Document:

Exhibit
4.3

 

EXECUTION VERSION

 

SERIES 2004-2 INDENTURE SUPPLEMENT

 

to MASTER INDENTURE

 

 

between

 

SSCE FUNDING, LLC,

as Issuer,

 

and

 

DEUTSCHE
BANK TRUST COMPANY AMERICAS,

as Indenture Trustee

on behalf of the Series 2004-2 Noteholders

 

DATED AS OF NOVEMBER 23, 2004

 

SSCE FUNDING, LLC

VARIABLE FUNDING NOTE, SERIES 2004-2

 

 

TABLE OF
CONTENTS

 

	
  ARTICLE I

  	
  DEFINITIONS;
  INCORPORATION OF TERMS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SECTION 1.1

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 1.2

  	
  Incorporation of Terms

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  DESIGNATION;
  AUTHENTICATION AND DELIVERY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.1

  	
  Designation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.2

  	
  Authentication and Delivery

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  CONDITIONS TO
  ISSUANCE; USE OF PROCEEDS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SECTION 3.1

  	
  Conditions to Initial
  Issuance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 3.2

  	
  Use of Proceeds

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 3.3

  	
  Initial
  Issuance; Procedure for Increasing the VFN Collateral Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 3.4

  	
  Procedure
  for Decreasing the VFN Collateral Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  PAYMENTS AND ALLOCATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SECTION 4.1

  	
  Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 4.2

  	
  Series
  Accounts; Series 2004-2 Distribution Account

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 4.3

  	
  Daily
  Calculations and Series Allocations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 4.4

  	
  Daily
  Allocations of Series Collections

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 4.5

  	
  Withdrawals
  from the Excess Funding Account

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 4.6

  	
  Determination
  of Principal to be Distributed with respect to Series 2004-2

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 4.7

  	
  Available
  Overcollateralization

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 4.8

  	
  Write-Offs and Recoveries

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 4.9

  	
  Certain
  Dilution in a Series 2004-2 Amortization Period

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  DISTRIBUTIONS AND REPORTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SECTION 5.1

  	
  Distributions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 5.2

  	
  Daily
  Reports, Monthly Reports and Other Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 5.3

  	
  Annual Tax Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 5.4

  	
  Periodic Perfection
  Certificate

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  SERIES 2004-2 PAY-OUT
  EVENTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SECTION 6.1

  	
  Series 2004-2 Pay-Out
  Events

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 6.2

  	
  Early Amortization Period

  	
   

  
					

 

i

 

	
  ARTICLE VII

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SECTION 7.1

  	
  Amendments, Waivers, Etc

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 7.2

  	
  Indenture Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 7.3

  	
  Instructions in Writing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 7.4

  	
  Rule 144A

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 7.5

  	
  Restrictions on Transfer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 7.6

  	
  Survival of Agreements

  	
   

  
					

 

ii

 

EXHIBITS

 

	
  EXHIBIT
  A

  	
   

  	
  Form of Series 2004-2 Notes

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT
  B

  	
   

  	
  Form of Daily Report

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT
  C

  	
   

  	
  Form of Monthly Report

  	
   

  

 

iii

 

This SERIES 2004-2 INDENTURE SUPPLEMENT,
dated as of November 23, 2004 (as amended, restated, supplemented or
otherwise modified from time to time, this “Indenture Supplement”),
is made between SSCE FUNDING, LLC,
as Issuer, and DEUTSCHE BANK TRUST COMPANY AMERICAS, as Indenture Trustee on
behalf of the Series 2004-2 Noteholders.

 

PRELIMINARY STATEMENT

 

Pursuant to the Master
Indenture, dated as of November 23, 2004 (the “Indenture”), between Issuer and
Indenture Trustee, Issuer may from time to time direct Indenture Trustee to
issue and authenticate, on behalf of Issuer, one or more Series of Notes.  Certain terms applicable to a new Series,
including the Principal Terms thereof, are to be set forth in an Indenture
Supplement. This Indenture Supplement is an “Indenture Supplement” as that term
is defined in the Indenture.

 

ARTICLE I

DEFINITIONS; INCORPORATION OF TERMS

 

SECTION 1.1                          Definitions.

 

(a) Capitalized
terms used and not otherwise defined herein are used as defined in Annex A to
the Indenture. This Indenture Supplement shall be interpreted in accordance
with the conventions set forth in Section 1.2 of the Indenture.

 

(b) Each
reference in this Indenture Supplement to funds on deposit in the Collection
Account refers only to funds in the administrative sub-accounts of those
accounts that are allocated to Series 2004-2. Unless the context otherwise
requires, in this Indenture Supplement: (i) each reference to a “Daily Report”
or “Monthly Report” refers to a Daily Report or Monthly Report for Series
2004-2; (ii) each reference to the “Servicing Fee” refers to the Servicing Fee
allocable to Series 2004-2; and (iii) each reference to the Transaction
Documents shall be deemed to include a reference to the Purchase Agreement (as
defined below).

 

(c) Each
capitalized term defined herein relates only to Series 2004-2 and to no other
Series.  Whenever used in this Indenture
Supplement, the following words and phrases shall have the following meanings:

 

“Accrual
Period” means, with respect to Series 2004-2, the period from and
including a Payment Date to but excluding the succeeding Payment Date; provided that in the case of the initial Accrual Period, it
shall mean the period from and including the Closing Date to but excluding December 15,
2004.

 

“Additional
Amounts” is defined in the Purchase Agreement.

 

“Adjusted Carrying Cost Reserve” at any time of
determination, means the product of (a) the Carrying Cost Receivables Reserve
at such time and (b) a fraction, the numerator of which is

 

 

one (1.00), and
the denominator of which is the result of one (1.00) minus the VFN Applicable Reserve Ratio at such time.

 

“Agent”
means Société Générale,
in its capacity as agent for the Series 2004-2 Noteholders.

 

“Available
Overcollateralization” means, at any time, the amount then calculated
as such pursuant to Section 4.7.

 

“Average
Dilution Ratio” means, as at any Determination Date and continuing
until (but not including) the next Determination Date, the average of the
Dilution Ratios for the twelve (12) consecutive Settlement Periods ending
immediately prior to such Determination Date.

 

“B&H
Measurement Date” means, for any calendar year, a date, which shall
be selected by the Servicer, falling within the month of December during
such calendar year.

 

“B&H
Ratio” means, for any calendar year, a fraction (expressed as a
percentage), (a) the numerator of which is aggregate of the Unpaid Balances of
all Transferred Receivables which have been billed, but for which the delivery
of the goods or merchandise or the rendering of the services giving rise to
such Transferred Receivable has not been completed, as of the applicable
B&H Measurement Date and (b) the denominator of which is the Aggregate
Receivables Balance as of the applicable B&H Measurement Date.

 

“B&H
Reserve” means, at any date of determination, the product of (a) the
highest of the three most recently calculated B&H Ratios, times (b) 3.5, times (c) the
Aggregate Receivables Balance as of such date of determination.

 

“Carrying
Cost Receivables Reserve” means, on any Business Day in any
Settlement Period, the sum of:

 

(a) the
product of (i) the aggregate Outstanding Principal Balances of the Series
2004-2 Notes on such day, multiplied by (ii) the Carrying Cost Reserve Ratio; plus

 

(b) the
product of (i) the percentage equivalent of a fraction, the numerator of which
is the Outstanding Principal Balances of all Series 2004-2 Notes and the
denominator of which is the aggregate Outstanding Principal Balances of all
Notes of all Series on such day, multiplied by (ii) the aggregate Unpaid Balances of
Transferred Receivables on such day, multiplied by (iii) the Servicing
Reserve Ratio.

 

“Carrying
Cost Reserve Ratio” means, on any date of determination, the amount
as reflected in the most recent Monthly Report equal to (i) 1.5, multiplied by (ii) One-Month LIBOR plus
3.25%, multiplied
by (iii) a fraction, (x) the numerator of which is the product of
(A) 2.0 and (B) the Days Sales Outstanding and (y) the denominator of which is
360.

 

“Charged-Off
Amount” shall mean, with respect to any Settlement Period, the sum
of the amount of Transferred Receivables that were included in the Net Eligible
Receivables and that (i) became 121 to 150 days past due as of the last
Business Day of such Settlement Period or (ii)

 

2

 

became Defaulted
Receivables during such Settlement Period prior to becoming 121 days past due.

 

“Closing Date”
with respect to Series 2004-2, means November 23, 2004.

 

“Daily Report”
is defined in Section 5.2(a).

 

“Decrease”
means, collectively, each Mandatory Decrease and each Voluntary Decrease.

 

“Default Ratio”
means, as
provided in the most recent Monthly Report, a fraction (expressed as a percentage) having (a) a
numerator equal to the Charged-Off Amount for the Settlement
Period ending on the last day of the Settlement Period preceding the
Determination Date on which such Monthly Report was required to be delivered,
and (b) a denominator equal to the
initial aggregate amount payable pursuant to invoices giving
rise to Transferred Receivables
that were generated during the fifth Settlement Period
immediately preceding the Settlement Period referred to in clause (a) above.

 

“Default
Ratio Average” means, with respect to any Settlement Period, the
average of the Default Ratios applicable to the Settlement Period then ended
and the two immediately preceding Settlement Periods.

 

“Dilution
Horizon Period” means, for each Seller, 60 days; provided, however, such period may be adjusted on an annual
basis upon satisfaction of the Rating Agency Condition following the delivery
of a credit memo sampling provided by the Servicer to the Rating Agencies.

 

“Dilution Horizon
Ratio” means, as of any Determination Date and continuing until (but
not including) the next Determination Date, a fraction (expressed as a
percentage) having (a) a numerator equal to the aggregate Unpaid Balances of
Transferred Receivables originated by the Sellers during the Dilution Horizon Period preceding
the last day of the Settlement Period immediately prior to such earlier Determination
Date and (b) a denominator equal to the Net Eligible Receivables as of the
last day of the Settlement Period immediately prior to such earlier
Determination Date.

 

“Dilution Ratio”
means, as provided in the most recent Monthly Report, a fraction (expressed as
a percentage) having (a) a numerator equal to the aggregate amount of Dilutive
Credits occurring during the Settlement Period ending on the last day of the
Settlement Period preceding the Determination Date on which such Monthly Report
was required to be delivered, and (b) a denominator equal to the aggregate
amounts payable pursuant to invoices giving rise to Transferred Receivables
that were generated by the Sellers
during the second Settlement Period immediately preceding the Settlement Period
referred to in clause (a).

 

“Dilution Reserve
Ratio” means, as provided in the most recent Monthly Report, the
amount (expressed as a percentage) that is calculated for the Series 2004-2
Notes, as follows:

 

3

 

	
   

  	
  DRR

  	
  =

  	
  [(c
  * d) + [(e – d) * (e/d)]] * f

  
	
   

  	
   

  	
   

  	
   

  
	
  where:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DRR

  	
  =

  	
  Dilution
  Reserve Ratio;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  a

  	
  =

  	
  the
  product of “g”, multiplied by “h”;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  b

  	
  =

  	
  the
  product of (1-”g”), multiplied by “i”;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  c

  	
  =

  	
  the
  sum of “a” plus “b”;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  d

  	
  =

  	
  the
  Average Dilution Ratio as of the Determination Date on which such Monthly
  Report was required to be delivered;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  e

  	
  =

  	
  the
  highest Dilution Ratio over the past twelve Settlement Periods immediately
  preceding the Determination Date referred to in “d”;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  f

  	
  =

  	
  the
  Dilution Horizon Ratio as of the Determination Date referred to in “d”;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  g

  	
  =

  	
  the
  fraction (expressed as a percentage), (x) the numerator of which is aggregate
  of the Unpaid Balances of all Transferred Receivables originated by the CBM division
  of Smurfit-Stone calculated as of the Determination Date referred to in “d”,
  and (y) the denominator of which is the Aggregate Receivables Balance
  calculated as of the Determination Date referred to in “d”;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  h

  	
  =

  	
  with
  respect to the Series 2004-2 Notes, 2.75; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  i

  	
  =

  	
  with
  respect to the Series 2004-2 Notes, 2.25.

  

 

“Distribution
Shortfall” means, on any Business Day:

 

(a) with
respect to Series 2004-2, that the funds available for allocation to the Series
Accounts for Series 2004-2 and the Excess Funding Account on such Business Day
pursuant to Section 4.4
are less than the amounts, if any, required to be deposited in such accounts on
such Business Day; and

 

(b) with
respect to any Series, that the funds available for allocation to a Series
Collection Subaccount on such Business Day pursuant to the Indenture Supplement
for such Series are less than the amounts, if any, required to be deposited in
such accounts on such Business Day pursuant to such Indenture Supplement.

 

“Early Amortization
Period” means the period beginning on the date specified therefor in
Section 6.2, and ending on the
earlier of (i) the day on which the Series 2004-2 Collateral Amount has been
reduced to zero and (ii) ending on the date after the date on which all amounts

 

4

 

owing to the Agent
and the Series 2004-2 Noteholders by the Issuer under the Indenture, this
Indenture Supplement and the Purchase Agreement have been reduced to zero.

 

“Excess
Program Costs” has the meaning as assigned to such term within the
definition of “Program Costs”.

 

“Group 1” means a group of Series which
will include Series 2004-2 and each other Series specified in the related
Indenture Supplement to be included in Group 1.

 

“Increase”
is defined in Section 3.3(a).

 

“Initial Note
Principal Balance” means the initial outstanding principal amount of
the Series 2004-2 Notes, which is $60,000,000.

 

“Institutional
Accredited Investor” is defined in Section 7.5(a)(iii).

 

“Issuer Indemnified
Losses” is defined in Section 7.1.

 

“Issuer Indemnified
Party” is defined in Section 7.1.

 

“Legal Final Maturity”
means the Payment Date in November, 2010.

 

“London
Business Day” means any day on which dealings in deposits in United
States dollars are transacted in the London interbank market.

 

“Loss Reserve Ratio”
means, as provided in the most recent Monthly Report, the amount (expressed as
a percentage) that is calculated for the Series 2004-2 Notes, as follows:

 

	
   

  	
  LRR

  	
  =

  	
  d *
  b * (a/c) * PTM

  
	
   

  	
   

  	
   

  	
   

  
	
  Where:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  LRR

  	
  =

  	
  Loss
  Reserve Ratio;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  a

  	
  =

  	
  the
  aggregate Unpaid Balances of Transferred Receivables originated by the
  Sellers during the three Settlement Periods immediately preceding the
  Determination Date on which such Monthly Report was required to be delivered;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  b

  	
  =

  	
  the
  highest Default Ratio Average that occurred during the period of twelve
  consecutive Settlement Periods ending prior to the Determination Date
  referred to in “a”;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  c

  	
  =

  	
  the
  Net Eligible Receivables as of the last day of the Settlement Period
  immediately preceding the Determination Date referred to in “a”;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  d

  	
  =

  	
  with
  respect to the Series 2004-2 Notes, 2.25; and

  

 

5

 

	
   

  	
  PTM

  	
  =

  	
  the
  Payment Term Multiplier as of the most recent Determination Date.

  

 

“Mandatory Decrease”
is defined in Section 3.4(a).

 

“Maximum
Principal Amount” equals $125,000,000, as such amount may be reduced
pursuant to and in accordance with the terms of the Purchase Agreement.

 

“Minimum
Reserve Ratio” means, as provided in the most recent Monthly Report,
the amount (expressed as a percentage) that is calculated for the Series 2004-2
Notes, as follows:

 

	
   

  	
  MRR

  	
  =

  	
  (the
  greater of (a * b) and c), plus d

  
	
   

  	
   

  	
   

  	
   

  
	
  Where:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MRR

  	
  =

  	
  Minimum
  Reserve Ratio;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  a

  	
  =

  	
  the
  Average Dilution Ratio as of the Determination Date on which such Monthly
  Report was required to be delivered;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  b

  	
  =

  	
  the
  Dilution Horizon Ratio as of the Determination Date referred to in “a”;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  c

  	
  =

  	
  the
  quotient (expressed as a percentage) of (i) the sum of the aggregate Unpaid
  Balances of all Eligible Receivables for the Top 3 Obligors, divided by (ii) the Net Eligible Receivables as of the
  Determination Date referred to in “a” above; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  d

  	
  =

  	
  with
  respect to the Series 2004-2 Notes, 10.0%.

  

 

“Minimum Transferor Percentage” for Series
2004-2, means zero.

 

“Monthly Report”
is defined in Section 5.2(a).

 

“Net
Recoveries” means, with respect to any OC Measuring Period, an
amount equal to the result of (a) the amount of Recoveries received in that OC
Measuring Period, minus (b) the Write-Off Amount
for that OC Measuring Period; provided that
the resulting amount calculated pursuant to this definition shall not be less
than zero.

 

“Noteholder”
means a Noteholder (as defined in the Indenture) of a Series 2004-2 Note.

 

“Notice of
Increase” is defined in the Purchase Agreement.

 

“One-Month LIBOR”
means, for any Accrual Period, the rate per annum, determined by Indenture
Trustee and notified in writing by Indenture Trustee to Servicer, which is the
arithmetic mean (rounded to the nearest 1/100 of 1%) of the offered rates for
dollar deposits having a maturity of one month commencing on the first day of
such Accrual Period that appears on the Telerate British Bankers Assoc.
Interest Settlement Rates Page (defined below) at

 

6

 

approximately
11:00 a.m., London time on the second full London Business Day prior to such
date; provided,
however,
that if there shall at any time no longer exist a Telerate British Bankers Assoc.
Interest Settlement Rates Page, “One-Month LIBOR” shall be determined on the basis of the
rates at which deposits in United States dollars are offered by the Reference
Banks at approximately 11:00 a.m., London time, on that day to prime banks in
the London interbank market for a period of one-month.  The Indenture Trustee shall request the
principal London office of each of the Reference Banks to provide a quotation
of its rate.  If at least two (2) such
quotations are provided, the rate for that Accrual Period shall be the
arithmetic mean of the quotations.  If
fewer than two (2) quotations are provided as requested, the rate for that
Accrual Period will be the arithmetic mean of the rates quoted by major banks in
New York City, selected by the Servicer, at approximately 11:00 a.m., New York
City time, on that day for loans in United States dollars to leading European
banks for a period of one month.  As used
herein, “Telerate
British Bankers Assoc. Interest Settlement Rates Page” means the
display designated as Page 3750 on the Telerate System Incorporated Service (or
such other page as may replace such page on such service for the purpose of
displaying the rates at which dollar deposits are offered by leading banks in
the London interbank deposit market), as reported by Bloomberg Financial
Markets Commodities News (or by another source selected by Indenture Trustee
and notified by Indenture Trustee to Servicer).

 

“Outstanding Principal
Balance” means, on any date, with respect to the Series 2004-2 Notes,
the actual outstanding principal balance of the Series 2004-2 Notes, taking
into effect all Increases and Decreases and all other payments on account of
principal (but no other payments) with respect to the Series 2004-2 Notes made
on or prior to such date.

 

“Payment Date”
means the 15th day of each month (or if such day is not a Business
Day, the next succeeding Business Day), commencing December 15, 2004.

 

“Payment Term”
means with respect to any Receivable, the number of days between its invoice
date and its Due Date.

 

“Payment Term
Multiplier” means, with respect to each Determination Date, (a) 1.0,
if the Payment Term Variable is not more than 36, (b) 1.1., if the Payment Term
Variable is 37 to 39, (c) 1.17, if the Payment Term Variable is 40 to 45, (d)
1.22, if the Payment Term Variable is 46 to 50, (e) 1.28, if the Payment Term
Variable is 51 to 55, (f) 1.33, if the Payment Term Variable is 56 to 60, and
(g) 1.38, if the Payment Term Variable is 61 to 65; provided
however, that, if the Payment Term Variable exceeds 65, the Payment
Term Multiplier on such Determination Date shall be determined by calculating
the sum of (x) 1.38 and (y) 0.05, for each 5-day increment by which the Payment
Term Variable exceeds 65, it being understood that the same number shall apply
for all Payment Term Variables that fall within a five-day range.

 

“Payment Term
Variable” means, as calculated in each Monthly Report as of the most
recently ended Settlement Period, the weighted average of the Payment Terms of
all Transferred Receivables with an Unpaid Balance as of the last day of such
Settlement Period.

 

“Program
Costs” means, for any Business Day, the sum of (i) the product of
(A) all unpaid fees and expenses due and payable to counsel to, and independent
auditors of, the Issuer

 

7

 

(other than fees
and expenses payable on or in connection with the closing of the issuance of
any Series) on such Business Day and (B) a fraction, the numerator of which is
the Series 2004-2 Collateral Amount as of the end of the immediately preceding
Business Day and the denominator of which is the sum of the Collateral Amounts
for all Series as of the end of the immediately preceding Business Day, (ii)
all unpaid fees and expenses due and payable to the Rating Agencies rating the
Series 2004-2 Notes and (iii) the product of (A) all unpaid fees and expenses
(including reasonable attorneys’ fees and expenses) due and payable to the
Indenture Trustee and (B) a fraction, the numerator of which is the Series
2004-2 Collateral Amount as of the end of the immediately preceding Business
Day and the denominator of which is the sum of the Collateral Amounts for all
Series as of the end of the immediately preceding Business Day, provided that Program Costs shall not exceed $100,000 in the
aggregate in any calendar year (any amount of the foregoing expenses,
indemnities and fees in excess of $100,000 shall be referred to herein as “Excess Program Costs”).

 

“Purchase Agreement”
means the Variable Funding Note Purchase Agreement, dated November 23,
2004, among the Issuer, Smurfit-Stone, the Agent and the Purchaser, as the same
may be amended, restated, modified or otherwise supplemented from time to
time.  The Purchase Agreement is hereby
designated a “Transaction Document”.

 

“Purchaser”
means Barton Capital LLC, together with its successors and permitted assigns
pursuant to the terms of the Purchase Agreement.

 

“Qualified
Institutional Buyer” is defined in Section 7.5(c).

 

“Rating Agency”
or “Rating
Agencies” for Series 2004-2, means S&P and Moody’s.

 

“Reference
Banks” means four major banks in the London interbank market
selected by the Servicer.

 

“Regulation S”
is defined in Section 7.5(a)(ii).

 

“Required
Amount” means, as calculated on each Business Day during an Accrual
Period with respect to the next Payment Date, the sum of (i) the Series 2004-2
Monthly Interest to be distributed on the next Payment Date, (ii) the aggregate
amount of all previously accrued and unpaid Series 2004-2 Monthly Interest for
prior Payment Dates, (iii) the Servicing Fee for Series 2004-2 and (iv) all
accrued and unpaid Program Costs and Additional Amounts, in each case for such
Accrual Period determined as of such day.

 

“Required
Overcollateralization Amount” means,

 

(a)                                  on
any date of determination during the Revolving Period, an amount equal to the
sum of:

 

(i)                                     an
amount equal to the product of (x) the Series 2004-2 Adjusted Collateral Amount
on such day and (y) a fraction, the numerator of which is the VFN Applicable
Reserve Ratio and the denominator of which is one minus the VFN Applicable
Reserve Ratio; plus

 

8

 

(ii)                                  the
Adjusted Carrying Cost Reserve on such day; and

 

(b)
on any date of determination during the Series 2004-2 Amortization Period, an
amount equal to the Required Overcollateralization Amount on the Series 2004-2
Amortization Period Calculation Date.

 

“Required
Reserve Ratio” means, as provided in the most recent Monthly Report,
for the Series 2004-2 Notes, the sum of the Dilution Reserve Ratio and the Loss
Reserve Ratio for the Series 2004-2 Notes.

 

“Revolving Period”
means the period beginning on the Closing Date and ending on the day before the
first day of the Series 2004-2 Amortization Period.

 

“Rule 144A”
is defined in Section 7.5(a)(i).

 

“Scheduled Revolving
Period Termination Date” means September 14, 2009.

 

“Series
Accounts” with respect to Series 2004-2, is defined in Section 4.2.

 

“Series 2004-2”
is defined in Section 2.1.

 

“Series
2004-2 Adjusted Collateral Amount” means, as of any date of
determination, (i) the Series 2004-2 Collateral Amount on such date, minus (ii) the lesser of (x) the Series 2004-2 Collateral
Amount and (y) the sum of (A) the amount on deposit in the Series 2004-2
Principal Collection Sub-subaccount on such date, plus
(B) the Series 2004-2 Allocation Percentage of the amounts on deposit in the
Excess Funding Account on such date.

 

“Series
2004-2 Allocable Dilution” means, for any OC Measuring Period, the
product of (a) the aggregate amount of Dilution Payment Amounts required to be
made as a result of Dilutive Credits granted during such OC Measuring Period
and as to which no payment has been made by SRC pursuant to Section 2.3 of
the Transfer and Servicing Agreement and (b) the Series 2004-2 Loss Allocation
Percentage for that OC Measuring Period.

 

“Series 2004-2
Allocable Dilution Adjustments” means, for any OC Measuring Period,
the product of (a) the aggregate amount of payments pursuant to or in respect
of Section 2.3 of the Transfer and Servicing Agreement received during
that OC Measuring Period relating to Dilutive Credits that occurred prior to
that OC Measuring Period and (b) the Series 2004-2 Loss Allocation Percentage
for that OC Measuring Period.

 

“Series 2004-2
Allocable Recoveries” means, for any OC Measuring Period, the
product of (a) the Net Recoveries for that OC Measuring Period, and (b) the
Series 2004-2 Loss Allocation Percentage for that OC Measuring Period.

 

“Series 2004-2
Allocable Write-Off Amount” means, for any OC Measuring Period, the
product of (a) the Write-Off
Amount for that OC Measuring Period, and (b) the Series 2004-2 Loss Allocation
Percentage for that OC Measuring Period.

 

9

 

“Series
2004-2 Allocated Receivables Amount” means, as of any date of
determination, the product of (a) the Net Eligible Receivables and (b) the
percentage equivalent of a fraction, the numerator of which is the Series
2004-2 Target Receivables Amount and the denominator of which is the Aggregate
Target Receivables Amount on such day.

 

“Series 2004-2
Allocation Percentage” for Series 2004-2 means, (a) for any
Business Day during the Revolving Period, a fraction (expressed as a
percentage), (i) the numerator of which is the lesser of the Series 2004-2
Allocated Receivables Amount and the Series 2004-2 Target Receivables Amount as
of the end of the immediately preceding Business Day and (ii) the denominator
of which is the greater of (A) the Net Eligible Receivables as of the end of
the immediately preceding Business Day and (B) the sum of the numerators used
to calculate the Allocation Percentages for all Outstanding Series of Notes on
the Business Day for which such percentage is determined, and (b) during the
Series 2004-2 Amortization Period, the percentage equivalent of a fraction, the
numerator of which is the lesser of the Series 2004-2 Allocated Receivables
Amount and the Series 2004-2 Target Receivables Amount, as of the Series 2004-2
Amortization Period Calculation Date and the denominator of which is the
greater of (A) the Net Eligible Receivables as of the end of the immediately
preceding Business Day and (B) the sum of the numerators used to calculate the
Allocation Percentages for all Outstanding Series on the Business Day for which
such percentage is determined.

 

“Series 2004-2
Amortization Period” means the period (a) beginning on the earliest
of (i) the Scheduled Revolving Period Termination Date, (ii) the date, if any,
on which an Early Amortization Period commences and (iii) the date that occurs
60 days after the date that the Agent and the Indenture Trustee receive written
notice from the Issuer (or the Servicer on behalf of the Issuer) of its
election to end the Revolving Period and (b) ending on the date after the date
on which all amounts owing to the Agent, the Series 2004-2 Noteholders and the
Indenture Trustee by the Issuer under the Indenture, this Indenture Supplement
and the Purchase Agreement have been reduced to zero.

 

“Series 2004-2
Amortization Period Calculation Date” means the day before the first day of the Series 2004-2
Amortization Period.

 

“Series
2004-2 Available Funds” is defined in Section 4.4.

 

“Series 2004-2
Collateral Amount” means, at any time, the VFN Collateral Amount.

 

“Series 2004-2
Collateral Amount Write-Offs” means, as calculated in any Monthly
Report relating to a Settlement Period falling completely or partially in the
Series 2004-2 Amortization Period:

 

(a)                                  if
the Available Overcollateralization is greater than zero for the related OC
Measuring Period, zero; and

 

(b)                                 if
the Available Overcollateralization is less than or equal to zero for the
related OC Measuring Period (taking into account any reduction in the Available
Overcollateralization shown in such Monthly Report), the excess (if any) of (i)
the result of (A) the Series 2004-2 Allocable Write-Off Amount, plus (B) the Series 2004-2

 

10

 

Allocable
Dilution, minus (C) the Series 2004-2 Allocable
Recoveries, minus (D) the
Series 2004-2 Allocable Dilution Adjustments for the related OC Measuring
Period, over
(ii) the Available Overcollateralization for the immediately preceding OC
Measuring Period.

 

“Series
2004-2 Collection Subaccount” is defined in Section 4.2.

 

“Series 2004-2
Collections” is defined in Section 4.3.

 

“Series
2004-2 Excess Funding Account Deposit Amount” means, at any time,
the product of (a) a fraction, the numerator of which is the Series 2004-2
Collateral Amount as of the end of the immediately preceding Business Day, and
the denominator of which is the sum of the Collateral Amounts for all Series as
of the end of the immediately preceding Business Day, multiplied
by (b) the Excess Funding Account Deposit Amount, after giving
effect to any deposit to be made pursuant to Section 8.6 of the Indenture
on such date.

 

“Series 2004-2 Loss Allocation Percentage”
means, for any day in any OC Measuring Period, a fraction (expressed as a
percentage), (a) the numerator of which is the Series 2004-2 Collateral Amount
as of the last day of the preceding Settlement Period and (b) the denominator
of which is the greater of (i) the sum for all Series of Notes that are
Outstanding of the “Collateral Amount” as defined in the Indenture Supplements
for each such Series and (ii) the Net Eligible Receivables, in each case as of
the last day of the preceding Settlement Period.

 

“Series 2004-2 Monthly
Interest”
for any Accrual Period means the VFN Monthly Interest for such Settlement
Period.

 

“Series 2004-2 Monthly
Principal Amount”
for any Settlement Period means the VFN Monthly Principal for such Settlement
Period.

 

“Series 2004-2
Noteholder” means the Person in whose name a Series 2004-2 Note is
registered on the Note Register.

 

“Series
2004-2 Notes” is defined in Section 2.1.  Each Series 2004-2 Note shall be
substantially in the form of Exhibit A.

 

“Series
2004-2 Non-Principal Collection Sub-subaccount” is defined in Section 4.2.

 

“Series 2004-2 Pay-Out
Event” is defined in Section 6.1.

 

“Series
2004-2 Principal Collection Sub-subaccount” is defined in Section 4.2.

 

“Series
2004-2 Servicer Transfer Cost Allocation” means, for any Business
Day, the product of (a) a fraction, the numerator of which is the Series
2004-2Collateral Amount as of the end of the immediately preceding Business
Day, and the denominator of which is the sum of the Collateral Amounts for all
Series as of the end of the immediately preceding Business Day, multiplied by (b) the amount of Servicer Transfer Costs
payable from Collections pursuant to Section 7.1(b) of the Transfer and
Servicing Agreement.

 

11

 

“Series
2004-2 Target Receivables Amount” means, on any date of
determination, the sum of (i) the Series 2004-2 Adjusted Collateral Amount on
such day and (ii) the Required Overcollateralization Amount on such day.

 

“Series 2004-2
Weighted Average Note Rate” means, at any date of determination, the
sum of (a) the VFN Note Rate in effect with regard to the Outstanding Series
2004-2 Notes, as of the end of the Settlement Period immediately preceding the
most recent Determination Date, plus (b) an
amount equal to (i) the aggregate amount of fees (other than the Servicing Fee
and Program Costs) accrued with respect to the Series 2004-2 Notes during the
Settlement Period immediately preceding the most recent Determination Date, divided by (ii) the average daily Outstanding Principal
Balance of the Series 2004-2 Notes during such Settlement Period.

 

“Servicing Fee”
shall mean, for any Settlement Period, an amount equal to one-twelfth of the
product of (a) 1.00% and (b) the Series 2004-2 Collateral Amount as of the last
day of the Settlement Period preceding such Payment Date; provided,
however, that with respect to the first
Payment Date, the Servicing Fee shall be pro rated for the actual number of days
in the period beginning on the Closing Date and ending on the last day of the
initial Settlement Period.

 

“Servicing
Reserve Ratio” means an amount (expressed as a percentage), provided
in the most recent Monthly Report,  equal
to (i) the product of (A) 1.00%, (B) 2.00, and (C) the Days Sales Outstanding, divided by (ii) 360.

 

“SSCE Credit
Agreement” means that certain Credit Agreement, dated as of November 1,
2004, among Smurfit-Stone Container Corporation, Smurfit-Stone Container
Enterprises, Inc., Smurfit-Stone Container Canada, Inc., the lenders from time
to time party thereto, JPMorgan Chase Bank, Deutsche Bank Trust Company
Americas and Deutsche Bank AG, as amended, supplemented or otherwise modified
from time to time.

 

“SSCE Credit
Agreement Default Event” means thirty (30) days has elapsed
following the occurrence of an “Event of Default” (under and as defined in the
SSCE Credit Agreement) and such event continues (after giving effect to any
applicable cure period, if any, and any requirement of knowledge or notice
thereunder).

 

“Unmatured Series
Pay-Out Event” means an event or condition that, upon the giving of
notice or the passage of time, would become a Series Pay-Out Event.

 

“VFN Applicable
Reserve Ratio” means, during any Settlement Period, the greater of
(a) the Minimum Reserve Ratio applicable to the Series 2004-2 Notes and (b) the
Required Reserve Ratio applicable to the Series 2004-2 Notes, each as
calculated in the Monthly Report required to be delivered on the Determination
Date in the immediately preceding Settlement Period.

 

“VFN Collateral Amount”
means, at any time, an amount equal to (a) the Initial Note Principal Balance, plus
(b) the aggregate amount of all Increases, minus (c) the aggregate
amount of all distributions that have been made to Series 2004-2 Noteholders on
account of principal (including, without limitation, any Decreases), minus
(d) the aggregate amount of reductions to the VFN Collateral Amount made
pursuant to Section 4.8 on or prior to such
time, plus (d) reinstatements of any such reductions in clause (c) of Section 4.8 on
or prior to such time.

 

12

 

“VFN Monthly Interest” is defined in Section 4.1.

 

“VFN Monthly Principal” means, with respect
to any Payment Date, (a) if such Payment Date occurs during the Series 2004-2
Amortization Period, the amount necessary to reduce the Outstanding Principal
Balance of the Series 2004-2 Notes to zero and (b) at any other time,
zero.  At no time shall the VFN Monthly
Principal exceed the VFN Collateral Amount at such time.

 

“VFN Note Rate” means (a) to the
extent any Purchaser is funding such Increase during such period through the
issuance of Commercial Paper (as defined in the Purchase Agreement), the CP
Rate (as defined in the Purchase Agreement), (b) to the extent any Purchaser is
not funding such Increase during such period through the issuance of Commercial
Paper, a rate per annum equal to One-Month LIBOR, plus 1.25%; provided,
that if One-Month LIBOR quotations are not available, the VFN Note Rate shall
be the Base Rate (as defined in the Purchase Agreement); provided, further
that on any day after the occurrence and continuance of any Pay-Out Event or an
Event of Default, the VFN Note Rate shall be the rate set forth in clause (a)
or (b) above, as applicable, plus 2% per annum.

 

“Voluntary Decrease”
is defined in Section 3.4(b).

 

(d) All
references herein to “Transferred Receivables”, when used to refer to
Receivables originated at any time prior to the Closing Date, shall mean all
Receivables other than Excluded Receivables, provided that Receivables
originated by the Containerboard Marketing division of the entity formerly
known as Jefferson Smurfit Corporation (U.S.) shall not be considered Excluded
Receivables solely when used to refer to Receivables originated at any time
prior to the Closing Date.

 

SECTION 1.2                          Incorporation of Terms.  The terms of the Indenture are incorporated
in this Indenture Supplement as if set forth in full herein. As supplemented by
this Indenture Supplement, the Indenture is in all respects ratified and
confirmed and both together shall be read, taken and construed as one and the
same agreement. If the terms of this Indenture Supplement and the terms of the
Indenture conflict, the terms of this Indenture Supplement shall control with
respect to the Series 2004-2 Notes.

 

ARTICLE II

DESIGNATION; AUTHENTICATION AND DELIVERY

 

SECTION 2.1                          Designation.  There is hereby created a Series to be known
as “Series
2004-2” or the “Series 2004-2 Notes,” consisting of one class:  the Variable Funding Notes, Series 2004-2
(the “Series 2004-2 Notes”).  Series 2004-2 shall be included in Group
1.  Series 2004-2 will not initially be a
Paired Series.  The Series 2004-2 Notes
will be issued in definitive form. 
Series 2004-2 will not be subordinated to any other Series. The Series
2004-2 Notes will be due and payable on the Legal Final Maturity.

 

13

 

SECTION 2.2                          Authentication and Delivery.

 

(a) On
the Closing Date, the Issuer shall sign, and shall direct the Indenture Trustee
in writing pursuant to Section 2.2 of the Indenture to duly authenticate, and
the Indenture Trustee, upon receiving such direction, (i) shall authenticate,
subject to Section 3.1,
the Series 2004-2 Notes in accordance with such written directions, and (ii)
subject to Section 2.2(b),
shall deliver the Series 2004-2 Notes to the Agent on behalf of the Purchaser.

 

(b) The
Series 2004-2 Notes shall be issued in definitive form, in the name of the
initial Series 2004-2 Noteholder.

 

(c) The
Series 2004-2 Notes issued hereunder, as provided in Section 2.12
of the Indenture, shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.

 

(d) The
Series 2004-2 Notes shall be executed by manual or facsimile signature on
behalf of the Issuer by any Authorized Officer of the Issuer.

 

(e) The
Series 2004-2 Notes shall be issued in minimum denominations of $1,000,000 and in integral multiples of $100,000 in
excess thereof.

 

ARTICLE III

CONDITIONS TO ISSUANCE; USE OF PROCEEDS

 

SECTION 3.1                          Conditions to Initial Issuance.  The Indenture Trustee shall not authenticate
the Series 2004-2 Notes unless (i) all conditions to the issuance of the Series
2004-2 Notes under Section 2.8 of the Indenture shall have been
satisfied, and (ii) the Servicer shall have delivered an Officer’s Certificate
to the Indenture Trustee and the Agent to the effect that all conditions set
forth in Article IV of the Purchase Agreement shall have been satisfied.

 

SECTION 3.2                          Use of Proceeds.  The Issuer shall ensure that the net funds
made available to the Issuer from the issuance of the Series 2004-2 Notes shall
be used by the Issuer to purchase Receivables from Transferor pursuant to the
Transfer and Servicing Agreement.  The
Transferor shall use the purchase price for such Receivables to purchase
Receivables from the Seller pursuant to the Sale Agreement.  The Seller, in turn, shall use the purchase
price for such Receivables to repurchase Receivables from Jefferson Smurfit
Finance Corporation and Stone Receivables Corporation.  Jefferson Smurfit Finance Corporation and Stone
Receivables Corporation, in turn, shall use the purchase price for such
Receivables to repurchase the Series 1999-1 and Series 1999-2 Certificates
issued by the Stone Receivables Corporation Master Trust and terminate such
Trust and to repay all commercial paper notes issued by Jefferson Smurfit
Finance Corporation and to terminate the related Liquidity Agreement and other
related program documents.

 

14

 

SECTION 3.3                          Initial
Issuance; Procedure for Increasing the VFN Collateral Amount.

 

(a)                                  (i)
On the Closing Date, the Issuer will issue and, subject to receipt of the
Officer’s Certificate set forth in Section 3.1,
the Indenture Trustee shall authenticate, the Series 2004-2 Notes in accordance
with the terms and provisions of the Indenture in the aggregate initial
principal amount equal to the Initial Note Principal Balance and a maximum
principal amount equal to the Maximum Principal Amount and (ii) on any Business
Day during the Revolving Period, the Issuer may, subject to the satisfaction of
each of conditions set forth in clause (b),
increase the VFN Collateral Amount (each such increase referred to as an “Increase”), upon delivery of a Notice of
Increase to the Indenture Trustee and the Agent received by each such Person
prior to 10:00 a.m. (Central Standard time) on such Business Day.

 

(b)                                 The
VFN Collateral Amount may be increased on any Business Day during the Revolving
Period pursuant to subsection (a)
above, only upon satisfaction of each of the following conditions with respect
to each proposed Increase:

 

(i)                                     The
amount of each Increase shall be equal to or greater than $250,000 (and in integral multiples of $100,000 in
excess thereof);

 

(ii)                                  After
giving effect to such Increase, the Outstanding Principal Balance shall not
exceed the Maximum Principal Amount;

 

(iii)                               Immediately
prior to and after giving effect to such Increase, the Series 2004-2 Allocated
Receivables Amount shall equal or exceed the Series 2004-2 Target Receivables
Amount;

 

(iv)                              All
of the conditions precedent to such Increase set forth in Article II of
the Purchase Agreement shall have been satisfied;

 

(v)                                 Such
Increase and the application of the proceeds thereof shall not result in the
occurrence of (1) a Pay-Out Event for any Series, a Servicer Default or an
Event of Default, or (2) an event or occurrence, which, with the passing of
time or the giving of notice thereof, or both, would become a Pay-Out Event for
any Series, a Servicer Default or an Event of Default; and

 

(vi)                              Immediately
prior to giving effect to any Increase, the Series 2004-2 Notes shall be rated
the same ratings as assigned by each Rating Agency to the Series 2004-2 Notes
on the Closing Date and as set forth in the Purchase Agreement.

 

(c)                                  Upon
receipt of the proceeds of such Increase by or on behalf of the Issuer, a duly
authorized officer of the Agent shall make appropriate notations on the grid
attached to the Series 2004-2 Notes or on its books and records of the amount
of such adjustment to the VFN Collateral Amount, and each of the Issuer, the
Series 2004-2 Noteholders and the Servicer hereby authorizes each duly
authorized officer of the Agent to make such notations on the Series 2004-2
Notes and on its books and records as aforesaid; provided, that
failure to make any such recordation on such grid or in its internal books and
records or any error in such grid or in its internal books and records shall
not adversely affect the Series 2004-2 Noteholders’ rights with respect to
their right to receive payments in respect of the Outstanding Principal
Balance;

 

15

 

provided, further, that any failure by such
officer of the Agent to make any such notation shall not affect the obligations
of the Issuer under the Series 2004-2 Notes.

 

(d)                                 The
Issuer shall not issue additional Notes of this Series.  For this purpose, neither an Increase
pursuant to subsection (b) above
nor an amendment to this Indenture Supplement to increase the Maximum Principal
Amount shall constitute the issuance of additional Notes.

 

SECTION 3.4                          Procedure for Decreasing the VFN Collateral Amount.

 

(a)                                  Mandatory Decrease.  Without limiting any of the terms and
provisions hereof, if on any date, the Series 2004-2 Allocated Receivables
Amount is less than the Series 2004-2 Target Receivables Amount as of such
date, then, within three (3) Business Days, the Issuer shall pay or cause to be
paid to the Series 2004-2 Noteholders from Series 2004-2 Available Funds
available for payments of principal in accordance with Section 4.4
or amounts otherwise available to the Issuer, a principal payment to decrease
the VFN Collateral Amount by the amount necessary, so that after giving effect
to all Decreases of the VFN Collateral Amount, the Series 2004-2 Allocated
Receivables Amount shall be greater than or equal to the Series 2004-2 Target
Receivables Amount (each such reduction of the VFN Collateral Amount pursuant
to this Section 3.4(a), a “Mandatory Decrease”).  By 10:00 a.m. (Central Standard time) on the
Business Day of payment of such Mandatory Decrease, the Servicer, on behalf of
the Issuer, shall provide written notice thereof to the Indenture Trustee and
the Agent.

 

(b)                                 Voluntary Decrease.  The Issuer may on any Business Day, upon
written notice to the Indenture Trustee and the Agent, which such notice must
be received by each such Person prior to 10:00 a.m. (Central Standard time) on
such Business Day, decrease the VFN Collateral Amount (each such decrease of
the VFN Collateral Amount pursuant to this Section 3.4(b),
a “Voluntary Decrease”) by paying or
causing to be paid to the Series 2004-2 Noteholders from Series 2004-2
Available Funds available for payments of principal in accordance with Section 4.4 or amounts otherwise available to the
Issuer, a principal payment equal to the amount of such Decrease.  Each such Voluntary Decrease shall be in a
minimum principal amount of $250,000 (and in
integral multiples of $100,000 in excess thereof).  Upon such Voluntary Decrease, the Servicer,
on behalf of the Issuer shall reflect such Decrease in the Monthly Report.

 

(c)                                  Principal Amortization.  During the Series 2004-2 Amortization Period,
principal will be allocated to the VFN Collateral Amount and paid to the Series
2004-2 Noteholders in accordance with Section 5.1.

 

(d)                                 Upon
each Decrease and each other payment of principal pursuant to Sections 4.4 and 5.1, a duly
authorized officer of the Agent shall make appropriate notations on the grid
attached to the Series 2004-2 Notes or on its books and records of the amount
of such adjustment to the VFN Collateral Amount, and each of the Issuer, the
Series 2004-2 Noteholders and the Servicer hereby authorizes each duly
authorized officer of the Agent to make such notations on the Series 2004-2
Notes and on its books and records as aforesaid; provided, that
failure to make any such recordation on such grid or in its internal books and
records or any error in such grid or in its internal books and records shall
not adversely affect the Series 2004-2 Noteholders’ rights with respect to
their right to receive payments in respect of the Outstanding Principal
Balance;

 

16

 

provided, further, that any failure by
such officer of the Agent to make any such notation shall not affect the obligations
of the Issuer under the Series 2004-2 Notes.

 

ARTICLE IV

PAYMENTS AND ALLOCATIONS

 

SECTION 4.1                          Interest.

 

(a)  Interest (“VFN Monthly Interest”) on the Series 2004-2 Notes shall (i)
accrue during each Accrual Period at the VFN Note Rate, (ii) be calculated on
the basis of actual days over a year of 360 days, (iii) be due and payable on
each Payment Date and (iv) be calculated based on the average of the daily
Outstanding Principal Balance of the Series 2004-2 Notes during such Accrual
Period (after giving effect to any distributions of principal on each date).

 

(b)  The Servicer shall calculate
the VFN Monthly Interest in accordance with this Section 4.1
based on the applicable VFN Note Rate. 
Prior to each Payment Date, the Indenture Trustee shall review the
Servicer’s calculation of the VFN Monthly Interest (relying on the VFN Note
Rate reported in the related Monthly Report or directly by the Agent to the
Indenture Trustee) and report any discrepancy to the Servicer, and, with the
Servicer, shall resolve such discrepancy.

 

SECTION 4.2                          Series Accounts;
Series 2004-2 Distribution Account.

 

(a)  The Indenture Trustee shall
cause to be established and maintained in the name of the Indenture Trustee,
(i) for the benefit of the Series 2004-2 Noteholders and (ii) in the case of clauses (A) and (B) below, for
the benefit, subject to the prior and senior interests of the Series 2004-2
Noteholders, of the holder of the Transferor Interest, (A) a subaccount of the
Collection Account (the “Series 2004-2 Collection
Subaccount”), which subaccount is the Series Collection Subaccount
with respect to Series 2004-2; and (B) two subaccounts of the Series 2004-2
Collection Subaccount: (1) the Series 2004-2 Principal Collection
Sub-subaccount and (2) the Series 2004-2 Non-Principal Collection
Sub-subaccount (respectively, the “Series 2004-2 Principal
Collection Sub-subaccount” and the “Series
2004-2 Non-Principal Collection Sub-subaccount”; all accounts
established pursuant to this subsection (a),
collectively, the “Series Accounts”
for Series 2004-2), each Series Account to bear a designation indicating that
the funds deposited therein are held for the benefit of the Persons (and, for
each such Person, to the extent) set forth in clauses (i) and
(ii) above and to otherwise be
maintained in accordance with the terms hereof and of the Indenture (including Sections 8.2 and 8.3 thereof).

 

(b) All Permitted Investments in the Series Accounts shall be invested,
subject to Section 8.3 of the Indenture,
together with funds held in other Sub-subaccounts of the Collection
Account.  After giving effect to any
distribution to the holder of the Transferor Interest pursuant to Section 8.6(f) of the Indenture, amounts on deposit and
available for investment in the Series 2004-2 Principal Collection
Sub-subaccount shall be invested by the Indenture Trustee at the written
direction of the Servicer in Permitted Investments that mature, or that are
payable or redeemable upon demand of the holder thereof, (i) in the case of any
such investment made

 

17

 

during
the Revolving Period, on or prior to the next Business Day and (ii) in the case
of any such investment made during the Series 2004-2 Amortization Period, on or
prior to the Business Day immediately preceding the next Payment Date.  Amounts on deposit and available for
investment in the Series 2004-2 Non-Principal Collection Sub-subaccount shall
be invested by the Indenture Trustee at the written direction of the Servicer
in Permitted Investments that mature, or that are payable or redeemable upon
demand of the holder thereof, on or prior to the Business Day immediately
preceding the next Payment Date.  As of
the Business Day immediately preceding each Payment Date, all interest and
other investment earnings (net of losses and investment expenses) on funds
deposited in the Series 2004-2 Principal Collection Sub-subaccount shall be
deposited in the Series 2004-2 Non-Principal Collection Sub-subaccount.  Absent its receipt of timely investment
instructions, the Indenture Trustee shall have no obligation to make any
investment and funds shall remain uninvested.

 

SECTION 4.3                          Daily Calculations and Series Allocations.

 

(a) On
each Business Day, the Servicer shall calculate the Series 2004-2 Allocation Percentage,
the Series 2004-2 Allocated Receivables Amount and the Series 2004-2 Target
Receivables Amount.

 

(b) The
funds allocated to Series 2004-2 in accordance with Section 8.6
of the Indenture are called the “Series 2004-2 Collections.”

 

SECTION 4.4                          Daily Allocations of Series Collections.  On each Business Day, the Servicer shall, (a)
determine the sum of (i) the aggregate amount of Series 2004-2 Collections for
such Business Day, and (ii) the amount of funds then available on account of a
Distribution Shortfall (with respect to Series 2004-2) pursuant to the
Indenture Supplements for any other Series in Group 1 to the extent needed to
fund the items described in priorities first and  second below, in the priority
indicated, (collectively, “Series 2004-2 Available
Funds”), (b) indicate the amount of Series 2004-2 Available Funds in
the Daily Report delivered on such Business Day (whether or not a Payment Date)
and (c) direct the Indenture Trustee in the Daily Report to, and upon receipt
of such Daily Report, the Indenture Trustee shall, in reliance on such
instructions and without any independent verification, distribute such Series
2004-2 Available Funds as follows:

 

first, an amount of Series 2004-2 Available
Funds for such Business Day up to the amount necessary to cause the Required
Amount for such day to be on deposit therein, shall be transferred by the
Indenture Trustee from the Series 2004-2 Collection Subaccount to the Series
2004-2 Non-Principal Collection Sub-subaccount;

 

second, following the transfers pursuant to clause first above, any remaining Series 2004-2 Available
Funds shall be transferred by the Indenture Trustee to the Series 2004-2
Principal Collection Sub-subaccount for distribution (in the following
priority):

 

(u)                                 an
amount equal to the lesser of (A) the Series 2004-2 Servicer Transfer Cost
Allocation, if any, on such Business Day and (B) the amount of funds available

 

18

 

pursuant to this clause second shall
be held in the Series 2004-2 Principal Collection Sub-subaccount for
distribution on the next Payment Date in accordance with Section 5.1;

 

(v)                                 an
amount equal to the lesser of (A) the aggregate amount of all Decreases
pursuant to Section 3.4, and (B) the amount of
funds remaining on deposit in the Series 2004-2 Principal Collection
Sub-subaccount that has not been allocated pursuant to subclause
(u) of this clause second,
for distribution to the Series 2004-2 Noteholders;

 

(w)                               an
amount equal to lesser of (A) the Series 2004-2 Monthly Principal Amount, if
any, on such Business Day, and (B) the amount of funds remaining on deposit in
the Series 2004-2 Principal Collection Sub-subaccount that has not been
allocated pursuant to subclause (u)
of this clause second, shall be held in the
Series 2004-2 Principal Collection Sub-subaccount for distribution in
accordance with Section 5.1 on each Payment
Date during the Series 2004-2 Amortization Period;

 

(x)                                   an
amount equal to the lesser of (A) the Series 2004-2 Excess Funding Account
Deposit Amount, if any, and (B) the amount remaining on deposit in the Series
2004-2 Principal Collection Sub-subaccount that has not been allocated pursuant
to subclauses (u) or (w) of this clause second, shall be deposited in the Excess Funding
Account;

 

(y)                                 an
amount equal to the lesser of (A) unpaid Excess Program Costs at such time and
(B) the amount remaining on deposit in the Series 2004-2 Principal Collection
Sub-subaccount that has not been allocated pursuant to subclauses
(u) or (w) of this clause second,
shall be held in the Series 2004-2 Principal Collection Sub-subaccount for
distribution on the next Payment Date in accordance with Section 5.1;

 

(z)                                   if
there is a Distribution Shortfall with respect to any Series (other than Series
2004-2) in Group 1 on such Business Day an amount equal to the lesser of
(A) the amount of such Distribution Shortfall and (B) the amount remaining
on deposit in the Series 2004-2 Principal Collection Sub-subaccount that has
not been allocated pursuant to subclauses (u), (w) or (y)
of this clause second, shall be transferred to
the Indenture Trustee, for distribution to the applicable accounts or Persons
specified in the Indenture Supplement with respect to such Series, it being
understood that if the Distribution Shortfalls for all Series (other than
Series 2004-2) in Group 1 exceed the amount of funds available pursuant to this
clause second, then such funds shall be
allocated to such Series pro  rata based on their respective
Distribution Shortfalls; and

 

third, the remainder of the Series 2004-2
Available Funds shall be distributed to the holder of the Transferor Interest.

 

SECTION 4.5                          Withdrawals from the Excess Funding Account.  On the first day of the Series 2004-2
Amortization Period, the Servicer shall instruct the Indenture Trustee to
transfer (and the Indenture Trustee shall transfer) the Series 2004-2
Allocation Percentage of the entire balance in the Excess Funding Account to
the Series 2004-2 Principal Collection Sub-subaccount.

 

19

 

SECTION 4.6                          Determination of Principal to be Distributed with
respect to Series 2004-2. 
The amount of principal distributable on any Payment Date with respect
to the Series 2004-2 Notes shall be determined by the Servicer and set forth on
each Monthly Report.  On each Payment
Date during the Series 2004-2 Amortization Period, an amount equal to the
Series 2004-2 Monthly Principal shall be distributable from the Series 2004-2 Principal
Collection Sub-subaccount with respect to the Series 2004-2 Notes up to the
amount on deposit in such account on the immediately preceding Determination
Date; provided, however,
distributions of such principal shall be in accordance with Section 5.1.

 

SECTION 4.7                          Available
Overcollateralization. 

 

(a) If
a Series 2004-2 Amortization Period begins, the Servicer shall calculate the
Available Overcollateralization as of the Series 2004-2 Amortization Period
Calculation Date and report such amount in the Daily Report for the first
Business Day in the Series 2004-2 Amortization Period.  The Servicer shall also calculate the
Available Overcollateralization as of each Determination Date falling in the
Series 2004-2 Amortization Period, such calculation to be reflected in the
related Monthly Report.

 

(b) The
Available Overcollateralization as of the Series 2004-2 Amortization Period
Calculation Date shall equal the result of:

 

(i) the
Series 2004-2 Allocated Receivables Amount as of the opening of business of the
Series 2004-2 Amortization Period Calculation Date; minus

 

(ii) the
sum of (A) the lesser of (x) the excess of the Series 2004-2 Allocated
Receivables Amount over the Required Overcollateralization Amount and (y) the
Series 2004-2 Collateral Amount and (B) the Adjusted Carrying Cost Reserve, in
each case, at the opening of business on the Series 2004-2 Amortization Period
Calculation Date.

 

(c) The
Available Overcollateralization, as of any Determination Date in the Series
2004-2 Amortization Period, shall equal the result of:

 

(i) the
Available Overcollateralization as of the preceding Determination Date (or as
of the Series 2004-2 Amortization Period Calculation Date, in the case of the
first Determination Date falling in the Series 2004-2 Amortization Period); minus

 

(ii) the
Series 2004-2 Allocable Write-Off Amount with respect to the OC Measuring
Period most recently ended prior to that Determination Date; minus

 

(iii) the
Series 2004-2 Allocable Dilution with respect to the OC Measuring Period most
recently ended prior to that Determination; plus

 

(iv) subject
to Section 4.8,
the Series 2004-2 Allocable Recoveries and the Series 2004-2 Allocable Dilution
Adjustments with respect to the OC Measuring Period prior to that Determination
Date.

 

20

 

(d) Notwithstanding
the foregoing, in no event shall the Available Overcollateralization at any
time be less than zero and in no event shall the Available
Overcollateralization at any time during the Series 2004-2 Amortization Period
be greater than the Available Overcollateralization calculated for the first
Determination Date falling in the Series 2004-2 Amortization Period pursuant to
subsection (c) (other than as a result of Recoveries).

 

SECTION 4.8                          Write-Offs and
Recoveries.  

 

(a) In
each Monthly Report required to be delivered during the Series 2004-2
Amortization Period, the Servicer shall calculate the Series 2004-2 Collateral
Amount Write-Offs and the Series 2004-2 Allocable Recoveries for the most recently
ended OC Measuring Period.

 

(b) If
the Series 2004-2 Collateral Amount Write-Offs calculated in any Monthly Report
exceed zero, the Series 2004-2 Collateral Amount shall be reduced by the amount
of the Series 2004-2 Collateral Amount Write-Offs with effect from the related
Determination Date, subject to the next sentence.  Any such reduction shall be allocated to the
VFN Collateral Amount until the VFN Collateral Amount has been reduced to zero.

 

(c) If
the Series 2004-2 Collateral Amount has been reduced on account of any Series
2004-2 Collateral Amount Write-Offs, then any Series 2004-2 Allocable
Recoveries with respect to any Settlement Period ending after the reduction
takes place shall be applied to reinstate the Series 2004-2 Collateral Amount, to
the extent of such prior reductions that have not previously been reinstated,
with effect from the related Determination Date.  Any such reinstatement shall be allocated to
the VFN Collateral Amount until all prior reductions to the VFN Collateral
Amount on account of Series 2004-2 Collateral Amount Write-Offs have been
reinstated.

 

(d) If
Series 2004-2 Allocable Recoveries are applied pursuant to subsection (c) to
reinstate the Series 2004-2 Collateral Amount on any Payment Date, then Series
2004-2 Allocable Recoveries shall be applied to increase the Available
Overcollateralization on the related Determination Date only to the extent of
the excess, if any, of the Series 2004-2 Allocable Recoveries, minus the
amount of Allocable Recoveries so applied.

 

SECTION 4.9                          Certain Dilution in a Series 2004-2 Amortization
Period.  

 

(a) In
each Monthly Report required to be delivered during the Series 2004-2
Amortization Period, the Servicer shall calculate the Series 2004-2 Allocable
Dilution and the Series 2004-2 Allocable Dilution Adjustments for the most
recently ended OC Measuring Period.

 

(b) If
the Available Overcollateralization or the Series 2004-2 Collateral Amount has
been reduced on account of any Series 2004-2 Allocable Dilution, then any
Series 2004-2 Allocable Dilution Adjustments with respect to any OC Measuring
Period ending after the reduction takes place shall be allocated (x) first, to reinstate the Series 2004-2

 

21

 

Collateral Amount,
and (y) second, to reinstate the Available
Overcollateralization, in each case to the extent not previously
reinstated.  Any funds so allocated on
any day shall be distributed in accordance with the priorities set forth in Section 4.4.

 

ARTICLE V

DISTRIBUTIONS AND REPORTS

 

SECTION 5.1                          Distributions.  (a) On each Payment Date, the Indenture
Trustee shall distribute (based solely on information provided in the
applicable Monthly Report and, subject to Section 4.1(b),
without any independent review or verification of such information) funds on
deposit in the Series 2004-2 Non-Principal Collection Sub-subaccount in the
following priority to the extent funds are available:

 

first, to the Servicer, the Servicing Fee for
the preceding Settlement Period;

 

second, to the Series 2004-2 Noteholders, an
amount equal to VFN Monthly Interest for such Payment Date, plus the amount of any VFN Monthly Interest previously due
but not distributed to the Series 2004-2 Noteholders on a prior Payment Date;

 

third, to the Series 2004-2 Noteholders, an
amount equal to Additional Amounts for such Payment Date (together with all
Additional Amounts previously due but not distributed to the Series 2004-2
Noteholders on a prior Payment Date) but only to the extent that amounts have
been set aside pursuant to clause first of Section 4.4;

 

fourth, to the Indenture Trustee, any unpaid
Program Costs for the preceding Settlement Period; provided that amounts
payable pursuant to this clause fourth shall
not exceed $50,000 during any calendar year;

 

fifth, to the applicable payees (including the
Indenture Trustee), pro rata, any
unpaid Program Costs for the preceding Settlement Period, to the extent not
paid pursuant to clause fourth above; and

 

sixth, if such Payment Date is during the
Series 2004-2 Amortization Period, to the Series 2004-2 Principal Collection
Sub-subaccount, any remaining funds.

 

To the extent that there are funds remaining in the Series 2004-2
Non-Principal Collection Sub-subaccount after the distribution of funds on
deposit therein as set forth above in this Section 5.1(a),
the Indenture Trustee shall deposit an amount equal to the Excess Funding
Account Deposit Amount, if any, to the Excess Funding Account, and any
remaining funds shall be paid to the holder of the Transferor Interest.

 

(b) On
each Payment Date, the Indenture Trustee shall distribute (based solely on the
information provided in the applicable Monthly Report), funds on deposit in the
Series 2004-2 Principal Collection Sub-subaccount in the following order of
priority to the extent funds are available:

 

22

 

first, if any amounts are owed to the
Indenture Trustee, on account of Servicer Transfer Costs to the Indenture
Trustee an amount equal to the Series 2004-2 Servicer Transfer Cost Allocation;

 

second,
an amount equal to the Series 2004-2 Monthly Principal Amount for such Payment
Date shall be distributed to the Series 2004-2 Noteholders until repayment in
full of the VFN Collateral Amount;

 

third, any unpaid Excess Program Costs for the
preceding Settlement Period shall be paid, pro rata, to
the applicable payees (including the Indenture Trustee); and

 

fourth, any remaining balance shall be paid to
the holder of the Transferor Interest.

 

(c) The
Indenture Trustee shall send distributions to each Series 2004-2 Noteholder on
each Payment Date by wire transfer of immediately available funds to an account
maintained by such Series 2004-2 Noteholder with a bank in the United States; provided
that such Noteholder notified the Indenture Trustee in writing as to such
account at least five Business Days
prior to such Payment Date (such notice to remain effective with respect to
such Noteholder until different instructions are received by the Indenture
Trustee).  Distributions to Series 2004-2
Noteholders which do not qualify under the preceding sentence shall be made by
check mailed to such Series 2004-2 Noteholders. 
All distributions to Series 2004-2 Noteholders shall be made on a pro rata basis (based on the Outstanding
Principal Balances of the Class A Notes). 
For purposes of distributions to Series 2004-2 Noteholders on a Payment
Date, the status of a Person as a Series 2004-2 Noteholder shall be determined
as of the preceding Record Date.

 

SECTION 5.2                          Daily Reports, Monthly Reports and Other
Information.

 

(a) A
report (the “Daily  Report”) shall be delivered by
the Servicer to Indenture Trustee on each Business Day and each such report
shall be substantially in the form set out in Exhibit B or in such other form
as may be consistent with the terms of this Indenture Supplement.  A report (the “Monthly Report”) shall be
delivered by the Servicer to Indenture Trustee on each Determination Date and
each such report shall be substantially in the form set out in Exhibit C
or in such other form as may be consistent with the terms of this Indenture
Supplement.  The Indenture Trustee shall
provide copies of each Monthly Report to the Agent and the Rating
Agencies.  Each Daily Report and Monthly
Report shall report the required information for all outstanding Series.

 

Without limiting the
preceding paragraph, at the written request of the Servicer, the Indenture
Trustee shall provide or make available electronically via its internet website
(or upon written request, by first class mail or facsimile) each Monthly Report
to the Persons referred to in the preceding paragraph; provided, however,
the Indenture Trustee shall have no obligation to provide such reports
described in this Section 5.2
until it has received the requisite information from the Servicer.

 

23

 

If the Servicer so
requests that the Indenture Trustee provide or make available electronically
the Monthly Reports, the Indenture Trustee may make available to any Rating
Agency, the Agent, any Noteholder or Note Owner of a Series 2004-2 Note, via
the Indenture Trustee’s internet website or via e-mail to the Agent and each
Noteholder as requested by the Servicer, in writing, all Monthly Reports
available each month and, with the consent or at the direction of the holder of
the Transferor Interest, such other information regarding the Series 2004-2
Notes and/or the Collateral as the Indenture Trustee may have in its
possession, but only, with respect to the Indenture Trustee’s internet website,
with the use of a password provided by the Indenture Trustee or its agent to
such Person.  The Indenture Trustee will
make no representation or warranties as to the accuracy or completeness of such
documents and will assume no responsibility therefor.

 

In connection with
providing access to the Indenture Trustee’s interest website, the Indenture
Trustee may require registration and the acceptance of a disclaimer. The
Indenture Trustee shall not be liable for the dissemination of information in
accordance with this Section 5.2.

 

(b) Notwithstanding
any other provision of this Indenture Supplement:

 

(i) In
the event that a calculation or determination to be made with respect to
periods prior to the Closing Date refers to a Daily Report or Monthly Report,
such calculation or determination shall be made even though Daily Reports or
Monthly Reports were not required to be delivered pursuant to this Indenture
Supplement prior to the Closing Date.

 

(ii) This
Section 5.2 shall not limit the
obligation of the Servicer to make the allocations and calculations required by
this Indenture Supplement on a daily basis.

 

SECTION 5.3                          Annual Tax Information.  During January (and on or before January 31)
of each calendar year, the Indenture Trustee shall furnish or cause to be
furnished to the Agent and each Person who at any time during the preceding
calendar year was a Series 2004-2 Noteholder the information for the preceding
calendar year, or the applicable portion thereof during which the Person was a
Noteholder, as is required to be provided by an issuer of indebtedness under
the Code to the holders of the issuer’s indebtedness and such other customary
information as is necessary to enable such Noteholder to prepare their federal
income tax returns.  Notwithstanding
anything to the contrary contained in this Agreement, the Indenture Trustee
shall, to the extent required by applicable law, from time to time furnish to
the Agent and the appropriate Persons prior to the end of the period required
by applicable law, the information required to complete a Form 1099-INT.

 

SECTION 5.4                          Periodic Perfection Certificate.  Within one hundred five (105) days after the
end of each fiscal year of the Issuer, the Servicer, on behalf of the Issuer,
shall furnish or cause to be furnished to the Indenture Trustee and the Agent
an Officer’s Certificate setting forth a list of all changes in the name,
identity, corporate structure or jurisdiction of incorporation of the Issuer,
the Transferor or any Seller that have taken place since the date of the Officer’s

 

24

 

Certificate
most recently delivered pursuant to this Section 5.4, or
indicating that no such events have taken place, and stating in each case what
filings of UCC financing statements, or amendments thereto, relating to the
Transaction Documents have been made in connection with each such event
(identifying the date and filing index numbers for each).  If any such new UCC financing statements are
filed, the Servicer shall cause the Indenture Trustee to be named as secured
party (in the case of any filing against the Issuer) or assignee of the secured
party (in the case of any filing against the Transferor or a Seller).  The Indenture Trustee shall be under no obligation
to file and prepare any financing or continuation statements or to take any
other action, such obligation being solely that of the Servicer.

 

ARTICLE VI

SERIES 2004-2 PAY-OUT EVENTS

 

SECTION 6.1                          Series 2004-2 Pay-Out Events.  Each of the following shall constitute a “Series 2004-2 Pay-Out Event”:

 

(a) The
occurrence of an Issuer Pay-Out Event.

 

(b) The
Series 2004-2 Allocated Receivables Amount shall be less than the Series 2004-2
Target Receivables Amount for any period of five (5) consecutive Business Days.

 

(c) The
failure (i) on the part of the Transferor, the Issuer or the Servicer to make
(x) any payment or deposit of principal or interest required by the terms of
the Indenture or this Indenture Supplement or the Transfer and Servicing
Agreement on or before three (3) Business Days after the date such payment or
deposit is required to be made or (y) any other payment or deposit required by
the Indenture or this Indenture Supplement or the Transfer and Servicing
Agreement on or before five (5) Business Days after
the date such other payment or deposit is required to be made; or (ii) on the
part of the Transferor or the Issuer to duly observe or perform in any material
respect any other covenants or agreements of the Transferor or the Issuer set
forth in the Indenture or this Indenture Supplement or the Transfer and
Servicing Agreement; or (iii) on the part of the Servicer to deliver the Daily
Report required on any Business Day pursuant to the Indenture or this Indenture
Supplement or the Transfer and Servicing Agreement; which failure with respect
to clause (ii), continues unremedied for
ten (10) days or, with respect to clause (iii)
continues unremedied for five (5) days, in each case after the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Transferor, the Issuer or the Servicer by the Indenture
Trustee, or to the Transferor and the Indenture Trustee by the Agent on behalf
of the Series 2004-2 Noteholders.

 

(d) Any
representation or warranty made by the Transferor or the Issuer in the
Indenture, this Indenture Supplement or the Transfer and Servicing Agreement,
or any information contained in a computer file, microfiche list or hard copy
list required to be delivered by the Transferor or the Issuer pursuant to the
Indenture, any Indenture Supplement or the Transfer and Servicing Agreement shall
prove to have been incorrect

 

25

 

in any material
respect when made or when delivered, which continues to be incorrect in any
material respect for a period of sixty (60) days after the date on which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Transferor or the Issuer by the Indenture Trustee, or to the
Transferor by the Indenture Trustee after receipt of notice from the Agent on
behalf of the Series 2004-2 Noteholders and as a result of which the interests
of the Series 2004-2 Noteholders are materially and adversely affected.

 

(e) The
occurrence of an SSCE Credit Agreement Default Event.

 

(f) Any
Rating Agency shall downgrade, suspend or withdraw the rating assigned by it on
the Closing Date to the Series 2004-2 Notes.

 

SECTION 6.2                          Early Amortization Period.  (a) If a Series 2004-2 Pay-Out Event
described in Section 6.1(b) occurs and
such deficiency in the Series 2004-2 Allocated Receivables Amount is not cured
within five (5) Business Days after the five (5) Business Day period specified
in Section 6.1(b), notwithstanding
such cure, the Early Amortization Period shall automatically commence at the
end of such additional five (5) Business Day period unless the Agent on behalf
of the Series 2004-2 Noteholders agrees in writing to waive the occurrence of
the Series 2004-2 Pay-Out Event described in Section 6.1(b)
and the commencement of the Early Amortization Period.  Notwithstanding the foregoing, the Agent on
behalf of the Series 2004-2 Noteholders may cause the commencement of the Early
Amortization Period prior to the end of the additional five (5) Business Day
period specified in the previous sentence by written notice delivered to the
Indenture Trustee if a Series 2004-2 Pay-Out Event described in Section 6.1(b) has occurred and is continuing.  Upon the occurrence of a Series 2004-2
Pay-Out Event described in Section 6.1(b),
the Indenture Trustee shall notify the Agent on behalf of the Series 2004-2
Noteholders of such event and shall review each Daily Report delivered
thereafter to determine whether the deficiency in the Series 2004-2 Allocated
Receivables Amount is reported to be cured within five (5) Business Days after
the five (5) Business Day period specified in Section 6.1(b).  If the deficiency in the Series 2004-2
Allocated Receivables Amount is not cured within five (5) Business Days after
the five (5) Business Day period specified in Section 6.1(b),
the Early Amortization Period shall automatically commence.

 

(b) Upon
the occurrence and continuance of any Series 2004-2 Pay-Out Event described in Section 6.1(a), the Early Amortization Period shall
commence immediately on the date of such occurrence without any notice or other
action on the part of any Person.

 

(c) If
a Series 2004-2 Pay-Out Event described in Section 6.1(c)(ii),
(c)(iii), (d),
(e) or (f)
occurs, the Agent on behalf of the Series 2004-2 Noteholders may, and the Indenture
Trustee, shall, at the direction of the Agent, by notice given in writing to
the Issuer and the Servicer (and to the Indenture Trustee if given by the
Agent) commence the Early Amortization Period as of the date of such notice.

 

(d) If
a Series 2004-2 Pay-Out Event described in Section 6.1(c)(i)
occurs, unless within fifteen (15) days of any such event (after the applicable
grace period) the Agent on

 

26

 

behalf of the
Series 2004-2 Noteholders waives such event, the Early Amortization Period
shall commence immediately without any notice on the part of the Series 2004-2
Noteholders or Indenture Trustee.

 

(e) After
the occurrence of a Series 2004-2 Pay-Out Event, the Indenture Trustee shall
promptly notify the Rating Agencies of such event and deliver to the Rating
Agencies, upon request, and the Agent any information that the Indenture
Trustee has received from the Servicer regarding the Transferred Receivables or
the transaction contemplated by this 
Indenture Supplement and the other Transaction Documents.

 

ARTICLE VII

MISCELLANEOUS

 

SECTION 7.1                          Amendments, Waivers, Etc.  This Indenture Supplement shall not be
amended, modified or waived except in accordance with Article IX
of the Indenture.

 

SECTION 7.2                          Indenture Trustee.  The Indenture Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Indenture Supplement or for or in respect of the
representations or recitals contained herein, all of which representations and
recitals are made solely by the Issuer and the Servicer.

 

SECTION 7.3                          Instructions in Writing.  All instructions given by the Servicer to the
Indenture Trustee pursuant to this Indenture Supplement shall be in writing,
and may be included in a Daily Report or Monthly Report.

 

SECTION 7.4                          Rule 144A.  So long as any of the Series 2004-2 Notes are
“restricted securities” within the meaning of Rule 144(a)(3) under the
Securities Act, Issuer shall, unless it becomes subject to and complies with
the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, provide to any Holder or Note Owner of such
restricted securities, or to any prospective Holder or Note Owner of such
restricted securities designated by a Holder or Note Owner, upon the request of
such Holder or Note Owner or prospective Holder or Note Owner, any information
required to be provided by Rule 144A(d)(4) under the Securities Act.

 

SECTION 7.5                          Restrictions on Transfer.

 

(a) On
the Closing Date, the Issuer shall sell the Series 2004-2 Notes to the initial
Series 2004-2 Noteholder pursuant to the Purchase Agreement and deliver such
Series 2004-2 Notes in accordance herewith and therewith.  Thereafter, no Series 2004-2 Note may be
sold, transferred or otherwise disposed of except as follows:

 

(i) to
Persons that the transferring Person reasonably believes are Qualified
Institutional Buyers in reliance on the exemption from the registration
requirements of Rule 144A under the Securities Act (“Rule 144A”);
or

 

27

 

(ii) in
offshore transactions to non-U.S. Persons in reliance on Regulation S under the
Securities Act (“Regulation S”); or

 

(iii) to
institutional “accredited investors” within the meaning of Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the Securities Act (“Institutional
Accredited Investors”) that take delivery of such Series 2004-2 Note
in an amount of at least one million dollars ($1,000,000) and that deliver
certification thereof to Indenture Trustee; or

 

(iv) to
a Person who is taking delivery of such Series 2004-2 Note pursuant to a
transaction that is otherwise exempt from the registration requirements of the
Securities Act, as confirmed in an Opinion of Counsel addressed to Indenture
Trustee and Issuer which counsel and opinion are satisfactory to Indenture
Trustee and Issuer;

 

and, in each case in
accordance with all applicable laws and regulations of the United States and
the States thereof, and (if applicable) foreign laws and regulations.

 

Indenture Trustee shall
have no obligations or duties with respect to determining whether any transfers
of the Series 2004-2 Notes are made in accordance with the Securities Act or
any other law; provided that with respect to
Definitive Notes, Indenture Trustee shall enforce such transfer restrictions in
accordance with the terms set forth on the related Series 2004-2 Note and the
provisions of this Indenture Supplement.

 

(b) Transfers
of Definitive Notes, in whole or in part, shall only be made in accordance with
this Section 7.5(b).

 

(i) Transfer of Definitive Notes.  If a Noteholder of a Definitive Note wishes
at any time to transfer such Definitive Note, such Noteholder may transfer or
cause the transfer of such interest (in an equivalent principal amount) in one
or more Definitive Notes as provided below. 
Upon receipt by the Note Registrar of (A) such holder’s Definitive
Note properly endorsed for assignment to the transferee and (B) a
certificate given by the prospective transferee of such interest, in
substantially the form of Exhibit D hereto, stating that the transfer of such
interest has been made in accordance with the applicable restrictions in the
Indenture, including that the transferee (x) if such Note is being offered, sold
or delivered in reliance on Rule 144A, such transferee is a Qualified
Institutional Buyer or (y) if such Note is being offered and sold in reliance
on Regulation S of the Securities Act, such transferee is not a U.S. Person and
is located outside of the United States, then the Note Registrar, shall cancel
such Definitive Note in accordance with Section 2.9
of the Indenture, record the transfer in the Note Register in accordance with Section 2.4(a) of the Indenture and Issuer shall
execute and Indenture Trustee shall authenticate and deliver one or more
Definitive Notes of the same Series, registered in the names specified in the
assignment described in clause (A) above, in principal amounts designated by the transferee
(the aggregate of such amounts being equal to the interest in the

 

28

 

Definitive Notes
surrendered by the transferor), which shall not be less than the minimum
denomination for the related Series.

 

(ii) Exchange of Definitive Notes.  If a Noteholder of a Definitive Note wishes
at any time to exchange such Definitive Notes for one or more Definitive Notes
of different principal amounts of the same Series (but not less than the
minimum authorized denomination applicable thereto) that will be owned by such
Noteholder, such Noteholder may exchange or cause the exchange of such interest
for an equivalent interest in Definitive Notes of the same Series as provided
below.  Upon receipt by the Note
Registrar of (A) such Noteholder’s Definitive Notes properly endorsed for
such exchange and (B) written instructions from the Noteholder of such
Definitive Note designating the number and principal amounts of the Definitive
Notes to be exchanged (the aggregate of such principal amounts being equal to
the aggregate principal amount of the Definitive Notes surrendered for
exchange) and certifying that such exchange does not represent a change in
ownership, then the Note Registrar, shall cancel such Definitive Note in
accordance with Section 2.9 of the
Indenture, record the exchange in the Note Register in accordance with Section 2.4(a) of the Indenture and Issuer shall
execute and Indenture Trustee shall authenticate and deliver one or more
Definitive Notes of the same Series, registered in the same names as the Definitive
Notes surrendered by such holder or such different names as are specified in
the endorsement described in clause (A) above, in principal amounts designated by such
Noteholder (the aggregate of such amounts being equal to the interest in the
Definitive Notes surrendered by such holder) and in no less than the minimum
denomination for the related Series.

 

(c) Each
purchaser (other than the initial Series 2004-2 Noteholder) of the Series
2004-2 Notes shall be deemed to have acknowledged and agreed as follows (terms
used in this paragraph that are defined in Rule 144A or Regulation S under the
Securities Act and used herein as defined therein):

 

(1)                                  It
is either (a)(i) a qualified institutional buyer as defined in Rule 144A (“Qualified Institutional Buyer”), (ii) is aware that the sale
of the Series 2004-2 Notes to it is being made in reliance on the exemption
from registration provided by Rule 144A, and (iii) is acquiring the Series
2004-2 Notes for its own account or for one or more accounts, each of which is
a Qualified Institutional Buyer, and as to each of which the owner exercises
sole investment discretion, and in a principal amount of not less than the
minimum denomination of such Note for the purchaser and for each such account
or (b) is not a U.S. Person and is purchasing the Note pursuant to Rule 903 or
904 of Regulation S, and in a principal amount of not less than the minimum
denomination of such Note.  Any purported
transfer of the Series 2004-2 Notes to a purchaser that does not comply with the
requirements of this paragraph shall be null and void ab initio.  Issuer or Indenture Trustee on its behalf,
may sell any Notes acquired in violation of the foregoing at the cost and risk
of purported owner.

 

29

 

(2)                                  It
understands that the Series 2004-2 Notes will bear a legend substantially as
set forth in the Exhibit A hereto.  The
Series 2004-2 Notes may not at any time be held by or on behalf of any Person
that is not a Qualified Institutional Buyer or a Non-U.S. Person purchasing in
accordance with Regulation S.

 

(3)                                  It
understands that the Series 2004-2 Notes are being offered only in a
transaction not involving any public offering in the United States within the
meaning of the Securities Act, the Series 2004-2 Notes have not been and will
not be registered under the Securities Act, and, if in the future the
transferee decides to offer, resell, pledge or otherwise transfer the Series
2004-2 Notes, such Series 2004-2 Notes may only be offered, resold, pledged or
otherwise transferred in accordance with the Indenture, this Indenture
Supplement and the applicable legend on such Series 2004-2 Notes.  It acknowledges that no representation is
made by Issuer as to the availability of any exemption under the Securities Act
or any applicable state securities laws for resale of the Series 2004-2 Notes.

 

(4)                                  It
understands that an investment in the Series 2004-2 Notes involves certain
risks, including the risk of loss of all or a substantial part of its
investment under certain circumstances. 
It has had access to such financial and other information concerning
Issuer and the Series 2004-2 Notes as it deemed necessary or appropriate in
order to make an informed investment decision with respect to purchase of the
Series 2004-2 Notes, including an opportunity to ask questions of and request
information from Servicer and Issuer.  It
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of its investment in the Series
2004-2 Notes, and it and any accounts for which it is acting are each able to
bear the economic risk of the holder’s or of its investment.

 

(5)                                  It
acknowledges that Indenture Trustee, the Note Registrar, any Paying Agent,
Issuer, their affiliates, and others will rely upon the truth and accuracy of
the foregoing acknowledgments, representations and agreements.  If it is acquiring the Series 2004-2 Notes or
any interest therein for the account of one or more qualified institutional
buyers, it represents that it has sole investment discretion with respect to
each such account and that it has full power to make the foregoing
acknowledgments, representations and agreements on behalf of each such account.

 

(6)                                  Either (a) it is not acquiring the Series
2004-2 Notes with the plan assets of any “employee benefit plan” as defined in Section 3(3)
of ERISA, which is subject to Title I of ERISA, a “plan” as defined in Section 4975
of the Internal Revenue Code of 1986, as amended (the “Code”),
or a “governmental plan” as defined in Section 3(32) of ERISA which is
subject to any law substantially similar to ERISA or Section 4975 of the
Code or (b) its acquisition and holding of the Series 2004-2 Note will not give
rise to a nonexempt prohibited transaction

 

30

 

under Section 406 of ERISA, Section 4975 of the Code or any
substantially similar applicable law.

 

(7)                                  It
is purchasing one or more Series 2004-2 Notes in an amount of at least one
million dollars ($1,000,000) and it understands that such Series 2004-2 Notes
may be resold, pledged or otherwise transferred only in an amount of at least
one million dollars ($1,000,000).

 

(8)                                  Each
investor described in subclause (1)(b)
above understands that the Series 2004-2 Notes have not and shall not be
registered under the Securities Act, that any offers, sales or deliveries of
the Series 2004-2 Notes purchased by it in the United States or to U.S. Persons
prior to the date that is 40 days after the later of (i) the commencement of
the distribution of the Series 2004-2 Notes and (ii) the Closing Date, may
constitute a violation of United States law.

 

SECTION 7.6                          Survival of Agreements.  All covenants, agreements, representations
and warranties made herein and in the Series 2004-2 Notes delivered pursuant
hereto shall survive the execution and delivery of this Indenture Supplement
and the Series 2004-2 Notes and shall continue in full force and effect,
and this Indenture Supplement shall not terminate, until the Outstanding Principal
Balance of the Series 2004-2 Notes shall have been reduced to zero, all accrued
and unpaid interest thereon shall have been paid in full, and all other
obligations owed in respect of the Series 2004-2 Notes have been paid and
performed in full.  In addition, Section 7.4 and this Section 7.6
shall survive termination of this Indenture Supplement.

 

[Signature
Pages Follow]

 

31

 

IN WITNESS WHEREOF, the Issuer and the
Indenture Trustee have caused this Indenture Supplement to be duly executed as
of the day and year first above written.

 

 

	
   

  	
  SSCE FUNDING, LLC, as Issuer

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard P. Marra

  	
   

  
	
   

  	
   

  	
  Name: Richard P. Marra

  
	
   

  	
   

  	
  Title: Assistant Treasurer

  

 

S-1

 

 

	
   

  	
  DEUTSCHE BANK TRUST COMPANY

  AMERICAS, as Indenture Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jenna Kaufman

  	
   

  
	
   

  	
   

  	
  Name: Jenna Kaufman

  
	
   

  	
   

  	
  Title: Vice President

  

 

S-2

 

	
  Acknowledged and Accepted:

  
	
   

  
	
  STONE
  RECEIVABLES CORPORATION, as Transferor

  
	
   

  
	
  By:

  	
  /s/ Richard P. Marra

  	
   

  
	
  Name: Richard P. Marra

  
	
  Title: Assistant Treasurer

  
	
   

  
	
   

  
	
  SMURFIT-STONE
  CONTAINER ENTERPRISES, INC., as Servicer

  
	
   

  
	
  By:

  	
  /s/ Richard P. Marra

  	
   

  
	
  Name: Richard P. Marra

  
	
  Title: Assistant Treasurer

  

 

S-3

 

EXHIBIT
A

to the Series 2004-2 Indenture Supplement

 

FORM OF SERIES 2004-2
NOTE

 

 

1

 

EXHIBIT B

to the Series 2004-2
Indenture Supplement

 

FORM OF DAILY REPORT

 

 

1

 

EXHIBIT C

to the Series 2004-2
Indenture Supplement

 

FORM OF MONTHLY REPORT

 

 

1

 

EXHIBIT D

to the Series 2004-2 Indenture Supplement

 

FORM OF PURCHASER LETTER

 

                        ,
20   

 

SSCE Funding, LLC

[Address]

 

Deutsche Bank Trust Company Americas

[Address]

 

Stone Receivables Corporation

[Address]

 

Smurfit-Stone Container Enterprises, Inc., as Servicer

[Address]

 

Société Générale

[Address]

 

Ladies and Gentlemen:

 

We are delivering this
letter in connection with the transfer of $                    
of the VARIABLE FUNDING NOTE, Series 2004-2 (the “Notes”) issued by SSCE Funding, LLC (the “Issuer”) created under the Master
Indenture, dated as of November 23, 2004 (as the same may be amended,
restated, supplemented or otherwise modified from time to time,  the “Indenture”),
between Issuer and Deutsche Bank Trust Company Americas, as Indenture Trustee
(the “Indenture Trustee”), and
the Series 2004-2 Indenture Supplement thereto, dated as of November 23,
2004 (as the same may be amended, restated, supplemented or otherwise modified
from time to time, the “Series 2004-2
Indenture Supplement”), among Issuer and Indenture Trustee.  Capitalized terms used herein without
definition shall have the meanings assigned thereto in (or by reference in) the
Series 2004-2 Indenture Supplement.

 

We hereby confirm that:

 

(i) we
are a “qualified
institutional buyer” (a “QIB”) as set forth in Rule 144A
under the Securities Act of 1933, as amended (the “Securities Act”);

 

(ii) we
are purchasing the Series 2004-2 Notes for our own account or for the account
of one or more other QIBs;

 

1

 

(iii) we
are taking delivery of Notes in an amount of at least $1,000,000 for our own account or for each separate
account for which we are acting;

 

(iv) we
have such knowledge and experience in financial and business matters, we are
capable of evaluating the merits and risks of purchasing Notes and we, or the
account for which we are purchasing Notes, can bear the economic risks of
investing in the Series 2004-2 Notes for an indefinite period of time;

 

(v) we
are acquiring Notes for investment and not with a view to any distribution
thereof in a transaction that would violate the Securities Act or the
securities laws of any state of the United States or any other applicable
jurisdiction; provided that the
disposition of our property and the property of any accounts for which we are
acting as fiduciary shall remain at all times within our control; and

 

(vi) we
represent to Issuer, Transferor Indenture Trustee, Servicer and any successor
Servicer that [to be updated upon final 7.5]

 

We understand that the
Series 2004-2 Notes are being offered in a transaction not involving any public
offering within the meaning of the Securities Act and that the Series 2004-2
Notes have not been registered under the Securities Act, and we agree, on our
own behalf and on behalf of each account for which we acquire any Notes, that
such Notes may be resold, pledged or transferred only in a transaction meeting
the requirements of Rule 144A (“Rule 144A”)
under the Securities Act, to a person that we reasonably believe is a “qualified
institutional buyer” (as defined in Rule 144A) that purchases for its own
account (or for the account or accounts of a qualified institutional buyer) and
to whom notice is given that the resale, pledge or other transfer is being made
in reliance on Rule 144A.

 

We understand that the
Paying Agent and Indenture Trustee shall not be required to accept for
registration of transfer any Notes, except upon presentation of evidence
satisfactory to Issuer that the foregoing restrictions on transfer have been
complied with.

 

We understand that the
Series 2004-2 Notes shall bear a legend substantially to the effect set forth
in the Exhibits to the Series 2004-2 Indenture Supplement.

 

We understand that this
letter is required in connection with certain securities laws.  If administrative or other proceedings are
commenced in connection with which this letter is or would be relevant, we
irrevocably authorize you to produce this letter or a copy of this letter to
any interested party in such proceedings.

 

THIS
LETTER WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.

 

2

 

IN WITNESS WHEREOF, the
undersigned has caused its name to be signed hereby by its duly authorized
officer, as of the day and year written above.

 

	
   

  	
  [NAME OF INVESTOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

3Exhibit 10.1

 

EXECUTION COPY

 

 

 

SALE AGREEMENT

 

 

Dated as of
November 23, 2004

 

 

by and among

 

 

 

SMURFIT-STONE
CONTAINER ENTERPRISES, INC.

 

 

as a Seller

 

 

and

 

 

 

STONE
RECEIVABLES CORPORATION

 

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I

  	
  DEFINITIONS AND INTERPRETATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 1.1

  	
   

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 1.2

  	
   

  	
  Rules of Construction

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  SALE AND CONTRIBUTION OF RECEIVABLES

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 2.1

  	
   

  	
  Sale and Contribution of Receivables

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 2.2

  	
   

  	
  Purchase Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 2.3

  	
   

  	
  No Repurchase

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 2.4

  	
   

  	
  Rebates, Adjustments, Returns and
  Reductions, Modifications

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 2.5

  	
   

  	
  Reimbursement

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 2.6

  	
   

  	
  Certain Allocations

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  CONDITIONS PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 3.1

  	
   

  	
  Conditions to Initial SA Transfer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 3.2

  	
   

  	
  Conditions to all Purchases

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 3.3

  	
   

  	
  Conditions to all Sales

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  REPRESENTATIONS, WARRANTIES AND COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 4.1

  	
   

  	
  Representations and Warranties of Sellers

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 4.2

  	
   

  	
  Affirmative Covenants of Seller

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 4.3

  	
   

  	
  Negative Covenants of Seller

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 4.4

  	
   

  	
  Representations and Warranties of SRC

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 4.5

  	
   

  	
  Covenants of SRC

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  PURCHASE TERMINATION EVENTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 5.1

  	
   

  	
  Purchase Termination Events

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VI

  	
  INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 6.1

  	
   

  	
  Costs and Expenses

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 6.2

  	
   

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 6.3

  	
   

  	
  No Indirect or Consequential Damages

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VII

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.1

  	
   

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.2

  	
   

  	
  No Waiver; Remedies

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.3

  	
   

  	
  Successors and Assigns

  	
   

  

 

i

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.4

  	
   

  	
  Termination; Survival of Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.5

  	
   

  	
  Survival

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.6

  	
   

  	
  Complete Agreement; Modification of
  Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.7

  	
   

  	
  Amendments and Waivers

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.8

  	
  GOVERNING LAW; CONSENT TO JURISDICTION;
  WAIVER OF JURY TRIAL

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.9

  	
   

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.10

  	
   

  	
  Severability

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.11

  	
   

  	
  Section Titles

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.12

  	
   

  	
  No Setoff

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.13

  	
   

  	
  Confidentiality

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII

  	
  ADDITION
  AND REMOVAL OF SELLERS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 8.1

  	
   

  	
  Addition of Sellers

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 8.2

  	
   

  	
  Termination of Sellers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule 4.1(k)

  	
   

  	
  Lockboxes

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule 4.1(m)

  	
   

  	
  Offices; Qualification
  to do Business

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule
  4.1(p)

  	
   

  	
  UCC Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Form of Short-Term Note

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  Form of Additional
  Seller Supplement

  	
   

  
						

 

ii

 

This SALE AGREEMENT (this “Agreement” or this “Sale Agreement”) is entered into as of November 23,
2004, by and among SMURFIT-STONE CONTAINER
ENTERPRISES, INC., a Delaware corporation (“SSCE”),
as a Seller (a “Seller” and, collectively with
each other Seller that becomes a party hereto, “Sellers”),
and STONE RECEIVABLES CORPORATION, a
Delaware corporation (“SRC”).

 

In consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS
AND INTERPRETATION

 

Section 1.1                                      Definitions.  Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in Annex A to the Master Indenture, dated
as of November 23, 2004 (the “Master Indenture”),
by and between SSCE Funding, LLC, a Delaware limited liability company, as
issuer, and Deutsche Bank Trust Company Americas, as indenture trustee.

 

Section 1.2                                      Rules of Construction.  For purposes of this Agreement, the rules of
construction set forth in Section 1.2 of
the Master Indenture shall govern.  All
Annexes, Exhibits and Schedules hereto are incorporated herein by reference
and, taken together with this Agreement, shall constitute but a single
agreement.

 

ARTICLE
II

SALE AND CONTRIBUTION OF RECEIVABLES

 

Section 2.1                                      Sale and Contribution of Receivables.  (a) Subject to the terms and conditions
hereof, each Seller shall sell, transfer and assign, or in the case of SSCE
(and in SSCE’s discretion), contribute, on the date hereof (or the related
Seller Addition Date for such Seller) to SRC without recourse (except as
expressly provided herein), and SRC shall acquire each Seller’s right, title
and interest in, all Receivables (other than Excluded Receivables) reflected on
the Daily Report for such SA Transfer Date and all SA Transferred Assets
relating thereto.  The Daily Report for
the SA Transfer Date occurring on the date hereof shall specify the amount of
SA Receivables contributed to SRC on such SA Transfer Date.

 

(b)                                 Subsequent Sales and Contributions.  Subject to the terms and conditions hereof,
on each day following the date hereof (or, with respect to any Seller that
becomes a Seller after the Closing Date, the related Seller Addition Date),
each Seller shall sell, transfer and assign, or in the case of SSCE (and in
SSCE’s discretion), contribute to SRC, and SRC shall acquire from each Seller,
all of the Receivables (other than Excluded Receivables) and the SA Transferred
Assets related to all of the Receivables (other than Excluded Receivables)
owned by such Seller on such day and not previously sold hereunder.  Each SA Transfer shall be made without
recourse to the applicable Seller except as specifically provided herein.  All sales by Sellers hereunder shall cease on
the

 

 

Agreement Termination
Date.  Each Daily Report shall specify
the amount of SA Receivables contributed to SRC on the related SA Transfer
Date.

 

(c)                                  Computer Files.  On or before each SA Transfer Date, as
appropriate, Sellers shall indicate in their respective computer files that the
SA Transferred Assets have been sold to SRC pursuant to this Agreement by so
identifying such SA Transferred Assets with an appropriate notation.

 

(d)                                 Confirmation of Transfer.  As further confirmation of the transfer of
the SA Receivables, each Seller agrees as follows, and it is understood and
agreed that SRC shall have the following rights:

 

(i)                                     each
Seller shall, upon SRC’s written request and at such Seller’s expense, (A)
assemble all of such Seller’s documents, instruments and other records
(including credit files and computer tapes or disks) that (1) evidence or will
evidence or record SA Receivables sold by Seller hereunder and (2) are
otherwise necessary or desirable to effect Collections of such SA Receivables
(collectively, the “Documents”) and (B) deliver the Documents to SRC or its designee at a
place designated by SRC.  In recognition
of each Seller’s need to have access to any Documents which may be transferred
to SRC hereunder, whether as a result of its continuing business relationship
with any Obligor or otherwise, SRC hereby grants to each Seller an irrevocable
license to access the Documents transferred by such Seller to SRC and to access
any such transferred computer software in connection with any activity arising
in the ordinary course of such Seller’s business; provided that no
Seller shall disrupt or otherwise interfere with SRC’s use of and access to the
Documents and its computer software during such license period; and

 

(ii)                                  promptly
upon written request of SRC or the Indenture Trustee, after the occurrence of a
Servicer Default each Seller will (A) deliver to SRC or its designee all
licenses, rights, computer programs, related material, computer tapes, disks,
cassettes and data necessary for the immediate collection of the SA Receivables
by SRC or its designee, with or without the participation of such Seller
(excluding software licenses which by their terms are not permitted to be so
delivered; provided that each Seller shall use reasonable efforts to
obtain the consent of the relevant licensor to such delivery) and (B) make such
arrangements with respect to the collection of the SA Receivables as may be
reasonably requested by SRC or its designee.

 

(e)                                  Grant of Security Interest.  The parties hereto intend that each SA
Transfer shall constitute a purchase by SRC and sale by the applicable Seller
to SRC and not a loan by SRC to such Seller secured by the SA Transferred
Assets.  Notwithstanding anything to the
contrary set forth in this Section 2.1,
if a court of competent jurisdiction determines that any transaction provided
for herein constitutes a loan and not a purchase and sale, then the parties
hereto intend that this Agreement shall constitute a security

 

2

 

agreement under
applicable law and that each Seller shall be deemed to have granted, and each
Seller hereby grants, to SRC a first priority lien and security interest in and
to all of such Seller’s right, title and interest in, to and under the SA
Transferred Assets.  Each Seller hereby
agrees to record and file, or cause to be recorded and filed, at its own expense,
financing statements (and continuation statements with respect to such
financing statements when applicable) with respect to the SA Receivables and
the SA Transferred Assets now existing and hereafter acquired pursuant to this
Agreement by SRC and in each case meeting the requirements of applicable law in
such manner and in such jurisdictions as are necessary to perfect and maintain
perfection and priority of SRC’s purchase of such SA Receivables and any other
SA Transferred Assets and to deliver to the Indenture Trustee a file-stamped
copy of each such financing statement.

 

Section 2.2                                      Purchase Price.  (a) 
The purchase price of all SA Receivables (other than SA Receivables
contributed by SSCE) and the other SA Transferred Assets related thereto on
each SA Transfer Date shall be equal to the product of the Purchase Price
Percentage and the Unpaid Balance of such SA Receivables transferred on such
date (such amount for any SA Receivables and SA Transferred Assets, the “Purchase Price”).

 

(b)                                 The
Purchase Price for any SA Receivables and SA Transferred Assets sold by any
Seller under this Agreement shall be paid or provided for in the manner
provided below on each day for which a Daily Report is prepared and delivered
to SRC.  All
payments under this Agreement (i) shall be made on the date specified therefor
in Dollars in same day funds or by check, as each Seller shall elect, (ii)
shall be made not later than 1:00 p.m. (New York time) on the date specified
therefor and (iii) shall be made to the bank account for such Seller designated
in writing by such Seller to SRC; provided that SRC may, with respect to
any SA Transfer, offset against such Purchase Price any amounts owed by the
applicable Seller to SRC hereunder and which remain unpaid.

 

(c)                                  If,
on any day, SRC has insufficient funds to pay in full the Purchase Price owed
on such day, or if the applicable Seller otherwise consents, SRC may pay all or
part of the applicable Purchase Price to be made on such day by borrowing under
its Short-Term Note, substantially in the form of Exhibit A and issued in favor
of the applicable Seller, and the applicable Seller shall have irrevocably
agreed to advance, and shall be deemed to have advanced, a revolving loan in
the amount so specified by SRC; provided that SRC may not make any
payment of a Purchase Price through the use of revolving loans if after giving
effect to any revolving loan, SRC’s Net Worth would be less than the Required
Capital Amount.  Each such revolving loan
shall be payable in accordance with the terms and provisions of the Short-Term
Note and this Agreement.  Each Seller may
evidence the making of each revolving loan by recording the date and amount
thereof on the grid attached to its Short Term Note; provided that
failure to make any such recordation on such grid or any error in such grid
shall not adversely affect such Seller’s rights to recover the outstanding
unpaid principal amount of the revolving loans made under its Short-Term Note.

 

3

 

(d)                                 Whenever
any payment to be made under this Agreement shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day.

 

Section 2.3                                      No Repurchase.  Except to the extent expressly set forth
herein, no Seller shall have any right or obligation under this Agreement, by
implication or otherwise, to repurchase from SRC any SA Transferred Assets or
to rescind or otherwise retroactively effect any sale of any SA Transferred
Assets after the SA Transfer Date relating thereto.

 

Section 2.4                                      Rebates, Adjustments, Returns and Reductions,
Modifications.  From time
to time, any Seller may apply Dilutive Credits to SA Receivables in accordance
with this Section 2.4.  Each Seller
agrees to pay to SRC the amount of any such Dilutive Credit applied by such
Seller (a “Dilution Adjustment”) as
follows: (i) prior to the termination of sales hereunder by such Seller, the
amount of any such Dilution Adjustment shall be paid by effectively netting
such Dilutive Credit against the Purchase Price of SA Receivables created after
the grant of such Dilutive Credit; and (ii) after the termination of sales
hereunder by such Seller, the amount of any such Dilution Adjustment shall be
paid in cash no later than five Business Days after the grant of such Dilutive
Credit; provided that if SRC is required to make a cash payment in
respect of such Dilutive Credit pursuant to Section 2.3 of the Transfer and
Servicing Agreement, such Seller shall, upon request of SRC, pay the amount of
such Dilution Adjustment in cash as described in the preceding clause (ii).

 

Section 2.5                                      Reimbursement.  SRC agrees to promptly pay to each Seller, as
a reimbursement of any payments made by such Seller pursuant to Section
7.2(b), all amounts that it receives in respect thereof from Funding LLC
pursuant to the Transfer and Servicing Agreement.

 

Section 2.6                                      Certain Allocations.  Each Seller hereby agrees that all
Collections and other proceeds received in respect of SA Receivables generated
by such Seller shall be applied to reduce the Unpaid Balance of the oldest
outstanding SA Receivables sold or contributed to SRC of the Obligor to whom
such Collections are attributable until such SA Receivables are paid in full; provided,
however that notwithstanding the foregoing, if Seller can attribute a
Collection to a specific Obligor and a specific SA Receivable, then such
Collection shall be applied to pay such SA Receivable of such Obligor.

 

ARTICLE III

CONDITIONS PRECEDENT

 

Section 3.1                                      Conditions to Initial SA Transfer.  The initial SA Transfer hereunder shall be
subject to satisfaction of each of the following conditions precedent (any one
or more of which may be waived in writing by SRC):

 

(a)                                  Sale Agreement.  This Agreement or counterparts hereof shall
have been duly executed by, and delivered to, each Seller and SRC in form and
substance reasonably satisfactory to SRC;

 

4

 

(b)                                 Financing Statements.  Each Seller shall have filed and recorded, at
its own expense, UCC-1 financing statements and, if necessary, UCC-3 financing
statements (and other similar instruments) with respect to the SA Receivables
and the other SA Transferred Assets in such manner and in such jurisdictions as
are necessary or desirable to perfect SRC’s ownership interest thereof under
the UCC (or any other similar law), and all other action necessary or
desirable, in the reasonable judgment of SRC, to perfect SRC’s ownership of the
SA Receivables and the other SA Transferred Assets shall have been duly taken;
and

 

(c)                                  Other Documents.  SRC shall have received such other documents,
instruments, agreements and legal opinions as SRC shall reasonably request in
connection with the transactions contemplated by this Agreement, each in form
and substance reasonably satisfactory to SRC.

 

Section 3.2                                      Conditions to all Purchases.  Each purchase by SRC hereunder (including the
initial SA Transfer) shall be subject to satisfaction of the following further
conditions precedent (any one or more of which may be waived by SRC) as of the
applicable SA Transfer Date:

 

(a)                                  the
representations and warranties of each Seller contained herein shall be true
and correct in all material respects (or, to the extent any such representation
or warranty is qualified by a materiality standard, such representation or
warranty shall be true and correct) as of such SA Transfer Date, both before
and after giving effect to such SA Transfer, except to the extent that any such
representation or warranty expressly relates to an earlier date; and

 

(b)                                 each
Seller shall be in compliance in all material respects with each of its
covenants and other agreements set forth in this Agreement.

 

The conditions to any
purchase hereunder shall be deemed to have been satisfied upon transfer of the
related SA Transferred Assets to Funding LLC.

 

Section 3.3                                      Conditions to all Sales.  Each sale by a Seller hereunder (including
the initial SA Transfer) shall be subject to satisfaction of the following
further conditions precedent (any one or more of which, except clause (b)
below), may be waived by the applicable Seller as of the applicable SA Transfer
Date:

 

(a)                                  all
representations and warranties of SRC contained herein shall be true and
correct in all material respects (or, to the extent any such representation or
warranty is qualified by a materiality standard, such representation or
warranty shall be true and correct) as of such SA Transfer Date, both before
and after giving effect to such SA Transfer, except to the extent that any such
representation or warranty expressly relates to an earlier date; and

 

(b)                                 in
connection with each SA Transfer, each Seller shall have received the related
Purchase Price in accordance with Section 2.2(b) or (c).

 

5

 

The conditions to any
sale hereunder shall be deemed to have been satisfied upon transfer of the
related SA Transferred Assets to Funding LLC.

 

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 4.1                                      Representations and Warranties of Sellers.  To induce SRC to purchase the SA Transferred
Assets, each Seller makes (as to itself only) the following representations and
warranties to SRC, as of the date hereof and each subsequent SA Transfer Date,
each and all of which shall survive the execution and delivery of this Agreement.

 

(a)                                  Organization, Corporate Powers.  It is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, has all
requisite corporate or other necessary power and authority to carry on its
business as now conducted and, except where the failure to do so, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect, is qualified to do business in, and is in good standing in,
every jurisdiction where such qualification is required and has the corporate
power and authority to execute, deliver and perform each of the Transaction
Documents to which it is a party and each agreement or instrument contemplated
hereby or thereby to which it is or will be a party.

 

(b)                                 Authorization.  The transactions contemplated herein are
within its corporate or other similar powers and have been duly authorized by
all requisite corporate or other similar action and, if required, stockholder
or other equity holder action.

 

(c)                                  Enforceability.  Each of this Agreement and the other
Transaction Documents to which it is a party has been duly executed and
delivered by it and constitutes a legal, valid and binding obligation of it
enforceable against it in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting creditors’ rights generally and except as enforceability
may be limited by general principles of equity, regardless of whether such enforceability
is considered in a proceeding in equity or at law.

 

(d)                                 Governmental Approvals; No Conflicts.  The execution, delivery and performance
by it of this Agreement and each of the other Transaction Documents to which it
is a party, the sale of SA Receivables and SA Transferred Assets by it
hereunder and the consummation of the other transactions contemplated by any of
the foregoing (i) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect, (ii) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of it or any order of any Governmental Authority,
(iii) will not violate or result in a default under any indenture, agreement or
other instrument binding upon such Seller or its assets, or give rise to a
right thereunder to require any payment to be made by such Seller, and (iv)
will not result in the creation or imposition of any Lien on any asset of such
Seller.

 

6

 

(e)                                  Litigation.  There are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to its knowledge, threatened against or affecting such Seller (i)
that could reasonably be expected, individually or in the aggregate, to result
in a Material Adverse Effect  or (ii)
that involve this Agreement or the transactions contemplated hereby.

 

(f)                                    Compliance with Laws and Agreements.  It is in compliance with all laws,
regulations and orders of any Governmental Authority applicable to it or its
property and all indentures, agreements and other instruments binding upon it
or its property, except, in any case, where the failure to do so, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.

 

(g)                                 Taxes. It has timely filed or caused
to be filed all federal, state and local tax returns which are required to have
been filed and has paid or caused to be paid all taxes required to have been
paid by it, except (i) taxes that are being contested in good faith by
appropriate proceedings and for which it has set aside adequate reserves or
(ii) to the extent that the failure to do so could not reasonably be expected
to result in a Material Adverse Effect.

 

(h)                                 Accuracy and Completeness of Information.  It has disclosed to SRC all agreements,
instruments and corporate or other restrictions to which it is subject, and all
other matters known to it, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.

 

(i)                                     Employee Benefit Plans.  No  ERISA Event
has occurred or is reasonably expected to occur that, when taken together with
all other such ERISA Events for which liability is reasonably expected to
occur, could reasonably be expected to result in a Material Adverse Effect.

 

(j)                                     Absence of Certain Restrictions.  No indenture, certificate of designation
for preferred stock, agreement or other instrument to which it or any of its
Subsidiaries is a party will prohibit or materially restrain, or have the
effect of prohibiting or materially restraining, or imposing materially adverse
conditions upon, the sale and assignment of SA Transferred Assets.

 

(k)                                  Lock-Box Accounts. Set forth in Schedule
4.1(k) is a complete and accurate description as of the date hereof of each
Lock-Box Account.  Such Lock-Box Account
will only be used for the collection of amounts owing on SA Receivables and no
amounts other than Collections will be deposited therein.  Such Seller has instructed all Obligors on
the SA Receivables to be sold by it hereunder to submit all payments on the SA
Receivables and SA Transferred Assets directly to one of the Lock-Box Accounts.

 

(l)                                     Filings. 
All filings and other acts (including but not limited to all filings
and other acts necessary or advisable under the UCC of each relevant
jurisdiction) shall have been made or performed such that SRC has a first
priority perfected ownership interest in respect of all SA Receivables and SA
Transferred Assets.

 

7

 

(m)                               Offices.  The offices at which such Seller keeps its
records concerning the SA Receivables are located at the addresses specified on
Schedule 4.1(m) or have been reported to SRC in accordance with the
provisions of Section 4.2(h) of this Agreement.  Such Seller is duly qualified to do business
in each state set forth opposite its name on Schedule 4.1(m) hereto and
is not qualified to do business in any other state.

 

(n)                                 Investment Company Act.  Such Seller is not an “investment company” or
“controlled by” an “investment company,” as such terms are defined in the
Investment Company Act, and such Seller is not subject to regulation under the
Investment Company Act.

 

(o)                                 Bulk Sales Act.  No  transaction
contemplated hereby with respect to such Seller requires compliance with, or
will be subject to avoidance under, any bulk sales act or similar law.

 

(p)                                 UCC Information.  The true legal name of such Seller as
registered in the jurisdiction of its organization, and the current location of
such Seller’s jurisdiction of organization and the address of its chief
executive office are set forth in Schedule 4.1(p)
and such location and address have not changed within the past 12 months.  Except as set forth on Schedule 4.1(p),
during the past five years, such Seller has not had or used any trade names,
fictitious names, assumed names, “doing business as” names, or any other names
under which it has done or is doing business. 
In addition, Schedule 4.1(p) lists
such Seller’s (i) federal employer identification number and (ii)
organizational identification number, if any, as designated by the jurisdiction
of its organization.

 

(q)                                 No Fraudulent Transfer.  Such Seller is not entering into this
Agreement with the intent (whether actual or constructive) to hinder, delay, or
defraud its present or future creditors and is receiving reasonably equivalent
value and fair consideration for the SA Receivables originated by it being
transferred hereunder.

 

(r)                                    SA Receivables.  With respect to each SA Receivable
transferred by a Seller, such Seller represents and warrants that:

 

(i)                                     other
than with respect to each SA Receivable that such Seller has identified as not
being an Eligible Receivable in the Daily Report delivered on the SA Transfer
Date relating to such SA Receivable, each SA Receivable is an Eligible
Receivable as of the applicable SA Transfer Date; and

 

(ii)                                  such
Seller is the sole legal and beneficial owner of such SA Receivable, and upon
the sale of each SA Receivable by such Seller, SRC will become the sole legal
and beneficial owner of such SA Receivable, free and clear of any Adverse
Claims and no effective financing statement or other instrument similar in
effect covering all or any part of such SA Receivable or SA Transferred Asset
with respect thereto will at such time be on file against such Seller in any
filing or recording office except such as have

 

8

 

been filed in
favor of SRC, Funding LLC or the Indenture Trustee in accordance with this
Agreement.

 

The representations and warranties described in this Section 4.1 shall survive the sale of the SA
Transferred Assets to SRC, any subsequent assignment or sale of the SA
Transferred Assets by SRC, and the termination of this Agreement and the other
Transaction Documents and shall continue until the payment in full of all SA
Transferred Assets.

 

Section 4.2                                      Affirmative Covenants of Seller.  Each Seller covenants and agrees that it
shall, unless otherwise consented to by SRC, from and after the date hereof and
until the date after the Agreement Termination Date when the Outstanding
Balances of all SA Receivables transferred hereunder prior to such Agreement
Termination Date have been reduced to zero:

 

(a)                                  Compliance with Laws, etc.  Comply in all material respects with its
certificate of incorporation and by-laws (or other constituting documents, as
applicable) and all laws, rules, regulations and orders of any Governmental
Authority, whether now in effect or hereafter enacted, applicable to such
Seller, except to the extent that failure to comply therewith could not have a
Material Adverse Effect.  Such Seller
will comply, in all material respects, with its obligations under contracts
with Obligors relating to the SA Receivables, except to the extent such
compliance would result in a violation of the laws, rules, regulations or
orders of any Governmental Authority.

 

(b)                                 Preservation of Corporate Existence.  (i) Preserve and maintain its corporate,
limited liability company or other similar existence, rights, franchises and
privileges in the jurisdiction of its incorporation or organization and (ii)
qualify and remain qualified in good standing as a foreign corporation or other
similar entity in each jurisdiction where the nature of its business so
requires, except where the failure so to qualify would not, individually or in
the aggregate with other such failures, have a Material Adverse Effect; provided
that, notwithstanding the foregoing, any Seller may be consolidated or merged
with or into or dissolved into any other Seller so long as written notice of
such consolidation or merger shall be given to SRC at least one day prior to
the date thereof.

 

(c)                                  Visitation Rights.  At any reasonable time during normal business
hours and from time to time, in each case upon reasonable notice to such Seller
permit (i) SRC or any of its respective agents or representatives to examine
and make copies of and abstracts from the Documents of such Seller relating to
the SA Receivables and SA Transferred Assets related thereto transferred
hereunder and (ii) SRC or any of its respective agents or representatives, to
visit the properties of such Seller for the purpose of examining such records,
books of account and documents, and to discuss the affairs, finances and
accounts of such Seller relating to the SA Receivables and SA Transferred
Assets related thereto or such Seller’s performance hereunder with any of its
officers or directors and with its independent certified public accountants
(subject to any requirements of confidentiality imposed by law or contract).

 

(d)                                 Separate Identity.  Take all actions
required or reasonably necessary to maintain SRC’s status as a separate legal
entity, including (i) not misleading third parties

 

9

 

as to SRC’s identity as
an entity with assets and liabilities distinct from Funding LLC, Servicer, each
Seller and each Subsidiary or Affiliate thereof; (ii) not holding itself out to
be responsible for the debts or decisions or actions relating to the business
and affairs of SRC; (iii) taking such other actions as are necessary on its
part to ensure that the covenants made by SRC in Section 4.5 are met at all
times; (iv) taking such other actions as are necessary on its part to ensure
that SRC’s corporate procedures required by its certificate of incorporation
and by-laws are duly and validly taken; and (v) complying with all “The
Transaction Facts” set forth in any opinion issued by Winston & Strawn LLP
in connection with the issuance of any Series of Notes and relating to
substantive consolidation issues.

 

(e)                                  Keeping of Records and Books of Account.  Maintain and implement, or cause to be
maintained or implemented, administrative and operating procedures reasonably
necessary or advisable for the collection of amounts owing on all SA
Receivables, and, until any delivery to SRC, keep and maintain, or cause to be
kept and maintained, all documents, books, records and other information
reasonably necessary or advisable for the collection of amounts owing on all
such SA Receivables and other SA Transferred Assets with respect thereto.  Such Seller shall at its own cost and
expense, for not less than three years from the date on which each SA
Receivable was originated, or for such longer period as may be required by law,
maintain adequate Records with respect to such SA Receivable, including records
of all payments received, credits granted and merchandise returned with respect
thereto.  Such Seller further agrees to
promptly record Dilutive Credits in accordance with its historical practice.

 

(f)                                    Location of Records.  Keep the offices where it keeps the records
concerning the SA Receivables (and all original documents relating thereto) at
the locations referred to in Section 4.1(m) or, upon 30 days prior
written notice to SRC, at such other locations in a jurisdiction where all
action required by Section 4.2(p)(i) shall have been taken and completed
and be in full force and effect.

 

(g)                                 Computer Files.  At its own cost and expense, retain the
ledger used by such Seller as a master record of the Obligors and retain copies
of all documents relating to each Obligor as custodian and agent for SRC and
other Persons with interests in the SA Receivables and mark the computer tape
or other physical records of the SA Receivables (other than individual invoices
or individual collection files) to the effect that interests in the SA
Receivables existing with respect to the Obligors listed thereon have been sold
to SRC.

 

(h)                                 Payment of and Compliance with Obligations.  Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on its books or
except where the failure to so pay, discharge or otherwise satisfy such
obligations would not have a Material Adverse Effect in respect of such
Seller.  Such Seller shall defend the
right, title and interest of SRC and its assigns in, to and under the SA
Receivables originated by it and the related SA Transferred Assets, whether now
existing or hereafter

 

10

 

created, against all
claims of third parties claiming through such Seller. Such Seller will duly
fulfill all obligations on its part to be fulfilled under or in connection with
each SA Receivable originated by it and will do nothing to impair the rights of
SRC or its assigns in such SA Receivable or any related SA Transferred Assets.

 

(i)                                     Policies.  Perform its obligations in accordance with
and comply in all material respects with the Credit and Collection Policies as
amended from time to time in accordance with the Transaction Documents, in
regard to the SA Receivables originated by it and the related SA Transferred
Assets.

 

(j)                                     Taxes.  Pay and discharge promptly all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property, before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise which, if unpaid, might give rise to a Lien upon such
properties or any part thereof, provided, however that such
payment and discharge shall not be required with respect to any such tax,
assessment, charge, levy or claim so long as (i) the validity or amount thereof
shall be contested in good faith by appropriate proceedings and such Seller
shall set aside adequate reserves with respect thereto, (ii) such tax,
assessment, charge, levy or claim is in respect of property taxes for property
that such Seller has determined to abandon and the sole recourse for such tax,
assessment, charge, levy or claim is to such property and (iii) the failure to
make payment pending such contest could not reasonably be expected to result in
a Material Adverse Effect.

 

(k)                                  Collections.  Instruct each Obligor to make payments in
respect of its SA Receivables in accordance with its current practices with
respect to such Obligor to a Lock-Box Account and to otherwise comply in all
material respects with procedures with respect to Collections reasonably
specified from time to time by SRC.  With
respect to payments in respect of any SA Receivables that are made directly to
such Seller (including, without limitation, any employees thereof or
independent contractors employed thereby), such Seller shall immediately (and
in no event later than 1 Business Day after determination that such amount was
misdirected) deliver (which may be via regular mail) or deposit such amount to
a Lock-Box Account and, prior to forwarding such amounts, such Seller shall
hold such payments in trust as custodian for SRC.

 

(l)                                     Furnishing Copies, etc.  Furnish to SRC:

 

(i)                                     promptly
upon obtaining knowledge of the occurrence of any Pay Out Event, Default or
Event of Default written notice thereof specifying the nature and extent
thereof; and

 

(ii)                                  promptly
following request therefor, such information, documents, records or reports
regarding or with respect to the SA Receivables of the applicable Seller, as
SRC may from time to time reasonably request.

 

(m)                               Obligations with Respect to Obligors and SA
Receivables.  (i) Take all
actions on its part reasonably necessary to maintain in full force and effect
its material

 

11

 

rights under all
contracts relating to each SA Receivable originated by it and (ii) perform all
services relating to, or which give rise to, each SA Receivable originated by
it.

 

(n)                                 Responsibilities of Sellers.  Notwithstanding anything herein to the
contrary, (i) such Seller shall perform or cause to be performed all its
obligations under the Credit and Collection Policies related to the SA
Receivables to the same extent as if such SA Receivables had not been
transferred to SRC hereunder, (ii) the exercise by SRC or its assigns of any of
its rights hereunder shall not relieve any Seller of its obligations with
respect to such SA Receivables and (iii) except as provided by law, SRC shall
not have any obligation or liability with respect to any SA Receivables, nor
shall SRC be obligated to perform any of the obligations or duties of any
Seller thereunder.

 

(o)                                 Sale of Receivables.  Sell Receivables solely in accordance with
the terms of this Agreement.

 

(p)                                 Further Action.  In addition to the foregoing:

 

(i)                                     Each
Seller shall, at its sole cost and expense, upon request of SRC, promptly and
duly authorize, execute and/or deliver, as applicable, any and all further
instruments and documents and take such further actions that may be necessary
or desirable or that SRC may reasonably request to carry out more effectively
the provisions and purposes of this Agreement or to obtain the full benefits of
this Agreement and of the rights and powers herein granted, including
authorizing and filing any financing or continuation statements under the UCC
with respect to the ownership interests or Liens granted hereunder.  Each Seller hereby authorizes SRC to file any
such financing or continuation statements without the signature of such Seller
to the extent permitted by applicable law. 
A carbon, photographic or other reproduction of this Agreement or of any
notice or financing statement covering the SA Transferred Assets or any part
thereof shall be sufficient as a notice or financing statement where permitted
by law.  If any amount payable under or
in connection with any of the SA Transferred Assets is or shall become
evidenced by any instrument, such instrument, other than checks and notes
received in the ordinary course of business, shall be duly endorsed in a manner
reasonably satisfactory to SRC immediately upon the applicable Seller’s receipt
thereof and promptly delivered to or at the direction of SRC.

 

(ii)                                  If
any Seller fails to perform any agreement or obligation under this Section 4.2(p), SRC may (but shall not be
required to) itself perform, or cause performance of, such agreement or
obligation, and the reasonable expenses of SRC incurred in connection therewith
shall be payable by Seller upon demand of SRC. 
SRC agrees promptly to notify such Seller after any such performance; provided, that the failure to give such notice shall not affect the
validity of any such performance

 

12

 

Section 4.3                                      Negative Covenants of Seller.  Each Seller covenants and agrees that,
without the prior written consent of SRC, from and after the date hereof and
until the date after the Agreement Termination Date when the Unpaid Balances of
all SA Receivables transferred hereunder prior to such Agreement Termination
Date have been reduced to zero:

 

(a)                                  Adverse Claims and Liens.  Except as otherwise expressly herein
provided, Seller shall not sell, assign (by operation of law or otherwise),
transfer or otherwise dispose of, or create or suffer to exist any Adverse
Claim or Lien upon or with respect to, any SA Receivables or other SA Transferred
Assets, or assign any right to receive proceeds in respect thereof except for
Permitted Encumbrances.

 

(b)                                 Ineligible Receivables.  Such Seller shall not take any action to
cause, or which would permit, an Eligible Receivable to cease to be an Eligible
Receivable, other than solely as a result of the Obligor with respect to such
SA Receivable becoming subject to an Exchange Partner Arrangement after the
related SA Transfer Date or except as otherwise expressly provided by this
Agreement; provided that in no event shall an Eligible Receivable
becoming a Defaulted Receivable constitute a breach of this Section 4.3(b).

 

(c)                                  Change in Payment Instructions to Obligors.  Such Seller shall not cause or permit any
Obligor of any SA Receivables to be instructed to make any payments with
respect to any SA Receivables other than in accordance with its current
practices with respect to such Obligor or to a Lock-Box Account.

 

(d)                                 UCC Matters.  Such Seller shall not change its name, use an
additional name or change its identity or corporate structure in any manner
which would or might make any financing statement or continuation statement (or
other similar instrument) relating to this Agreement seriously misleading
within the meaning of the UCC (or any other similar law) or impair the
perfection of SRC’s interest in any SA Receivable or SA Transferred Asset under
any similar law, without 30 days prior written notice to SRC and without it
taking all actions required by Section 2.1(e).

 

(e)                                  Policies.  Such Seller shall not make any change or
modification (or permit any change or modification to be made) to the Credit
and Collection Policies, except (i) if such changes or modifications are
necessary under any Requirement of Law or (ii) if such changes or modifications
could not reasonably be expected to have a Material Adverse Effect.

 

(f)                                    Modification of Ledger.  Such Seller shall not delete or otherwise
modify the marking on the ledger referred to in Section 4.2(g).

 

(g)                                 Accounting of Purchases.  Such Seller shall not prepare, or have
prepared on its behalf, any financial statements which shall account for the
transactions contemplated hereby in any manner other than as sales of the SA
Receivables and SA Transferred Assets by such Seller to SRC or in any other
respect account for or treat the transactions contemplated hereby (including
for accounting purposes, except as required by law) in any manner other than as
sales of the SA Receivables and SA Transferred

 

13

 

Assets by such Seller to
SRC; provided, that this Section 4.3(g) shall not apply for any
tax or tax accounting purposes.

 

(h)                                 Instruments.  Such Seller shall not take any action to
cause any SA Receivable to be evidenced by any instrument (as defined in the
UCC as in effect in each applicable state) except in connection with the
enforcement or collection of an SA Receivable.

 

(i)                                     Modifications of SA
Receivables or Contracts. 
Seller shall not extend, amend, forgive, discharge, compromise, cancel,
waive or otherwise modify the terms or conditions of any SA Receivable or
Contract, as applicable, except (i) as provided in the Credit and Collection
Policies, or (ii) to the extent that such extension, amendment, forgiveness,
discharge, compromise, cancellation, waiver or modification does not affect SRC’s
ownership interest in such SA Receivable or Contract, as applicable, and does
not negatively impact the ultimate collectibility of such SA Receivable.

 

(j)                                     No Proceedings.  From and after the date hereof and until the
date one year plus one day following the date on which all amounts due with
respect to all the SA Transferred Assets and any amounts owing SRC hereunder
have been paid in full in cash, such Seller shall not, directly or indirectly,
institute or cause to be instituted against SRC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding or other proceeding under any
federal or state bankruptcy or similar law; provided
that the foregoing shall not in any way limit such Seller’s right to pursue any
other creditor rights or remedies that Seller may have under any applicable
law.

 

(k)                                  Lock-Box Accounts.  Such Seller shall not deposit or otherwise
credit, or cause or permit to be so deposited or credited, to any Lock-Box
Account cash or cash proceeds other than Collections, or take any action to
cause, or which would permit, the termination or amendment of any Lock-Box
Agreement.

 

Section 4.4                                      Representations and Warranties of SRC.  SRC hereby represents and warrants to each
Seller as follows:

 

(a)                                  Organization, Corporate Powers.  It is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, has all
requisite corporate power and authority to carry on its business as now
conducted and, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect, is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required and has the corporate power
and authority to execute, deliver and perform each of the Transaction Documents
to which it is a party and each other agreement or instrument contemplated
hereby or thereby to which it is or will be a party.

 

(b)                                 Authorization.  The transactions contemplated herein are
within the corporate powers of SRC and have been duly authorized by all
requisite corporate and, if required, Stockholder action.

 

14

 

(c)                                  Enforceability.  Each of this Agreement and each of the other
Transaction Documents to which it is a party has been duly executed and
delivered by SRC and constitutes a legal, valid and binding obligation of SRC
enforceable against it in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting creditors’ rights generally and except as enforceability
may be limited by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.

 

(d)                                 Governmental Approvals; No Conflicts.  The execution, delivery and performance by it
of this Agreement and each of the other Transaction Documents to which it is a
party, the acquisition of SA Receivables by it hereunder and the consummation
of the other transactions contemplated by any of the foregoing (i) do not
require any consent or approval of, registration or filing with, or any other
action by, any Governmental Authority, except such as have been obtained or
made and are in full force and effect, (ii) will not violate any applicable law
or regulation or the charter, by laws or other organizational documents of it
or any order of any Governmental Authority, (iii) will not violate or result in
a default under any indenture, agreement or other instrument binding upon SRC
or its assets, or give rise to a right thereunder to require any payment to be
made by SRC, and (iv) will not result in the creation or imposition of any Lien
on any asset of SRC.

 

Section 4.5                                      Covenants of SRC.  SRC
hereby acknowledges that the Indenture Trustee and the Noteholders are, and
will be, entering into the transactions contemplated by the Transaction
Documents in reliance upon SRC’s identity as a legal entity separate from SSCE,
each Seller and any other Person. 
Therefore, from and after the date hereof, SRC shall take all reasonable
steps to continue its identity as a separate legal entity and to make it
apparent to third Persons that it is an entity with assets and liabilities
distinct from those of SSCE, each Seller and any other Person, and that it is
not a division of SSCE, any Seller or any other Person.  Without limiting the generality of the
foregoing, SRC shall take such actions as shall be required in order that:

 

(i)                                     SRC
will maintain its own board of directors;

 

(ii)                                  Not
less than one member of SRC’s board of directors will be an Independent
Director and SRC’s board of directors will not approve, or take any other
action to cause the filing of, a voluntary bankruptcy petition with respect to
SRC unless the Independent Director and all other members of SRC’s board of
directors unanimously approve the taking of such action in writing prior to the
taking of such action;

 

(iii)                               SRC
will restrict its Independent Director from at any time serving as a trustee in
bankruptcy for any Affiliate;

 

(iv)                              SRC
will compensate each of its employees, consultants and agents from SRC’s own
funds for services provided to SRC, it being understood that this clause (iv)
shall not limit payments of the Servicing Fee. 
SRC will

 

15

 

not act as agent for the
Servicer and will engage no agents other than a servicer for the SA
Receivables, which servicer will be fully compensated for its services hereunder
by payment of the Servicing Fee, placement agents for the placement of Notes
and accountants and attorneys who, except to the extent provided otherwise
below in clause (v), will be compensated by SRC for their fees and other
charges as agreed to by SRC and such placement agents, accountants or attorneys
(as applicable);

 

(v)                                 SRC
will not incur any material indirect or overhead expenses for items shared
between SRC and any Affiliate, other than shared items of expenses not
reflected in the Servicing Fee, such as legal, auditing and other professional
services, that will be allocated on a basis reasonably related to the actual
use or the value of services rendered, it being understood that SSCE may pay
all expenses relating to the preparation, negotiation, execution and delivery
of the Transaction Documents, including, without limitation, legal, commitment,
agency and other fees; provided, further, that other than
pursuant to this Agreement, SRC will not engage in any other transactions with
the Servicer;

 

(vi)                              SRC’s
operating expenses or liabilities will not be paid by any Affiliate, including
guarantees or advancements of funds from the Servicer, recognizing that certain
organizational expenses of SRC and expenses relating to creation and initial
implementation of the transactions contemplated by the Transaction Documents,
however, have been or shall be paid by SSCE;

 

(vii)                           SRC
will conduct its business at an office separate from the offices of each
Affiliate, which office of SRC may consist of office space shared with an
Affiliate;

 

(viii)                        SRC
will maintain corporate records and books of account separate from those of
every Affiliate, and stationery and other business forms that are separate and
distinct from those of every Affiliate and will only conduct business under its
own name;

 

(ix)                                Any
financial statements of any Affiliate which are consolidated to include SRC
will contain detailed notes clearly stating that SRC is a separate corporate
entity and that its assets will only be available to satisfy the claims of its
own creditors;

 

(x)                                   SRC’s
assets and liabilities will be maintained in a manner that facilitates their
identification and segregation from those of any Affiliate and, in a manner
such that it will not be difficult or costly to segregate or ascertain, and
otherwise identify the individual assets and liabilities of SRC on the one
hand, from those of SSCE or any Affiliate on the other hand;

 

16

 

(xi)                                SRC
will strictly observe corporate formalities in its dealings with each
Affiliate, and funds or other assets of SRC will not be commingled with those
of any Affiliates and SRC shall not maintain joint bank accounts or other
depository accounts to which any Affiliate (other than SSCE in its capacity as
Servicer) has independent access;

 

(xii)                             SRC
shall not, directly or indirectly, be named and shall not enter into an
agreement to be named as a direct or contingent beneficiary or loss payee on
any insurance policy with respect to any loss relating to the property of an
Affiliate;

 

(xiii)                          Any
transaction between SRC and an Affiliate will be fair and equitable to SRC,
will be the type of transaction which would be entered into by a prudent Person
in the position of SRC with an Affiliate, and will be on terms which are at
least as favorable as may be obtained from a Person which is not an Affiliate;

 

(xiv)                         Any
Affiliate that renders or otherwise furnishes services to SRC will be
compensated by SRC at market rates for such services;

 

(xv)                            Neither
SRC nor any Affiliate will be or will hold itself out to be responsible for the
debts of the other; and

 

(xvi)                         The
duly elected board of directors of SRC and SRC’s duly appointed officers shall
at all times have sole authority to control decisions and actions with respect
to the daily business affairs of SRC.

 

ARTICLE
V

PURCHASE TERMINATION EVENTS

 

Section 5.1                                      Purchase Termination Events.  If a Purchase Termination Event occurs with
respect to any Seller, such Seller shall on the day any such Purchase
Termination Event occurs, immediately cease to transfer SA Receivables to SRC
and shall promptly give notice thereof to the Indenture Trustee and the Rating
Agencies.  Notwithstanding any cessation
of the transfer to SRC of SA Receivables, SA Receivables transferred to SRC
prior to the occurrence of a Purchase Termination Event and Collections in
respect thereof shall continue to be property of SRC.  Each of the Sellers and SRC agrees that late
charge revenue, reversals of discounts, other fees and charges and other similar
items, whenever created, accrued in respect of SA Transferred Assets from a
Seller shall be property of SRC notwithstanding the termination of the sale of
SA Receivables hereunder with respect to such Seller, and all Collections with
respect thereto shall continue to be allocated and treated as Collections in
respect of such SA Transferred Assets.

 

17

 

ARTICLE VI

INDEMNIFICATION

 

Section 6.1             Costs and Expenses.  Each Seller hereby jointly and severally
agrees to (a) pay or reimburse SRC for all its out-of-pocket costs and expenses
incurred in connection with the preparation and execution of, and any amendment,
supplement or modification to, this Agreement, the other Transaction Documents
and any other documents prepared in connection herewith or therewith, the
consummation and administration of the transactions contemplated hereby and
thereby, including, without limitation, all reasonable and documented fees and
disbursements of counsel, (b) pay or reimburse SRC for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement and any of the other Transaction Documents,
including, without limitation, the reasonable fees and disbursements of counsel
and (c) pay, indemnify and hold SRC harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying stamp, excise and other similar taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement and any such other documents.

 

Section 6.2             Indemnification.  Each Seller hereby jointly and severally
agrees to pay, indemnify and hold SRC (each, a “SRC Indemnified Person”) harmless from and against
any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever (i) which may at any time be imposed on, incurred by or
asserted against any such SRC Indemnified Person in any way relating to or
arising out of this Agreement or the Transaction Documents or the transactions
contemplated hereby and thereby or in connection herewith or any action taken
or omitted by any such SRC Indemnified Person under or in connection with any
of the foregoing (all such other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements being
herein called “Indemnified Liabilities”) or (ii)
which would not have been imposed on, incurred by or asserted against such SRC
Indemnified Person but for SRC having acquired the SA Receivables hereunder; provided,
that such indemnity shall not be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of such SRC Indemnified Person; and provided,
further, that no Seller shall have any obligation under this Section
6.2 to any SRC Indemnified Person with respect to Indemnified Liabilities
arising from (i) any action taken, or omitted to be taken, by a Servicer which
is not an Affiliate of such Seller, (ii) any action taken by SRC at the
direction of the Indenture Trustee in collecting from an Obligor or (iii) a
delay in payment, or a default, by an Obligor with respect to any SA Receivable
(other than arising out of (x) any discharge, claim, offset or defense (other
than discharge in bankruptcy of the Obligor) of the Obligor to the payment of
any SA Receivable (including, without limitation, a defense based on such SA
Receivable not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms) or any other claim
resulting from the sale of the merchandise or services related to any such SA
Receivable or the furnishing or failure to furnish such merchandise or
services, (y) a failure by any Seller to perform its duties or obligations
under this Agreement or (z) the transfer hereunder of any SA Receivable that is

 

18

 

designated on the
applicable Daily Report to be an Eligible Receivable and is determined to have
been at the date of such sale not an Eligible Receivable).  The agreements in this Section 6.2
shall survive the collection of all amounts owing in respect of SA Receivables,
the termination of this Agreement and the payment of all amounts payable
hereunder.

 

Section 6.3             No Indirect or Consequential
Damages.  NO PARTY TO THIS AGREEMENT SHALL BE
RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO THIS AGREEMENT, ANY SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON
ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES THAT MAY BE ALLEGED AS A RESULT OF ANY
TRANSACTION CONTEMPLATED HEREUNDER.

 

ARTICLE VII

MISCELLANEOUS

 

Section 7.1             Notices.  Except as otherwise provided herein, whenever
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other parties, or whenever any of the parties desires to
give or serve upon any other parties any communication with respect to this
Agreement, each such notice, demand, request, consent, approval, declaration or
other communication shall be in writing and shall be deemed to have been
validly served, given or delivered (a) upon the earlier of actual receipt
and three Business Days after deposit in the United States mail, registered or
certified mail, return receipt requested, with proper postage prepaid,
(b) upon transmission, when sent by telecopy or other similar facsimile
transmission (with such telecopy or facsimile promptly confirmed by delivery of
a copy by personal delivery or United States mail as otherwise provided in this
Section 7.1, (c) one Business
Day after deposit with a reputable overnight courier with all charges prepaid
or (d) when delivered, if hand-delivered by messenger, all of which shall
be addressed to the party to be notified and sent to the address or facsimile
number set forth below or to such other address (or facsimile number) as may be
substituted by notice given as herein provided. 
The giving of any notice required hereunder may be waived in writing by
the party entitled to receive such notice. 
Failure or delay in delivering copies of any notice, demand, request,
consent, approval, declaration or other communication to any Person (other than
SRC) designated in any written communication provided hereunder to receive
copies shall in no way adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.  Notwithstanding the foregoing, whenever it is
provided herein that a notice is to be given to any other party hereto by a
specific time, such notice shall be effective only if actually received by such
party prior to such time, and if such notice is received after such time or on
a day other than a Business Day, such notice shall be effective only on the
immediately succeeding Business Day.

 

19

 

SRC:                                                                      Stone
Receivables Corporation

8182 Maryland Avenue

Clayton, Missouri 63105

Attention: Treasurer

Telephone: 314- 746-1255

Telecopy: 314-746-1281

 

Seller:                                                                Smurfit-Stone
Container Enterprises, Inc.  

8182 Maryland Avenue

Clayton, Missouri 63105

Attention: Assistant Treasurer

Telephone: 314-746-1212

Telecopy: 314-746-1281

 

Section 7.2             No Waiver; Remedies.  (a) Any party’s failure, at any time or
times, to require strict performance by any other party hereto of any provision
of this Agreement shall not waive, affect or diminish any right of such party
thereafter to demand strict compliance and performance herewith or
therewith.  Any suspension or waiver of
any breach or default hereunder shall not suspend, waive or affect any other
breach or default whether the same is prior or subsequent thereto and whether
of the same or a different type.  None of
the undertakings, agreements, warranties, covenants and representations of any
party contained in this Agreement, and no breach or default by any party
hereunder or thereunder, shall be deemed to have been suspended or waived by
any other party unless such waiver or suspension is by an instrument in writing
signed by an officer of or other duly authorized signatory of such party and
directed to the defaulting party specifying such suspension or waiver.

 

(b)           In
the event that (i) any of the representations or warranties contained in Section
4.1(r) in respect of any SA Receivable shall be or shall have been
incorrect as of the date made or deemed made, any Seller shall breach any
covenant contained in Section 4.2(a), (i) or (m) or Section 4.3 with respect to
any SA Receivable or that any SA Receivable is
subject to any claim of ownership or any Lien (other than any ownership
interest or Lien created under this Agreement, the Transfer and Servicing
Agreement or the Indenture), and as a result of such breach or claim such SA
Receivable is charged off as uncollectible or SRC’s rights in, to or under such
SA Receivable or its proceeds are materially impaired or the proceeds of such
SA Receivable are not available for any reason to SRC  to the extent set forth herein free and clear
of any Adverse Claim, (ii) any SA Receivable shall become subject to any
defense, dispute, offset or counterclaim of any kind (other than as expressly
permitted by this Agreement) or (iii) any SA Receivable shall cease to be an
Eligible Receivable because it becomes subject to an Exchange Partner
Arrangement after the related SA Transfer Date for such SA Receivable (each of
the foregoing events or circumstances, a “SA  Repurchase Event”), such SA
Receivable shall cease to be an Eligible Receivable on the date on which such
SA Repurchase Event occurs.  In addition,
if any SA Repurchase Event shall occur with respect to any SA Receivable, then
the applicable Seller agrees to pay to SRC an amount (the “SA Repurchase
Amount”) in cash equal to the Unpaid
Balance of such SA Receivable, such payment to occur no later than the 30th day
after the day such SA Repurchase Event becomes known (or should have become
known with due diligence) to the applicable

 

20

 

Seller unless such SA
Repurchase Event shall have been cured on or before such day; provided
that any such payments to SRC may be netted against the Purchase Price of newly
created SA Receivables in accordance with clause (ii) of the definition of
Purchase Price Percentage to the extent of such Purchase Price and the
remaining amount of such payment due to SRC after such netting, if any, shall
be paid to SRC on such date in cash.  Any
payment by a Seller pursuant to this Section 7.2(b) received by SRC is
referred to as a “Seller Repurchase Payment.”  If, on or prior to
such 30th day, the applicable Seller shall so reacquire any such SA Receivable,
then SRC shall have no further remedy against such Seller in respect of the SA
Repurchase Event with respect to such reacquired SA Receivable. Upon a Seller
Repurchase Payment, SRC shall automatically and without further action be
deemed to sell, transfer, assign, set over and otherwise convey to the
applicable Seller, without recourse, representation or warranty, all the right,
title and interest of SRC in, to and under such SA Receivable and the other SA
Transferred Assets with respect thereto. 
SRC shall execute such documents and instruments of transfer or
assignment and take such other actions as shall be reasonably requested by such
Seller to effect the conveyance of such SA Receivable pursuant to this Section
7.2(b).

 

(c)           Each party’s rights and remedies
under this Agreement shall be cumulative and nonexclusive of any other rights
and remedies that such party may have under any other agreement, including the
other Transaction Documents, by operation of law or otherwise.

 

Section 7.3             Successors and Assigns.  This Agreement shall be binding upon and
shall inure to the benefit of each Seller and SRC and their respective
successors and permitted assigns, except as otherwise provided herein.  No Seller may assign, transfer, hypothecate
or otherwise convey its rights, benefits, obligations or duties hereunder
without the prior express written consent of SRC.  Any such purported assignment, transfer,
hypothecation or other conveyance by any Seller without the prior express
written consent of SRC shall be void. 
Each Seller acknowledges that: (a) under the Transfer and Servicing Agreement,
SRC will assign its rights granted hereunder to Funding LLC, and upon such
assignment, Funding LLC shall have, to the extent of such assignment, all
rights of SRC hereunder and (b) under the Indenture, Funding LLC will assign
such rights granted hereunder and under the Transfer and Servicing Agreement to
the Indenture Trustee and upon such assignment, the Indenture Trustee shall
have, to the extent of such assignment, all rights of Funding LLC under the
Transfer and Servicing Agreement and all rights of SRC hereunder.  The terms and provisions of this Agreement
are for the purpose of defining the relative rights and obligations of Sellers
and SRC with respect to the transactions contemplated hereby and no Person
shall be a third-party beneficiary of any of the terms and provisions of this
Agreement.

 

Section 7.4             Termination; Survival of Obligations.  This Agreement shall create and constitute
the continuing obligations of the parties hereto in accordance with its terms,
and shall remain in full force and effect until the later of (a) the
termination of Funding LLC as provided in the Funding LLC Limited Liability
Company Agreement and (b) such date agreed upon between SRC and the Sellers
(such date the “Agreement Termination Date”).

 

Section 7.5             Survival.  Except as otherwise expressly provided herein
or in any other Transaction Document, no termination or cancellation
(regardless of cause or procedure) of any

 

21

 

commitment made by SRC
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of any Seller or the rights of SRC relating to any unpaid
portion of any and all recourse and indemnity obligations of any Seller to SRC,
due or not due, liquidated, contingent or unliquidated or any transaction or
event occurring prior to such termination, or any transaction or event, the
performance of which is required after the Agreement Termination Date.  Except as otherwise expressly provided herein
or in any other Transaction Document, all undertakings, agreements, covenants,
warranties and representations of or binding upon Seller, and all rights of SRC
hereunder shall not terminate or expire, but rather shall survive any such
termination or cancellation and shall continue in full force and effect until
the date after the Agreement Termination Date when the Unpaid Balances of all
SA Receivables transferred hereunder prior to such Agreement Termination Date
have been reduced to zero; provided, that the
rights and remedies pursuant to Section 7.2(b),
the indemnification and payment provisions of Article VI,
and the provisions of Section 4.3(j)
shall be continuing and shall survive any termination of this Agreement.

 

Section 7.6             Complete Agreement; Modification of Agreement.  This Agreement constitutes the complete
agreement between the parties with respect to the subject matter hereof,
supersedes all prior agreements and understandings relating to the subject
matter hereof and thereof, and may not be modified, altered or amended except
as set forth in Section 7.7.

 

Section 7.7             Amendments and Waivers.  (a) This Agreement may be amended,
supplemented, modified or waived from time to time by SRC and any affected
Seller, with notice to the Rating Agencies, but without the consent of any of
Indenture Trustee or any Noteholder to cure any ambiguity, to correct or
supplement any provisions herein which may be inconsistent with any other
provisions herein or to add any other provisions with respect to matters or
questions raised under this Agreement which shall not be inconsistent with the
provisions of this Agreement; provided, however, that such action shall not adversely
affect in any material respect the interests of any of the Noteholders.  Additionally, this Agreement may be amended, supplemented,
modified or waived from time to time by SRC and any affected Seller by a
written instrument signed by each of them, without the consent of Indenture
Trustee or any of the Noteholders; provided
that (i) SRC shall have delivered to Indenture Trustee an Officer’s
Certificate, dated the date of any such amendment, supplement, modification or
waiver stating that SRC reasonably believes that such amendment, supplement,
modification or waiver will not have an Adverse Effect and (ii) the Rating
Agency Condition shall have been satisfied with respect to any such material
amendment.

 

(b)           This Agreement may also be amended,
supplemented, modified or waived from time to time by SRC and any affected
Seller with the prior written consent of the Noteholders holding more than a
majority of the Outstanding Principal Balance of the Notes of each Series
affected thereby for which SRC has not delivered an Officer’s Certificate
stating that there is no Adverse Effect.

 

(c)           Promptly after the execution of any
such amendment, supplement, modification or consent, SRC shall furnish
notification of the substance of such amendment, supplement, modification or
waiver to the Servicer, Funding LLC, the Indenture Trustee, and Servicer shall
furnish notification of the substance of such amendment to each Rating Agency.

 

22

 

(d)           It shall not be necessary for the
consent of Noteholders under this Section 7.7
to approve the particular form of any proposed amendment, supplement, modification
or waiver but it shall be sufficient if such consent shall approve the
substance thereof.

 

Section 7.8             GOVERNING LAW; CONSENT TO
JURISDICTION; WAIVER OF JURY TRIAL.   (a)  THIS AGREEMENT AND
THE OBLIGATIONS ARISING HEREUNDER SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING SECTION 5-1401(1) OF THE GENERAL OBLIGATIONS LAW, BUT WITHOUT REGARD
TO ANY OTHER CONFLICT OF LAWS PROVISIONS THEREOF) AND ANY APPLICABLE LAWS OF
THE UNITED STATES OF AMERICA.

 

(b)           EACH
PARTY HERETO HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS
LOCATED IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY SHALL HAVE NON-EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THEM
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO
THIS AGREEMENT; PROVIDED, THAT EACH PARTY
HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY
A COURT LOCATED OUTSIDE OF THE BOROUGH OF MANHATTAN IN NEW YORK CITY; PROVIDED, FURTHER, THAT NOTHING IN
THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE SRC FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE SA
RECEIVABLES OR ANY SECURITY FOR THE OBLIGATIONS OF SELLERS ARISING HEREUNDER OR
TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SRC.  EACH PARTY HERETO SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND EACH PARTY HERETO HEREBY WAIVES ANY OBJECTION THAT SUCH PARTY MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS
TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY
SUCH COURT.  EACH PARTY HERETO HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN
ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND
OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH
PARTY AT ITS ADDRESS DETERMINED IN ACCORDANCE WITH SECTION 7.1 AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF SUCH PARTY’S ACTUAL RECEIPT THEREOF OR THREE DAYS
AFTER DEPOSIT IN THE UNITED STATES MAIL, PROPER POSTAGE PREPAID.  NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

 

23

 

(c)           BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.  THEREFORE, TO ACHIEVE THE BEST COMBINATION OF
THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO
RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

 

Section 7.9             Counterparts.  This Agreement may be executed in any number
of separate counterparts, each of which shall be an original and all of which
taken together shall constitute one agreement.

 

Section 7.10           Severability.  Wherever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by
or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity without invalidating the remainder
of such provision or the remaining provisions of this Agreement.

 

Section 7.11           Section Titles.  The section titles and table of contents
contained in this Agreement are provided for ease of reference only and shall
be without substantive meaning or content of any kind whatsoever and are not a
part of the agreement between the parties hereto.

 

Section 7.12           No Setoff.  No Seller’s obligations under this Agreement
shall be affected by any right of setoff, counterclaim, recoupment, defense or
other right such Seller may have against SRC, all of which rights are hereby
expressly waived by each Seller.

 

Section 7.13           Confidentiality.  Notwithstanding anything herein to the
contrary, there is no restriction (express or implied) on any disclosure or
dissemination of the structure or tax aspects of the transaction contemplated
by the Transaction Documents. 
Furthermore, each party hereto acknowledges that it has no proprietary
rights to any tax matter or tax idea contemplated hereby or to any element of
the transaction structure contemplated hereby.

 

ARTICLE
VIII

ADDITION AND REMOVAL OF SELLERS

 

Section 8.1             Addition of Sellers.  (a) Subject to clause (b) below and any
applicable provisions in any Indenture Supplement, from time to time one or
more direct or indirect Subsidiaries or Affiliates of SSCE may become a Seller
hereunder and a party hereto.  If any

 

24

 

such Subsidiary or
Affiliate desires to become a Seller, it shall submit a request to such effect
in writing to SRC. SRC, in its sole and absolute discretion, may agree to or
deny any such request; provided that if SRC shall have failed to respond
to any such request within 30 days after receipt thereof, such request shall be
deemed to have been denied. If SRC shall have agreed to any such request, such
Subsidiary or Affiliate shall become an additional Seller hereunder and a party
hereto on the related Seller Addition Date upon satisfaction of the conditions
set forth in clause (b) below.

 

(b)           Conditions Precedent to
the Addition of a Seller. 
No Subsidiary or Affiliate of SSCE approved by SRC in writing as an
additional Seller pursuant to clause (a) above shall be added as a
Seller hereunder unless the conditions set forth below shall have been
satisfied on or before the date designated for the addition of such Seller (the
“Seller Addition Date”):

 

(i)                                     SRC
shall have received an additional seller supplement in substantially the form
of Exhibit B hereto (the “Additional Seller
Supplement”), duly executed and delivered by such additional Seller;

 

(ii)                                  SRC
shall have received copies of duly adopted resolutions of the board of
directors of such Seller as in effect on the related Seller Addition Date and
in form and substance reasonably satisfactory to SRC, authorizing this
Agreement, the documents to be delivered by such Seller hereunder and the
transactions contemplated hereby, certified by the Secretary or an Assistant
Secretary  of such Seller;

 

(iii)                               SRC
shall have received the certificate or articles of incorporation or formation
and by-laws of such Seller or other organizational documents of such Seller,
duly certified by the Secretary or an Assistant Secretary of such Seller;

 

(iv)                              SRC
shall have received a good standing certificate with respect to such additional
Seller dated as of a date reasonably satisfactory to SRC;

 

(v)                                 SRC
shall have received duly executed certificates of the Secretary or an Assistant
Secretary of such Seller dated the related Seller Addition Date and in form and
substance reasonably satisfactory to SRC, certifying the names and true
signatures of the officers authorized on behalf of such Seller to sign the
Additional Seller Supplement or any instruments or documents in connection with
this Agreement (on which certificates SRC may conclusively rely until such time
as SRC shall receive from such Seller a revised certificate with respect to
such Seller meeting the requirements of this subsection (v));

 

(vi)                              such
Seller shall have filed and recorded, at its own expense, UCC-1 financing
statements (and other similar instruments) with respect to the SA Receivables
and the other SA Transferred Assets in such manner and in such jurisdictions as
are necessary or desirable to perfect SRC’s ownership

 

25

 

interest thereof under
the Uniform Commercial Code (or any other similar law), and all other action
necessary, in the opinion of SRC, to perfect SRC’s ownership of the SA
Receivables and the other SA Transferred Assets shall have been duly taken; and

 

(vii)                           SRC
shall have received written confirmation from the Rating Agencies that the
addition of such additional Seller will not result in a downgrade or withdrawal
of the current ratings on any outstanding Notes of any Series; provided,
however, three Sellers may be added annually with notice to the Rating
Agencies, but without obtaining written confirmation from the Rating Agencies
if (a) the added Sellers are in the same line of business as the current Sellers;
(b) the Eligible SA Receivables of each added Seller do not represent more than
five percent of the current aggregate Unpaid Balances of all Eligible
Receivables; and (c) the reserves related to losses and dilutions are restated
before each Seller is added to include the historical performance of the SA
Receivables transferred by the added Seller.

 

Section 8.2             Termination
of Sellers.  (a) From and after the
date that any Seller notifies SRC (with a copy of such notice to the Servicer
and the Indenture Trustee), SRC shall cease buying SA Receivables and other SA
Transferred Assets from such Seller. 
Each such Seller shall be released as a Seller party hereto for all
purposes and shall cease to be a party hereto on the date on which there are no
amounts outstanding with respect to SA Receivables previously sold by such
Seller to SRC, whether such amounts have been repurchased, collected or written
off in accordance with the Credit and Collection Policies.  The Rating Agencies shall be notified by the
Servicer of such termination.  Prior to
such date such Seller shall be obligated to perform its servicing and other
obligations hereunder and under the Transaction Documents to which it is a
party with respect to SA Receivables previously sold by such Seller to SRC,
including, without limitation, its obligation to deposit Collections into the
appropriate Lock-Box Accounts.

 

(b)           A terminated Seller shall have no
obligation to repurchase any SA Receivables other than SA Receivables sold by
any Seller to SRC prior to such Seller’s termination which are subject to an SA
Repurchase Event.

 

(c)           Upon termination of a Seller, the
reserves related to losses and dilutions shall be recalculated to exclude the historical
performance of the terminated Seller.

 

[Remainder of
page intentionally left blank.]

 

26

 

IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed by their respective duly
authorized representatives, as of the date first above written.

 

	
   

  	
  STONE RECEIVABLES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard P. Marra

  
	
   

  	
   

  	
  Name:

  	
  Richard P. Marra

  
	
   

  	
   

  	
  Title:

  	
  Assistant
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SMURFIT-STONE CONTAINER

  ENTERPRISES, INC.,

  
	
   

  	
  as a Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard P. Marra

  
	
   

  	
   

  	
  Name:

  	
  Richard P. Marra

  
	
   

  	
   

  	
  Title:

  	
  Assistant
  Treasurer

  
							

 

S-1

 

Schedule 4.1(k)

 

LOCKBOXES

 

Bank of America, N.A.

 

Lock-Box Addresses: 840865, 409813 and 18265

 

Lock-Box Account No. 3750677531

 

 

 

JPMorgan Chase Bank, N.A.

 

Lock-Box Nos. 21515, 905338 and 730707

 

Lock-Box Account No. 636282956, 1007574

 

1

 

Schedule 4.1(m)

 

OFFICES; QUALIFICATION TO DO BUSINESS

 

	
  Location of Records:

  	
  401 Alton Street

  
	
   

  	
   

  
	
   

  	
  Alton, Illinois 62002

  

 

	
  States in which Seller is duly qualified to do business:

  
	
   

  	
   

  
	
   

  	
  Alabama, Arizona, Arkansas, California, Colorado, Connecticut,
  Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana,
  Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana,
  Nebraska, New Mexico, New Jersey, New York, North Carolina, North Dakota,
  Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota,
  Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin

  

 

1

 

Schedule 4.1(p)

 

UCC
INFORMATION

 

Smurfit-Stone
Container Enterprises, Inc.

 

	
  True
  Legal Name:

  	
  Smurfit-Stone
  Container Enterprises, Inc.

  
	
   

  	
   

  
	
  Jurisdiction
  of Organization:

  	
  Delaware

  
	
   

  	
   

  
	
  Chief
  Executive Offices/Collateral Locations:

  	
  150
  N. Michigan Avenue, Chicago, Illinois

  60601

  
	
   

  	
   

  
	
  FEIN:

  	
  36-2041256

  
	
   

  	
   

  
	
  Organizational
  Identification Number:

  	
  2123437

  

 

 

Prior to November 1, 2004, Smurfit-Stone Container Enterprises, Inc.
operated under the name  Stone Container
Corporation.  In addition, Smurfit-Stone
Container Enterprises, Inc. used the following names in connection with the
conduct of its business or the ownership of its properties during the past five
years: i 2 i, Smurfit-Stone Recycling Company and Castle Rock Container.

 

1

 

Exhibit A

FORM OF SHORT-TERM NOTE

 

November 23, 2004

 

FOR VALUE RECEIVED, the undersigned, STONE RECEIVABLES
CORPORATION, a Delaware corporation, (“SRC”) hereby promises to pay to the
order of Smurfit-Stone Container Enterprises, Inc., a Delaware corporation
(together with its successors and assigns, the “Lender”), to the “Lender’s
Account” (as defined below) in lawful money of the United States of America and
in immediately available funds, on the Short-Term Note Maturity Date (as
defined below), the aggregate unpaid principal sum outstanding of all loans
made from time to time by the Lender to SRC to fund the acquisition of
Receivables by SRC as contemplated by and in accordance with the Sale Agreement
referred to below.  SRC may at any time
and from time to time prepay the outstanding indebtedness evidenced hereby, in
whole or in part, without premium or penalty.

 

This Short-Term Note is referred to in and was
executed and delivered pursuant to that certain Sale Agreement dated as of
November 23, 2004 (as such agreement may be amended, restated or otherwise
modified from time to time, the “Sale Agreement”).  Reference to the Sale Agreement is hereby
made for a statement of the terms and conditions under which the loans evidenced
hereby have been and will be made. All terms which are capitalized and used
herein (which are not otherwise specifically defined herein) and which are
defined in the Sale Agreement or the Master Indenture (as defined in the Sale
Agreement) shall have the meanings assigned to such terms in the Sale Agreement
and the Master Indenture, respectively.

 

SRC further promises to pay interest on the
outstanding unpaid principal amount hereof, as provided in the Sale Agreement,
for each day from the date hereof until payment in full hereof at a rate equal
to the Eurodollar Rate for such day plus one-half of one percent (0.5%); provided,
however, that if SRC shall default in the payment of any principal
hereof, SRC promises to pay interest on any such unpaid amounts, from and after
the Business Day immediately following the Business Day SRC receives notice
thereof from the Lender to the date of actual payment, at two percent (2%) per
annum in excess of the rate of interest otherwise payable hereunder (but in no
case higher than the highest lawful rate). 
Interest shall be payable on each Payment Date in arrears.

 

The Lender is authorized and directed by SRC to enter
on the grid attached hereto, or, at its option, in its books and records, the
date and amount of each loan made by it which is evidenced by this Short-Term
Note and the amount of each payment of principal made by SRC, and absent
manifest error, such entries shall constitute prima facie evidence of
the accuracy of the information so entered; provided, that neither the
failure of the Lender to make any such entry nor any error therein shall
expand, limit or affect the obligations of SRC hereunder.

 

All payments of principal and interest in respect of
this Short-Term Note shall be made to the Lender in lawful money of the United
States of America in same day funds to the Lender’s account at such place as
shall be designated from time to time in writing by the Lender for such purpose
in accordance with the terms of the Sale Agreement (the “Lender’s Account”).

 

1

 

The indebtedness evidenced by this instrument is
subordinated to the prior payment in full of all “Senior Claims” of SRC,
which is any Indebtedness of SRC and all renewals, extensions, refinancings and
refundings thereof, except any such Indebtedness that expressly provides that
it is not senior or superior in right of payment hereto, including any
Indebtedness that would become due except for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a), and
interest fees and charges that, but for the filing of a petition in bankruptcy
with respect to SRC would accrue on such Obligations whether or not a claim is
allowed against SRC for the same in such proceedings.  “Indebtedness” is any indebtedness,
whether or not contingent, in respect of borrowed money or evidenced by bonds,
notes, debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereto) and guarantees of any of the foregoing, whether
or not any such indebtedness would appear as a liability on a balance sheet of
SRC prepared on a consolidated basis in accordance with generally accepted
accounting principles.

 

All scheduled payments of principal and interest in
respect of Senior Claims must be paid before this Short-Term Note shall be
payable, and all scheduled payments of principal and interest on this
Short-Term Note shall be payable only to the extent that SRC, after paying all
of its accounts payable and other expenses and obligations, has funds to make
such payments.  SRC agrees, and the
holder hereof, by accepting this Short-Term Note agrees, to the subordination
provisions herein contained.

 

Lender agrees that upon any distribution of the assets
or readjustment of the obligations of SRC, whether by reason of voluntary or
involuntary liquidation, dissolution, winding up, composition, bankruptcy,
reorganization, arrangement, receivership, assignment for the benefit of
creditors or any marshalling of its assets or the readjustment of its
liabilities or any other action or proceeding whether partial or total
(collectively, “Bankruptcy Proceeding”), the holders of the Senior
Claims (“Senior Holders”) shall be entitled to receive cash payment in
full of lawful money of the United States of America of any and all Senior
Claims in accordance with their respective terms prior to the payment of, or
other distribution in respect of, all or any part of the indebtedness or other
obligations hereunder.

 

In order to enable any Senior Holder or any such
trustee, agent or representative acting on behalf of any such Senior Holder, to
enforce their rights hereunder in any Bankruptcy Proceeding, such Senior
Holders are hereby irrevocably authorized and empowered in their respective discretion
to present for and on behalf of Lender such proofs of claim against SRC on
account of the indebtedness or other obligations hereunder as such Senior
Holder may deem expedient or proper and to vote such proofs of claim in any
such Bankruptcy Proceeding, and to receive and collect any and all dividends or
other payments or disbursements made thereon in whatever form the same may be
paid or issued and to apply the same on account of any Senior Claim in
accordance with the provisions of the Master Indenture.  Lender agrees to execute and deliver any
assignments or instruments which may be expedient or necessary to enable any
Senior Holder to enforce any such claims and to collect any and all dividends
or other payments or disbursements which may be made at any time on account of
this Short-Term Note.

 

Lender further agrees that it shall not
(i) challenge the legality, validity, enforceability or priority of the
Senior Claims or the legality, validity, enforceability, perfection or priority
of the liens granted in support of the Senior Claims or the rights of Senior
Holders in respect of the

 

2

 

Senior Claim, (ii)
exercise any remedy or commence, prosecute or participate in any action,
whether private, judicial, equitable, administrative or otherwise, including
without limitation any bankruptcy case, against SRC or any of its assets to
enforce any rights under or in respect of this Short-Term Note or otherwise
take any action to collect, recover or seek enforcement of payment of this
Short-Term Note prior to one year plus one day after the latest occurring Legal
Final Maturity for any Series of Notes (the “Short-Term Note Maturity Date”);
provided that this paragraph shall not prohibit (subject to the
subordination terms hereof) Lender from filing a proof of claim or otherwise
participating in any such proceeding not commenced by it or SRC to the extent
the Senior Holder does not file a proof of claim in respect of this Short-Term
Note pursuant to the preceding paragraph.

 

In the event that, notwithstanding the foregoing
provisions prohibiting such payment or distribution, Lender shall have received
any payment under or in respect of this Short-Term Note at a time when such
payment is prohibited and before the principal, interest and all other amounts
constituting the Senior Claims are paid in full in cash in accordance with
their respective terms, then in such event such payment or distribution shall
be received and held in trust for the Senior Holders and shall be paid over or
delivered to such Senior Holders or their agent to the extent necessary to pay
in full, in accordance with its terms the principal, interest and all other
amounts of such Senior Claims after giving effect to any concurrent payment or
distribution to the Senior Holders in respect of such Senior Claim.

 

To the extent that SRC makes any payment on the Senior
Claims which is subsequently invalidated, declared to be fraudulent or
preferential, set aside or is required to be repaid to a trustee, receiver or
any other party under any Bankruptcy Proceeding or otherwise (such payment
being hereinafter referred to as a “Voided Payment”) then, to the extent
of such voided payment, that portion of the Senior Claims which had previously
been satisfied by such Voided Payment shall be revived to continue in full
force and effect as if such Voided Payment had never been made and, until the
amount of such Voided Payment is fully and finally restored to the Senior
Holders, the foregoing subordination provisions shall be in full force and
effect with respect to the obligations of SRC hereunder.

 

The foregoing subordination provisions shall not be
released, discharged or otherwise affected by:

 

(1)           any
extension, renewal, settlement, compromise, waiver or release in respect of any
obligation of any Seller, the Servicer, the Issuer or SRC (each, a “Relevant
Person”) under any Transaction Document, by operation of law or otherwise;

 

(2)           any
modification or amendment of or supplement to any Transaction Document;

 

(3)           any
release, non-perfection or invalidity of any direct or indirect security for
any obligation of any Relevant Person under any Transaction Document;

 

(4)           any
change in the corporate existence, structure or ownership of any Relevant
Person, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting any Relevant Person or its assets or any resulting release
or 

 

3

 

discharge of any
obligation of any Relevant Person contained in any Transaction Document;

 

(5)           the
existence of any claim, setoff or other rights which the holder hereof may have
at any time against any Relevant Person, including the Indenture Trustee, or
any other corporation or person, whether in connection herewith or any unrelated
transactions, provided that nothing herein shall prevent the assertion
of any such claim by separate suit or compulsory counterclaim;

 

(6)           any
invalidity or unenforceability relating to or against any Relevant Person for
any reason of any Transaction Document, or any provision of applicable law or
regulation purporting to prohibit the payment by any Relevant Person of any
amount payable by any Relevant Person under any Transaction Document; or

 

(7)           any
other act or omission to act or delay of any kind by any Relevant Person or any
other corporation or person or any other circumstance whatsoever which might,
but for the provisions of this paragraph, constitute a legal or equitable
discharge of such subordination provisions.

 

4

Exhibit A

 

THIS SHORT-TERM NOTE AND THE OBLIGATIONS ARISING
HEREUNDER SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION
5-1401(1) OF THE GENERAL OBLIGATIONS LAW, BUT WITHOUT REGARD TO ANY OTHER
CONFLICT OF LAWS PROVISIONS THEREOF) AND ANY APPLICABLE LAWS OF THE UNITED
STATES OF AMERICA.

 

Wherever possible each provision of this Short-Term
Note shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Short-Term Note shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Short-Term Note.

 

All parties hereto, whether as makers, endorsers, or
otherwise, severally waive presentment for payment, demand, protest and notice
of dishonor.

 

	
   

  	
  STONE RECEIVABLES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

 

Schedule

to

SHORT-TERM NOTE

LOANS AND PAYMENTS OF PRINCIPAL

 

	
  Date

  	
   

  	
  Amount

  of

  Loan

  	
   

  	
  Amount

  of

  Principal Paid

  	
   

  	
  Unpaid

  Principal

  Balance

  	
   

  	
  Notation

  made by

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

6

 

EXHIBIT B

 

[FORM OF ADDITIONAL SELLER SUPPLEMENT]

 

 

ADDITIONAL SELLER SUPPLEMENT

 

SUPPLEMENT, dated [               ],
to the Sale Agreement, dated as of November 23, 2004 (as amended, supplemented
or otherwise modified from time to time in accordance with its terms, the “Sale
Agreement”), among Smurfit-Stone Container Enterprises, Inc. (“Stone”),
as a Seller, the other Sellers added pursuant to a prior Additional Seller
Supplement and Stone Receivables Corporation, as the Purchaser.

 

W I T N E S S E T H:

 

WHEREAS, the Sale Agreement provides that any direct
or indirect Affiliate or Subsidiary of Stone, although not originally a Seller
thereunder, may become a Seller under the Sale Agreement upon the satisfaction
of each of the conditions precedent set forth in Section 8.1 of the Sale
Agreement;

 

WHEREAS, the undersigned was not an original Seller
under the Sale Agreement but now desires to become a Seller thereunder.

 

NOW, THEREFORE, the undersigned hereby agrees as
follows:

 

The undersigned agrees to be bound by all of the
provisions of the Sale Agreement applicable to a Seller thereunder and agrees
that it shall, on the date this Supplement is accepted by Stone, the Purchaser
and the Indenture Trustee and each of the conditions precedent set forth in Section
8.1 of the Sale Agreement have been satisfied, become a Seller for all
purposes of the Sale Agreement to the same extent as if originally a party
thereto.

 

Schedules 4.1(m) and 4.1(p) hereto shall supplement
Schedules 4.1(m) and 4.1(p) of the Sale Agreement with respect to the
undersigned Seller.

 

[signature
page follows]

 

B-1

 

IN WITNESS WHEREOF, the undersigned has caused this
Supplement to be executed and delivered by a duly authorized officer on the
date first above written.

 

	
   

  	
  [Insert name of Seller]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  [address]

  
	
   

  	
   

  
	
  Accepted as of the date

  	
   

  
	
  first above written:

  	
   

  
	
   

  	
   

  
	
  SMURFIT-STONE CONTAINER ENTERPRISES, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  STONE RECEIVABLES CORPORATION

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  DEUTSCHE BANK TRUST COMPANY

  	
   

  
	
  AMERICAS, as Indenture Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
										

 

B-2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}]]