SECOND AMENDMENT
OF CREDIT AGREEMENT
THIS SECOND AMENDMENT OF CREDIT AGREEMENT, dated as of March 26, 1998 (this
"AMENDMENT"), is by and among Stone Container Corporation, a Delaware
corporation (the "BORROWER"), the undersigned financial institutions, including
Bankers Trust Company, in their capacities as lenders (collectively, the
"LENDERS," and each individually, a "Lender"), Bankers Trust Company, as agent
(the "AGENT") for the Lenders, and the undersigned financial institutions in
their capacities as Co-Agents.
RECITALS:
A. The Borrower, Bank of America National Trust & Savings Association,
The Bank of New York, The Bank of Nova Scotia, Caisse Nationale de Credit
Agricole, The Chase Manhattan Bank, N.A., Dresdner Bank AG-Chicago and Grand
Cayman Branches, The First National Bank of Chicago, The Long-Term Credit Bank
of Japan, Ltd., NationsBank, N.A. (Carolinas), The Sumitomo Bank, Ltd., Chicago
Branch and Toronto Dominion (Texas), Inc., as co-agents (collectively, the
"CO-AGENTS," and each individually, a "CO-AGENT"), the Agent and the Lenders are
parties to that certain Amended and Restated Credit Agreement dated as of June
19, 1997, as amended by the First Amendment of Credit Agreement dated as of
December 22, 1997 (the "CREDIT AGREEMENT").
B. The Borrower has requested the Agent and the Lenders to amend the
Credit Agreement to, among other things, adjust the Indebtedness Ratio levels
that are required to be maintained by the Borrower under SECTION 5.3 of the
Credit Agreement, and to modify certain other provisions of the Credit
Agreement.
C. The Borrower, the Agent and the Lenders desire to amend the Credit
Agreement on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS. Unless otherwise defined herein, all
capitalized terms used herein shall have the meanings given them in the Credit
Agreement.
SECTION 2. AMENDMENTS TO THE CREDIT AGREEMENT. The Credit Agreement
is, as of the Effective Date (as defined below), hereby amended as follows:
(a) SECTION 5.2.2(t) of the Credit Agreement is amended by deleting
"December 23, 1997" appearing in the second proviso of such Section and
substituting "March 26, 1998" therefor.
(b) SECTION 5.2.10(e) of the Credit Agreement is amended by deleting
such Section in its entirety and substituting therefor the following:
"(e) Make any mandatory offer to purchase, or redeem or purchase,
any Indebtedness created pursuant to or evidenced by any of the
Specified Senior Indentures pursuant to a "Deficiency Offer" made
in accordance with Article Eleven (or any other similar Article
or provision) of any thereof (it being understood and agreed that
no such Deficiency Offer may be directly or indirectly made out
of the proceeds of Indebtedness incurred as permitted by SECTION
5.2.2(q) or out of Discretionary Funds); PROVIDED, HOWEVER, that
the Borrower may make a Deficiency Offer solely with respect to
the Borrower's failure to maintain the Minimum Subordinated
Capital Base (as such term is defined in each of the Senior
Indentures) as of Borrower's two consecutive Fiscal Quarters
ended December 31, 1997 and March 31, 1998, no later than April
7, 1998 (regardless of the actual payment date for securities
accepted pursuant to such Deficiency Offer) in accordance with
the terms and conditions set forth in Article Eleven of each of
the Senior Indentures, and purchase any securities tendered in
such Deficiency Offer, provided that the Borrower satisfies each
of the following conditions: (i) the sum of (A) the Total
Available Revolving Commitment PLUS (B) the Total Available
Supplemental Revolving Commitment shall be equal to or greater
than $225,000,000 on the final date for the tender of securities
in such Deficiency Offer (and after taking into effect any
proposed borrowings of Revolving Loans and Supplemental Revolving
Loans, the proceeds of which are proposed to be used to purchase
securities tendered in such Deficiency Offer and accepted for
payment); (ii) on the final date for the tender of securities in
such Deficiency Offer, all of the securities outstanding under
the Specified Senior Indentures (other than the 12-5/8% Senior
Notes due July 15, 1998, the 11-7/8% Senior Notes due December 1,
1998 and the 9-7/8% Senior Notes due February 1, 2001) shall be
trading at a price of not less than par value as quoted to the
Agent by at least two out of three independent brokers and/or
market makers acceptable to the Agent; and (iii) in the event the
Borrower uses proceeds, whether directly or indirectly, of
Revolving Loans and/or Supplemental Revolving Loans in an
aggregate amount in excess of $60,000,000 (such amount in excess
of $60,000,000 being referred to herein as the "EXCESS REVOLVER
AMOUNT"), then the Borrower shall repay such Excess Revolver
Amount (provided that the Borrower shall not be obligated to
repay such Excess Revolver Amount until the Excess Revolver
Amount is equal to or greater than $5,000,000) on or before the
90th day following the last incurrence of such Revolving Loans
and/or Supplemental Loans, the proceeds of which are used,
directly or indirectly, to fund such Deficiency Offer, with
proceeds from the incurrence of Indebtedness which the Borrower
or any of its Subsidiaries incurs in compliance with the terms
and conditions of this Agreement (including, without limitation,
SECTION 5.2.2) and the Specified Senior Indentures; and PROVIDED
FURTHER, that the terms and conditions of the foregoing proviso
shall not be construed to permit the Borrower to make any
subsequent Deficiency Offer following the one-time Deficiency
Offer that is expressly permitted in the foregoing proviso, any
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such subsequent Deficiency Offer remaining expressly prohibited by
this SECTION 5.2.10(e)."
(c) SECTION 5.3.1(a) of the Credit Agreement is amended by deleting
the ratio "0.75 to 1" appearing opposite the date "June 30, 1998" in such
Section and substituting therefor the ratio "0.65 to 1".
(d) SECTION 5.3.2 of the Credit Agreement is amended by deleting such
Section in its entirety and substituting therefor the following:
"Section 5.3.2 INDEBTEDNESS RATIO. Have an Indebtedness Ratio
of not more than the following amounts as of the end of each
Fiscal Quarter ending on a date set forth below:
Date Ratio
----- -------
December 31, 1994 through
March 31, 1997 .85 to 1
June 30, 1997 .86 to 1
September 30, 1997 .88 to 1
December 31, 1997 .90 to 1
March 31, 1998 .92 to 1
June 30, 1998 .92 to 1
September 30, 1998 .92 to 1
December 31, 1998 .91 to 1
March 31, 1999 .90 to 1
June 30, 1999 .85 to 1
September 30, 1999 .80 to 1
December 31, 1999 and
thereafter .76 to 1"
(e) The Definitional Appendix of the Credit Agreement is amended by
deleting the last sentence appearing in the definition of "Consolidated Net
Income" and "Consolidated Net Loss" appearing therein and substituting
therefor the following:
"Notwithstanding the foregoing, (i) any loss recognized upon the
sale or other disposition of any Abitibi Shares (including,
without limitation, upon the exchange or conversion of any
security or other instrument for Abitibi Shares which constituted
Monetized Assets), (ii) any non-cash exchange related gain or
loss at Stone Finance from and after October 1, 1997 and (iii)
any loss recognized as the result of the write-off of all or any
portion of Stone-Canada's investment in SVCPI, in each case,
shall be excluded for purposes of determining Consolidated Net
Income and Consolidated Net Loss."
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(f) The Definitional Appendix of the Credit Agreement is amended by
inserting at the end of the definition of "Consolidated Net Worth"
appearing therein the following:
"Notwithstanding the foregoing, (i) any loss recognized as the
result of the write-off of all or any portion of Stone-Canada's
investment in SVCPI, (ii) any losses recognized in the fourth
Fiscal Quarter in 1997 up to an aggregate amount not exceeding
$29 million with respect to non-cash exchange related losses and
one-time restructuring charges at S-CC, Stone Finance and SVCPI,
and (iii) any non-cash exchange related gain or loss at S-CC,
Stone Finance or SVCPI from and after January 1, 1998, in each
case, shall be excluded for purposes of determining Consolidated
Net Worth."
SECTION 3. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AMENDMENT. This
Amendment shall become effective upon the date (the "EFFECTIVE DATE") when
each of the following conditions precedent are satisfied:
(a) each of the Borrower, the Agent and the Required Lenders shall
have executed and delivered this Amendment;
(b) the Borrower shall have paid in full to the Agent on or before
March 27, 1998 (the "FEE PAYMENT DATE"), for ratable distribution to those
Lenders that have executed and delivered this Amendment at or before 5:00
p.m. (Chicago time) on March 26, 1998, an amount equal to .125% of the
aggregate outstanding Loans (in the case of Term Loans, Additional Term
Loans, D Tranche Term Loans and E Tranche Term Loans) and Commitments (in
the case of Revolving Loan Commitments and Supplemental Revolving Loan
Commitments) of such Lenders as of the Fee Payment Date; PROVIDED, HOWEVER,
that no such fee shall be payable pursuant to this clause (b) in the event
that this Amendment is not executed by the Required Lenders; and
(c) the Agent shall have received from the Borrower an opinion of
Sidley & Austin, counsel to the Borrower, in form and substance reasonably
satisfactory to the Agent and stating that (i) the Credit Agreement, as
amended by this Amendment, constitutes the legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms, and
(ii) the execution, delivery and performance of the Credit Agreement, as
amended by this Amendment, does not conflict with or result in a breach of,
or constitute a default under, any indenture, loan or credit agreement or
other agreement or instrument known to such counsel to which the Borrower
or any of its Subsidiaries is a party or by which any of their respective
properties are bound, and such certificates and other opinions with respect
hereto as the Agent may reasonably require.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
Borrower represents and warrants to the Lenders, the Co-Agents and the Agent as
follows:
(a) The representations and warranties contained in the Credit
Agreement and the other Loan Documents are true and correct in all material
respects at and as of the date hereof as though made on and as of the date
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hereof (except to the extent specifically made with regard to a particular
date).
(b) No Event of Default or Unmatured Event of Default has occurred
and is continuing.
(c) The execution, delivery and performance of this Amendment has
been duly authorized by all necessary action on the part of, and duly
executed and delivered by, the Borrower and this Amendment is a legal,
valid and binding obligation of the Borrower enforceable against the
Borrower in accordance with its terms, except as the enforcement thereof
may be subject to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and general principles of equity (regardless of whether such
enforcement is sought in a proceeding in equity or at law).
(d) The execution, delivery and performance of this Amendment do not
conflict with or result in a breach by the Borrower of any term of any
material contract, loan agreement, indenture or other agreement or
instrument to which the Borrower is a party or is subject.
SECTION 5. REFERENCES TO AND EFFECT ON THE CREDIT AGREEMENT.
(a) On and after the Effective Date each reference in the Credit
Agreement to "this Agreement," "hereunder," "hereof," "herein," or words of
like import, and each reference to the Credit Agreement in the Loan
Documents and all other documents (the "ANCILLARY DOCUMENTS") delivered in
connection with the Credit Agreement shall mean and be a reference to the
Credit Agreement as amended hereby.
(b) Except as specifically amended above, the Credit Agreement, the
Loan Documents and all other Ancillary Documents shall remain in full force
and effect and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of the Lenders, the
Co-Agents or the Agent under the Credit Agreement, the Loan Documents or
the Ancillary Documents.
(d) The Borrower acknowledges and agrees that this Amendment
constitutes a "Loan Document" for purposes of the Credit Agreement,
including, without limitation , SECTION 7.1(d) of the Credit Agreement.
SECTION 6. EXECUTION IN COUNTERPARTS. This Amendment may be executed
in counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute but one and the
same instrument. This Amendment shall be binding upon the respective parties
hereto upon the execution and delivery of this Amendment by the Borrower, the
Agent and the Required Lenders regardless of whether it has been executed
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and delivered by all of the Lenders. Delivery of an executed counterpart of a
signature page of this Amendment by facsimile transmission shall be effective as
delivery of a manually executed counterpart of this Amendment.
SECTION 7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND BE
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE INTERNAL CONFLICTS OF LAWS PROVISIONS THEREOF.
SECTION 8. HEADINGS. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.
SECTION 9. SUCCESSORS AND ASSIGNS. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
[Signature Pages Follow]
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