<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of
earliest event reported): January 24, 1994
STONE CONTAINER CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 1-3439 36-2041256
(State or other jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
150 North Michigan Avenue, Chicago, Illinois 60601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (312) 346-6600
N/A
(Former name or former address, if changed since last report.)
<PAGE>
Item 5. OTHER EVENTS
A. RECENT FINANCIAL RESULTS
Stone Container Corporation (the "Company") incurred a loss for
the year and the fourth quarter ended December 31, 1993. For the year ended
December 31, 1993, the loss before the cumulative effect of a change in the
accounting for postretirement benefits other than pensions was $319.2 million
or $4.59 per share of common stock. The adoption of Statement of Financial
Accounting Standards No. 106 "Accounting for Postretirement Benefits Other
than Pensions" ("SFAS 106"), effective January 1, 1993, resulted in a
one-time, non-cash cumulative effect charge of $39.5 million net of income
taxes or $.56 per share of common stock, resulting in a net loss of $358.7
million or $5.15 per share of common stock. For the year ended December 31,
1992, the restated loss before the cumulative effect of a change in the
accounting for income taxes was $170 million, or $2.49 per share of common
stock. The adoption of SFAS 109, which the Company adopted retroactive to
January 1, 1992, resulted in a one-time, non-cash cumulative effect charge of
$99.5 million, or $1.40 per share of common stock, resulting in a restated net
loss of $269.4 million, or $3.89 per share of common stock. In 1993, the
Company adjusted the discount rate for the calculation of its pension
liabilities from 9% to 7-1/2% for its U.S. and German pension plans and from
9% to 8% for its Canadian pension plans. Excluding the Company's unfunded
German plans, for which the impact of this change has not yet been
determined, with the implementation of this change the excess of the Company's
projected benefit obligations over the asset value of the Company's plans
increased from $71.0 million at December 31, 1992 to $146.6 million at
December 31, 1993. In addition, the surplus of the asset value of the U.S.
and Canadian plans over the accumulated benefit obligations of such plans
of $4.6 million at December 31, 1992 became a deficit of $64.7 million at
December 31, 1993.
On February 3, 1993, the Company issued a press release
concerning its financial results, which is attached as Exhibit 99.1 hereto and
is incorporated by reference herein. Recent developments concerning the
Company are described in the Company's Prospectus Supplement dated February 3,
1994 relating to the sale of 16,500,000 shares of Common Stock, which is
attached as Exhibit 99.2 hereto and is incorporated by reference herein.
B. SECOND AMENDMENT AND WAIVER
TO U.S. CREDIT AGREEMENT
The Company and its bank group have entered into the Second
Amendment and Waiver dated as of January 24, 1994 (the "Second Amendment") to
the Company's Amended and Restated Credit Agreement effective as of December
17, 1993, which restated credit agreement is attached as Exhibit 4(a) to the
Company's 8-K dated January 3, 1994 (the "Third Restated Credit Agreement").
The Second Amendment is attached hereto as Exhibit 4.1 and incorporated by
reference herein. The effectiveness of the Second Amendment is subject to
various conditions, including a requirement that substantially
contemporaneously with the consummation of the Company's 1994 offering of
common stock and senior notes, the Company shall have applied a portion of the
net proceeds of the offerings to the prepayment of an amount due under the
Third Restated Credit Agreement equal to the aggregate amount of all regularly
scheduled principal installments remaining due in 1994 and 1995.
The Second Amendment waives the mandatory prepayment requirements
of Section 3.4(b) of the Third Restated Credit Agreement to the extent
necessary to permit the Company (a) to
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apply up to $200 million of net proceeds of the Company's offerings of common
stock and senior notes to be applied to the reduction of revolving credit
loans without a reduction in commitments (or, to the extent no revolving
credit agreements remain outstanding, the Company may retain the balance in
cash) and (b) to utilize a portion of the net proceeds of the common stock
offering to prepay the outstanding $98 million (plus accrued interest) of the
Company's 13-5/8% Subordinated Notes due June 1, 1995.
The Second Amendment amends Section 5.3.3 of the Third Restated
Credit Agreement to require that the Company have EBITDA (as defined in the
Third Restated Credit Agreement) equal to or greater than the following
amounts for the respective periods indicated below:
<TABLE>
<CAPTION>
($ IN MILLIONS)
---------------
<S> <C>
For the quarter ended 3/31/94...............................$ 20.0
For the two quarters ended 6/30/94..........................$ 55.0
For the three quarters ended 9/30/94........................$111.0
For the four quarters ended 12/31/94........................$180.0
For the four quarters ended 3/31/95.........................$226.0
For the four quarters ended 6/30/95.........................$300.0
For the four quarters ended 9/30/95.........................$380.0
For the four quarters ended 12/31/95........................$457.0
For the four quarters ended 3/31/96.........................$567.0
For the four quarters ended 6/30/96.........................$651.0
For the four quarters ended 9/30/96.........................$735.0
For the four quarters ended 12/31/96
and each four quarter period thereafter...................$822.0
</TABLE>
In calculating compliance with the EBITDA minimum requirements, there will be
excluded from Consolidated Net Income (as defined in the Third Restated Credit
Agreement) any income reported by the Company or any of its subsidiaries
arising out of payments received in the event that the Company terminates or
amends the 1984 electric power purchase agreement between the Company and a
public utility company. In the calculation of Consolidated Net Income for
purposes of the EBITDA covenant, the net income or net loss of three of the
Company's subsidiaries, Seminole Kraft Corporation ("Seminole Kraft"), Stone
Savannah River Pulp & Paper Corporation ("Stone Savannah") and
Stone-Consolidated Corporation, are not included in the calculation except to
the extent, if any, that such subsidiaries pay dividends to the Company.
The Second Amendment also amends Section 7.1(g) of the Third
Restated Credit Agreement to provide that the existing cross-default
provisions in the Third Restated Credit Agreement relating to obligations of
$10 million or more of Seminole Kraft and Stone Savannah are replaced with
cross-acceleration provisions (i.e., an event of default will not occur unless
such
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an obligation is declared due and payable prior to its stated maturity or due
date). An event of default will also occur under the Third Restated Credit
Agreement, as amended, if a payment default of such indebtedness occurs at
final maturity and the holder thereof has commenced legal action in respect of
such default.
The Second Amendment also amends Section 5.2.5(b) of the Third
Restated Credit Agreement to provide that the Company may pay cash dividends,
make distributions on its capital stock or make purchases or redemptions of
its capital stock to the extent that the aggregate amount of all such
dividends, distributions, purchases and redemptions from January 1, 1994 to
the date of the proposed dividend, distribution, purchase or redemption (after
giving effect to such proposed dividend, distribution, purchase or redemption)
would not exceed the sum of (A) an amount equal to (1) 75% of the Consolidated
Net Income (as defined) of the Company for the period from January 1, 1994 to
the date of payment of such proposed dividend, distribution, purchase or
redemption minus (2) 100% of the Consolidated Net Loss (as defined) of the
Company for the period from January 1, 1994 to the date of payment of such
proposed dividend, distribution, purchase or redemption and (B) 100% of the
cash proceeds (net of the pro rata fees, costs and expenses of sale and
underwriting discounts and commissions) of sales of common stock (other than
common stock sold in the 1994 Equity Offering) and Permitted Preferred Stock
(as defined) of the Company from January 1, 1994 to the date of payment of
such proposed dividend, distribution, purchase or redemption; provided,
however, that without respect to the foregoing limitations, the Company shall
be permitted to pay cash dividends and to make distributions with respect to
its Permitted Preferred Stock outstanding as of January 1, 1994 [the $1.75
Series E Cumulative Convertible Exchangeable Preferred Stock] (but not with
respect to its common stock or subsequently issued preferred stock) to the
extent permitted by the terms of the Company's Indenture to the Bank of New
York, as trustee, dated as of March 15, 1992. This change has the effect of
resetting to zero as of January 1, 1994 the "dividend basket" under the Third
Restated Credit Agreement. In calculating Consolidated Net Income for the
purpose of determining whether dividends can be paid, any income of the
Company or any of its subsidiaries arising out of payments received in the
event that Company terminates or amends the 1984 electric power purchase
agreement between the Company and a public utility company are excluded.
The Second Amendment also amends Section 5.2.7 of the Third
Restated Credit Agreement to eliminate the prohibition of investments in Stone
Venepal (Celgar) Pulp Inc. and permits limited investments to the extent that
capital expenditures are below specified levels.
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The Second Amendment makes certain other changes to the Third
Restated Credit Agreement as described in Exhibit 4.1 attached hereto and
incorporated by reference herein.
C. DIVIDEND RESTRICTIONS IN INDENTURES
The Company is currently prohibited from paying dividends under
the indenture dated as of March 15, 1992 (the "1992 Indenture") between the
Company and The Bank of New York, as trustee, relating to senior subordinated
indebtedness. The 1992 Indenture prohibits the payment of dividends if the
Company has a net worth of less than $750,000,000 or if after giving effect to
such dividend, the aggregate amount expended subsequent to March 15, 1992 for
dividends and other restricted payments exceeds the sum of (w) 100% of the
aggregate Consolidated Net Income (as defined) calculated on a cumulative basis
during the period subsequent to December 31, 1991 through the end of the last
fiscal quarter that is prior to the declaration of such dividend (if such amount
is negative, 100% of such amount is subtracted), (x) the aggregate net cash
proceeds received from the issuance and sale of capital stock subsequent to
March 15, 1992, (y) the aggregate net proceeds received by the Company from
the issuance and sale of indebtedness that is converted into capital stock
subsequent to March 15, 1992 and (z) $300 million. Computations are made
under the 1992 Indenture using generally accepted accounting principles in
effect on March 15, 1992. At December 31, 1993, the dividend pool under such
indenture was negative $194.9 million. The dividend pool will be increased
by 100% of the net proceeds of the common stock offering and increased or
decreased in the future depending on whether there is net income or net losses
for the period subsequent to December 31, 1993. The Indenture dated November 1,
1991, as amended by The First Supplemental Indenture dated June 23, 1993 between
the Company and The Bank of New York, as trustee, relating to the senior notes,
and the Indenture dated September 1, 1989, as supplemented by the First
Supplemental Indenture dated as of November 13, 1989, between the Company and
Bankers Trust Company, as Trustee, relating to the Company's 11-1/2% Senior
Subordinated Notes due 1999, also contain dividend restrictions. These
indenture restrictions are not currently as restrictive as the March 15, 1992
indenture.
Item 7. FINANCIAL STATEMENTS, PRO FORMA
FINANCIAL INFORMATION AND EXHIBITS
C. EXHIBITS
The exhibits accompanying this report are listed in the
accompanying exhibit index.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STONE CONTAINER CORPORATION
By: /S/LESLIE T. LEDERER
-------------------------------
Leslie T. Lederer
Vice President, Secretary
and Counsel
Date: February 4, 1994
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<PAGE>
EXHIBIT INDEX
The following exhibits are filed herewith as noted below.
EXHIBIT NO.
1.1 Form of U.S. Terms Agreement
1.2 Form of Terms Agreement
1.3 Form of International Terms Agreement
4.1 Second Amendment and Waiver made as of January 24, 1994 by and among
Stone Container Corporation, the financial institutions signatory
thereto and Bankers Trust Company, as agent under the U.S. Credit
Agreement (as defined therein), Citibank, N.A., Chemical Bank (as
successor to Manufacturers Hanover Trust Company) and The First National
Bank of Chicago, as co-agents under the U.S. Credit Agreement
4.2 Form of Second Supplemental Indenture dated as of February 1, 1994 to the
Indenture dated as of November 1, 1991 between Stone Container Corporation
and The Bank of New York, as trustee
99.1 Press Release issued by the Company dated February 3, 1994
99.2 Prospectus Supplement dated February 3, 1994 relating to sale of Common
Stock
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<PAGE>
EXHIBIT 1.1
FORM
STONE CONTAINER CORPORATION
COMMON STOCK
US TERMS AGREEMENT
February ___, 1994
Stone Container Corporation
150 North Michigan Avenue
Chicago, Illinois 60601
Attention: Mr. Leslie T. Lederer
Dear Sir:
We understand that Stone Container Corporation, a Delaware
corporation (the "Company"), proposes to issue and sell 14,000,000 shares of
Common Stock, par value $.01 per share (the "Common Stock") of the Company
(said shares to be issued and sold by the Company being hereinafter called
the "US Underwritten Securities"). The Company also proposes to grant an
option to purchase up to 2,475,000 additional shares of Common Stock (the "US
Option Securities"; the US Option Securities together with the US
Underwritten Securities being hereinafter called the "US Securities") to
cover over-allotments.
It is understood that the Company is concurrently entering into an
agreement (the "International Underwriting Agreement" providing for the issue
and sale by the Company of up to 2,500,000 shares of Common Stock (the
"International Underwritten Securities"), plus an option with respect to the
issuance and sale of an additional 375,000 shares of Common Stock to cover
over-allotments (the "International Option Securities," the International
Option Securities, together with the International Underwritten Securities
being hereinafter called the "International Securities"), through
arrangements with certain managers outside the United States and Canada (the
"International Managers"), for whom Salomon Brothers International Limited,
Bear, Stearns International Limited and Bankers Trust International PLC are
acting as representatives (the "International Representatives"). The
International Securities, together with the US Securities, are hereinafter
called the "Securities." It is further understood and agreed that the
Underwriters (as defined in Section 2 below) and the International Managers
are entering into an Agreement Among US Underwriters and International
Managers, dated the date hereof (the "Agreement Among"), pursuant to which,
among other things, the Managers may purchase from the Underwriters a portion
of the U.S. Securities to be sold pursuant to this Agreement and the
Underwriters may purchase from the Managers a portion of the
<PAGE>
International Securities to be sold pursuant to the International
Underwriting Agreement.
It is understood that two forms of prospectus are to be used in
connection with the offering and sale of the Securities: one form of
prospectus relating to the US Securities, which are to be offered and sold to
United States and Canadian Persons (as defined in Section 15(a) below), and
one form of prospectus relating to the International Securities, which are to
be offered and sold to persons other than United States and Canadian Persons.
The two forms of prospectus are identical except for the outside front cover
page, the inside front cover page, the discussion under the heading
"Underwriting," the discussion under the heading "Certain United States Tax
Consequences to Non-United States Holders" in the form of prospectus relating
to the International Securities, and the outside back cover page.
1. BASIC PROVISIONS. Except as set forth herein, all of the
provisions contained in the document entitled "Stone Container Corporation
Common Stock Underwriting Agreement - Basic Provisions," dated as of August
1, 1993, a copy of which is attached hereto as Annex A (the "Basic
Provisions"), are herein incorporated by reference in their entirety and
shall be deemed to be a part of this Agreement to the same extent as if such
provisions had been set forth in full herein. Except as otherwise indicated
herein, terms defined in the Basic Provisions are used herein as therein
defined. For purposes of this Terms Agreement, wherever used in the Basic
Provisions, the term "Prospectus" shall be amended to read "Prospectuses" and
the term "Underwriter(s)" shall also refer to "Manager(s)."
2. THE SECURITIES. Subject to the terms and conditions set forth
herein or incorporated by reference herein, each underwriter named below
(collectively, the "Underwriters"), hereby severally offers to purchase the
number of US Underwritten Securities set forth opposite its name below:
Underwriters and the number of US Underwritten
Securities to be purchased by each:
<TABLE>
<CAPTION>
NUMBER OF US UNDERWRITTEN
SECURITIES
UNDERWRITER TO BE PURCHASED
----------- -------------------------
<S> <C>
Salomon Brothers Inc
Bear Stearns & Co. Inc.
BT Securities Corporation
</TABLE>
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<PAGE>
Representatives of the Underwriters: Salomon Brothers Inc; Bear,
Stearns & Co. Inc.; BT Securities Corporation.
Public offering price: $_____ per share.
Purchase price: $_____ per share.
Delayed Delivery Contracts: N/A.
Closing date, time and location: Subject to Section 6 hereof,
February ___, 1994, Cleary, Gottlieb, Steen & Hamilton, One Liberty
Plaza, New York, New York 10006.
U.S. Option Securities: 2,100,000 shares.
3. INTRODUCTORY MATERIAL. For purposes of this Terms Agreement,
the third paragraph of the Basic Provisions shall not apply.
4. REPRESENTATIONS AND WARRANTIES. For purposes of this Terms
Agreement,
(a) The following shall be added at the beginning of Section 1(a)
of the Basic Provisions:
The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933 (the "1933 Act") and has filed with the
Securities and Exchange Commission (the "Commission") a
registration statement (No. ) on such Form, including a basic
prospectus, for registration under the Act of Common Stock and the
offering thereof from time to time in accordance with Rule 415 of
the rules and regulations under the 1933 Act (the "1933 Act
Regulations"), which registration statement was declared effective
by the Commission on August 13, 1993. The Company will next file
with the Commission pursuant to Rules 415 and 424(b)(2) or (5)
final supplements to the form of prospectus included in such
registration statement relating to the U.S. Securities and the
International Securities and the offering thereof. As filed, such
final prospectus supplements shall include all required information
with respect to the Securities and the offering thereof and, except
to the extent the Representatives shall agree in writing to a
modification, shall be in all substantive respects in the form
furnished to the Representatives prior to the date and time that
this Agreement is executed and delivered by the parties hereto (the
"Execution Time") or, to the extent not completed at the Execution
Time, shall contain only such specific additional information and
other changes as the Company has advised the Representatives, prior
to the Execution Time, will be included or made therein.
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<PAGE>
(b) The following shall be added at the end of Section 1(a) of the
Basic Provisions:
("Registration Statement" shall mean the registration statement
referred to above, including all documents incorporated therein by
reference, as amended or supplemented as of the Effective Time
pursuant to the Securities Exchange Act of 1934 (the "1934 Act"),
the 1933 Act or otherwise. "Prospectuses" shall mean the US
Prospectus and the International Prospectus. "US Prospectus" shall
mean the basic prospectus relating to the issue and sale of the
Common Stock by the Company constituting a part of the Registration
Statement, including all documents incorporated therein by
reference, together with the final prospectus supplement that is
first filed with the Commission pursuant to Rule 424(b) after the
Execution Time relating to the issue and sale by the Company of the
US Securities (the "Final Prospectus Supplement"). "International
Prospectus" shall mean the basic prospectus relating to the issue
and sale of the Common Stock by the Company constituting a part of
the Registration Statement, including all documents incorporated
therein by reference, together with the final prospectus supplement
that is first filed with the Commission pursuant to Rule 424(b)
after the Execution Time relating to the issue and sale by the
Company of the International Securities.)
(c) The following new Section 1(1) shall be added to the Basic
Provisions:
(1) The Company has delivered to the Representatives true and
correct copies of the final amendments, dated _______, 1994 (the
"Amendments"), to the Company's Credit Agreements (as defined in
the Prospectuses), as contemplated by the Prospectuses, and no
amendments, modifications or supplements have been made to such
amendments without the prior written consent of the
Representatives.
5. MATERIAL SUBSIDIARIES. For purposes of this Terms Agreement,
all references to "Stone-Consolidated Inc." and "Stone-Consolidated, Inc." in
the Basic Provisions shall be amended to read "Stone-Consolidated Corporation
and Stone Container (Canada) Inc."
6. PURCHASE AND SALE. For purposes of this Terms Agreement,
Section 2 of the Basic Provisions shall be replaced with the following:
2. PURCHASE AND SALE. (a) Subject to the terms and
conditions and in reliance upon the representations
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and warranties set forth, the Company agrees to sell to each
Underwriter, and each Underwriter agrees, severally and not
jointly, to purchase from the Company at a purchase price of $
per share, the amount of the US Underwritten Securities set forth
opposite such Underwriter's name in the applicable Terms Agreement.
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company
hereby grants an option to the several Underwriters to purchase,
severally and not jointly, up to 2,475,000 shares of the US Option
Securities at the same purchase price per share as the Underwriters
shall pay for the US Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the US
Underwritten Securities by the Underwriters. Said option may be
exercised in whole or in part at any time (but not more than once)
on or before the 30th day after the date of the Final Prospectus
Supplement upon written or telegraphic notice by the
Representatives to the Company setting forth the number of shares
of the US Option Securities as to which the several Underwriters
are exercising the option and the settlement date. Delivery of
certificates for the shares of US Option Securities by the Company,
and payment therefor to the Company, shall be made as provided in
this Section 2. The number of shares of the US Option Securities
to be purchased by each Underwriter shall be the same percentage of
the total number of shares of the US Option Securities to be
purchased by the several Underwriters as such Underwriter is
purchasing of the US Underwritten Securities, subject to such
adjustments as the Representatives shall make in their absolute
discretion to eliminate any fractional shares.
(c) Delivery of and payment for the US Underwritten Securities
and the US Option Securities (if the option provided for in Section
2(b) hereof shall have been exercised on or before the third
business day prior to the Closing Date) shall be made at 10:00 AM,
New York City time, on , 19 , or such later date (not later
than , 19 ) as the Representatives shall designate, which date
and time may be postponed by agreement among the Representatives
and the Company or as provided in Section 8 hereof (such date and
time of delivery and payment for the US Securities being herein
called the "Closing Date"). Delivery of the US Securities shall be
made to the Representatives for the respective accounts of the
several Underwriters against payment by the several Underwriters
through the Representatives of the aggregate purchase price of the
US Securities being
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<PAGE>
sold by the Company to or upon the order of the Company by
certified or official bank check or checks drawn on or by a New
York Clearing House bank and payable in next day funds. Delivery
of the US Securities shall be made at such location as the
Representatives shall reasonably designate at least one business
day in advance of the Closing Date and payment for the US
Securities shall be made at the office of Cleary, Gottlieb, Steen &
Hamilton, New York, New York. Certificates for the US Securities
shall be registered in such names and in such denominations as the
Representatives may request not less than three full business days
in advance of the Closing Date.
The Company agrees to have the US Securities available for
inspection, checking and packaging by the Representatives in New
York, New York, not later than 1:00 PM on the business day prior to
the Closing Date.
If the option provided for in Section 2(b) hereof is exercised
after the third business day prior to the Closing Date, the Company
will deliver (at the expense of the Company) to the
Representatives, at Seven World Trade Center, New York, New York,
on the date specified by the Representatives (which shall be within
three business days after exercise of said option), certificates
for the US Option Securities in such names and denominations as the
Representatives shall have requested against payment of the
purchase price thereof to or upon the order of the Company by
certified or official bank check or checks drawn on or by a New
York Clearing House bank and payable in next day funds. If
settlement for the US Option Securities occurs after the Closing
Date, the Company will deliver to the Representatives on the
settlement date for the US Option Securities, and the obligation of
the Underwriters to purchase the US Option Securities shall be
conditioned upon receipt of, supplemental opinions, certificates
and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 5
hereof.
7. COMPANY COVENANTS. For purposes of this Terms Agreement,
(a) The reference to "thirty (30) days" in Section 3(j) of the
Basic Provisions shall be replaced with "one hundred and eighty (180) days"
and the reference to "the Underwriters' prior written consent" in such
Section 3(j) shall be replaced with "the prior written consent of Salomon
Brothers Inc, acting on behalf of the Representatives."
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<PAGE>
(b) The following new subparagraph shall be added at the end of
Section 3 of the Basic Provisions:
(1) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida,
Chapter 92-198, AN ACT RELATING TO DISCLOSURE OF DOING BUSINESS
WITH CUBA, and the Company further agrees that if it commences
engaging in business with the government of Cuba or with any person
or affiliate located in Cuba after the date the Registration
Statement becomes or has become effective with the Commission or
with the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the information
reported in the Prospectuses, if any, concerning the Company's
business with Cuba or with any person or affiliate located in Cuba
changes in any material way, the Company will provide the
Department notice of such business or change, as appropriate, in a
form acceptable to the Department.
8. LEGAL OPINION OF COMPANY'S GENERAL COUNSEL. For purposes of
this Terms Agreement, Section 5(b) of the Basic Provisions shall be amended
as follows:
(a) The following words shall be added at the end of the third
sentence of subparagraph (ii): "; the certificates for the
Securities are in valid and sufficient form; no holders of
outstanding securities of the Company are entitled to register such
securities under the Registration Statement."
(b) Subparagraph (viii) should be amended as follows:
(i) The words "1993 Act and the 1933 Act Regulations" in
the first sentence shall be replaced by the following: "the
1933 Act and the 1934 Act and the respective rules
thereunder."
(ii) The following sentence shall be added at the end of
subparagraph (viii): "The summaries of the Credit Agreements
(including the Amendments) contained in the Prospectuses
(excluding the incorporation by reference of the full text of
the Credit Agreements) constitute fair and accurate summaries
of the provisions thereof."
(c) The words "relying as to materiality to a large extent" in
the first full paragraph following subparagraph (x) shall be
replaced with the words
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"relying to the extent appropriate in the exercise of such
counsel's professional responsibilities."
9. LEGAL OPINION OF COMPANY'S SPECIAL COUNSEL. For purposes of
this Terms Agreement, the words in Section 5(c) of the Basic Provisions
"clauses (ii) (other than the second sentence thereof), (iv), (v) (other than
the last clause thereof), (viii) and (ix) of Section 5(b) hereof" shall be
replaced with the following:
"clauses (ii) (other than the second clause thereof), (iii), (iv),
(v) (other than the last clause thereof), (vi), (vii) (but only as
to the first sentence thereof), (viii) and (ix)."
10. CLOSING CERTIFICATE. For purposes of this Terms Agreement,
the certificate referred to in Section 5(d) of the Basic Provisions shall
also indicate that since the date of the most recent financial statements
included in the Prospectuses (exclusive of any supplement thereto), there has
been no material adverse change in the condition (financial or other),
earnings, business or properties of the Company, whether or not arising from
transactions in the ordinary course of business except as disclosed in or
contemplated in the Prospectuses (exclusive of any supplement thereto).
11. ACCOUNTANT'S LETTERS. For purposes of this Terms Agreement,
(a) The text of Section 5(e)(iii)(B) of the Basic Provisions shall
be replaced with the following:
"any pro forma financial statements contained in the Registration
Statement or the Prospectuses (including any documents incorporated
by reference therein) do not comply in form in all material
respects with the applicable accounting requirements of the 1933
Act Regulations or that the pro forma adjustments to the historical
amounts in such pro forma financial statements have not been
properly applied to the historical amounts in the compilation of
such statements."
(b) The following shall be added as a new subsection (iii)(E) to
Section 5(e) of the Basic Provisions:
"the amounts included in any 'unaudited' capsule information
included or incorporated in the Registration Statement or the
Prospectuses do not agree with the amounts set forth in the
Company's unaudited financial statements for the same periods or
were not determined in accordance with generally accepted
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accounting principles or on a basis substantially consistent with
that of the corresponding amounts in the audited financial
statements included or incorporated in the Registration Statement
or the Prospectuses."
12. ADDITIONAL CLOSING CONDITIONS. For purposes of this Terms
Agreement, the following new subparagraphs shall be added to Section 5 of the
Basic Provisions:
(h) Subsequent to the Execution Time or, if earlier, the dates as
of which information is given in the Registration Statement (exclusive
of any amendment thereof) and the Prospectuses (exclusive of any
supplement thereto), there shall not have been any change or decrease
specified in the letter or letters referred to in subparagraph (e) of
this Section 5, the effect of which is, in the judgment of the
Representatives, so material and adverse so as to make it impractical or
inadvisable to proceed with the offering or the delivery of the
Securities as contemplated by the Registration Statement (exclusive of
any amendment thereof) and the Prospectuses (exclusive of any supplement
thereto).
(i) The execution and delivery by all of the parties to the
Amendments, the satisfaction of all conditions precedent to the
effectiveness of the Amendments and the closing of the transactions
contemplated thereby shall occur prior to or concurrently with the
closing with respect to the US Underwritten Securities, and the
Representatives shall have received such information, certificates and
documents in connection therewith as they may reasonably require.
(j) The closing of the purchase of the International Underwritten
Securities pursuant to the International Underwriting Agreement shall
occur concurrently with the closing with respect to the U.S.
Underwritten Securities.
(k) The closing of the purchase of $710 million principal amount of
the Company's % Senior Notes due 2001 pursuant to the Underwriting
Agreement, dated the date hereof, between the Company and Salomon
Brothers Inc, Bear, Stearns & Co. Inc., BT Securities Corporation,
Kidder, Peabody & Co. Incorporated, Chemical Securities Inc. and
NationsBanc Capital Markets, Inc. shall occur concurrently with the
closing with respect to the U.S. Underwritten Securities.
(l) The Securities shall have been approved for trading on the New
York Stock Exchange, subject only to notice of issuance.
(m) At the Execution Time, the Company shall have furnished to the
Representatives a letter from ____________
-9-
<PAGE>
addressed to the Representatives, in which each such person agrees not
to offer, sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce an offering of, any shares of Common Stock (or
securities convertible into or exchangeable for shares of Common Stock)
beneficially owned by such person for a period of 180 days following the
Execution Time without the prior written consent of Salomon Brothers
Inc, acting on behalf of the Representatives, other than shares of
Common Stock (or securities convertible into, or exchangeable for shares
of Common Stock) disposed of as bona fide gifts.
13. INDEMNIFICATION AND CONTRIBUTION. For purposes of this Terms
Agreement,
(a) The following sentence shall be added at the end of
Section 6(c) of the Basic Provisions:
"Attorneys' fees and other expenses incurred by an indemnified
party in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim which are
reimbursable by an indemnified party to such indemnified party
pursuant to this Section 6 shall be reimbursed as incurred."
(b) The following words shall be added between the words
"unavailable," and "the Company" on the fourth line in the first
sentence of Section 7 of the Basic Provisions: "to or insufficient
to hold harmless an indemnified party for any reason."
(c) The third sentence of Section 7 of the Basic Provisions
shall be replaced with the following:
"Relative fault shall be determined by reference to whether
any alleged untrue statement or omission relates to
information provided by the Company or the Underwriters."
14. TERMINATION. For purposes of this Terms Agreement, Section 11
of the Basic Provisions shall be amended as follows:
(a) Section 11(a)(iv) of the Basic Provisions shall be amended by
adding the following at the end thereof:
"or trading in the Company's Common Stock shall have been suspended
by the Commission or the New York Stock Exchange."
The references to "Underwriters" in subparagraphs (i), (iii), (vi) and
(vii) of Section 11 shall be replaced with "Representatives."
-10-
<PAGE>
(b) The words "Sections 8 and 11 (a) hereof, except for clauses
(ii) and (iii) of Section 11 (a) "in Section 11 (b) of the Basic
Provisions shall be replaced with the words "Section 8."
15. AGREEMENTS OF UNDERWRITERS. (a) Each Underwriter agrees that
(i) it is not purchasing any of the US Securities for the account of anyone
other than a United States or Canadian Person, (ii) it has not offered or
sold, and will not offer or sell, directly or indirectly, any of the US
Securities or distribute any US Prospectus to any person outside the United
States or Canada, or to anyone other than a United States or Canadian Person,
and (iii) any dealer to whom it may sell any of the US Securities will
represent that it is not purchasing for the account of anyone other than a
United States or Canadian Person and agree that it will not offer or resell,
directly or indirectly, any of the US Securities outside the United States or
Canada, or to anyone other than a United States or Canadian Person or to any
other dealer who does not so represent and agree; PROVIDED, HOWEVER, that the
foregoing shall not restrict (A) purchases and sales between the Underwriters
on the one hand and the Managers on the other hand pursuant to Section 1(b)
of the Agreement Among, (B) stabilization transactions contemplated under
Section 2 of the Agreement Among, conducted through Salomon Brothers Inc as
part of the distribution of the Securities, and (C) sales to or through (or
distributions of US Prospectuses or preliminary US Prospectuses to) United
States or Canadian Persons who are investment advisors, or who otherwise
exercise investment discretion, and who are purchasing for the account of
anyone other than a United States or Canadian Person. "United States or
Canadian Person" shall mean any person who is a national or resident of the
United States or Canada, a corporation, partnership, or other entity created
or organized in or under the laws of the United States or Canada or of any
political subdivision thereof, or any estate or trust the income of which is
subject to United States or Canadian federal income taxation, regardless of
its source (other than any non-United States or non-Canadian branch of any
United States or Canadian Person), and shall include any United States or
Canadian branch of a person other than a United States or Canadian Person.
"US" or "United States" shall mean the Unites States of America (including
the states thereof and the District of Columbia), its territories, its
possessions and other areas subject to its jurisdiction.
(b) The agreements of the Underwriters set forth in paragraph (a)
of this Section 15 shall terminate upon the earlier of the following events:
(i) a mutual agreement of the
Representatives and the International
Representatives to terminate the selling
restrictions set forth in paragraph (a) of this
-11-
<PAGE>
Section 15 and in Section 15 of the
International Terms Agreement; or
(ii) the expiration of a period of 30 days
after the Closing Date, unless (A) the
Representatives shall have given notice to the
Company and the International Representatives
that the distribution of the US Securities by
the Underwriters has not yet been completed, or
(B) the International Representatives shall
have given notice to the Company and the
Representatives that the distribution of the
International Securities by the Managers has not
yet been completed. If such notice by the
Representatives or the International
Representatives is given, the agreements set
forth in such paragraph (a) shall survive until
the earlier of (1) the event referred to in
clause (i) of this subsection (b) or (2) the
expiration of any additional period of 30 days
from the date of any such notice.
(c) Each Underwriter severally agrees that offers and sales of the
U.S. Securities in Canada as part of the distribution will be made only in
Ontario and Quebec and pursuant to an exemption from the prospectus
requirements in each such jurisdiction.
16. NOTICES TO UNDERWRITERS. Any notice by the Company to the
Underwriters pursuant to this Agreement shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form
of telecommunication addressed (with confirmation) to the Representatives c/o
Salomon Brothers Inc at Seven World Trade Center, New York, New York 10048,
Attention: Corporate Financing Department.
-12-
<PAGE>
Please accept this offer by signing a copy of this Terms Agreement
in the space set forth below and returning the signed copy to us.
SALOMON BROTHERS INC
BEAR, STEARNS & CO. INC.
BT SECURITIES CORPORATION,
By: SALOMON BROTHERS INC
By:
-----------------------
Name:
Title:
For themselves and the several
Underwriters indentified in Section 2
hereof
Accepted and agreed to as of
the date first above written:
STONE CONTAINER CORPORATION
By:________________________
Name:
Title:
-13-
<PAGE>
EXHIBIT 1.2
FORM
STONE CONTAINER CORPORATION
SENIOR DEBT SECURITIES
TERMS AGREEMENT
February ___, 1994
Stone Container Corporation
150 North Michigan Avenue
Chicago, Illinois 60601
Attention: Mr. Leslie T. Lederer
Dear Sir:
We understand that Stone Container Corporation, a Delaware corporation
(the "Company"), proposes to issue and sell $710,000,000 aggregate principal
amount of its ___% Senior Notes due 2001 (the "Securities").
1. BASIC PROVISIONS. Except as set forth herein, all of the
provisions contained in the document entitled "Stone Container Corporation
Senior Debt Securities, Senior Subordinated Debt Securities and/or Subordinated
Debt Securities Underwriting Agreement - Basic Provisions," dated as of August
1, 1993, a copy of which is attached hereto as Annex A (the "Basic Provisions"),
are herein incorporated by reference in their entirety and shall be deemed to be
a part of this Agreement to the same extent as if such provisions had been set
forth in full herein. Except as otherwise indicated herein, terms defined in
such documents are used herein as therein defined.
2. THE SECURITIES. The Securities to be purchased by the
Underwriters, which are to be issued under an Indenture dated as of November 1,
1991, as supplemented by the First Supplemental Indenture dated as of June 23,
1993, between the Company and The Bank of New York, as Trustee, shall have the
following terms:
Title: ___% Senior Notes due 2001.
Ranking: PARI PASSU in right of payment with all other senior
indebtedness of the Company, and senior in right of payment to
all subordinated indebtedness of the Company.
Aggregate principal amount to be issued: $710,000,000.
Date of maturity: _________________, 2001.
<PAGE>
Interest rate: ______% per annum.
Interest payment dates: ______ and ______ of each year,
commencing _________. Interest accrues from date of issuance
Public offering price: ______%.
Purchase price: _____%.
Conversion provisions: N/A.
Redemption provisions: May not be redeemed by the
Company prior to ___________, 1999 and are redeemable thereafter
at the redemption prices set forth below:
Redemption Date Redemption Price
--------------- ----------------
and thereafter at 100% of principal amount.
Basis points for Interest Rate Reset in the event that
there is a Reset Date: _____ Basis Points.
Treasury Rate(s) applicable to Interest Rate Reset: The higher of the
____ and ____ Treasury Rate.
Delayed Delivery Contracts: N/A.
Closing date, time and location: Subject to Section 2
of the Basic Provisions, February ___, 1994, 10 A.M. New York
time), Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New
York, New York 10006.
Settlement: Flat, New York Clearing House (next day)
Funds.
Lead Managing Underwriter: Salomon Brothers Inc
[Other: ______________________________].
Subject to the terms and conditions set forth herein or incorporated
by reference herein, each underwriter named below (collectively, the
"Underwriters"), hereby severally offers to purchase such Securities in the
amount set forth opposite its name below.
2
<PAGE>
<TABLE>
<CAPTION>
Aggregate Principal Amount
Underwriter To Be Purchased
----------- --------------------------
<S> <C>
Salomon Brothers Inc $
Bear Stearns & Co. Inc.
BT Securities Corporation
Kidder, Peabody & Co. Incorporated
Chemical Securities Inc.
NationsBanc Capital Markets, Inc.
--------------------------
$
</TABLE>
3. INTRODUCTORY MATERIAL. For purposes of this Terms Agreement, the
third paragraph of the Basic Provisions shall not apply.
4. REPRESENTATIONS AND WARRANTIES. For purposes of this Terms
Agreement,
(a) The following shall be added at the beginning of Section 1(a) of
the Basic Provisions:
The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933 (the "1933 Act") and has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement (No. ) on such Form, including a basic prospectus, for
registration under the Act of Common Stock and the offering thereof
from time to time in accordance with Rule 415 of the rules and
regulations under the 1933 Act (the "1933 Act Regulations"), which
registration statement was declared effective by the Commission on
August 13, 1993. The Company will next file with the Commission
pursuant to Rules 415 and 424(b) (2) or (5) a final supplement to the
form of prospectus included in such registration statement relating
to the Securities and the offering thereof. As filed, such final
prospectus supplement shall include all required information with
respect to the Securities and the offering thereof and, except to the
extent the Underwriters shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to the
Underwriters prior to the date and time that this Agreement is
executed and delivered by the parties hereto (the "Execution Time")
or, to the extent not completed at the Execution Time, shall contain
only such specific additional information and other changes as the
Company has advised the Underwriters, prior to the Execution Time,
will be included or made therein.
3
<PAGE>
(b) The following shall be added at the end of Section 1(a) of the
Basic Provisions:
("Registration Statement" shall mean the registration statement
referred to above, including all documents incorporated therein by
reference, as amended or supplemented as of the Effective Time
pursuant to the Securities Exchange Act of 1934 (the "1934 Act"), the
1933 Act or otherwise. "Prospectus" shall mean the basic prospectus
relating to the issue and sale of the Securities by the Company
constituting a part of the Registration Statement, including all
documents incorporated therein by reference, together with the final
prospectus supplement that is first filed with the Commission pursuant
to Rule 424(b) after the Execution Time relating to the issue and sale
by the Company of the Securities (the "Final Prospectus").)
(c) The following new Section 1(n) shall be added to the Basic
Provisions:
(n) The Company has delivered to the Underwriters true and
correct copies of the final amendments, dated _________, 1994 (the
"Amendments"), to the Company's Credit Agreements (as defined in the
Prospectus), as contemplated by the Prospectus, and no amendments,
modifications or supplements have been made to such amendments without
the prior written consent of the Underwriters.
5. MATERIAL SUBSIDIARIES. For purposes of this Terms Agreement, all
references to "Stone-Consolidated Inc." and "Stone-Consolidated, Inc." in the
Basic Provisions shall be amended to read "Stone-Consolidated Corporation and
Stone Container (Canada) Inc."
6. COMPANY COVENANTS. For purposes of this Terms Agreement,
(a) The reference to "your prior written consent" in Section 3(j) of
the Basic Provisions shall be replaced with "the prior written consent of
Salomon Brothers Inc, acting on behalf of the Underwriters."
(b) The following new subparagraph shall be added at the end of
Section 3 of the Basic Provisions:
(k) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida,
Chapter 92-198, AN ACT RELATING TO DISCLOSURE OF DOING BUSINESS WITH
CUBA, and the Company further agrees that if it commences engaging in
4
<PAGE>
business with the government of Cuba or with any person or affiliate
located in Cuba after the date the Registration Statement becomes or
has become effective with the Commission or with the Florida
Department of Banking and Finance (the "Department"), whichever date
is later, or if the information reported in the Prospectus, if any,
concerning the Company's business with Cuba or with any person or
affiliate located in Cuba changes in any material way, the Company
will provide the Department notice of such business or change, as
appropriate, in a form acceptable to the Department.
7. LEGAL OPINION OF COMPANY'S GENERAL COUNSEL. For purposes of this
Terms Agreement, Section 5(b) of the Basic Provisions shall be amended as
follows:
(a) The following words shall be added at the end of subparagraph
(i): "The Company's authorized equity capitalization is as set forth
in the Final Prospectus; the Securities conform to the description
thereof contained in the Final Prospectus."
(b) The following words shall be added at the end of the third
sentence of subparagraph (ii): "; the certificates for the Securities
are in valid and sufficient form; no holders of outstanding securities
of the Company are entitled to register such securities under the
Registration Statement."
(c) Subparagraph (vii) shall be amended as follows:
(i) The words "1933 Act and the 1933 Act Regulations" in the
first sentence shall be replaced by the following: "the 1933 Act,
the 1934 Act and the Trust Indenture Act and the respective rules
thereunder."
(ii) The following sentence shall be added at the end of
subparagraph (vii): "The summaries of the Credit Agreements
(including the Amendments) contained in the Prospectus (excluding
the incorporation by reference of the full text of the City
Agreements) constitute fair and accurate summaries of the
material provisions thereof."
(d) The words "relying as to materiality to a large extent" in
the second full paragraph following subparagraph (ix) shall be
replaced with the words "relying to the extent appropriate in the
exercise of such counsel's professional responsibilities."
5
<PAGE>
8. LEGAL OPINION OF COMPANY'S SPECIAL COUNSEL. For purposes of this
Terms Agreement, the words in Section 5(c) of the Basic Provisions "clauses
(ii), (iii), (iv) (other than the last clause thereof), (vii) and (viii) of
Section 5(b) hereof" shall be replaced with the following:
"clauses (ii), (iii), (iv) (other than the last clause thereof), (v),
(vi) (but only as to the first sentence thereof), (vii) and (viii)."
9. CLOSING CERTIFICATE. For purposes of this Terms Agreement, the
certificate referred to in Section 5(d) of the Basic Provisions shall also
indicate that since the date of the most recent financial statements included in
the Prospectus (exclusive of any supplement thereto), there has been no material
adverse change in the condition (financial or other), earnings, business or
properties of the Company, whether or not arising from transactions in the
ordinary course of business except as disclosed in or contemplated in the
Prospectus (exclusive of any supplement thereto).
10. ACCOUNTANT'S LETTERS. For purposes of this Terms Agreement,
(a) The text of Section 5(e) (iii) (B) of the Basic Provisions shall
be replaced with the following:
"any pro forma financial statements contained in the Registration
Statement or the Prospectus (including any documents incorporated by
reference therein) do not comply in form in all material respects with
the applicable accounting requirements of the 1933 Act Regulations or
that the pro forma adjustments to the historical amounts in such pro
forma financial statements have not been properly applied to the
historical amounts in the compilation of such statements."
(b) The following shall be added as a new subsection (iii) (E) to
Section 5(e) of the Basic Provisions:
"the amounts included in any `unaudited' capsule information included
or incorporated in the Registration Statement or the Prospectus do not
agree with the amounts set forth in the Company's unaudited financial
statements for the same periods or were not determined in accordance
with generally accepted accounting principles or on a basis
substantially consistent with that of the corresponding amounts in
the audited financial statements included or
6
<PAGE>
incorporated in the Registration Statement or the Prospectus."
11. ADDITIONAL CLOSING CONDITIONS. For purposes of this Terms
Agreement, the following new subparagraphs shall be added to Section 5 of the
Basic Provisions:
(j) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Final Prospectus (exclusive of any supplement
thereto), there shall not have been any change or decrease specified in the
letter or letters referred to in subparagraph (e) of this Section 5, the
effect of which is, in the judgment of the Underwriters, so material and
adverse so as to make it impractical or inadvisable to proceed with the
offering or the delivery of the Securities as contemplated by the
Registration Statement (exclusive of any amendment thereof) and the
Prospectus (exclusive of any supplement thereto).
(k) The execution and delivery by all of the parties to the
Amendments, the satisfaction of all conditions precedent to the
effectiveness of the Amendments and the closing of the transactions
contemplated thereby shall occur prior to or concurrently with the closing
with respect to the Securities, and the Underwriters shall have received
such information, certificates and documents in connection therewith as
they may reasonably require.
(l) The rating of the senior unsecured notes of the Company as of the
Closing Time shall not have been downgraded by Standard & Poor's
Corporation or by Moody's Investors Service, Inc. below the publicly-
announced ratings as of the Execution Time and neither Standard & Poor's
Corporation nor Moody's Investors Service, Inc. shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating or the senior unsecured notes of the Company.
(m) The closing of the purchase of 17,500,000 shares of the Company's
Common Stock, $.01 par value (the "Common Stock"), pursuant to the
Underwriting Agreement, dated the date hereof, between the Company and
Salomon Brothers Inc, Bear, Stearns & Co., Inc. and BT Securities
Corporation, as representatives of the several underwriters, shall occur
concurrently with the closing with respect to the Securities.
(n) The closing of the purchase of 3,500,000 shares of Common Stock,
pursuant to the Underwriting Agreement, dated the date hereof, between the
Company and Salomon Brothers
7
<PAGE>
International Limited, Bear, Stearns International Limited and Bankers Trust
International PLC, as representatives of the several managers, shall occur
concurrently with the closing with respect to the Securities.
12. INDEMNIFICATION AND CONTRIBUTION. For purposes of this Terms
Agreement,
(a) The following sentence shall be added at the end of Section 6(c)
of the Basic Provisions:
"Attorneys' fees and other expenses incurred by an indemnified party
in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim which are reimbursable by an
indemnified party to such indemnified party pursuant to this Section 6
shall be reimbursed as incurred."
(b) The following new Section 6(d) shall be added to the Basic
Provisions:
"(d) Without limitation and in addition to its other obligations
under this Section 6, the Company agrees to indemnify and hold
harmless Salomon Brothers Inc, its directors, officers, employees and
agents and each person who controls Salomon Brothers Inc within the
meaning of either the 1933 Act or the 1934 Act against any and all
losses, claims, damages or liabilities to which they or any of them
may become subject, insofar as such losses, claims, damages or
liabilities (or action in respect thereof) arise out of or are based
upon Salomon Brothers Inc acting as a `qualified independent
underwriter' (within the meaning of Schedule E to the By-Laws and
Section 44(c)(8) of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc.) in connection with the
offering contemplated by this Agreement, and agrees to reimburse each
such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability results from the
gross negligence or wilful misconduct of Salomon Brothers Inc."
(c) The words "(including, without limitation, Section 6(d) hereof)"
shall be added after the words "Section 6 hereof" on the third line in the
first sentence of Section 7 of the Basic Provisions.
8
<PAGE>
(d) The following words shall be added between the words
"unavailable," and "the Company" on the fourth line in the first sentence
of Section 7 of the Basic Provisions: "to or insufficient to hold harmless
an indemnified party for any reason."
(e) The third sentence of Section 7 of the Basic Provisions shall be
replaced with the following:
"Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided
by the Company or the Underwriters."
13. TERMINATION. For purposes of this Terms Agreement, Section 11 of
the Basic Provisions shall be amended as follows:
(a) Section 11(a)(iv) of the Basic Provisions shall be amended by
adding the following at the end thereof:
"or trading in the Company's Common Stock shall have been suspended by
the Commission or the New York Stock Exchange."
(b) The words "Sections 8 and 11(a) hereof, except for clauses (ii)
and (iii) of Section 11(a))" in Section 11(b) of the Basic Provisions shall
be replaced with the words "Section 8."
14. NOTICES TO UNDERWRITERS. Any notice by the Company to the
Underwriters pursuant to this Agreement shall be in writing and shall be deemed
to have been duly given if mailed or transmitted by any standard form of
telecommunication addressed (with confirmation) to the Underwriters c/o Salomon
9
<PAGE>
Brothers Inc at Seven World Trade Center, New York, New York 10048, Attention:
Corporate Financing Department.
Please accept this offer by signing a copy of this Terms Agreement in
the space set forth below and returning the signed copy to us.
SALOMON BROTHERS INC
BEAR, STEARNS & CO. INC.
BT SECURITIES CORPORATION
KIDDER, PEABODY & CO. INCORPORATED
CHEMICAL SECURITIES INC.
NATIONSBANC CAPITAL MARKETS, INC.
By: Salomon Brothers Inc.
By:____________________________________
Name:
Title
Accepted and agreed to as of
the date first above written:
STONE CONTAINER CORPORATION
By:____________________________________
Name:
Title:
10
<PAGE>
EXHIBIT 1.3
FORM
STONE CONTAINER CORPORATION
COMMON STOCK
INTERNATIONAL TERMS AGREEMENT
February __, 1994
Stone Container Corporation
150 North Michigan Avenue
Chicago, Illinois 60601
Attention: Mr. Leslie T. Lederer
Dear Sir:
We understand that Stone Container Corporation, a Delaware corporation
(the "Company"), proposes to issue and sell 2,500,000 shares of Common Stock,
par value $.01 per share (the "Common Stock") of the Company (said shares to be
issued and sold by the Company being hereinafter called the "International
Underwritten Securities"). The Company also proposes to grant an option to
purchase up to 375,000 additional shares of Common Stock (the "International
Option Securities"; the International Option Securities together with the
International Underwritten Securities being hereinafter called the
"International Securities") to cover over-allotments.
It is understood that the Company is concurrently entering into an
agreement (the "US Underwriting Agreement") with certain Underwriters in the
U.S. (the "Underwriters"), for whom Salomon Brothers Inc, Bear, Stearns & Co.
Inc. and BT Securities Corporation are acting as Representatives (the
"Representatives"), providing for the issue and sale by the Company of up to
16,500,000 shares of Common Stock (the "US Underwritten Securities"), plus an
option with respect to the issuance and sale of an additional 2,475,000 shares
of Common Stock to cover over-allotments (the "US Option Securities," the US
Option Securities, together with the US Underwritten Securities being
hereinafter called the "US Securities"), for distribution in the United States
and Canada. The US Securities, together with the International Securities, are
hereinafter called the "Securities". It is further understood and agreed that
the Managers (as defined in Section 2 below) and the Underwriters are entering
into an Agreement Among Underwriters and International Managers, dated the date
hereof (the "Agreement Among"), pursuant to which, among other things, the
Managers may purchase from the Underwriters a portion of the US Securities to
be sold pursuant to the US Underwriting Agreement and the Underwriters may
purchase from the Managers a portion of the International Securities to be sold
pursuant to this Agreement.
<PAGE>
It is understood that two forms of prospectus are to be used in
connection with the offering and sale of the Securities: one form of prospectus
relating to the US Securities, which are to be offered and sold to United States
and Canadian Persons (as defined in Section 15(a) below), and one form of
prospectus relating to the International Securities, which are to be offered and
sold to persons other than United States and Canadian Persons. The two forms of
prospectus are identical except for the outside front cover page, the inside
front cover page, the discussion under the heading "Underwriting," the
discussion under the heading "Certain United States Tax Consequences to Non-
United States Holders" in the form of prospectus relating to the International
Securities, and the outside back cover page.
1. BASIC PROVISIONS. Except as set forth herein, all of the
provisions contained in the document entitled "Stone Container Corporation
Common Stock Underwriting Agreement - Basic Provisions," dated as of August 1,
1993, a copy of which is attached hereto as Annex A (the "Basic Provisions"),
are herein incorporated by reference in their entirety and shall be deemed to be
a part of this Agreement to the same extent as if such provisions had been set
forth in full herein. Except as otherwise indicated herein, terms defined in
the Basic Provisions are used herein as therein defined. For purposes of this
Terms Agreement, wherever used in the Basic Provisions, the term "Prospectus"
shall be amended to read "Prospectuses" and the term "Underwriter(s)" shall also
refer to "Manager(s)."
2. THE SECURITIES. Subject to the terms and conditions set forth
herein or incorporated by reference herein, each manager named below
(collectively, the "Managers"), hereby severally offers to purchase the number
of International Underwritten Securities set forth opposite its name below:
Managers and the number of International Underwritten Securities to be
purchased by each:
<TABLE>
<CAPTION>
Number of International
Underwritten Securities
Manager To Be Purchased
------- -----------------------
<S> <C>
Salomon Brothers International
Limited
Bear, Stearns International
Limited
Bankers Trust International PLC
</TABLE>
International Representatives of the Managers: Salomon Brothers
International Limited; Bear, Stearns International Limited; Bankers
Trust International PLC.
-2-
<PAGE>
Public offering price: $____ per share.
Purchase price: $____ per share.
Delayed Delivery Contracts: N/A.
Closing date, time and location: Subject to Section 6 hereof,
February __, 1994, Cleary, Gottlieb, Steen & Hamilton, One Liberty
Plaza, New York, New York 10006.
3. INTRODUCTORY MATERIAL. For purposes of this Terms Agreement, the
third paragraph of the Basic Provisions shall not apply.
4. REPRESENTATIONS AND WARRANTIES. For purposes of this Terms
Agreement,
(a) The following shall be added at the beginning of Section 1(a) of
the Basic Provisions:
The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933 (the "1933 Act") and has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement (No. ) on such Form, including a basic prospectus, for
registration under the Act of Common Stock and the offering thereof
from time to time in accordance with Rule 415 of the rules and
regulations under the 1933 Act (the "1933 Act Regulations"), which
registration statement was declared effective by the Commission on
August 13, 1993. The Company will next file with the Commission
pursuant to Rules 415 and 424(b)(2) or (5) final supplements to the
form of prospectus included in such registration statement relating to
the U.S. Securities and the International Securities and the offering
thereof. As filed, such final prospectus supplements shall include
all required information with respect to the Securities and the
offering thereof and, except to the extent the International
Representatives shall agree in writing to a modification, shall be in
all substantive respects in the form furnished to the International
Representatives prior to the date and time that this Agreement is
executed and delivered by the parties hereto (the "Execution Time")
or, to the extent not completed at the Execution Time, shall contain
only such specific additional information and other changes as the
Company has advised the International Representatives, prior to the
Execution Time, will be included or made therein.
(b) The following shall be added at the end of Section 1(a) of the
Basic Provisions:
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("Registration Statement" shall mean the registration statement
referred to above, including all documents incorporated therein by
reference, as amended or supplemented as of the Effective Time
pursuant to the Securities Exchange Act of 1934 (the "1934 Act"), the
1933 Act or otherwise. "Prospectuses" shall mean the US Prospectus
and the International Prospectus. "US Prospectus" shall mean the
basic prospectus relating to the issue and sale of the Common Stock by
the Company constituting a part of the Registration Statement,
including all documents incorported therein by reference, together
with the final prospectus supplement that is first filed with the
Commission pursuant to Rule 424(b) after the Execution Time relating
to the issue and sale by the Company of the US Securities.
"International Prospectus" shall mean the basic prospectus relating to
the issue and sale of the Common Stock by the Company constituting a
part of the Registration Statement, including all documents
incorporated therein by reference, together with the final prospectus
supplement that is first filed with the Commission pursuant to Rule
424(b) after the Execution Time relating to the issue and sale by the
Company of the International Securities (the "Final Prospectus
Supplement")).
(c) The following new Section 1(1) shall be added to the Basic
Provisions:
(1) The Company has delivered to the International
Representatives true and correct copies of the final amendments, dated
___________________, 1994 (the "Amendments"), to the Company's Credit
Agreements (as defined in the Prospectuses), as contemplated by the
Prospectuses, and no amendments, modifications or supplements have
been made to such amendments without the prior written consent of the
International Representatives.
5. MATERIAL SUBSIDIARIES. For purposes of this Terms Agreement, all
references to "Stone-Consolidated Inc." and "Stone-Consolidated, Inc." in the
Basic Provisions shall be amended to read "Stone-Consolidated Corporation and
Stone Container (Canada) Inc."
6. PURCHASE AND SALE. For purposes of this Terms Agreement, Section
2 of the Basic Provisions shall be replaced with the following:
2. PURCHASE AND SALE. (a) Subject to the terms and conditions
and in reliance upon the representations and warranties set forth, the
Company agrees to sell to each Manager, and each Manager agrees,
severally and not jointly, to purchase from the Company at a purchase
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price of $ per share, the amount of the International Underwriten
Securities set forth opposite such Manager's name in the applicable
Terms Agreement.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby
grants an option to the several Managers to purchase, severally and
not jointly, up to 375,000 shares of the International Option
Securities at the same purchase price per share as the Managers shall
pay for the International Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the
International Underwritten Securities by the Managers. Said option
may be exercised in whole or in part at any time (but not more than
once) on or before the 30th day after the date of the Final Prospectus
Supplement upon written or telegraphic notice by the International
Representatives to the Company setting forth the number of shares of
the Option Securities as to which the several Managers are exercising
the option and the settlement date. Delivery of certificates for the
shares of International Option Securities by the Company, and payment
therefor to the Company, shall be made as provided in this Section 2.
The number of shares of the International Option Securities to be
purchased by each Manager shall be the same percentage of the total
number of shares of the International Underwritten Securities to be
purchased by the several Managers as such Manager is purchasing of the
International Underwritten Securities, subject to such adjustments as
the International Representatives shall make in their absolute
discretion to eliminate any fractional shares.
(c) Delivery of and payment for the International Underwritten
Securities and the International Option Securities (if the option
provided for in Section 2(b) hereof shall have been exercised on or
before the third business day prior to the Closing Date) shall be made
at 10:00 AM, New York City time, on , 19 , or such later
date (not later than , 19 ) as the International
Representatives shall designate, which date and time may be postponed
by agreement among the International Representatives and the Company
or as provided in Section 8 hereof (such date and time of delivery and
payment for the International Securities being herein called the
"Closing Date"). Delivery of the International Securities shall be
made to the International Representatives for the respective accounts
of the several Managers against payment by the several Managers
through the International
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Representatives of the aggregate purchase price of the International
Securities being sold by the Company to or upon the order of the
Company by certified or official bank check or checks drawn on or by a
New York Clearing House bank and payable in next day funds. Delivery
of the International Securities shall be made at such location as the
International Representatives shall reasonably designate at least one
business day in advance of the Closing Date and payment for the U.S.
Securities shall be made at the office of Cleary, Gottlieb, Steen &
Hamilton, New York, New York. Certificates for the International
Securities shall be registered in such names and in such denominations
as the International Representatives may request not less than three
full business days in advance of the Closing Date.
The Company agrees to have the International Securities available
for inspection, checking and packaging by the International
Representatives in New York, New York, not later than 1:00 PM on the
business day prior to the Closing Date.
If the option provided for in Section 2(b) hereof is exercised
after the third business day prior to the Closing Date, the Company
will deliver (at the expense of the Company) to the International
Representatives, at Seven World Trade Center, New York, New York, on
the date specified by the International Representatives (which shall
be within three business days after exercise of said option),
certificates for the International Option Securities in such names and
denominations as the International Representatives shall have
requested against payment of the purchase price thereof to or upon the
order of the Company by certified or official bank check or checks
drawn on or by a New York Clearing House bank and payable in next day
funds. If settlement for the International Option Securities occurs
after the Closing Date, the Company will deliver to the International
Representatives on the settlement date for the International Option
Securities, and the obligation of the Managers to purchase the
International Option Securities shall be conditioned upon receipt of,
supplemental opinions, certificates and letters confirming as of such
date the opinions, certificates and letters delivered on the Closing
Date pursuant to Section 5 hereof.
7. COMPANY COVENANTS. For purposes of this Terms Agreement, the
reference to "thirty (30) days" in Section 3(j) of the Basic Provisions shall be
replaced with "one hundred and eighty (180) days" and the reference to "the
Underwriters' prior written consent" in such Section 3(j) shall be replaced with
"the
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prior written consent of Salomon Brothers International Limited, acting on
behalf of the International Representatives."
8. LEGAL OPINION OF COMPANY'S GENERAL COUNSEL. For purposes of this
Terms Agreement, Section 5(b) of the Basic Provisions shall be amended as
follows:
(a) The following words shall be added at the end of the third
sentence of subparagraph (ii): "; the certificates for the Securities are
in valid and sufficient form; no holders of outstanding securities of the
Company are entitled to register such securities under the Registration
Statement."
(b) Subparagraph (viii) shall be amended as follows:
(i) The words "1933 Act and the 1933 Act Regulations" in the
first sentence shall be replaced by the following: "the 1933 Act and
the 1934 Act and the respective rules thereunder."
(ii) The following sentence shall be added at the end of
subparagraph (viii): "The summaries of the Credit Agreements
(including the Amendments) contained in the Prospectuses (excluding
the incorporation by reference of the full text of the Credit
Agreements) constitute fair and accurate summaries of the material
provisions thereof."
(c) The words "relying as to materiality to a large extent" in the
first full paragraph following subparagraph (x) shall be replaced with the
words "relying to the extent appropriate in the exercise of such counsel's
professional responsibilities."
9. LEGAL OPINION OF COMPANY'S SPECIAL COUNSEL. For purposes of this
Term Agreement,
(a) The words in Section 5(c) of the Basic Provisions "clauses (ii)
(other than the second sentence thereof), (iv), (v) (other than the last
clause thereof), (viii) and (ix) of Section 5(b) hereof" shall be replaced
with the following:
"clauses (ii) (other than the second clause thereof), (iii), (iv), (v)
(other than the last clause thereof), (vi), (vii) (but only as to the first
sentence thereof), (viii) and (ix)."
(b) Such counsel's opinion shall also state that the section of the
Final Prospectus Supplement
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captioned "Certain United States Tax Consequences to Non-United States
Holders" contains a fair and accurate summary of the principal United
States federal income and estate tax consequences generally applicable
to Non-U.S. Holders (as defined in the Final Prospectus Supplement) of
the Securities.
10. CLOSING CERTIFICATE. For purposes of this Terms Agreement, the
certificate referred to in Section 5(d) of the Basic Provisions shall also
indicate that since the date of the most recent financial statements included in
the Prospectuses (exclusive of any supplement thereto), there has been no
material adverse change in the condition (financial or other), earnings,
business or properties of the Company, whether or not arising from transactions
in the ordinary course of business except as disclosed in or contemplated in the
Prospectuses (exclusive of any supplement thereto).
11. ACCOUNTANT'S LETTERS. For purposes of this Terms Agreement,
(a) The text of Section 5(e) (iii) (B) of the Basic Provisions shall
be replaced with the following:
"any pro forma financial statements contained in the Registration
Statement or the Prospectuses (including any documents incorporated by
reference therein) do not comply in form in all material respects with
the applicable accounting requirements of the 1933 Act Regulations or
that the pro forma adjustments to the historical amounts in such pro
forma financial statements have not been properly applied to the
historical amounts in the compilation of such statements."
(b) The following shall be added as a new subsection (iii) (E) to
Section 5(e) of the Basic Provisions:
"the amounts included in any 'unaudited' capsule information included
or incorporated in the Registration Statement or the Prospectuses do
not agree with the amounts set forth in the Company's unaudited
financial statements for the same periods or were not determined in
accordance with generally accepted accounting principles or on a basis
substantially consistent with that of the corresponding amounts in the
audited financial statements included or incorporated in the
Registration Statement or the Prospectuses."
12. ADDITIONAL CLOSING CONDITIONS. For purposes of this Terms
Agreement, the following new subparagraphs shall be added to Section 5 of the
Basic Provisions:
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<PAGE>
(h) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectuses (exclusive of any supplement
thereto), there shall not have been any change or decrease specified in the
letter or letters referred to in subparagraph (e) of this Section 5, the
effect of which is, in the judgment of the International Representatives,
so material and adverse so as to make it impractical or inadvisable to
proceed with the offering or the delivery of the Securities as contemplated
by the Registration Statement (exclusive of any amendment thereof) and the
Prospectuses (exclusive of any supplement thereto).
(i) The execution and delivery by all of the parties to the
Amendments, the satisfaction of all conditions precedent to the
effectiveness of the Amendments and the closing of the transactions
contemplated thereby shall occur prior to or concurrently with the closing
with respect to the International Underwritten Securities, and the
International Representatives shall have received such information,
certificates and documents in connection therewith as they may reasonably
require.
(j) The closing of the purchase of the US Underwritten Securities
pursuant to the US Underwriting Agreement shall occur concurrently with the
closing with respect to the International Underwritten Securities.
(k) The closing of the purchase of $710 million principal amount of
the Company's % Senior Notes due 2001 pursuant to the Underwriting
Agreement, dated the date hereof, between the Company and Salomon Brothers
Inc, Bear, Stearns & Co. Inc., BT Securities Corporation, Kidder, Peabody &
Co. Incorporated, Chemical Securities Inc. and NationsBanc Capital Markets,
Inc. shall occur concurrently with the closing with respect to the
International Underwritten Securities.
(l) The Securities shall have been approved for trading on the New
York Stock Exchange, subject only to notice of issuance.
(m) At the Execution Time, the Company shall have furnished to the
International Representatives a letter from _________________ addressed to
the International Representatives, in which each such person agrees not to
offer, sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce an offering of, any shares of Common Stock (or
securities convertible into or exchangeable for shares of Common Stock)
beneficially owned by such person for a period of 180 days following the
Execution Time without the prior written consent of Salomon Brothers
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International Limited, acting on behalf of the International
Representatives, other than shares of Common Stock (or securities
convertible into, or exchangeable for shares of Common Stock) disposed of
as bona fide gifts.
13. INDEMNIFICATION AND CONTRIBUTION. For purposes of this Terms
Agreement,
(a) The following sentence shall be added at the end of Section 6(c)
of the Basic Provisions:
"Attorneys' fees and other expenses incurred by an indemnified party
in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim which are reimbursable by an
indemnified party to such indemnified party pursuant to this Section 6
shall be reimbursed as incurred."
(b) The following words shall be added between the words
"unavailable," and "the Company" on the fourth line in the first sentence
of Section 7 of the Basic Provisions: "to or insufficient to hold harmless
an indemnified party for any reason."
(c) The third sentence of Section 7 of the Basic Provisions shall be
replaced with the following:
"Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided
by the Company or the Underwriters."
14. TERMINATION. For purposes of this Terms Agreement, Section 11 of
the Basic Provisions shall be amended as follows:
(a) Section 11(a) (iv) of the Basic Provisions shall be amended by
adding the following at the end thereof:
"or trading in the Company's Common Stock shall have been suspended by
the Commission or the New York Stock Exchange."
The references to "Underwriters" in subparagraphs (i), (iii), (vi) and
(vii) of Section 11 shall be replaced with "International Representatives."
(b) The words "Sections 8 and 11(a) hereof, except for clauses (ii)
and (iii) of Section 11(a)" in Section 11(b) of the Basic Provisions shall
be replaced with the words "Section 8."
15. AGREEMENTS OF MANAGERS. (a) Each Manager agrees that (i) it is
not purchasing any of the International Securities
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<PAGE>
for the account of any United States or Canadian Person, (ii) it has not offered
or sold, and will not offer or sell, directly or indirectly, any of the
International Securities or distribute any International Prospectus to any
person inside the United States or Canada, or to any United States or Canadian
Person, and (iii) any dealer to whom it may sell any of the International
Securities will represent that it is not purchasing for the account of any other
than a United States or Canadian Person and agree that it will not offer or
resell, directly or indirectly, any of the International Securities inside the
United States or Canada, or to any United States or Canadian Person or to any
other dealer who does not so represent and agree; PROVIDED, HOWEVER, that the
foregoing shall not restrict (A) purchases and sales between the Underwriters on
the one hand and the Managers on the other hand pursuant to Section 1(b) of the
Agreement Among, (B) stabilization transactions contemplated under Section 2 of
the Agreement Among, conducted through Salomon Brothers Inc as part of the
distribution of the Securities, and (C) sales to or through (or distributions of
International Prospectuses (or preliminary International Prospectuses to))
persons not United States or Canadian Persons who are investment advisors, or
who otherwise exercise investment discretion, and who are purchasing for the
account of United States or Canadian Persons. "United States or Canadian
Person" shall mean any person who is a national or resident of the United States
or Canada, a corporation, partnership, or other entity created or organized in
or under the laws of the United States or Canada or of any political subdivision
thereof, or any estate or trust the income of which is subject to United States
or Canadian federal income taxation, regardless of its source (other than any
non-United States or non-Canadian branch of any United States or Canadian
Person), and shall include any United States or Canadian branch of a person
other than a United States or Canadian Person. "US" or "United States" shall
mean the United States of America (including the states thereof and the District
of Columbia), its territories, its possessions and other areas subject to its
jurisdiction.
(b) The agreements of the Managers set forth in paragraph (a) of this
Section 15 shall terminate upon the earlier of the following events:
(i) a mutual agreement of the Representatives and the
International Representatives to terminate the selling restrictions
set forth in paragraph (a) of this Section 15 and in Section 15 of the
U.S. Terms Agreement; or
(ii) the expiration of a period of 30 days after the Closing
Date, unless (A) the International Representatives shall have given
notice to the Company and the Representatives that
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the distribution of the International Securities by the Managers has
not yet been completed, or (B) the Representatives shall have given
notice to the Company and the International Representatives that the
distribution of the US Securities by the Underwriters has not yet been
completed. If such notice by the International Representatives or the
Representatives is given, the agreements set forth in such paragraph
(a) shall survive until the earlier of (1) the event referred to in
clause (i) of this subsection (b) or (2) the expiration of any
additional period of 30 days from the date of any such notice.
(c) Each Manager represents and agrees that : (i) it has not offered
or sold and will not offer to sell in the United Kingdom by means of any
document any Securities other than to persons whose ordinary business it is to
buy or sell shares or debentures (whether as principal or agent) or in
circumstances which do not constitute an offer to the public within the meaning
of the Companies Act 1985: (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Securities in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on and will
only issue or pass on to any person in the United Kingdom any document received
by it in connection with the issue of the Securities if that person is of a kind
described in Article 9(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1988 (as amended by Article 5(c) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1992
or is a person to whom the document may otherwise lawfully be issued or passed
on.
16. NOTICES TO MANAGERS. Any notice by the Company to the Managers
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given if mailed or transmitted by any standard form of telecommunication
addressed (with confirmation) to the International Representatives c/o Salomon
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Brothers International Limited at 111 Buckingham Palace Road, London SW1WO SB,
Attention: Corporate Financing Department.
Please accept this offer by signing a copy of this Terms Agreement in
the space set forth below and returning the signed copy to us.
SALOMON BROTHERS INTERNATIONAL LIMITED
BEAR, STEARNS INTERNATIONAL LIMITED
BANKERS TRUST INTERNATIONAL PLC
By: SALOMON BROTHERS INTERNATIONAL LIMITED
By: _____________________________________
Name:
Title:
Accepted and agreed to as of
the date first above written:
STONE CONTAINER CORPORATION
By: _____________________________________
Name:
Title:
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EXHIBIT 4.1
SECOND AMENDMENT AND WAIVER OF THIRD RESTATED AGREEMENT
This Second Amendment and Waiver (this "Amendment") is made as of
January 24, 1994 by and among Stone Container Corporation, a Delaware
corporation (the "Borrower"), the undersigned financial institutions, Bankers
Trust Company, as agent under the U.S. Credit Agreement (as defined below)
(the "Agent"), and Citibank, N.A., Chemical Bank (as successor to
Manufacturers Hanover Trust Company) and The First National Bank of Chicago,
as co-agents under the U.S. Credit Agreement (collectively, the "Co-Agents").
Each capitalized term used but not otherwise defined herein shall have the
meaning ascribed to it in the U.S. Credit Agreement. The undersigned
financial institutions which are parties to the U.S. Credit Agreement are
collectively referred to herein as the "Banks".
R E C I T A L S:
A. The Borrower, the Banks, the Agent and the Co-Agents are party to
that certain Credit Agreement dated as of the March 1, 1989, and re-executed
as of October 25, 1993 as an amended and restated agreement which became
effective as of December 17, 1993 and was amended as of December 29, 1993 (as
amended, modified or supplemented from time to time, the "U.S. Credit
Agreement").
B. The Borrower, the Banks, the Agent and the Co-agents desire to
amend the U.S. Credit Agreement as set forth herein.
C. The undersigned financial institutions which are parties to any of
the Canadian Financing Documents but not also parties to the U.S. Credit
Agreement desire to evidence their consent to this Amendment.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENT OF THE U.S. CREDIT AGREEMENT. The Banks, the
Agent and the Co-Agents hereby agree with the Borrower that the U.S. Credit
Agreement is, as of the Effective Date (as defined below), amended as follows:
(a) Section 5.1.15 is amended by adding the following
sentence at the conclusion thereof:
"To the extent that the Borrower shall have designated any portion
of the net proceeds of the 1994 Debt Offering or the 1994 Equity
Offering for application to the payment of principal or interest
on the Subordinated Notes pursuant to Section 4(e) of the Second
Amendment, the Borrower shall cause the amount so designated to be
used for such purpose on or prior to the redemption date specified
in the redemption notice given by the Borrower pursuant to Section
4(f) of the Second Amendment."
<PAGE>
(b) Section 5.2.2(u) is amended in its entirety to read as
follows:
"(u) Indebtedness for Money Borrowed of the Borrower
as permitted by the penultimate sentence of SECTION 5.2.14; and
Indebtedness for Money Borrowed by StoneSub from the Issuer
pursuant to Receivables Financings which in the aggregate shall
not permit StoneSub to incur Indebtedness for Money Borrowed in
excess of, subject to the third proviso of the penultimate
sentence of SECTION 5.2.14, $500 million at any one time
outstanding (and in the event that the Accounts Receivable
Financing Program includes Canadian dollar Receivables of Canadian
Subsidiaries, without giving effect to increases in such amount
after the date of the incurrence of such Indebtedness for Money
Borrowed, or portion thereof, solely as the result of subsequent
fluctuations in the exchange rate between U.S. and Canadian
dollars); provided, however, that (i) the net proceeds from
transactions permitted by the penultimate sentence of SECTION
5.2.14 and the initial proceeds to StoneSub of each Receivables
Financing, net of the amount of any initial deposit to the
applicable cash collateral spread account and of the fees and
expenses of StoneSub incurred in establishing such Receivables
Financing and net of any amounts required to refinance then
existing Receivables Financings, shall be used (following
remittance to the Borrower or the Participating Subsidiary, as
applicable, for the purchase of Receivables therefrom) to make a
Prepayment as required by SECTION 3.4(B) in the order required
by SECTIONS 3.4(D) and 3.6(A)(III) and (II) in the case of
any Receivables Financing structured as a borrowing by StoneSub
(or deemed to be a borrowing pursuant to the terms hereof),
StoneSub shall borrow (a) on the initial date of any Receivables
Financing, the maximum borrowings then available to it (based on
the initial amount of Receivables transferred) under such
Receivables Financing (except that such initial maximum borrowings
may be reduced by no more than $2 million for each Receivables
Financing for reasons of administrative practicality) and (b)
after such initial date, in the reasonable business judgment of
StoneSub, the maximum borrowings practicable under such
Receivables Financings which have been established and are
continuing. For purposes of this Agreement, (i) in the event that
the terms of any Receivables Financing are amended to increase the
potential borrowings or sales thereunder (including without
limitation by means
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of adding additional Participating Subsidiaries or additional
business lines of existing Participating Subsidiaries), the initial
borrowing or sale by StoneSub under such amended program shall be
deemed to constitute a borrowing or sale under a new Receivables
Financing to the extent of such increase, provided that this clause
(i) shall not apply in the event that the increase in the potential
borrowings or sales under such Receivables Financing is being made
solely to finance additional purchases of Receivables from then
existing business lines of Participating Subsidiaries whose
Receivables with respect to such business line or lines have grown
or are expected to grow as the results of price increases, greater
sales or similar changes in general business lines, (ii) in the
event that any sale or purported sale of Receivables to StoneSub
by the Borrower or any Participating Subsidiary is required to be
recharacterized as a loan, the resulting obligations of the
Borrower or such Participating Subsidiary shall not be deemed to
be Indebtedness for Money Borrowed and (iii) any Receivables
Financing structured as a sale of Receivables by StoneSub to the
Issuer shall, for all purposes of this Agreement (including
without limitation with respect to this Section, ARTICLE I and
SECTIONS 3.4(B), 3.4(C), 3.6(A), 5.2.13, 5.2.14 and
5.3), and regardless of the treatment thereof by the Borrower on
its financial statements, be deemed to be an incurrence by
StoneSub of Indebtedness for Money Borrowed in respect of the
financing of the Receivables involved and not as a sale of such
Receivables by StoneSub;"
(c) Section 5.2.2 is further amended by deleting the word
"and" at the conclusion of Section 5.2.2(dd), replacing the period at
the end of Section 5.2.2(ee) with "and;" and adding a new Section
5.2.2(ff) as follows:
"(ff) senior or subordinated Indebtedness for Money
Borrowed of the Borrower issued as part of the 1994 Debt Offering;
provided that (i) the net proceeds thereof, less the 1994 Debt
Retention Amount, are applied on the effective date of the Second
Amendment to Prepayments as though required by SECTION 3.5(B) in
the order required by SECTION 3.6(A)(III) and (ii) such
Indebtedness is unsecured, has no scheduled amortization or
mandatory prepayments on or prior to March 1, 1997 and is
otherwise on terms and subject to documentation satisfactory to
the Majority Agents."
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(d) The last sentence of Section 5.2.4 is deleted and
replaced by the following:
"Except as specified on SCHEDULE 5.2.4 or as otherwise
specifically permitted under this Agreement, the Borrower shall
not permit any contract identified on SCHEDULE 5.2.4 or
referenced in SECTION 5.2.4(B) OR (C) to be directly or
indirectly amended or extended without the prior consent of the
Required Banks; provided, however, that any such contract may be
amended without the prior consent of the Required Banks if the
applicable amendment is not materially adverse to the Borrower or
its applicable Subsidiary and if a copy of the amendment is
delivered to the Agent within five Business Days after its
execution. The Borrower shall cause the "Completion Date" (as
defined in the Amended and Restated Output Purchase Agreement
dated March 27, 1991 between the Borrower and Seminole Kraft) to
occur at the earliest practicable date and, in any event, not
later than September 1, 1994 or otherwise cause the pricing
provisions of Section 3(b) of such agreement to be inapplicable
after such date."
(e) Section 5.2.5(b) is amended in its entirety to read as
follows:
"(b) the Borrower may pay cash dividends, make
distributions on its capital stock or make purchases or
redemptions of its capital stock to the extent that the aggregate
amount of all such dividends, distributions, purchases and
redemptions from January 1, 1994 to the date of the proposed
dividend, distribution, purchase or redemption (after giving
effect to such proposed dividend, distribution, purchase or
redemption) would not exceed the sum of (A) an amount equal to (1)
75% of the Consolidated Net Income of the Borrower for the period
from January 1, 1994 to the date of payment of such proposed
dividend, distribution, purchase or redemption minus (2) 100% of
the Consolidated Net Loss of the Borrower for the period from
January 1, 1994 to the date of payment of such proposed dividend,
distribution, purchase or redemption and (B) 100% of the cash
proceeds (net of the pro rata fees, costs and expenses of sale and
underwriting discounts and commissions) of sales of common stock
(other than common stock sold in the 1994 Equity Offering) and
Permitted Preferred Stock of the Borrower from January 1, 1994 to
the date of payment of such proposed dividend, distribution,
purchase or redemption;
-4-
<PAGE>
provided, however, that withoutrespect to the foregoing limitations,
the Borrower shall be permitted to pay cash dividends and to make
distributions with respect to its Permitted Preferred Stock
outstanding as of January 1, 1994 (but not with respect to its
common stock or subsequently issued preferred stock) to the extent
such dividends or distributions are at the time permitted by the
terms of the Borrower's Indenture to the Bank of New York, as
trustee, dated as of March 15, 1992; and provided further that if
all of the conditions to the declaration of a dividend or
distribution set out in this subsection are satisfied at the time
such dividend or distribution is declared, then, subject to the
proviso which follows Section 5.2.5(j), such dividend or
distribution may be paid or made within forty-five (45) days after
such declaration even if the payment of such dividend, the making of
such distribution or the declaration thereof would not have been
permitted under this subsection 5.2.5(b) at any time after such
declaration."
(f) Section 5.2.7 is amended by deleting the word "and" at
the conclusion of Section 5.2.7(q), replacing it with a ",", deleting
the last sentence of Section 5.2.7 and adding the following at the
conclusion of Section 5.2.7(r):
"and (s) Investments by Europa Carton, A.G. out of the proceeds of
Indebtedness incurred by Europa Carton, A.G. pursuant to SECTION
5.2.2(B)(II)(D). Except as specifically provided in the
foregoing clauses (d) (with respect to SVCPI only), (o), (p) and
(q), neither the Borrower nor Amalco nor any Subsidiary of either
shall be permitted to make additional Investments in Newsco or any
of Newsco's Subsidiaries or in SVCPI (other than pursuant to
contractual agreements permitted by this Agreement and as in
effect on September 30, 1993)."
(g) Section 5.2.14(c) and the second sentence of Section
5.2.14 up to the first proviso thereof are amended in their entirety to
read as follows:
"(c) the Borrower or any Participating Subsidiary may sell or
otherwise grant an interest in its Receivables to StoneSub, and
StoneSub may sell or otherwise grant an interest in its
Receivables to other Persons, in each case pursuant to the
Accounts Receivable Financing Program. In addition to the
foregoing, the Borrower or any Subsidiary eligible to be a
Participating Subsidiary may directly sell interests in
Receivables to a
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<PAGE>
financial institution or other Person (whether on a revolving
purchase basis or in a one-time transaction);"
(h) Section 5.3.3 is amended in its entirety to read as
follows:
"5.3.3 EBITDA. Have EBITDA equal to or greater than the
following amounts for the respective periods indicated below:
<TABLE>
<CAPTION>
($ IN MILLIONS)
---------------
<S> <C>
For the quarter ended 12/31/93 ............. $ 50.0
For the quarter ended 3/31/94 .............. $ 20.0
For the two quarters ended 6/30/94 ......... $ 55.0
For the three quarters ended 9/30/94 ....... $111.0
For the four quarters ended 12/31/94 ....... $180.0
For the four quarters ended 3/31/95 ........ $226.0
For the four quarters ended 6/30/95 ........ $300.0
For the four quarters ended 9/30/95 ........ $380.0
For the four quarters ended 12/31/95 ....... $457.0
For the four quarters ended 3/31/96 ........ $567.0
For the four quarters ended 6/30/96 ........ $651.0
For the four quarters ended 9/30/96 ........ $735.0
For the four quarters ended 12/31/96
and each four quarter period thereafter .. $822.0"
</TABLE>
(i) Section 7.1(g) is amended by adding the following
after the semicolon at the conclusion thereof:
"provided, however, that solely with respect to Seminole Kraft and
Stone Savannah, (A) any event described in subsection (i) above
shall constitute an Event of Default only if the payment default
relates to the final maturity of the relevant Indebtedness for
Money Borrowed and the holder thereof has commenced legal action
in respect of such default and (B) any event described in
subsection (ii) or (iii) above shall constitute an Event of
Default only if the relevant "event of default", "event" or
"condition" results in any such Indebtedness for Money Borrowed
being declared due and payable prior to its stated maturity or due
date;"
(j) The definition of "Consolidated Net Income" in the
Definitional Appendix is amended by adding the following at the
conclusion thereof:
"; and provided further that solely for purposes of computing
compliance by the Borrower with SECTION 5.2.5(B) and 5.3.3,
there shall be excluded from
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<PAGE>
"Consolidated Net Income" any income of the Borrower
or its Subsidiaries arising out of payments received in
consideration of the Borrower's termination or amendment of that
certain Electric Power Purchase Agreement dated as of December 17,
1984 between the Borrower and Carolina Power & Light Company."
(k) The second, third and fourth sentences of Section
9.12(d) are amended in their entirety to read as follows:
"Each such assignment by an Original Bank (i) if to any entity
other than an Original Bank, must be in an amount that equals or
exceeds $10 million (which amount may include the amount of a
simultaneous assignment being made pursuant to SECTION
9.12(D)(II) and any simultaneous assignment in respect of an L/C
Participation Agreement) and (ii) in the case of any assignment
with respect to the Term Loan, may only be made in connection with
a simultaneous assignment to the Assignee of a like percentage of
the assigning Bank's loans under the Holdco Term Loan Agreement.
Each Additional Bank may separately assign its rights and delegate
its obligations under this Agreement with respect to the
Additional Multiple Draw Loans or the Additional Term Loan to one
or more Assignees pursuant to a Transfer Supplement substantially
in the form of EXHIBIT 9.12(D)-A hereto (with such changes
thereto as may be appropriate in the circumstances), provided that
such assignment, if to any entity other than a Bank, must be in
the amount of at least $10 million. Notwithstanding anything
herein to the contrary, (a) a Bank may simultaneously assign to an
Assignee which is not at the time either an Original Bank or an
Additional Bank an amount of at least $10 million consisting of
any combination of its rights and obligations with respect to (1)
the Additional Term Loan, (2) the Term Loan and/or the Revolving
Loans, (3) the Canadian Term Loan, (4) an L/C Participation
Agreement and/or (5) the Amalco Revolving Credit Agreement,
provided that the restrictions set forth in clause (ii) of this
Section 9.12(d) shall be applicable thereto and (b) if at any time
the aggregate amount of any Bank's commitments and loans under
this Agreement, the Holdco Term Loan Agreement, the L/C
Participation Agreements and the Amalco Revolving Credit Agreement
is less than $10 million, then such Bank may assign to any one
other Assignee all of such commitments and loans."
-7-
<PAGE>
(l) The first sentence of the definition of "Accounts
Receivable Financing Program" in the Definitional Appendix is amended in
its entirety to read as follows:
""ACCOUNTS RECEIVABLE FINANCING PROGRAM" means a program
of sales of, or transfers of interests in, receivables (whether
characterized as sales or as non-recourse loans) and related
contract rights and other property (the "Receivables") by the
Borrower and its Participating Subsidiaries to StoneSub, which
shall finance such purchases through (i) sales or transfers of
Receivables or borrowings or other debt issuances (which, except
as described in EXHIBIT 1.1(E) to the Second Restated Agreement,
shall be non-recourse to the Borrower and its Subsidiaries other
than StoneSub) from one or more limited purpose finance companies,
financial institutions or other Persons not affiliated with the
Borrower or through one or more trusts originated by StoneSub
(individually and collectively, the "Issuer"), (ii) capital
contributions from the Borrower, (iii) subordinated loans from the
Borrower and its applicable Participating Subsidiaries and (iv)
collections from previously purchased Receivables."
(m) The following definitions are added to the
Definitional Appendix in the appropriate alphabetical order:
""1994 AGGREGATE PREPAYMENT REDUCTION AMOUNT" means an
amount designated as such by the Borrower on the effective date of
the Second Amendment, which amount shall in no event exceed an
amount equal to (a)(i) $200 million plus (ii) the aggregate
outstanding principal amount of the Subordinated Notes plus (iii)
the amount of interest which has accrued on the Subordinated Notes
through the effective date of the Second Amendment and which will
accrue on the Subordinated Notes from such effective date to and
including the redemption date specified pursuant to Section 4(f)
of the Second Amendment MINUS (b) 25% of the net proceeds of the
1994 Equity Offering. It is understood that the Borrower may
elect to designate a 1994 Aggregate Prepayment Reduction Amount of
less than the maximum permitted amount in order to satisfy the
conditions set forth in the second sentence of Section 4(d) of the
Second Amendment.
"1994 DEBT OFFERING" means the public issuance by the
Borrower of Indebtedness for Money Borrowed meeting the
requirements of SECTION 5.2.2(FF) and
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<PAGE>
occurring on the effective date of the Second Amendment.
"1994 DEBT RETENTION AMOUNT" means an amount equal to the
1994 Debt Retention Fraction times the 1994 Aggregate Prepayment
Reduction Amount.
"1994 DEBT RETENTION FRACTION" means a fraction, the
numerator which is equal to 100% of the net proceeds of the 1994
Debt Offering and the denominator of which is equal to the sum of
the numerator plus 75% of the net proceeds of the 1994 Equity
Offering.
"1994 EQUITY OFFERING" means the public issuance by the
Borrower of its common shares occurring on the effective date of
the Second Amendment.
"1994 EQUITY RETENTION AMOUNT" means an amount equal to
(a) 25% of the net proceeds of the 1994 Equity Offering plus (b)
an amount equal to the 1994 Equity Retention Fraction times the
1994 Aggregate Prepayment Reduction Amount.
"1994 EQUITY RETENTION FRACTION" means a fraction, the
numerator of which is equal to 75% of the net proceeds of the 1994
Equity Offering and the denominator of which is equal to the sum
of the numerator plus 100% of the net proceeds of the 1994 Debt
Offering.
"SECOND AMENDMENT" means the Second Amendment and Waiver
of the Third Restated Agreement dated as of January 24, 1994."
(n) The "Overview" paragraph of EXHIBIT 1.1(E) to the
Second Restated Agreement is amended in its entirety to read as follows:
"The Borrower may, from time to time, form one or more
corporations constituting a StoneSub the business of which will be
limited to the purchase of Receivables generated by the Borrower
or one or more Participating Subsidiaries (each a "Seller"). Each
StoneSub will be capitalized with equity (which may take the form
of Receivables) and/or subordinated debt. Sales of Receivables by
a Seller will be on a non-recourse basis except that the Seller
will be liable for breaches of representations, warranties and
covenants, for certain dilution adjustment payments and for
certain other indemnification obligations. In
-9-
<PAGE>
order to finance the purchases, StoneSub may enter into various
credit and/or sale or transfer arrangements with unaffiliated third
parties and/or with a trust originated by StoneSub (collectively,
"StoneSub Credit Arrangements"), including without limitation
revolving credit and commercial paper issuance facilities, and may
pledge any or all of its assets (including the Receivables) as
security for such credit facilities. The Sellers will neither
guaranty nor pledge any of their assets to secure the outstanding
principal under such credit facilities or interest thereon."
(o) EXHIBIT 9.12(D) and EXHIBIT 9.12(D)-A,
respectively, are amended in their entirety to read as Exhibits A and B
hereto.
(p) Schedule 4.12 is amended in its entirety to read as
Exhibit C hereto.
SECTION 2. CONSENT AND WAIVER. Subject to satisfaction of the
conditions set forth in Section 4 below, the Banks hereby consent to the
Borrower's retention and application of the 1994 Debt Retention Amount and
1994 Equity Retention Amount out of the net proceeds of the 1994 Debt Offering
and 1994 Equity Offering, respectively, as set forth in Section 4(e) below and
waive any Event of Default under Section 3.4(b) or Section 5.2.10 of the U.S.
Credit Agreement which would otherwise arise out of such retention or
application.
SECTION 3. FEES. If the Supermajority Banks execute this Amendment
(and the other documents contemplated to be executed by them in connection
herewith) or, as necessary, give their consent thereto, the Borrower shall (a)
within two Business Days following such date pay to the Agent for distribution
to each Bank and to each lender under the Amalco Revolving Credit Agreement (a
"Consenting Lender") that has delivered its executed signature pages or
consents to the Agent by 5:00 P.M. (New York City time) on January 24, 1994,
or such later date to which the Borrower may agree, an initial amendment fee
of ten one-hundredths of one percent (0.10%) of the aggregate of such
Consenting Lender's Term Loan, Revolving Loan Commitment, Additional Term
Loan, Canadian Term Loan, Revolving Commitment under the Amalco Revolving
Credit Agreement and commitments in respect of the L/C Agreement, in each case
outstanding or in effect as of January 24, 1994 and (b) on the Effective Date
of this Amendment pay to the Agent for distribution to each Consenting Lender
an additional amendment fee of fifteen one-hundredths of one percent (0.15%)
of the aggregate of such Consenting Lender's Term Loan, Revolving Loan
Commitment, Additional Term Loan, Canadian Term Loan, Revolving Commitment
under the Amalco Revolving Credit Agreement and commitments in respect of the
L/C Agreement (before giving effect to the Prepayments out of the proceeds of
the 1994 Debt Offering and 1994
-10-
<PAGE>
Equity Offering). The fee payable pursuant to clause (a) of this Section
shall be fully earned when paid and shall not be refunded to the Borrower
regardless of the fact that the other provisions of this Amendment do not
become effective due to the failure of the satisfaction of the conditions
precedent set forth in Section 4.
SECTION 4. CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS AMENDMENT.
This Amendment (including the consent and waiver set forth in Section 2 above)
shall become effective upon the date (the "Effective Date") the following
conditions are satisfied:
(a) The Borrower, the Agent, the Co-Agents and the
Supermajority Banks shall have executed and delivered this Amendment;
and
(b) The Borrower shall have paid in full to the Agent, for
distribution as appropriate, all of fees then required to have been paid
by the Borrower pursuant to Section 3 above.
(c) The Borrower shall have consummated the 1994 Debt
Offering and the 1994 Equity Offering.
(d) Substantially contemporaneously with the consummation
of the 1994 Equity Offering and the 1994 Debt Offering the Borrower
shall have given the Agent written notice of the 1994 Aggregate
Prepayment Reduction Amount and shall have applied (i) all of the net
proceeds of the 1994 Equity Offering (less the 1994 Equity Retention
Amount) and (ii) all of the net proceeds of the 1994 Debt Offering (less
the 1994 Debt Retention Amount) to Prepayments pursuant to Section
3.4(b) of the U.S. Credit Agreement in the order of application required
by Section 3.6(a)(iii) of the U.S. Credit Agreement. The aggregate
amount of such Prepayments shall be at least equal to the aggregate
amount of all Regularly Scheduled Principal Installments remaining due
in calendar years 1994 and 1995 as of the Effective Date.
(e) Substantially contemporaneously with satisfying the
conditions in Section 4(d) above, the Borrower shall have designated for
application (in the case of (i) below) or applied (in the case of (ii)
below) any portion of the net proceeds of the 1994 Equity Offering and
the 1994 Debt Offering retained as permitted by Section 4(d) above, in
such order as the Borrower may determine, to (i) prepayment at par of
principal and accrued (through the redemption date specified pursuant to
Section 4(f) below) interest on the Subordinated Notes and (ii) the
reduction of revolving credit loans under this Agreement and/or the
Amalco Revolving Credit Agreement without a corresponding reduction in
commitments (provided, however, that to the extent that after giving
effect to any such payments, no revolving credit loans shall
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<PAGE>
remain outstanding under either such agreement, the Borrower may retain
the balance of such amounts in cash).
(f) To the extent that any portion of the net proceeds of
the 1994 Debt Offering or the 1994 Equity Offering permitted hereby to
be retained by the Borrower are designated pursuant to Section 4(e)
above for application to the payment of the Subordinated Notes, the
Borrower shall have given irrevocable notice of redemption of such
Subordinated Notes to the trustee under the indenture pursuant to which
the Subordinated Notes were issued specifying the earliest possible date
for redemption permitted by such indenture.
(g) No Event of Default or Unmatured Event of Default
shall have occurred and be continuing or will occur after giving effect
to the consummation of the transactions contemplated by this Amendment,
including the 1994 Debt Offering and the 1994 Equity Offering.
(h) The Fourth Amendment to the Holdco Term Loan Agreement
dated as of the date hereof shall have been executed by or consented to,
as appropriate, the Supermajority Banks and shall have become effective
according to its terms.
(i) The Third Amendment to the Amalco Revolving Credit
Agreement dated as of the date hereof shall have been executed by, or
consented to, as appropriate, the Supermajority Banks and shall have
become effective according to its terms.
(j) The Agent shall have received the signed opinion of
Sidley & Austin, counsel to the Borrower, dated the Effective Date and
addressed to the Agent, the Co-Agents and all the Banks in such form and
substance as shall be acceptable to the Agent.
(k) The Agent shall have received such other documents or
legal opinions as the Agent may reasonably request, all in form and
substance satisfactory to the Agent. The Borrower shall have furnished
to the Agent such additional copies or executed counterparts of the
documents referred to above as the Agent or any Bank may request.
In the event that all of the foregoing conditions precedent have
not been satisfied or waived by the Supermajority Banks on or before March 31,
1994 (or such later date approved by the Supermajority Banks), this Amendment
(other than Section 3(a) shall be of no force or effect and the Third Restated
Agreement, as amended by the first amendment thereto, shall continue in full
force and effect.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
Borrower represents and warrants that:
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<PAGE>
(a) the execution, delivery and performance by it of this
Amendment have been duly authorized by all necessary corporate action on
its part;
(b) this Amendment has been duly executed and delivered by
the Borrower;
(c) this Amendment is the legal, valid and binding
obligation of the Borrower, enforceable against the Borrower in
accordance with its terms, except as enforcement thereof may be subject
to (i) the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and (ii) general principles of equity (regardless of whether
such enforcement is sought in a proceeding in equity or at law);
(d) the representations and warranties contained in
Article IV of the U.S. Credit Agreement are true and correct in all
material respects on and as of the date hereof;
(e) no Event of Default or Unmatured Event of Default
under the U.S. Credit Agreement, the Holdco Term Loan Agreement or the
Amalco Revolving Credit Agreement has occurred and is continuing; and
(f) as of January 1, 1994, the aggregate outstanding
principal balance of the Subordinated Notes was $98,140,486 and interest
thereon had been paid through November 30, 1993.
SECTION 6. REFERENCE TO AND EFFECT ON CREDIT AGREEMENT.
(a) On and after the Effective Date, each reference in the
U.S. Credit Agreement to "this Agreement," "hereunder," "hereof,"
"herein," or words of like import, and each reference to any of such
agreements in any of the other documents (the "Loan Documents")
delivered in connection therewith, shall mean and be a reference to the
applicable agreement as amended hereby.
(b) Except as specifically amended or waived hereby, the
U.S. Credit Agreement and the Loan Documents shall remain in full force
and effect and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of the Banks, the Agent or the
Co-Agents under the U.S. Credit Agreement or any of the Loan Documents.
SECTION 7. CONSENT OF OTHER FINANCIAL INSTITUTIONS. Each of the
undersigned which is a party to any of the Canadian Financing
-13-
<PAGE>
Documents, whether or not also a party to the U.S. Credit Agreement, hereby
consents to the foregoing provisions with respect to the U.S. Credit Agreement
and the Canadian Financing Documents.
SECTION 8. EXECUTION IN COUNTERPARTS. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
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, the Co-Agents and the Supermajority Banks regardless of
whether it has been executed and delivered by all of the undersigned financial
institutions.
SECTION 9. GOVERNING LAW. This Amendment shall be governed by and
construed with reference to the laws of the State of New York, without regard
to principles of conflicts of law.
SECTION 10. 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.
[Signature Pages Follow]
C:\DOCS\GSM\BT\SCC\AMEN-NO2.7
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
STONE CONTAINER CORPORATION BANKERS TRUST COMPANY, as a Bank and
as the Agent
By:/S/ LESLIE T. LEDERER By: /S/ MARY ZADROGA
--------------------- ------------------
Its: Vice President Its: Vice President
CITIBANK, N.A., as a Bank and as a
Co-Agent
By: /S/ ELIZABETH NEWMAN
----------------------
Its: Vice President
CHEMICAL BANK AS SUCCESSOR FOR
MANUFACTURERS HANOVER TRUST COMPANY,
as a Bank and as a Co-Agent
By: /S/ JULIA BOUHUYS
-------------------
Its: Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
as a Bank and as a Co-Agent
By: /S/ LINDA M. THOMPSON
-----------------------
Its: Vice President
-15-
<PAGE>
EXHIBIT A TO
THE AMENDMENT
Exhibit 9.12(d)
TRANSFER SUPPLEMENT
This Transfer Supplement (this "Transfer Supplement"), is dated as of
__________ __, 19__ and constitutes an assignment to _______________ (the
"Transferee/Assignee Bank") of [all or a portion of] the rights, titles and
interests of _______________ (the "Transferor Bank") in and to and the
delegation of [all or a portion of] its obligations under or in respect of (a)
the Credit Agreement dated as of March 1, 1989 and re-executed as an amended
and restated agreement as of October 25, 1993 among Stone Container
Corporation (the "Borrower"), the financial institutions signatory thereto in
their capacities as lenders thereunder (collectively, the "Banks"), Bankers
Trust Company, as agent (the "Agent") for the Banks, and Citibank, N.A.
("Citibank"), Chemical Bank (as successor to Manufacturers Hanover Trust
Company) ("Chemical") and The First National Bank of Chicago ("FNBC"), as
co-agents for the Banks (collectively, the "Co-Agents") (such agreement, as
from time to time amended and as further amended hereby, being referred to
herein as the "Credit Agreement") and the Commitments and Obligations under
the Credit Agreement, (b) the Holdco Term Loan Agreement and the Commitments
and Obligations under the Holdco Term Loan Agreement, [and (c) each of (A)
that certain Letter of Credit and Term Loan Participation Agreement dated as
of March 1, 1989 (the "D&K Participation Agreement") entered into by Bankers
Trust Company and the Transferor Bank with respect to the Letter of Credit
Agreement dated as of June 25, 1987 between Bankers Trust Company and D&K
Financial Corporation, as amended, and (B) that certain Letter of Credit and
Term Loan Participation Agreement dated as of March 1, 1989 (the "WCC
Participation Agreement") entered into by Bankers Trust Company and the
Transferor Bank with respect to the Letter of Credit Agreement dated as of
June 25, 1987 between Bankers Trust Company and Westinghouse Credit
Corporation, as amended (the D&K Participation Agreement and the WCC
Participation Agreement being referred to collectively herein as the
"Participation Agreements").] The documents and interests set forth in
clauses (a), (b) [and (c)] of the foregoing sentence are hereinafter referred
to collectively as the "Assigned Documents and Interests." The Credit
Agreement, the Holdco Term Loan Agreement [and the Participation Agreements]
are hereinafter referred to collectively as the "Credit Facilities."
Capitalized terms which are not otherwise defined herein shall have the
meanings assigned to them in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Transferor Bank desires to reduce each of its
Commitments under the Credit Agreement, each of its Commitments under the
Holdco Term Loan Agreement [and its Participation Percentage under each of the
Participation Agreements] from those which are currently set forth on Schedule
A hereto to those which are set forth on Schedule B hereto and to assign the
amounts set forth on Schedule C hereto, which
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<PAGE>
are proportionately equivalent to such reduction of its rights, titles and
interest in and to the Assigned Documents and Interests (the "Assigned
Portion"), to the Transferee/Assignee Bank; and
WHEREAS, the Transferee/Assignee Bank desires to become a party to
each of the respective Credit Facilities to the extent of the Assigned Portion
and to act as the Transferee/Assignee Bank; and
WHEREAS, the Borrower and the Agent consent to the aforesaid
assignment by the Transferor Bank to the Transferee/ Assignee Bank;
NOW, THEREFORE, the parties agree as follows:
1. Effective as of the Assignment Effective Date (as hereinafter
defined), the Transferor Bank hereby transfers and assigns to the
Transferee/Assignee Bank, except with respect to indemnities of the Borrower,
if any, which have not been satisfied and which shall have arisen prior to the
date hereof, the Assigned Portion in and to the Assigned Documents and
Interests, and the Transferee/Assignee Bank hereby accepts said assignment
and, to the extent of their respective interests therein, assumes the rights
and obligations established under the Assigned Documents and Interests. The
assignment effected hereby is without recourse against or warranty by the
Transferor Bank, except for default in its express obligations,
representations and warranties hereunder.
2. This Transfer Supplement shall become effective on
______________, 199__ at [INSERT TIME] (the "Assignment Effective Date").
3. In connection with the assignment effected hereby by the
Transferor Bank to the Transferee/Assignee Bank of the Assigned Portion with
respect to the Credit Facilities:
(a) on the Assignment Effective Date, the Transferee/Assignee
Bank shall pay to the Transferor Bank an amount equal to the outstanding
indebtedness owed to it (i) by the Borrower under each of the Credit Agreement
and the Holdco Term Loan Agreement or (ii) by Bankers Trust Company under the
Participation Agreements, in any case with respect to the Assigned Portion;
(b) from and after the Assignment Effective Date and to the
extent provided in this Transfer Supplement, the Transferee/Assignee Bank
shall be a Bank [or participant, as applicable] for all purposes of the Credit
Facilities, subject to all of the rights, privileges, duties and obligations
to which the Banks or participants are subject thereunder and in respect
thereof[, except in the case of fees as otherwise agreed to in a separate
letter agreement being entered into between the Transferor Bank and the
Transferee/Assignee Bank as of the date hereof]. Schedule C sets forth
information regarding delivery of all notices provided for in any Credit
Facility to be directed to the Transferee/Assignee Bank and information
regarding wire transfers to be sent or received in connection with either of
the Credit Facilities.
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<PAGE>
(c) the parties to the Credit Facilities shall take such
action and shall execute and/or provide such other documents as counsel to the
Agent reasonably deems necessary to effect the changes contemplated by this
Transfer Supplement.
4. [IF BORROWER CONSENT REQUIRED, INSERT PARAGRAPH A, OTHERWISE
INSERT PARAGRAPH B]. A-[The Borrower agrees that its execution of this
Transfer Supplement shall constitute the consent of the Borrower required by
any provision in any of the Credit Facilities for the transactions effected by
this Transfer Supplement.] B-[The Transferor Bank agrees to notify the
Borrower of the execution of this Transfer Supplement in accordance with
Section 9.12(d) of the Credit Agreement.]
5. By executing and delivering this Transfer Supplement, the
Transferor Bank and the Transferee/Assignee Bank confirm to and agree with
each other and the Agent and the Banks as follows: (i) the Transferor Bank
represents and warrants that it is the legal and beneficial owner of the
interest being assigned hereby free and clear of any adverse claim; (ii)
except for the foregoing, the Transferor Bank makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit
Facilities or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Facilities and any Loan Document or any
other instrument or document furnished pursuant thereto; (iii) the Transferor
Bank makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower, or any of their respective
Subsidiaries or the performance or observance by the Borrower, or any of their
respective Subsidiaries of any of its obligations under the Credit Facilities,
any other Loan Document or any other instrument or document furnished pursuant
thereto; (iv) the Transferee/Assignee Bank confirms that it has received a
copy of the Credit Facilities, together with copies of the financial
statements referred to in Section 5.1.1 of the Credit Agreement, if any, and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Transfer Supplement; (v)
the Transferee/Assignee Bank will, independently and without reliance upon the
Agent, the Transferor Bank or any other bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Facilities;
(vi) the Transferee/Assignee Bank appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under the
Credit Facilities and the other Loan Documents as are delegated to the Agent
by the terms thereof; and (vii) the Transferee/Assignee Bank agrees that it
will perform in accordance with their terms all of the obligations which by
the terms of the Credit Facilities are required to be performed by it as a
Bank.
6. The execution, delivery and effectiveness of this Transfer
Supplement shall not, except as expressly provided herein, operate as a waiver
of any right, power or remedy of the Banks under any of the Credit Facilities
and shall not affect the Borrower's right to withhold its consent to any
future assignment by any Bank as set forth in any of the Credit Facilities.
-18-
<PAGE>
7. On the date hereof, the Transferor Bank shall pay to the Agent,
for its own account, in immediately available funds, a nonrefundable transfer
fee of $2000 pursuant to Section 9.12(d) of the Credit Agreement.
8. This Transfer Supplement may be executed in any number of
counterparts and by different parties hereto in separate 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.
9. This Transfer Supplement shall be governed by and construed in
accordance with the internal laws of the State of New York.
10. No assignment effected pursuant to this Transfer Supplement
shall constitute a novation of the obligations of the Borrower being assigned.
11. [IF BANKERS TRUST COMPANY IS THE TRANSFEROR BANK, AND IF LETTER
OF CREDIT COMMITMENTS ARE ASSIGNED, THEN THE FOLLOWING SECTION SHOULD BE
ADDED.] Contemporaneously herewith Bankers Trust Company and the
Transferee/Assignee Bank are entering into participation agreements in the
form of the Participation Agreements which grant to the Transferee/Assignee
Bank a percentage of the "Credit" (as defined in each of the Participation
Agreements) equal to the percentage of its interests set forth on Schedule C
hereto. Notwithstanding any provision herein to the contrary, all other
provisions of this Transfer Supplement referencing an assignment or assumption
by Bankers Trust Company or the Transferee/Assignee Bank with respect to the
Participation Agreements or the Letter of Credit Agreements referenced above
shall be without effect, such assignment and assumption instead being
accomplished by the separate participation agreements referenced in the
preceding sentence. For purposes of the Schedules hereto, the "Participation
Percentage" of Bankers Trust Company in the Participation Agreements shall be
deemed to be that percentage of the "Credit" (as defined in each of the
Participation Agreements) as to which Bankers Trust Company has neither sold a
participation to a Bank (as defined in the Credit Agreement) in connection
with the signing of the Credit Agreement nor made a prior assignment.
[signature page follows]
-19-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Transfer
Supplement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
[STONE CONTAINER CORPORATION]
By: __________________________
Its: _________________________
[STONE CONTAINER (CANADA) INC.]
By: __________________________
Its: _________________________
BANKERS TRUST COMPANY, as Agent
By: ___________________________
Its: __________________________
[TRANSFEROR BANK]
By: ___________________________
Its: __________________________
[TRANSFEREE/ASSIGNEE BANK]
By: ___________________________
Its: __________________________
-20-
<PAGE>
SCHEDULE A
Commitments of Transferor Bank Prior to Effectiveness
of Transfer Supplement
I. Credit Agreement
Amount of Maximum Commitment:__________________________
Amount of Term Loan Commitment:________________________
Amount of Revolving Loan Commitment:___________________
II. Holdco Term Loan Agreement
Amount of Maximum Commitment:__________________________
Amount of Tender Offer Loan Commitment:________________
Amount of Term Loan Commitment:________________________
III. D&K Participation Agreement
Participation Percentage:______________________________
IV. WCC Participation Agreement
Participation Percentage:______________________________
-21-
<PAGE>
SCHEDULE B
Commitments of Transferor Bank After the Effectiveness
of Transfer Supplement
I. Credit Agreement
Amount of Maximum Commitment:__________________________
Amount of Term Loan Commitment:________________________
Amount of Revolving Loan Commitment:___________________
II. Holdco Term Loan Agreement
Amount of Maximum Commitment:__________________________
Amount of Tender Offer Loan Commitment:________________
Amount of Term Loan Commitment:________________________
III. D&K Participation Agreement
Participation Percentage:______________________________
IV. WCC Participation Agreement
Participation Percentage:______________________________
-22-
<PAGE>
SCHEDULE C
Amounts of Assigned Portion Assigned Pursuant to
Transfer Supplement
I. Credit Agreement
Amount of Maximum Commitment:__________________________
Amount of Term Loan Commitment:________________________
Amount of Revolving Loan Commitment:___________________
II. Holdco Term Loan Agreement
Amount of Maximum Commitment:__________________________
Amount of Tender Offer Loan Commitment:________________
Amount of Term Loan Commitment:________________________
III. D&K Participation Agreement
Participation Percentage:______________________________
IV. WCC Participation Agreement
Participation Percentage:______________________________
Notice Instructions:
Transferee: ___________________________________________
___________________________________________
___________________________________________
Transferor: ___________________________________________
___________________________________________
___________________________________________
Payment Instructions:
Transferee: ___________________________________________
___________________________________________
___________________________________________
Transferor: ___________________________________________
___________________________________________
___________________________________________
Account and Wire Transfer Information called for by Exhibit A to the
Participation Agreements:
-23-
<PAGE>
EXHIBIT B TO
THE AMENDMENT
Exhibit 9.12(d)-A
TRANSFER SUPPLEMENT
This Transfer Supplement (this "Transfer Supplement"), is dated as of
__________ __, 19__ and constitutes an assignment to _______________ (the
"Transferee/Assignee Additional Bank") of [all or a portion of] the rights,
titles and interests of ___________ (the "Transferor Additional Bank") in and
to and the delegation of [all or a portion of] certain of its obligations
under or in respect of the Credit Agreement dated as of March 1, 1989 and
re-executed as an amended and restated agreement as of October 25, 1993 among
Stone Container Corporation (the "Borrower"), the financial institutions
signatory thereto in their capacities as lenders thereunder (collectively, the
"Banks"), Bankers Trust Company, as agent (the "Agent") for the Banks, and
Citibank, N.A. ("Citibank"), Chemical Bank (as successor to Manufacturers
Hanover Trust Company) ("Chemical") and The First National Bank of Chicago
("FNBC"), as co-agents for the Banks (collectively, the "Co-Agents") (such
agreement, as from time to time amended and as further amended hereby, being
referred to herein as the "Credit Agreement"). The document and interests set
forth in the foregoing sentence are hereinafter referred to collectively as
the "Assigned Document and Interests." Capitalized terms which are not
otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Transferor Additional Bank desires to reduce the
principal amount now outstanding in respect of the Additional Term Loan under
the Credit Agreement from those which are currently set forth on SCHEDULE A
hereto to those which are set forth on SCHEDULE B hereto and to assign the
amounts set forth on SCHEDULE C hereto, which are equivalent to such
reduction of its rights, titles and interest in and to the Assigned Document
and Interests (the "Assigned Portion"), to the Transferee/Assignee Additional
Bank; and
WHEREAS, the Transferee/Assignee Additional Bank desires to become a
party to the Credit Agreement to the extent of the Assigned Portion and to act
as the Transferee/Assignee Additional Bank; and
WHEREAS, the Borrower and the Agent consent to the aforesaid
assignment by the Transferor Additional Bank to the Transferee/Assignee
Additional Bank;
NOW, THEREFORE, the parties agree as follows:
1. Effective as of the Assignment Effective Date (as hereinafter
defined), the Transferor Additional Bank hereby transfers and assigns to the
Transferee/Assignee Additional Bank, except with respect to indemnities of the
Borrower, if any, which have not been
-24-
<PAGE>
satisfied and which shall have arisen prior to the date hereof, the Assigned
Portion in and to the Assigned Document and Interests, and the
Transferee/Assignee Additional Bank hereby accepts said assignment and, to the
extent of its interest therein, assumes the rights and obligations established
under the Assigned Document and Interests. The assignment effected hereby is
without recourse against or warranty by the Transferor Additional Bank, except
for default in its express obligations, representations and warranties
hereunder.
2. This Transfer Supplement shall become effective on
_______________, 199__ at [INSERT TIME] (the "Assignment Effective Date").
3. In connection with the assignment effected hereby by the
Transferor Additional Bank to the Transferee/Assignee Additional Bank of the
Assigned Portion with respect to the Credit Agreement:
(a) on the Assignment Effective Date, the transferee/Assignee
Additional Bank shall pay to the Transferor Additional Bank an amount equal to
the outstanding indebtedness owed to it by the Borrower under the Credit
Agreement with respect to the Assigned Portion.
(b) from and after the Assignment Effective Date and to the
extent provided in this Transfer Supplement, the Transferee/Assignee
Additional Bank shall be an Additional Bank, for all purposes of the Credit
Agreement, subject to all of the rights, privileges, duties and obligations to
which the Additional Banks are subject thereunder and in respect thereof,
except in the case of fees as otherwise agreed to in a separate letter
agreement being entered into between the Transferor Additional Bank and the
Transferee/Assignee Additional Bank as of the date hereof. SCHEDULE C sets
forth information regarding delivery of all notices provided for in the Credit
Agreement to be directed to the Transferee/Assignee Additional Bank.
(c) the parties to the Credit Agreement shall take such
action and shall execute and/or provide such other documents as counsel to the
Agent reasonably deems necessary to effect the changes contemplated by this
Transfer Supplement.
4. [IF BORROWER CONSENT REQUIRED, INSERT PARAGRAPH A, OTHERWISE
INSERT PARAGRAPH B]. A-[The Borrower agrees that its execution of this
Transfer Supplement shall constitute the consent of the Borrower required by
any provision in the Credit Agreement for the transactions effected by this
Transfer Supplement.] B-[The Transferor Bank agrees to notify the Borrower of
the execution of this Transfer Supplement in accordance with Section 9.12(d)
of the Credit Agreement.]
5. By executing and delivering this Transfer Supplement, the
Transferor Bank and the Transferee/Assignee Bank confirm to and agree with
each other and the Agent and the Banks as follows: (i) the Transferor Bank
represents and warrants that it is the legal and beneficial owner of the
interest being assigned hereby free and clear of any adverse claim; (ii)
except for the foregoing, the Transferor Bank makes no representation or
warranty and assumes no responsibility with
-25-
<PAGE>
respect to any statements, warranties or representations made in or in
connection with the Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement, and
any Loan Document or any other instrument or document furnished pursuant
thereto; (iii) the Transferor Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower, or any of their respective Subsidiaries or the performance or
observance by the Borrower, or any of their respective Subsidiaries of any of
its obligations under the Credit Agreement, any other Loan Document or any
other instrument or document furnished pursuant thereto; (iv) the
Transferee/Assignee Bank confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 5.1.1 of the Credit Agreement, if any, and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Transfer Supplement; (v) the Transferee/Assignee
Bank will, independently and without reliance upon the Agent, the Transferor
Bank or any other bank and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (vi) the
Transferee/Assignee Bank appoints and authorizes the Agent to take such action
as agent on its behalf and to exercise such powers under the Credit Agreement
and the other Loan Documents as are delegated to the Agent by the terms
thereof; and (vii) the Transferee/Assignee Bank agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank.
6. The execution, delivery and effectiveness of this Transfer
Supplement shall not, except as expressly provided herein, operate as a waiver
of any right, power or remedy of the Banks under the Credit Agreement and
shall not affect the Borrower's right to withhold its consent to any future
assignment by any Bank as set forth in the Credit Agreement.
7. On the date hereof, the Transferor Bank shall pay to the Agent,
for its own account, in immediately available funds, a nonrefundable transfer
fee of $2000 pursuant to Section 9.12(d) of the Credit Agreement.
8. This Transfer Supplement relates exclusively to such rights and
obligations as the Transferee/Assignee Additional Bank and the Transferor
Additional Bank may have or hereby acquire as an "Additional Bank" in respect
of the Additional Term Loan and the Additional Term Loan Obligations and shall
not affect such rights or obligations as such party may have in other
capacities under the Credit Agreement.
9. This Transfer Supplement may be executed in any number of
counterparts and by different parties hereto in separate 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.
10. This Transfer Supplement shall be governed by and construed in
accordance with the internal laws of the State of New York.
-26-
<PAGE>
11. No assignment effected pursuant to this Transfer Supplement
shall constitute a novation of the obligations of the Borrower being assigned.
[signature pages follow]
-27-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Transfer
Supplement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
[STONE CONTAINER CORPORATION]
By: __________________________
Its: _________________________
BANKERS TRUST COMPANY, as Agent
By: ___________________________
Its: __________________________
[TRANSFEROR ADDITIONAL BANK]
By: ___________________________
Its: __________________________
[TRANSFEREE/ASSIGNEE ADDITIONAL BANK]
By: ___________________________
Its: __________________________
-28-
<PAGE>
SCHEDULE A
Principal Amount of Additional Term Loan by Transferor Additional
Bank PRIOR TO Effectiveness of Transfer Supplement:
$
-29-
<PAGE>
SCHEDULE B
Principal Amount of Additional Term Loan by Transferor Additional
Bank AFTER the Effectiveness of Transfer Supplement:
$
-30-
<PAGE>
SCHEDULE C
Amounts of Assigned Portion Assigned Pursuant to
Transfer Supplement
Amount of Additional
Term Loans: $__________
Notice Instructions:
Transferor: ____________________________________
____________________________________
____________________________________
Payment Instructions:
Transferor: ____________________________________
____________________________________
____________________________________
-31-
<PAGE>
EXHIBIT C TO
THE AMENDMENT
Schedule 4.12
1. The Annual Report on Form 10-K of the Borrower for the year
ended December 31, 1992, as amended by Amendment No. 1 on Form 8 dated April
9, 1993 and Amendment No. 2 on Form 10-K/A dated June 24, 1993.
2. The Quarterly Reports on Form 10-Q of the Borrower for the
quarters ended March 31, 1993, June 30, 1993 and September 30, 1993.
3. The Current Reports on Form 8-K of the Borrower dated January
8, 1993, April 15, 1993, June 24, 1993, July 7, 1993, July 26, 1993, September
30, 1993, January 3, 1994 and January 5, 1994.
4. Registration Statement on Form F-1 of Stone-Consolidated
Corporation dated August 27, 1993, as amended by Amendment No. 1 to Form F-1
of Stone-Consolidated Corporation dated October 7, 1993.
-32-
<PAGE>
EXHIBIT 4.2
SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE dated as of February 1, 1994 ("Second
Supplemental Indenture") to the Indenture dated as of November 1, 1991 between
Stone Container Corporation, a Delaware corporation (herein called the
"Company"), and The Bank of New York, a banking corporation duly organized and
existing under the laws of the State of New York, as trustee (herein called
the "Trustee").
WHEREAS, THE COMPANY HAS ISSUED, the Trustee has authenticated and there
have been delivered pursuant to the Indenture $240,000,000 aggregate principal
amount of 11-7/8% Senior Notes due December 1, 1998 and $150,000,000 aggregate
principal amount of 12 5/8% Senior Notes due July 15, 1998, all of which are
currently outstanding;
WHEREAS, the company desires to add a definition of "Five Year Treasury
Rate" and amend the definition of "Seven Year Treasury Rate" in Article One of
the Indenture;
WHEREAS, Section 901 of the Indenture provides that the Company and the
Trustee may enter into a supplemental indenture, without the consent of any
Holders, for the purpose of curing any ambiguity, defect or inconsistency or
to correct or supplement any provision therein or for the purpose of making
any change that does not materially adversely affect the Holders of Securities
of any series.
WHEREAS, all acts and proceedings requires by law and the Indenture to
authorize, approve and constitute the Second Supplemental Indenture as a valid
and binding agreement for the uses and purposes set forth herein, in
accordance with its terms, have been done and taken, and the execution and
delivery of this Second Supplemental Indenture have in all respects been duly
authorized by the Company; and
WHEREAS, the foregoing recitals are made as representations or
statements of fact by the Company and not by the Trustee.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Company and the Trustee hereby agree as follows:
1. The definition of Article One is hereby amended by adding a
definition of "FIVE YEAR TREASURY RATE" to read in its entirety as follows:
"FIVE YEAR TREASURY RATE" means the arithmetic average (rounded to the
nearest basis point) of the weekly average per annum yield to maturity
values adjusted to constant maturities of five years, for the Rate
Determination Period as determined from the yield curves of the most
actively traded marketable United States Treasury fixed interest rate
securities (x) constructed daily by the United States Treasury Department
(i) as published by the Federal Reserve Board in its Statistical
Release H.15 (519), "Selected Interest Rates," which weekly average yield
to maturity values currently are set forth in such Statistical Release
under the caption "U.S. Government Securities-Treasury Constant
Maturities-5 Year" or (ii) if said Statistical Release H.15 (519) is not
then published, as published by the Federal Reserve Board in any release
comparable to its Statistical Release H.15 (519) or (iii) if the Federal
Reserve Board shall not then be publishing a comparable release, as
published in any official publication or release of
<PAGE>
any other United States Government Department or agency or (y) if the
United States Treasury Department shall not then be constructing such
yield curves, then as constructed by the Federal Reserve Board or any
other United States Government Department or agency and published as set
forth in (x) above. However, if the Five Year Treasury Rate cannot be
determined as provided above, then the Five Year Treasury Rate shall mean
the arithmetic average (rounded to the nearest basis point) of the per
annum yields to maturity for each Business Day during the Rate
Determination Period of all of the issues of actively trading issues of
non-interest bearing United States Treasury fixed interest rate securities
with a maturity of not less than 57 months nor more than 63 months from
such Business Day (1) as published in THE WALL STREET JOURNAL or (2) if
THE WALL STREET JOURNAL shall cease such publication, based on average
asked prices (or yields) as quoted by each of three United States
Government securities dealers of recognized national standing selected
by the Company.
2. The definition of "SEVEN YEAR TREASURY RATE" is hereby amended
to read in its entirety as follows:
"SEVEN YEAR TREASURY RATE" means the arithmetic average (rounded to
the nearest basis point) of the weekly average per annum yield to
maturity values adjusted to constant maturities of seven years, for the
Rate Determination Period as determined from the yield curves of the most
actively traded marketable United States Treasury fixed interest rate
securities (x) constructed daily by the United States Treasury Department
(i) as published by the Federal Reserve Board in its Statistical Release
H.15 (519), "Selected Interest Rates," which weekly average yield to
maturity values currently are set forth in such Statistical Release under
the caption "U.S. Government Securities-Treasury Constant Maturities-
7 Year" or (ii) if said Statistical Release H.15 (519) is not then
published, as published by the Federal Reserve Board in any release
comparable to its Statistical Release H.15 (519) or (iii) if the Federal
Reserve Board shall not be publishing a comparable release, as
published in any official publication or release of any other United
States Government Department of agency, or (y) if the United States
Treasury Department shall not then be constructing such yield curves, then
as constructed by the Federal Reserve Board or any other United States
Government Department or agency and published as set forth in (x) above.
However, if the Seven Year Treasury Rate cannot be determined as provided
above, then the Seven Year Treasury Rate shall mean the arithmetic average
(rounded to the nearest basis point) of the per annum yields to maturity
for each Business Day during the Rate Determination Period of all of the
issues of actively trading issues of non-interest bearing United States
Treasury fixed interest rate securities with a maturity of not less than
81 months nor more than 87 months from such Business Day (1) as published
in THE WALL STREET JOURNAL or (2) if THE WALL STREET JOURNAL shall cease
such publication, based on average asked prices (or yields) as quoted by
each of three United States Government securities dealers of recognized
national standing selected by the Company. Notwithstanding the foregoing,
with respect to any Securities issued on and after February 1,1994, in the
event that Statistical Release H.15 (519) is not then published, the
Seven Year Treasury Rate may be determined using the basis or formula, if
any, set forth in the Board Resolution or supplemental indenture specified
by Section 301 hereof relating to the issuance of such Securities.
3. All capitalized terms used in this Second Supplemental Indenture
have the respective meanings set forth in the Indenture. This Second
Supplemental Indenture may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, and all of
<PAGE>
such counterparts shall together constitute one and the same instrument.
Except as expressly amended hereby, the Indenture is in all respects ratified
and confirmed and all the terms, conditions and provisions thereof shall
remain in full force and effect.
4. Each of the Company and the Trustee makes and reaffirms as of the
date of execution of this Second Supplemental Indenture all of its respective
covenants and agreements set forth in the Indenture.
5. All covenants and agreements in this Second Supplemental Indenture
by the Company or the Trustee shall bind its respective successors and
assigns, whether so expressed or not.
6. In case any provision in tise Second Supplemental Indenture shall
be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
7. Nothing in this Second Supplemental Indenture, express or implied,
shall give to any person, other than the parties hereto and their successors
under the Indenture and the Holders of the Securities, any benefit or any
legal or equitable right, remedy or claim under the Indenture.
8. If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Second Supplemental Indenture, such required provision
shall control. If any provision hereof modifies or excludes any provision of
the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Second Supplemental Indenture as so
modified or shall be excluded, as the case may be.
9. This Second Supplemental Indenture shall be governed by and
construed in accordance with the laws (other than choice of law provisions) of
the State of New York.
10. All provisions of this Second Supplemental Indenture shall be
deemed to be incorporated in, and made a part of, the Indenture; and the
Indenture, as amended and supplemented by this Second Supplemental Indenture,
shall be read, taken and construed as one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Second Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
STONE CONTAINER CORPORATION
By:
_______________________
Name:
Title:
(SEAL)
Attest:
______________________
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By:
____________________________
Name:
Title:
(SEAL)
Attest:
______________________
Name:
Title:
<PAGE>
STATE OF )
)
COUNTY OF )
On the __ day of February, 1994, before me personally came _____________,
to me known, who, being by me duly sworn, did depose and say that he is
__________________ of Stone Container Corporation, one of the parties described
in and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal,
that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
______________________
My commission expires:
<PAGE>
STATE OF )
)
COUNTY OF )
On the __ day of February, 1994, before me personally came _____________,
to me known, who, being by me duly sworn, did depose and say that he is
__________________ of The Bank of New York, one of the parties described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal,
that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
______________________
My commission expires:
<PAGE>
TRADED: NYSE
FOR FURTHER INFORMATION: SYMBOL: STO
Arnold F. Brookstone Ira N. Stone
Executive Vice President - Senior Vice President -
Chief Financial & Chief Marketing, Communications
Planning Officer & Public Affairs Officer
(312) 580-4637 (313) 580-4608
FOR IMMEDIATE RELEASE
STONE CONTAINER REPORTS LOSS FOR FOURTH QUARTER AND YEAR 1993
CHICAGO, Feb. 3, 1994 -- Stone Container Corporation reported a loss before
the cumulative effect of an accounting change of $319.2 million, or $4.59 per
Common share, for the year 1993, and a net loss of $85.8 million, or $1.23 per
Common share, for the fourth quarter. For 1992, the loss, also before the
cumulative effect of accounting changes, was $169.9 million, or $2.49 per Common
share, for the year and $76.7 million, or $1.10 per Common share, for the final
quarter.
SFAS 106, relating to post-retirement benefits other than pensions, was
adopted effective January 1, 1993, and resulted in a non-cash charge of $39.5
million net of income taxes, or $0.56 per Common share, in 1993.
SFAS 109, relating to income taxes, was adopted effective January 1, 1992,
and resulted in a non-cash charge of $99.5 million, or $1.40 per Common share,
in 1992.
--more--
<PAGE>
STONE--Add 1
Sales for the year 1993 were $5.06 billion, compared to 1992 sales of $5.52
billion. For the fourth quarter, sales were $1.24 billion in 1993 and $1.33
billion in 1992.
In the fourth quarter, the gain on the sale of the Company's interest in a
Mexican packaging company was significantly offset by the net effect of
writedowns of the carrying values of certain Company assets, as well as certain
adjustments to accruals.
Commenting on industry business conditions, Roger W. Stone, Chairman,
President and Chief Executive Officer, noted that industry shipments of
corrugated containers reached record levels in 1993, rising 5.4 percent over
1992 shipments.
"In an improving climate, we successfully implemented a first-stage partial
price recovery for containerboard in late 1993, and have also announced to our
customers an additional price increase that is scheduled to become effective
during the first quarter of 1994," Stone said. "Box price increases have been
announced to accompany the containerboard price increases."
The Company also advised its customers that a newsprint price increase is
scheduled to become effective as early as March first.
Market pulp prices have also shown recent improvement. The Company has
implemented a price increase as of January 1, 1994, and has announced another
increase for March first. Most major producers have also announced similar
increases.
--more--
<PAGE>
STONE--Add 2
During the fourth quarter, the Company's Canadian newsprint and groundwood
papers subsidiary, Stone-Consolidated Corporation, completed the sale of 25.4
percent of its Common stock through an initial public offering.
In December, the Company extended the maturity of its revolving credit
facilities from 1994 to 1997.
By year-end 1993, the Company had finalized asset sales that yielded gross
proceeds of approximately $125 million.
The Company is in the final stages of concurrent offerings currently
estimated to be $500 million of senior unsecured notes and $250 million of
equity. Net proceeds will be used to: prepay bank indebtedness of
approximately $370 million due in 1995 and $30 million due in 1996; to call and
redeem the outstanding amount of approximately $98 million on the
13 5/8 percent subordinated notes due June 1, 1995; and to provide additional
liquidity estimated to be $200 million.
--more--
<PAGE>
STONE--Add 3
Stone Container Corporation is a multinational pulp, paper and paper
packaging company. Its product line includes containerboard, corrugated
containers, kraft paper, paper bags and sacks, market pulp, wood products and,
through Stone-Consolidated Corporation, newsprint and groundwood papers.
Headquartered in Chicago, the Company has manufacturing facilities and
sales offices in North America, Central America, Europe, the United Kingdom and
the Far East.
(SEE TABULAR ATTACHED)
# # #
<PAGE>
STONE CONTAINER CORPORATION (NYSE)
SUMMARY
<TABLE>
<CAPTION>
For the three months ended For the year ended
December 31, December 31,
------------------------ ------------------------
(dollars in millions except per share amounts) 1993 1992 (a) 1993 1992 (a)
- ---------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . . . . . . $1,243.1 $1,330.7 $5,059.6 $5,520.7
--------- --------- --------- ---------
Income (loss) from operations. . . . . . . . . . . . . (7.5) 10.1 (h) (39.3) 156.2 (h)
--------- --------- --------- ---------
Loss before income taxes and cumulative
effects of accounting changes. . . . . . . . . . . . (120.1) (93.4) (466.9) (229.3)
Credit for income taxes. . . . . . . . . . . . . . . . (34.3) (16.7) (147.7) (56.4)
--------- --------- --------- ---------
Loss before cumulative effects of accounting
changes. . . . . . . . . . . . . . . . . . . . . . . (85.8) (76.7) (319.2) (169.9)
Cumulative effect of change in accounting for
postretirement benefits (net of income taxes). . . . -- -- (39.5) --
Cumulative effect of change in accounting
for income taxes . . . . . . . . . . . . . . . . . . -- -- -- (99.5)
--------- --------- --------- ---------
Net loss . . . . . . . . . . . . . . . . . . . . . . . $ (85.8) $ (76.7) $ (358.7) $ (269.4)
--------- --------- --------- ---------
--------- --------- --------- ---------
Net loss applicable to common shares . . . . . . . . . $ (87.8) $ (78.7) $ (366.8) $ (276.3)
--------- --------- --------- ---------
--------- --------- --------- ---------
Per share of common stock:
- --------------------------
Loss before cumulative effects of accounting
changes. . . . . . . . . . . . . . . . . . . . . . . $ (1.23) $ (1.10) $ (4.59) $ (2.49)
Cumulative effect of change in accounting
for postretirement benefits (net of
income taxes). . . . . . . . . . . . . . . . . . . . -- -- (.56) --
Cumulative effect of change in accounting for
income taxes . . . . . . . . . . . . . . . . . . . . -- -- -- (1.40)
--------- --------- --------- ---------
Net loss . . . . . . . . . . . . . . . . . . . . . . . $ (1.23) $ (1.10) $ (5.15) $ (3.89)
--------- --------- --------- ---------
--------- --------- --------- ---------
Cash dividends . . . . . . . . . . . . . . . . . . . . $ -- $ -- $ -- $ .35
--------- --------- --------- ---------
--------- --------- --------- ---------
Average common shares outstanding
(in millions). . . . . . . . . . . . . . . . . . . . 71.2 71.0 71.2 71.0
--------- --------- --------- ---------
--------- --------- --------- ---------
Mill tonnage produced (in thousands of short tons):
- ---------------------------------------------------
Containerboard and kraft paper (b)(e). . . . . . . . . 1,306 1,235 4,888 4,988
Newsprint. . . . . . . . . . . . . . . . . . . . . . . 326 317 1,312 1,243
Market pulp (b)(c) . . . . . . . . . . . . . . . . . . 215 226 733 824
Groundwood paper . . . . . . . . . . . . . . . . . . . 110 115 461 381
Other (e). . . . . . . . . . . . . . . . . . . . . . . 20 19 81 81
--------- --------- --------- ---------
Total mill tonnage produced. . . . . . . . . . . . . . 1,977 1,912 7,475 7,517
--------- --------- --------- ---------
--------- --------- --------- ---------
Containerboard and kraft paper converted
(in thousands of short tons)(d)(e)(f)(g) . . . . . . 1,063 1,047 4,354 4,373
--------- --------- --------- ---------
Corrugated shipments (in billions of square
feet)(d)(e)(f)(g). . . . . . . . . . . . . . . . . . 12.7 12.4 52.5 51.7
--------- --------- --------- ---------
Paper bag and sack shipments (in thousand
of short tons) . . . . . . . . . . . . . . . . . . . 154 167 613 689
--------- --------- --------- ---------
<FN>
Notes: (a) Restated to reflect adoption of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" retroactive to
January 1, 1992.
(b) Includes 100 percent of the Stone Savannah River and/or Seminole
Kraft mills.
(c) Includes 25 percent of the Calgar mill.
(d) Includes 50 percent of MacMillan Bathurat.
(e) Includes 49 percent of Titan.
(f) Includes 100 percent of Cartonmills.
(g) Includes 49 percent of Societe Emballages Des Cavennes through March
31, 1992, and 100 percent effective April 1, 1992.
(h) Adjusted to conform with current financial statement
presentation
</TABLE>
<PAGE>
PROSPECTUS SUPPLEMENT FILED PURSUANT TO RULE 424(B)(2)
(To Prospectus Dated January 7, 1994) REGISTRATION NO. 33-49857
16,500,000 SHARES
[LOGO]
COMMON STOCK
($.01 PAR VALUE)
Of the 16,500,000 shares of Common Stock offered hereby (the "Common Stock"),
14,000,000 shares are being offered by the U.S. Underwriters in the United
States and Canada (the "U.S. Offering"), and 2,500,000 shares are being offered
by the International Underwriters in a concurrent international offering outside
the United States and Canada (the "International Offering," and collectively
with the U.S. Offering, the "Common Stock Offering"), subject to transfers
between the U.S. Underwriters and the International Underwriters (collectively,
the "Underwriters"). The public offering price and the aggregate underwriting
discount per share are identical for both offerings. See "Underwriting."
Concurrently with the Common Stock Offering, the Company is selling in a public
offering (the "Notes Offering") $710,000,000 aggregate principal amount of its
9 7/8% Senior Notes due 2001 (the "Notes"). The closing of the Common Stock
Offering and the Notes Offering (collectively, the "Offerings") are conditional
upon one another.
The Common Stock is listed on the New York Stock Exchange under the symbol
"STO". On February 3, 1994, the last reported sale price for the Common Stock,
as reported on the New York Stock Exchange Composite Transactions Tape was
$15.50 per share. See "Price Range of Common Stock and Dividend Policy."
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE
CONSIDERED IN CONNECTION WITH THIS OFFERING.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO
WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
<S> <C> <C> <C>
Per Share..................................... $15.250 $0.686 $14.564
Total(3)...................................... $251,625,000 $11,319,000 $240,306,000
- -------------------------------------------------------------------------------------------
<FN>
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses of the Offerings payable by the Company, estimated
to be $500,000.
(3) The Company has granted to the U.S. Underwriters and International
Underwriters 30 day-options to purchase up to an aggregate of 2,475,000
additional shares of Common Stock at the Price to Public, less Underwriting
Discount, solely to cover over-allotments, if any. If the Underwriters
exercise such option in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $289,368,750, $13,016,850, and
$276,351,900, respectively. See "Underwriting."
</TABLE>
The Common Stock is offered subject to receipt and acceptance by the
Underwriters, to prior sale and to the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of the Common Stock will be made against payment
therefor at the office of Salomon Brothers Inc, Seven World Trade Center, New
York, New York or through the facilities of the Depository Trust Company on or
about February 10, 1994.
SALOMON BROTHERS INC
BEAR, STEARNS & CO. INC.
BT SECURITIES CORPORATION
The date of this Prospectus Supplement is February 3, 1994.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION AND
FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND IN THE ACCOMPANYING
PROSPECTUS. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FACTORS SET
FORTH HEREIN UNDER THE CAPTION "RISK FACTORS." CERTAIN CAPITALIZED TERMS USED
HEREIN ARE DEFINED ELSEWHERE IN THIS PROSPECTUS SUPPLEMENT OR IN THE PROSPECTUS.
AS USED HEREIN, THE TERM "COMPANY" INCLUDES STONE CONTAINER CORPORATION, ITS
SUBSIDIARIES AND ITS AFFILIATES, EXCEPT AS THE CONTEXT OTHERWISE MAY REQUIRE.
EXCEPT AS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS SUPPLEMENT
ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION.
THE COMPANY
GENERAL
The Company is a major international pulp and paper company engaged
principally in the production and sale of paper, packaging products, and
commodity pulp. The Company believes that it is the world's largest producer of
unbleached containerboard and kraft paper and the world's largest converter of
those products. The Company also believes that it is one of the largest paper
companies in terms of annual tonnage produced. The Company produced 5.0 million
tons and 4.9 million tons of unbleached containerboard and kraft paper in 1992
and 1991, respectively, which accounted for approximately 66% of its total
tonnage produced for both 1992 and 1991. The Company had net sales of
approximately $5.5 billion and $5.4 billion in 1992 and 1991, respectively.
The Company has increased dramatically in size over the past ten years,
primarily through four major acquisitions, including the 1989 acquisition of
Consolidated-Bathurst Inc. (a Canadian corporation, now renamed Stone Container
(Canada) Inc. ("Stone Canada")), and several smaller acquisitions. The
acquisition of Stone Canada increased the Company's market share in its core
business operations and provided the Company with the opportunity to pursue its
strategy to expand its production capacity and sales in international markets.
The Company owns or has an interest in 136 manufacturing facilities in the
United States, 27 in Canada, 15 in Germany, five in France, two in Belgium and
one in each of the United Kingdom and the Netherlands. The facilities include 24
mills. The Company also maintains sales offices in the United States, Canada,
the United Kingdom, Germany, Belgium, France, China and Japan.
RECENT DEVELOPMENTS
PROGRESS OF FINANCIAL PLAN
In 1993, the Company adopted a financial plan designed to enhance the
Company's liquidity, reduce amortization under certain bank credit agreements of
the Company and Stone Canada (the "Credit Agreements") and improve financial
flexibility. The Company completed a major portion of its financial plan during
1993 resulting in net proceeds to the Company and Stone Canada of approximately
$1.0 billion which the Company and Stone Canada used to repay indebtedness under
the Credit Agreements and fund operating losses and working capital needs. These
repayments satisfied the remaining September 1993 amortization of approximately
$118 million, the full 1994 amortization of approximately $409 million and
approximately $21 million of the March 1995 amortization under the Credit
Agreements. The Company had as of January 31, 1994 approximately $43 million
available for borrowing out of a total revolving credit commitment of $311.8
million.
The transactions completed in 1993 were as follows:
- the sale in June, 1993 of $150 million of the Company's 12 5/8%
Senior Notes due 1998 and a concurrent private sale of $250
million principal amount of the Company's 8 7/8% Convertible
Senior Subordinated Notes due 2000.
- the public offerings in December 1993 by Stone-Consolidated
Corporation, a newly created Canadian subsidiary
("Stone-Consolidated"), of Cdn. $231 million of its common stock
(representing 25.4% of its outstanding common stock), Cdn. $231
million of its 8% Convertible Unsecured Subordinated Debentures
due 2003 and $225 million of its 10.25% Senior Secured Notes due
2000 (the "Stone-Consolidated Transaction"). Stone-Consolidated
now owns all of
S-3
<PAGE>
the Canadian and U.K. newsprint and groundwood papers assets of
the Company and its subsidiaries. The net proceeds paid by
Stone-Consolidated to the Company and Stone Canada in connection
with these offerings approximated $490 million.
- the sale of the Company's 49% equity interest in Empaques de
Carton Titan, S.A., a Mexican corrugated container company
("Titan"), two of the Company's short line railroads and a
specialty packaging plant in Sheridan, Arkansas. The proceeds of
these three transactions approximated $125 million.
In connection with the completion of the Stone-Consolidated Transaction, the
Company also received approval from its bank group to extend the maturity date
of its revolving credit facilities from March 1, 1994 to March 1, 1997.
The final stages of the Company's current financial plan are as follows:
- the Offerings, from which the Company expects to use the net
proceeds to (i) prepay approximately $623.9 million of 1995, 1996
and 1997 required amortization under the Credit Agreements
(including amortization payments under the Company's revolving
credit facilities reducing the total commitments thereunder to
approximately $177.4 million); (ii) redeem at par approximately
$98 million plus accrued interest of the Company's 13 5/8%
Subordinated Notes due 1995; and (iii) repay approximately $200
million of the borrowings under the Company's revolving credit
facilities without reducing the commitments thereunder (or to the
extent no borrowings are outstanding, the Company may retain the
balance in cash).
- the completion of a transaction involving a favorable energy
supply agreement relating to the Company's mill in Florence, South
Carolina. The proceeds of this transaction are subject to the
execution of definitive documentation and regulatory approval.
The gross proceeds of this transaction, which are currently
expected to be approximately $100 million, would be utilized to
repay borrowings under the Company's revolving credit facilities
without reducing commitments thereunder (or to the extent no
borrowings are outstanding, the Company may retain the balance in
cash). There can be no assurance, however, that this transaction
will be consummated or that the expected amount of proceeds from
such transaction will be received.
The completion of the Offerings will provide the Company with the following
benefits:
- repayment of all major amortization through the end of 1995
(except for revolving credit facilities relating to receivables
financings which the Company intends to extend or refinance and
amortization totalling approximately $236 million for 1996 and
1997).
- improvement of the Company's liquidity by repaying borrowings
under the revolving credit facility by $200 million (or to the
extent no borrowings are outstanding, the Company may retain the
balance in cash). As of January 31, 1994, the Company had
approximately $43 million available for borrowing out of a total
revolving credit commitment of $311.8 million.)
- improvement of the Company's financial flexibility through
amendments to the Credit Agreements (see "-- Amendments to Credit
Agreements").
PRODUCTS AND INDUSTRY TRENDS
The markets for products sold by the Company are highly competitive and are
also sensitive to cyclical changes in industry capacity and in the economy, both
of which can significantly influence selling prices and thereby the Company's
profitability. Although the Company has experienced declining product pricing in
all of its product lines over the last several years, the Company believes that
market conditions are present which should permit the Company to realize
improved product pricing in most of its product lines.
The Company implemented a $25 per ton price increase for linerboard
effective October 1, 1993, which raised the transaction price for the base grade
of linerboard to $325 per ton. This increase will not, however, restore prices
for linerboard to the levels present at the beginning of 1993. In addition, the
Company is in the process of final implementation of a corrugated container
price increase. The Company currently expects final implementation to
S-4
<PAGE>
occur in the first quarter of 1994. As a result of strengthening demand, the
Company announced a further price increase of $30 per ton for linerboard
effective in March 1994. There can be no assurance that prices will continue to
increase or even be maintained at present levels, but the Company believes the
demand for linerboard and the converted products produced from linerboard are
increasing.
Pricing conditions for newsprint and groundwood paper have been volatile in
recent years. While the industry successfully implemented a price increase in
1992, efforts to maintain an additional price increase in 1993 were
unsuccessful. In 1993, Stone-Consolidated and other industry participants
attempted to balance supply and demand by taking downtime at selected production
facilities. Stone-Consolidated announced a $47.50 per metric ton price increase
for newsprint effective March 1, 1994 in light of recent industry improvements
in supply and demand characteristics. Other major North American producers have
announced similar price increases. There is no assurance, however, that such
price increases will be achieved as scheduled or at all.
Market pulp has also experienced volatile pricing in recent years. The
Company announced a price increase of $40 to $80 per metric ton in the various
grades of market pulp effective January 1, 1994 in light of improved supply and
demand characteristics in the industry. In addition, a further price increase
scheduled for March 1, 1994 has been announced. There is, however, significant
world-wide competition in this product line and no assurances can be given that
such price increases will be maintained.
OPERATING PERFORMANCE
The Company has announced a loss before the cumulative effect of an
accounting change of $319.2 million, or $4.59 per common share, for the year
1993, and a net loss of $85.8 million, or $1.23 per common share, for the fourth
quarter. For 1992, the loss, also before the cumulative effect of accounting
changes, was $169.9 million, or $2.49 per common share, for the year and $76.7
million, or $1.10 per common share, for the fourth quarter. Sales reported for
the year 1993 were $5.06 billion, compared to 1992 sales of $5.52 billion. For
the fourth quarter, sales reported were $1.24 billion in 1993 and $1.33 billion
in 1992.
In the fourth quarter, the gain on the sale of the Company's interest in a
Mexican packaging company was significantly offset by the net effect of
writedowns of the carrying values of certain Company assets as well as a
reduction in an accrual resulting from a change in the Company's vacation pay
policy effected in 1993.
The losses incurred in 1993 and in the previous two years had a severe
negative impact on the Company's liquidity. The Company believes, however, that
the implementation of its financial plan significantly improves the Company's
liquidity. As of January 31, 1994, available borrowings under the Company's
revolving credit facilities were approximately $43 million and upon consummation
of the Offerings, the Company's cash and available borrowings under such
facilities are expected to increase by approximately $200 million.
The Company believes that demand for its products has recently increased.
Production of containerboard for the fourth quarter of 1993 versus the similar
period in 1992 increased 5.8%. The Company also increased its sales of
corrugated products (measured in terms of footage sold) by 2.4% for the fourth
quarter of 1993 versus the similar period in 1992. The production of newsprint
and groundwood papers increased by 1% for the fourth quarter of 1993 versus the
similar period in 1992. Production of market pulp, however, declined 4.9% for
the comparable period.
AMENDMENTS TO CREDIT AGREEMENTS
In connection with the Offerings, the Company has received approval for
certain amendments to the Credit Agreements. The amendments, which will be
effected upon the consummation of the Offerings, contain the following
provisions:
- Permit the repayment of borrowings under the revolving credit
facilities without reducing the commitments thereunder (or to
the extent no borrowings are outstanding, the Company may retain
the balance in cash) of up to $200 million with a portion of the
net proceeds from the Offerings.
- Permit the redemption of the Company's 13 5/8% Subordinated
Notes due 1995 with a portion of the net proceeds from the
Common Stock Offering.
S-5
<PAGE>
- Amend the EBITDA (as defined under the Credit Agreements)
covenant to require the Company to meet the following minimum
EBITDA levels:
<TABLE>
<S> <C>
For the quarter ended 3/31/94................. $ 20 million
For the two quarters ended 6/30/94............ $ 55 million
For the three quarters ended 9/30/94.......... $111 million
For the four quarters ended 12/31/94.......... $180 million
For the four quarters ended 3/31/95........... $226 million
For the four quarters ended 6/30/95........... $300 million
For the four quarters ended 9/30/95........... $380 million
For the four quarters ended 12/31/95.......... $457 million
For the four quarters ended 3/31/96........... $567 million
For the four quarters ended 6/30/96........... $651 million
For the four quarters ended 9/30/96........... $735 million
and each four quarter period thereafter....... $822 million
</TABLE>
- Replace the existing cross-default provisions relating to
obligations of $10 million or more
of the Company's separately financed subsidiaries, Seminole Kraft
Corporation ("Seminole Kraft") and Stone Savannah River Pulp &
Paper Corporation ("Stone Savannah"), with cross-acceleration
provisions.
- Reset to zero as of January 1, 1994 the "dividend basket" under
the Credit Agreements which permits payment of dividends on the
Company's capital stock. The dividend basket under the Credit
Agreements as of September 30, 1993 had a deficit amount of
$334.1 million. On an ongoing basis, the dividend basket would be
increased by (a) 100% (rather than the current 50%) of the cash
proceeds of sales of Common Stock (other than proceeds of the
Common Stock Offering, for which no dividend credit would be
received) and permitted preferred stock and (b) 75% (rather than
the current 50%) of Consolidated Net Income (as defined in the
Credit Agreements) from January 1, 1994 and would be decreased by
100% of Consolidated Net Losses (as defined) from January 1,
1994. Additionally, restrictions with respect to dividends on the
Series E Preferred Stock would be modified to mirror the dividend
restrictions in the Company's Senior Subordinated Indenture dated
as of March 15, 1992. This should permit a higher dividend basket
for payment of dividends on the Series E Preferred Stock. See
"Price Range of Common Stock and Dividend Policy."
- Replace the current prohibition of investments in Stone Venepal
(Celgar) Pulp Inc. with restrictions substantially similar to the
restrictions applicable to the Company's subsidiaries, Stone
Savannah and Seminole Kraft.
For a more complete description of the Credit Agreements, see "Credit
Agreements" in the accompanying Prospectus.
S-6
<PAGE>
THE COMMON STOCK OFFERING
<TABLE>
<S> <C>
Common Stock to be Offered in the United
States and Canada............................ 14,000,000 shares.
Common Stock to be Offered Outside the United
States and Canada............................ 2,500,000 shares.
Common Stock to be Outstanding After the
Offerings.................................... 87,659,622 shares (excluding shares issuable upon
exercise of over-allotment option and shares issuable
upon exercise of convertible securities).
Use of Proceeds............................... The net proceeds will be used to repay the Company's
indebtedness and for general corporate purposes. See
"Use of Proceeds."
New York Stock Exchange Symbol................ STO.
</TABLE>
S-7
<PAGE>
SUMMARY FINANCIAL DATA
The following Statement of Operations and Balance Sheet Data for the five
years ended December 31, 1992 has been derived from, and should be read in
conjunction with, the related audited consolidated financial statements and
accompanying notes of the Company. The audit report relating to the Company's
1992 consolidated financial statements contains an explanatory paragraph
referring to the March 1, 1994 expiration of the Company's revolving credit
facilities and the Company's financial plan discussed in Note 10 to the
Company's 1992 consolidated financial statements. Effective December 17, 1993,
the Company's revolving credit facilities were extended until March 1, 1997. The
summary financial data for the nine months ended September 30, 1993 and
September 30, 1992 has been derived from the unaudited consolidated financial
statements included in the Company's Quarterly Reports on Form 10-Q for the
quarters ended September 30, 1993 and 1992. The summary financial data does not
purport to be indicative of the Company's future results of operations or
financial position.
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER
30,
---------------------------
1993 1992(B)
---------- ----------
(IN THOUSANDS, EXCEPT PER
SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $3,816,509 $4,189,938
Cost of products sold.............. 3,180,906 3,385,299
Selling, general and administrative
expenses.......................... 404,844 406,066
Depreciation and amortization...... 262,100 250,807
Income (loss) before interest
expense, income taxes and
cumulative effects of accounting
changes........................... (35,567) 148,443
Interest expense................... 311,271 284,391
Income (loss) before income taxes
and cumulative effects of
accounting changes................ (346,838) (135,948)
Cumulative effect of change in
accounting for post retirement
benefits (net of income taxes).... (39,544) --
Cumulative effect of change in
accounting for income taxes....... -- (99,527)
Net income (loss).................. (272,994) (192,762)
Income (loss) per common share
before cumulative effects of
accounting changes................ (3.36) (1.38)(d)
Net income (loss) per common
share............................. (3.92) (2.78)(d)
Ratio of earnings to fixed
charges........................... (e) (e)
Dividends paid per common share
(d)............................... -- $ 0.35
Average common shares
outstanding....................... 71,159 70,983(d)
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital.................... $ 190,622(g) $ 785,202
Property, plant and
equipment-net..................... 3,431,491 3,791,588
Goodwill........................... 912,870 1,020,375
Total assets....................... 6,724,579 7,192,766
Long-term debt..................... 3,782,414(f)(g) 4,042,082(f)
Stockholders' equity............... 738,842 1,296,823
OTHER DATA:
Net cash provided by (used in)
operating activities.............. $ (115,587) $ 46,457
Capital expenditures............... 100,665(h) 195,989(h)
Paperboard, paper and market pulp:
Produced (thousand tons)......... 5,498 5,605
Converted (thousand tons)........ 3,291 3,327
Corrugated shipments (billion sq.
ft.).............................. 39.80 39.30
Consolidated EBITDA (i)............ 226,533 399,250
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1992(B) 1991 1990 1989(A) 1988
---------- ---------- ---------- ---------- ----------
<S> <C><C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................... $5,520,655 $5,384,291 $5,755,858 $5,329,716 $3,742,489
Cost of products sold.............. 4,473,746 4,285,612 4,421,930 3,893,842 2,618,062
Selling, general and administrative
expenses.......................... 543,519 522,780 495,499 474,438 351,133(c)
Depreciation and amortization...... 334,054 277,534(c) 257,041 237,047 148,072
Income (loss) before interest
expense, income taxes and
cumulative effects of accounting
changes........................... 156,788 379,314 609,873 825,722 657,757
Interest expense................... 386,122 397,357 421,667 344,693 108,262
Income (loss) before income taxes
and cumulative effects of
accounting changes................ (229,334) (18,043) 188,206 481,029 549,495
Cumulative effect of change in
accounting for post retirement
benefits (net of income taxes).... -- -- -- -- --
Cumulative effect of change in
accounting for income taxes....... (99,527) -- -- -- --
Net income (loss).................. (269,437) (49,149) 95,420 285,828 341,786
Income (loss) per common share
before cumulative effects of
accounting changes................ (2.49)(d) (.78)(d) 1.56(d) 4.67(d) 5.58(d)
Net income (loss) per common
share............................. (3.89)(d) (.78)(d) 1.56(d) 4.67(d) 5.58(d)
Ratio of earnings to fixed
charges........................... (e) (e) 1.2 2.0 5.1
Dividends paid per common share
(d)............................... $ 0.35 $ 0.71 $ 0.71 $ 0.70 $ 0.35
Average common shares
outstanding....................... 70,987(d) 63,207(d) 61,257(d) 61,223(d) 61,251(d)
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital.................... $ 756,964 $ 770,457 $ 439,502 $ 614,433 $ 457,477(c)
Property, plant and
equipment-net..................... 3,703,248 3,520,178 3,364,005 2,977,860 1,275,960
Goodwill........................... 983,499 1,126,100 1,160,516 1,089,817 29,786
Total assets....................... 7,026,973 6,902,852 6,689,989 6,253,708 2,395,038
Long-term debt..................... 4,104,982(f) 4,046,379(f) 3,680,513(f) 3,536,911(f) 765,150
Stockholders' equity............... 1,102,691 1,537,543 1,460,487 1,347,624 1,063,558
OTHER DATA:
Net cash provided by (used in)
operating activities.............. $ 85,557 $ 210,498 $ 451,579(c) $ 315,196(c) $ 453,556(c)
Capital expenditures............... 281,446(h) 430,131(h) 551,986(h) 501,723(h) 136,588
Paperboard, paper and market pulp:
Produced (thousand tons)......... 7,517 7,365 7,447 6,772 4,729
Converted (thousand tons)........ 4,373 4,228 4,241 3,930 3,344
Corrugated shipments (billion sq.
ft.).............................. 51.67 49.18 47.16 41.56 34.47
Consolidated EBITDA (i)............ 490,842 656,848 866,914 1,062,769 805,829
<FN>
- ----------------------------------
(a) The Company acquired Stone Canada in 1989.
(b) Restated to reflect the adoption of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" retroactive to January 1,
1992.
(c) Adjusted to conform with the current financial statement presentation.
(d) Amounts per common share and average common shares outstanding have been
adjusted to reflect a 2% Common Stock dividend issued September 15, 1992.
(e) The Company's earnings for the nine months ended September 30, 1993 and 1992
and the years ended December 31, 1992 and 1991 were insufficient to cover
fixed charges by $352.3 million, $172.1 million and $270.1 million and $94.6
million, respectively.
(f) Includes approximately $539.1 million and $594.9 million as of September 30,
1993 and 1992, respectively, and $584.3 million, $573.3 million, $471.2
million and $267.2 million as of December 31, 1992, 1991, 1990 and 1989,
respectively, of long-term debt of certain consolidated subsidiaries that is
non-recourse to the parent.
(g) At September 30, 1993, $271 million of revolving credit facility borrowings
which were previously due on March 1, 1994 are classified as current
maturities of long-term debt.
(h) Includes approximately $12.4 million and $63.8 million for the nine months
ended September 30, 1993 and 1992, respectively, and $79.1 million, $219.8
million, $245.2 million and $36.8 million for 1992, 1991, 1990 and 1989,
respectively, of expenditures financed through project financings.
(i) "Consolidated EBITDA" means earnings before interest, taxes, depreciation
and amortization. EBITDA is not intended to represent cash flow or any other
measure of performance in accordance with GAAP. The Consolidated EBITDA
presented herein is different than the EBITDA definition in the Company's
Credit Agreements. In calculating EBITDA for purposes of the Credit
Agreements, the net income or net loss of Seminole Kraft, Stone Savannah and
Stone-Consolidated are not included in the calculation except to the extent,
if any, that such subsidiaries pay dividends to the Company. See "Credit
Agreements" in the accompanying Prospectus.
</TABLE>
S-8
<PAGE>
RISK FACTORS
BEFORE INVESTING, PROSPECTIVE PURCHASERS OF THE NOTES SHOULD CAREFULLY
CONSIDER THE RISK FACTORS SET FORTH BELOW AND THE OTHER INFORMATION SET FORTH
AND INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS.
SIGNIFICANT LEVERAGE AND DEBT SERVICE REQUIREMENTS; LIMITED LIQUIDITY
The Company is significantly leveraged and will continue to be so after
completion of the Offerings. The Company's long-term debt to total
capitalization ratio was 74.3% at September 30, 1993. On a pro forma basis,
after giving effect to the Stone-Consolidated Transaction, the sale of the
Company's 49% equity interest in Titan, and the sale by the Company of its
interest in two short line railroads (the "1993 Fourth Quarter Transactions")
and the Offerings, and the use of the estimated net proceeds therefrom, such
ratio at September 30, 1993 would have been approximately 72.0%. Capitalization,
for purposes of this ratio, includes long-term debt, deferred income taxes,
redeemable preferred stock, minority interests and stockholders' equity. Giving
effect to the 1993 Fourth Quarter Transactions and the Offerings, the amounts of
long-term debt (excluding capitalized lease obligations) outstanding at
September 30, 1993 maturing during the next five years and thereafter are as
follows:
<TABLE>
<CAPTION>
THE COMPANY
EXCLUDING STONE SAVANNAH, NON-RECOURSE
SEMINOLE KRAFT INDEBTEDNESS OF
AND STONE-CONSOLIDATED CERTAIN SUBSIDIARIES(1) TOTAL
--------------------------- ----------------------- -------------
(IN MILLIONS)
<S> <C> <C> <C>
Remainder of 1993......... $ 4.7 $ 33.1 $ 37.8
1994...................... 17.6 54.3 71.9
1995...................... 276.4(2) 54.6 331.0(2)
1996...................... 199.9 67.0 266.9
1997...................... 727.1 68.1 795.2
1998...................... 458.0 137.8 595.8
Thereafter................ 1,797.3 576.9 2,374.2
<FN>
- ------------------------------
(1) Includes indebtedness of Stone Savannah, Seminole Kraft and
Stone-Consolidated. See "-- Credit Agreement Restrictions."
(2) The 1995 maturities include $261.3 million outstanding under Stone
Financial Corporation's and Stone Fin II Receivables Corporation's
revolving credit facilities, which the Company intends to extend or
refinance.
</TABLE>
The Company's income before interest expense and income taxes was
insufficient to cover interest expense for the years ended December 31, 1993 and
1992 by $466.9 and $229.3 million, respectively, and will continue to be
insufficient for at least 1994.
The Company's liquidity and financial flexibility is adversely affected by
continued losses which have resulted in utilization of a significant portion of
its revolving credit facilities (for which the borrowing availability was
approximately $43 million as of January 31, 1994). The net proceeds from the
Offerings will be used to (i) prepay approximately $623.9 million of 1995, 1996
and 1997 required amortization under the Credit Agreements (including
amortization payments under the Company's revolving credit facilities reducing
the total commitments thereunder to approximately $177.4 million); (ii) redeem
at par approximately $98 million plus accrued interest of the Company's 13 5/8%
Subordinated Notes due 1995; and (iii) repay approximately $200 million of the
borrowings under the Company's revolving credit facilities without reducing the
commitments thereunder (or to the extent no borrowings are outstanding, the
Company may retain the balance in cash). See "Use of Proceeds." The Company is
also expecting to improve its liquidity and financial flexibility through a
transaction involving a favorable energy supply agreement relating to its mill
in Florence, South Carolina, the net proceeds of which would be applied to repay
borrowings under the revolving credit facilities without reducing commitments
thereunder (or to the extent no borrowings are outstanding, the Company may
retain the balance in cash). There can be no assurance, however, that this
transaction will be consummated or that the expected amount of proceeds from
such transaction will be received.
Notwithstanding the improvements in the Company's liquidity and financial
flexibility which will result from the Offerings and which would result from the
proposed energy supply contract transaction, unless the Company achieves
sustained price increases beyond current levels (including announced price
increases which have not yet
S-9
<PAGE>
been fully implemented as described under "Prospectus Summary -- Recent
Developments -- Products and Industry Trends"), the Company will continue to
incur net losses and a deficit in net cash provided by operating activities.
Without such sustained price increases, the Company may exhaust all or
substantially all of its cash resources and borrowing availability under the
revolving credit facilities. In such event, the Company would be required to
pursue other alternatives to improve liquidity, including further cost
reductions, sales of assets, the deferral of postponable capital expenditures,
obtaining additional sources of funds or pursuing the possible restructuring of
its indebtedness. There can be no assurance that such measures, if required,
would generate the liquidity required by the Company to operate its business and
service its indebtedness.
Beginning in 1996 and continuing thereafter, the Company will be required to
make significant amortization payments on its indebtedness which will require
the Company to raise sufficient funds from operations or other sources or
refinance or restructure maturing indebtedness. No assurance can be given that
the Company will be successful in doing so.
ADVERSE INDUSTRY CONDITIONS AND CYCLICAL PRODUCT PRICING
The markets for paper, packaging products and commodity pulp sold by the
Company are highly competitive, and are sensitive to changes in industry
capacity and cyclical changes in the economy, both of which can significantly
impact selling prices and the Company's profitability. The markets for
containerboard and corrugated containers, which represent a substantial portion
of the Company's net sales, generally experienced price declines during the
period since 1990. The Company has, however, successfully implemented a $25 per
ton price increase for containerboard and is in the process of implementing a
price increase in corrugated containers to accompany the containerboard
increase. The Company expects to realize the benefits of such price increase in
the first quarter of 1994. The Company has also announced a further linerboard
increase of $30 per ton and a corrugated medium increase of $40 per ton
effective as early as March 1, 1994. Newsprint and market pulp prices have also
fallen substantially since 1990 due to supply/demand imbalances. While newsprint
prices generally increased in 1992, an additional price increase announced in
1993 was unsuccessful. The Company has announced a price increase for newsprint
effective March 1, 1994 in light of strengthening demand for newsprint. Market
pulp prices, which had improved modestly during 1992 from the low prices of
1991, began deteriorating in the fourth quarter of 1992 and weakened further in
1993. The Company has implemented price increases effective January 1, 1994 for
market pulp of $40 to $80 per metric ton. An additional price increase of $50
per metric ton has been announced for March 1, 1994. There can be no assurance
that announced price increases for the Company's products can be implemented,
that prices for the Company's products will not decline from current levels or
that the Company will not elect to take economic downtime.
RECENT LOSSES; NET CASH USED IN OPERATING ACTIVITIES
The Company has announced a loss before the cumulative effect of an
accounting change of $319.2 million, or $4.59 per common share, for the year
1993, and a net loss of $85.8 million, or $1.23 per common share, for the fourth
quarter. For 1992, the loss, also before the cumulative effect of accounting
changes, was $169.9 million, or $2.49 per common share, for the year and $76.7
million, or $1.10 per common share, for the fourth quarter. See "Prospectus
Summary -- Recent Developments -- Operating Performance."
Net cash used in operating activities totalled $115.6 million for the nine
months ended September 30, 1993, while net cash provided by operating activities
totalled $46.5 million for the nine months ended September 30, 1992. The Company
expects the fourth quarter of 1993 will have a deficit in net cash provided by
operating activities.
As a result of the net losses, it has been necessary for the Company to
obtain various amendments and waivers of certain covenants in the Credit
Agreements. See "Credit Agreements" in the accompanying Prospectus. If current
pricing levels for the Company's products do not significantly improve, the
Company will continue to incur losses. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Outlook" in the accompanying
Prospectus.
CREDIT AGREEMENT RESTRICTIONS
All indebtedness under the Credit Agreements is secured by a substantial
portion of the assets of the Company. The Credit Agreements contain certain
restrictions on the Company, including requirements that the
S-10
<PAGE>
Company achieve and maintain certain financial ratios (including a minimum
current ratio, an indebtedness ratio, minimum "EBITDA" (as defined in the Credit
Agreements) and a tangible net worth test). The restrictions also include, among
other things, limitations on the ability of the Company to incur additional
indebtedness, to create, incur or permit the existence of certain liens, to make
guarantees, to make certain investments, to make aggregate capital expenditures
above certain levels, to make certain payments with respect to its outstanding
stock, and to enter into certain types of transactions. In particular, the
Credit Agreements currently prohibit investments in Stone Venepal (Celgar) Pulp
Inc., and Stone-Consolidated. A default by Stone-Consolidated of any of its
obligations in excess of $10 million constitutes a default under the Credit
Agreements.
The Credit Agreements also limit in certain specific circumstances any
further investments by the Company in two of its subsidiaries, Seminole Kraft
and Stone Savannah. Stone Savannah and Seminole Kraft have incurred substantial
indebtedness in connection with project financings and are significantly
leveraged. As of September 30, 1993, Stone Savannah had $413.8 million in
outstanding indebtedness (including $280.1 million in secured indebtedness owed
to bank lenders) and Seminole Kraft had $179.8 million in outstanding
indebtedness (including $117.5 million in secured indebtedness owed to bank
lenders). The Company has entered into separate output purchase agreements with
each subsidiary which require the Company to purchase the output of the mills
operated by each subsidiary at rates which are above current market rates until
September 1, 1994 for Seminole Kraft, until December 20, 1994 for linerboard
production at Stone Savannah and until November 14, 1995 for market pulp
production at Stone Savannah. After such dates, the Company is required to
purchase the respective productions at market prices for the remaining terms of
these agreements. At the time that the fixed price provisions of the output
purchase agreements terminate, such subsidiaries may need to undertake
additional measures to meet their debt service requirements, including obtaining
additional sources of funds, postponing or restructuring of debt service
payments or refinancing of the indebtedness. In the event that such measures are
required and are not successful, and such indebtedness is accelerated by the
respective lenders to Stone Savannah or Seminole Kraft, the lenders to the
Company under various of its debt instruments will be entitled to accelerate the
indebtedness owed by the Company. The cross-acceleration provisions in the
Credit Agreements are effective upon the completion of the Offerings. Prior to
the completion of the Offerings, the Credit Agreements contained cross-default
provisions similar to the cross-default provisions mentioned above for
Stone-Consolidated Corporation.
There can be no assurance that the Company will be able to achieve and
maintain compliance with the prescribed financial ratio tests or other
requirements of the Credit Agreements. Failure to achieve or maintain compliance
with such financial ratio tests or other requirements under the Credit
Agreements, in the absence of a waiver or amendment, would result in an event of
default and could lead to the acceleration of the obligations under the Credit
Agreements. The Company has successfully sought and received waivers and
amendments to its Credit Agreements on various occasions since entering into the
Credit Agreements. Most recently, the Credit Agreements were modified to permit
the earnings from the sale of the Company's interest in Titan to be included in
EBITDA (as defined in the Credit Agreements), solely for purposes of satisfying
the minimum EBITDA requirement for the quarter ended December 31, 1993. On
December 17, 1993, the Company obtained approval of amendments to the Credit
Agreements in connection with the Stone-Consolidated Transaction which
permitted, among other things, Stone-Consolidated to grant liens on its property
to the holders of its 10.25% Senior Secured Notes due 2000 and the lenders under
its revolving credit facilities, and restrictions on Stone-Consolidated's
ability to pay dividends on its capital stock.
In connection with the Offerings, the Company is seeking further amendments
to the Credit Agreements which will, upon the effective date of the Offerings,
amend the Credit Agreements including to change certain financial covenants to
allow the Company to remain in compliance with the Credit Agreements. See
"Recent Developments -- Amendments to Credit Agreements." If further waivers or
amendments are requested by the Company, there can be no assurance that the
Company's bank lenders will again grant such requests. The failure to obtain any
such waivers or amendments would reduce the Company's flexibility to respond to
adverse industry conditions and could have a material adverse effect on the
Company. See "Credit Agreements -- Covenants" in the accompanying Prospectus.
S-11
<PAGE>
FUTURE ACCESS TO THE CAPITAL MARKETS
Giving effect to the Offerings, the Company will have sold securities on a
number of occasions in the last two years for total proceeds in excess of $2.2
billion. The recent issuance of a substantial amount of securities may make it
difficult, at least in the near future, for the Company to access the capital
markets for further financings and therefore may limit the Company's sources for
future liquidity.
ENVIRONMENTAL MATTERS
The Company's operations are subject to extensive environmental regulation
by federal, state and local authorities in the United States and regulatory
authorities with jurisdiction over its foreign operations. Such regulation
requires significant capital expenditures. On December 17, 1993, the
Environmental Protection Agency proposed regulations under the Clean Air Act and
the Clean Water Act for the pulp and paper industry which when implemented would
affect directly many of the Company's facilities. Since the regulations have
only recently been proposed, the Company is currently unable to estimate the
nature or level of future expenditures that may be required to comply. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Financial Condition and Liquidity -- Environmental Issues" in the
accompanying Prospectus. In addition, the Company is from time to time subject
to litigation and governmental proceedings regarding environmental matters in
which injunctive and/or monetary relief is sought. The Company has been named as
a potentially responsible party ("PRP") at a number of sites which are the
subject of remedial activity under the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA" or "Superfund") or comparable state
laws. Although the Company is subject to joint and several liability imposed
under Superfund, at most of the multi-PRP sites there are organized groups of
PRPs and costs are being shared among PRPs. The Company currently believes that
adequate provisions have been established for these sites and that such costs
will not, individually or in the aggregate, have a material adverse effect on
its financial position or future operating results.
DIVIDEND SUSPENSION; LIMITATIONS ON PAYMENT OF DIVIDENDS
Due to limitations and restrictions imposed on the Company under the Credit
Agreements, certain indentures and the Company's recent net losses, the Company
was unable to declare a cash dividend on its Common Stock in the third and
fourth quarters of 1992 and all four quarters of 1993. Whether the Board of
Directors declares any future cash dividends on the Common Stock will depend
upon the Company's future earnings, financial condition and capital needs and
other factors deemed pertinent by the Board of Directors. In addition, the
payment of dividends on the Common Stock will be subject to restrictions and
limitations contained in the Credit Agreements, other credit facilities and
indentures and the Certificate of Incorporation.
The Company is also currently prohibited from paying dividends under the
indenture dated as of March 15, 1992 between the Company and The Bank of New
York, as trustee, relating to senior subordinated indebtedness. At December 31,
1993, the dividend pool under the Company's Senior Subordinated Indenture dated
March 15, 1992 had a deficit of $194.9 million. Such dividend pool will be
increased or decreased by 100% of the net income or net losses for subsequent
periods and increased by the aggregate net proceeds received by the Company from
the issuance of Common Stock, including the Common Stock Offering. At September
30, 1993, the dividend pool under the Credit Agreements had a deficit of
approximately $334.1 million. The dividend pool under the Credit Agreements will
be reset to zero as of January 1, 1994 pursuant to the amendment to the Credit
Agreements which will be effected at the completion of this offering of Common
Stock. See "Recent Developments -- Amendments to Credit Agreements."
The Company is also prohibited from paying dividends on its Series E
Preferred Stock and has not paid dividends on its Series E Preferred Stock since
May 15, 1993. As of December 31, 1993, accrued and unpaid dividends on the
Series E Preferred Stock aggregated $4.0 million. Unless full cumulative
dividends on the Series E Preferred Stock have been paid or provided for, no
dividends may be paid on the Common Stock. If the Company fails to pay any six
quarterly dividends on the Series E Preferred Stock, then the holders of the
Series E Preferred Stock, voting together as a class, shall have the right to
elect two directors to be added to the Company's board of directors. The
limitations contained in the Credit Agreements pertaining to the payment of
future Series E Preferred Dividends will be based upon the limitation contained
in the Company's Senior Subordinated Indenture dated March 15, 1992. See "Credit
Agreements," "Price Range of Common Stock and Dividend Policy" and "Description
of Capital Stock -- Series E Preferred Stock."
S-12
<PAGE>
The Company does not intend to pay any dividends on its Common Stock until
such dividends are permitted by the Credit Agreements, the applicable indentures
and the terms of the Series E Preferred Stock and at such time as the Board of
Directors believes that any such payment will not impair the Company's cash
availability for operations and debt service.
DILUTION; CONVERSION OF CONVERTIBLE SECURITIES
The 8 7/8% Convertible Senior Subordinated Notes due 2000 (the "8 7/8%
Notes") are convertible into Common Stock at a conversion price of $11.55 per
share, subject to adjustment in certain events. If all of the 8 7/8% Notes were
converted into Common Stock, an additional 21,645,022 shares of Common Stock
would be issued. No prediction can be made as to the effect, if any, that the
conversion of the 8 7/8% Notes into Common Stock or the fact that the 8 7/8%
Notes are outstanding and unconverted will have on the market price of the
Common Stock prevailing from time to time. The conversion of 8 7/8% Notes into
Common Stock could adversely affect prevailing market prices of the Common
Stock. Certain other securities of the Company are convertible at much higher
conversion prices. The 4,600,000 shares of Series E Preferred Stock are
convertible at the option of the holder into up to 3,388,332 shares of Common
Stock at a conversion price of $33.94, subject to adjustment under certain
conditions. The Company's $115,000,000 aggregate principal amount of 6 3/4%
Convertible Subordinated Debentures due 2007 are convertible at the option of
the holder into up to 3,388,332 shares of Common Stock at a conversion price of
$33.94 per share, subject to adjustment under certain conditions. See
"Description of Capital Stock."
Assuming no conversion of convertible securities, the net tangible book
value per share at September 30, 1993 after giving effect to the 1993 Fourth
Quarter Transactions and prior to giving effect to the Common Stock Offering was
approximately $(9.04) and the net tangible book value per share at September 30,
1993 after giving effect to the estimated net proceeds of the Common Stock
Offering at the offering price of $15.25 per share and the receipt by the
Company of the estimated net proceeds therefrom, is approximately $(4.78). The
amount of the increase in net tangible book value per share attributable to the
estimated cash payments to be made by purchasers of the Common Stock is
approximately $4.26 and the amount of the immediate dilution from the public
offering price which will be absorbed by such purchasers is equivalent to the
public offering price since the net tangible book value after giving effect to
the Common Stock Offering is negative.
In December 1993, Stone-Consolidated issued Cdn. $231 million of 8%
Convertible Unsecured Subordinated Debentures due 2003. If all of the 8%
Convertible Unsecured Subordinated Debentures due 2003 are converted to common
shares of Stone-Consolidated, the Company's ownership of the common shares of
Stone-Consolidated would be reduced from 74.6% to 61.1% of the outstanding
shares.
ANTI-TAKEOVER PROVISIONS
The Company's Certificate of Incorporation and the Series D Rights (as
defined) issued pursuant to the Rights Agreement (as defined) contain certain
provisions that could make more difficult or discourage a change in control of
the Company. These provisions are designed to discourage situations in which the
Company is forced to accept a proposal for the takeover of the Company without
ample time to evaluate the proposal and appropriate alternatives and to
encourage anyone contemplating a business combination with the Company to
negotiate directly with the Company on a fair and equitable basis. See
"Description of Capital Stock." However, these provisions may discourage certain
takeover proposals that would permit stockholders to sell or exchange their
equity securities of the Company for an amount that includes a premium over the
then market price for such securities.
S-13
<PAGE>
COMPANY PROFILE
The following is a profile of the Company's products, markets, industry
position, manufacturing facilities and 1992 production and shipment figures:
<TABLE>
<CAPTION>
INDUSTRY MANUFACTURING 1992 PRODUCTION
MARKETS POSITION FACILITIES & SHIPMENTS
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
PAPERBOARD AND CONTAINERBOARD A broad range of Industry leader Production at 16 4.425 million
PAPER PACKAGING AND CORRUGATED manufacturers of mills short tons of
CONTAINERS consumable and container-board
durable goods Converting at produced
and other 106 plants
manufacturers of 51.7 billion
corrugated square feet of
containers. corrugated
containers
shipped
KRAFT PAPER AND Supermarket Industry leader Production at 6 563 thousand
BAGS AND SACKS chains and other mills short tons of
retailers of kraft paper
consumable Converting at 19 produced
products. plants
Industrial and 689 thousand
consumer bags short tons of
sold to the paper bags and
food, sacks shipped
agricultural,
chemical and
cement
industries,
among others.
BOXBOARD, Manufacturers of A major position Production at 2 81 thousand
FOLDING CARTONS consumable in Europe; a mills short tons of
AND OTHER goods, nominal position boxboard and
especially food, in North America Converting at 11 other paperboard
beverage and plants produced
tobacco
products, and 80 thousand
other box short tons of
manufacturers. folding cartons
and partitions
shipped
WHITE PAPER NEWSPRINT Newspaper A major position Production at 6 1.243 million
AND PULP publishers and mills short tons
commercial produced
printers.
UNCOATED Producers of A major position Production at 2 381 thousand
GROUNDWOOD PAPER advertising mills short tons
materials, produced
magazines,
directories and
computer papers.
MARKET PULP Manufacturers of A major position Production at 5 824 thousand
paper products, mills short tons
including fine produced
papers,
photographic
papers, tissue
and newsprint.
WOOD PRODUCTS LUMBER, PLYWOOD Construction and A moderate Production at 18 541 million
AND VENEER furniture position in mills board feet of
industries. North America lumber produced
551 million
square feet of
plywood and
veneer produced
</TABLE>
S-14
<PAGE>
STONE CONTAINER CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1993
Set forth below are the unaudited pro forma condensed consolidated statement
of operations of the Company for the nine months ended September 30, 1993. The
unaudited pro forma condensed consolidated statements of operations includes the
historical results of the Company and gives effect to the Stone-Consolidated
Transaction as if it had occurred as of January 1, 1993. THE PRO FORMA FINANCIAL
DATA DOES NOT PURPORT TO BE INDICATIVE OF THE COMPANY'S RESULTS OF OPERATIONS
THAT WOULD ACTUALLY HAVE BEEN OBTAINED HAD THE STONE-CONSOLIDATED TRANSACTION
BEEN COMPLETED AS OF THE DATE OR FOR THE PERIOD PRESENTED, OR TO PROJECT THE
COMPANY'S RESULTS OF OPERATIONS AT ANY FUTURE DATE OR FOR ANY FUTURE PERIOD. The
unaudited pro forma adjustments are based upon available information and upon
certain assumptions that the Company believes are reasonable. The unaudited pro
forma financial data and accompanying notes should be read in conjunction with
the historical financial information of the Company, including the notes
thereto, included elsewhere in this Prospectus and the Company's Current Report
on Form 8-K dated January 3, 1994, which is incorporated by reference herein.
<TABLE>
<CAPTION>
HISTORICAL
(NOTE 1) PRO FORMA
NINE MONTHS NINE MONTHS
ENDED PRO FORMA ADJUSTMENTS ENDED
SEPTEMBER 30, (NOTE 2) SEPTEMBER 30,
1993 STONE-CONSOLIDATED 1993
-------------- --------------------- --------------
(in millions, except per share data)
<S> <C> <C> <C>
Net sales................................................ $ 3,816.5 $ $ 3,816.5
Operating Costs and Expenses
Cost of products sold.................................... 3,180.9 3,180.9
Selling, general and administrative expenses............. 404.8 404.8
Depreciation and amortization............................ 262.1 262.1
Equity (income) loss from affiliates..................... 5.6 5.6
-------------- ----- --------------
3,853.4 3,853.4
-------------- ----- --------------
Loss from operations..................................... (36.9) (36.9)
Interest expense......................................... (311.3) 15.4(a) (330.1)
(34.2)(b)
Other net................................................ 1.3 (4.2)(c) 3.9
6.8(d)
-------------- ----- --------------
Loss before income taxes and cumulative effect of all
accounting change....................................... (346.9) (16.2) (363.1)
Credit for income taxes.................................. (113.4) (7.8)(e) (121.2)
-------------- ----- --------------
Net loss before cumulative effect of an accounting
change.................................................. $ (233.5) $ (8.4) $ (241.9)
-------------- ----- --------------
-------------- ----- --------------
Loss per share of common stock before cumulative effect
of an accounting change................................. $ (3.36) $ (3.48)
-------------- --------------
-------------- --------------
Weighted average common shares outstanding............... 71.2 71.2
-------------- --------------
-------------- --------------
<FN>
- ------------------------------
(1) Basis of preparation:
The unaudited pro forma condensed consolidated Statement of Operations has
been prepared from and should be read in conjunction with the historical
consolidated financial statements of the Company.
The pro forma condensed consolidated Statement of Operations gives effect to
the following pro forma adjustments as of January 1, 1993.
</TABLE>
S-15
<PAGE>
<TABLE>
<S> <C>
(2) Pro forma adjustments:
(a) To record a reduction to historical interest expense of $15.4 million
as a result of the assumed repayment of certain Credit Agreements
indebtedness.
(b) To record pro forma interest expense and amortization of debt fees of
$30.2 million related to Stone-Consolidated's 10.25% Senior Secured
Notes due 2000 and 8% Convertible Unsecured Subordinated Debentures due
2003 and to record amortization of the amendment fees of $4.0 million
related to the Company's restated Credit Agreements.
(c) To increase the foreign exchange transaction losses by $4.2 million to
reflect the effects of foreign currency revaluation pertaining to
Stone-Consolidated's U.S. denominated 10.25% Senior Secured Notes due
2000, partially offset by the reversal of the historical foreign
exchange transaction losses associated with the U.S. denominated debt
that was repaid.
(d) To record the minority interest share of the net losses of
Stone-Consolidated of $6.8 million for the nine months ended September
30, 1993 based on the pro forma statement of operations of
Stone-Consolidated.
(e) To record the adjustment to income taxes of $7.8 million pertaining to
the interest expense adjustments recorded in note 2(a) and 2(b) and for
the foreign exchange transaction loss adjustment recorded in note 2(c)
using the applicable U.S. and Canadian statutory income tax rates of
39.6 percent and 35.0 percent. The U.S. tax rates include the effects
of state income tax rates.
</TABLE>
S-16
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the Offerings will be used to repay
indebtedness of the Company and for general corporate purposes. Such proceeds
are estimated to aggregate $925.6 million ($961.6 million if the Underwriters'
over-allotment option with respect to the Common Stock Offering is exercised in
full). For further information on the interest rate, maturity and other terms
with respect to the Company's indebtedness, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Financial Condition
and Liquidity" and "Credit Agreements" in the accompanying Prospectus.
The sources and uses of funds in connection with the Offerings (assuming no
exercise of the Underwriters' over-allotment options) are estimated to be as
follows:
<TABLE>
<CAPTION>
(IN
MILLIONS)
<S> <C>
SOURCES:
Notes..................................................................................... $ 710.0
Common Stock Offering..................................................................... 251.6
------------
TOTAL:...................................................................................... $ 961.6
------------
------------
USES:
Prepayment of Credit Agreements amortization.............................................. $ 623.9
Redemption of 13 5/8% Subordinated Notes due 1995 (plus accrued interest)................. 101.6
General Corporate Purposes (1)............................................................ 236.1
------------
TOTAL:...................................................................................... $ 961.6
------------
------------
<FN>
- ------------------------------
(1) Includes repayments of borrowings under the revolving credit facilities
which can be reborrowed and fees and expenses of the Offerings, including
bank amendment fees.
</TABLE>
S-17
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Company's Common Stock is traded on the New York Stock Exchange under
the symbol "STO." The quarterly per share price ranges for the Common Stock on
the New York Stock Exchange and cash dividends paid since January 1, 1990 were
as follows:
<TABLE>
<CAPTION>
CASH
HIGH LOW DIVIDEND
-------- -------- --------
<S> <C> <C> <C>
CALENDAR 1990
First Quarter............................... $25- 1/4 $20- 1/4 $.18
Second Quarter.............................. 22 16 .18
Third Quarter............................... 17- 5/8 10 .18
Fourth Quarter.............................. 12- 7/8 8- 1/2 .18
CALENDAR 1991
First Quarter............................... $19 $ 9 $.18
Second Quarter.............................. 24- 5/8 14- 1/4 .18
Third Quarter............................... 22- 5/8 16- 7/8 .18
Fourth Quarter.............................. 26 17- 5/8 .18
CALENDAR 1992
First Quarter............................... $32- 5/8 $24- 1/2 $.18
Second Quarter.............................. 29- 3/8 22- 1/2 .18
Third Quarter (1)........................... 25- 3/8 14- 3/8 0
Fourth Quarter.............................. 19- 1/2 12- 1/2 0
CALENDAR 1993
First Quarter............................... $19- 1/2 $13- 1/8 $ 0
Second Quarter.............................. 14 6- 3/8 0
Third Quarter............................... 9- 1/4 6- 1/2 0
Fourth Quarter.............................. 12- 3/8 6- 7/8 0
CALENDAR 1994
First Quarter through February 3, 1994...... $16- 1/2 $10- 1/8 $ 0
<FN>
- ------------------------
(1) On September 15, 1992, the Company paid a 2% stock dividend (approximately
1.4 million shares) to record holders of its Common Stock as of August 25,
1992. The amounts set forth in the table for the periods prior to August 15,
1992 have not been restated to reflect such stock dividend.
</TABLE>
On February 3, 1994, the reported closing price for the Common Stock on the
NYSE Composite Tape was $15.50 per share.
Due to limitations and restrictions imposed on the Company under the Credit
Agreements (including those described below) and the Company's recent net
losses, the Company was unable to declare a cash dividend on its Common Stock in
the third and fourth quarters of 1992 and all four quarters of 1993. Whether the
Board of Directors declares any future cash dividends will depend upon the
Company's future earnings, financial condition and capital needs and other
factors deemed pertinent by the Board of Directors, and will be subject to
restrictions and limitations contained in the Company's Credit Agreements and
other credit facilities and indentures. See "Credit Agreements." The Company
does not intend to pay any dividends on its Common Stock until such dividends
are permitted by the Credit Agreements and at such time as it believes that any
such payment will not impair the Company's cash availability for operations and
debt service.
The most restrictive limitation on the payment of cash dividends is
currently contained in the Credit Agreements. Giving effect to the amendment,
the Credit Agreements provide that the Company's dividend payments,
distributions or purchases of any class of capital stock of the Company or its
subsidiaries cannot exceed the sum of (i) 75% of the consolidated net income (as
defined in the Credit Agreements) of the Company from January 1, 1994 to the
date of payment of such dividends, minus (ii) 100% of the consolidated net loss
(as defined in the Credit Agreements) of the Company from January 1, 1994 to the
date of payment of such dividends, plus (iii) 50% of the
S-18
<PAGE>
net cash proceeds from sales of Common Stock or certain preferred stock of the
Company from January 1, 1994 to any date of payment of such dividends. The
proceeds of the Common Stock Offering offered hereunder will not add to the
dividend pool. At September 30, 1993, the dividend pool under the Credit
Agreements had a deficit of approximately $334.1 million. See "Credit
Agreements."
Following consummation of the Offerings, the dividend pool will be reset to
zero as of January 1, 1994 and other restrictions will be liberalized. See
"Recent Developments -- Amendments to Credit Agreements."
The Company is also currently prohibited from paying dividends under the
Indenture dated as of March 15, 1992 (the "1992 Indenture") between the Company
and The Bank of New York, as trustee, relating to senior subordinated
indebtedness. The 1992 Indenture prohibits the payment of dividends if the
Company has a net worth of less than $750,000,000 or if after giving effect to
such dividend, the aggregate amount expended subsequent to March 15, 1992 for
dividends and other restricted payments exceeds the sum of (w) 100% of the
aggregate Consolidated Net Income (as defined therein) calculated on a
cumulative basis during the period subsequent to December 31, 1991 through the
end of the last fiscal quarter that is prior to the declaration of such dividend
(if such amount is negative, 100% of such amount is subtracted), (x) the
aggregate net cash proceeds received from the issuance and sale of capital stock
subsequent to March 15, 1992, (y) the aggregate net proceeds received by the
Company from the issuance and sale of indebtedness that is converted into
capital stock subsequent to March 15, 1992 and (z) $300 million. Computations
are made under the 1992 Indenture using generally accepted accounting principles
in effect on March 15, 1992. At December 31, 1993, the dividend pool under such
indenture was negative $194.9 million. The dividend pool will be increased by
100% of the net proceeds of the common stock offering and increased or decreased
in the future depending on whether there is net income or net losses for the
period subsequent to December 31, 1993. In addition, the indentures relating to
the Company's outstanding senior indebtedness, other senior subordinated
indebtedness and the 13 5/8% Subordinated Notes due 1995 contain restrictions on
the Company's ability to pay dividends. The 13 5/8% Subordinated Notes due 1995
will be redeemed from the proceeds of the Common Stock Offering. See
"Description of Debt Securities -- Particular Terms of the Senior Debt
Securities -- Certain Covenants -- Dividend Restrictions" and "-- Additional
Terms of the Senior Subordinated Debt Securities -- Dividend Restrictions" in
the accompanying Prospectus.
S-19
<PAGE>
CAPITALIZATION
The following table sets forth a summary of the short-term debt and
capitalization of the Company, on a consolidated basis at September 30, 1993, as
adjusted to give effect to the 1993 Fourth Quarter Transactions and the
application of the estimated net proceeds therefrom to reduce indebtedness under
the Credit Agreements and as further adjusted to give effect to the Offerings
and the application of the estimated net proceeds therefrom to reduce
indebtedness.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1993
---------------------------------------------
AS ADJUSTED
FOR AS FURTHER
THE 1993 ADJUSTED FOR
FOURTH QUARTER THE
ACTUAL TRANSACTIONS OFFERINGS
----------- -------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Short-term debt:
Notes payable................................................................... $ 12,116 $ 12,116 $ 12,116
Current maturities of long-term debt............................................ 757,731 77,921 77,921
----------- -------------- ------------
Total short-term debt......................................................... $ 769,847 $ 90,037 $ 90,037
----------- -------------- ------------
----------- -------------- ------------
Long-term debt:
Senior debt:
Credit Agreements other than revolving credit facilities...................... $ 1,482,800 $ 1,156,067(a) $ 688,217(b)
Less: Current maturities...................................................... (408,810) -- --
Revolving credit facilities................................................... 271,000 151,211(c) --(d)
Less: Current maturities...................................................... (271,000) --(e) --
12 5/8% Senior Notes due July 15, 1998........................................ 150,000 150,000 150,000
11 7/8% Senior Notes due December 1, 1998..................................... 238,859 238,859 238,859
9 7/8% Senior Notes due February 1, 2001...................................... -- -- 710,000
4% -- 11 5/8% fixed rate debt and other variable rate debt (including
capitalized lease obligations)............................................... 279,948 307,355 307,355
Obligations under accounts receivable securitization programs................. 261,300 261,300 261,300
Less: Current maturities........................................................ (18,483) (18,483) (18,483)
----------- -------------- ------------
Total senior long-term debt................................................... 1,985,614 2,246,309 2,337,248
----------- -------------- ------------
Subordinated debt:
10 3/4% Senior Subordinated Notes due June 15, 1997........................... 150,000 150,000 150,000
11% Senior Subordinated Notes due August 15, 1999............................. 125,000 125,000 125,000
11 1/2% Senior Subordinated Notes due September 1, 1999....................... 230,000 230,000 230,000
10 3/4% Senior Subordinated Debentures due April 1, 2002...................... 199,095 199,095 199,095
8 7/8% Convertible Senior Subordinated Notes due July 15, 2000................ 248,429 248,429 248,429
13 5/8% Subordinated Notes due June 1, 1995................................... 98,114 98,114 --
12 1/8% Subordinated Debentures due September 15, 2001 (f).................... 92,110 92,110 92,110
6 3/4% Convertible Subordinated Debentures due February 15, 2007.............. 115,000 115,000 115,000
Variable Rate Subordinated Note due January 16, 1994.......................... 4,875 4,875 4,875
Less: Current maturities........................................................ (4,875) (4,875) (4,875)
----------- -------------- ------------
Total subordinated long-term debt............................................. 1,257,748 1,257,748 1,159,634
----------- -------------- ------------
Debt of consolidated subsidiaries (non-recourse to parent)...................... 593,615 991,865 991,865
Less: Current maturities........................................................ (54,563) (54,563) (54,563)
----------- -------------- ------------
Total long-term debt of consolidated subsidiaries (non-recourse to parent).... 539,052 937,302 937,302
----------- -------------- ------------
Total long-term debt.......................................................... 3,782,414 4,441,359 4,434,184
----------- -------------- ------------
Stockholders' equity:
$1.75 Series E Cumulative Convertible Exchangeable Preferred Stock (4,600,000
shares, $25 per share liquidation preference).................................. 114,983 114,983 114,983
Common Stock.................................................................... 648,650 571,376(g) 810,545(h)
Retained earnings............................................................... 219,020 235,104(i) 220,224(j)
Foreign currency translation adjustment......................................... (238,068) (238,068) (238,068)
Unamortized expense of restricted stock plan.................................... (5,723) (5,723) (5,723)
----------- -------------- ------------
Total stockholders' equity.................................................... 738,862 677,672 901,961
----------- -------------- ------------
Total capitalization.......................................................... 4,521,276 5,119,031 5,336,145
----------- -------------- ------------
Total short-term debt and capitalization...................................... $ 5,291,123 $ 5,209,068 $ 5,426,182
----------- -------------- ------------
----------- -------------- ------------
</TABLE>
SEE FOOTNOTES ON THE FOLLOWING PAGE
S-20
<PAGE>
- ------------------------------
(a) Reflects the prepayment of $326.7 million as a result of the 1993 Fourth
Quarter Transactions.
(b) Reflects the prepayment of approximately $467.9 million as a result of the
Offerings.
(c) Reflects the repayment of $119.8 million as a result of the 1993 Fourth
Quarter Transactions.
(d) Reflects the repayment of $151.2 million as a result of the Offerings. Upon
consummation of the Offerings, the Company will have no borrowings under its
total revolving credit facilities commitments of $177.4 million.
(e) As a result of the December 17, 1993 amendment to the Credit Agreements, the
maturity of the Company's revolving credit facility was extended from March
1, 1994 to March 1, 1997.
(f) Obligations of Stone-Southwest, Inc., a wholly-owned subsidiary of the
Company.
(g) The Stone-Consolidated Transaction resulted in a charge to Common Stock of
approximately $77.3 million.
(h) The Common Stock Offering assumes the issuance of 16,500,000 shares at a
price of $15.25 per share with issuance costs of approximately $12.5
million.
(i) The 1993 Fourth Quarter Transactions resulted in an after-tax gain of
approximately $19.0 million and the write-off of deferred debt issuance
costs which resulted in an after-tax loss of approximately $2.9 million.
(j) Reflects the write-off of deferred debt issuance costs which resulted in an
after-tax loss of approximately $14.9 million.
S-21
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the U.S. Underwriting
Agreement among the Company and Salomon Brothers Inc, Bear, Stearns & Co. Inc.
and BT Securities Corporation, as representatives of the several U.S.
Underwriters, (the "U.S. Representatives") the Company has agreed to sell to the
U.S. Underwriters, and the U.S. Underwriters have severally agreed to purchase,
the respective number of shares of Common Stock set forth opposite their names
below.
<TABLE>
<CAPTION>
SHARES OF
U.S. UNDERWRITER COMMON STOCK
- ------------------------------------------------------------------------------- ---------------
<S> <C>
Salomon Brothers Inc........................................................... 2,691,668
Bear, Stearns & Co. Inc........................................................ 2,691,666
BT Securities Corporation...................................................... 2,691,666
CS First Boston Corporation.................................................... 300,000
Donaldson, Lufkin & Jenrette Securities Corporation............................ 300,000
A.G. Edwards & Sons, Inc....................................................... 300,000
Kidder, Peabody & Co. Incorporated............................................. 300,000
Lehman Brothers Inc............................................................ 300,000
J.P. Morgan Securities Inc..................................................... 300,000
Morgan Stanley & Co. Incorporated.............................................. 300,000
Oppenheimer & Co., Inc......................................................... 300,000
PaineWebber Incorporated....................................................... 300,000
Prudential Securities Incorporated............................................. 300,000
UBS Securities Inc............................................................. 300,000
S.G. Warburg & Co., Inc........................................................ 300,000
William Blair & Company........................................................ 225,000
Dain Bosworth Incorporated..................................................... 225,000
Kemper Securities, Inc......................................................... 225,000
McDonald & Company Securities, Inc............................................. 225,000
Raymond James & Associates, Inc................................................ 225,000
Baird, Patrick & Co., Inc...................................................... 150,000
The Buckingham Research Group Incorporated..................................... 150,000
The Chicago Corporation........................................................ 150,000
First Albany Corporation....................................................... 150,000
Hamilton Investments, Inc...................................................... 150,000
WR Lazard, Laidlaw & Mead Incorporated......................................... 150,000
Raffensperger, Hughes & Co., Inc............................................... 150,000
Rodman Renshaw, Inc............................................................ 150,000
---------------
Total.................................................................... 14,000,000
---------------
---------------
</TABLE>
The U.S. Underwriting Agreement provides that the obligations of the U.S.
Underwriters are subject to certain conditions precedent and that the U.S.
Underwriters will be obligated to purchase all of the Common Stock offered in
the U.S. Offering if any is purchased. It is a condition precedent to the U.S.
Underwriters' obligations to purchase the Common Stock offered in the U.S.
Offering pursuant to the U.S. Underwriting Agreement that the sale of the Notes
by the Company occur simultaneously.
The U.S. Representatives have advised the Company that they propose
initially to offer the Common Stock directly to the public at the public
offering price set forth on the cover page of this Prospectus Supplement and to
certain dealers at such price less a concession not in excess of $.40 per share.
The U.S. Underwriters may allow, and such dealers may reallow, a concession not
in excess of $.10 per share on sales to certain other dealers. After the initial
offering, the public offering price and concessions to dealers may be changed.
S-22
<PAGE>
The Company has granted to the U.S. Underwriters and the international
managers of the International Offering ("International Managers") options to
purchase up to an additional 2,100,000 shares and 375,000 shares of Common
Stock, respectively, at the initial offering price less the aggregate
underwriting discounts and commissions. Either or both options may be exercised
at any time up to 30 days after the date of this Prospectus Supplement. The
Company has entered into an International Underwriting Agreement with the
International Managers providing for the concurrent offer and sale of 2,500,000
shares of Common Stock in Europe. The offering price and aggregate underwriting
discounts and commissions per share for the two Common Stock Offerings are
identical. The closing of the U.S. Offering is a condition to the closing of the
International Offering, and vice versa. The representatives of the International
Managers are Salomon Brothers International Limited, Bear Stearns International
Limited, and Bankers Trust International PLC.
The U.S. Underwriters and the International Managers have entered into an
Agreement Between Underwriters and Managers pursuant to which each U.S.
Underwriter has agreed that, as part of the distribution of the shares of Common
Stock offered in the U.S. Offering and subject to certain exceptions, (a) it is
not purchasing any such shares for the account of an International Person (as
defined below), (b) it has not offered or sold, and will not offer, sell, resell
or deliver, directly or indirectly, any shares of Common Stock or distribute any
prospectus relating to the Common Stock to anyone other than a U.S. or Canadian
Person (as defined below) and (c) any dealer to whom it may sell any of the
shares of Common Stock will represent and agree that it will comply with the
restrictions set forth in (a) and (b) and will not offer, sell, resell or
deliver, directly or indirectly, any of the shares or distribute any prospectus
relating to the Common Stock to any other dealer who does not so represent and
agree. In addition, pursuant to the Agreement Between Underwriters and Managers,
each International Manager has agreed that, as part of the distribution of the
shares of Common Stock offered in the International Offering and subject to
certain exceptions, (a) it is not purchasing any such shares for the account of
anyone other than an International Person, (b) it has not offered or sold, and
will not offer, sell, resell or deliver, directly or indirectly, any shares of
Common Stock or distribute any prospectus relating to the Common Stock to anyone
other than an International Person and (c) any dealer to whom it may sell any of
the shares of Common Stock will represent and agree that it will comply with the
restrictions set forth in (a) and (b) and will not offer sell, resell or
deliver, directly or indirectly, any of the shares or distribute any prospectus
relating to the Common Stock to any other dealer who does not so represent and
agree.
The foregoing limitations do not apply to stabilization transactions or to
transactions among the U.S. Underwriters and the International Managers pursuant
to the Agreement Between Underwriters and Managers. As used herein, "United
States" means the United States of America (including the District of Columbia)
and its territories, its possessions and other areas subject to its
jurisdiction, "Canada" means Canada, its provinces, territories, possessions and
other areas subject to its jurisdiction, and "U.S. or Canadian Person" means a
citizen or resident of the United States or Canada, a corporation, partnership
or other entity created or organized in or under the laws of the United States
or Canada or any political subdivision thereof, or any estate or trust the
income of which is subject to United States or Canadian income taxation,
regardless of its source (other than a foreign branch of such entity) and
includes any United States or Canadian branch of a person other than a U.S. or
Canadian Person. As used herein, the term "International Person" means any
person, corporation, partnership or other entity which is not a U.S. or Canadian
Person.
Pursuant to the Agreement Between Underwriters and Managers, sales may be
made between the U.S. Underwriters and the International Managers of such number
of shares of Common Stock as may be mutually agreed. The price of any shares so
sold shall be the initial public offering price, less an amount not greater than
the selling concession. To the extent that these are sales between the U.S.
Underwriters and the International Managers, pursuant to the Agreement Between
Underwriters and Managers, the number of shares initially available for sale by
the U.S. Underwriters or by the International Managers may be more or less than
the amount specified on the cover page of this Prospectus Supplement.
The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including certain liabilities under the Securities Act of 1933, as
amended (the "Act").
The Company has agreed that, for a period of 180 days from the date of the
issuance of the Common Stock, without the consent of Salomon Brothers Inc,
acting on behalf of the U.S. Underwriters, and Salomon Brothers
S-23
<PAGE>
International Limited, acting on behalf of the International Managers, neither
the Company nor any subsidiary of the Company (except in limited circumstances)
will (i) file with the Securities and Exchange Commission or publicly announce
its intent to file any registration statement under the Act or pre-effective
amendment to any registration statement under the Act relating to Common Stock
(other than the Common Stock offered hereby) or (ii) enter into any agreement
for or consummate the sale of, or publicly announce its intent to sell, any
Common Stock (other than the Common Stock offered hereby).
Each of the U.S. Representatives from time to time perform investment
banking and other financial advisory services for the Company for which they
receive customary compensation.
Bankers Trust Company ("Bankers Trust"), an affiliate of BT Securities
Corporation, is the agent and a lender under the Credit Agreements. Morgan
Guaranty Trust, an affiliate of J.P. Morgan Securities Inc., Lehman Commercial
Paper Inc., an affiliate of Lehman Brothers Inc., and Union Bank of Switzerland,
an affiliate of UBS Securities Inc., are lenders under the Credit Agreement. In
their capacity as lenders under the Credit Agreement, Bankers Trust, Morgan
Guaranty Trust and Union Bank of Switzerland will receive their pro rata shares
of the net proceeds of the sale of the Common Stock offered hereby used to repay
indebtedness under the Credit Agreements. See "Use of Proceeds." In the
aggregate, such lenders may receive more than 10% of the net proceeds from the
Common Stock offered hereby and, accordingly, the Offering is being made in
accordance with Section 44(c)(8) of the Rules of Fair Practice of National
Association of Securities Dealers, Inc. Bankers Trust is also the indenture
trustee for the Company's 11 1/2% Senior Subordinated Notes due September 1,
1999.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Leslie T. Lederer, Vice President, Secretary and Counsel of the
Company (who owns approximately 15,900 shares of Common Stock) and by Sidley &
Austin, Chicago, Illinois. Certain legal matters will be passed upon for the
Underwriters by Cleary, Gottlieb, Steen & Hamilton, New York, New York.
S-24
<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS
PROSPECTUS SUPPLEMENT. THIS PROSPECTUS SUPPLEMENT AND PROSPECTUS DO NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Summary............................ S-3
Risk Factors.................................. S-9
Company Profile............................... S-14
Pro Forma Condensed Consolidated Statement of
Operations................................... S-15
Use of Proceeds............................... S-17
Price Range of Common Stock and Dividend
Policy....................................... S-18
Capitalization................................ S-20
Underwriting.................................. S-22
Legal Matters................................. S-24
PROSPECTUS
Available Information......................... 2
Incorporation of Certain Documents by
Reference.................................... 2
The Company................................... 3
Use of Proceeds............................... 4
Selected Consolidated Financial Data.......... 5
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 6
Credit Agreements............................. 15
Description of Debt Securities................ 19
Description of Capital Stock.................. 50
Plan of Distribution.......................... 54
Validity of the Securities.................... 54
Experts....................................... 54
</TABLE>
16,500,000 SHARES
[LOGO] STONE CONTAINER CORPORATION COMMON STOCK
($.01 PAR VALUE)
SALOMON BROTHERS INC
BEAR, STEARNS & CO. INC.
BT SECURITIES CORPORATION
PROSPECTUS SUPPLEMENT
DATED FEBRUARY 3, 1994
