Exhibit 10.2

 

ASSET PURCHASE AGREEMENT

 

BETWEEN

 

SMURFIT-STONE CONTAINER CANADA INC.

 

AND

 

MBI LIMITED/LIMITÉE

 

AND

 

SMURFIT-MBI

 

AND

 

FRANCOBEC COMPANY

 

AND

 

B.C. SHIPPER SUPPLIES LTD.

 

AND

 

SMURFIT-STONE CONTAINER CANADA, L.P.

 

 

MADE AS OF

 

June 30, 2010

 

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TABLE OF CONTENTS

 

ARTICLE 1 - INTERPRETATION

1

 

 

1.01

Definitions

1

1.02

Headings

6

1.03

Extended Meanings

6

1.04

Statutory References

6

1.05

Currency

6

1.06

Schedules

6

 

 

 

ARTICLE 2 - TRANSFER OF ASSETS

7

 

 

2.01

Transfer of Acquired Assets

7

2.02

Excluded Assets

8

2.03

Purchase Price

9

2.04

Excluded Liabilities

9

2.05

Tax Elections

10

2.06

Transfer Taxes

11

2.07

Amounts Received After Effective Time

11

2.08

Non-Assignable Contracts and Commitments

11

2.09

CAAFs

12

2.10

Authorizations

12

 

 

 

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES

12

 

 

3.01

Sellers’ Representations and Warranties

12

3.02

Purchaser’s Representations and Warranties

13

 

 

 

ARTICLE 4 - COVENANTS

14

 

 

4.01

Employees

14

4.02

Pension and Benefits

14

4.03

Environmental Matters

14

4.04

Cooperation on Tax Matters

15

 

 

 

ARTICLE 5 - GENERAL

15

 

 

5.01

Further Assurances

15

5.02

Benefit of the Agreement

15

5.03

Entire Agreement

16

5.04

Amendments and Waivers

16

5.05

Assignment

16

5.06

Notices

16

5.07

Plan Prevails

17

5.08

Governing Law

17

5.09

Attornment

17

5.10

Counterparts

17

5.11

Electronic Transmission

17

 

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ASSET PURCHASE AGREEMENT

 

THIS AGREEMENT is made as of June 30, 2010

 

BETWEEN                            SMURFIT-STONE CONTAINER CANADA INC., a
company existing under the laws of the Province of Nova Scotia (“SSC Canada”);
MBI LIMITED/LIMITÉE, a corporation existing under the laws of the Province of
New Brunswick (“MBI”); SMURFIT-MBI, a limited partnership existing under the
laws of the Province of Ontario (“Smurfit-MBI”), acting and represented by its
general partner, MBI; FRANCOBEC COMPANY, an unlimited company existing under the
laws of the Province of Nova Scotia (“Francobec”); and B.C. SHIPPER SUPPLIES
LTD., a corporation existing under the laws of the Province of British Columbia
(“BCSS”) (collectively, the “Sellers”); and

 

SMURFIT-STONE CONTAINER CANADA, L.P., a limited partnership existing under the
laws of the Province of Ontario (the “Purchaser”), herein acting by 3242795 Nova
Scotia Limited, its general partner (the “General Partner”);

 

WHEREAS the Sellers wish to sell, convey, transfer and assign the Acquired
Assets (as hereinafter defined) to the Purchaser, and the Purchaser wishes to
acquire the Acquired Assets from the Sellers, upon and subject to the terms and
conditions set out in this Agreement;

 

NOW THEREFORE, in consideration of the covenants and agreements herein
contained, the parties agree as follows:

 

ARTICLE 1 - INTERPRETATION

 

1.01                           Definitions

 

(1)           In this Agreement, unless something in the subject matter or
context is inconsistent therewith:

 

“Acquired Assets” has the meaning set out in Section 2.01.

 

“Administrative Expense Claims” has the meaning set out in the Plan.

 

“Affected Unsecured Creditors” has the meaning set out in the Plan.

 

“Agreement” means this asset purchase agreement, including its preamble and
schedules, as amended from time to time.

 

“Applicable Law” means:

 

(i)                                     any domestic or foreign law including
any statute or subordinate legislation as enacted and enforceable at the
Effective Time; and

 

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(ii)                                  any guideline, directive, rule, standard,
requirement, policy, order, judgment, injunction, award or decree of a
Governmental Authority having the force of law at the Effective Time.

 

“Assumed Contracts” has the meaning set out in Section 2.01(1)(h).

 

“Assumed Liabilities” means the following liabilities of the Sellers: (i) all
existing and future obligations of SSC Canada and Smurfit-MBI under the Canadian
Collective Bargaining Agreements (excluding, for greater certainty,
Non-Transferred CBAs); (ii) all existing and future obligations of SSC Canada
and Smurfit-MBI under the Canadian Pension Plans (including all unfunded
liabilities thereunder) as set out in Section 4.02; (iii) all existing and
future obligations of SSC Canada and Smurfit-MBI under the Canadian Employee
Benefit Plans; (iv) accrued liabilities relating to the wages and benefits of
Employees employed by the Purchaser pursuant to Section 4.01(1) except to the
extent specifically indicated as an Excluded Liability; (v) outstanding
severance obligations of the Sellers to Employees and former employees of
Sellers at the Effective Time; (vi) obligations relating to the Assumed
Contracts that constitute Post-Filing Claims that are not otherwise satisfied
pursuant to the Plan; (vii) obligations regarding any Authorizations relating to
the Acquired Assets; (viii) all obligations arising in the ordinary course of
the Sellers to their customers, vendors and suppliers to the extent such
obligations constitute Post-Filing Claims that have not been otherwise satisfied
under the Plan; (ix) all liabilities with respect to the Acquired Assets arising
after the Effective Time; and (x) the liabilities set forth in Schedule 1.01(1).
For greater certainty, any Liability which is an Excluded Liability is not an
Assumed Liability. In the event of a contradiction between the definition of
Excluded Liabilities and Assumed Liabilities, the definition of Excluded
Liabilities shall prevail and Assumed Liabilities shall be interpreted in
consequence.

 

“Authorization” means, with respect to any Person, any order, permit, approval,
consent, waiver, licence, certificate, certificate of authorization,
registration, franchise, right, privilege, quota, exemption or similar
authorization of any Governmental Authority having jurisdiction over the Person.

 

“BCSS” has the meaning set out in the preamble.

 

“CAAF” means a timber supply and forest management agreement (contrat
d’approvisionnement et d’aménagement forestier), as such term is used in the
Forest Act (Québec), all those to which the Sellers have rights being set out in
Schedule 2.09.

 

“Canadian Collective Bargaining Agreements” has the meaning set out in the Plan.

 

“Canadian Debtor(s)” means, individually or collectively, SSC Canada, Stone
Container Finance Company of Canada II, 3083527 Nova Scotia Company, MBI,
Smurfit-MBI, 639647 British Columbia Ltd., BCSS, Specialty Containers Inc., SLP
Finance General Partnership, Francobec and 605681 N.B. Inc.

 

“Canadian Employee Benefit Plans” has the meaning set out in the Plan.

 

“Canadian Pension Plans” has the meaning set out in the Plan.

 

2

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“CCAA Charges” has the meaning set out in the Plan.

 

“Claim” has the meaning set out in the Plan.

 

“Contract” means any contract, agreement, commitment, promise or undertaking
(whether written or oral) that is legally binding and which relates to a Seller
or the Acquired Assets and to which any of the Sellers is a party or by which
any of the Sellers is bound.

 

“Effective Time” means the time (Eastern Time) at which the final Monitor’s
Certificate is delivered under the Vesting Orders.

 

“Employees” means all of the employees of the Sellers at the Effective Time,
including employees on leave who return within the period prescribed by
Applicable Law based on the nature of the leave.

 

“Encumbrance” means any lien, encumbrance, security interest, pledge, servitude,
easement, lease, charge, preemptive right, right of first refusal, option to
purchase, encroachments and imperfections of title in regard to real property,
mortgage, hypothecation, restriction on transfer of title, adverse claim, title
retention agreement of any nature or kind, or other encumbrance.

 

“Environmental Authorities” means all Governmental Authorities charged with
enforcing any of the Environmental Laws.

 

“Environmental Authorizations” means all Authorizations listed in
Schedule 2.01(1)(l) issued or granted to any of the Sellers by Environmental
Authorities pursuant to any Environmental Laws.

 

“Environmental Laws” means all Applicable Laws in respect of the environment and
the protection of the environment.

 

“Excluded Assets” has the meaning set out in Section 2.02.

 

“Excluded Contracts” has the meaning set out in Section 2.02(i).

 

“Excluded Liabilities” has the meaning set out in Section 2.04.

 

“Francobec” has the meaning set out in the preamble.

 

“General Partner” has the meaning set out in the preamble.

 

“Governmental Authority” means any Canadian federal, provincial, municipal or
local government, or any other governmental, regulatory or administrative
authority, or any agency, board, department, commission, court, tribunal or
instrumentality thereof.

 

“GST” has the meaning set out in Section 2.05(1).

 

“Intellectual Property” means intellectual property of any nature and kind
including all domestic and foreign trade-marks, business names, trade names,
domain names, trading styles, patents, trade secrets, software, industrial
designs and copyrights, whether registered or

 

3

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unregistered, and all applications for registration thereof, and inventions,
formulae, recipes, product formulations, processes and processing methods,
technology and techniques and know-how.

 

“Intercompany Claims” has the meaning set out in the Plan.

 

“Inventories” means all inventories of finished goods, work-in-progress,
materials, supplies, tooling, service parts, spare parts, fuels and other goods
used by the Sellers.

 

“Leased Properties” has the meaning set out in Section 2.01(1)(b).

 

“Liability” means, with respect to any Person, any liability or obligation of
such Person whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether matured or
unmatured, and whether or not required under generally accepted accounting
principles to be accrued on the financial statements of such Person.

 

“Litigation Claims” has the meaning set out in the Plan.

 

“MBI” has the meaning set out in the preamble.

 

“Monitor” means Deloitte & Touche Inc., the court appointed Monitor of the
Sellers.

 

“Monitor’s Certificate” means each certificate required pursuant to a Vesting
Order to be issued by the Monitor in order for Acquired Assets to be vested in
the Purchaser and/or the General Partner.

 

“Non-Qualified Employee Benefit Plans” has the meaning set out in the Plan.

 

“Non-Transferred CBA” means a Canadian Collective Bargaining Agreement in
respect of former employees of any Seller whose employment related primarily to:
(i) the Excluded Assets; or (ii) any business of the Sellers which has ceased
operations or been sold to a third party prior to the Effective Time.

 

“Other Secured Claim” has the meaning set out in the Plan.

 

“Partnership Agreement” means the limited partnership agreement in respect of
the Purchaser dated March 17, 2010, as amended or restated from time to time.

 

“Permitted Encumbrances” has the meaning set out in Section 3.01(d).

 

“Person” means any individual, corporation, partnership, association, joint
stock company, joint venture, limited liability company, limited liability
partnership, trust, estate, unincorporated organization or other entity, or any
domestic or foreign government, governmental agency, or any subdivision,
department or other instrumentality thereof.

 

“Petition Date” has the meaning set out in the Plan.

 

4

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“Plan” means the joint plan of reorganization for Smurfit-Stone Container
Corporation and its debtor subsidiaries and plan of arrangement for SSC Canada
and affiliated Canadian Debtors dated January 29, 2010, including all exhibits,
supplements, appendices and schedules thereto, as the same may be amended,
modified or supplemented from time to time in accordance with the terms thereof
and the terms of the CCAA Creditors’ Meeting Order and includes, for purposes of
the CCAA Proceedings, the CCAA Plan that is incorporated into such joint plan of
reorganization.

 

“Post-Filing Claims” has the meaning set out in the Plan.

 

“Prepetition Canadian Revolving Loans” has the meaning set out in the Plan.

 

“Prepetition Canadian Term Loans” has the meaning set out in the Plan.

 

“Prepetition Credit Agreement” has the meaning set out in the Plan.

 

“Purchase Price” has the meaning set out in Section 2.03.

 

“Purchaser” has the meaning set out in the preamble.

 

“QST” has the meaning set out in Section 2.05(1).

 

“Sellers” has the meaning set out in the preamble.

 

“Smurfit-MBI” has the meaning set out in the preamble.

 

“Smurfit-MBI Distribution Pool” has the meaning set out in the Plan.

 

“SSC Canada” has the meaning set out in the preamble.

 

“SSC Canada Distribution Pool” has the meaning set out in the Plan.

 

“Tax” means (a) any foreign, federal, provincial, state, municipal, school,
county or local income, capital, sales and use, value added (including GST,
Harmonized Sales Tax and QST), excise, franchise, real and personal property,
land transfer, gross receipt, capital stock, production, business and
occupation, disability, employment, payroll, severance or withholding tax or
other tax, duty, fee, assessment, deficiency, imposition, Liability or charge
imposed by any taxing authority, including any Canada, Québec or other
government pension plan premium or contribution, social security or employment
insurance premium, deductions at source, withholding tax, and any interest,
penalties or fines related thereto or in addition thereto, and (b) any Liability
for the payment of any amounts of the type described in clause (a) of this
definition of “Tax” as a result of any express obligation to indemnify any other
Person or as a result of any obligations under any agreement or arrangements
with any other Person with respect to such amounts.

 

“Tax Act” means the Income Tax Act (Canada).

 

“Transfer Taxes” has the meaning set out in Section 2.06.

 

5

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“Vesting Order” has the meaning set out in Section 5.03.

 

(2)           Capitalized terms used herein that are not otherwise defined shall
have the meanings attributed to them in the Plan.

 

1.02                           Headings

 

The division of this Agreement into Articles and Sections and the insertion of a
table of contents and headings are for convenience of reference only and do not
affect the construction or interpretation of this Agreement.  The
terms “hereof”, “hereunder” and similar expressions refer to this Agreement and
not to any particular Article, Section or other portion hereof.  Unless
something in the subject matter or context is inconsistent therewith, references
herein to Articles, Sections and Schedules are to Articles and Sections of and
Schedules to this Agreement.

 

1.03                           Extended Meanings

 

In this Agreement, words importing the singular number include the plural and
vice versa and words importing any gender include all genders.  The
term “including” means “including without limiting the generality of the
foregoing” and the term “third party” means any Person other than the Sellers
and the Purchaser.

 

1.04                           Statutory References

 

In this Agreement, unless something in the subject matter or context is
inconsistent therewith or unless otherwise herein provided, a reference to any
statute is to that statute as now enacted and includes any regulations made
thereunder.

 

1.05                           Currency

 

All references to currency herein are to lawful money of Canada, except as
otherwise indicated.

 

1.06                           Schedules

 

The following are the Schedules to this Agreement:

 

Schedule 1.01(1)

-

Certain Assumed Liabilities;

Schedule 2.01(1)(a)

-

Owned Real Properties;

Schedule 2.01(1)(b)

-

Leased Properties;

Schedule 2.01(1)(g)

-

Owned Intellectual Property;

Schedule 2.01(1)(i)

-

Schiffenhaus Canada Inc. Shares;

Schedule 2.01(1)(j)

-

Aspamill, Rollcraft and Rosenbloom Group Shares;

Schedule 2.01(1)(l)

-

Environmental Authorizations and Other Authorizations;

Schedule 2.01(1)(n)

-

Certain Litigation Claims;

Schedule 2.02(i)

-

Excluded Contracts;

Schedule 2.02(j)

-

Excluded Assets;

Schedule 2.03(2)

-

Purchase Price Allocation (Seller and Asset Class);

 

6

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Schedule 2.09

-

CAAFs; and

Schedule 3.01(d)

-

Permitted Encumbrances.

 

ARTICLE 2 - TRANSFER OF ASSETS

 

2.01                           Transfer of Acquired Assets

 

(1)           Upon and subject to the terms and conditions hereof, as of and
with effect from the Effective Time, each of the Sellers hereby sells, conveys,
transfers and assigns to the Purchaser, and the Purchaser hereby acquires from
the Sellers, the universality of the personal and movable and real and immovable
property of each of the Sellers, other than the Excluded Assets, (the “Acquired
Assets”) including all rights, title, benefit and interest of each of the
Sellers in and to the following:

 

(a)                                  the immovable and real properties described
in Schedule 2.01(1)(a);

 

(b)                                 all rights as lessee in the immovable and
real properties set out in Schedule 2.01(1)(b) (the “Leased Property”);

 

(c)                                  all machinery, equipment, vehicles, tools,
handling equipment, furniture, furnishings, computer hardware and peripheral
equipment, supplies and accessories owned, leased or otherwise used by the
Sellers;

 

(d)                                 all Inventories;

 

(e)                                  all cash on hand or held in bank accounts
of the Sellers;

 

(f)                                    all accounts receivable, trade accounts,
credits, notes receivable (other than Intercompany Claims), book debts and any
other debts and amounts due or accruing to the Sellers with respect to their
business and operations as at the Effective Time;

 

(g)                                 all Intellectual Property owned by the
Sellers, including the Intellectual Property listed in Schedule 2.01(1)(g);

 

(h)                                 all Contracts other than the Excluded
Contracts, including the Contracts listed in Exhibit 11 to the Plan (the
“Assumed Contracts”);

 

(i)                                     the shares in the share capital of
Schiffenhaus Canada Inc. held by Smurfit-MBI, as set out in Schedule 2.01(1)(i);

 

(j)                                     the shares in the share capitals of
Aspamill Inc., Rollcraft Inc. and Rosenbloom Group Inc. held by SSC Canada, as
set out in Schedule 2.01(1)(j);

 

(k)                                  all Intercompany Claims held by Canadian
Debtors that are Sellers;

 

7

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(l)                                     all Authorizations required to carry on
the operations of the Sellers in the usual and ordinary course, including the
Environmental Authorizations listed in Schedule 2.01(1)(l), the whole to the
extent transferable by Applicable Law;

 

(m)                               the goodwill related to the operations of the
Sellers;

 

(n)                                 all Litigation Claims of the Sellers,
including those set out in Schedule 2.01(1)(n);

 

(o)                                 all prepaid expenses and deposits of the
Sellers including all prepaid Taxes (other than income Taxes) and water rates,
all prepaid purchases of gas, oil and electricity and all prepaid lease
payments;

 

(p)                                 all personnel records, inspection records
and other records, books, documents and data bases recorded or stored by means
of any device, including in electronic form, as are in the possession or under
the control of the Sellers; and

 

(q)                                 all assets held in connection with the
Canadian Pension Plans as set out in Section 4.02, including all agreements
pursuant to which the assets of the Canadian Pension Plans are held, and all
contracts for service relating to the Canadian Pension Plans.

 

(2)           Title to, and ownership and possession of, the Acquired Assets
shall pass to the Purchaser at the Effective Time.

 

2.02                           Excluded Assets

 

The Acquired Assets shall not include any of the following owned by any Seller
(collectively, the “Excluded Assets”):

 

(a)                                  shares in the share capital of St. Laurent
Display and Packaging Inc.;

 

(b)                                 shares in the share capital of Celgar
Investments, Inc.;

 

(c)                                  shares in the share capital of Stone
Venepal (Celgar) Pulp, Inc.;

 

(d)                                 shares in the share capital of Serpac
Containers Limited;

 

(e)                                  shares in the share capital of 639647
British Columbia Ltd.;

 

(f)                                    shares in the capital of Specialty
Containers Inc.;

 

(g)                                 the shares in the share capital of 3083527
Nova Scotia Company;

 

(h)                                 all shares, units or other equity interests
held by any Seller in the capital of any other Seller;

 

(i)                                     the Contracts set out in Schedule
2.02(i) and any Contracts with respect to any business or assets which have
ceased operations or have been sold to a third party prior to the Effective Time
(the “Excluded Contracts”); and

 

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(j)                                    any of the assets or property set out in
Schedule 2.02(j).

 

2.03        Purchase Price

 

(1)                                 The purchase price agreed by the Sellers and
the Purchaser for the sale, conveyance, transfer and assignment of the Acquired
Assets by the Sellers to the Purchaser shall be the aggregate of the following
(the “Purchase Price”) and shall be paid as follows on the date of this
Agreement:

 

(a)                                 the payment of cash in the amount of
US$393,646,808.20, being the amount necessary to repay the principal amount of
the Prepetition Canadian Revolving Loans and the Prepetition Canadian Term Loans
in full, plus any accrued but unpaid interest thereon payable at the non-default
interest rate under the Prepetition Credit Agreement and all other amounts
payable in connection therewith under the Plan;

 

(b)                                 the payment of cash in the amount of
US$64,451.00, being the amount necessary to pay the principal amount of all
Other Secured Claims against the Sellers in full, plus any accrued but unpaid
interest thereon required to be paid under Applicable Law;

 

(c)                                  the payment of cash in the amount of
US$7,979,222.00, being the amount necessary to satisfy in full all
Administrative Expense Claims, Post-Filing Claims and CCAA Charges against the
Canadian Debtors, including, without limitation, any monetary amounts by which
each executory Contract and unexpired lease to be assigned to the Purchaser is
in default;

 

(d)                                 the payment of cash in the amount (i) of
US$39,000,000.00 necessary to fund the SSC Canada Distribution Pool and the
Smurfit-MBI Distribution Pool, which shall be available for distribution to
Affected Unsecured Creditors of SSC Canada and Smurfit-MBI in accordance with
Article IV of the Plan and (ii) US$110,000.00 for General Unsecured Claims with
respect to BCSS; and

 

(e)                                  the assumption and undertaking by the
Purchaser to timely fulfil and perform all of the Assumed Liabilities.

 

(2)                                 The payments set forth in
Section 2.03(1) shall be (i) paid to or as directed by the Sellers and
(ii) allocated among each of the Sellers as set forth in Schedule 2.03(2), and
among each class of assets as set forth in such Schedule. Each of the Sellers
and the Purchaser hereby agree to file their respective Tax returns in a manner
consistent with the allocation set out in Schedule 2.03(2).

 

2.04        Excluded Liabilities

 

The Purchaser will not assume or be liable for, and the Sellers will retain and
remain responsible for, all of the Liabilities of the Sellers other than the
Assumed Liabilities (and then only in accordance with the terms of, and to the
extent of, the Assumed Liabilities), whether such

 

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Liabilities are related to the Acquired Assets or otherwise (the “Excluded
Liabilities”). Without limiting the foregoing, the Excluded Liabilities
specifically include each of the following:

 

(i)            all Liabilities of each of the Sellers for Taxes;

 

(ii)           all Liabilities of, and Claims (including without limitation any
grievance) against, any Seller or the Acquired Assets as of the Effective Time
or arising thereafter but related to or arising out of the operations of any of
the Sellers or the Acquired Assets prior to the Petition Date;

 

(iii)          all Liabilities of each of the Sellers with respect to any
business or assets which have ceased operations or have been sold to a third
party prior to the Effective Time;

 

(iv)          all Liabilities arising out of any violation of Applicable Laws,
including Environmental Laws, by any Seller on or prior to the Petition Date;

 

(v)           all Liabilities for debt or any other liability or obligation of
any Seller that does not relate to, or arise from, the operations of the Sellers
or the Acquired Assets;

 

(vi)          all Liabilities of Employees who refuse the offer of employment by
the Purchaser pursuant to Section 4.01(1);

 

(vii)         any existing or future obligation of any Canadian Debtor under any
Non-Qualified Employee Benefit Plan;

 

(viii)        all Liabilities relating to the Excluded Assets; and

 

(ix)          all Liabilities relating to bulk sales laws applicable to the
transactions contemplated by this Agreement.

 

2.05        Tax Elections

 

(1)           Each of the Sellers and the Purchaser will jointly execute an
election, in the prescribed form and containing the prescribed information, to
have Section 167 of the Excise Tax Act (Canada) and, to the extent applicable,
Sections 75 and 75.1 of An Act respecting the Québec Sales Tax apply to the
conveyance, transfer and assignment of the Acquired Assets hereunder so that no
tax is payable in respect of such conveyance, transfer and assignment under
Part IX of the Excise Tax Act (Canada) (such tax is hereinafter referred to as
“GST”) and Title I of An Act respecting the Québec Sales Tax (such tax is
hereinafter referred to as “QST”). The Purchaser will file such elections with
the applicable Governmental Authorities within the time prescribed by the Excise
Tax Act (Canada) and An Act respecting the Québec Sales Tax.

 

(2)           Each of the Sellers and the Purchaser will execute and file, on a
timely basis and using the prescribed form, a joint election under Section 22 of
the Tax Act and Section 184 of the Taxation Act (Québec) as to the sale of the
accounts receivable conveyed, transferred and assigned under this Agreement, and
prepare their respective Tax returns in a manner consistent

 

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with such joint election.  For the purposes of such joint election, the elected
amount in respect of the accounts receivable will be consistent with the
allocation set forth in Schedule 2.03(2) with respect to the accounts
receivable.

 

(3)           Each of the Sellers and the Purchaser will, if the Purchaser
notifies such Seller, execute and file, on a timely basis and using any
prescribed form, a joint election under Subsection 20(24) of the Tax Act and
Section 157.10 of the Taxation Act (Québec) as to the assumption hereunder of
prepaid obligations to deliver goods or provide services in the future, and
prepare their respective Tax returns in a manner consistent with such joint
election. To the extent such an election is filed, the Sellers acknowledge that
each applicable Seller conveyed, transferred and assigned the Acquired Assets to
the Purchaser in part as consideration for the Purchaser assuming prepaid
obligations of each such Seller to deliver goods or provide services in the
future.

 

2.06        Transfer Taxes

 

The Purchaser will be liable for and will pay all transfer, land transfer or
other similar Taxes properly payable under any Applicable Law (collectively,
“Transfer Taxes”) on or with respect to the conveyance, transfer and assignment
of the Acquired Assets under this Agreement to the extent no exemption from such
Transfer Taxes is available by Applicable Law or court order.  The consideration
payable by the Purchaser to Sellers hereunder does not include Transfer Taxes.

 

2.07        Amounts Received After Effective Time

 

All amounts collected on or after the Effective Time or other amounts receivable
relating to the Acquired Assets or the business conducted by the Sellers prior
to the Effective Time or the Purchaser on or after the Effective Time shall
belong to the Purchaser, and if received by any Seller shall be received for the
benefit and the account of the Purchaser, and such Seller shall transfer and
remit to the Purchaser all such amounts received by or paid to it on or after
the Effective Time.

 

2.08        Non-Assignable Contracts and Commitments

 

(1)           The Sellers will use commercially reasonable efforts (other than
the payment of money or assumption of obligations) to obtain any third party
consents or waivers necessary to permit the assignment to, and assumption by,
the Purchaser of all the Assumed Contracts that have not been obtained prior to
the Effective Time.

 

(2)           Nothing in this Agreement will constitute an agreement to assign
or an attempted assignment of any Assumed Contract for which any requisite
consent or waiver to the assignment thereof has not been obtained or otherwise
ordered by a court of competent jurisdiction (including the Vesting Order). To
the extent permitted by Applicable Law, if any requisite consent or waiver has
not been obtained or ordered on or prior to the Effective Time, the applicable
Assumed Contract will be held by the applicable Seller in trust for the benefit
of the Purchaser and the Purchaser will perform the obligations of such Seller
thereunder and be entitled to receive all money becoming due and payable under
and other benefits derived from the Assumed Contract immediately after receipt
by the applicable Seller; however, at the request,

 

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expense and direction of the Purchaser and in the name of the applicable Seller
or otherwise as the Purchaser may specify, the applicable Seller will take all
action and do or cause to be done all things that are, in the opinion of the
Purchaser, necessary or proper in order that the obligations of such Seller may
be performed in such a manner that the value of the Assumed Contract is
preserved and enure to the benefit of the Purchaser, and that the collection of
moneys due and payable to the Purchaser in and under the Assumed Contract are
received by the Purchaser.

 

2.09        CAAFs

 

The applicable Sellers and the Purchaser will use commercially reasonable
efforts, including the provision of such notices and applicable information to
Governmental Authorities as may be necessary or useful, to permit the Purchaser
to enter into CAAFs and the biomass agreement on terms substantially similar to
those of the CAAFs and agreement set out in Schedule 2.09.  The Sellers and the
Purchaser shall provide each other with a copy of any written documents received
or to be sent relating to the entering into by the Purchaser of such CAAFs and
agreement.  The applicable Sellers hereby authorize the Purchaser to act on
their behalf in order to do such things and perform such acts as may be
necessary or useful to permit the Purchaser to enter into such CAAFs and
agreement.

 

2.10        Authorizations

 

The Sellers and the Purchaser will use commercially reasonable efforts,
including the provision of such notices and applicable information to
Governmental Authorities as may be necessary or useful, to permit the Purchaser
to obtain such Authorizations as may be necessary to put into effect the
transactions set out in this Agreement.  The Sellers and the Purchaser shall
provide each other with a copy of any written documents received or to be sent
relating to such Authorizations.  The Sellers hereby authorize the Purchaser to
act on their behalf in order to do such things and perform such acts as may be
necessary or useful to permit the Purchaser to obtain such Authorizations.

 

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES

 

3.01        Sellers’ Representations and Warranties

 

The Sellers jointly and severally represent and warrant as follows to the
Purchaser and acknowledge and agree that the Purchaser is relying upon the
representations and warranties in connection with the transactions contemplated
in this Agreement:

 

(a)                                 Incorporation and Qualification.  Each of
the Sellers (other than Smurfit-MBI) is a corporation incorporated and existing
under the laws of its respective incorporating jurisdiction as set out in the
preamble, and has the corporate power to own and operate its property, carry on
its business and enter into and perform its obligations under this Agreement. 
Smurfit-MBI has been formed and is existing as a limited partnership under the
laws of Ontario and has the power to own and operate its property, carry on its
business and perform its obligations under this Agreement.

 

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(b)                                 Authorization.  The execution and delivery
of and performance by the Sellers of this Agreement and the consummation of the
transactions contemplated by it have been duly authorized by all necessary
corporate action on the part of each of the Sellers and, in the case of
Smurfit-MBI, all partnership action on its part and all necessary corporate
action on the part of MBI in its capacity as general partner of Smurfit-MBI.

 

(c)                                  Execution and Binding Obligation.  This
Agreement has been duly executed and delivered by each of the Sellers, and
constitutes a legal, valid and binding agreement of each of them, enforceable
against each of them in accordance with its terms, subject only to any
limitation under Applicable Laws relating to (i) bankruptcy, winding-up,
insolvency, arrangement, fraudulent preference and conveyance, assignment and
preference and other similar laws of general application affecting the
enforcement of creditors’ rights, and (ii) the discretion that a court may
exercise in the granting of equitable remedies such as specific performance and
injunction.

 

(d)                                 Title to the Acquired Assets.  Except for
the Excluded Assets, the property and assets included in the Acquired Assets
constitute all of the assets used by the Sellers in carrying on their
operations.  The Sellers have legal and beneficial ownership of the Acquired
Assets free and clear of all Encumbrances, except for the encumbrances set out
in Schedule 3.01(d) (the “Permitted Encumbrances”).  No Person other than the
Sellers owns any property or assets which are being used by the Sellers, except
for the Leased Property.

 

(e)                                  Residence.  None of the Sellers is a
non-resident of Canada for the purposes of the Tax Act.

 

3.02        Purchaser’s Representations and Warranties

 

The Purchaser represents and warrants as follows to the Sellers and acknowledges
and agrees that the Sellers are relying upon the representations and warranties
in connection with the transactions contemplated in this Agreement:

 

(a)                                 Formation and Qualification.  The General
Partner has the corporate power and capacity to own its property and assets, to
conduct business as presently conducted, including the business of the
Purchaser, and to enter into and perform the obligations of the Purchaser under
the Partnership Agreement and under this Agreement.  The Purchaser has been
formed and is existing as a limited partnership under the Limited Partnerships
Act (Ontario) and the General Partner has registered the name of the Purchaser
with the registrar under the Business Names Act (Ontario).

 

(b)                                 Authorization.  The General Partner has
taken all necessary corporate and partnership action to authorize the execution,
delivery and performance by the Purchaser of this Agreement and the transactions
contemplated by it.

 

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(c)                                  Execution and Binding Obligation.  The
General Partner has duly executed and delivered this Agreement on behalf of the
Purchaser.  This Agreement is a legal, valid and binding obligation of the
Purchaser, and is enforceable against it in accordance with its terms, subject
only to any limitation under Applicable Laws relating to (i) bankruptcy,
winding-up, insolvency, arrangement, fraudulent preference and conveyance,
assignment and preference and other similar laws of general application
affecting the enforcement of creditors’ rights, and (ii) the discretion that a
court may exercise in the granting of equitable remedies such as specific
performance and injunction.

 

ARTICLE 4 - COVENANTS

 

4.01        Employees

 

(1)                                 The Purchaser will, effective at the
Effective Time:

 

(a)                                 offer employment or, as the case may be,
continued employment to all of the Employees on the terms and conditions of
employment that are in effect at the Effective Time for those Employees who are
not covered by a Canadian Collective Bargaining Agreement; and

 

(b)                                 be the successor to Sellers for those
Employees who are covered by the Canadian Collective Bargaining Agreements other
than Non-Transferred CBAs, and will be bound by and observe all of the terms,
conditions, rights and obligations under such applicable Canadian Collective
Bargaining Agreements, as the case may be, subject to Applicable Laws governing
labour.

 

(2)           The Purchaser will be responsible for and will discharge all
obligations and liabilities in respect of all Employees, with the exception of
the Excluded Liabilities contemplated in Section 2.04.

 

4.02        Pension and Benefits

 

Effective as of the Effective Time, each Seller hereby assigns, and the
Purchaser hereby assumes, all of the rights, obligations and benefits of such
Seller in respect of (i) the Canadian Pension Plans, including all funding
agreements pursuant to which the assets of the Canadian Pension Plans are held,
and all contracts for service relating to the Canadian Pension Plans, and
(ii) the Canadian Employee Benefit Plans.

 

4.03        Environmental Matters

 

(1)           The Sellers hereby authorize the Purchaser to act on their behalf
in order to do such things and perform such acts as may be necessary or useful
for the transfer, modification, issuance or re-issuance of any Environmental
Authorizations. The Sellers will ensure that the Purchaser has access to all
relevant information necessary for preparing and filing the documentation to
effect such transfers.  The Sellers and the Purchaser shall provide each other

 

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with a copy of any written documents received or to be sent relating to the
transfer of Environmental Authorizations.

 

(2)           The Purchaser will immediately inform the Sellers upon receipt of
any verbal or written notice, claim or remediation order in connection with
transfer of Environmental Authorizations, including any letter concerning
inspections from the Environmental Authorities, meetings or discussions relating
to the transfer of the Environmental Authorizations or in connection with the
transfer of the Acquired Assets. The Purchaser shall provide the Sellers with a
copy of any such written notice, claim or remediation order within twenty-four
(24) hours upon receipt.

 

4.04        Cooperation on Tax Matters

 

The Sellers and the Purchaser will furnish or cause to be furnished to each
other, each at its own expense, as promptly as practicable, such information and
assistance, and provide additional information and explanations of any material
provided, relating to the Acquired Assets as is reasonably necessary for the
filing of any Tax returns, for the preparation of any audit, and for the
prosecution or defence of any claim relating to any adjustment or proposed
adjustment with respect to Taxes.

 

ARTICLE 5- GENERAL

 

5.01        Further Assurances

 

(1)           Each of the Sellers and the Purchaser will from time to time
execute and deliver all such further documents and instruments and do all acts
and things as the other party may reasonably require to effectively carry out or
better evidence or perfect the full intent and meaning of this Agreement,
including to fully vest title to the Acquired Assets in the name of the
Purchaser.

 

(2)           Each of the Sellers hereby appoints the Purchaser as its
non-exclusive agent in order to effect the transactions contemplated in this
Agreement, including the transfer or re-issuance of or in respect of
Environmental Authorizations, other Authorizations, CAAFs and benefit plans
(including pension plans).

 

(3)           The Purchaser may designate the General Partner as its nominee to
hold registered title to, and/or, if applicable, legal or bare title to, any
Acquired Assets, including immovable and real property, for and on behalf of the
Purchaser.

 

5.02        Benefit of the Agreement

 

This Agreement will enure to the benefit of and be binding upon the respective
heirs, executors, administrators, other legal representatives, successors and
permitted assigns of the parties.

 

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5.03        Entire Agreement

 

This Agreement (read in conjunction with the provisions of the Plan applicable
to the Purchaser and the Sellers) constitutes the entire agreement between the
parties with respect to the subject matter hereof and cancels and supersedes any
prior understandings and agreements among the parties with respect thereto. 
There are no representations, warranties, terms, conditions, undertakings or
collateral agreements, express, implied or statutory, among the parties other
than as expressly set forth in this Agreement and the applicable provisions of
the Plan.  Notwithstanding the foregoing, the parties agree that the Acquired
Assets are being sold, conveyed, transferred and assigned to the Purchaser, and
the Assumed Liabilities are being assumed by the Purchaser, subject to and
strictly in accordance with the terms of the approval of, and vesting orders
issued by, the Ontario Superior Court of Justice (Commercial List) in respect of
this Agreement (each a “Vesting Order”).

 

5.04        Amendments and Waivers

 

No amendment to this Agreement will be valid or binding unless set forth in
writing and duly executed by all of the parties.  No waiver of any breach of any
provision of this Agreement will be effective or binding unless made in writing
and signed by the party purporting to give the same and, unless otherwise
provided, will be limited to the specific breach waived.

 

5.05        Assignment

 

This Agreement may not be assigned by a party without the prior written consent
of the other parties.

 

5.06        Notices

 

Any demand, notice or other communication to be given in connection with this
Agreement must be given in writing and will be given by personal delivery, by
registered mail or by electronic means of communication addressed to the
recipient as follows:

 

To the Sellers:

 

Smurfit-Stone Container Canada Inc.
1035 Hodge Street, Suite A
Montreal, Quebec
Canada H4N 2B4

 

Attention:  Senior Counsel
Fax: 1 (866) 414-6954

 

To the Purchaser:

 

Smurfit-Stone Container Canada, L.P.
1035 Hodge Street, Suite A
Montreal, Quebec
Canada H4N 2B4

 

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Attention:  Senior Counsel
Fax: 1 (866) 414-6954

 

or to such other street address, individual or electronic communication number
or address as may be designated by notice given by any party to the other.  Any
demand, notice or other communication given by personal delivery will be
conclusively deemed to have been given on the day of actual delivery thereof
and, if given by registered mail, on the third business day (in the jurisdiction
of receipt) following the deposit thereof in the mail and, if given by
electronic communication, on the day of transmittal thereof if given during the
normal business hours of the recipient and on the business day (in the
jurisdiction of receipt) during which such normal business hours next occur if
not given during such hours on any day.  If the party giving any demand, notice
or other communication knows or ought reasonably to know of any difficulties
with the postal system that might affect the delivery of mail, any such demand,
notice or other communication may not be mailed but must be given by personal
delivery or by electronic communication.

 

5.07        Plan Prevails

 

In the event of any inconsistency between the terms of this Agreement and the
terms of the Plan, the terms of the Plan shall prevail. In the event any term of
this Agreement is ambiguous, the terms of the Plan may be used to try to resolve
such ambiguity.

 

5.08        Governing Law

 

This Agreement is governed by and will be construed in accordance with the laws
of the Province of Ontario and the laws of Canada applicable therein.

 

5.09        Attornment

 

For the purpose of all legal proceedings this Agreement will be deemed to have
been performed in the Province of Ontario and the courts of the Province of
Ontario will have jurisdiction to entertain any action arising under this
Agreement. The Sellers and the Purchaser each attorns to the non-exclusive
jurisdiction of the courts of the Province of Ontario.

 

5.10        Counterparts

 

This Agreement may be executed in any number of counterparts, each of which will
be deemed to be an original and all of which taken together will be deemed to
constitute one and the same instrument.

 

5.11        Electronic Transmission

 

Delivery of an executed signature page to this Agreement by any party by
electronic transmission will be as effective as delivery of a manually executed
copy of this Agreement by such party.

 

[Signature page follows.]

 

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IN WITNESS WHEREOF the parties have executed this Agreement.

 

 

SMURFIT–STONE CONTAINER CANADA INC.

 

 

 

 

 

Per:

/s/ Dean Jones

 

 

Name:

Dean Jones

 

 

Title:

Assistant Secretary

 

 

 

 

 

 

 

MBI LIMITED/LIMITÉE

 

 

 

 

 

Per:

/s/ Dean Jones

 

 

Name:

Dean Jones

 

 

Title:

Assistant Secretary

 

 

 

 

 

 

 

SMURFIT—MBI,
herein acting by its general partner,
MBI Limited/Limitée

 

 

 

 

 

Per:

/s/ Dean Jones

 

 

Name:

Dean Jones

 

 

Title:

Assistant Secretary

 

 

 

 

 

 

 

FRANCOBEC COMPANY

 

 

 

 

 

Per:

/s/ Dean Jones

 

 

Name:

Dean Jones

 

 

Title:

Assistant Secretary

 

 

 

 

 

 

 

B.C. SHIPPER SUPPLIES LTD.

 

 

 

 

 

Per:

/s/ Dean Jones

 

 

Name:

Dean Jones

 

 

Title:

Assistant Secretary

 

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SMURFIT-STONE CONTAINER CANADA, L.P.,
herein acting by its general partner,
3242795 Nova Scotia Limited

 

 

 

 

 

Per:

/s/ Dean Jones

 

 

Name:

Dean Jones

 

 

Title:

Assistant Secretary

 

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