Pledged Collateral and (b) any securities intermediary which is the holder of any such Pledged Collateral, to cause the Administrative Agent to have and retain Control over such Pledged Collateral.  Without limiting the foregoing, such Grantor will, with respect to any such Pledged Collateral held with a securities intermediary, cause such securities intermediary within 60 days after the Filing Date to enter into a control agreement with the Administrative Agent, in form and substance satisfactory to the Administrative Agent, giving the Administrative Agent Control.  Each Grantor confirms and agrees that each issuer of uncertificated securities which are Pledged Collateral shall comply with any instructions that are originated by the Administrative Agent without any further consent of such Grantor.  Each Grantor that is an issuer of Pledged Collateral hereby acknowledges and agrees to comply with any instructions that are originated by the Administrative Agent without any further consent of any such Grantor in accordance with this Section.

4.6. Pledged Collateral.

(a) Changes in Capital Structure of Issuers. Such Grantor will not, except to the extent expressly permitted by the Credit Agreement, (i) permit or suffer any other Grantor or Subsidiary thereof to dissolve, liquidate, retire any of its capital stock or other Instruments or Securities evidencing ownership, reduce its capital, sell or encumber all or substantially all of its assets or merge or consolidate with any other entity, or (ii) vote any such Pledged Collateral in favor of any of the foregoing.

(b) Issuance of Additional Securities.  Such Grantor will not permit or suffer the issuer of capital stock constituting Pledged Collateral consisting of ownership interests in a Subsidiary owned by it to issue additional capital stock, any right to receive the same or any right to receive earnings, except to such Grantor.

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(c) Registration of Pledged Collateral.  Such Grantor will permit any registerable Pledged Collateral owned by it to be registered in the name of the Administrative Agent or its nominee at any time at the option of the Required Secured Parties.

(d) Exercise of Rights in Pledged Collateral.

(i) Without in any way limiting the foregoing and subject to clause (ii) below, such Grantor shall have the right to exercise all voting rights or other rights relating to the Pledged Collateral owned by it for all purposes not inconsistent with this Security Agreement, the Credit Agreement or any other Loan Document; provided however, that no vote or other right shall be exercised or action taken which would have the effect of impairing the rights of the Administrative Agent in respect of such Pledged Collateral.

(ii) Such Grantor will permit the Administrative Agent or its nominee at any time after the occurrence of an Event of Default, without notice, subject to Section 5.2(h), to exercise all voting rights or other rights relating to the Pledged Collateral owned by it, including, without limitation, exchange, subscription or any other rights, privileges, or options pertaining to any capital stock or Investment Property constituting such Pledged Collateral as if it were the absolute owner thereof.

(iii) Such Grantor shall be entitled to collect and receive for its own use all cash dividends and interest paid in respect of the Pledged Collateral owned by it to the extent not in violation of the Credit Agreement other than any of the following distributions and payments (collectively referred to as the “Excluded Payments”): (A) dividends and interest paid or payable other than in cash in respect of such Pledged Collateral, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Collateral;  (B) dividends and other distributions paid or payable in cash in respect of such Pledged Collateral in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in capital of an issuer; and (C) cash paid, payable or otherwise distributed, in respect of principal of, or in redemption of, or in exchange for, such Pledged Collateral; provided however, that until actually paid, all rights to such distributions shall remain subject to the Lien created by this Security Agreement; and

(iv) All Excluded Payments and all other distributions in respect of any of the Pledged Collateral owned by such Grantor, whenever paid or made, shall be delivered to the Administrative Agent to hold as Pledged Collateral and shall, if received by such Grantor, be received in trust for the benefit of the Administrative Agent, be segregated from the other property or funds of such Grantor, and be forthwith delivered to the Administrative Agent as Pledged Collateral in the same form as so received (with any necessary endorsement).

4.7. Intellectual Property.

(a) Such Grantor will use its best efforts to secure all consents and approvals necessary or appropriate for the assignment to or benefit of the Administrative Agent of any License held by such Grantor and to enforce the security interests granted hereunder.

(b) Such Grantor shall notify the Administrative Agent immediately if it knows or has reason to know that any application or registration relating to any Patent, Trademark or Copyright (now or hereafter existing) may become abandoned or dedicated, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court) regarding such Grantor’s ownership of any Patent, Trademark or Copyright, its right to register the same, or to keep and maintain the same.

(c) In no event shall such Grantor, either directly or through any agent, employee, licensee or designee, file an application for the registration of any Patent, Trademark or Copyright with the United States

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Patent and Trademark Office, the United States Copyright Office or any similar office or agency without giving the Administrative Agent prior written notice thereof, and, upon request of the Administrative Agent, such Grantor shall execute and deliver any and all security agreements as the Administrative Agent may request to evidence the Administrative Agent’s first priority security interest on such Patent, Trademark or Copyright, and the General Intangibles of such Grantor relating thereto or represented thereby.

(d) Such Grantor shall take all actions necessary or requested by the Administrative Agent to maintain and pursue each application, to obtain the relevant registration and to maintain the registration of each of its Patents, Trademarks and Copyrights (now or hereafter existing), including the filing of applications for renewal, affidavits of use, affidavits of noncontestability and opposition and interference and cancellation proceedings, unless the Administrative Agent shall determine that such Patent, Trademark or Copyright is not material to the conduct of such Grantor’s business.

(e) Such Grantor shall, unless it shall reasonably determine that such Patent, Trademark or Copyright is in no way material to the conduct of its business or operations, promptly xxx for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and shall take such other actions as the Administrative Agent shall deem appropriate under the circumstances to protect such Patent, Trademark or Copyright.  In the event that such Grantor institutes suit because any of its Patents, Trademarks or Copyrights constituting Collateral is infringed upon, or misappropriated or diluted by a third party, such Grantor shall comply with Section 4.8.

4.8 Commercial Tort Claims.  Such Grantor shall promptly, and in any event within two Business Days after the same is acquired by it, notify the Administrative Agent of any commercial tort claim (as defined in the UCC) having, in such Grantor’s reasonable business judgment, a value in excess of $1,000,000, acquired by it and, unless the Administrative Agent otherwise consents, such Grantor shall enter into an amendment to this Security Agreement, in the form of Exhihbit F hereto, granting to Administrative Agent a first priority security interest in such commercial tort claim.

4.9. Letter-of-Credit Rights.  If such Grantor is or becomes the beneficiary of a letter of credit with a stated amount in excess of $5,000,000, it shall promptly, and in any event within two Business Days after becoming a beneficiary, notify the Administrative Agent thereof and cause the issuer and/or confirmation bank to (i) consent to the assignment of any Letter-of-Credit Rights to the Administrative Agent and (ii) agree to direct all payments thereunder to a Deposit Account at the Administrative Agent or subject to a Deposit Account Control Agreement for application to the Secured Obligations, in accordance with Section 2.15 of the Credit Agreement, all in form and substance reasonably satisfactory to the Administrative Agent.

4.10. Federal, State or Municipal Claims.  Such Grantor will promptly notify the Administrative Agent of any Collateral having a value in excess of $1,000,000 which constitutes a claim against the United States government or any state or local government or any instrumentality or agency thereof, the assignment of which claim is restricted by federal, state or municipal law.

4.11. No Interference.  Such Grantor agrees that it will not interfere with any right, power and remedy of the Administrative Agent provided for in this Security Agreement or now or hereafter existing at law or in equity or by statute or otherwise, or the exercise or beginning of the exercise by the Administrative Agent of any one or more of such rights, powers or remedies.

4.12. Insurance.

(a) In the event any Collateral is located in any area that has been designated by the Federal Emergency Management Agency as a “Special Flood Hazard Area”, such Grantor shall purchase and maintain flood insurance on such Collateral (including any personal property which is located on any real property leased by such Loan Party within a “Special Flood Hazard Area”).  The amount of flood insurance required by this Section shall be in an amount equal to the lesser of the total Commitment or the total replacement cost value of the improvements.

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(b) All insurance policies required hereunder and under Section 5.3 of the Credit Agreement shall name the Administrative Agent (for the benefit of the Administrative Agent and the Lenders) as an additional insured or as loss payee, as applicable, and shall contain loss payable clauses or mortgagee clauses, through endorsements in form and substance satisfactory to the Administrative Agent, which provide that: (i) all proceeds thereunder with respect to any Collateral shall be payable to the Administrative Agent; (ii) no such insurance shall be affected by any act or neglect of the insured or owner of the property described in such policy; and (iii) such policy and loss payable or mortgagee clauses may be canceled, amended, or terminated only upon at least thirty days prior written notice given to the Administrative Agent.

(c) All premiums on any such insurance shall be paid when due by such Grantor, and promptly upon request of the Administrative Agent, copies of the policies shall be delivered to the Administrative Agent.  If such Grantor fails to obtain any insurance as required by this Section, the Administrative Agent may obtain such insurance at the Borrower’s expense.  By purchasing such insurance, the Administrative Agent shall not be deemed to have waived any Default arising from the Grantor’s failure to maintain such insurance or pay any premiums therefor.

4.13. Landlord Lien Waivers.  Such Grantor shall use commercially reasonable efforts to obtain a Landlord Lien Waiver, from the lessor of each leased property, mortgagee of owned property or bailee or consignee with respect to any warehouse, processor or converter facility or other location where Collateral having a value in excess of $100,000 is stored or located, which agreement or letter shall provide access rights, contain a waiver or subordination of all Liens or claims that the landlord, mortgagee, bailee or consignee may assert against the Collateral at that location, and shall otherwise be reasonably satisfactory in form and substance to the Administrative Agent. With respect to such locations or warehouse space leased as of the Closing Date and thereafter, if the Administrative Agent has not received a Landlord Lien Waiver as of the Effective Date (or, if later, as of the date such location is acquired or leased), Borrower’s Eligible Inventory at that location shall be subject to such Reserves as may be established by the Administrative Agent in accordance with the provisions of the Credit Agreement.  After the Closing Date, no real property or warehouse space shall be leased by such Grantor and no Inventory shall be shipped to a processor or converter under arrangements established after the Closing Date, unless and until a satisfactory Landlord Lien Waiver shall first have been obtained with respect to such location and if it has not been obtained, Borrower’s Eligible Inventory at that location shall be subject to the establishment of Reserves acceptable to the Administrative Agent in accordance with the provisions of the Credit Agreement.  Such Grantor shall timely and fully pay and perform its obligations under all leases and other agreements with respect to each leased location or third party warehouse where any Collateral is or may be located.

4.14. Deposit Account Control Agreements.  Such Grantor (other than Calpine) will provide to the Administrative Agent upon the Administrative Agent’s request, a Deposit Account Control Agreement duly executed on behalf of each financial institution holding a deposit account (other than zero balance accounts, payroll accounts and withholding tax payment accounts) of such Grantor in which an average balance of at least $1,000,000 is maintained; provided that, the aggregate average balance in such deposit accounts (other than deposit accounts of Calpine, zero balance accounts, payroll accounts and withholding tax payment accounts) as to which a Deposit Account Control Agreement is not in effect shall not exceed $5,000,000; provided further that, the Administrative Agent may, in its discretion, defer delivery of any such Deposit Account Control Agreement, establish a Reserve with respect to any deposit account for which the Administrative Agent has not received such Deposit Account Control Agreement, and require such Grantor to open and maintain a new deposit account with a financial institution subject to a Deposit Account Control Agreement.

4.15. Change of Name or Location; Change of Fiscal Year.  Such Grantor shall not (a) change its name as it appears in official filings in the state of its incorporation or organization, (b) change its chief executive office, principal place of business, mailing address, or the location of its records concerning the Collateral as set forth in the Security Agreement, (c) change the type of entity that it is, (d) change its organization identification number, if any, issued by its state of incorporation or other organization, or (e) change its state of incorporation or organization, in each case, unless the Administrative Agent shall have received at least thirty days prior

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written notice of such change and the Administrative Agent shall have acknowledged in writing that either (1) such change will not adversely affect the validity, perfection or priority of the Administrative Agent’s security interest in the Collateral, or (2) any reasonable action requested by the Administrative Agent in connection therewith has been completed or taken (including any action to continue the perfection of any Liens in favor of the Administrative Agent, on behalf of Lenders, in any Collateral), provided that, any new location shall be in the continental U.S. or in Canada.  Such Grantor shall not change its fiscal year which currently ends on December 31.

ARTICLE V

EVENTS OF DEFAULT AND REMEDIES

5.1. Events of Default.  The occurrence of any one or more of the following events shall constitute an Event of Default hereunder:

(a) Any representation or warranty made by or on behalf of any Grantor under or in connection with this Security Agreement shall be materially false as of the date on which made.

(b) The breach by any Grantor of any of the terms or provisions of Article IV or Article VII.

(c) The breach by any Grantor (other than a breach which constitutes an Event of Default under any other Section of this Article V) of any of the terms or provisions of this Security Agreement which is not remedied within ten days after such breach.

(d) The occurrence of any “Event of Default” under, and as defined in, the Credit Agreement.

(e) Any capital stock which is included within the Collateral shall at any time constitute a Security or the issuer of any such capital stock shall take any action to have such interests treated as a Security (other than any Securities having a face or fair market value of $1,000,000 or less which are not issued by a Grantor hereunder) unless (i) all certificates or other documents constituting such Security have been delivered to the Administrative Agent and such Security is properly defined as such under Article 8 of the UCC of the applicable jurisdiction, whether as a result of actions by the issuer thereof or otherwise, or (ii) the Administrative Agent has entered into a control agreement with the issuer of such Security or with a securities intermediary relating to such Security and such Security is defined as such under Article 8 of the UCC of the applicable jurisdiction, whether as a result of actions by the issuer thereof or otherwise.

5.2. Remedies.

(a) Upon the occurrence of an Event of Default, subject to Section 5.2(h), the Administrative Agent may, or upon the request of the Required Secured Parties shall, exercise any or all of the following rights and remedies:

(i) those rights and remedies provided in the Orders, this Security Agreement, the Credit Agreement, or any other Loan Document; provided that, this Section 5.2(a) shall not be understood to limit any rights or remedies available to the Administrative Agent and the Lenders prior to an Event of Default;

(ii) those rights and remedies available to a secured party under the UCC (whether or not the UCC applies to the affected Collateral) or under any other applicable law (including, without limitation, any law governing the exercise of a bank’s right of setoff or bankers’ lien) when a debtor is in default under a security agreement;

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(iii) give notice of sole control or any other instruction under any Deposit Account Control Agreement or and other control agreement with any securities intermediary and take any action therein with respect to such Collateral;

(iv) without notice (except as specifically provided in Section 8.1 or elsewhere herein), demand or advertisement of any kind to any Grantor or any other Person, enter the premises of any Grantor where any Collateral is located (through self-help and without judicial process) to collect, receive, assemble, process, appropriate, sell, lease, assign, grant an option or options to purchase or otherwise dispose of, deliver, or realize upon, the Collateral or any part thereof in one or more parcels at public or private sale or sales (which sales may be adjourned or continued from time to time with or without notice and may take place at any Grantor’s premises or elsewhere), for cash, on credit or for future delivery without assumption of any credit risk, and upon such other terms as the Administrative Agent may deem commercially reasonable; and

(v) concurrently with written notice to the applicable Grantor, transfer and register in its name or in the name of its nominee the whole or any part of the Pledged Collateral, to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations, to exercise the voting and all other rights as a holder with respect thereto, to collect and receive all cash dividends, interest, principal and other distributions made thereon and to otherwise act with respect to the Pledged Collateral as though the Administrative Agent was the outright owner thereof.

(b) The Administrative Agent, on behalf of the Lenders, may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and compliance will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

(c) The Administrative Agent shall have the right upon any such public sale or sales and, to the extent permitted by law, upon any such private sale or sales, to purchase for the benefit of the Administrative Agent and the Lenders, the whole or any part of the Collateral so sold, free of any right of equity redemption, which equity redemption the Grantor hereby expressly releases.

(d) Until the Administrative Agent is able to effect a sale, lease, or other disposition of Collateral, the Administrative Agent shall have the right to hold or use Collateral, or any part thereof, to the extent that it deems appropriate for the purpose of preserving Collateral or its value or for any other purpose deemed appropriate by the Administrative Agent.  The Administrative Agent may, if it so elects, seek the appointment of a receiver or keeper to take possession of Collateral and to enforce any of the Administrative Agent’s remedies (for the benefit of the Administrative Agent and Lenders), with respect to such appointment without prior notice or hearing as to such appointment.

(e) If, after the Credit Agreement has terminated by its terms and all of the Obligations have been paid in full, there remain Swap Obligations outstanding, the Required Secured Parties may exercise the remedies provided in this Section 5.2 upon the occurrence of any event which would allow or require the termination or acceleration of any Swap Obligations pursuant to the terms of the Swap Agreement.

(f) Notwithstanding the foregoing, neither the Administrative Agent nor the Lenders shall be required to (i) make any demand upon, or pursue or exhaust any of their rights or remedies against, any Grantor, any other obligor, guarantor, pledgor or any other Person with respect to the payment of the Secured Obligations or to pursue or exhaust any of their rights or remedies with respect to any Collateral therefor or any direct or indirect guarantee thereof, (ii) marshal the Collateral or any guarantee of the Secured Obligations or to resort to the Collateral or any such guarantee in any particular order, or (iii) effect a public sale of any Collateral.

(g) Each Grantor recognizes that the Administrative Agent may be unable to effect a public sale of any or all the Pledged Collateral and may be compelled to resort to one or more private sales thereof in

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accordance with clause (a) above.  Each Grantor also acknowledges that any private sale may result in prices and other terms less favorable to the seller than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall not be deemed to have been made in a commercially unreasonable manner solely by virtue of such sale being private.  The Administrative Agent shall be under no obligation to delay a sale of any of the Pledged Collateral for the period of time necessary to permit any Grantor or the issuer of the Pledged Collateral to register such securities for public sale under the Securities Act of 1933, as amended, or under applicable state securities laws, even if the applicable Grantor and the issuer would agree to do so.

(h) Notwithstanding anything to the contrary contained in this Agreement, the exercise of remedies hereunder shall be subject to compliance with the notice requirements set forth in Section 7.1 of the Credit Agreement.

5.3. Grantor’s Obligations Upon Default.  Upon the request of the Administrative Agent after the occurrence of a Default, each Grantor will:

(a) assemble and make available to the Administrative Agent the Collateral and all books and records relating thereto at any place or places specified by the Administrative Agent, whether at a Grantor’s premises or elsewhere;

(b) permit the Administrative Agent, by the Administrative Agent’s representatives and agents, to enter, occupy and use any premises where all or any part of the Collateral, or the books and records relating thereto, or both, are located, to take possession of all or any part of the Collateral or the books and records relating thereto, or both, to remove all or any part of the Collateral or the books and records relating thereto, or both, and to conduct sales of the Collateral, without any obligation to pay the Grantor for such use and occupancy;

(c) prepare and file, or cause an issuer of Pledged Collateral to prepare and file, with the Securities and Exchange Commission or any other applicable government agency, registration statements, a prospectus and such other documentation in connection with the Pledged Collateral as the Administrative Agent may request, all in form and substance satisfactory to the Administrative Agent, and furnish to the Administrative Agent, or cause an issuer of Pledged Collateral to furnish to the Administrative Agent, any information regarding the Pledged Collateral in such detail as the Administrative Agent may specify;

(d) take, or cause an issuer of Pledged Collateral to take, any and all actions necessary to register or qualify the Pledged Collateral to enable the Administrative Agent to consummate a public sale or other disposition of the Pledged Collateral; and

(e) at its own expense, cause the independent certified public accountants then engaged by each Grantor to prepare and deliver to the Administrative Agent and each Lender, at any time, and from time to time, promptly upon the Administrative Agent’s request, the following reports with respect to the applicable Grantor: (i) a reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial balances; and (iv) a test verification of such Accounts.

5.4. Grant of Intellectual Property License.  For the purpose of enabling the Administrative Agent to exercise the rights and remedies under this Article V at such time as the Administrative Agent shall be lawfully entitled to exercise such rights and remedies, but in each case subject to the limitations and exclusions set forth in Article II hereof, each Grantor hereby (a) grants to the Administrative Agent, for the benefit of the Administrative Agent and the Lenders, an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to any Grantor) to use, license or sublicense any intellectual property rights now owned or hereafter acquired by such Grantor, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof and (b) irrevocably agrees that the Administrative Agent may sell any of such Grantor’s Inventory directly to any person, including without limitation persons who have previously purchased the Grantor’s Inventory from such Grantor and in connection

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with any such sale or other enforcement of the Administrative Agent’s rights under this Security Agreement, may sell Inventory which bears any Trademark owned by or licensed to such Grantor and any Inventory that is covered by any Copyright owned by or licensed to such Grantor and the Administrative Agent may finish any work in process and affix any Trademark owned by or licensed to such Grantor and sell such Inventory as provided herein.

ARTICLE VI

ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY

6.1. Account Verification.  The Administrative Agent may at any time, in the Administrative Agent’s own name, in the name of a nominee of the Administrative Agent, or in the name of any Grantor communicate (by mail, telephone, facsimile or otherwise) with the Account Debtors of any such Grantor, parties to contracts with any such Grantor and obligors in respect of Instruments of any such Grantor to verify with such Persons, to the Administrative Agent’s satisfaction, the existence, amount, terms of, and any other matter relating to, Accounts, Instruments, Chattel Paper, payment intangibles and/or other Receivables.

6.2. Authorization for Secured Party to Take Certain Action.

(a) Each Grantor irrevocably authorizes the Administrative Agent at any time and from time to time in the sole discretion of the Administrative Agent and appoints the Administrative Agent as its attorney in fact (i) to execute on behalf of such Grantor as debtor and to file financing statements necessary or desirable in the Administrative Agent’s sole discretion to perfect and to maintain the perfection and priority of the Administrative Agent’s security interest in the Collateral, (ii) to endorse and collect any cash proceeds of the Collateral, (iii) to file a carbon, photographic or other reproduction of this Security Agreement or any financing statement with respect to the Collateral as a financing statement and to file any other financing statement or amendment of a financing statement (which does not add new collateral or add a debtor) in such offices as the Administrative Agent in its sole discretion deems necessary or desirable to perfect and to maintain the perfection and priority of the Administrative Agent’s security interest in the Collateral, (iv) to contact and enter into one or more agreements with the issuers of uncertificated securities which are Pledged Collateral or with securities intermediaries holding Pledged Collateral as may be necessary or advisable to give the Administrative Agent Control over such Pledged Collateral, (v) to apply the proceeds of any Collateral received by the Administrative Agent to the Secured Obligations as provided in Section 7.3, (vi) to discharge past due taxes, assessments, charges, fees or Liens on the Collateral (except for such Liens as are specifically permitted hereunder), (vii) to contact Account Debtors for any reason, (viii) to demand payment or enforce payment of the Receivables in the name of the Administrative Agent or such Grantor and to endorse any and all checks, drafts, and other instruments for the payment of money relating to the Receivables, (ix) to sign such Grantor’s name on any invoice or xxxx of lading relating to the Receivables, drafts against any Account Debtor of the Grantor, assignments and verifications of Receivables, (x) to exercise all of such Grantor’s rights and remedies with respect to the collection of the Receivables and any other Collateral, (xi) to settle, adjust, compromise, extend or renew the Receivables, (xii) to settle, adjust or compromise any legal proceedings brought to collect Receivables, (xiii) to prepare, file and sign such Grantor’s name on a proof of claim in bankruptcy or similar document against any Account Debtor of such Grantor, (xiv) to prepare, file and sign such Grantor’s name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables, (xv) to change the address for delivery of mail addressed to such Grantor to such address as the Administrative Agent may designate and to receive, open and dispose of all mail addressed to such Grantor, and (xvi) to do all other acts and things necessary to carry out this Security Agreement; and such Grantor agrees to reimburse the Administrative Agent on demand for any payment made or any expense incurred by the Administrative Agent in connection with any of the foregoing; provided that, this authorization shall not relieve such Grantor of any of its obligations under this Security Agreement or under the Credit Agreement.

(b) All acts of said attorney or designee are hereby ratified and approved. The powers conferred on the Administrative Agent, for the benefit of the Administrative Agent and Lenders, under this Section 6.2 are solely to protect the Administrative Agent’s interests in the Collateral and shall not impose any

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duty upon the Administrative Agent or any Lender to exercise any such powers.  The Administrative Agent agrees that, except for the powers granted in Section 6.2(a)(i)-(vi) and Section 6.2(a)(xvi), it shall not exercise any power or authority granted to it unless an Event of Default has occurred and is continuing.

6.3. Proxy. EACH GRANTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS THE ADMINISTRATIVE AGENT AS ITS PROXY AND ATTORNEY-IN-FACT (AS SET FORTH IN SECTION 6.2 ABOVE) WITH RESPECT TO ITS PLEDGED COLLATERAL, INCLUDING THE RIGHT TO VOTE SUCH PLEDGED COLLATERAL, WITH FULL POWER OF SUBSTITUTION TO DO SO. IN ADDITION TO THE RIGHT TO VOTE ANY SUCH PLEDGED COLLATERAL, THE APPOINTMENT OF THE ADMINISTRATIVE AGENT AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF SUCH PLEDGED COLLATERAL WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH MEETINGS). SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY SUCH PLEDGED COLLATERAL ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER OF SUCH PLEDGED COLLATERAL OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE OF A DEFAULT.

6.4. Nature of Appointment; Limitation of Duty.  THE APPOINTMENT OF THE ADMINISTRATIVE AGENT AS PROXY AND ATTORNEY-IN-FACT IN THIS ARTICLE VI IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE ON WHICH THIS SECURITY AGREEMENT IS TERMINATED IN ACCORDANCE WITH SECTION 8.14. NOTWITHSTANDING ANYTHING CONTAINED HEREIN, NEITHER THE ADMINISTRATIVE AGENT, NOR ANY LENDER, NOR ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL HAVE ANY DUTY TO EXERCISE ANY RIGHT OR POWER GRANTED HEREUNDER OR OTHERWISE OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION; PROVIDED THAT, IN NO EVENT SHALL THEY BE LIABLE FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

ARTICLE VII

COLLECTION AND APPLICATION OF COLLATERAL PROCEEDS; DEPOSIT ACCOUNTS

7.1. Collection of Receivables.

(a) On or before the date which is sixty (60) days after the Closing Date (or such later date as the Administrative Agent may agree under Section 5.7 of the Credit Agreement), each Grantor (other than Calpine) shall (a) execute and deliver to the Administrative Agent Deposit Account Control Agreements for each Deposit Account maintained by such Grantor into which all cash, checks or other similar payments relating to or constituting payments made in respect of Receivables will be deposited (a “Collateral Deposit Account”), which Collateral Deposit Accounts are identified as such on Exhibit B, and (b) establish lock box service (the “Lock Boxes”) with the bank(s) set forth in Exhibit B, which lock boxes shall be subject to irrevocable lockbox agreements in the form provided by or otherwise acceptable to the Administrative Agent and shall be accompanied by an acknowledgment by the bank where the Lock Box is located of the Lien of the Administrative Agent granted hereunder and of irrevocable instructions to wire all amounts collected therein to the Concentration Account (a “Lock Box Agreement”). After the Closing Date, each Grantor will comply with the terms of Section 7.2.

(b) On or before the date which is sixty (60) days after the Closing Date (or such later date as the Administrative Agent may agree under Section 5.7 of the Credit Agreement), each Grantor (other than

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Calpine) shall direct all of its Account Debtors to forward payments directly to Lock Boxes subject to Lock Box Agreements.  The Administrative Agent shall have sole access to the Lock Boxes at all times and each Grantor shall take all actions necessary to grant the Administrative Agent such sole access.  At no time shall any Grantor remove any item from a Lock Box or from a Collateral Deposit Account without the Administrative Agent’s prior written consent.  If any Grantor (other than Calpine) should refuse or neglect to notify any Account Debtor to forward payments directly to a Lock Box subject to a Lock Box Agreement after notice from the Administrative Agent, the Administrative Agent shall, notwithstanding the language set forth in Section 6.2(b) be entitled to make such notification directly to Account Debtor.  If notwithstanding the foregoing instructions, any such Grantor receives any proceeds of any Receivables, such Grantor shall receive such payments as the Administrative Agent’s trustee, and shall immediately deposit all cash, checks or other similar payments related to or constituting payments made in respect of Receivables received by it to a Collateral Deposit Account.  All funds deposited into any Lock Box subject to a Lock Box Agreement or a Collateral Deposit Account will be swept on a daily basis into a concentration account maintained by the U.S. Borrower with the Administrative Agent (the “Concentration Account”). The Administrative Agent shall hold and apply funds received into the Concentration Account as provided by the terms of Section 7.3.  Notwithstanding the foregoing, (i) up to $2,000,000 held in deposit accounts of Smurfit-Stone Puerto Rico, Inc. shall not be required to be swept into the Concentration Account, and (ii) payments made to a U.S. Loan Party in Canadian Dollars may be deposited in the Canadian Concentration Account instead of the Concentration Account.

7.2.          Covenant Regarding New Deposit Accounts; Lock Boxes.  Before opening or replacing any Collateral Deposit Account, other Deposit Account (other than deposit accounts of Calpine, zero balance accounts, payroll accounts and withholding tax payment accounts) in which an average balance of at least $1,000,000 is maintained (provided that, the aggregate average balance in Deposit Accounts (other than deposit accounts of Calpine, zero balance accounts, payroll accounts and withholding tax payment accounts) as to which a Deposit Account Control Agreement is not in effect shall not exceed $5,000,000), or establishing a new Lock Box, each Grantor (other than Calpine) shall (a) obtain the Administrative Agent’s consent in writing to the opening of such Deposit Account or Lock Box, and (b) cause each bank or financial institution in which it seeks to open (i) a Deposit Account, to enter into a Deposit Account Control Agreement with the Administrative Agent in order to give the Administrative Agent Control of such Deposit Account, or (ii) a Lock Box, to enter into a Lock Box Agreement with the Administrative Agent in order to give the Administrative Agent Control of the Lock Box.  In the case of Deposit Accounts or Lock Boxes maintained with Lenders, the terms of such letter shall be subject to the provisions of the Credit Agreement regarding setoffs.

7.3.          Application of Proceeds; Deficiency.  All amounts deposited in the Concentration Account shall, after having been credited to the Concentration Account, be applied (and allocated) by Administrative Agent to the Secured Obligations as and to the extent required by Sections 2.15 and 5.7 of the Credit Agreement.  Collections which are received into the Concentration Account but are not required to be applied to or held as security for the Secured Obligations shall be deposited into the U.S. Borrower’s general operating account rather than being used to reduce amounts owing under the Credit Agreement.  The Grantors shall remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to pay all Secured Obligations, including any attorneys’ fees and other expenses incurred by Administrative Agent or any Lender to collect such deficiency.

ARTICLE VIII

GENERAL PROVISIONS

8.1.          Waivers.  Each Grantor hereby waives notice of the time and place of any public sale or the time after which any private sale or other disposition of all or any part of the Collateral may be made.  To the extent such notice may not be waived under applicable law, any notice made shall be deemed reasonable if sent to the Grantors, addressed as set forth in Article IX, at least ten days prior to (i) the date of any such public sale or (ii) the time after which any such private sale or other disposition may be made.  To the maximum extent permitted by applicable law, each Grantor waives all claims, damages, and demands against the Administrative Agent or any Lender arising out of the repossession, retention or sale of the Collateral, except such as arise solely out of the gross negligence or willful misconduct of the Administrative Agent or such Lender as finally

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determined by a court of competent jurisdiction. To the extent it may lawfully do so, each Grantor absolutely and irrevocably waives and relinquishes the benefit and advantage of, and covenants not to assert against the Administrative Agent or any Lender, any valuation, stay, appraisal, extension, moratorium, redemption or similar laws and any and all rights or defenses it may have as a surety now or hereafter existing which, but for this provision, might be applicable to the sale of any Collateral made under the judgment, order or decree of any court, or privately under the power of sale conferred by this Security Agreement, or otherwise.  Except as otherwise specifically provided herein, each Grantor hereby waives presentment, demand, protest or any notice (to the maximum extent permitted by applicable law) of any kind in connection with this Security Agreement or any Collateral.

8.2.          Limitation on Administrative Agent’s and Lenders’ Duty with Respect to the Collateral.  The Administrative Agent shall have no obligation to clean-up or otherwise prepare the Collateral for sale. The Administrative Agent and each Lender shall use reasonable care with respect to the Collateral in its possession or under its control.  Neither the Administrative Agent nor any Lender shall have any other duty as to any Collateral in its possession or control or in the possession or control of any agent or nominee of the Administrative Agent or such Lender, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto. To the extent that applicable law imposes duties on the Administrative Agent to exercise remedies in a commercially reasonable manner, each Grantor acknowledges and agrees that it is commercially reasonable for the Administrative Agent (i) to fail to incur expenses deemed significant by the Administrative Agent to prepare Collateral for disposition or otherwise to transform raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Account Debtors or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies against Account Debtors and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as such Grantor, for expressions of interest in acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the Administrative Agent against risks of loss, collection or disposition of Collateral or to provide to the Administrative Agent a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by the Administrative Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Administrative Agent in the collection or disposition of any of the Collateral. Each Grantor acknowledges that the purpose of this Section 8.2 is to provide non-exhaustive indications of what actions or omissions by the Administrative Agent would be commercially reasonable in the Administrative Agent’s exercise of remedies against the Collateral and that other actions or omissions by the Administrative Agent shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 8.2.  Without limitation upon the foregoing, nothing contained in this Section 8.2 shall be construed to grant any rights to any Grantor or to impose any duties on the Administrative Agent that would not have been granted or imposed by this Security Agreement or by applicable law in the absence of this Section 8.2.

8.3.          Compromises and Collection of Collateral.  The Grantors and the Administrative Agent recognize that setoffs, counterclaims, defenses and other claims may be asserted by obligors with respect to certain of the Receivables, that certain of the Receivables may be or become uncollectible in whole or in part and that the expense and probability of success in litigating a disputed Receivable may exceed the amount that reasonably may be expected to be recovered with respect to a Receivable.  In view of the foregoing, each Grantor agrees that the Administrative Agent may at any time and from time to time, if an Event of Default has occurred and is continuing, subject to Section 5.2(h), compromise with the obligor on any Receivable, accept in

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full payment of any Receivable such amount as the Administrative Agent in its sole discretion shall determine or abandon any Receivable, and any such action by the Administrative Agent shall be commercially reasonable so long as the Administrative Agent acts in good faith based on information known to it at the time it takes any such action.

8.4.          Secured Party Performance of Debtor Obligations.  Without having any obligation to do so, the Administrative Agent may perform or pay any obligation which any Grantor has agreed to perform or pay in this Security Agreement and the Grantors shall reimburse the Administrative Agent for any amounts paid by the Administrative Agent pursuant to this Section 8.4.  The Grantors’ obligation to reimburse the Administrative Agent pursuant to the preceding sentence shall be a Secured Obligation payable on demand.

8.5.          Specific Performance of Certain Covenants.  Each Grantor acknowledges and agrees that a breach of any of the covenants contained in Sections 4.1(d), 4.1(e), 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.12, 4.13, 4.14, 4.15, 5.3, or 8.7 or in Article VII will cause irreparable injury to the Administrative Agent and the Lenders, that the Administrative Agent and Lenders have no adequate remedy at law in respect of such breaches and therefore agrees, without limiting the right of the Administrative Agent or the Lenders to seek and obtain specific performance of other obligations of the Grantors contained in this Security Agreement, that the covenants of the Grantors contained in the Sections referred to in this Section 8.5 shall be specifically enforceable against the Grantors.

8.6.          Dispositions Not Authorized.  No Grantor is authorized to sell or otherwise dispose of the Collateral except as set forth in Section 4.1(d) and notwithstanding any course of dealing between any Grantor and the Administrative Agent or other conduct of the Administrative Agent, no authorization to sell or otherwise dispose of the Collateral (except as set forth in Section 4.1(d)) shall be binding upon the Administrative Agent or the Lenders unless such authorization is in writing signed by the Administrative Agent with the consent or at the direction of the Required Secured Parties.

8.7.          No Waiver; Amendments; Cumulative Remedies. No delay or omission of the Administrative Agent or any Lender to exercise any right or remedy granted under this Security Agreement shall impair such right or remedy or be construed to be a waiver of any Default or an acquiescence therein, and any single or partial exercise of any such right or remedy shall not preclude any other or further exercise thereof or the exercise of any other right or remedy. No waiver, amendment or other variation of the terms, conditions or provisions of this Security Agreement whatsoever shall be valid unless in writing signed by the Administrative Agent with the concurrence or at the direction of the Lenders required under Section 9.02 of the Credit Agreement and then only to the extent in such writing specifically set forth.  All rights and remedies contained in this Security Agreement or by law afforded shall be cumulative and all shall be available to the Administrative Agent and the Lenders until the Secured Obligations have been paid in full.

8.8.          Limitation by Law; Severability of Provisions. All rights, remedies and powers provided in this Security Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Security Agreement are intended to be subject to all applicable mandatory provisions of law that may be controlling and to be limited to the extent necessary so that they shall not render this Security Agreement invalid, unenforceable or not entitled to be recorded or registered, in whole or in part.  Any provision in any this Security Agreement that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of this Security Agreement are declared to be severable.

8.9.          Reinstatement.  This Security Agreement shall remain in full force and effect and continue to be effective should a Grantor become a debtor in a case under Chapter 7 of the Bankruptcy Code or should a Chapter 11 or Chapter 7 trustee be appointed for such Grantor, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned

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by any obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made.  In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

8.10.        Benefit of Agreement.  The terms and provisions of this Security Agreement shall be binding upon and inure to the benefit of the Grantors, the Administrative Agent and the Lenders and their respective successors and assigns (including all persons who become bound as a debtor to this Security Agreement), except that no Grantor shall have the right to assign its rights or delegate its obligations under this Security Agreement or any interest herein, without the prior written consent of the Administrative Agent.  No sales of participations, assignments, transfers, or other dispositions of any agreement governing the Secured Obligations or any portion thereof or interest therein shall in any manner impair the Lien granted to the Administrative Agent, for the benefit of the Administrative Agent and the Lenders, hereunder.

8.11.        Survival of Representations.  All representations and warranties of the Grantors contained in this Security Agreement shall survive the execution and delivery of this Security Agreement.

8.12.        Taxes and Expenses.  Any taxes (including income taxes) payable or ruled payable by Federal or State authority in respect of this Security Agreement shall be paid by the Grantors, together with interest and penalties, if any.  The Grantors shall reimburse the Administrative Agent for any and all fees, costs and expenses as contemplated by Section 9.5 of the Credit Agreement.

8.13.        Headings.  The title of and section headings in this Security Agreement are for convenience of reference only, and shall not govern the interpretation of any of the terms and provisions of this Security Agreement.

8.14.        Termination.  This Security Agreement shall continue in effect (notwithstanding the fact that from time to time there may be no Secured Obligations outstanding) until (i) the Credit Agreement has terminated pursuant to its express terms and (ii) all of the Secured Obligations have been indefeasibly paid and performed in full (or with respect to any outstanding Letters of Credit, a cash deposit or back to back Letter of Credit has been delivered to the Administrative Agent as required by the Credit Agreement) and no commitments of the Administrative Agent or the Lenders which would give rise to any Secured Obligations are outstanding.

8.15.        Entire Agreement.  This Security Agreement represents the entire agreement between the Grantors and the Administrative Agent with regard to the Collateral and supersedes all prior agreements and understandings between the Grantors and the Administrative Agent relating to the Collateral.  In the event of any conflicts between the express provisions of this Security Agreement and the Credit Agreement, the provisions of the Credit Agreement shall control to the extent of any such inconsistency.

8.16.        CHOICE OF LAW.  THIS SECURITY AGREEMENT SHALL, UNLESS OTHERWISE SPECIFIED THEREIN, IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE AND THE BANKRUPTCY CODE.

8.17.        CONSENT TO JURISDICTION.  EACH GRANTOR HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT AND EACH GRANTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH

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A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.  NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION.  ANY JUDICIAL PROCEEDING BY ANY GRANTOR AGAINST THE ADMINISTRATIVE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK.

8.18.        WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.

8.19.        Indemnity.  Each Grantor hereby agrees to indemnify the Administrative Agent and the Lenders, and their respective successors, assigns, agents and employees on the terms and subject to the conditions of Section 9.6 of the Credit Agreement.

8.20.        Counterparts.  This Security Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Security Agreement by signing any such counterpart.  Any facsimile copy of a signature hereto shall have the same effect as the original thereof.

ARTICLE IX

NOTICES

9.1.          Sending Notices.  Any notice required or permitted to be given under this Security Agreement shall be sent by United States mail, telecopier, personal delivery or nationally established overnight courier service, and shall be deemed received (a) when received, if sent by hand or overnight courier service, or mailed by certified or registered mail notices or (b) when sent, if sent by telecopier (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient), in each case at the addresses set forth in Section 9.1 of the Credit Agreement.

9.2.          Change in Address for Notices.  Each of the Grantors, the Administrative Agent and the Lenders may change the address for service of notice upon it by a notice in writing to the other parties.

ARTICLE X

THE ADMINISTRATIVE AGENT

JPMorgan Chase Bank, N.A. has been appointed Administrative Agent for the Lenders hereunder pursuant to Article VIII of the Credit Agreement.  It is expressly understood and agreed by the parties to this Security Agreement that any authority conferred upon the Administrative Agent hereunder is subject to the terms of the delegation of authority made by the Lenders to the Administrative Agent pursuant to the Credit Agreement, and that the Administrative Agent has agreed to act (and any successor Administrative Agent shall act) as such hereunder only on the express conditions contained in such Article VIII.  Any successor Administrative Agent appointed pursuant to Article VIII of the Credit Agreement shall be entitled to all the rights, interests and benefits of the Administrative Agent hereunder.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Grantors and the Administrative Agent have executed this Security Agreement as of the date first above written.

GRANTORS:

SMURFIT-STONE CONTAINER ENTERPRISES, INC.

By:

Name:

Title:

SMURFIT-STONE CONTAINER CORPORATION

By:

Name:

Title:

CALPINE CORRUGATED LLC

By:

Name:

Title:

CAMEO CONTAINER CORPORATION

By:

Name:

Title:

Signature Page to Security and Pledge Agreement

XXX 00X XXXXXXXXXXXXX XXXXXXXXXXX

By:

Name:

Title:

ATLANTA & SAINT XXXXXXX BAY RAILWAY COMPANY

By:

Name:

Title:

STONE INTERNATIONAL SERVICES CORPORATION

By:

Name:

Title:

Signature Page to Security and Pledge Agreement

STONE GLOBAL, INC.

By:

Name:

Title:

STONE CONNECTICUT PAPERBOARD PROPERTIES, INC.

By:

Name:

Title:

SMURFIT-STONE PUERTO RICO, INC.

By:

Name:

Title:

SMURFIT NEWSPRINT CORPORATION

By:

Name:

Title:

SLP FINANCE I, INC.

By:

Name:

Title:

Signature Page to Security and Pledge Agreement

SLP FINANCE II, INC.

By:

Name:

Title:

SMBI INC.

By:

Name:

Title:

Signature Page to Security and Pledge Agreement

JPMORGAN CHASE BANK, N.A.,

  as Administrative Agent

By:

Name:

Title:

Signature Page to Security and Pledge Agreement

EXHIBIT A

(See Sections 3.2, 3.3, 3.4, 3.9 and 9.1 of Security Agreement)

INFORMATION AND COLLATERAL LOCATIONS OF

[provide for each Grantor]

I. Name of Grantor:

II. State of Incorporation or Organization:

III. Type of Entity:

IV. Organizational Number assigned by State of Incorporation or Organization:

V. Federal Identification Number:

VI. Place of Business (if it has only one) or Chief Executive Office (if more than one place of business) and Mailing Address:

Attention:

VII. Locations of Collateral:

(a) Properties Owned by the Grantor:

(b) Properties Leased by the Grantor (Include Landlord’s Name):

(c) Public Warehouses or other Locations pursuant to Bailment or Consignment Arrangements (include name of Warehouse Operator or other Bailee or Consignee):

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EXHIBIT B

(See Section 3.5 of Security Agreement)

DEPOSIT ACCOUNTS

Name of Grantor Name of Institution Account Number Check here if
Deposit Account is
a Collateral Deposit
Account Description of
Deposit Account
if not a Collateral
Deposit Account

LOCK BOXES

Name of Grantor Name of Institution Lock Box Number

31

EXHIBIT C

(See Section 3.7 of Security Agreement)

LETTER OF CREDIT RIGHTS

CHATTEL PAPER

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EXHIBIT D

(See Section 3.11 of Security Agreement)

FIXTURES

Street address of property on which Fixtures are located (by Grantor):

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EXHIBIT E

(See Section 3.13 of Security Agreement and Definition of “Pledged Collateral”)

LIST OF PLEDGED COLLATERAL, SECURITIES AND OTHER INVESTMENT PROPERTY

STOCKS

Name of
Grantor Issuer Certificate
Number(s) Number of
Shares Class of Stock Percentage of
Outstanding
Shares

BONDS

Name of
Grantor Issuer Number Face Amount Coupon Rate Maturity

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GOVERNMENT SECURITIES

Name of
Grantor Issuer Number Type Face Amount Coupon Rate Maturity

OTHER SECURITIES OR OTHER INVESTMENT PROPERTY

(CERTIFICATED AND UNCERTIFICATED)

Name of Grantor Issuer Description of Collateral Percentage Ownership
Interest

[Add description of custody accounts or arrangements with securities intermediary, if applicable]

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EXHIBIT F

(See Section 4.4 and 4.8 of Security Agreement)

AMENDMENT

This Amendment, dated                                 ,        is delivered pursuant to Section 4.4 of the Security Agreement referred to below.  All defined terms herein shall have the meanings ascribed thereto or incorporated by reference in the Security Agreement.  The undersigned hereby certifies that the representations and warranties in Article III of the Security Agreement are and continue to be true and correct.  The undersigned further agrees that this Amendment may be attached to that certain Security and Pledge Agreement, dated                              ,         , between the undersigned, as the Grantors, and JPMorgan Chase Bank, N.A., as the Administrative Agent, (the “Security Agreement”) and that the Collateral listed on Schedule I to this Amendment shall be and become a part of the Collateral referred to in said Security Agreement and shall secure all Secured Obligations referred to in said Security Agreement.

By:

Name:

Title:

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SCHEDULE I TO AMENDMENT

STOCKS

Name of
Grantor Issuer Certificate
Number(s) Number of
Shares Class of Stock Percentage of
Outstanding
Shares

BONDS

Name of
Grantor Issuer Number Face Amount Coupon Rate Maturity

GOVERNMENT SECURITIES

Name of
Grantor Issuer Number Type Face Amount Coupon Rate Maturity

37

OTHER SECURITIES OR OTHER INVESTMENT PROPERTY

(CERTIFICATED AND UNCERTIFICATED)

Name of Grantor Issuer Description of Collateral Percentage Ownership
Interest

[Add description of custody accounts or arrangements with securities intermediary, if applicable]

COMMERCIAL TORT CLAIMS

Name of Grantor Description of Claim Parties Case Number; Name of
Court where Case was
Filed

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Exhibit B-2

CANADIAN SECURITY AGREEMENT

THIS CANADIAN SECURITY AGREEMENT is made as of January           , 2009 by each of the Debtors (as defined in Section 1 below) in favour of JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Collateral Agent (as defined in Section 1 below).

RECITALS:

A. Smurfit-Stone Container Corporation, a debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code, as the Parent and a U.S. Guarantor, Smurfit-Stone Container Enterprises, Inc., a debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code, as U.S. Borrower, Smurfit-Stone Container Canada Inc., a company operating pursuant to a proceeding under the CCAA and a debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code, the other Loan Parties party thereto, the Lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, and JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent and Canadian Collateral Agent, are parties to a credit agreement dated as of the date hereof (as amended, supplemented, restated or replaced from time to time, the “Credit Agreement”).

B. Each of the Debtors are debtor entities pursuant to the CCAA Cases and each of the Debtors has absolutely and unconditionally guaranteed, in favour of the Canadian Administrative Agent (for its own benefit and for the ratable benefit of the Secured Parties), the prompt payment when due of the Obligations of such Debtor.

C. To secure the payment and performance of the Obligations, each Debtor has agreed to grant to the Canadian Collateral Agent (for its own benefit and for the ratable benefit of the other Secured Parties) the Security Interests in respect of its Collateral in accordance with the terms of this Agreement.

D. It is in the best interests of each Debtor to execute this Agreement.

For good and valuable consideration, the receipt and adequacy of which are acknowledged by each Debtor, each Debtor severally (and not jointly or jointly and severally) agrees with and in favour of the Canadian Collateral Agent (for its own benefit and for the ratable benefit of the other Secured Parties) as follows:

1. Definitions.  In this Agreement capitalized terms used but not otherwise defined in this Agreement shall have the meanings given to them in the Credit Agreement, and the following terms have the following meanings:

“Accessions”, “Account”, “Chattel Paper”, “Certificated Security”, “Consumer Goods”, “Document of Title”, “Equipment”, “Futures Account”, “Futures Contract”, “Futures Intermediary”, “Goods”, “Instrument”, “Intangible”, “Inventory”, “Investment Property”,  “Money”, “Proceeds”, “Securities Account”, “Securities Intermediary” “Security”, “Security Certificate”, “Security Entitlement”, and “Uncertificated Security” have the meanings given to them in the PPSA.

“Agreement” means this Canadian Security Agreement, including the exhibits and recitals hereto, the Supplements and the Schedules, as it or they may be amended, supplemented, restated or replaced from time to time, and the expressions “hereof”, “herein”, “hereto”, “hereunder”, “hereby” and similar expressions refer to this Agreement and not to any particular section or other portion of this Agreement.

“Books and Records” means, in respect of any Debtor, all books, records, files, papers, disks, documents and other repositories of data recording in any form or medium, evidencing or relating to the Personal

Property of such Debtor which are at any time owned by such Debtor or to which such Debtor (or any Person on such Debtor’s behalf) has access.

“Canadian Collateral Agent” means JPMorgan Chase Bank, N.A., Toronto Branch, in its capacity as Canadian collateral agent for the Secured Parties under the Credit Agreement, or any successor Canadian collateral agent appointed pursuant to the Credit Agreement.

“Collateral” means, in respect of any Debtor, all of the present and future:

(a) undertaking;

(b) Personal Property (including any Personal Property that may be described in any schedule to this Agreement or any schedules, documents or listings that such Debtor may from time to time provide to the Canadian Collateral Agent in connection with this Agreement); and

(c) real property (including any real property that may be described in any schedule to this Agreement or any schedules, documents or listings that such Debtor may from time to time provide to the Canadian Collateral Agent in connection with this Agreement and including all fixtures, improvements, buildings and other structures placed, installed or erected from time to time on any such real property),

of such Debtor (including Books and Records, Contracts, Intellectual Property Rights and Permits, including all such property in which such Debtor now or in the future has any right, title or interest whatsoever, whether owned, leased, licensed, possessed or otherwise held by such Debtor, and all Proceeds thereof, wherever located.

“Collateral Reports” means any certificate (including any Borrowing Base Certificate), report or other document delivered by any Debtor with respect to the Collateral pursuant to any Loan Document.

“Contracts” means, in respect of any Debtor, all contracts and agreements to which such Debtor is at any time a party or pursuant to which such Debtor has at any time acquired rights, and includes (i) all rights of such Debtor to receive money due and to become due to it in connection with a contract or agreement, (ii) all rights of such Debtor to damages arising out of, or for breach or default in respect of, a contract, licence or agreement, and (iii) all rights of such Debtor to perform and exercise all remedies in connection with a contract or agreement.

“Control” means, in respect of a particular Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlled” has meanings correlative thereto.

“Credit Agreement” has the meaning set out in the recitals hereto.

“Debtors” means each of the Persons identified under the caption “DEBTORS” on the signature page(s) of this Agreement and any other Person which hereafter delivers a Supplement, and “Debtor” means any one of them.

“Intellectual Property Rights” means, in respect of any Debtor, all industrial and intellectual property rights of such Debtor or in which such Debtor has any right, title or interest, including copyrights, patents, inventions (whether or not patented), trade-marks, get-up and trade dress, industrial designs, integrated circuit topographies, plant breeders’ rights, know how and trade secrets, registrations and applications for

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registration for any of such industrial and intellectual property rights, and all Contracts related to any such industrial and intellectual property rights.

“Issuer” has the meaning given to that term in the STA.

“Laws” means all federal, provincial, municipal, foreign and international statutes, acts, codes, ordinances, decrees, treaties, rules, regulations, municipal by-laws, judicial or arbitral or administrative or ministerial or departmental or regulatory judgements, orders, decisions, rulings or awards or any provisions of the foregoing, including general principles of common and civil law and equity, and all policies, practices and guidelines of any Governmental Authority binding on or affecting the Person referred to in the context in which such word is used (including, in the case of tax matters, any accepted practice or application or official interpretation of any relevant taxation authority); and “Law” means any one or more of the foregoing.

“Obligations” means, in respect of (i) the Canadian Borrower, the Secured Obligations of the Canadian Borrower, and (ii) each Debtor other than the Canadian Borrower, the Canadian Secured Obligations of such Debtor.

“Permits” means, in respect of any Debtor, all permits, licences, waivers, exemptions, consents, certificates, authorizations, approvals, franchises, rights-of-way, easements and entitlements that such Debtor has, requires or is required to have, to own, possess or operate any of its property or to operate and carry on any part of its business.

“Personal Property” means personal property and includes Accounts, Chattel Paper, Documents of Title, Equipment, Goods, Instruments, Intangibles, Inventory, Investment Property and Money.

“Pledged Certificated Securities” means, in respect of any Debtor, any and all Collateral of such Debtor that is a Certificated Security.

“Pledged Futures Contracts” means, in respect of any Debtor, any and all Collateral of such Debtor that is a Futures Contract.

“Pledged Futures Accounts” means, in respect of any Debtor, any and all Collateral of such Debtor that is a Futures Account.

“Pledged Futures Intermediary” means, at any time, any Person which is at such time a Futures Intermediary at which a Pledged Futures Account is maintained.

“Pledged Futures Intermediary’s Jurisdiction” means, with respect to any Pledged Futures Intermediary, its jurisdiction as determined under section 7.1(4) of the PPSA.

“Pledged Issuer” means, in respect of any Debtor at any time, any Person which is at such time an Issuer with respect to any Pledged Securities or Pledged Security Entitlements.

“Pledged Issuer’s Jurisdiction” means, with respect to any Pledged Issuer, its jurisdiction as determined under section 44 of the STA.

“Pledged Security Certificates” means, in respect of any Debtor, any and all Security Certificates owned by such Debtor representing the Pledged Certificated Securities.

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“Pledged Securities” means, in respect of any Debtor, any and all Collateral of such Debtor that is a Security.

“Pledged Securities Accounts” means, in respect of any Debtor, any and all Collateral of such Debtor that is a Securities Account.

“Pledged Securities Intermediary” means, at any time, any Person which is at such time a Securities Intermediary at which a Pledged Securities Account is maintained.

“Pledged Securities Intermediary’s Jurisdiction” means, with respect to any Securities Intermediary, its jurisdiction as determined under section 45(2) of the STA.

“Pledged Security Entitlements” means, in respect of any Debtor, any and all Collateral of such Debtor that is a Security Entitlement.

“Pledged Uncertificated Securities” means, in respect of any Debtor, any and all Collateral of such Debtor that is an Uncertificated Security.

“PPSA” means the Personal Property Security Act (Ontario), as such legislation may be amended, renamed or replaced from time to time, and includes all regulations from time to time made under such legislation.

“Receiver” means a receiver, a manager or a receiver and manager.

“Release Date” means the date on which all of the Obligations of each Debtor have been indefeasibly paid and discharged in full and no Secured Party has any further obligations under the Loan Documents pursuant to which further Obligations of any Loan Party might arise.

“Schedules” means the schedules to this Agreement.

 “Security Interests” means, with respect to any Debtor, the Liens created by such Debtor in favour of the Canadian Collateral Agent (for its own benefit and for the ratable benefit of the other Secured Parties) under this Agreement.

“Serial Number Goods” means a motor vehicle, a trailer, a mobile home, a designated manufactured home, an aircraft, a boat or an outboard motor for a boat.

“STA” means the Securities Transfer Act (Ontario), as such legislation may be amended, renamed or replaced from time to time, and includes all regulations from time to time made under such legislation.

“Supplement” has the meaning given to it in Section 34.

“ULC” means an Issuer that is an unlimited company or unlimited liability company.

“ULC Laws” means the Companies Act (Nova Scotia), the Business Corporations Act (Alberta), the Business Corporations Act (British Columbia) and any other present or future Laws governing ULCs.

“ULC Shares” means shares or other equity interests in the capital stock of a ULC.

2.             Grant of Security Interests.  As general and continuing collateral security for the due payment and performance of its Obligations (including the payment of any such Obligations that would become due but for any automatic stay under the provisions of the Bankruptcy and Insolvency Act (Canada) and

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the United States Bankruptcy Code or any analogous provisions of any other applicable Law in Canada, the United States, or any other jurisdiction), each Debtor pledges, mortgages, charges and assigns (by way of security) to the Canadian Collateral Agent (for its own benefit and for the ratable benefit of the other Secured Parties), and grants to the Canadian Collateral Agent (for its own benefit and for the ratable benefit of the other Secured Parties) a security interest in, the Collateral of such Debtor.

3. Limitations on Grant of Security Interests.  If the grant of the Security Interests in respect of any Contract, Intellectual Property Right or Permit under Section 2 would result in the termination or breach of such Contract, Intellectual Property Right or Permit, or is otherwise prohibited or ineffective (whether by the terms thereof or under applicable Law), then such Contract, Intellectual Property Right or Permit will not be subject to the Security Interests but will be held in trust by the applicable Debtor for the benefit of the Canadian Collateral Agent (for its own benefit and for the ratable benefit of the other Secured Parties) and, on the exercise by the Canadian Collateral Agent of any of its rights or remedies under this Agreement following an Event of Default will be assigned by such Debtor as directed by the Canadian Collateral Agent; provided that: (a) the Security Interests of such Debtor shall attach to such Contract, Intellectual Property Right or Permit, or applicable portion thereof, immediately at such time as the condition causing such termination or breach is remedied, and (b) if a term in a Contract that prohibits or restricts the grant of the Security Interests in the whole of an Account or Chattel Paper forming part of the Collateral is unenforceable against the Canadian Collateral Agent under applicable Law, then the exclusion from the Security Interests set out above shall not apply to such Account or Chattel Paper.  In addition, the Security Interests do not attach to Consumer Goods or extend to the last day of the term of any lease or agreement for lease of real property.  Such last day will be held by the applicable Debtor in trust for the Canadian Collateral Agent (for its own benefit and for the ratable benefit of the other Secured Parties) and, on the exercise by the Canadian Collateral Agent of any of its rights or remedies under this Agreement following an Event of Default, will be assigned by such Debtor as directed by the Canadian Collateral Agent.  For greater certainty, no Intellectual Property Right in any trade-xxxx, get-up or trade dress is presently assigned to the Canadian Collateral Agent by sole virtue of the grant of the Security Interests contained in Section 2.

4. Attachment; No Obligation to Advance.  Each Debtor confirms that value has been given by the Secured Parties to such Debtor, that such Debtor has rights in its Collateral existing at the date of this Agreement or the date of any Supplement, as applicable, and that such Debtor and the Canadian Collateral Agent have not agreed to postpone the time for attachment of the Security Interests to any of the Collateral of such Debtor.  The Security Interests in respect of the Collateral of each Debtor created by this Agreement will have effect and be deemed to be effective whether or not the Obligations of such Debtor or any part thereof are owing or in existence before or after or upon the date of this Agreement or the date of any Supplement, as applicable.  Neither the execution and delivery of this Agreement or any Supplement nor the provision of any financial accommodation by any Secured Party shall oblige any Secured Party to make any financial accommodation or further financial accommodation available to any Debtor or any other Person.

5. Representations and Warranties.  Each Debtor represents and warrants to the Canadian Collateral Agent (for its own benefit and for the ratable benefit of the other Secured Parties) that, as of the date of this Agreement or the date of any Supplement or such other date as specified below, as applicable:

(a) Debtor Information.  All of the information set out in the Schedules and Supplements, as applicable, with respect to such Debtor is accurate and complete.

(b) Title to Investment Property. Such Debtor is the record and beneficial owner of all Collateral of such Debtor that is Investment Property.

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(c) Consents — Pledged Securities.  Except in the case of ULC Shares, for the purposes of complying with any transfer restrictions contained in the Organizational Documents of any Pledged Issuer, such Debtor hereby irrevocably consents to any transfer of such Debtor’s Pledged Securities of such Pledged Issuer.

(d) No Consumer Goods.  Such Debtor does not own any Consumer Goods which are material in value or which are material to the business, operations, property, condition or prospects (financial or otherwise) of such Debtor.

(e) Intellectual Property Rights.  All registrations and applications for registration pertaining to any Intellectual Property Rights of such Debtor, all other material Intellectual Property Rights of such Debtor, and the nature of such Debtor’s right, title or interest therein, are described in the Schedules and Supplements as applicable, with respect to such Debtor.

(f) Accounts and Chattel Paper.  The names of the obligors, amounts owing, due dates and other material information with respect to its Accounts and Chattel Paper are and will be correctly stated in all records of such Debtor relating thereto and in all invoices and Collateral Reports with respect thereto furnished in accordance with the Credit Agreement by such Debtor from time to time.  As of the time when each Account or each item of Chattel Paper arises, such Debtor shall be deemed to have represented and warranted that such Account and Chattel Paper, as the case may be, and all records relating thereto, are genuine and in all material respects what they purport to be.  As of the Filing Date, except as specifically disclosed on the most recent Collateral Report, (i) all Accounts are Eligible Accounts, (ii) all Accounts represent bona fide sales of Inventory or rendering of services to Account debtors in the ordinary course of such Debtor’s business and are not evidenced by a judgment, Instrument or Chattel Paper, (iii) there are no set-offs, claims or disputes existing or asserted with respect thereto and such Debtor has not made any agreement with any Account debtor for any extension of time for the payment thereof, any compromise or settlement for less than the full amount thereof, any release of any Account debtor from liability therefor, or any deduction therefrom except a discount or allowance allowed by such Debtor in the ordinary course of business for prompt payment and disclosed in accordance with the Credit Agreement, (iv) to such Debtor’s knowledge, there are no facts, events or occurrences which in any way impair the validity or enforceability thereof or could reasonably be expected to reduce the amount payable thereunder as shown on such Debtor’s books and records and any invoices, statements and Collateral Reports with respect thereto, (v) such Debtor has not received any notice of proceedings or actions which are threatened or pending against any Account debtor which might result in any adverse change in such Account debtor’s financial condition, and (vi) such Debtor has no knowledge that any Account debtor is unable to pay its debts generally as they become due.  In addition, as of the Filing Date, the amounts shown on all invoices, statements and Collateral Reports with respect thereto are actually and absolutely owing to such Debtor as indicated thereon and are not in any way contingent and, to such Debtor’s knowledge, all Account debtors have the capacity to contract.

(g) Inventory.  As of the Filing Date, with respect to any Inventory scheduled or listed on the most recent Collateral Report, (i) such Inventory (other than Inventory in transit) is located at one of such Debtor’s locations set forth in the Schedules hereto, (ii) such Debtor has good, indefeasible and merchantable title to such Inventory and such Inventory is not subject to any Lien or security interest or document whatsoever except for the Lien granted to the Canadian Collateral Agent (for its own benefit and for the

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ratable benefit of the other Secured Parties), and except for Permitted Liens, (iii) except as disclosed in the most recent Collateral Report, such Inventory is Eligible Inventory of good and merchantable quality, free from any defects, (iv) such Inventory is not subject to any licensing, patent, royalty, trademark, trade name or copyright agreement(s) with any third parties which would require any consent of any third party upon sale or disposition of that Inventory or payment of any monies to any third party upon such sale or disposition, and (v) the completion of manufacture, sale or other disposition of such Inventory by the Canadian Collateral Agent following and Event of Default shall not require the consent of any Person and shall not consent of any Person and shall not constitute a breach of default under any contract or agreement to which such Debtor is a party or which such property is subject.

(h) Due Authorization.  The Pledged Securities of such Debtor have been duly authorized and validly issued and are fully paid and, except in the case of ULC Shares, non-assessable.

(i) Warrants, Options, etc.  There are no outstanding warrants, options or other rights to purchase, or other agreements outstanding with respect to, or property that is now or hereafter convertible into, or that requires the issuance or sale of, any Pledged Securities of such Debtor.

(j) No Required Disposition.  Other than pursuant to the Security Documents (as defined in the Pre-Petition Credit Agreement) and the rights of the Pre-Petition Agent thereunder following an Event of Default (as defined in the Pre-Petition Credit Agreement), there is no existing agreement, option, right or privilege capable of becoming an agreement or option pursuant to which such Debtor would be required to sell or otherwise dispose of any Pledged Securities of such Debtor or under which any Pledged Issuer thereof has any obligation to issue any Securities of such Pledged Issuer to any Person.

6. Covenants.  Each Debtor covenants and agrees with the Canadian Collateral Agent (for its own benefit and for the ratable benefit of the other Secured Parties) that:

(a) Further Documentation.  Such Debtor will from time to time, at the expense of such Debtor, promptly and duly authorize, execute and deliver such further instruments and documents, and take such further action, as the Canadian Collateral Agent may reasonably request for the purpose of obtaining or preserving the full benefits of, and the rights and powers granted by, this Agreement (including the filing of any financing statements or financing change statements under any applicable legislation with respect to the Security Interests).  Such Debtor acknowledges that this Agreement has been prepared based on the existing Laws in the Province of Ontario and that a change in such Laws, or the Laws of other jurisdictions, may require the execution and delivery of different forms of security documentation.  Accordingly, such Debtor agrees that the Canadian Collateral Agent will have the right to require that this Agreement be amended, supplemented, restated or replaced, and that such Debtor will promptly on request by the Canadian Collateral Agent authorize, execute and deliver any such amendment, supplement, restatement or replacement (i) to reflect any changes in such Laws, whether arising as a result of statutory amendments, court decisions or otherwise, (ii) to facilitate the creation and registration of appropriate security in all appropriate jurisdictions, or (iii) if such Debtor merges or amalgamates with any other Person or enters into any corporate reorganization, in each case in order to confer on the Canadian Collateral Agent Liens similar to, and having the same effect as, the Security Interests.

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(b) Maintenance of Records.  At the written request of the Canadian Collateral Agent, acting reasonably, such Debtor will xxxx any Collateral of such Debtor specified by the Canadian Collateral Agent to evidence the existence of the Security Interests.

(c) Further Identification of Collateral.  Such Debtor will promptly furnish to the Canadian Collateral Agent such statements and schedules further identifying and describing the Collateral of such Debtor, and such other reports in connection with the Collateral of such Debtor, as the Canadian Collateral Agent may from time to time reasonably request, including an updated list of any motor vehicles or other “serial number” goods owned by such Debtor and classified as Equipment, including vehicle identification numbers.

(d) Amalgamation, Merger or Consolidation.  Such Debtor will not permit any Pledged Issuer of such Debtor to amalgamate, merge or consolidate unless all of the outstanding capital stock of the surviving or resulting corporation is, upon such amalgamation, merger or consolidation, pledged under this Agreement.

(e) Agreements re Intellectual Property Rights.  Promptly upon request from time to time by the Canadian Collateral Agent, such Debtor will authorize, execute and deliver any and all agreements, instruments, documents and papers that the Canadian Collateral Agent may reasonably request to evidence the Security Interests in any Intellectual Property Rights of such Debtor and, where applicable, the goodwill of the business of such Debtor connected with the use of, and symbolized by, any such Intellectual Property Rights.

(f) Instruments; Documents of Title; Chattel Paper.  Promptly upon request from time to time by the Canadian Collateral Agent, such Debtor will deliver to the Canadian Collateral Agent, endorsed and/or accompanied by such instruments of assignment and transfer in such form and substance as the Canadian Collateral Agent may reasonably request, any and all Instruments, Documents of Title and Chattel Paper of such Debtor included in or relating to the Collateral of such Debtor as the Canadian Collateral Agent may specify in its request.

(g) Pledged Certificated Securities.  Promptly upon request from time to time by the Canadian Collateral Agent, such Debtor will deliver to the Canadian Collateral Agent any and all Pledged Security Certificates of such Debtor and other materials as may be required from time to time to provide the Canadian Collateral Agent with control over all Pledged Certificated Securities of such Debtor in the manner provided under section 23 of the STA.  Except in the case of ULC Shares (which shall not be so registered other than in the course of realization thereon hereunder), at the request of the Canadian Collateral Agent, such Debtor will cause all Pledged Security Certificates of such Debtor to be registered in the name of the Canadian Collateral Agent or its nominee.

(h) Pledged Uncertificated Securities.  Promptly upon request from time to time by the Canadian Collateral Agent, such Debtor will deliver to the Canadian Collateral Agent any and all such documents, agreements and other materials as may be required from time to time to provide the Canadian Collateral Agent with control over all Pledged Uncertificated Securities of such Debtor in the manner provided under section 24 of the STA.  Each Debtor confirms and agrees that the Pledged Issuer shall comply with any instructions that are originated by the Canadian Collateral Agent without any further consent of such Debtor.  Each Debtor that is a Pledged Issuer hereby acknowledges and agrees to comply with any instructions that are originated by the Canadian Collateral Agent without any further consent of the Debtor in accordance with this Section.

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(i) Pledged Security Entitlements.  Promptly upon request from time to time by the Canadian Collateral Agent, such Debtor will deliver to the Canadian Collateral Agent any and all such documents, agreements and other materials as may be required from time to time to provide the Canadian Collateral Agent with control over all Pledged Security Entitlements of such Debtor in the manner provided under section 25 or 26 of the STA.

(j) Pledged Futures Contracts.  Promptly upon request from time to time by the Canadian Collateral Agent, such Debtor will deliver to the Canadian Collateral Agent any and all such documents, agreements and other materials as may be required from time to time to provide the Canadian Collateral Agent with control over all Pledged Futures Contracts of such Debtor in the manner provided under subsection 1(2) of the PPSA.

(k) Partnerships, Limited Liability Companies.  Within 10 days of the date of this Agreement (or, with respect to any Supplement, at the time of execution of such Supplement), such Debtor will ensure that the terms of any interest in a partnership or limited liability company that is Collateral of such Debtor will expressly provide that such interest is a “security” for the purposes of the STA.

(l) Transfer Restrictions.  If the constating documents of any Pledged Issuer (other than a ULC) restrict the transfer of the Securities of such Pledged Issuer, then such Debtor will deliver to the Canadian Collateral Agent a certified copy of a resolution of the directors, shareholders, unitholders or partners of such Pledged Issuer, as applicable, consenting to the transfer(s) contemplated by this Agreement, including any prospective transfer of the Collateral of such Debtor by the Canadian Collateral Agent upon a realization on the Security Interests.

(m) Notices.  Such Debtor will advise the Canadian Collateral Agent promptly, in reasonable detail, of any:

(i) change to a Pledged Securities Intermediary’s Jurisdiction, Pledged Issuer’s Jurisdiction, or Pledged Future Intermediary’s Jurisdiction, or the creation or acquisition of any Certificated Security, Uncertificated Security, Security Entitlement, Securities Account, Futures Contract or Futures Account;

(ii) change in the location of the jurisdiction of incorporation or amalgamation, chief executive office, or domicile of such Debtor;

(iii) change in the name of such Debtor;

(iv) merger, consolidation or amalgamation of such Debtor with any other Person;

(v) additional jurisdiction in which such Debtor has tangible Personal Property;

(vi) acquisition of any right, title or interest in real property by such Debtor;

(vii) acquisition of any Intellectual Property Rights which are the subject of a registration of application with any governmental intellectual property or other governing body or registry, or which are material to such Debtor’s business;

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(viii) acquisition of any Instrument (other than cheques in the ordinary course of business), Document of Title or Chattel Paper other than any Instrument, Document of Title or Chattel Paper in any amount less than $1,000,000;

(ix) creation or acquisition of any Subsidiary of such Debtor;

(x) Lien (other than Permitted Liens) on, or claim asserted against, any of the Collateral of such Debtor; or

(xi) occurrence of an event, claim or occurrence that could reasonably be expected to have a material adverse effect on the value of the Collateral of such Debtor or on the Security Interests.

Such Debtor will not effect or permit any of the changes referred to in clauses (ii) through (vii) above unless all filings have been made and all other actions taken that are required in order for the Canadian Collateral Agent to continue at all times following such change to have a valid and perfected first priority Security Interest in respect of all of the Collateral of such Debtor.

(n) Disposition of Collateral.  Each Debtor will not sell, lease or otherwise dispose of the Collateral owned by it except for dispositions specifically permitted pursuant to Section 6.12 of the Credit Agreement.

(o) Serial Number Goods.  Within 20 days from the date of this Agreement (or, with respect to any Supplement, at the time of execution of such Supplement), such Debtor shall provide a schedule setting out all Serial Number Goods owned by such Debtor which comprise Collateral of such Debtor.

7. Survival of Representations, Warranties and Covenants.  All agreements, representations, warranties and covenants made by each Debtor or incorporated by reference in this Agreement (a) are material, (b) will be considered to have been relied on by the Secured Parties, and (c) will survive the execution and delivery of this Agreement and any Supplement or any investigation made at any time by or on behalf of any Secured Party and any disposition or payment of the Obligations until the Release Date.

8. Voting Rights.  Unless an Event of Default has occurred and is continuing, each Debtor will be entitled to exercise all voting power from time to time exercisable in respect of the Pledged Securities and Pledged Security Entitlements of such Debtor and give consents, waivers and ratifications in respect thereof; provided, however, that no vote will be cast or consent, waiver or ratification given or action taken which would be, or would have a reasonably likelihood of being, prejudicial to the interests of the Secured Parties or which would have the effect of reducing the value of the Collateral of such Debtor as security for the Obligations of such Debtor or imposing any restriction on the transferability of any of the Collateral of such Debtor.  Unless an Event of Default has occurred and is continuing, the Canadian Collateral Agent shall, from time to time at the request and expense of the applicable Debtor, execute or cause to be executed, in respect of all Pledged Securities of such Debtor (which shall not include any ULC Shares) that are registered in the name of the Canadian Collateral Agent or its nominee, valid proxies appointing such Debtor as its (or its nominee’s) proxy to attend, vote and act for and on behalf of the Canadian Collateral Agent or such nominee, as the case may be, at any and all meetings of the applicable Pledged Issuer’s shareholders or debt holders, all Pledged Securities that are registered in the name of the Canadian Collateral Agent or such nominee, as the case may be, and to execute and deliver, consent to or approve or disapprove of or withhold consent to any resolutions in writing of shareholders

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or debt holders of the applicable Pledged Issuer for and on behalf of the Canadian Collateral Agent or such nominee, as the case may be.  Subject to Section 14 hereof, immediately upon the occurrence and during the continuance of any Event of Default, all such rights of the applicable Debtor to vote and give consents, waivers and ratifications will cease and the Canadian Collateral Agent or its nominee will be entitled to exercise all such voting rights and to give all such consents, waivers and ratifications.

9. Dividends; Interest.  Unless an Event of Default has occurred and is continuing, each Debtor will be entitled to receive any and all cash dividends, interest, principal payments and other forms of cash distribution on the Pledged Securities or Pledged Security Entitlements of such Debtor which it is otherwise entitled to receive, but any and all stock dividends or other non-cash distributions made on or in respect of the Pledged Securities or Pledged Security Entitlements of such Debtor, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock of any Pledged Issuer of such Debtor or received in exchange for such Pledged Securities, Pledged Security Entitlements or any part thereof or as a result of any amalgamation, merger, consolidation, acquisition or other exchange of property to which any Pledged Issuer of such Debtor may be a party or otherwise, and any and all stock dividends and other non-cash distributions received in exchange for any Pledged Securities or Pledged Security Entitlements will be and become part of the Collateral of such Debtor subject to the Security Interests and, if received by such Debtor, except with respect to any ULC Shares will forthwith be delivered to the Canadian Collateral Agent or its nominee (accompanied, if appropriate, by proper instruments of assignment and/or stock powers of attorney executed by such Debtor in accordance with the Canadian Collateral Agent’s instructions) to be held subject to the terms of this Agreement; and if any of the Pledged Security Certificates have been registered in the name of the Canadian Collateral Agent or its nominee, the Canadian Collateral Agent will execute and deliver (or cause to be executed and delivered) to such Debtor all such dividend orders and other instruments as such Debtor may request for the purpose of enabling such Debtor to receive the dividends, distributions or other payments which such Debtor is authorized to receive and retain pursuant to this Section.  Subject to Section 14 hereof, if an Event of Default has occurred and is continuing, all rights of such Debtor pursuant to this Section will cease and the Canadian Collateral Agent will have the sole and exclusive right and authority to receive and retain the cash dividends, interest, principal payments and other forms of cash distribution which such Debtor would otherwise be authorized to retain pursuant to this Section.  Any money and other property paid over to or received by the Canadian Collateral Agent pursuant to the provisions of this Section will be retained by the Canadian Collateral Agent as additional Collateral hereunder and be applied in accordance with the provisions of this Agreement.

10. Rights on Event of Default.  Subject to the Initial Order, if an Event of Default has occurred and is continuing, then and in every such case the Security Interests of each Debtor shall become enforceable and the Canadian Collateral Agent, in addition to any rights now or hereafter existing under applicable Law may, personally or by agent, at such time or times as the Canadian Collateral Agent, in its discretion may determine, do any one or more of the following:

(a) Rights under PPSA, etc.  Exercise against such Debtor all of the rights and remedies granted to secured parties under the PPSA and any other applicable statute, or otherwise available to the Canadian Collateral Agent by contract, at law or in equity.

(b) Demand Possession.  Demand possession of any or all of the Collateral of such Debtor, in which event such Debtor will, at the expense of such Debtor, immediately cause the Collateral of such Debtor designated by the Canadian Collateral Agent to be assembled and made available and/or delivered to the Canadian Collateral Agent at any place designated by the Canadian Collateral Agent.

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(c) Take Possession.  Enter on any premises where any Collateral of such Debtor is located and take possession of, disable or remove such Collateral.

(d) Deal with Collateral.  Hold, store and keep idle, or operate, lease or otherwise use or permit the use of, any or all of the Collateral of such Debtor for such time and on such terms as the Canadian Collateral Agent may determine, and demand, collect and retain all earnings and other sums due or to become due from any Person in respect of any of the Collateral of such Debtor.

(e) Carry on Business.  Carry on, or concur in the carrying on of, any or all of the business or undertaking of such Debtor and enter on, occupy and use (without charge by such Debtor) any of the premises, buildings, plant and undertaking of, or occupied or used by, such Debtor.

(f) Enforce Collateral.  Seize, collect, receive, enforce or otherwise deal with any Collateral of such Debtor in such manner, on such terms and conditions and at such times as the Canadian Collateral Agent deems advisable.

(g) Dispose of Collateral.  Realize on any or all of the Collateral of such Debtor and sell, lease, assign, give options to purchase, or otherwise dispose of and deliver any or all of the Collateral of such Debtor (or contract to do any of the above), in one or more parcels at any public or private sale, at any exchange, broker’s board or office of the Canadian Collateral Agent or elsewhere, with or without advertising or other formality, except as required by applicable Law, on such terms and conditions as the Canadian Collateral Agent may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery.

(h) Court-Approved Disposition of Collateral.  Obtain from any court of competent jurisdiction an order for the sale or foreclosure of any or all of the Collateral of such Debtor.

(i) Purchase by Canadian Collateral Agent.  At any public sale, and to the extent permitted by Law on any private sale, bid for and purchase any or all of the Collateral of such Debtor offered for sale and, upon compliance with the terms of such sale, hold, retain, sell or otherwise dispose of such Collateral without any further accountability to such Debtor or any other Person with respect to such holding, retention, sale or other disposition, except as required by Law.  In any such sale to the Canadian Collateral Agent, the Canadian Collateral Agent may, for the purpose of making payment for all or any part of the Collateral of such Debtor so purchased, use any claim for any or all of the Obligations of such Debtor then due and payable to it as a credit against the purchase price.

(j) Collect Accounts.  Notify (whether in its own name or in the name of the Debtor) the account debtors under any Accounts of such Debtor of the assignment of such Accounts to the Canadian Collateral Agent and direct such account debtors to make payment of all amounts due or to become due to such Debtor in respect of such Accounts directly to the Canadian Collateral Agent and, upon such notification and at the expense of such Debtor, enforce collection of any such Accounts, and adjust, settle or compromise the amount or payment of such Accounts, in such manner and to such extent as the Canadian Collateral Agent deems appropriate in the circumstances.

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(k) Transfer of Collateral.  Subject to Section 14 hereof, transfer any Collateral of such Debtor that is Investment Property into the name of the Canadian Collateral Agent or its nominee.

(l) Voting.  Subject to Section 14 hereof, vote any or all of the Pledged Securities of such Debtor (whether or not transferred to the Canadian Collateral Agent or its nominee) and Pledged Security Entitlements of such Debtor and give or withhold all consents, waivers and ratifications in respect thereof and otherwise act with respect thereto as though it were the outright owner thereof.

(m) Exercise Other Rights.  Subject to Section 14 hereof, exercise any and all rights, privileges, entitlements and options pertaining to any Collateral of such Debtor that is Investment Property as if the Canadian Collateral Agent were the absolute owner of such Investment Property.

(n) Dealing with Contracts and Permits.  Deal with any and all Contracts and Permits of such Debtor to the same extent as such Debtor might (including the enforcement, realization, sale, assignment, transfer, and requirement for continued performance), all on such terms and conditions and at such time or times as may seem advisable to the Canadian Collateral Agent.

(o) Payment of Liabilities.  Pay any liability secured by any Lien against any Collateral of such Debtor.  Such Debtor will immediately on demand reimburse the Canadian Collateral Agent for all such payments and, until paid, any such reimbursement obligation shall form part of the Obligations of such Debtor and shall be secured by the Security Interests.

(p) Borrow and Grant Liens.  Borrow money for the maintenance, preservation or protection of any Collateral of such Debtor or for carrying on any of the business or undertaking of such Debtor and grant Liens on any Collateral of such Debtor (in priority to the Security Interests of such Debtor or otherwise) as security for the money so borrowed.  Such Debtor will immediately on demand reimburse the Canadian Collateral Agent for all such borrowings and, until paid, any such reimbursement obligations shall form part of the Obligations of such Debtor and shall be secured by the Security Interests of such Debtor.

(q) Appoint Receiver.  Appoint by instrument in writing one or more Receivers of such Debtor or any or all of the Collateral of such Debtor with such rights, powers and authority (including any or all of the rights, powers and authority of the Canadian Collateral Agent under this Agreement) as may be provided for in the instrument of appointment or any supplemental instrument, and remove and replace any such Receiver from time to time.  To the extent permitted by applicable Law, any Receiver appointed by the Canadian Collateral Agent will (for purposes relating to responsibility for the Receiver’s acts or omissions) be considered to be the agent of such Debtor and not of the Canadian Collateral Agent or any of the other Secured Parties.  Any Receiver appointed by the Canadian Collateral Agent shall be vested with the rights and remedies which could have been exercised by the Canadian Collateral Agent in respect of each Debtor or the Collateral of any such Debtor and such other power and discretions as are granted by any instrument of appointment or any court of competent jurisdiction.

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(r) Court-Appointed Receiver.  Obtain from any court of competent jurisdiction an order for the appointment of a Receiver of such Debtor or of any or all of the Collateral of such Debtor.

(s) Consultants.  Require such Debtor to engage a consultant of the Canadian Collateral Agent’s choice, or engage a consultant on its own behalf, such consultant to receive the full cooperation and support of such Debtor and its agents and employees, including unrestricted access to the premises of such Debtor and the Books and Records of such Debtor; all reasonable fees and expenses of such consultant shall be for the account of such Debtor and such Debtor hereby authorizes any such consultant to report directly to the Canadian Collateral Agent and to disclose to the Canadian Collateral Agent any and all information obtained in the course of such consultant’s employment.

The Canadian Collateral Agent may exercise any or all of the foregoing rights and remedies without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except as required by applicable Law) to or on any Debtor or any other Person, and each Debtor hereby waives each such demand, presentment, protest, advertisement and notice to the extent permitted by applicable Law.  None of the above rights or remedies will be exclusive of or dependent on or merge in any other right or remedy, and one or more of such rights and remedies may be exercised independently or in combination from time to time.  Each Debtor acknowledges and agrees that any action taken by the Canadian Collateral Agent hereunder following the occurrence and during the continuance of an Event of Default shall not be rendered invalid or ineffective as a result of the curing of the Event of Default on which such action was based.

11. Realization Standards.  To the extent that applicable Law imposes duties on the Canadian Collateral Agent to exercise remedies in a commercially reasonable manner and without prejudice to the ability of the Canadian Collateral Agent to dispose of the Collateral in any such manner, each Debtor acknowledges and agrees that it is not commercially unreasonable for the Canadian Collateral Agent to (or not to) (a) incur expenses reasonably deemed significant by the Canadian Collateral Agent to prepare the Collateral of such Debtor for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (b) fail to obtain third party consents for access to the Collateral of such Debtor to be disposed of, (c) fail to exercise collection remedies against account debtors or other Persons obligated on the Collateral of such Debtor or to remove Liens against the Collateral of such Debtor, (d) exercise collection remedies against account debtors and other Persons obligated on the Collateral of such Debtor directly or through the use of collection agencies and other collection specialists, (e) dispose of Collateral of such Debtor by way of public auction, public tender or private contract, with or without advertising and without any other formality, (f) contact other Persons, whether or not in the same business of such Debtor, for expressions of interest in acquiring all or any portion of the Collateral of such Debtor, (g) hire one or more professional auctioneers to assist in the disposition of the Collateral of such Debtor, whether or not such Collateral is of a specialized nature or an upset or reserve bid or price is established, (h) dispose of the Collateral of such Debtor by utilizing internet sites that provide for the auction of assets of the types included in such Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (i) dispose of assets in wholesale rather than retail markets, (j) disclaim disposition warranties, such as title, possession or quiet enjoyment, (k) purchase insurance or credit enhancements to insure the Canadian Collateral Agent against risks of loss, collection or disposition of the Collateral of such Debtor or to provide to the Canadian Collateral Agent a guaranteed return from the collection or disposition of such Collateral, (l) the extent deemed appropriate by the Canadian Collateral Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Canadian Collateral Agent in the collection or disposition of any of the Collateral of such Debtor, (m) dispose of Collateral of such Debtor in whole or

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in part, and (n) dispose of Collateral of such Debtor to a customer of the Canadian Collateral Agent, and (o) establish an upset or reserve bid price in respect of Collateral of such Debtor.

12. Grant of Licence.  For the purpose of enabling the Canadian Collateral Agent to exercise its rights and remedies under this Agreement when the Canadian Collateral Agent is entitled to exercise such rights and remedies, and for no other purpose, each Debtor grants to the Canadian Collateral Agent an irrevocable, non-exclusive licence (exercisable without payment of royalty or other compensation to such Debtor) to use, assign or sublicense any or all of the Intellectual Property Rights of such Debtor, including in such licence reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout of the same.  For any trade-marks, get up and trade dress and other business indicia, such licence includes an obligation on the part of the Canadian Collateral Agent to maintain the standards of quality maintained by such Debtor or, in the case of trade-marks, get-up and trade dress, or other business indicia licensed to such Debtor, the standards of quality imposed upon such Debtor by the relevant licence.  For copyright works, such licence shall include the benefit of any waivers of moral rights and similar rights.

13. Securities Laws.  The Canadian Collateral Agent is authorized, in connection with any offer or sale of any Pledged Securities or Pledged Security Entitlements of any Debtor, to comply with any limitation or restriction as it may be advised by counsel is necessary to comply with applicable Law, including compliance with procedures that may restrict the number of prospective bidders and purchasers, requiring that prospective bidders and purchasers have certain qualifications, and restricting prospective bidders and purchasers to Persons who will represent and agree that they are purchasing for their own account or investment and not with a view to the distribution or resale of such Securities.  In addition to and without limiting Section 11, each Debtor further agrees that compliance with any such limitation or restriction will not result in a sale being considered or deemed not to have been made in a commercially reasonable manner, and the Canadian Collateral Agent will not be liable or accountable to such Debtor for any discount allowed by reason of the fact that such Pledged Securities or Pledged Security Entitlements are sold in compliance with any such limitation or restriction.  If the Canadian Collateral Agent chooses to exercise its right to sell any or all Pledged Securities or Pledged Security Entitlements of any Debtor, upon written request, such Debtor will cause each applicable Pledged Issuer to furnish to the Canadian Collateral Agent all such information as the Canadian Collateral Agent may request in order to determine the number of shares and other instruments included in the Collateral of such Debtor which may be sold by the Canadian Collateral Agent in exempt transactions under any Laws governing securities, and the rules and regulations of any applicable securities regulatory body thereunder, as the same are from time to time in effect.

14. ULC Shares.  Each Debtor acknowledges that certain of the Collateral of such Debtor may now or in the future consist of ULC Shares, and that it is the intention of the Canadian Collateral Agent and each Debtor that neither the Canadian Collateral Agent nor any other Secured Party should under any circumstances prior to realization thereon be held to be a “member” or a “shareholder”, as applicable, of a ULC for the purposes of any ULC Laws.  Therefore, notwithstanding any provisions to the contrary contained in this Agreement, the Credit Agreement or any other Loan Document, where a Debtor is the registered owner of ULC Shares which are Collateral of such Debtor, such Debtor will remain the sole registered and beneficial owner of such ULC Shares until such time as such ULC Shares are effectively transferred into the name of the Canadian Collateral Agent, any other Secured Party, or any other Person on the books and records of the applicable ULC.  Accordingly, each Debtor shall be entitled to receive and retain for its own account any dividend on or other distribution, if any, in respect of such ULC Shares (except for any dividend or distribution comprised of Pledged Security Certificates of such Debtor, which shall be delivered to the Canadian Collateral Agent to hold as Collateral hereunder) and shall have the right to vote such ULC Shares and to control the direction, management and policies of the applicable ULC to the same extent as such Debtor would if such ULC Shares were not pledged to the Canadian

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Collateral Agent pursuant hereto.  Nothing in this Agreement, the Credit Agreement or any other Loan Document is intended to, and nothing in this Agreement, the Credit Agreement or any other Loan Document shall, constitute the Canadian Collateral Agent, any other Secured Party, or any other Person other than the applicable Debtor, a member or shareholder of a ULC for the purposes of any ULC Laws (whether listed or unlisted, registered or beneficial), until such time as notice is given to such Debtor and further steps are taken pursuant hereto or thereto so as to register the Canadian Collateral Agent, any other Secured Party, or such other Person, as specified in such notice, as the holder of the ULC Shares.  To the extent any provision hereof or of the Credit Agreement or any other Loan Document would have the effect of constituting the Canadian Collateral Agent or any other Secured Party as a member or a shareholder, as applicable, of any ULC prior to such time, such provision shall be severed herefrom and shall be ineffective with respect to ULC Shares which are Collateral of any Debtor without otherwise invalidating or rendering unenforceable this Agreement or invalidating or rendering unenforceable such provision insofar as it relates to Collateral of any Debtor which is not ULC Shares.  Except upon the exercise of rights of the Canadian Collateral Agent to sell, transfer or otherwise dispose of ULC Shares in accordance with this Agreement, each Debtor shall not cause or permit, or enable a Pledged Issuer that is a ULC to cause or permit, the Canadian Collateral Agent or any other Secured Party to: (a) be registered as a shareholder or member of such Pledged Issuer; (b) have any notation entered in their favour in the share register of such Pledged Issuer; (c) be held out as shareholders or members of such Pledged Issuer; (d) receive, directly or indirectly, any dividends, property or other distributions from such Pledged Issuer by reason of the Canadian Collateral Agent holding the Security Interests over the ULC Shares; or (e) act as a shareholder or member of such Pledged Issuer, or exercise any rights of a shareholder of member of such Pledged Issues including the right to attend a meeting of shareholders of such Pledged Issuer or to vote its ULC Shares, issued by such Pledged Issuer.

15. Application of Proceeds.  All Proceeds of Collateral of any Debtor received by the Canadian Collateral Agent or a Receiver may be applied to discharge or satisfy any expenses (including the Receiver’s remuneration and other expenses of enforcing the Canadian Collateral Agent’s rights against such Debtor under this Agreement), Liens on the Collateral of such Debtor in favour of Persons other than the Canadian Collateral Agent, borrowings, taxes and other outgoings affecting the Collateral of such Debtor or which are considered advisable by the Canadian Collateral Agent or the Receiver to protect, preserve, repair, process, maintain or enhance the Collateral of such Debtor or prepare it for sale, lease or other disposition, or to keep in good standing any Liens on the Collateral of such Debtor ranking in priority to any of the Security Interests, or to sell, lease or otherwise dispose of the Collateral of such Debtor.  The balance of such Proceeds may, at the sole discretion of the Canadian Collateral Agent, be held as collateral security for the Obligations of the applicable Debtor or be applied to such of the Obligations of the applicable Debtor (whether or not the same are due and payable) in such manner and at such times as the Canadian Collateral Agent considers appropriate and thereafter will be accounted for as required by Law.

16. Continuing Liability of each Debtor.  Each Debtor will remain liable for any Obligations of such Debtor that are outstanding following realization of all or any part of the Collateral of such Debtor and the application of the Proceeds thereof.

17. Canadian Collateral Agent’s Appointment as Attorney-in-Fact.  Effective upon the occurrence and during the continuance of an Event of Default, each Debtor constitutes and appoints the Canadian Collateral Agent and any officer or agent of the Canadian Collateral Agent, with full power of substitution, as such Debtor’s true and lawful attorney-in-fact with full power and authority in the place of such Debtor and in the name of such Debtor or in its own name, from time to time in the Canadian Collateral Agent’s discretion, to take any and all appropriate action and to execute any and all documents and instruments as, in the opinion of such attorney, may be necessary or desirable to accomplish the purposes of this Agreement.  Without limiting the effect of this Section, each Debtor grants the Canadian

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Collateral Agent an irrevocable proxy to vote the Pledged Securities and Pledged Security Entitlements of such Debtor and to exercise all other rights, powers, privileges and remedies to which a holder thereof would be entitled (including giving or withholding written consents of shareholders, calling special meetings of shareholders and voting at such meetings), which proxy shall be effective, automatically and without the necessity of any action (including any transfer of any Pledged Securities or Pledged Security Entitlements of such Debtor on the books and records of a Pledged Issuer or Pledged Securities Intermediary, as applicable), upon the occurrence of an Event of Default.  These powers are coupled with an interest and are irrevocable until the Release Date.  Nothing in this Section affects the right of the Canadian Collateral Agent as secured party or any other Person on the Canadian Collateral Agent’s behalf, to sign and file or deliver (as applicable) all such financing statements, financing change statements, notices, verification statements and other documents relating to the Collateral and this Agreement as the Canadian Collateral Agent or such other Person considers appropriate.  Each Debtor hereby ratifies and confirms, and agrees to ratify and confirm, whatever lawful acts the Canadian Collateral Agent or any of the Canadian Collateral Agent’s sub-agents, nominees or attorneys do or purport to do in exercise of the power of attorney granted to the Canadian Collateral Agent pursuant to this Section.

18. Performance by Canadian Collateral Agent of Debtor’s Obligations.  If any Debtor fails to perform or comply with any of the obligations of such Debtor under this Agreement, the Canadian Collateral Agent may, but need not, perform or otherwise cause the performance or compliance of such obligation, provided that such performance or compliance will not constitute a waiver, remedy or satisfaction of such failure.  The expenses of the Canadian Collateral Agent incurred in connection with any such performance or compliance will be payable by such Debtor to the Canadian Collateral Agent immediately on demand, and until paid, any such expenses will form part of the Obligations of such Debtor and will be secured by the Security Interests of such Debtor.

19. Interest.  If any amount payable by any Debtor to the Canadian Collateral Agent under this Agreement is not paid when due, such Debtor will pay to the Canadian Collateral Agent, immediately on demand, interest on such amount from the date due until paid, at a nominal annual rate equal to the rate set out in Section 2.10 of the Credit Agreement.  All amounts payable by such Debtor to the Canadian Collateral Agent under this Agreement, and all interest on all such amounts, compounded monthly on the last Business Day of each month, will form part of the Obligations of such Debtor and will be secured by the Security Interests of such Debtor.

20. Severability.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction will, as to that jurisdiction, be ineffective to the extent of such prohibition or unenforceability and will be severed from the balance of this Agreement, all without affecting the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

21. Rights of Canadian Collateral Agent; Limitations on Canadian Collateral Agent’s Obligations.

(a) Limitations on Liability of Secured Parties.  Neither the Canadian Collateral Agent nor any other Secured Party will be liable to any Debtor or any other Person for any failure or delay in exercising any of the rights of such Debtor under this Agreement (including any failure to take possession of, collect, sell, lease or otherwise dispose of any Collateral of such Debtor, or to preserve rights against prior parties).  Neither the Canadian Collateral Agent, any other Secured Party, a Receiver, nor any agent thereof (including, in Alberta or British Columbia, any sheriff) is required to take, or will have any liability for any failure to take or delay in taking, any steps necessary or advisable to preserve rights against other Persons under any Collateral of any Debtor in its possession.  Neither the

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Canadian Collateral Agent, any other Secured Party, any Receiver, nor any agent thereof will be liable for any, and each Debtor will bear the full risk of all, loss or damage to any and all of the Collateral of such Debtor (including any Collateral of such Debtor in the possession of the Canadian Collateral Agent, any other Secured Party, any Receiver, or any agent thereof) caused for any reason other than the gross negligence or wilful misconduct of the Canadian Collateral Agent, such other Secured Party, such Receiver or such agent thereof.

(b) Debtors Remain Liable under Accounts and Contracts.  Notwithstanding any provision of this Agreement, each Debtor will remain liable under each of the documents giving rise to the Accounts of such Debtor and under each of the Contracts of such Debtor to observe and perform all the conditions and obligations to be observed and performed by such Debtor thereunder, all in accordance with the terms of each such document and Contract.  Neither the Canadian Collateral Agent nor any other Secured Party will have any obligation or liability under any Account of any Debtor (or any document giving rise thereto) or Contract of any Debtor by reason of or arising out of this Agreement or the receipt by the Canadian Collateral Agent of any payment relating to such Account or Contract pursuant hereto, and in particular (but without limitation), neither the Canadian Collateral Agent nor any other Secured Party will be obligated in any manner to perform any of the obligations of any Debtor under or pursuant to any Account of such Debtor (or any document giving rise thereto) or under or pursuant to any Contract of such Debtor, to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any Account of such Debtor (or any document giving rise thereto) or under any Contract of such Debtor, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time.

(c) Collections on Accounts and Contracts.  Each Debtor shall be authorized to, at any time that an Event of Default is not continuing, collect the Accounts of such Debtor and payments under the Contracts of such Debtor in the normal course of the business of such Debtor and for the purpose of carrying on the same.

(d) Use of Agents.  The Canadian Collateral Agent may perform any of its rights or duties under this Agreement by or through agents and is entitled to retain counsel and to act in reliance on the advice of such counsel concerning all matters pertaining to its rights and duties under this Agreement.

22. Dealings by Canadian Collateral Agent.  The Canadian Collateral Agent will not be obliged to exhaust its recourse against any Debtor or any other Person or against any other security it may hold in respect of the Obligations of such Debtor or any part thereof before realizing upon or otherwise dealing with the Collateral of such Debtor in such manner as the Canadian Collateral Agent may consider desirable.  The Canadian Collateral Agent and the other Secured Parties may grant extensions of time and other indulgences, take and give up security, accept compositions, grant releases and discharges and otherwise deal with any Debtor and any other Person, and with any or all of the Collateral of any Debtor, and with other security and sureties, as they may see fit, all without prejudice to the Obligations of any Debtor or to the rights and remedies of the Canadian Collateral Agent under this Agreement.  The powers conferred on the Canadian Collateral Agent under this Agreement are solely to protect the interests of the Canadian Collateral Agent in the Collateral of each Debtor and will not impose any duty upon the Canadian Collateral Agent to exercise any such powers.

18

23. Communication.  Any notice or other communication required or permitted to be given under this Agreement will be made in accordance with the terms of the Credit Agreement.

24. Release of Information.  Each Debtor authorizes the Canadian Collateral Agent to provide a copy of this Agreement and such other information as may be requested of the Canadian Collateral Agent (i) to the extent necessary to enforce the Canadian Collateral Agent’s rights, remedies and entitlements under this Agreement, (ii) to any assignee or prospective assignee of all or any part of its Obligations, and (iii) as required by applicable Law.

25. Expenses; Indemnity; Waiver.

(a) Each Debtor agrees to pay, and to indemnify and save the Canadian Collateral Agent and each of the other Secured Parties harmless from, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the preparation, execution, delivery, enforcement, performance and administration of this Agreement to the extent such Debtor would be required to do so pursuant to Section 9.5 of the Credit Agreement.

(b) No Debtor shall assert, and each Debtor hereby unconditionally and irrevocably waives (to the fullest extent permitted by applicable Law), (i) any claim against any Secured Party (or any director, officer or employee thereof) or any Receiver, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, and (ii) all of the rights, benefits and protections given by any present or future statute that imposes limitations on the rights, powers or remedies of a secured party or on the methods of, or procedures for, realization of security, including any “seize or xxx” or “anti-deficiency” statute or any similar provision of any other statute.

(c) All amounts due under this Section shall be payable to the Canadian Collateral Agent for the ratable benefit of the applicable Secured Parties in accordance with the Credit Agreement.

(d) The indemnifications set out in this Section will survive the Release Date and the release or extinguishment of the Security Interests.

26. Release of Debtor.  Upon the written request of any Debtor given at any time on or after the Release Date (or prior to the Release Date with respect to any disposition of Collateral specifically permitted pursuant to Section 6.12 of the Credit Agreement), the Canadian Collateral Agent shall at the expense of such Debtor, release such Debtor and the Collateral of such Debtor or such Collateral specifically permitted to be disposed of, as the case may be, from the Security Interests and, in the case of any release on or after the Release Date, such release shall serve to terminate any licence granted in this Agreement.  Upon any such release, and at the request and expense of such Debtor, the Canadian Collateral Agent shall execute and deliver to such Debtor such releases and discharges as such Debtor may reasonably request.

27. Additional Security.  This Agreement is in addition to, and not in substitution of, any and all other security previously or concurrently delivered by any Debtor or any other Person to any Secured Party, all of which other security shall remain in full force and effect.

28. Alteration or Waiver.  None of the terms or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except by a written instrument executed by the Canadian

19

Collateral Agent.  The Secured Parties will not, by any act or delay, be deemed to have waived any right or remedy hereunder or to have acquiesced in any Event of Default or in any breach of any of the terms and conditions hereof.  No failure to exercise, nor any delay in exercising, on the part of any Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right, power or privilege hereunder will preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  A waiver by any Secured Party of any right or remedy hereunder on any one occasion will not be construed as a bar to any right or remedy which the Canadian Collateral Agent would otherwise have on any future occasion.  Neither the taking of any judgment nor the exercise of any power of seizure or sale will extinguish the liability of any Debtor to pay the Obligations of such Debtor, nor will the same operate as a merger of any covenant contained in this Agreement or of any other liability, nor will the acceptance of any payment or other security constitute or create any novation.

29. Amalgamation.  If any Debtor is a corporation or other body corporate, such Debtor acknowledges that if it amalgamates or merges with any other corporation or corporations or bodies corporate, then (i) the Collateral and the Security Interests of such Debtor will extend to and include all the property and assets of the amalgamated corporation and to any property or assets of the amalgamated corporation thereafter owned or acquired, (ii) the term “Debtor”, where used in this Agreement, will extend to and include the amalgamated corporation or other body corporate, and (iii) the term “Obligations”, where used in this Agreement, will extend to and include the Obligations of the amalgamated corporation or other body corporate.

30. Governing Law; Attornment.  This Agreement will be governed by and construed in accordance with the Laws of the Province of Ontario, excluding any conflict of laws rule or principle that might refer these matters to the laws of another jurisdiction.  Without prejudice to or limitation of any other rights or remedies available to the Canadian Collateral Agent and/or the ability of the Canadian Collateral Agent to enforce this Agreement in any other proper jurisdiction, each Debtor irrevocably submits and attorns to the non-exclusive jurisdiction of the courts of such province.  Each of the Debtors agrees that service of all writs, processes, statements, correspondence or summonses in any suit, action or proceeding brought against such Debtor under or in respect of this Agreement in the Province of Ontario shall be made upon such Debtor at such Debtor’s address for notice as provided in the Credit Agreement, or in any other manner permitted by applicable Law. To the extent permitted by applicable Law, each Debtor irrevocably waives any objection (including any claim of inconvenient forum) that it may now or hereafter have to the venue of any legal proceeding arising out of or relating to this Agreement in the courts of such Province.

31. Interpretation.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word ‘shall”.  The word “or” is disjunctive; the word “and” is conjunctive.  The word “shall” is mandatory; the word “may” is permissive.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set out herein), (b) any reference herein to any statute or any section thereof shall, unless otherwise expressly stated, be deemed to be a reference to such statute or section as amended, restated or re-enacted from time to time, (c) any reference herein to any Person shall be construed to include such Person’s successors and permitted assigns, (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, and (e) all references herein to Sections and Schedules shall be construed to refer to

20

Sections and Schedules to, this Agreement, Section headings are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.  Any reference in this Agreement to a Permitted Lien is not intended to subordinate or postpone, and shall not be interpreted as subordinating or postponing, or as any agreement to subordinate or postpone, any Security Interest to any Permitted Lien.  In accordance with the Property Law Act (British Columbia), the doctrine of consolidation applies to this Agreement.

32. Successors and Assigns.  This Agreement will enure to the benefit of, and be binding on, each Debtor and its successors and permitted assigns, and will enure to the benefit of, and be binding on, the Canadian Collateral Agent and its successors and assigns.  No Debtor may assign this Agreement, or any of its rights or obligations under this Agreement.  The Canadian Collateral Agent may assign this Agreement and any of its rights and obligations hereunder to any Person that replaces it in its capacity as such.  If any Debtor or the Canadian Collateral Agent is an individual, then the term “Debtor” or “Canadian Collateral Agent”, as applicable, will also include his or her heirs, administrators and executors.

33. Additional Debtor(s).  Additional Persons may from time to time after the date of this Agreement become Debtors under this Agreement by executing and delivering to the Canadian Collateral Agent a supplemental agreement (together with all schedules thereto, a “Supplement”) to this Agreement, in substantially the form attached hereto as Exhibit A.  Effective from and after the date of the execution and delivery by any Person to the Canadian Collateral Agent of a Supplement:

(a) such Person shall be, and shall be deemed for all purposes to be, a Debtor under this Agreement with the same force and effect, and subject to the same agreements, representations, indemnities, liabilities, obligations and Security Interests, as if such Person had been an original signatory to this Agreement as a Debtor; and

(b) all Collateral of such Person shall be subject to the Security Interest from such Person as security for the due payment and performance of the Canadian Secured Obligations of such Person in accordance with the provisions of this Agreement, and such Canadian Secured Obligations shall be Obligations of such Person.

The execution and delivery of a Supplement by any additional Person shall not require the consent of any Debtor and all of the Obligations of each Debtor and the Security Interests granted thereby shall remain in full force and effect, notwithstanding the addition of any new Debtor to this Agreement.

34. Acknowledgment of Receipt/Waiver.  Each Debtor acknowledges receipt of an executed copy of this Agreement and, to the extent permitted by applicable Law, waives the right to receive a copy of any financing statement or financing change statement registered in connection with this Agreement or any verification statement issued in respect of any such financing statement or financing change statement.

35. Enforcement by Canadian Collateral Agent.  This Agreement and the Security Interests may be enforced only by the action of the Canadian Collateral Agent acting on behalf of the Secured Parties and no other Secured Party shall have any rights individually to enforce or seek to enforce this Agreement or any of the Security Interests, it being understood and agreed that such rights and remedies may be exercised by the Canadian Collateral Agent for the benefit of the Secured Parties upon the terms of this Agreement.

36. Electronic Signature.  Delivery of an executed signature page to this Agreement by any Debtor by facsimile or other electronic form of transmission shall be as effective as delivery by such Debtor of a

21

manually executed copy of this Agreement by such Debtor.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.

[signatures on the next following page]

22

IN WITNESS WHEREOF the undersigned has caused this Agreement to be duly executed as of the date first written above.

DEBTORS:

SMURFIT-STONE CONTAINER CANADA INC./EMBALLAGES SMURFIT-STONE CANADA INC.			3083527 NOVA SCOTIA COMPANY
By:			By:
Name:			Name:
Title:			Title:
MBI LIMITED/LIMITÉE			SMURFIT-MBI, by its general partner MBI LIMITED/LIMITÉE
By:			By:
Name:			Name:
Title:			Title:
FRANCOBEC COMPANY/SOCIÉTÉ FRANCOBEC			STONE CONTAINER FINANCE COMPANY OF CANADA II
By:			By:
Name:			Name:
Title:			Title:
639647 BRITISH COLUMBIA LTD.			B.C. SHIPPER SUPPLIES LTD.
By:			By:
Name:			Name:
Title:			Title:
SPECIALTY CONTAINERS INC.			605681 N.B. INC.
By:			By:
Name:			Name:
Title:			Title:

Signature Page to Canadian Security Agreement

S-1

SLP FINANCE 1, INC. and SLP FINANCE

II, INC., carrying on business in partnership under the firm name SLP FINANCE GENERAL PARTNERSHIP

By:

Name:

Title:

Signature Page to Canadian Security Agreement

S-2

SCHEDULE A-1

DEBTOR INFORMATION

Full legal name: Smurfit-Stone Container Canada Inc.

Prior names:(1)

Smurfit-Stone Container Canada Inc.

Emballages Smurfit-Stone Canada Inc.

3767825 Canada Inc.

3767809 Canada Inc.

3767817 Canada Inc.

3767795 Canada Inc.

3701174 Canada Inc.

St. Laurent Paperboard Inc.

Cartons St-Laurent Inc.

St. Laurent Fibre Resources Inc.

Ressources en Fibre St-Laurent Inc.

Thunder Bay Packaging Inc.

Emballages Thunder Bay Inc.

Emballages Stone (Canada) Inc.

Stone Container (Canada) Inc.

Predecessor companies:

Smurfit-Stone Container Canada Inc.

Emballages Smurfit-Stone Canada Inc.

3767825 Canada Inc.

3767809 Canada Inc.

3767817 Canada Inc.

3767795 Canada Inc.

3701174 Canada Inc.

St. Laurent Paperboard Inc.

Cartons St-Laurent Inc.

St. Laurent Fibre Resources Inc.

Ressources en Fibre St-Laurent Inc.

Thunder Bay Packaging Inc.

Emballages Thunder Bay Inc.

Emballages Stone (Canada) Inc.

Stone Container (Canada) Inc.

Jurisdiction of incorporation, continuance or organization: Nova Scotia

Address of chief executive office: 000, Xxxx. Xxxx-Xxxxxxxx Ouest, Bureau 3000, Xxxxxxxx, XX X0X 0X0

Addresses of all places where business is carried on or tangible Personal Property is kept:

The paperboard mill located at 0000 Xxxxxx xx x’Xxxxx, Xx Xxxxx, Xxxxxx

The corrugating medium mill located at 00 Xxxx Xxxxxxxxxx, Xxxxxx, Xxxxxx

The converting plant located at 00000 Xxxxxxxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxxxxx

(1) The prior names and predecessor companies listed are for the past ten years.

General Security Agreement

The converting plant located at 000 Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx

The pulp mill located at 000, Xxxxx 000, Xxxxxxx-Xx-Xxxx, Xxxxxx*

The limerboard mill located at 000 Xxxxxx Xx-Xxxxx, Xxx Xxxxxxxx, Xxxxxx*

The corrugating medium mill located at 000 Xxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxxxxx*

* permanently shut down

Addresses of all owned real property:

The paperboard mill located at 0000 Xxxxxx xx x’Xxxxx, Xx Xxxxx, Xxxxxx

The corrugating medium mill located at 00 Xxxx Xxxxxxxxxx, Xxxxxx, Xxxxxx

The converting plant located at 00000 Xxxxxxxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxxxxx

The converting plant located at 000 Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx

The pulp mill located at 000, Xxxxx 000, Xxxxxxx-Xx-Xxxx, Xxxxxx*

The limerboard mill located at 000 Xxxxxx Xx-Xxxxx, Xxx Xxxxxxxx, Xxxxxx*

The corrugating medium mill located at 000 Xxxx Xxxxxx, Xxxxxxxx, Xxx Xxxxxxxxx*

* permanently shut down

Addresses of all leased real property: 000, Xxxx. Xxxx-Xxxxxxxx Ouest, Bureau 3000, Xxxxxxxx, XX X0X 0X0

Description of all “serial number goods” (i.e., motor vehicles, trailers, aircraft, boats and outboard motors for boats) (2):

Instruments, Documents of Title and Chattel Paper of such Debtor in an amount in excess of $1,000,000:

Borrowing Entity		Lending Entity		Balance as of December 31, 2008
Smurfit-Stone Container Enterprises, Inc.		Smurfit-Stone Container Canada Inc.		$	50,000,000
3083527 Nova Scotia Company		Smurfit-Stone Container Canada Inc.		$	220,127,119

(2) As per Section 6(o) hereof, to be delivered within 20 days of the date of the Canadian Security Agreement.

2

Pledged Certificated Securities(3):

Pledged Issuer		Securities Owned		% of issued and outstanding Securities of Pledged Issuer		Security Certificate Numbers		Security Certificate Location
3083527 Nova Scotia Company		·		100	%	·		·
MBI Limited/Limitée		·		50	%	·		·
St. Laurent Display and Packaging Corp.		·		100	%	·		·
Celgar Investments, Inc.		·		100	%	·		·
Stone Venepal (Celgar) Pulp, Inc.		·		45	%	·		·

Pledged Uncertificated Securities(4):

Pledged Issuer		Pledged Issuer’s Jurisdiction		Securities Owned		% of issued and outstanding Securities of Pledged Issuer
Smurfit-MBI		Ontario		·		49.9999	%
Aspamill Inc.		·		·		45	%
Groupement Forestier de Champlain Inc.		·		·		10	%
Xxxxxxxxxx Group, Inc.		·		·		45	%
Associated Paper Xxxxx (Ontario) Limited		·		·		45	%
Cascapedia Booming Co. Ltd.		·		·		50	%

(3) To be completed by the Debtor.

(4) To be completed by the Debtor.

3

Pledged Securities Accounts: None

Pledged Futures Accounts: None

Intellectual Property:

Trademark		Status		Xxx.Xx.		Filing Date		Reg. No.		Reg. Date
COPLY		Registered		409157		4/1/1977		TMA229101		7/14/1978
ECO-FILM		Registered		699423		2/20/1992		TMA416028		8/27/1993

Trademark		Status		Xxx.Xx.		Filing Date		Reg. No.		Reg. Date
AUTOBIN		Allowed		1256866		5/6/2005		—		—
CHEMCOR		Registered		310214		1/12/1968		TMA158488		9/27/1968
ECOWRAP		Registered		730490		6/4/1993		TMA443919		6/16/1995
GRAFXFLÜT DESSIN		Registered		856480		9/18/1997		TMA518251		10/20/1999
HYDROCOR		Registered		323156		6/10/1969		TMA171951		10/9/1970
ICE-PAK		Registered		300665		11/7/1966		TMA156627		5/3/1968
LOGO DE CARTONS ST-LAURENT		Registered		878695		5/19/1998		TMA535710		10/25/2000
PREPRINT THE OUTSIDE EDGE & Design		Registered		1263479		7/4/2005		TMA700912		11/15/2007

4

Trademark		Status		Xxx.Xx.		Filing Date		Reg. No.		Reg. Date
PRINTERS’ SELECT		Registered		856481		9/18/1997		XXX000000		2/23/1999
RECALT		Registered		1076109		9/25/2000		XXX000000		7/30/2002
RECYCLACORR		Allowed		1275724		10/14/2005		—		—
SNO-TOP		Registered		281956		4/28/1964		TMA138119		11/13/1964
SNO-TOP PLUS		Registered		808744		4/2/1996		TMA473599		3/25/1997
TUKOTE & DESIGN		Registered		274193		2/27/1963		TMA138084		11/13/1964

Patents — Canada		Registration or Application Number
Multi-Layer Wrapper Construction		CA 2,139,082
Envelope Multicouche
Method of Making Coated or Impregnated Paper or Paperboard		CA 2,256,744

Patents — United States of America		Registration or Application Number
Multi-Layer Wrapper Construction (Ecowrap)		5,562,980
Method of Making Coated or Impregnated Paper or Paperboard		08/660,553

5

SCHEDULE A-1

DEBTOR INFORMATION

Full legal name: Stone Container Finance Company of Canada II

Prior names: None

Predecessor companies: None

Jurisdiction of incorporation, continuance or organization: Nova Scotia

Address of chief executive office: 0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX X0X 0X0

Addresses of all places where business is carried on or tangible Personal Property is kept: 0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX X0X 0X0

Addresses of all owned real property: None

Addresses of all leased real property: None

Description of all “serial number goods” (i.e., motor vehicles, trailers, aircraft, boats and outboard motors for boats) (1):

Instruments, Documents of Title and Chattel Paper of such Debtor in an amount in excess of $1,000,000:

Borrowing Entity		Lending Entity		Balance as of December 31, 2008
Smurfit-Stone Container Canada Inc.		Stone Container Finance Company of Canada II		$	207,031,994

Pledged Certificated Securities(2):

Pledged Issuer		Securities Owned		% of issued and outstanding Securities of Pledged Issuer		Security Certificate Numbers		Security Certificate Location
Smurfit-Stone Container Canada Inc.		Class C Shares		·		·		·

(1) As per Section 6(o) hereof, to be delivered within 20 days of the date of the Canadian Security Agreement.

(2) To be completed by the Debtor.

Pledged Uncertificated Securities(3):

Pledged Issuer		Pledged Issuer’s Jurisdiction		Securities Owned		% of issued and outstanding Securities of Pledged Issuer
·		·		·		·

Pledged Securities Accounts: None

Pledged Futures Accounts: None

Intellectual Property: None

(3) To be completed by the Debtor.

2

SCHEDULE A-1

DEBTOR INFORMATION

Full legal name: 3083527 Nova Scotia Company

Prior names: None

Predecessor companies: None

Jurisdiction of incorporation, continuance or organization: Nova Scotia

Address of chief executive office: 000 Xxxx-Xxxxxxxx Xxxx. Xxxx, Xxxxx 0000, Xxxxxxxx, XX X0X 0X0

Addresses of all places where business is carried on or tangible Personal Property is kept: 000 Xxxx-Xxxxxxxx Xxxx. Xxxx, Xxxxx 0000, Xxxxxxxx, XX X0X 0X0

Addresses of all owned real property: None

Addresses of all leased real property: None

Description of all “serial number goods” (i.e., motor vehicles, trailers, aircraft, boats and outboard motors for boats) (1):

Instruments, Documents of Title and Chattel Paper of such Debtor in an amount in excess of $1,000,000: None

Pledged Certificated Securities(2):

Pledged Issuer		Securities Owned		% of issued and outstanding Securities of Pledged Issuer		Security Certificate Numbers		Security Certificate Location
MBI Limited/Limitée		·		50	%	·		·

Pledged Uncertificated Securities(3):

Pledged Issuer		Pledged Issuer’s Jurisdiction		Securities Owned		% of issued and outstanding Securities of Pledged Issuer
Smurfit-MBI		Ontario		·		49.9999	%

(1) As per Section 6(o) hereof, to be delivered within 20 days of the date of the Canadian Security Agreement.

(3) To be completed by the Debtor.

(3) To be completed by the Debtor.

General Security Agreement

Pledged Securities Accounts: None

Pledged Uncertificated Securities: None

Pledged Futures Accounts: None

Intellectual Property: None

2

SCHEDULE A-1

DEBTOR INFORMATION

Full legal name: MBI Limited/Limitée

Prior names: MacMillan Bathurst Inc.

Predecessor companies: N/A

Jurisdiction of incorporation, continuance or organization: New Brunswick

Address of chief executive office: 0000 Xxxxxxxxxx Xxxx, Xxxxxxxxxxx, XX X0X 0X0

Addresses of all places where business is carried on or tangible Personal Property is kept: 0000 Xxxxxxxxxx Xxxx, Xxxxxxxxxxx, XX X0X 0X0

Addresses of all owned real property:

000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx

000 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxx

000 Xxxxxxxx Xxxx, Xxxx, Xxxxxx, Xxxxxxx

0000 Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxx

0000 0xx Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxxx

0000 00xx Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxx

0000 00xx Xxxxxx, Xxxxxxxx, Xxxxxxx

0000 Xxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxxxxx

0000 Xxxxx Xxxxxx, Xxxxx-Xxxxxxx, Xxxxxx

0000 Xxxxxxxxxx Xxxxxx, Xxxx xx Xxxxx Xxxxx, Xxxxxx

Foot of Xxxxxxx Xxxxxx, Xxx Xxxxxxxxxxx, Xxxxxxx Xxxxxxxx

Addresses of all leased real property: None

Description of all “serial number goods” (i.e., motor vehicles, trailers, aircraft, boats and outboard motors for boats) (1):

Instruments, Documents of Title and Chattel Paper of such Debtor in an amount in excess of $1,000,000: None

(1) As per Section 6(o) hereof, to be delivered within 20 days of the date of the Canadian Security Agreement.

General Security Agreement

Pledged Certificated Securities(2):

Pledged Issuer		Securities Owned		% of issued and outstanding Securities of Pledged Issuer		Security Certificate Numbers		Security Certificate Location
Smurfit-MBI		·		0.0002	%	·		·

Pledged Uncertificated Securities(3):

Pledged Issuer		Pledged Issuer’s Jurisdiction		Securities Owned		% of issued and outstanding Securities of Pledged Issuer
·		·		·		·

Pledged Securities Accounts: None

Pledged Futures Accounts: None

Intellectual Property: None

(2) To be completed by the Debtor.

(3) To be completed by the Debtor.

2

SCHEDULE A-1

DEBTOR INFORMATION

Full legal name: Smurfit-MBI

Prior names: MBI, MacMillan Bathurst

Predecessor companies: N/A

Jurisdiction of incorporation, continuance or organization: Ontario

Address of chief executive office: 0000 Xxxxxxxxxx Xxxx, Xxxxxxxxxxx, XX X0X 0X0

Addresses of all places where business is carried on or tangible Personal Property is kept:

000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx

000 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxx(0)

000 Xxxxxxxx Xxxx, Xxxx, Xxxxxx, Xxxxxxx

0000 Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxx

0000 0xx Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxxx

0000 00xx Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxx

0000 00xx Xxxxxx, Xxxxxxxx, Xxxxxxx

0000 Xxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxxxxx

0000 Xxxxx Xxxxxx, Xxxxx-Xxxxxxx, Xxxxxx

0000 Xxxxxxxxxx Xxxxxx, Xxxx xx Xxxxx Xxxxx, Xxxxxx

Foot of Xxxxxxx Xxxxxx, Xxx Xxxxxxxxxxx, Xxxxxxx Xxxxxxxx

Addresses of all owned real property: None(2)

Addresses of all leased real property:

0000 Xxxxx Xxxxxx Xxxx, Xxxx 0, Xxxxxxx XX X0X 0X0

0000 Xxxxxxx Xxxx, Xxxx 0, Xxxxxxxxxxx, XX X0X 0X0

0000 Xxxxxxx Xxxxxx, Xxxxxxxxxxx, XX X0X 0X0

Xxxx 000, 00000 Xxxxxx Xxxxx, Xxxxxxxx, XX X0X 0X0

Description of all “serial number goods” (i.e., motor vehicles, trailers, aircraft, boats and outboard motors for boats) (3):

(1) Permitted Asset Sale — this is the Whitby, Ontario plant shut down permanently in 2008

(2) Smurfit-MBI does not own any Real Property, MBI Limited does.  Smurfit-MBI owns all Personal Property at the locations and operates the Businesses.

(3) As per Section 6(o) hereof, to be delivered within 20 days of the date of the Canadian Security Agreement.

General Security Agreement

Instruments, Documents of Title and Chattel Paper of such Debtor in an amount in excess of $1,000,000:

Borrowing Entity		Lending Entity		Balance as of December 31, 2008
Smurfit-Stone Container Canada Inc.		Smurfit-MBI		$	93,630,281

Pledged Certificated Securities(4):

Pledged Issuer		Securities Owned		% of issued and outstanding Securities of Pledged Issuer		Security Certificate Numbers		Security Certificate Location
SMBI Inc.		·		100	%	·		·
639647 British Columbia Ltd.		·		100	%	·		·

Pledged Uncertificated Securities(5):

Pledged Issuer		Pledged Issuer’s Jurisdiction		Securities Owned		% of issued and outstanding Securities of Pledged Issuer
Schiffenhaus Canada, Inc.		·		·		33.33	%
Serpac Containers Limited		·		·		49.5	%

Pledged Securities Accounts: None

Pledged Futures Accounts: None

(4) To be completed by the Debtor.

(5) To be completed by the Debtor.

2

Intellectual Property:

Trademark		Status		Xxx.Xx.		Filing Date		Reg. No.		Reg. Date
FASTPAK		Registered		300882		11/17/1966		TMA152204		7/21/1967
GUARDMAC		Registered		468173		4/7/1981		XXX000000		11/12/1982
HYDRA-GUARD		Registered		884855		7/20/1998		XXX000000		2/5/2004
IMAGE PAC		Registered		604153		3/31/1988		TMA363186		11/10/1989
IMAGE PAC & DESIGN		Registered		604156		3/31/1988		TMA379874		2/15/1991
IMAGE PAC DISPLAY & DESIGN		Registered		604154		3/31/1988		TMA364429		1/19/1990
IMAGE PAC GRAPHICS & DESIGN		Registered		689335		9/12/1991		TMA410448		4/2/1993

3

IMAGE PAC GRAPHICS & DESIGN		Registered		604155		3/31/1988		TMA363187		11/10/1989
IMAGE PAC MERCHANDISING DESIGN		Registered		843543		4/28/1997		TMA498069		7/30/1998
MBI		Registered		721242		1/28/1993		TMA423895		2/25/1994
MBI & DESIGN		Registered		732739		7/9/1993		TMA437117		12/16/1994
POWDER BLUE BOX DESIGN		Registered		783227		5/18/1995		TMA470366		2/4/1997
RAINBOW BOX DESIGN		Registered		783226		5/18/1995		TMA470362		2/4/1997
RIGI-MAC		Registered		313867		6/10/1968		XXX000000		7/25/1969

4

SCUFF-GUARD		Registered		884854		7/20/1998		TMA538415		12/6/2000
SEAL-GUARD		Registered		884853		7/20/1998		TMA525016		3/15/2000
SILHOUETTE PACKAGING		Registered		797975		11/23/1995		TMA469276		1/21/1997
SLIP-GUARD		Registered		884856		7/20/1998		TMA601160		2/3/2004
STICK-GUARD		Registered		884851		7/20/1998		TMA611581		0/0/0000
XXXXX X XXXXX & XXXXXX		Xxxxxxxxxx		000000		2/24/1987		TMA340119		5/13/1988
THE IMAGE MAKERS design		Registered		1164314		1/10/2003		TMA638768		5/2/2005
GREASE-GUARD		Registered		884850		7/20/1998		TMA549335		8/6/2001

5

SCHEDULE A-1

DEBTOR INFORMATION

Full legal name: 639647 British Columbia Ltd.

Prior names: N/A

Predecessor companies: None

Jurisdiction of incorporation, continuance or organization: British Columbia

Address of chief executive office: 0000 Xxxxxxxxxx Xxxxxx, Xx. 000, Xxxxxxxxxxx, XX X0X 0X0

Addresses of all places where business is carried on or tangible Personal Property is kept:  0000 Xxxxxxxxxx Xxxxxx, Xx. 000, Xxxxxxxxxxx, XX X0X 0X0

Addresses of all owned real property: None

Addresses of all leased real property: None

Description of all “serial number goods” (i.e., motor vehicles, trailers, aircraft, boats and outboard motors for boats) (1):

Instruments, Documents of Title and Chattel Paper of such Debtor in an amount in excess of $1,000,000: None

Pledged Certificated Securities(2):

Pledged Issuer		Securities Owned		% of issued and outstanding Securities of Pledged Issuer		Security Certificate Numbers		Security Certificate Location
B.C. Shipper Supplies Ltd.		·		100	%	·		·
Specialty Containers Inc.		·		100	%	·		·

(1) As per Section 6(o) hereof, to be delivered within 20 days of the date of the Canadian Security Agreement.

(2) To be completed by the Debtor.

General Security Agreement

Pledged Uncertificated Securities(3):

Pledged Issuer Pledged Issuer’s
Jurisdiction Securities Owned % of issued and
outstanding Securities
of Pledged Issuer

Pledged Securities Accounts: None

Pledged Futures Accounts: None

Intellectual Property: None

(3) To be completed by the Debtor.

2

SCHEDULE A-1

DEBTOR INFORMATION

Full legal name: B.C. Shipper Supplies Ltd.

Prior names: N/A

Predecessor companies: 455913 British Columbia Ltd.(1)

Jurisdiction of incorporation, continuance or organization: British Columbia

Address of chief executive office: 0000 Xxxxxxxxxx Xxxxxx, Xx. 000, Xxxxxxxxxxx, XX X0X 0X0

Addresses of all places where business is carried on or tangible Personal Property is kept: 0000 Xxxxxxx Xxx, Xxxxx, XX

Addresses of all owned real property: None

Addresses of all leased real property: 0000 Xxxxxxx Xxx, Xxxxx, XX

Description of all “serial number goods” (i.e., motor vehicles, trailers, aircraft, boats and outboard motors for boats) (2):

Instruments, Documents of Title and Chattel Paper of such Debtor in an amount in excess of $1,000,000: None

Pledged Certificated Securities: None

Pledged Uncerificated Securities: None

Securities Accounts: None

Pledged Uncertificated Securities: None

Pledged Futures Accounts: None

Intellectual Property: None

(1) Amalgamation on November 1, 1993 and continued as B.C. Shipper Supplies Ltd.

(2) As per Section 6(o) hereof, to be delivered within 20 days of the date of the Canadian Security Agreement.

General Security Agreement

SCHEDULE A-1

DEBTOR INFORMATION

Full legal name: Specialty Containers Inc.(1)

Prior names: N/A

Predecessor companies: N/A

Jurisdiction of incorporation, continuance or organization: Alberta

Address of chief executive office: 0000 Xxxxxxxxxx Xxxxxx, Xx. 000, Xxxxxxxxxxx, XX X0X 0X0

Addresses of all places where business is carried on or tangible Personal Property is kept: None

Addresses of all owned real property: None

Addresses of all leased real property: 0000 Xxxxxxxxxx Xxxxxx, Xx. 000, Xxxxxxxxxxx, XX X0X 0X0

Description of all “serial number goods” (i.e., motor vehicles, trailers, aircraft, boats and outboard motors for boats) (2):

Instruments, Documents of Title and Chattel Paper of such Debtor in an amount in excess of $1,000,000: None

Pledged Certificated Securities: None

Pledged Uncertificated Securities: None

Pledged Securities Accounts: None

Pledged Uncertificated Securities: None

Pledged Futures Accounts: None

Intellectual Property: None

(1) All Personal Property was sold in 2008.

(2) As per Section 6(o) hereof, to be delivered within 20 days of the date of the Canadian Security Agreement.

General Security Agreement

SCHEDULE A-1

DEBTOR INFORMATION

Full legal name: SLP Finance General Partnership

Prior names: N/A

Predecessor companies: N/A

Jurisdiction of incorporation, continuance or organization: Quebec

Address of chief executive office: 000, Xxxx. Xxxx-Xxxxxxxx Ouest, Bureau 3000, Xxxxxxxx, XX X0X 0X0

Addresses of all places where business is carried on or tangible Personal Property is kept: 000, Xxxx. Xxxx-Xxxxxxxx Ouest, Bureau 3000, Xxxxxxxx, XX X0X 0X0

Addresses of all owned real property: None

Addresses of all leased real property: None

Description of all “serial number goods” (i.e., motor vehicles, trailers, aircraft, boats and outboard motors for boats) (1):

Instruments, Documents of Title and Chattel Paper of such Debtor in an amount in excess of $1,000,000:

Borrowing Entity		Lending Entity		Balance as of December 31, 2008
Smurfit-Stone Container Canada Inc.		SLP Finance General Partnership		$1,793,288 $338,439,677 (St. Laurent Acq.)

(1) As per Section 6(o) hereof, to be delivered within 20 days of the date of the Canadian Security Agreement.

General Security Agreement

Pledged Certificated Securities(2):

Pledged Issuer		Securities Owned		% of issued and outstanding Securities of Pledged Issuer		Security Certificate Numbers		Security Certificate Location
Smurfit-Stone Container Canada Inc.		Class D Shares		·		·		·
Francobec Company		·		100	%	·		·
605681 N.B. Inc.		·		100	%	·		·

Pledged Uncertificated Securities(3):

Pledged Issuer		Pledged Issuer’s Jurisdiction		Securities Owned		% of issued and outstanding Securities of Pledged Issuer
·		·		·		·

Pledged Securities Accounts: None

Pledged Futures Accounts: None

Intellectual Property: None

(2) To be completed by the Debtor.

(3) To be completed by the Debtor.

2

SCHEDULE A-1

DEBTOR INFORMATION

Full legal name: Francobec Company

Prior names: N/A

Predecessor companies: N/A

Jurisdiction of incorporation, continuance or organization: Nova Scotia

Address of chief executive office: 0000 Xxxxxx xx l’Usine, La Tuque, QC G9X3P8

Addresses of all places where business is carried on or tangible Personal Property is kept: 000 Xxxxxx xx xx Xxxxxxx xx Xxxx, Xxxxxx xx Xxxxxxxxx, Haut St. Xxxxxxx, QC

Addresses of all owned real property: 000 Xxxxxx xx xx Xxxxxxx xx Xxxx, Xxxxxx xx Xxxxxxxxx, Haut St. Xxxxxxx, QC

Addresses of all leased real property: None

Description of all “serial number goods” (i.e., motor vehicles, trailers, aircraft, boats and outboard motors for boats) (1):

Instruments, Documents of Title and Chattel Paper of such Debtor in an amount in excess of $1,000,000: None

Pledged Certificated Securities: None

Pledged Securities Accounts: None

Pledged Uncertificated Securities: None

Pledged Futures Accounts: None

Intellectual Property: None

(1) As per Section 6(o) hereof, to be delivered within 20 days of the date of the Canadian Security Agreement.

General Security Agreement

SCHEDULE A-1

DEBTOR INFORMATION

Full legal name: 605681 N.B. Inc.(1)

Prior names: N/A

Predecessor companies: N/A

Jurisdiction of incorporation, continuance or organization: New Brunswick

Address of chief executive office: 00 Xxxxxxx Xxxx, Xxxxx 0000, Xxxx Xxxxxx Xxx 0000 Xxx X, Xxxxx Xxxx, XX X0X 0X0

Addresses of all places where business is carried on or tangible Personal Property is kept: None

Addresses of all owned real property: None

Addresses of all leased real property: None

Description of all “serial number goods” (i.e., motor vehicles, trailers, aircraft, boats and outboard motors for boats) (2):

Instruments, Documents of Title and Chattel Paper of such Debtor in an amount in excess of $1,000,000: None

Pledged Certificated Securities: None

Pledged Securities Accounts: None

Pledged Uncertificated Securities: None

Pledged Futures Accounts: None

Intellectual Property: None

(1) Company has been liquidated, to be dissolved.

(2) As per Section 6(o) hereof, to be delivered within 20 days of the date of the Canadian Security Agreement.

General Security Agreement

EXHIBIT A

FORM OF SUPPLEMENT
TO
CANADIAN SECURITY AGREEMENT

TO: JPMORGAN CHASE BANK, N.A., as Canadian Collateral Agent

WHEREAS:

A.            Reference is made to the Canadian Security Agreement (the “Security Agreement”) dated as of [date] entered into by each of the Persons identified under the caption “DEBTORS” on the signature pages thereto and any other Person which thereafter signs a Supplement, in favour of the Canadian Collateral Agent (for its own benefit and for the ratable benefit of the other Secured Parties).

B.            Smurfit-Stone Container Corporation, a debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code, as the Parent and a U.S. Guarantor, Smurfit-Stone Container Enterprises, Inc., a debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code, as U.S. Borrower, Smurfit-Stone Container Canada Inc., a company operating pursuant to a proceeding under the CCAA and a debtor and debtor-in-possession under Chapter 11 of the Bankruptcy Code, the other Loan Parties party thereto, the Lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, and JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent and Canadian Collateral Agent, are parties to a credit agreement dated as of the date hereof (as amended, supplemented, restated or replaced from time to time, the “Credit Agreement”).

C.            Capitalized terms used but not otherwise defined in this Supplement have the respective meanings given to such terms in the Security Agreement, including the definitions of terms incorporated in the Security Agreement by reference to other agreements.

D.            Section 34 of the Security Agreement provides that additional Persons may from time to time after the date of the Security Agreement become Debtors under the Security Agreement by executing and delivering to the Canadian Collateral Agent a supplemental agreement to the Security Agreement in the form of this Supplement.

E.             The undersigned (the “New Debtor”) has agreed to become a Debtor under the Security Agreement by executing and delivering this Supplement to the Canadian Collateral Agent.

For good and valuable consideration, the receipt and sufficiency of which are acknowledged by the New Debtor, the New Debtor agrees with and in favour of the Canadian Collateral Agent (for its own benefit and for the ratable benefit of the Secured Parties) as follows:

1.             The New Debtor has received a copy of, and has reviewed, the Security Agreement and is executing and delivering this Supplement to the Canadian Collateral Agent pursuant to Section 34 of the Security Agreement.

2.             Effective from and after the date this Supplement is executed and delivered to the Canadian Collateral Agent by the New Debtor:

(a) the New Debtor shall be, and shall be deemed for all purposes to be, a Debtor under the Security Agreement with the same force and effect, and subject to the same agreements,

General Security Agreement

representations, indemnities, liabilities, obligations and Security Interests, as if the New Debtor had been, as of the date of this Supplement, an original signatory to the Security Agreement as a Debtor; and

(b) all Collateral of the New Debtor shall be subject to the Security Interests granted by the New Debtor as security for the due payment and performance of the New Debtor’s Canadian Secured Obligations in accordance with the provisions of the Security Agreement, and such Canadian Secured Obligations shall be Obligations of the New Debtor.

In furtherance of the foregoing, the New Debtor, as general and continuing collateral security for the due payment and performance of its Obligations, pledges, mortgages, charges and assigns (by way of security) to the Canadian Collateral Agent (for its own benefit and for the ratable benefit of the other Secured Parties), and grants to the Canadian Collateral Agent (for its own benefit and for the ratable benefit of the other Secured Parties) a security interest in, the Collateral of the New Debtor.  The terms and provisions of the Security Agreement are incorporated by reference in this Supplement.

3.             The New Debtor represents and warrants to the Canadian Collateral Agent (for its own benefit and for the ratable benefit of the other Secured Parties) that each of the representations and warranties made or deemed to have been made by it under the Security Agreement as a Debtor are true and correct on the date of this Supplement.

4.             All of the information set out in Schedule A with respect to the New Debtor is accurate and complete.

5.             Upon this Supplement bearing the signature of any Person claiming to have authority to bind the New Debtor coming into the possession of the Canadian Collateral Agent, this Supplement and the Security Agreement will be deemed to be finally and irrevocably executed and delivered by, and be effective and binding on, and enforceable against, the New Debtor free from any promise or condition affecting or limiting the liabilities of the New Debtor and the New Debtor shall be, and shall be deemed for all purposes to be, a Debtor under the Security Agreement.  No statement, representation, agreement or promise by any officer, employee or agent of the Canadian Collateral Agent or any Secured Party, unless expressly set forth in this Supplement, forms any part of this Supplement or has induced the New Debtor to enter into this Supplement and the Security Agreement or in any way affects any of the agreements, obligations or liabilities of the New Debtor under this Supplement and the Security Agreement.

6.             Delivery of an executed signature page to this Supplement by the New Debtor by facsimile or other electronic transmission shall be as effective as delivery by the New Debtor of a manually executed copy of this Supplement by the New Debtor.

7.             This Supplement will be governed by and construed in accordance with the laws of the Province of Ontario, and the laws of Canada applicable therein.

2

8.             This Supplement and the Security Agreement shall be binding upon the New Debtor and its successors.  The New Debtor shall not assign its rights and obligations under this Supplement or the Security Agreement, or any of its rights or obligations in this Supplement or the Security Agreement.

Dated:	[DATE]
		[NEW DEBTOR]
Address:		By:
		Name:
		Title:
Attention:
Facsimile:
E-mail:

3

SCHEDULE A

DEBTOR INFORMATION

Full legal name:

Prior names:

Predecessor companies:

Jurisdiction of incorporation, continuance or organization:

Address of chief executive office:

Addresses of all places where business is carried on or tangible Personal Property is kept:

Addresses of all owned real property:

Addresses of all leased real property:

Description of all “serial number goods” (i.e., motor vehicles, trailers, aircraft, boats and outboard motors for boats):

Instruments, Documents of Title and Chattel Paper of the Debtor in an amount in excess of $1,000,000:

Pledged Certificated Securities:

Pledged Issuer Securities Owned % of issued and
outstanding
Securities of
Pledged Issuer Security Certificate
Numbers Security Certificate
Location

Pledged Securities Accounts:

Pledged Securities
Intermediary Securities Account
Number Pledged Securities
Intermediary’s
Jurisdiction Pledged Security Entitlements

General Security Agreement

Pledged Uncertificated Securities:

Pledged Issuer Pledged Issuer’s
Jurisdiction Securities Owned % of issued and
outstanding Securities of
Pledged Issuer

Pledged Futures Accounts:

Pledged Futures
Intermediary Futures Account
Number Pledged Futures
Intermediary’s
Jurisdiction Pledged Futures Contracts

Registered trade-marks and applications for trademark registrations:

Country

Trade-xxxx

Application No.

Application Date

Registration No.

Registration Date

Licenced to or by Debtor

(Y/N)

Patents and patent applications:

Country		Title		Patent No.		Application Date		Date of Grant		Licenced to or by Debtor
										(Y/N)

Copyright registrations and applications for copyright registrations:

Country		Work		Application No.		Application Date		Registration No.		Licenced to or by Debtor
										(Y/N)

Industrial designs/registered designs and applications for registered designs:

Country

Design

Application No.

Application Date

Registration No.

Issue Date

Licenced to or by Debtor

(Y/N)

2

Exhibit C-1

Form of Weekly Borrowing Base Certificate

Smurfit-Stone Container Enterprises, Inc. (as U.S. Borrower) / Smurfit-Stone Container Canada Inc. (as
Canadian Borrower)
Borrowing Base Certificate
For the period ended                (in $000’s US Dollars)

			US			Canada			Total
Summary of Availability
A.	Available Receivables		$	—		$	—		$	—
B.	Available Inventory (as of period ended        )		—			—			—
C.	PP&E Component (as of period ended             )		—			—			—
D.	Less:
Carve-Out (US Only)			—			—			—
Administration Charge (Canada Only)			—			—			—
Directors Charge (Canada Only)			—			—			—
Priority Payables Reserve (to the extent not included in the Administrative or Directors Charges)			—			—			—
Other (Per Terms of the Credit Agreement)			—			—			—
E.	Available Borrowing Base (lines A + B + C - D)		—			—			—
F.	Total Commitment		$	650,000		$	100,000		$	750,000
G.	Lower of Borrowing Base and Total Commitment (Lesser of line E or F)		—			—			—
H.	Less:
(i)   Revolving Loans			—			—			—
(ii)  Letter of Credit Obligations			—			—			—
(iii) Term Loans Outstanding			—			—			—
Aggregate Credit Exposure (Sum of (i),(ii) and (iii))			—			—			—
I.	Excess Availability (G - H)		$	—		$	—		$	—
Available Cash									$	—
Excess Availability plus Available Cash									$	—

Officer’s Certification:

Pursuant to, and in accordance with, the terms and provisions of the Credit Agreement dated as of January [ ], 2009 (as amended, spuplemented or otherwise modified from time to time, the “Credit Agreement”; capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Credit Agreement), among Smurfit-Stone Container Corporation, Smurfit-Stone Container Enterprises, Inc. (the “US Borrower”), Smurfit-Stone Container Canada Inc. (the (“Canadian Borrower”), the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent and Canadian Collateral Agent, the undersigned certifies on behalf of the US Borrower and Canadian Borrower that the information provided in this Borrowing Base Certificate (including in any exhibits, schedules, supporting documentation or reports requested by either Agent in accordance with the terms of the Credit Agreement) to JPMorgan Chase Bank, N.A. as Administrative Agents and Collateral Agents, has been determined in accordance with the Credit Agreement and is accurate and complete.

Signature & Title Date

1

Smurfit-Stone Container Enterprises, Inc. (as U.S. Borrower) / Smurfit-Stone Container Canada Inc. (as Canadian Borrower)
Borrowing Base Certificate
For the period ended                (in $000’s US Dollars)

		US			Canada			Grand Total
Gross Accounts Receivable per Aging		$	—		$	—		$	—
Less ineligibles:
No Perfected First Priority Lien		—			—			—
No Sole, Lawful, Absolute Title		—			—			—
Over 90 Days Past Invoice Date		—			—			—
Credits Over 90 Days Past Invoice Date		—			—			—
Cross - Aging (Greater than 50% of Total Balance Past Due)		—			—			—
Concentration Cap (10% of Eligible Accounts Receivable)		—			—			—
In Excess of Approved Credit Limit		—			—			—
Does Not Comply With Any Covenant, Representation or Warranty of Credit Agreement		—			—			—
Non-Trade A/R, Progress Xxxxxxxx or Un-invoiced		—			—			—
Xxxx and Hold / Services Billed Not Yet Performed		—			—			—
Consignment or Guaranteed Sales		—			—			—
Finance Charges		—			—			—
Pre-Billed		—			—			—
Duplicate Billing		—			—			—
Bankruptcy/Insolvent (Other Than Post-Petition)		—			—			—
Written Off or Otherwise Designated Uncollectible		—			—			—
Foreign except Canada (not supported by L/C)		—			—			—
Not denominated in US or Canadian Dollars		—			—			—
US Federal Government Accounts / Canadian Government Accounts (not supported by L/C)		—			—			—
Intercompany / Affiliate / Employee / Director A/R		—			—			—
Contra Exchange		—			—			—
Contra Unvouchered A/P Reserve - Exchange		—			—			—
Contra Non-Exchange		—			—			—
Contra Unvouchered A/P Reserve - Non-Exchange (2.63%)		—			—			—
In dispute or subject to deduction, setoff or counterclaim		—			—			—
Defective Product Reserve		—			—			—
Evidenced by Promissory Note, Chattel Paper, or other instrument		—			—			—
Subject to Payment Plan		—			—			—
Reserve for Returns, Discounts, Finance Charges, Sales Allowances		—			—			—
Short Paid Invoices		—			—			—
Debit Memos / Chargebacks		—			—			—
Does Not Comply With Requirements of All Applicable Laws		—			—			—
Invoice Does Not Indicate Loan Party as Payee or Remittance Party		—			—			—
Translation Adjustment		—			—			—
Cash in Advance / Cash on Delivery Terms		—			—			—
Meadwestvaco Accrual		—			—			—
Customer Rebates		—			—			—
Unapplied Cash		—			—			—
Other (Per Terms of the Credit Agreement)		—			—			—
Total ineligibles:		—			—			—
Eligible Accounts		—			—			—
Advance Rate		85.0		%	85.0		%	85.0		%
Net Amount of Eligible Accounts before Reserves		$	—		$	—		$	—
Less:
Dilution Reserve		—			—			—
Canadian Sales Tax Reserve (to the extent not included in the Priority Payables Reserve)		—			—			—
Other Reserves (Per Terms of the Credit Agreement)		—			—			—
Total Reserves		—			—			—
Net Amount of Eligible Accounts Receivable less Reserves		$	—		$	—		$	—

Translation Adjustment

2

Schedule 1.0

to Exhibit C-1

Smurfit-Stone Container Enterprises, Inc. (as U.S. Borrower) / Smurfit-Stone Container Canada Inc. (as Canadian Borrower)

Collateral Monitoring Reporting Requirements

Documents to be Submitted to the Bank

The following information is to be submitted, pursuant to Section 5.08 of the Credit Agreement as noted below.

			Weekly Reporting: Due the last business		Per terms of Credit
	Reporting Frequency		day of each week (a)		Agreement
1.	Borrowing Base Certificate in the form of Exhibit C-2.		X
	Accounts Receivable Supporting Documents:
1.	Accounts receivable summary aging in an electronic format suitable to the Collateral Agent.		X
2.	Accounts receivable rollforward as follows: A/R Beginning of Month + Gross Xxxxxxxx + Other Debit Adjustments - Cash Receipts - Discounts - Credit Memos Issued - Write-offs - Returns - Other Credit Adjustments = A/R End of Month (To be calculated without duplication of items reported as Ineligible on the Borrowing Base Certificate)		X
3.	Top 10 accounts receivable balances aged per the most recent consolidated summary aging (To be provided only if unable to provide a summary aging by customer account as per #1).
4.	Reconciliation of A/R aging report to general ledger and financial statements
5.	Top 10 sales concentration on a consolidated basis.
6.	Supporting documentation (system generated extract report where applicable) for the A/R ineligibles/ reserves reported on the Borrowing Base Certificate by division. (In a manner mutually agreeable to the Borrowers and Administrative Agent)		X
	Inventory Supporting Documents:
1.	Inventory by category (raw material, supplies, WIP and Finished).
2.	Total page of inventory general ledger reports and supporting documentation for all inventory categories reported on the Borrowing Base Certificate.
3.	Gross margin and turnover by segment as reported to Company Management.
4.	Reconciliation of inventory reports to general ledger and financial statements.
5.	Schedule of monthly rent for all leased locations (to the extent applicable to the Rent Reserve calculated in the Borrowing Base Certificate).
6.	Supporting documentation (system generated extract report where applicable) for the inventory ineligibles/ reserves reported on the Borrowing Base Certificate by division.
	Other Supporting Documents:
1.	Consolidated financial statements (to be submitted per terms of the Credit Agreement)
2.	Accounts payable summary by vendor.
3.	Top 10 accounts payable vendor balances (To be provided only if unable to provide a summary aging by customer account as per #1).
4.	Top 10 vendors by total purchases.
5.	Reconciliation of A/P aging to general ledger and financial statements.
6.	Projected financial statements (to be submitted per terms of the Credit Agreement)
7.	Listing to support the Reserve calculations reported on the Borrowing Base Certificate, including the Priority Payable Reserve, in a format suitable to the Collateral Agent. (In a manner mutually agreeable to the Borrowers and Administrative Agent)		X

(a) Showing the Borrowing Base as of the last business day of the immediately preceding week.

1

Smurfit-Stone Container Enterprises, Inc. (as U.S. Borrower) / Smurfit-Stone Container Canada Inc.
(as Canadian Borrower)

Collateral Monitoring Reporting Requirements

Documents to be Submitted to the Bank

Submit to:

JPMorgan Chase Bank

IB ABL Portfolio Management

Attn: Xxxxxx X. Xxxxxxx

270 Park Avenue, 44th Floor

New York, NY 00000- 0000

Phone: (212) 270 - 0285

Fax: (646) 534 - 2288

E-Mail: xxxxxx.x.xxxxxxx@xxxxxxxx.xxx

2

Exhibit C-2

Form of Monthly Borrowing Base Certificate

Smurfit-Stone Container Enterprises, Inc. (as U.S. Borrower) / Smurfit-Stone Container Canada Inc. (as
Canadian Borrower)
Borrowing Base Certificate
For the period ended            (in $000’s US Dollars)

			US			Canada			Total
Summary of Availability
A.	Available Receivables		$	—		$	—		$	—
B.	Available Inventory		—			—			—
C.	PP&E Component		135,000			15,000			150,000
D.	Less:
	Carve-Out (US Only)		—			—			—
	Administration Charge (Canada Only)		—			—			—
	Directors Charge (Canada Only)		—			—			—
	Priority Payables Reserve (to the extent not included in the Administrative or Directors Charges)		—			—			—
	Other (Per Terms of the Credit Agreement)		—			—			—
E.	Available Borrowing Base (lines A + B + C - D)		135,000			15,000			150,000
F.	Total Commitment		$	650,000		$	100,000		$	750,000
G.	Lower of Borrowing Base and Total Commitment (Lesser of line E or F)		135,000			15,000			150,000
H.	Less:
	(i) Revolving Loans		—			—			—
	(ii) Letter of Credit Obligations		—			—			—
	(iii) Term Loans Outstanding		—			—			—
	Aggregate Credit Exposure (Sum of (i),(ii) and (iii))		—			—			—
I.	Excess Availability (G - H)		$	135,000		$	15,000		$	150,000
	Available Cash								$	—
	Excess Availability plus Available Cash								$	150,000

Officer’s Certification:
Pursuant to, and in accordance with, the terms and provisions of the Credit Agreement dated as of January [ ], 2009 (as amended, spuplemented or otherwise modified from time to time, the “Credit Agreement”; capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Credit Agreement), among Smurfit-Stone Container Corporation, Smurfit-Stone Container Enterprises, Inc. (the “US Borrower”), Smurfit-Stone Container Canada Inc. (the (“Canadian Borrower”), the Lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent and Canadian Collateral Agent, the undersigned certifies on behalf of the US Borrower and Canadian Borrower that the information provided in this Borrowing Base Certificate (including in any exhibits, schedules, supporting documentation or reports requested by either Agent in accordance with the terms of the Credit Agreement) to JPMorgan Chase Bank, N.A. as Administrative Agents and Collateral Agents, has been determined in accordance with the Credit Agreement and is accurate and complete.
Signature & Title		Date

1

Smurfit-Stone Container Enterprises, Inc. (as U.S. Borrower) / Smurfit-Stone Container Canada Inc. (as Canadian Borrower)
Borrowing Base Certificate
For the period ended              (in $000’s US Dollars)

		US			Canada			Grand Total
Gross Accounts Receivable per Aging		$	—		$	—		$	—
Less ineligibles:
No Perfected First Priority Lien		—			—			—
No Sole, Lawful, Absolute Title		—			—			—
Over 90 Days Past Invoice Date		—			—			—
Credits Over 90 Days Past Invoice Date		—			—			—
Cross - Aging (Greater than 50% of Total Balance Past Due)		—			—			—
Concentration Cap (10% of Eligible Accounts Receivable)		—			—			—
In Excess of Approved Credit Limit		—			—			—
Does Not Comply With Any Covenant, Representation or Warranty of Credit Agreement		—			—			—
Non-Trade A/R, Progress Xxxxxxxx or Un-invoiced		—			—			—
Xxxx and Hold / Services Billed Not Yet Performed		—			—			—
Consignment or Guaranteed Sales		—			—			—
Finance Charges		—			—			—
Pre-Billed		—			—			—
Duplicate Billing		—			—			—
Bankruptcy/Insolvent (Other Than Post-Petition)		—			—			—
Written Off or Otherwise Designated Uncollectible		—			—			—
Foreign except Canada (not supported by L/C)		—			—			—
Not denominated in US or Canadian Dollars		—			—			—
US Federal Government Accounts / Canadian Government Accounts (not supported by L/C)		—			—			—
Intercompany / Affiliate / Employee / Director A/R		—			—			—
Contra Exchange		—			—			—
Contra Unvouchered A/P Reserve - Exchange		—			—			—
Contra Non-Exchange		—			—			—
Contra Unvouchered A/P Reserve - Non-Exchange (2.63%)		—			—			—
In dispute or subject to deduction, setoff or counterclaim		—			—			—
Defective Product Reserve		—			—			—
Evidenced by Promissory Note, Chattel Paper, or other instrument		—			—			—
Subject to Payment Plan		—			—			—
Reserve for Returns, Discounts, Finance Charges, Sales Allowances		—			—			—
Short Paid Invoices		—			—			—
Debit Memos / Chargebacks		—			—			—
Does Not Comply With Requirements of All Applicable Laws		—			—			—
Invoice Does Not Indicate Loan Party as Payee or Remittance Party		—			—			—
Translation Adjustment		—			—			—
Cash in Advance / Cash on Delivery Terms		—			—			—
Meadwestvaco Accrual		—			—			—
Customer Rebates		—			—			—
Unapplied Cash		—			—			—
Discount reserve		—			—			—
Other (Per Terms of the Credit Agreement)		—			—			—
Total ineligibles:		—			—			—
Eligible Accounts		—			—			—
Advance Rate		85.0		%	85.0		%	85.0		%
Net Amount of Eligible Accounts before Reserves		$	—		$	—		$	—
Less:
Dilution Reserve		—			—			—
Canadian sales tax reserve (to the extent not included in the Priority Payables Reserve)		—			—			—
Other Reserves (Per Terms of the Credit Agreement)		—			—			—
Total Reserves		—			—			—
Net Amount of Eligible Accounts Receivable less Reserves		$	—		$	—		$	—

Translation Adjustment

2

Smurfit-Stone Container Enterprises, Inc. (as U.S. Borrower) / Smurfit-Stone Container Canada Inc. (as Canadian Borrower)

Borrowing Base Certificate

For the period ended                           (in $000’s US Dollars)

		US Inventory
		Container Division																								Mill Division
		Raw Material			Chemicals			Fuels			Supplies			Work-in- Process			Finished Goods			Inventory in- transit			Total			Raw Material			Chemicals			Fuels			Supplies			Consigned			WIP			Finished Goods			Inventory in- transit			Total			Subtotal
Inventory per inventory summary		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Foreign currency adjustment		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Gross Inventory per Perpetual / Listing		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Less ineligibles:
No Perfected First Priority Lien		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
No valid unencumbered title		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Obsolete, Slow Moving, Unmerchantable or Unfit for Sale		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Does Not Comply With Any Covenant, Representation or Warranty of Credit Agreement		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Subject to Third Party Security Interest		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Packaging Materials / Shipping Materials / Manufacuring Supplies		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Damaged or Marked for Return to Vendor		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Consigned Inventory (with Company as Consignor or Consignee)		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Xxxx and Hold Inventory		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Sample, Prototype, Display Inventory		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Foreign (not located in US - Excluding In-Transit between Loan Parties)		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Third Party Warehouse / Bailee Location - No Landlord Lien Waiver, No Rent Reserve or No Assigned Access Rights		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Located at Outside Processor (Excluding Eligible In-Transit Inventory)		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Discontinued Products		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Subject to Proprietary Rights (licenses, patents, trademarks, etc.) Deemed by Collateral Agent to Impede Ability to Sell or Dispose of Such Inventory		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Not Included in a Current Perpetual Report		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Subject to Reclamation Rights Asserted by the Seller		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Intercompany Profit (to the extent of such portion)		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Starch Inventory		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Reclamation Inventory		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Chemicals Inventory		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Fuels Inventory		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Pulp in Europe		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Other (Per Terms of the Credit Agreement)		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Total ineligibles:		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Eligible Inventory		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
(i) Advance Rate		65.0		%	65.0		%	65.0		%	65.0		%	65.0		%	65.0		%	65.0		%	N/A			65.0		%	65.0		%	65.0		%	65.0		%	65.0		%	65.0		%	65.0		%	65.0		%	N/A			N/A
NOLV Factor Rate		72.4		%	0.0		%	0.0		%	43.1		%	53.4		%	86.3		%	72.4		%	N/A			58.7		%	0.0		%	0.0		%	0.0		%	0.0		%	42.1		%	80.8		%	58.7		%	N/A			N/A
(ii) 85% of NOLV Factor Rate		61.5		%	0.0		%	0.0		%	36.6		%	45.4		%	73.4		%	61.5		%	#DIV/0!			49.9		%	0.0		%	0.0		%	0.0		%	0.0		%	35.8		%	68.7		%	49.9		%	#DIV/0!			N/A
Lesser of (i) or (ii)		61.5		%	0.0		%	0.0		%	36.6		%	45.4		%	65.0		%	61.5		%	#DIV/0!			49.9		%	0.0		%	0.0		%	0.0		%	0.0		%	35.8		%	65.0		%	49.9		%	#DIV/0!			N/A
Net Amount of Eligible Inventory		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Less Inventory Reserves:
Rent Reserve - Warehouse		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Rent Reserve - Facility		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Rent Reserve - In/Out Charges		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Freight Reserve (related to In-Transit Inventory-Container)		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Freight Reserve (related to In-Transit Inventory-Board Sales)		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Other (Per Terms of the Credit Agreement)		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Total Inventory Reserves:		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Net Amount of Eligible Inventory less Reserves		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

3

Smurfit-Stone Container Enterprises, Inc. (as U.S. Borrower) / Smurfit-Stone Container Canada Inc. (as Canadian Borrower)

Borrowing Base Certificate

For the period ended                      (in $000’s US Dollars)

		US Inventory
		Reclamation Division															Board Sales Division						Corporate
		Supplies			Work-in- Process			Finished Goods			Inventory in- transit			Total			Finished Goods			Total			Total			SubTotal
Inventory per inventory summary		—			—			—			—			—			—			—			—			—
Foreign currency adjustment		—			—			—			—			—			—			—			—			—
Gross Inventory per Perpetual / Listing		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Less ineligibles:
No Perfected First Priority Lien		—			—			—			—			—			—			—			—			—
No valid unencumbered title		—			—			—			—			—			—			—			—			—
Obsolete, Slow Moving, Unmerchantable or Unfit for Sale		—			—			—			—			—			—			—			—			—
Does Not Comply With Any Covenant, Representation or Warranty of Credit Agreement		—			—			—			—			—			—			—			—			—
Subject to Third Party Security Interest		—			—			—			—			—			—			—			—			—
Packaging Materials / Shipping Materials / Manufacuring Supplies		—			—			—			—			—			—			—			—			—
Damaged or Marked for Return to Vendor		—			—			—			—			—			—			—			—			—
Consigned Inventory (with Company as Consignor or Consignee)		—			—			—			—			—			—			—			—			—
Xxxx and Hold Inventory		—			—			—			—			—			—			—			—			—
Sample, Prototype, Display Inventory		—			—			—			—			—			—			—			—			—
Foreign (not located in US - Excluding In-Transit between Loan Parties)		—			—			—			—			—			—			—			—			—
Third Party Warehouse / Bailee Location - No Landlord Lien Waiver, No Rent Reserve or No Assigned Access Rights		—			—			—			—			—			—			—			—			—
Located at Outside Processor (Excluding Eligible In-Transit Inventory)		—			—			—			—			—			—			—			—			—
Discontinued Products		—			—			—			—			—			—			—			—			—
Subject to Proprietary Rights (licenses, patents, trademarks, etc.) Deemed by Collateral Agent to Impede Ability to Sell or Dispose of Such Inventory		—			—			—			—			—			—			—			—			—
Not Included in a Current Perpetual Report		—			—			—			—			—			—			—			—			—
Subject to Reclamation Rights Asserted by the Seller		—			—			—			—			—			—			—			—			—
Intercompany Profit (to the extent of such portion)		—			—			—			—			—			—			—			—			—
Starch Inventory		—			—			—			—			—			—			—			—			—
Reclamation Inventory		—			—			—			—			—			—			—			—			—
Chemicals Inventory		—			—			—			—			—			—			—			—			—
Fuels Inventory		—			—			—			—			—			—			—			—			—
Pulp in Europe		—			—			—			—			—			—			—			—			—
Other (Per Terms of the Credit Agreement)		—			—			—			—			—			—			—			—			—
Total ineligibles:		—			—			—			—			—			—			—			—			—
Eligible Inventory		—			—			—			—			—			—			—			—			—
(i) Advance Rate		65.0		%	65.0		%	65.0		%	65.0		%	N/A			65.0		%	65.0		%	N/A			N/A
NOLV Factor Rate		0.0		%	0.0		%	0.0		%	0.0		%	N/A			80.8		%	80.8		%	75.7		%	N/A
(ii) 85% of NOLV Factor Rate		0.0		%	0.0		%	0.0		%	0.0		%	0.0		%	68.7		%	68.7		%	64.3		%	#DIV/0!
Lesser of (i) or (ii)		0.0		%	0.0		%	0.0		%	0.0		%	N/A			65.0		%	65.0		%	64.3		%	#DIV/0!
Net Amount of Eligible Inventory		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Less Inventory Reserves:
Rent Reserve - Warehouse		—			—			—			—			—			—			—			—			—
Rent Reserve - Facility		—			—			—			—			—			—			—			—			—
Rent Reserve - In/Out Charges		—			—			—			—			—			—			—			—			—
Freight Reserve (related to In-Transit Inventory-Container)		—			—			—			—			—			—			—			—			—
Freight Reserve (related to In-Transit Inventory-Board Sales)		—			—			—			—			—			—			—			—			—
Other (Per Terms of the Credit Agreement)		—			—			—			—			—			—			—			—		0	—
Total Inventory Reserves:		—			—			—			—			—			—			—			—			—
Net Amount of Eligible Inventory less Reserves		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—

4

Smurfit-Stone Container Enterprises, Inc. (as U.S. Borrower) / Smurfit-Stone Container Canada Inc. (as Canadian Borrower)

Borrowing Base Certificate

For the period ended                (in $000’s US Dollars)

Exchange Rate Exchange Rate $ —

		Canadian Inventory
		Container Division																								Mill Division																											Corporate
		Raw Material			Chemicals			Fuels			Supplies			Work-in- Process			Finished Goods			Inventory in- transit			Total			Raw Material			Chemicals			Fuels			Supplies			Consigned			Work-in- Process			Finished Goods			Inventory in- transit			Total			Total			Grand Total
Inventory per inventory summary		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Foreign currency adjustment		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Gross Inventory per Perpetual / Listing		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—			—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Less ineligibles:
No Perfected First Priority Lien		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
No valid unencumbered title		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Obsolete, Slow Moving, Unmerchantable or Unfit for Sale		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Does Not Comply With Any Covenant, Representation or Warranty of Credit Agreement		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Subject to Third Party Security Interest		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Packaging Materials / Shipping Materials / Manufacuring Supplies		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Damaged or Marked for Return to Vendor		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Consigned Inventory (with Company as Consignor or Consignee)		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Xxxx and Hold Inventory		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Sample, Prototype, Display Inventory		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Foreign (not located in US - Excluding In-Transit between Loan Parties)		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Third Party Warehouse / Bailee Location - No Landlord Lien Waiver, No Rent Reserve or No Assigned Access Rights		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Located at Outside Processor (Excluding Eligible In-Transit Inventory)		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Discontinued Products		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Subject to Proprietary Rights (licenses, patents, trademarks, etc.) Deemed by Collateral Agent to Impede Ability to Sell or Dispose of Such Inventory		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Not Included in a Current Perpetual Report		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Subject to Reclamation Rights Asserted by the Seller		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Intercompany Profit (to the extent of such portion)		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Starch Inventory		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Reclamation Inventory		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Chemicals Inventory		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Fuel Inventory		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Pulp in Europe		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Other (Per Terms of the Credit Agreement)		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Total ineligibles:		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Eligible Inventory		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
(i) Advance Rate		65.0		%	65.0		%	65.0		%	65.0		%	65.0		%	65.0		%	65.0		%	N/A			65.0		%	65.0		%	65.0		%	65.0		%	65.0		%	65.0		%	65.0		%	65.0		%	N/A			N/A			N/A
NOLV Factor Rate		68.6		%	0.0		%	0.0		%	43.1		%	53.4		%	87.9		%	68.6		%	N/A			60.2		%	0.0		%	0.0		%	0.0		%	0.0		%	42.1		%	61.6		%	60.2		%	N/A			72.5		%	N/A
(ii) 85% of NOLV Factor Rate		58.3		%	0.0		%	0.0		%	36.6		%	45.4		%	74.7		%	58.3		%	#DIV/0!			51.2		%	0.0		%	0.0		%	0.0		%	0.0		%	35.8		%	52.4		%	51.2		%	#DIV/0!			61.6		%	#DIV/0!
Lesser of (i) or (ii)		58.3		%	0.0		%	0.0		%	36.6		%	45.4		%	65.0		%	58.3		%	#DIV/0!			51.2		%	0.0		%	0.0		%	0.0		%	0.0		%	35.8		%	52.4		%	51.2		%	#DIV/0!			61.6		%	N/A
Net Amount of Eligible Inventory before Inventory Reserves		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Less Inventory Reserves:
Rent Reserve - Warehouse		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Rent Reserve - Facility		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Rent Reserve - In/Out Charges		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Freight Reserve (related to In-Transit Inventory-Container)		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Shrink Reserve		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Capitalized Variance Reserve		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Lower of Cost or Market Reserve		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Other (Per Terms of the Credit Agreement)		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Total Inventory Reserves:		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			—