##### 



EXHIBIT
4.14
     
 CREDIT AGREEMENT
   AINSWORTH ENGINEERED CANADA LIMITED PARTNERSHIP,
AINSWORTH CORP. and
AINSWORTH ENGINEERED (USA), LLC,
  AINSWORTH LUMBER CO. LTD., and
 AINSWORTH ENGINEERED CORP.,
   The Lenders Party Hereto
  JPMORGAN CHASE BANK, N.A., TORONTO BRANCH
  GE CANADA FINANCE HOLDING COMPANY
 
 J.P. MORGAN SECURITIES INC.,
 
 McMillan Binch Mendelsohn llp




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##### 



TABLE OF CONTENTS
 RECITALS
    
    
    1ARTICLE I DEFINITIONS
    
    
    1SECTION 1.01. Defined Terms
    
    
    1SECTION 1.02. Classification of Loans and Borrowings
    
    
    26SECTION 1.03. Terms Generally
    
    
    26SECTION 1.04. Accounting Terms; GAAP
    
    
    26SECTION 1.05. Currency Matters
    
    
    26ARTICLE II THE CREDITS
    
    
    27SECTION 2.01. Commitments
    
    
    27SECTION 2.02. Loans and Borrowings
    
    
    27SECTION 2.03. Requests for Revolving Borrowings
    
    
    28SECTION 2.04. Protective Advances
    
    
    28SECTION 2.05. Swingline Loans
    
    
    29SECTION 2.06. Letters of Credit
    
    
    30SECTION 2.07. Funding of Borrowings
    
    
    34SECTION 2.08. Interest Elections
    
    
    34SECTION 2.09. Termination of Commitments
    
    
    36SECTION 2.10. Repayment and Amortization of Loans; Evidence of Debt
    
    
    36SECTION 2.11. Prepayment of Loans
    
    
    37SECTION 2.12. Fees
    
    
    38SECTION 2.13. Interest
    
    
    39SECTION 2.14. Alternate Rate of Interest
    
    
    40SECTION 2.15. Increased Costs
    
    
    41SECTION 2.16. Break Funding Payments
    
    
    42SECTION 2.17. Taxes
    
    
    42SECTION 2.18. Payments Generally; Allocation of Proceeds; Sharing of Set-offs
    
    
    43SECTION 2.19. Mitigation Obligations; Replacement of Lenders
    
    
    46SECTION 2.20. Returned Payments
    
    
    46SECTION 2.21. Joint and Several Liability of Loan Parties
    
    
    46ARTICLE III REPRESENTATIONS AND WARRANTIES
    
    
    49SECTION 3.01. Organization; Powers
    
    
    49SECTION 3.02. Authorization; Enforceability
    
    
    49SECTION 3.03. Governmental Approvals; No Conflicts
    
    
    49SECTION 3.04. Financial Condition; No Material Adverse Change
    
    
    49SECTION 3.05. Properties
    
    
    50SECTION 3.06. Litigation and Environmental Matters
    
    
    50SECTION 3.07. Compliance with Laws and Agreements
    
    
    51SECTION 3.08. Investment and Holding Company Status
    
    
    51SECTION 3.09. Taxes
    
    
    51SECTION 3.10. ERISA
    
    
    51SECTION 3.11. Canadian Pension Plans and Benefit Plans
    
    
    51SECTION 3.12. Disclosure
    
    
    52SECTION 3.13. Material Agreements
    
    
    52SECTION 3.14. Solvency
    
    
    52SECTION 3.15. Insurance
    
    
    52
 (i)




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SECTION 3.16. Capitalization and Subsidiaries
    
    
    52SECTION 3.17. Security Interest in Collateral
    
    
    53SECTION 3.18. Labour Disputes
    
    
    53SECTION 3.19. Affiliate Transactions
    
    
    53SECTION 3.20. Common Enterprise
    
    
    53ARTICLE IV CONDITIONS
    
    
    54SECTION 4.01. Effective Date
    
    
    54SECTION 4.02. Each Credit Event
    
    
    56ARTICLE V AFFIRMATIVE COVENANTS
    
    
    57SECTION 5.01. Financial Statements; Borrowing Base and Other Information
    
    
    57SECTION 5.02. Notices of Material Events
    
    
    60SECTION 5.03. Existence; Conduct of Business
    
    
    61SECTION 5.04. Payment of Obligations
    
    
    61SECTION 5.05. Maintenance of Properties
    
    
    61SECTION 5.06. Books and Records; Inspection Rights
    
    
    61SECTION 5.07. Compliance with Laws
    
    
    62SECTION 5.08. Use of Proceeds
    
    
    62SECTION 5.09. Insurance
    
    
    62SECTION 5.10. Casualty and Condemnation
    
    
    63SECTION 5.11. Appraisals
    
    
    63SECTION 5.12. Additional Collateral; Further Assurances
    
    
    63ARTICLE VI NEGATIVE COVENANTS
    
    
    64SECTION 6.01. Indebtedness
    
    
    64SECTION 6.02. Liens
    
    
    66SECTION 6.03. Fundamental Changes
    
    
    67SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions
    
    
    67SECTION 6.05. Asset Sales
    
    
    69SECTION 6.06. Swap Agreements
    
    
    70SECTION 6.07. Restricted Payments; Certain Payments of Indebtedness
    
    
    70SECTION 6.08. Transactions with Affiliates
    
    
    71SECTION 6.09. Restrictive Agreements
    
    
    71SECTION 6.10. Amendment of Material Documents
    
    
    72SECTION 6.11. Fixed Charge Coverage Ratio
    
    
    72ARTICLE VII EVENTS OF DEFAULT
    
    
    72ARTICLE VIII THE ADMINISTRATIVE AGENT
    
    
    75ARTICLE IX MISCELLANEOUS
    
    
    77SECTION 9.01. Notices
    
    
    77SECTION 9.02. Waivers; Amendments
    
    
    78SECTION 9.03. Expenses; Indemnity; Damage Waiver
    
    
    80SECTION 9.04. Successors and Assigns
    
    
    82SECTION 9.05. Survival
    
    
    84SECTION 9.06. Counterparts; Integration; Effectiveness
    
    
    85SECTION 9.07. Severability
    
    
    85SECTION 9.08. Right of Setoff
    
    
    85SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process
    
    
    85SECTION 9.10. WAIVER OF JURY TRIAL
    
    
    86
 (ii)




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SECTION 9.11. Headings
    
    
    86SECTION 9.12. Confidentiality
    
    
    86SECTION 9.13. Several Obligations; Nonreliance; Violation of Law
    
    
    87SECTION 9.14. USA PATRIOT Act
    
    
    87SECTION 9.15. Disclosure
    
    
    87SECTION 9.16. Appointment for Perfection
    
    
    87SECTION 9.17. Judgement Currency Conversion
    
    
    87ARTICLE X LOAN GUARANTEE
    
    
    88SECTION 10.01. Guarantee
    
    
    88SECTION 10.02. Guarantee of Payment
    
    
    88SECTION 10.03. No Discharge or Diminishment of Loan Guarantee
    
    
    89SECTION 10.04. Defenses Waived
    
    
    90SECTION 10.05. Rights of Subrogation
    
    
    90SECTION 10.06. Reinstatement; Stay of Acceleration
    
    
    90SECTION 10.07. Information
    
    
    90SECTION 10.08. Termination
    
    
    91SECTION 10.09. Taxes
    
    
    91SECTION 10.10. Contribution
    
    
    91SECTION 10.11. Liability Cumulative
    
    
    91
 (iii)




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SCHEDULES
              EXHIBITS
      (i)
    
    
    CREDIT AGREEMENT




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Agreement
 RECITALS
   Definitions
 SECTION 1.01. Defined Terms
  ABR
 Account
 Account Debtor
 Adjusted LIBO Rate
 Administrative Agent
 Administrative Questionnaire
 Affiliate
 Aggregate Credit Exposure




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- 2 - Alternate Base Rate 1 2
 ANS
 Applicable Percentage
 Applicable Rate
  CDOR/EurodollarAvailability
    
    Canadian Prime/ABR Spread
    
    SpreadCategory 13 $68,000,000
    
    
    0.00
    %
    
    
    1.375
    %Category 2< $68,000,000 but
3 $33,000,000
    
    
    0.125
    %
    
    
    1.50
    %Category 3< $33,000,000
    
    
    0.25
    %
    
    
    1.75
    %




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##### 



- 3 -  Revolving Exposure as a % ofRevolving
Commitments
    
    Applicable Percentage> 67%
    
    
    0.25
    %£67% but >33%
    
    
    0.375
    %£33%
    
    
    0.50
    %
 Approved Fund
 Assignment and Assumption
 Availability
 Available Revolving Commitment
 Availability Period
 Banking Services
 Banking Services Obligations
 Banking Services Reserves
 BMO Facilities
 Board




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- 4 - Borrower Representative
 Borrowers
 Borrowing
 Borrowing Base
 Borrowing Base Certificate
 Borrowing Request
 Business Day provided Business
Day
 Canadian Benefit Plans
 Canadian Dollars Cdn $ Dollars $
 Canadian Dollar Loans




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- 5 - Canadian Funding Accounts
 Canadian Borrower
 Canadian Pension Plans
 Canadian Prime Rate
 Capital Expenditures
 Capital Lease Obligations
 Cash Equivalents




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- 6 -   CRA
 CDOR Rate provided
 CDOR Rate Loan
 Change in Control
 Change in Law
 Chase




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- 7 - Class
 Code
 Collateral
 Collateral Access Agreement
 Collateral Documents
 Collection Account
 Commitment
 Commitment Schedule
 Consolidated Net Tangible Assets
 Control Controlling Controlled
 Credit Exposure
 Default
 Disclosed Matters
 Document




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- 8 - EBITDA minus
 Effective Date
 Eligible Accounts




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- 9 -      Financial Administration Act Federal Assignment of Claims Act of 1940




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- 10 -   U.S. Federal Consumer Credit Protection Act U.S. Federal Truth in Lending Act Regulation Z
    Eligible Inventory




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- 11 -




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- 12 -     Eligible Stores Inventory
 Environmental Laws Waste Management
Act Water Act Environmental Management Act Fisheries Act Canadian Environmental Protection Act, 1999
 Environmental Liability
 Equity Interests
 Equivalent Amount first currency second currency www.bloomberg.com/markets/currencies/fxc.html
 ERISA Employee Retirement Income Security Act of 1974




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- 13 - ERISA Affiliate
 ERISA Event
 Eurodollar
 Event of Default
 Excluded Subsidiaries
 Excluded Taxes
 Federal Funds Effective Rate




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- 14 -  Financial Officer
 Fixed Charge Coverage Ratio
 Fixed Charges
 Footner Inventory
 Footner Plant
 Foreign Lender
 Forest Act Forest Act
 Funding Accounts
 GAAP
 Governmental Authority
 Grant
 Guarantee guarantor




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- 15 - primary obligee provided
 Guaranteed Obligations
 Hazardous Materials
 Indebtedness
 Indemnified Taxes
 Indentures
 Insolvency Laws Bankruptcy and Insolvency Act Companies Creditors Arrangement Act Winding-Up and Restructuring Act




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- 16 -  Interest Election Request
 Interest Expense
 Interest Payment Date .
 Interest Period provided
 Inventory
 Issuing Bank
 ITA Income Tax Act
 Joinder Agreement




---



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- 17 - LC Disbursement
 LC Exposure
 LC Collateral Account
 Lenders Lenders
 Letter of Credit
 LIBO Rate www.bloomberg.com/markets/rates/index.html
 Lien
 Loan Documents




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- 18 -  Loan Guarantee
 Loan Guarantor
 Loan Parties
 Loans
 Material Adverse Effect
 Material Agreements
 Material Indebtedness
 Maturity
Date
 Maximum Liability
 Minister of Forests
 Ministry of Forests
 Moodys




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- 19 - Multiemployer Plan
 Net Income provided
 Net Orderly Liquidation Value
 Net Proceeds
 Non-Consenting Lender
 Non-Paying Guarantor
 Obligated Party
 Obligations
 Off-Balance Sheet Liability




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- 20 -  Other Taxes
 Participant
 Paying Guarantor
 PBGC
 Permitted Acquisition Target
    Permitted Discretion
 Permitted Encumbrances




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- 21 -     Permitted Holders
     Permitted Joint Ventures
 Permitted Lines of Business
 Person
 Plan
 PPSA Personal Property Security Act PPSA Personal Property Security Act




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- 22 -  Prepayment Event
   Prior Claims
 Projections
 Protective Advance
 Quebec Security Documents
 Register
 Related Parties
 Report
 Required Lenders 2 3
 Requirement of Law




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- 23 - Reserves
 Restricted Payment
 Revolving Commitment
 Revolving Exposure
 Revolving Lender
 Revolving Loan
 S&P
 Secured Obligations
 Security Agreements
 Statutory Reserve Rate




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- 24 - Eurocurrency Liabilities
 Subordinated Indebtedness
 subsidiary parent
 Subsidiary
 Swap Agreement provided
 Swap Obligations
 Swingline Lender
 Swingline Loan
 Taxes




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- 25 - Timber Tenures
 Transactions
 Type
 UCC
 US Borrowers
 US Dollars US$
 US Dollar Loans
 US Funding Accounts
 US Lending Office
 US Prime Rate
 Unliquidated Obligations
 Withdrawal Liability




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- 26 - SECTION 1.02. Classification of Loans and Borrowings.
 Revolving Loan Eurodollar Loan Eurodollar Revolving Loan Revolving Borrowing Eurodollar
Borrowing Eurodollar Revolving Borrowing
 SECTION 1.03. Terms Generally.
  SECTION 1.04. Accounting Terms; GAAP.
 provided
 SECTION 1.05. Currency Matters.




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- 27 -   The Credits
 SECTION 2.01. Commitments.
  SECTION 2.02. Loans and Borrowings
  provided
 provided




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- 28 -  SECTION 2.03. Requests for Revolving Borrowings.
        SECTION 2.04. Protective Advances.




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- 29 - Protective
Advances provided provided further
  SECTION 2.05. Swingline Loans.
 provided




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- 30 -   SECTION 2.06. Letters of Credit.
 General
 Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions




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- 31 -  Expiration Date
 Participations
 Reimbursement provided




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- 32 -  Obligations Absolute provided
 Disbursement Procedures provided




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- 33 -  Interim Interest provided
 Replacement of the Issuing Bank Issuing Bank
 Cash Collateralization LC Collateral Account provided




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- 34 -  SECTION 2.07. Funding of Borrowings.
 provided provided
  SECTION 2.08. Interest Elections.
 provided




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- 35 -




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- 36 -  SECTION 2.09. Termination of Commitments.
  
 provided
 SECTION 2.10. Repayment and Amortization of Loans; Evidence of Debt.
 provided
 first pro
rata second




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- 37 -  provided
  SECTION 2.11. Prepayment of Loans.
  
  first second
 provided




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- 38 -  SECTION 2.12. Fees.
  provided




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SECTION 2.13. Interest.
       provided
  Interest Act(Canada) Interest Act




---



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Limitation on Interest firstly
 SECTION 2.14. Alternate Rate of Interest.




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SECTION 2.15. Increased Costs.




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provided provided
 SECTION 2.16. Break Funding Payments.
  SECTION 2.17. Taxes.
 provided




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provided
  SECTION 2.18. Payments Generally; Allocation of Proceeds; Sharing of Set-offs.




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Article VII
 first second third fourth fifth sixth seventh eighth ninth




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provided




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##### 



SECTION 2.19. Mitigation Obligations; Replacement of Lenders.
   Departing Lender provided
 SECTION 2.20. Returned Payments.
 
 SECTION 2.21. Joint and Several Liability of Loan Parties.




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(1)
    
    to enforce any right or remedy against any Loan
Party, as the case may be, or any other Person or Loan Guarantor under
the provisions of this Agreement, such note, or otherwise, or(2)
    
    to exercise any right or remedy against any
guarantor of, or collateral securing, any obligations;




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Applicable Insolvency Laws Maximum Liability




---



##### 



Representations and Warranties
  SECTION 3.01. Organization; Powers.
  SECTION 3.02. Authorization; Enforceability.
  SECTION 3.03. Governmental Approvals; No Conflicts.
  SECTION 3.04. Financial Condition; No Material Adverse Change.




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SECTION 3.05. Properties.
    SECTION 3.06. Litigation and Environmental Matters.




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SECTION 3.07. Compliance with Laws and Agreements.
  SECTION 3.08. Investment and Holding Company Status.
 investment company Investment Company Act of 1940 holding
company Public Utility Holding Company Act
of 1935
 SECTION 3.09. Taxes.
  SECTION 3.10. ERISA.
  SECTION 3.11. Canadian Pension Plans and Benefit Plans.
 Income Tax Act




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SECTION 3.12. Disclosure.
 provided
 SECTION 3.13. Material Agreements.
  SECTION 3.14. Solvency.
  SECTION 3.15. Insurance.
  SECTION 3.16. Capitalization and Subsidiaries.




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SECTION 3.17. Security Interest in Collateral.
  SECTION 3.18. Labour Disputes.
 Employment Standards Act
 SECTION 3.19. Affiliate Transactions.
  SECTION 3.20. Common Enterprise.




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Conditions
 SECTION 4.01. Effective Date.
 
 Credit Agreement and Loan Documents
 Financial Statements and Projections
 Closing Certificates; Certified Certificate of Incorporation; Status Certificates
 No Default Certificate




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Fees
 Lien Searches
 Pay-Off Letter
 Funding Account Canadian Funding Accounts US Funding Accounts
 Customer List
 Solvency
 Borrowing Base Certificate
 Closing Availability
 Filings, Registrations and Recordings
 Insurance




---



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Letter of Credit Application
 Governmental Approvals Certificate
 Due Diligence
 Other Documents
  SECTION 4.02. Each Credit Event.




---



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Affirmative Covenants
  SECTION 5.01. Financial Statements; Borrowing Base and Other Information.




---



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Projections
 provided




---



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, :




---



##### 



.
 SECTION 5.02. Notices of Material Events.




---



##### 



SECTION 5.03. Existence; Conduct of Business.
 provided
 SECTION 5.04. Payment of Obligations.
  SECTION 5.05. Maintenance of Properties.
  SECTION 5.06. Books and Records; Inspection Rights.
 provided




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##### 



SECTION 5.07. Compliance with Laws.
 General
 Canadian Pension Plans and Benefit Plans
    Environmental Covenant
 SECTION 5.08. Use of Proceeds.
  SECTION 5.09. Insurance.




---



##### 



SECTION 5.10. Casualty and Condemnation.
  SECTION 5.11. Appraisals.
 provided
 SECTION 5.12. Additional Collateral; Further Assurances.
 Joinder Agreement




---



##### 



Negative Covenants
  SECTION 6.01. Indebtedness.
      provided




---



##### 



provided
  ,




---



##### 



SECTION 6.02. Liens.
    provided
 provided
 provided




---



##### 



SECTION 6.03. Fundamental Changes.
    SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions.




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---



##### 



SECTION 6.05. Asset Sales.




---



##### 



SECTION 6.06. Swap Agreements.
  SECTION 6.07. Restricted Payments; Certain Payments of Indebtedness.




---



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SECTION 6.08. Transactions with Affiliates.
  SECTION 6.09. Restrictive Agreements.
 provided




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- 72 -
  SECTION 6.10.  Amendment of Material Documents.
  SECTION 6.11.  Fixed Charge Coverage Ratio.
   Events of Default
 Events of Default




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- 73 -
    provided




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- 74 -
        )




---



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- 75 -
   The Administrative Agent




---



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- 76 -




---



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- 76 -
    Miscellaneous
 SECTION 9.01. Notices.




---



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- 78 -
  
  th
   provided provided
  SECTION 9.02. Waivers; Amendments.




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- 79 -
  provided Required Lenders provided




---



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- 80 -
 provided
 Non-Consenting Lender
 SECTION
9.03. Expenses; Indemnity; Damage Waiver.




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- 81 -
       Indemnitee provided
 provided




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- 82 -
   SECTION 9.04. Successors and Assigns.
   (1)
    
    the Borrower Representative, provided that no
consent of the Borrower Representative shall be required for an
assignment to a Lender, an Affiliate of a Lender, an Approved Fund or,
if an Event of Default has occurred and is continuing, any other
assignee;(2)
    
    the Administrative Agent; and(3)
    
    the Issuing Bank.
  (1)
    
    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
Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than Cdn$5,000,000 unless each
of the Borrower Representative and the Administrative Agent otherwise
consent, provided that no such consent of the Borrower Representative
shall be required if an Event of Default has occurred and is
continuing;(2)
    
    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;




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- 83 -
 (3)
    
    the parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee of $3,500; and(4)
    
    the assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent an Administrative
Questionnaire.
 Approved Fund
 Approved Fund
  Register
 provided




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- 84 -
 Participant provided provided
  provided
 SECTION 9.05.  Survival.




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- 85 -
 SECTION 9.06. Counterparts; Integration; Effectiveness.
  SECTION 9.07.  Severability.
  SECTION 9.08.  Right of Setoff.
  SECTION 9.09.  Governing Law; Jurisdiction; Consent to Service of Process.




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- 86 -
    SECTION 9.10.  WAIVER OF JURY TRIAL.
  SECTION 9.11.  Headings.
  SECTION 9.12.  Confidentiality.




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##### 



- 87 -
 provided
 SECTION 9.13.  Several Obligations; Nonreliance; Violation of Law.
  SECTION 9.14.  USA PATRIOT Act.
 USA Patriot Act Act
 SECTION 9.15.  Disclosure.
  SECTION 9.16.  Appointment for Perfection.
  SECTION 9.17.  Judgement Currency Conversion.
 Obligation
Currency




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- 88 -
 Judgment Currency Judgment Currency Conversion Date
    Loan Guarantee
 SECTION 10.01.  Guarantee.
 Guaranteed Parties Guaranteed Obligations
 SECTION 10.02.  Guarantee of Payment.
 Obligated Party




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- 89 -
    SECTION 10.03.  No Discharge or Diminishment of Loan Guarantee.




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- 90 -
 SECTION 10.04.  Defenses Waived.
  SECTION 10.05.  Rights of Subrogation.
  SECTION 10.06.  Reinstatement; Stay of Acceleration.
  SECTION 10.07.  Information.




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- 91 -
 SECTION 10.08.  Termination.
  SECTION
10.09. Taxes.
 provided
 SECTION 10.10.  Contribution.
 Paying Guarantor Non-Paying Guarantor
 SECTION 10.11.  Liability Cumulative.




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- 92 -
  [THIS SPACE INTENTIONALLY LEFT BLANK]




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AINSWORTH ENGINEERED CANADA
LIMITED PARTNERSHIP, by its General
Partner, AINSWORTH LUMBER CO. LTD.By:

/s/  Michael AinsworthName:
    Michael AinsworthTitle:
    Executive Vice-President AINSWORTH CORP.By:
    /s/  Catherine AinsworthName:
    Catherine AinsworthTitle:
    Secretary AINSWORTH ENGINEERED (USA), LLCBy:

/s/  Michael AinsworthName:
    Michael AinsworthTitle:
    Executive Vice-President AINSWORTH LUMBER CO. LTD.By:
    /s/  Michael AinsworthName:
    Michael AinsworthTitle:
    Executive Vice-President AINSWORTH ENGINEERED CORP.By:
    /s/  Michael AinsworthName:
    Michael AinsworthTitle:
    Executive Vice-President




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##### 



JPMORGAN CHASE BANK, N.A., TORONTO
BRANCH, individually, as Administrative Agent,
Lender, Issuing Bank and Swingline LenderBy:

/s/  Dan HowatName:
    Dan HowatTitle:
    Senior Vice-President AND by its applicable US Lending Office:
JPMORGAN CHASE BANK, N.A.By:

/s/  John FreemanName:
    John FreemanTitle:
    Vice-President GE CANADA FINANCE HOLDING 
COMPANY, as LenderBy:

/s/  Jack MorroneName:
    Jack MorroneTitle:
    Senior Vice-President AND by its applicable US Lending Office:
GENERAL ELECTRIC CAPITAL CORPORATIONBy:
    /s/  Jack MorroneName:
    Jack MorroneTitle:
    Duly Authorized Signatory




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Schedule 1.01
 Excluded Subsidiaries
 1.01 - 1
    
    CREDIT AGREEMENT




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##### 



Schedule 2.01
 Commitment Schedule
 Lender
    
    CommitmentJPMorgan Chase Bank, N.A., Toronto Branch
    
    $
    60,000,000GE Canada Finance Holding Company
    
    $
    40,000,000Total
    
    $
    100,000,000.00
 2.01 - 1
    
    CREDIT AGREEMENT




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Schedule 3.05
 Properties
 3.05 - 1
    
    CREDIT AGREEMENT




---



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Schedule 3.06
 Disclosed Matters
 3.06 - 1
    
    CREDIT AGREEMENT




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Schedule 3.11
 Canadian Pension Plans and Benefit Plans
 3.11 - 1
    
    CREDIT AGREEMENT




---



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Schedule 3.13
 Material Agreements
 3.11 - 1
    
    CREDIT AGREEMENT




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Schedule 3.15
 Insurance
 3.15 - 1
    
    CREDIT AGREEMENT




---



##### 



Schedule 3.16
 Capitalization and Subsidiaries
 3.16 - 1
    
    CREDIT AGREEMENT




---



##### 



Schedule 3.19
 Affiliate Transactions
 3.19 - 1
    
    CREDIT AGREEMENT




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##### 



Schedule 6.01
 Existing Indebtedness
 6.01 - 1
    
    CREDIT AGREEMENT




---



##### 



Schedule 6.02  Existing Liens
 6.02 - 1
    
    CREDIT AGREEMENT




---



##### 



Schedule 6.04  Existing Investments
 6.04 - 1
    
    CREDIT AGREEMENT




---



##### 



Schedule 6.09  Existing Restrictions
 6.09 - 1
    
    CREDIT AGREEMENT




---



##### 



Exhibit A  Assignment and Assumption
 Assignment and Assumption [ Insert name of Assignor ] Assignor [ Insert name of Assignee ] Assignee Credit Agreement
 Assigned Interest
 1.
    
    Assignor:2.
    
    Assignee:[and is an Affiliate/Approved Fund of [identify Lender]1]3.
    
    Borrowers:4.
    
    Administrative Agent:
    
    
    , as the administrative agent under the Credit Agreement5.
    
    Credit Agreement:
    

    [The [amount]Credit Agreement dated as of  among [name of Borrower(s)], the Lenders
parties thereto, [name of Administrative Agent], as Administrative Agent, and the other agents
parties thereto]
 
 1

    Select as applicable. A - 1
    
    CREDIT AGREEMENT




---



##### 



Aggregate Amount of
    
    Amount ofCommitment/Loans for
    
    Commitment/Loans
    
    Percentage Assigned ofFacility Assigned
    
    all Lenders
    
    Assigned
    
    Commitment/Loans2Revolving Commitment
    
    $
    
    
    
    $
    
    
    
    
    %
 [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL
BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]
  ASSIGNOR[NAME OF ASSIGNOR]By:Name: lTitle:   l[NAME OF ASSIGNEE]By:Name: lTitle:   l
 
 2

    Set forth, to at least 9 decimals, as a
percentage of the Commitment/Loans of all Lenders thereunder. A - 2
    
    CREDIT AGREEMENT




---



##### 



[Consented to and] Accepted:
 [NAME OF ADMINISTRATIVE AGENT]
 By:Name: lTitle:   l
 [Consented to:] 3
 [NAME OF RELEVANT PARTY]
 By:Name: lTitle:   l
 
 3

    To be added only if the consent of the
Borrower and/or other parties (e.g. Swingline Lender, Issuing Bank) is required
by the terms of the Credit Agreement. A - 3
    
    CREDIT AGREEMENT




---



##### 



Representations and Warranties
 Assignor
 Assignee [if assignment is prior to an
Event of Default,]
 Payments
 General Provisions
 CREDIT AGREEMENT




---



##### 



A - 2
    
    CREDIT AGREEMENT




---



##### 



Exhibit B  Opinion of Counsel for the Borrower
 File No.: 36897-269
  JP Morgan Chase Bank, N.A.,
    
    McMillan Binch Mendelsohn LLPas Administrative Agent
    
    Barristers & Solicitors200 Bay Street
    
    BCE Place, Suite 4400Royal Bank Plaza, Suite 1800
    
    Bay Wellington TowerToronto, Ontario M5J 2J2
    
    Toronto, Ontario M5J 2T3The Lenders under the Credit Agreement (as definedbelow)
  RE : Credit Agreement in favour of Ainsworth Lumber Co. Ltd.
 A.  SCOPE OF OPINION
 Introduction
 Ainsworth Lumber Ainsworth LP BC Loan Parties Loan Parties Credit Agreement Administrative Agent Lenders
 Examination of Documents
  (a)
    
    the Credit Agreement;(b)
    
    each of the Canadian security agreements (collectively the Canadian Security
Documents) made by each of the Loan Parties with the exception of Ainsworth
 B - 1
    
    CREDIT AGREEMENT




---



##### 



Engineered (USA), LLC (Ainsworth LLC) and Ainsworth Corp. (collectively the U.S.
Loan Parties) in favour of the Administrative Agent dated as December 14, 2005;(c)
    
    that certain $100,000,000 Canadian Revolving Note made by Ainsworth LP in
favour of GE Canada Finance Holding Company dated December 14, 2005;(d)
    
    each of the $100,000,000 U.S. Revolving Notes made by the U.S. Loan Parties in
favour of General Electric Capital Corporation dated December 14, 2005; and(e)
    
    the fee letter executed by Ainsworth Lumber in favour of the Agent,
 Documents
  B.
    
    ASSUMPTIONS AND RELIANCE
  (a)
    
    the legal capacity of all individuals, the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity to
authentic original documents of all documents submitted to us as photostatic,
certified, conformed, notarial or facsimile copies thereof;(b)
    
    the due authorization, execution and delivery of the Documents by each of the
parties thereto other than the Loan Parties;(c)
    
    the accuracy and completeness of all corporate minutes, resolutions and records
which we have seen in the minute books of the B.C. Loan Parties;(d)
    
    that all information provided to us by federal and provincial government
agencies and departments were correct as at the applicable currency dates and that such
information remains current as of the date hereof; and(e)
    
    this opinion is given based only on the facts existing and laws in place on the
date hereof and in this regard we have relied upon Officers Certificates of each of
the Loan Parties, copies of which are attached, as of the date hereof with respect to
the accuracy of the factual matters contained therein. While we have not made any
independent investigations in this regard, nothing has come to our attention during our
participation with respect to the Documents which leads us to believe that such
certificate is incorrect;(f)
    
    as used herein, the phrase to our knowledge means the conscious awareness of
facts or other information by Douglas A. Side, Andrea J. Wales or Jim Alam. The
foregoing persons are the lawyers of our firm who have acted in connection with the
above referenced transaction; and
 B - 2
    
    CREDIT AGREEMENT




---



##### 



(g)
    
    insofar as the opinions expressed in paragraph 10 are concerned, we have
assumed in respect of the Loan Parties that are not BC Loan Parties (the Foreign Loan
Parties):
 (i)
    
    that each of the Foreign Loan Parties has been duly
incorporated and validly exists under the laws of the jurisdiction of its
incorporation;(ii)
    
    that each of the Foreign Loan Parties has all requisite
corporate power and capacity, and that all necessary corporate acts and
proceedings have been taken, to authorize the execution, delivery and
performance by the Foreign Loan Parties of each of the Documents to which it is
a party and the consummation of the transactions contemplated thereby;(iii)
    
    the execution and delivery by each of the Foreign Loan Parties
of each of the Documents to which it is a party and the consummation of the
transactions contemplated in such Documents do not breach and will not result
in a default under its constating documents;(iv)
    
    that all requirements of any applicable foreign law in respect
of any of the foregoing and in respect of the execution and delivery of the
Documents to which any of the Foreign Loan Parties is a party have been
complied with; and(v)
    
    that no foreign laws are contravened by the execution, delivery
and performance by any of the Foreign Loan Parties of the Documents to which it
is a party or the consummation of the transactions contemplated thereby; and
 (h)
    
    where used herein, the terms foreign laws and foreign law shall include,
without limitation, all laws, statutes, rules or regulations having the force of law
applicable in those jurisdictions to which each of the Loan Parties is subject (other
than BC Laws (as defined herein)).
 C.
    
    OPINIONS
  Credit Parties
 1.
    
    Ainsworth Lumber is a corporation amalgamated,and validly
existing under the laws of the province of British Columbia.2.
    
    Ainsworth Lumber has the corporate power and capacity to (i)
own its real and personal property and assets and to carry on its business as
presently conducted; (ii) borrow money as contemplated by the Credit Agreement;
(iii) mortgage, charge, assign, hypothecate, pledge, transfer and otherwise
grant a security interest in its assets and the assets of Ainsworth LP in
accordance with and on the terms of the Documents to which it is a party; and
(iv) execute, deliver and perform its obligations under each of the Documents
to which it is a party, on its own behalf, and as general partner on behalf of
Ainsworth LP.
 B - 3
    
    CREDIT AGREEMENT




---



##### 



3.
    
    All necessary corporate actions and proceedings have been taken
by Ainsworth Lumber to authorize the execution and delivery of and performance
by Ainsworth Lumber of each of the Documents to which it is a party, on its own
behalf, and as general partner on behalf of Ainsworth LP, and the consummation
of the transactions contemplated thereby.4.
    
    Ainsworth LP is a limited partnership existing under the laws
of the Province of British Columbia.5.
    
    All necessary action has been taken in accordance with the
provisions of the Ainsworth Engineered Canada Limited Partnership Agreement
dated · and the laws of the Province of British Columbia to authorize the
execution, delivery and performance by Ainsworth Lumber, in its capacity as
general partner for and on behalf of Ainsworth LP, of each of the Documents to
which Ainsworth LP is a party.6.
    
    Each of the Loan Parties has duly executed and delivered each
of the Documents to which it is a party including, in the case of Ainsworth
Lumber, on its own behalf, and as general partner for and on behalf of
Ainsworth LP.
 Non-Contravention and No Breach Opinion
 7.
    
    The execution and delivery by each of the BC Loan Parties of
each of the Documents to which it is a party including, in the case of
Ainsworth Lumber, on its own behalf, and as general partner on behalf of
Ainsworth LP, and the consummation of the transactions contemplated in such
Documents do not breach and will not result in a default under its constating
documents.8.
    
    The execution and delivery by each of the Loan Parties of each
of the Documents to which it is a party including, in the case of Ainsworth
Lumber, on its own behalf, and as general partner on behalf of Ainsworth LP,
and the consummation of the transactions contemplated in such Documents do not
breach and will not result in a default under any law, statute, rule or
regulation having the force of law applicable in the Province of British
Columbia, or to our knowledge, any judgment, order or decree of any court,
agency, tribunal, arbitrator or other authority to which each of the Loan
Parties is subject.9.
    
    The execution and delivery of, and the performance by each of
the Loan Parties of, its obligations under the Documents to which it is a party
including, in the case of Ainsworth Lumber, on its own behalf, and as general
partner on behalf of Ainsworth LP, do not and will not contravene, to the best
of our knowledge: (i) any term, provision or condition of any indenture or
agreement listed in Schedule 3.13 of the Credit Agreement; or (ii) result in
the creation of any security interest, hypothec, assignment, charge or other
lien or encumbrance on any of its properties other than in favour of the
Administrative Agent, for the benefit of the Administrative Agent and the
Lenders.
 Enforceability Opinion
 10.
    
    Each of the Documents constitutes a legal, valid and binding
obligation of each of the Loan Parties party thereto including, in the case of
Ainsworth Lumber, on
 B - 4
    
    CREDIT AGREEMENT




---



##### 



Creation of Security Interests
 11.
    
    Each of the Canadian Security Documents to which each of the
Loan Parties is a party thereto creates a valid security interest in favour of
the Administrative Agent on behalf of itself and the Lenders in the collateral
described therein in which each of the Loan Parties now has rights, and is
sufficient to create a valid security interest in favour of the Administrative
Agent on behalf of itself and the Lenders in such collateral charged therein in
which the Loan Parties hereafter acquire rights when those rights are acquired
by such Loan Parties, in each case, to secure payment and performance of the
obligations described therein as being secured thereby.
 Registration and Perfection of Security Interests
 12.
    
    Registration has been made in all public offices provided for
under the laws of British Columbia or the federal laws of Canada applicable
therein where such registration is necessary or desirable to preserve, protect
or perfect the security interests created by the Canadian Security Documents
to which the Loan Parties are a party in the collateral described therein in
favour of the Administrative Agent on behalf of itself and the Lenders. Except
such filings and registrations in respect of the Canadian Security Documents to
which the Loan Parties are a party as have been made, no action is, and no
authorizations, consents, approvals, licences or permits of, further or other
filings with or notice to or registrations with any local, provincial or
federal, governmental or regulatory authority or agency, regulatory body,
court, tribunal or other similar entity are (a) required in connection with the
execution, delivery and performance by the Loan Parties of the Documents to
which each of them is a party, or (b) required or desirable to preserve,
protect or perfect the validity, enforceability or priority, as the case may
be, of any of the security interests created by such Documents in favour of the
Administrative Agent on behalf of itself and the Lenders.13.
    
    No taxes, fees or other charges are payable in connection with
the execution or delivery of the Documents or the recordation or filing of the
Financing Statements relating to the Canadian Security Documents to which the
BC Loan Parties are a party, other than nominal recording fees payable in
respect of the filing of such Financing Statements pursuant to the PPSA (as
hereinafter defined).
 D.
    
    RESERVATIONS AND QUALIFICATIONS
  (a)
    
    We are members of The Law Society of British Columbia and are neither admitted
to practice in nor expert on the laws of any other jurisdiction. These opinions are
rendered solely with respect to the laws of the Province of British Columbia and the
federal laws of Canada applicable therein as of the date of this opinion (collectively,
the BC Laws);
 B - 5
    
    CREDIT AGREEMENT




---



##### 



(b)
    
    The validity, enforceability and binding nature of the Documents may be limited
by the application of bankruptcy, insolvency, liquidation, reorganization, moratorium
and other laws of general application relating to or affecting the right, powers,
privileges, remedies and/or interests of creditors generally;(c)
    
    The enforcement of the Documents is subject to and may be limited by general
principles of equity;(d)
    
    To the extent that any of the assets secured under the Canadian Security
Documents are or may constitute fixtures as defined in the Personal Property
Security Act (British Columbia) (the PPSA), the Lenders security in those
fixtures may be subordinate to the interest of a person who acquires an interest in the
real property to which those fixtures are affixed before registration by the
Administrative Agent and Lenders of a fixtures notice pursuant to the PPSA;(e)
    
    The Indentures (as defined in the Credit Agreement) are governed by the laws of
the State of New York and certain of the agreements listed in Schedule 3.13 of the
Credit Agreement are also governed by foreign law. Insofar as the opinions expressed
in paragraph 9 are concerned, we have construed the Indentures (as defined in the
Credit Agreement) and such agreements in accordance with their ordinary and grammatical
meaning and have assumed that the provisions of such Indentures (as defined in the
Credit Agreement) and such agreements would be construed under the foreign laws in the
same manner as they would be construed under the laws of the Province of British
Columbia if each of the Indentures (as defined in the Credit Agreement) and the
agreements were governed by the laws of the Province of British Columbia;(f)
    
    We express no opinion with respect to the laws of any other jurisdiction to the
extent that those laws may govern the validity, effect of perfection or non-perfection
or enforcement of the security interest created by the Canadian Security Documents as a
result of the application of the conflict of laws rules of the Province of British
Columbia, including, without limitation, the relevant provisions of the PPSA;(g)
    
    We express no opinion as to the availability of specific performance or
injunctive or other equitable relief or remedy in respect of any of the obligations as
set out in the Documents;(h)
    
    Claims may become barred under the laws relating to the limitation of actions;(i)
    
    We express no opinion as to whether value has been given in order to perfect a
secured partys security interests pursuant to the Canadian Security Documents;(j)
    
    To the extent that any of the assets secured under the Canadian Security
Documents are or may constitute serial number goods as defined in the PPSA, the failure
to register by serial number may result in the Administrative Agent and Lenders not
having priority over certain third parties in relation to such assets. As no
registration by serial number has been effected in respect of such assets, this opinion
is qualified to the extent that further serial number registrations may be necessary or
desirable;(k)
    
    We express no opinion with respect to:
 B - 6
    
    CREDIT AGREEMENT




---



##### 



(i)
    
    the ownership of or title to any property, right, or interest
owned or held or purported to be owned or held by the parties to the Documents
including, but not limited to, the secured collateral;(ii)
    
    the existence or absence of any liens, claims under any trust
or deemed trust, encumbrances, registrations or security interests other than
as expressed in paragraph 9 above; and(iii)
    
    the priority or ranking of the Administrative Agents, or
Lenders, rights under the Documents;
 (l)
    
    We express no opinion with respect to the creation or perfection of any
security interest in any collateral to which the PPSA does not apply, including,
without limitation, any claim in or under any policy of insurance or contract of
annuity];(m)
    
    We express no opinion as to whether a security interest may be created in
property consisting of trade marks, trade names, copyrights, patents, industrial
designs or other intellectual property (collectively the Special Property) to the
extent that the terms of the Special Property or any applicable law prohibits its
assignment or requires, as a condition of its assignability, a consent, approval or
other authorization or registration which has not been made or given nor do we express
an opinion as to whether the Lenders security interest in the trade-marks referred to
in the collateral description would be improved by filing the Canadian Security
Documents or notice of the Lenders claim thereunder in accordance with the
Trade-Marks Act (Canada);(n)
    
    The security interest in leases and other agreements charged by the Canadian
Security Documents may not be enforceable against other parties to such leases and
agreements to the extent that such leases or other agreements prohibit the Loan Partie
from granting a security therein and such other parties have not otherwise consented to
such grant;(o)
    
    We express no opinion as to any security interest created by the Canadian
Security Documents with respect to any proceeds of property of the Loan Parties that
are not identifiable or traceable;(p)
    
    We express no opinion as to the effect of those provisions of the Documents
which purport to allow the severance of invalid, illegal or unenforceable provisions or
restricting their effect;(q)
    
    A court, or any applicable statute legislation, may impose additional
requirements or time periods with respect to the rights of a creditor to receive
payment or amounts stated to be payable on demand;(r)
    
    The determination of the rate of interest payable on judgment debts is in the
discretion of the court or competent authority;(s)
    
    A court of the Province of British Columbia might not give effect to a claim
for indemnity or a contribution under the Documents to the extent they are found to be
contrary to public policy, as that term is understood under the laws of the Province of
British Columbia;
 B - 7
    
    CREDIT AGREEMENT




---



##### 



(t)
    
    Pursuant to the Currency Act(Canada), a judgment by a court in any province in
Canada may be awarded in Canadian currency only;(u)
    
    If the collateral charged by the Documents now or hereafter includes an account
or chattel paper (as defined in the PPSA), the security interest therein is subject to
Section 41 of the PPSA, including, inter alia, the giving of proper notice of the
security interest to account debtors thereunder;(v)
    
    To the extent that any one or more of the Loan Parties now or at any time in
the future becomes a creditor of a debt of the Crown in Right of Canada, the charges
created by the Documents with respect to such debt or other rights of action (to the
extent same may be hypothecated or is assignable) may not be opposable to the Crown
unless the provisions of the Financial Administration Act(Canada) are complied with;
 1.
    
    A financing statement registered under the PPSA must be renewed
before the expiry of the registration period set out thereon by registration of
a financing change statement in the prescribed form in order for the security
interest to continue to be perfected and we shall not be responsible for filing
any renewals of the registration(s) made in favour of the Administrative Agent
on behalf of itself and the Lenders and we assume no responsibility for any
such renewals; and2.
    
    We express no opinion as to the legality, validity, binding
nature or enforceability of any provision of the Documents which provide for a
higher rate of interest payable after default.
   B - 8
    
    CREDIT AGREEMENT




---



##### 



Exhibit C  Borrowing Base Certificate
 (CHASE LOGO)



    
    BORROWING BASE REPORTf(x)Rate0.86015Rpt #
    
    
    
    1Obligor Number: TBD

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    DatePeriod   Covered:Loan Number: TBD
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    _____to _____COLLATERAL CATEGORY
    
    
    Ainsworth
Corp.
A/R US$
    

    
    Ainsworth
Engineered Canada
LP A/R CDN$
    
    
    Total CDN$Description1
    
    Beginning Balance ( Previous report  Line 8)2
    
    Additions to Collateral (Gross Sales or Purchases)3
    
    Other Additions (Add back any non-A/R cash in
line 3)4
    
    Deductions to Collateral (Cash Received)5
    
    Deductions to Collateral (Discounts, other)6
    
    Deductions to Collateral (Credit Memos, all)7
    
    Other non-cashcredits to A/R8
    
    Total Ending Collateral Balance
    
    
    
    0.00
    
    
    
    
    0.009
    
    Less Ineligible  60 Days Past Due Date10
    
    Less Ineligible  Credits in Prior11
    
    Less Ineligible  Cross-age ( 50%)12
    
    Less Ineligible  Contra13
    
    Less Ineligible  Foreign Not Covered By L/C14
    
    Less Ineligible  Intercompany/Affiliate15
    
    Less Ineligible  Employee16
    
    Less Ineligible  COD Account/Cash Sales17
    
    Less Ineligible  Interex18
    
    Less Ineligible  Exco19
    
    Less Ineligible  Wood Chips20
    
    Less Ineligible  Other (attach schedule)21
    
    Total Ineligibles -Accounts Receivable
    
    
    
    0.00
    
    
    
    
    0.0022
    
    Exchange Rate (US to Canadian) @ .86015
    
    
    
    0.8623
    
    Total Eligible -Accounts Receivable
    
    
    
    0.00
    
    
    
    
    0.00
    
    
    
    
    0.0024
    
    Advance Rate Percentage
    
    
    
    85
    %
    
    
    
    85
    %
    
    
    
    85
    %25
    
    Net Available -Accounts Receivable
    
    
    
    0.00
    
    
    
    
    0.00
    
    
    
    
    0.00
 C - 1
    
    CREDIT AGREEMENT




---



##### 



(CHASE LOGO)
    
    BORROWING BASE REPORTRpt #
    
    
    
    1Obligor Number: TBD
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    DatePeriod Covered:Loan Number: TBD
    
    
    
    
    
    
    


    
    


    
    
    
    
    
    
    
    ___to ___Ainsworth
    
    
    AinsworthAinsworth
    
    
    Engineered
    
    
    EngineeredCorp.
    
    
    (USA) LLC
    
    
    Canada LP
    
    
    TotalCOLLATERAL CATEGORY
    
    
    Inv. US$
    
    
    Inv. US$
    
    
    Inv. CDN$
    
    
    CDN$Description26
    
    
    Total Ending Collateral Balance
    
    
    
    0.00
    
    
    
    
    0.00
    
    
    
    
    0.0027
    
    
    Less Ineligible   Spare Parts28
    
    
    Less Ineligible   Packaging/Supplies29
    
    
    Less Ineligible  WIP30
    
    
    Less Ineligible   Inventory Slow-moving/Obsolete31
    
    
    Less Ineligible  Consigned Out32
    
    
    Less Ineligible  Inventory @ High Level Location33
    
    
    Less Ineligible  Other (attach schedule)35
    
    
    Total Ineligibles Inventory
    
    
    
    0.00
    
    
    
    
    0.00
    
    
    
    
    0.0035
    
    
    Exchange Rate (US to Canadian) @ .86015
    
    
    
    0.86
    
    
    
    
    0.8636
    
    
    Total Eligible Inventory
    
    
    
    0.00
    
    
    
    
    0.00
    
    
    
    
    0.00
    
    
    
    
    0.0037
    
    
    Advance Rate Percentage
    
    
    
    65
    %
    
    
    
    65
    %
    
    
    
    65
    %38
    
    
    Net Available  Inventory
    
    
    
    0.00
    
    
    
    
    0.00
    
    
    
    
    0.00
    
    
    
    
    0.0039
    
    
    Inventory Cap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75,000,000.0040
    
    
    Total Available  Inventory
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
 C - 2
    
    CREDIT AGREEMENT




---



##### 



(CHASE LOGO)
    
    BORROWING BASE REPORTRpt #
    
    
    
    1Obligor Number: TBD
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    DatePeriod Covered:Loan Number: TBD
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ___ to ___COLLATERAL CATEGORY
    
    
    
    Ainsworth
Corp.
Stores US$
    
    
    
    
    Ainsworth
Engineered
(USA) LLC
Stores US$
    
    
    
    Ainsworth
Engineered
Canada LP
Stores CDN$
    
    
    Total CDN$Description41
    
    
    Total Ending Collateral Balance
    
    
    
    0.00
    
    
    
    
    0.00
    
    
    
    
    0.0042
    
    
    Exchange Rate (US to Canadian) @ .86015
    
    
    
    0.86
    
    
    
    
    0.8643
    
    
    Total Eligible Stores
    
    
    
    0.00
    
    
    
    
    0.00
    
    
    
    
    0.00
    
    
    
    
    0.0044
    
    
    Advance Rate Percentage
    
    
    
    15
    %
    
    
    
    15
    %
    
    
    
    15
    %45
    
    
    Net Available  Stores
    
    
    
    0.00
    
    
    
    
    0.00
    
    
    
    
    0.00
    
    
    
    
    0.0046
    
    
    Stores Cap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,500,000.0047
    
    
    Total Available  Stores
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.0048
    
    
    Reserve  Payroll Tax Reserve49
    
    
    Total Borrowing Base Value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
 C - 3
    
    CREDIT AGREEMENT




---



##### 



50
    
    
    CAPS / Loan Limits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000,000.00
    
    
    
    Total CAPS/ Loan Line
    
    
    
    100,000,000.0051
    
    
    Maximum Borrowing Limit (Lesser of 49. or 50.)*
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    
    
    
    Total Available
    
    
    
    0.00LOAN STATUS52
    
    
    Previous Loan Balance (Previous Report Line 52)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.0053
    
    
    Less: A. Net Collections (Same as line 4)
    
    
    
    0.00
    
    
    
    
    
    
    
    
    
    0.00
    
    
    
    
    0.00B. Adjustments / Other ___54
    
    
    Add: A. Request for FundsB. Adjustments / Other ___55
    
    
    New Loan Balance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00
    
    
    
    Total New
Loan Balance:
    
    
    
    0.0056
    
    
    Letter of Credit/Bankers Acceptance Outstanding57
    
    
    Availability Not Borrowed (Line 51 less 55 & 56)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.0058
    
    
    Term Loan59
    
    
    OVERALL EXPOSURE (lines 55, 56 & 58)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.00Pursuant to, and in accordance with, the terms and
provisions of that certain Loan and Security
Agreement (Agreement), between JPM Chase
(Secured Party) and___(Borrower),
Borrower is executing and delivering to
Secured Party this
Collateral Report accompanied by
supporting data
(collectively referred to as (Report).Borrower warrants and represents to Secured
Party that this Report is true, correct,
and based on information
contained in Borrowers own financial
accounting records. Borrower, by the
execution of this Report, hereby
ratifies, confirms and affirms all
of the terms, conditions and provisions
of the Agreement,
and further certifies
on this ___day of ___,
___, that the
Borrower is in compliance with said
Agreement.BORROWER NAME:
    
    
    
    
    
    
    
    
    
    
    AUTHORIZED SIGNATURE:
 C - 4
    
    CREDIT AGREEMENT




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##### 



Exhibit D  Compliance Certificate
 To:
    
    The Lenders parties to theCredit Agreement Described Below
 Agreement
  
 [for quarterly or monthly financial statements add:
  Article IV
 Schedule I
 Schedule II
   
 D - 1
    
    CREDIT AGREEMENT




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##### 



[COMPANY NAME]By:Name: lTitle:   l
 D - 2
    
    CREDIT AGREEMENT




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D - 3
    
    CREDIT AGREEMENT




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D - 4
    
    CREDIT AGREEMENT




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##### 



D - 5
    
    CREDIT AGREEMENT




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##### 



Exhibit E  Joinder Agreement
 Agreement New
Subsidiary Administrative Agent Borrower Representative Credit Agreement
  A. The New Subsidiary hereby acknowledges, agrees and confirms that, by
its execution of this Agreement, the New Subsidiary will be deemed to
be a Loan Party under the Credit Agreement and a  Loan Guarantor  for
all purposes of the Credit Agreement and shall have all of the obligations
of a Loan Party and a Loan Guarantor thereunder as if it had executed the Credit Agreement.
The New Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by,
all of the terms, provisions and conditions contained in the Credit Agreement,
including without limitation (a) all of the representations and warranties of the
Loan Parties set forth in Article III of the Credit Agreement, and (b) all of
the covenants set forth in Articles V and VI of the Credit Agreement l
 B. If required, the New Subsidiary is, simultaneously with the execution of this
Agreement, executing and delivering such Collateral Documents (and such other documents and
instruments) as requested by the Administrative Agent in accordance with the Credit Agreement.
 C. The address of the New Subsidiary for purposes of Section 9.01 of the Credit Agreement is as follows:
 
 E - 1
    
    CREDIT AGREEMENT




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##### 



D. The New Subsidiary hereby waives acceptance by the Administrative Agent and the
Lenders of the guaranty by the New Subsidiary upon the execution of this Agreement by the New
Subsidiary.
 E. This Agreement may be executed in any number of counterparts, each of which when
so executed and delivered shall be an original, but all of which shall constitute one and the same
instrument.
 F. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE PROVINCE OF BRITISH
COLUMBIA.
  [NEW SUBSIDIARY]By:Name: lTitle:   lAcknowledged and accepted:JPMORGAN CHASE BANK,
N.A., Toronto Branch, as Administrative AgentBy:Name: lTitle:   l
 E - 2
    
    CREDIT AGREEMENT