363152.doc 8
EXHIBIT 4.1
FIFTH AMENDMENT
OF CREDIT AGREEMENT
THIS FIFTH AMENDMENT OF CREDIT AGREEMENT, dated as of
October 5, 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 designated as such 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,
Credit Agricole Indosuez, 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., 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 Second Amendment of Credit Agreement dated as of March
26, 1998, the Third Amendment of Credit Agreement dated as of
June 5, 1998 and the Fourth Amendment of Credit Agreement dated
as of July 31, 1998 (the "Credit Agreement").
B. The Borrower has requested the Agent and the Lenders to
amend the Credit Agreement and to consent to certain actions,
including, without limitation, the amendment of various Loan
Documents and the release of certain Collateral securing the
Obligations, in order to permit, among other things, (a) Stone
Snowflake Newsprint Company to sell all or substantially all of
its assets and to engage in certain related transactions, (b) the
Borrower to sell all of the outstanding capital stock of Apache
Railway Corporation, an Arizona corporation and a Wholly-Owned
Subsidiary of the Borrower ("Apache"), and (c) the distribution
of a portion of the Abitibi Shares owned by Stone-Canada to the
Borrower as consideration for the redemption of shares of
preferred stock of Stone-Canada that are pledged to the Agent
under a Pledge Agreement, and the pledge of such Abitibi Shares
to the Agent for the benefit of the Lenders to secure the
Obligations.
C. The Borrower, the Agent and the Lenders desire to amend
the Credit Agreement and to consent to various actions, including
without limitation, the amendment of various Loan Documents, 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 as amended hereby.
SECTION 2. Amendment to the Credit Agreement. The Credit
Agreement is, as of the Effective Date (as defined below), hereby
amended as follows:
(a) Section 3.4(e) of the Credit Agreement is amended
in its entirety to read as follows:
"(e) [intentionally deleted]"
(b) A new Section 5.1.20 is added to the Credit
Agreement reading as follows:
"Section 5.1.20 Stone Snowflake Sale Proceeds.
Substantially simultaneously with the consummation of
the Stone Snowflake Sale Transaction, the Borrower
shall cause Stone Snowflake to declare and pay to the
Borrower an extraordinary dividend in an amount not
less than the amount of proceeds received by Stone
Snowflake in the Stone Snowflake Sale Transaction which
would have constituted "Material Sale Proceeds" under
Section 3.4(c) of the Credit Agreement but for the
Borrower's election to treat such proceeds as Excluded
Sale Proceeds under the Excluded Sales Proceeds Basket
pursuant to the terms of the Fifth Amendment to this
Credit Agreement dated as of October 5, 1998 (such
amount being the "Snowflake Collateral Amount"). The
Borrower shall cause (i) the amount of proceeds
received by the Borrower for the sale of all of the
capital stock of Apache Railway Corporation which would
have constituted "Material Sale Proceeds" under Section
3.4(c) of the Credit Agreement but for the Borrower's
election to treat such proceeds as Excluded Sale
Proceeds under the Excluded Sales Proceeds Basket
pursuant to the terms of the Fifth Amendment to this
Credit Agreement dated as of October 5, 1998 (such
amount being the "Apache Collateral Amount") and (ii)
the Snowflake Collateral Amount to be paid for the
Borrower's account directly into the cash collateral
account established pursuant to the Stone Snowflake
Cash Collateral Agreement. Prior to consummating the
Stone Snowflake Sale Transaction, the Borrower shall
execute and deliver to the agent the Stone Snowflake
Cash Collateral Agreement, together with such financing
statements, legal opinions and other certificates and
documents as the Agent may reasonably request, all in
form and substance satisfactory to the Agent. The
Borrower shall also take or cause to be taken all
actions reasonably requested by the Agent in order to
perfect or protect the Lien of the Stone Snowflake Cash
Collateral Agreement with respect to such cash
Collateral. The Borrower acknowledges and agrees that,
pursuant to Section 6 of the Stone Snowflake Pledge
Agreement, the Snowflake Collateral Amount constitutes,
and shall be held as, Collateral as required under the
terms of the Stone Snowflake Pledge Agreement and
pursuant to the terms and conditions of the Stone
Snowflake Cash Collateral Agreement."
(c) Section 5.2.2(y) of the Credit Agreement is
amended in its entirety to read as follows:
"(y) [intentionally deleted]; and"
(d) Section 5.2.10(a) of the Credit Agreement is
amended by replacing the ";" with a "." at the end thereof
and adding the following additional sentence at the end
thereof:
"For purposes of this Section 5.2.10(a), a "voluntary
purchase or prepayment" of Indebtedness for Money
Borrower shall include, without limitation, the
purchase of any Subordinated Debt or any Indebtedness
created pursuant to or evidenced by any of the
Specified Senior Indentures or any other indenture or
agreement in connection with or as a consequence of any
"change of control" (or any other similar term) as such
term is defined or used in any Subordinated Debt or any
indenture relating thereto or any Indebtedness created
pursuant to or evidenced by any Specified Senior
Indenture or any other indenture or agreement where
such "change of control" arises from a transaction
approved by the Board of Directors of the Borrower,
which purchase shall be prohibited by this Section
5.2.10(a)."
(e) Section 5.2.12(vi) of the Credit Agreement is
amended in its entirety to read as follows:
"(vi) [intentionally deleted] or"
(f) Subpart (y) of the second sentence of Section
5.2.12 of the Credit Agreement is amended by deleting
therefrom the phrase "("Stone Snowflake")".
(g) Section 5.3.2 of the Credit Agreement is
amended by deleting the ratio ".92 to 1" appearing opposite
September 30, 1998 and substituting therefor the ratio ".95
to 1".
(h)The Definitional Appendix to the Credit
Agreement is amended by adding the following
definitions in their appropriate alphabetical order:
""Stone Snowflake Cash Collateral Agreement" means a
cash collateral account agreement to be entered into
between the Borrower and the Agent for the benefit of
the "Beneficiaries" (as defined in the Stone Snowflake
Pledge Agreement). Such agreement shall be in form and
substance satisfactory to the Agent and shall provide,
among other things, that unless prior to such time the
Required Lenders have otherwise agreed, on November 30,
1998 all amounts in the cash collateral account
established pursuant thereto shall be applied on a pro
rata basis to repay the Term Loan, Additional Term
Loan, D Tranche Term Loan and E Tranche Term Loan in
accordance with Section 3.6(b) of the Credit Agreement
as if such amounts constituted Material Sale Proceeds
subject to application under such Section.
"Stone Snowflake Guaranty" means that certain
Subsidiary Guaranty entered into by Stone Snowflake and
dated as of December 4, 1997, as amended, restated,
supplemented or otherwise modified from time to time.
"Stone Snowflake Pledge Agreement" means that certain
Pledge Agreement dated as of December 4, 1997 by the
Borrower in favor of the Agent pursuant to which the
Borrower pledged as collateral, among other things, all
of the outstanding shares of the capital stock of Stone
Snowflake, as amended, restated, supplemented or
otherwise modified from time to time.
"Stone Snowflake Sale Transaction" means (i) the sale
by Stone Snowflake to Abitibi Consolidated Sales
Corporation or an Affiliate thereof ("Purchaser") of
all or substantially all of the assets of Stone
Snowflake and (ii) the sale by the Borrower to
Purchaser of all of the capital stock of Apache Railway
Corporation, an Arizona corporation and a Wholly-Owned
Subsidiary of the Borrower, for aggregate gross cash
consideration of not less than $240 million and the
entering into a lease agreement and other related
agreements, all pursuant to documentation reasonably
satisfactory to the Agent."
(i) The definition of "Stone Snowflake" in the
Definitional Appendix of the Credit Agreement is amended in
its entirety to read as follows:
""Stone Snowflake" means Stone Snowflake Newsprint
Company, a Delaware corporation which is the "newly
formed Wholly-Owned Subsidiary of the Borrower"
referenced in the second sentence of Section 5.2.12."
SECTION 3. Consent, Waiver and Agreement. (a) The
undersigned Lenders and the Agent hereby consent to the release
and termination of the Deed of Trust, Security Agreement,
Financing Statement and Assignment of Rents dated as of October
12, 1994, as amended, made by the Borrower and Apache Railway
Corporation in favor of the Agent (the "Stone Snowflake
Mortgage") which secures the Borrower's medium machine and
leasehold interest located at the Snowflake Mill (the "Stone
Snowflake Property"), and the release of any Liens existing under
any other Loan Documents on any Stone Snowflake Property, with
all such releases and terminations being conditioned upon, and
effective contemporaneously with, the consummation of the Stone
Snowflake Sale Transaction. The Lenders authorize the Agent to
execute and deliver such documentation (including, without
limitation, a mortgage release and UCC partial release
statements), and to take such further actions, all as may be
reasonably required to release the Agent's and the Lender's Liens
on the Stone Snowflake Property. The Lenders also authorize the
Agent to execute and deliver such further documentation and to
take such further actions (including, without limitation, to
release any Liens with respect to assets (including any assets of
Apache Railway Corporation) being sold in the Stone Snowflake
Sale Transaction), all as may reasonably be required to
facilitate the Stone Snowflake Sale Transaction. The Lenders,
the Agent and the Borrower further agree that, notwithstanding
any provision to the contrary in the Stone Snowflake Pledge
Agreement, and except as the Required Lenders may otherwise
subsequently consent to, (i) amounts held in the cash collateral
account established pursuant to the Stone Snowflake Cash
Collateral Agreement shall be applied as set forth in the
definition of Stone Snowflake Cash Collateral Agreement unless
the Loans shall have been accelerated prior to November 30, 1998
(in which case such amounts shall be applied as provided in the
Stone Snowflake Cash Collateral Agreement) and (ii) any portion
of the proceeds relating to the sale of Stone Snowflake's assets
as part of the Stone Snowflake Sale Transaction which is in
excess of the Snowflake Collateral Amount and which is dividended
to the Borrower by Stone Snowflake shall not constitute
Collateral under the Stone Snowflake Pledge Agreement or
otherwise and shall not be required to be deposited by the
Borrower with the Agent. The Lenders and the Borrower authorize
and direct the Agent to make the application of funds described
in part (i) of the preceding sentence in accordance with the
terms of the Stone Snowflake Cash Collateral Agreement.
(b) The undersigned Lenders and the Agent hereby consent
to, and waive any breach of Section 5.2.5 of the Credit Agreement
arising out of, the redemption or purchase for cancellation by
Stone-Canada of shares of its preferred stock owned of record by
the Borrower which are pledged to the Agent in exchange for the
transfer of Abitibi Shares by Stone-Canada to the Borrower in
consideration for such redemption or purchase (such transaction
being referred to as the "Stone-Canada Abitibi Share
Distribution"), so long as (i) all such Abitibi Shares
transferred to Stone are delivered to the Agent, together with
appropriately executed stock powers, to be held as Collateral
pursuant to the terms and conditions of that certain Pledge
Agreement dated as of June 19, 1997, as amended (the "Stone-
Canada Pledge Agreement"), between the Borrower and the Agent,
relating to the pledge of 51% of the capital stock of Stone-
Canada by the Borrower in favor of the Agent and (ii) 51% of the
remaining outstanding shares of preferred stock of Stone-Canada
owned by the Borrower are delivered to the Agent, together with
appropriately executed stock powers, to be held as Collateral
pursuant to the terms and conditions of the Stone-Canada Pledge
Agreement. The Lenders also authorize the Agent to execute and
deliver such further documentation (including, without
limitation, an amendment to the Stone-Canada Pledge Agreement to
facilitate the Stone-Canada Abitibi Share Distribution and to
effect a valid, first priority pledge of all Abitibi Shares and
Stone-Canada preferred shares so received by the Borrower in
favor of the Agent), and to take such further actions (including,
without limitation, to release any necessary preferred shares
which are being redeemed or repurchased from the Lien under the
Stone-Canada Stock Pledge), all as may be reasonably required to
facilitate the Stone-Canada Abitibi Share Distribution.
(c) The undersigned Lenders and the Agent hereby waive any
breach of the Credit Agreement by the Borrower resulting from the
Borrower's failure to comply with Section 5.3.2 of the Credit
Agreement as in effect prior to giving effect to this Amendment
for the Fiscal Quarter ending September 30, 1998, provided that
the Borrower shall comply with Section 5.3.2 of the Credit
Agreement as amended by this Amendment.
SECTION 4. Excluded Sales Proceeds Designation. The
Borrower hereby elects to have the net proceeds received by the
Borrower and Stone Snowflake as consideration in the Stone
Snowflake Sale Transaction designated as Excluded Sale Proceeds
and thereby excluded from the prepayment requirements of Section
3.4(c) of the Credit Agreement; provided, however, that such
designation shall in no way affect or diminish the Borrower's
agreements or obligations set forth in Section 2(b) above.
SECTION 5. Conditions Precedent to Effectiveness of
Amendment. This Amendment shall become effective upon the date
(the "Effective Date") when each of the following conditions
precedent has been satisfied:
(a) each of the Borrower, the Agent and the Required
Lenders shall have executed and delivered this Amendment;
(b) Stone Snowflake shall have executed and delivered a
Reaffirmation of Guaranty in substantially the form attached
hereto as Exhibit A; and
(c) the Agent shall have received from the Borrower such
certificates and opinions, including an opinion of Messrs. Sidley
& Austin, counsel for the Company, with respect hereto as the
Agent may reasonably require.
SECTION 6. 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 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, including without limitation any
Specified Senior Indenture, any agreement relating to
Subordinated Debt or that certain Agreement and Plan of Merger
dated as of May 10, 1998 among the Borrower, Jefferson Smurfit
Corporation and JSC Acquisition Corporation.
SECTION 7. 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
except as expressly provided above.
(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 8. 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 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 9. 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]
EXHIBIT A
REAFFIRMATION OF GUARANTY
The undersigned acknowledges receipt of a copy of the Fifth
Amendment of Credit Agreement (the "Amendment") dated as of
October ____, 1998, consents to such amendment and each of the
transactions and waivers referenced therein and hereby reaffirms
its obligations under the Stone Snowflake Guaranty (as defined in
the Amendment).
Dated as of October ____, 1998
STONE SNOWFLAKE NEWSPRINT COMPANY
By:_____________________________________
Title: _________________________________
