STONE CONTAINER CORP, S-8, 1997-12-12

STONE CONTAINER CORP
S-8, 1997-12-12
PAPERBOARD MILLS

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 12, 1997
REGISTRATION NO. 333-_____

- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

------------------

STONE CONTAINER CORPORATION
(Exact name of Registrant as Specified in its Charter)

------------------

DELAWARE 36-2041256
(State or Other (I.R.S. Employer
Jurisdiction Identification Number)
of Incorporation or
Organization)

150 NORTH MICHIGAN 60601
AVENUE (Zip Code)
CHICAGO, ILLINOIS
(Address of Principle
Executive Offices)

STONE CONTAINER CORPORATION DEFERRED INCOME SAVINGS PLAN
(Full Title of the Plan)

LESLIE T. LEDERER COPIES TO:
STONE CONTAINER CORPORATION
150 NORTH MICHIGAN AVENUE KEVIN F. BLATCHFORD
CHICAGO, ILLINOIS 60601 SIDLEY & AUSTIN
(312) 346-6600 ONE FIRST NATIONAL PLAZA
(Name, Address and Telephone Number CHICAGO, ILLINOIS 60603
Including Area Code, of Agent for Service)

-------------------------------------------

CALCULATION OF REGISTRATION FEE

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<S> <C> <C> <C> <C>
Title of Each Class Amount to be Registered Proposed Maximum Proposed Maximum Amount of Registration
Securities to be Offering Price Per Share Aggregate Offering Price Fee
Registered(1)
- --------------------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par 5,000,000 shares $10.813(2) $54,065,000(2) $15,949.18
value
- --------------------------------------------------------------------------------------------------------------------------------
Preferred Stock 5,000,000 rights (3) (3) (3)
Purchase Rights
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------

</TABLE>

(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, as
amended (the "Securities Act"), this Registration Statement also covers an
indeterminate amount of plan interests to be offered pursuant to the employee
benefit plan described herein.

(2) Estimated solely for the purpose of calculating the registration fee
required by Section 6(b) of the Securities Act, pursuant to Rule 457(h)
thereunder, based upon the average of the high and low prices of the Common
Stock on December 9, 1997, as reported in the consolidated reporting system.

(3) The Preferred Stock Purchase Rights initially are attached to and trade
with the shares of Common Stock being registered hereby. Value attributable to
such Rights, if any, is reflected in the market price of the Common Stock.

<PAGE>

PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT

ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents heretofore filed (File No. 1-3439) with the
Securities and Exchange Commission (the "Commission") by Stone Container
Corporation (the "Company") and the Stone Container Corporation Deferred Income
Savings Plan (the "Plan") are incorporated herein by reference:

(a) the Company's Annual Report on Form 10-K for the year ended
December 31, 1996;

(b) the Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997;

(d) the Plan's Annual Report on Form 11-K for the year ended December
31, 1996;

(e) the Company's Registration Statement on Form 8-A, dated July 27,
1988, as amended by Forms 8, dated August 2, 1990 and June 8,
1996, with respect to the Preferred Stock Purchase Rights; and

(f) the description of the Company's Common Stock, par value $.01 per
share, which is contained in a registration statement filed under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), including any subsequent amendment or any report filed for
the purpose of updating such description.

All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act, and all documents filed by the Plan pursuant to
Section 15(d) of the Exchange Act, after the date of this Registration Statement
and prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
then remaining unsold, are deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the respective dates of
filing of such documents (such documents, and the documents enumerated above,
being hereinafter referred to as "Incorporated Documents").

Any statement contained in an Incorporated Document shall be deemed to
be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
Incorporated Document modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.

ITEM 4. DESCRIPTION OF SECURITIES

Not applicable.

ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL

Not applicable.

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Reference is made to Section 145 ("Section 145") of the Delaware
General Corporation Law of the State of Delaware (the "Delaware GCL") which
provides for indemnification of directors and officers in certain circumstances.

II-1
<PAGE>

In accordance with Section 102(b)(7) of the Delaware GCL, the
Company's Restated Certificate of Incorporation provides that directors shall
not be personally liable for monetary damages for breaches of their fiduciary
duty as directors except for (i) breaches of their duty of loyalty to the
Company or its stockholders, (ii) acts or omissions not in good faith or which
involve intentional misconduct or knowing violations of law, (iii) under Section
174 of the Delaware GCL (unlawful payment of dividends) or (iv) transactions
from which a director derives an improper personal benefit.

The Certificate of Incorporation, as amended, of the Company provides
for indemnification of directors and officers to the full extent provided by the
Delaware GCL, as amended from time to time. It states that the indemnification
provided therein shall not be deemed exclusive. The Company may maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Company, or another corporation, partnership, joint venture, trust
or other enterprise against any expense, liability or loss, whether or not the
Company would have the power to indemnify him against such expense, liability or
loss, under the provisions of the Delaware GCL.

Pursuant to Section 145 and the Restated Certificate of Incorporation,
the Company maintains directors' and officers' liability insurance coverage.

ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED

Not applicable.

ITEM 8. EXHIBITS

The Company will submit or has submitted the Plan and any amendment
thereto to the Internal Revenue Service (the "IRS") in a timely manner and has
made all changes required by the IRS in order to qualify the Plan under Section
401 of the Internal Revenue Code of 1986, as amended.

Exhibit
Number Description of Exhibit
- ------- ----------------------

4.1 Restated Certificate of Incorporation of the Company, filed as Exhibit
3(a) to the Company's Registration Statement on Form S-1, Registration
Number 33-54769, is hereby incorporated by reference.

4.2 Bylaws of the Company, as amended March 27, 1997, filed as Exhibit 4.2
to the Company's Form 10-Q for the quarter ended September 30, 1997,
is hereby incorporated by reference.

4.3 Stone Container Corporation Deferred Income Savings Plan.

4.4 Certificate of Designation for the Series D Junior Participating
Preferred Stock, filed as Exhibit 3(b) to the Company's Annual Report
on Form 10-K for the year ended December 31, 1991, is hereby
incorporated by reference.

4.5 Certificate of Increase of Series D Junior Participating Preferred
Stock dated July 1, 1993, filed as Exhibit 4(f) to the Company's
Registration Statement on Form S-3, Registration No. 33-66086, is
hereby incorporated by reference.

4.6 Certificate of Designation for the $1.75 Series E Cumulative
Convertible Exchange Preferred Stock, filed as Exhibit 3(c) to the
Company's Annual Report on Form 10-K for the year ended December 31,
1991, is hereby incorporated by reference.

4.7 Specimen certificate representing the $1.75 Series E Cumulative
Convertible Exchangeable Preferred Stock, filed as Exhibit 4(g) to the
Company's Registration Statement on Form S-3, Registration Number
33-45374, is hereby incorporated by reference.

4.8 Rights Agreement dated as of July 25, 1988 between the Company and The
First National Bank of Chicago, filed as Exhibit 1 to the Company's
Registration Statement on Form 8-A dated July 27, 1988, is hereby
incorporated by reference.

II-2
<PAGE>

4.9 Amendment to Rights Agreement dated as of July 23, 1990 between the
Company and The First National Bank of Chicago, filed as Exhibit 1A to
the Company's Form 8 dated August 2, 1990 amending the Company's
Registration Statement on Form 8-A dated July 27, 1988, is hereby
incorporated by reference.

4.10 Amendment to Rights Agreement dated as of May 16, 1996 between the
Company and First Chicago Trust Company of New York, filed as Exhibit
1 to the Company's Form 8 dated June 8, 1996 amending the Company's
Registration Statement on Form 8 dated August 2, 1990 amending the
Company's Registration Statement on Form 8-A dated July 27, 1988, as
amended, is hereby incorporated by reference.

4.11 Amended and Restated Credit Agreement dated as of June 19, 1997
between the Company and the financial institutions signatory thereto
and Bankers Trust Company, as Agent, filed as Exhibit 4.1 to the
Company's Form 10-Q for the quarter ended September 30, 1997, is
hereby incorporated by reference.

4.12 Indenture dated as of July 24, 1996 between the Company and The Bank
of New York, as Trustee, relating to the Rating Adjustable Senior
Notes due 2016, filed as Exhibit 4.1 to the Company's Registration
Statement on Form S-4, Registration Number 333-12155, is hereby
incorporated by reference.

4.13 First Supplemental Indenture dated July 24, 1996 between the Company
and The Bank of New York, as Trustee, relating to the Rating
Adjustable Senior Notes due 2016, filed as Exhibit 4.2 to the
Company's Registration Statement on Form S-4, Registration Number
333-12155, is hereby incorporated by reference.

4.14 Indenture dated as of October 12, 1994 between the Company and Norwest
Bank Minnesota, N.A., as Trustee, relating to the 10 3/4% First
Mortgage Notes due October 1, 2002, filed as Exhibit 4(b) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994 is hereby incorporated by reference.

4.15 Indenture dated as of October 12, 1994 between the Company and The
Bank of New York, as Trustee, relating to the 11 1/2% Senior Notes
due October 1, 2004, filed as Exhibit 4(c) to the Company's
Quarterly Report on Form 10-Q for the quartet ended September 30,
1994, is hereby incorporated by reference.

4.16 Indenture dated as of February 15, 1992 between the Company and The
Bank of New York, as Trustee, relating to the Company's 6 3/4%
Convertible Subordinated Debentures due February 15, 2007, filed as
Exhibit 4(p) to the Company's Registration Statement on From S-3,
Registration Number 33-45978, is hereby incorporated by reference.

4.17 Senior Subordinated Indenture dated as of March 15, 1992 between
the Company and The Bank of New York, as Trustee, filed as Exhibit
4(a) to the Company's Registration Statement on Form S-3,
Registration Number 33-46764, is hereby incorporated by reference.

4.18 First Supplemental Indenture dated as of May 28, 1997 between the
Company and The Bank of New York, as Trustee, relating to the
Indenture dated as of March 15, 1992 between the Company and The
Bank of New York, as Trustee, filed as Exhibit 4(i)(i) to the
Company's Current Report on Form 8-K dated May 28, 1997, is hereby
incorporated by reference.

4.19 Indenture dated as of June 15, 1993 between the Company and Norwest
Bank Minnesota, National Association, as Trustee, relating to the
Company's 8 7/8% Convertible Senior Subordinated Notes due 2000,
filed as Exhibit 4(a) to the Company's Registration Statement on
Form S-3, Registration Number 33-66086, is hereby incorporated by
reference.

4.20 Indenture dated as of November 1, 1991 between the Company and the
Bank of New York, as Trustee, relating to the Company's Senior Debt
Securities, filed as Exhibit 4(u) to the Company's Registration
Statement on Form S-3, Registration Number 33-45374, is hereby
incorporated by reference.

4.21 First Supplemental Indenture dated as of June 23, 1993 between the
Company and The Bank of New York, as Trustee, relating to the
Indenture dated as of November 1, 1991, between the Company and The
Bank of New York, as Trustee, filed as Exhibit 4(aa) to the Company's
Registration Statement on Form S-3, Registration Number 33-66086, is
hereby incorporated by reference.

II-3
<PAGE>

4.22 Second Supplemental Indenture dated as of February 1, 1994 between the
Company and the Bank of New York, as Trustee, relating to the
Indenture dated as of November 1, 1991, as amended, filed as Exhibit
4.2 to the Company's Current Report on Form 8-K, dated January 24,
1994, is hereby incorporated by reference.

4.23 Master Trust Indenture and Security Agreement dated as of March 14,
1995 among Stone Receivables Corporation, the Company, as Servicer,
Marine Midland Bank, as Trustee, and Bankers Trust Company, as
Administrative Agent, relating to the accounts receivable
securitization program, filed as Exhibit 4(o) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, is hereby
incorporated by reference.

4.24 Series 1995-1 Supplemental dated as of March 14, 1995 to the Master
Trust Indenture and Security Agreement dated as of March 14, 1995,
among Stone Receivables Corporation, the Company, as Servicer, Marine
Midland Bank, as Trustee, and Bankers Trust Company, as Administrative
Agent, relating to the accounts receivable securitization program,
filed as Exhibit 4(p) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995, is hereby incorporated by reference.

4.25 Indentures with respect to other long-term debt, none of which exceeds
10 percent of the total assets of the Company and its subsidiaries on
a consolidated basis, are not attached. (The Registrant agrees to
furnish a copy of such documents to the Commission upon request).

4.26 Guaranty dated October 7, 1983 between the Company and The Continental
Group, Inc., filed as Exhibit 4(h) to the Company's Registration
Statement on Form S-3, Registration Number 33-36218, is hereby
incorporated by reference.

4.27 Amendment No. 1 to Guaranty, dated as of June 1, 1996, among
Continental Holdings, Inc., Continental Group, Inc. and the Company,
filed as Exhibit 4(r) to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1996, is hereby incorporated by
reference.

5 Opinion of Leslie T. Lederer, Vice President, Secretary and Counsel of
the Company.

23 Consent of Price Waterhouse LLP

24 Power of Attorney (included in the signature page of this Registration
Statement).

ITEM 9. UNDERTAKINGS

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and

(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;

II-4
<PAGE>

PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), that are incorporated by reference in the
registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.

(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

II-5
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, State of Illinois, on this 10th day of
December, 1997.

STONE CONTAINER CORPORATION

By: /s/ Leslie T. Lederer
------------------------------------
Leslie T. Lederer
Vice President, Secretary and
Counsel

II-6
<PAGE>

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears immediately below constitutes and appoints Leslie T. Lederer, his true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or any them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below on December 10, 1997,
by the following persons in the capacities indicated:

/s/ Roger W. Stone Chairman of the Board of Directors and
------------------------------------- President (Chief Executive Officer)
Roger W. Stone

/s/ Randolph C. Read Senior Vice President - Chief
------------------------------------- Financial and Planning Officer (Chief
Randolph C. Read Financial Officer)

/s/ Thomas P. Cutilletta Senior Vice President, Administration
------------------------------------- and Corporate Controller (Principal
Thomas P. Cutilletta Accounting Officer)

/s/ William F. Aldinger, III
------------------------------------- Director
William F. Aldinger, III

/s/ Dionisio Garza
------------------------------------- Director
Dionisio Garza

/s/ Richard A. Giesen
------------------------------------- Director
Richard A. Giesen

/s/ James J. Glasser
------------------------------------- Director
James J. Glasser

/s/ Jack M. Greenberg
------------------------------------- Director
Jack M. Greenberg

/s/ John D. Nichols
------------------------------------- Director
John D. Nichols

/s/ Jerry K. Pearlman
------------------------------------- Director
Jerry K. Pearlman

/s/ Richard J. Raskin
------------------------------------- Director
Richard J. Raskin

/s/ Phillip B. Rooney
------------------------------------- Director
Phillip B. Rooney

/s/ Alan Stone
------------------------------------- Director
Alan Stone

/s/ Ira N. Stone
------------------------------------- Director
Ira N. Stone

/s/ James H. Stone
------------------------------------- Director
James H. Stone

II-7
<PAGE>

Pursuant to the requirements of the Securities Act of 1933, the Stone
Container Corporation Deferred Income Savings Plan has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Chicago, State of Illinois, on this 10th day of
December, 1997.

STONE CONTAINER CORPORATION
DEFERRED INCOME SAVINGS PLAN

STONE CONTAINER CORPORATION,
AS PLAN ADMINISTRATOR

By: /s/ Leslie T. Lederer
------------------------------------
Name: Leslie T. Lederer
----------------------------------
Title: Vice President
---------------------------------

II-8
<PAGE>

INDEX TO EXHIBITS TO REGISTRATION STATEMENT ON FORM S-8

Exhibit
Number Description of Exhibit
- ------- ----------------------

4.1 Restated Certificate of Incorporation of the Company, filed as
Exhibit 3(a) to the Company's Registration Statement on Form S-1,
Registration Number 33-54769, is hereby incorporated by reference

4.2 Bylaws of the Company, as amended March 27, 1997, filed as
Exhibit 4.2 to the Company's Form 10-Q for the quarter ended
September 30, 1997, is hereby incorporated by reference

4.3 Stone Container Corporation Deferred Income Savings Plan*

4.4 Certificate of Designation for the Series D Junior Participating
Preferred Stock, filed as Exhibit 3(b) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1991, is
hereby incorporated by reference

4.5 Certificate of Increase of Series D Junior Participating
Preferred Stock dated July 1, 1993, filed as Exhibit 4(f) to the
Company's Registration Statement on Form S-3, Registration No.
33-66086, is hereby incorporated by reference

4.6 Certificate of Designation for the $1.75 Series E Cumulative
Convertible Exchange Preferred Stock, filed as Exhibit 3(c) to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1991, is hereby incorporated by reference

4.7 Specimen certificate representing the $1.75 Series E Cumulative
Convertible Exchangeable Preferred Stock, filed as Exhibit 4(g)
to the Company's Registration Statement on Form S-3, Registration
Number 33-45374, is hereby incorporated by reference

4.8 Rights Agreement dated as of July 25, 1988 between the Company
and The First National Bank of Chicago, filed as Exhibit 1 to the
Company's Registration Statement on Form 8-A dated July 27, 1988,
is hereby incorporated by reference

4.9 Amendment to Rights Agreement dated as of July 23, 1990 between
the Company and The First National Bank of Chicago, filed as
Exhibit 1A to the Company's Form 8 dated August 2, 1990 amending
the Company's Registration Statement on Form 8-A dated July 27,
1988, is hereby incorporated by reference

4.10 Amendment to Rights Agreement dated as of May 16, 1996 between
the Company and First Chicago Trust Company of New York, filed as
Exhibit 1 to the Company's Form 8 dated June 8, 1996 amending the
Company's Registration Statement on Form 8 dated August 2, 1990
amending the Company's Registration Statement on Form 8-A dated
July 27, 1988, as amended, is hereby incorporated by reference

4.11 Amended and Restated Credit Agreement dated as of June 19, 1997
between the Company and the financial institutions signatory
thereto and Bankers Trust Company, as Agent, filed as Exhibit 4.1
to the Company's Form 10-Q for the quarter ended September 30,
1997, is hereby incorporated by reference

4.12 Indenture dated as of July 24, 1996 between the Company and The
Bank of New York, as Trustee, relating to the Rating Adjustable
Senior Notes due 2016, filed as Exhibit 4.1 to the Company's
Registration Statement on Form S-4, Registration Number
333-12155, is hereby incorporated by reference

4.13 First Supplemental Indenture dated July 24, 1996 between the
Company and The Bank of New York, as Trustee, relating to the
Rating Adjustable Senior Notes due 2016, filed as Exhibit 4.2 to
the Company's Registration Statement on Form S-4, Registration
Number 333-12155, is hereby incorporated by reference

<PAGE>

4.14 Indenture dated as of October 12, 1994 between the Company and
Norwest Bank Minnesota, N.A., as Trustee, relating to the 10 3/4%
First Mortgage Notes due October 2002, filed as Exhibit 4(b) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994 is hereby incorporated by reference

4.16 Indenture dated as of February 15, 1992 between the Company and
The Bank of New York, as Trustee, relating to the Company's 63/4%
Convertible Subordinated Debentures due February 15, 2007, filed
as Exhibit 4(p) to the Company's Registration Statement on From
S-3, Registration Number 33-45978, is hereby incorporated by
reference

4.17 Senior Subordinated Indenture dated as of March 15, 1992 between the
Company and The Bank of New York, as Trustee, filed as Exhibit 4(a) to
the Company's Registration Statement on Form S-3, Registration Number
33-46764, is hereby incorporated by reference.

4.20 Indenture dated as of November 1, 1991 between the Company and
the Bank of New York, as Trustee, relating to the Company's
Senior Debt Securities, filed as Exhibit 4(u) to the Company's
Registration Statement on Form S-3, Registration Number 33-45374,
is hereby incorporated by reference

4.21 First Supplemental Indenture dated as of June 23, 1993 between
the Company and The Bank of New York, as Trustee, relating to the
Indenture dated as of November 1, 1991, between the Company and
The Bank of New York, as Trustee, filed as Exhibit 4(aa) to the
Company's Registration Statement on Form S-3, Registration Number
33-66086, is hereby incorporated by reference

4.22 Second Supplemental Indenture dated as of February 1, 1994
between the Company and the Bank of New York, as Trustee,
relating to the Indenture dated as of November 1, 1991, as
amended, filed as Exhibit 4.2 to the Company's Current Report on
Form 8-K, dated January 24, 1994, is hereby incorporated by
reference

4.23 Master Trust Indenture and Security Agreement dated as of March
14, 1995 among Stone Receivables Corporation, the Company, as
Servicer, Marine Midland Bank, as Trustee, and Bankers Trust
Company, as Administrative Agent, relating to the accounts
receivable securitization program, filed as Exhibit 4(o) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1995, is hereby incorporated by reference

4.24 Series 1995-1 Supplemental dated as of March 14, 1995 to the
Master Trust Indenture and Security Agreement dated as of March
14, 1995, among Stone Receivables Corporation, the Company, as
Servicer, Marine Midland Bank, as Trustee, and Bankers Trust
Company, as Administrative Agent, relating to the accounts
receivable securitization program, filed as Exhibit 4(p) to the
Company's Annual Report on Form 10-K for the year ended December
31, 1995, is hereby incorporated by reference

4.25 Indentures with respect to other long-term debt, none of which
exceeds 10 percent of the total assets of the Company and its
subsidiaries on a consolidated basis, are not attached. (The
Registrant agrees to furnish a copy of such documents to the
Commission upon request)

4.26 Guaranty dated October 7, 1983 between the Company and The
Continental Group, Inc., filed as Exhibit 4(h) to the Company's
Registration Statement on Form S-3, Registration Number 33-36218,
is hereby incorporated by reference

<PAGE>

4.27 Amendment No. 1 to Guaranty, dated as of June 1, 1996, among
Continental Holdings, Inc., Continental Group, Inc. and the
Company, filed as Exhibit 4(r) to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1996, is hereby
incorporated by reference

5 Opinion of Leslie T. Lederer, Vice President, Secretary and Counsel of
the Company.*

23 Consent of Price Waterhouse LLP*

24 Power of Attorney (included in the signature page of this Registration
Statement)

- ---------------------

* Filed herewith.

<PAGE>

STONE CONTAINER CORPORATION
DEFERRED INCOME SAVINGS PLAN

(As Amended and Restated Effective as of January 1, 1997)

Kirkland & Ellis

Chicago, Illinois

<PAGE>

CERTIFICATE

I, Leslie T. Lederer, Secretary of Stone Container Corporation,
hereby certify that the attached document is a correct copy of Stone Container
Corporation Deferred Income Savings Plan, as amended and restated effective as
of January 1, 1997, or such other date as indicated herein, and as in effect on
the date hereof.

Dated this 10th day of December, 1997.

By: /s/ Leslie T. Lederer
--------------------------------
Leslie T. Lederer
Secretary as Aforesaid

(Corporate Seal)

<PAGE>

STONE CONTAINER CORPORATION
DEFERRED INCOME SAVINGS PLAN

(As Amended and Restated Effective as of January 1, 1997)

TABLE OF CONTENTS

Page
----

ARTICLE 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purpose of the Plan, Effective Date. . . . . . . . . . . . . . . . . 1
Plan Administrator, Plan Year. . . . . . . . . . . . . . . . . . . . 1
Funding of Plan Benefits . . . . . . . . . . . . . . . . . . . . . . 2
Plan Benefits for Participants Who Terminated
Employment Prior to January 1, 1997. . . . . . . . . . . . . . . . 2

ARTICLE 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Plan Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Years of Service . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Hours of Service . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Leave of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Cessation of Active Participation. . . . . . . . . . . . . . . . . . 5
Resumption of Active Participation, Transfers. . . . . . . . . . . . 5
Notice of Participation. . . . . . . . . . . . . . . . . . . . . . . 6
Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

ARTICLE 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Employer Contributions. . . . . . . . . . . . . . . . . . . . . . . . . 6
Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . 6
Payment of Employer Matching Contributions . . . . . . . . . . . . . 7
Profit and Deduction Limitations . . . . . . . . . . . . . . . . . . 8
Allocation of Employer Matching Contributions. . . . . . . . . . . . 8
Verification of Employer Contributions . . . . . . . . . . . . . . . 8
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Participant Contributions . . . . . . . . . . . . . . . . . . . . . . . 9
Participant Elected Salary Reduction Contributions . . . . . . . . . 9
Payment of Participant Contributions . . . . . . . . . . . . . . . . 11
Rollover Contributions . . . . . . . . . . . . . . . . . . . . . . . 11
Transferred Benefits . . . . . . . . . . . . . . . . . . . . . . . . 12
Restricted Participation . . . . . . . . . . . . . . . . . . . . . . 13

-i-
<PAGE>

TABLE OF CONTENTS (cont'd)

Page
----

ARTICLE 5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Plan Accounting and Investment Funds. . . . . . . . . . . . . . . . . . 13
Separate Participant Accounts. . . . . . . . . . . . . . . . . . . . 13
Accounting Dates . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Date of Crediting Contributions and Forfeitures. . . . . . . . . . . 14
Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Investment Elections . . . . . . . . . . . . . . . . . . . . . . . . 16
Investment Risks . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Voting of Company Common Stock and Other Rights. . . . . . . . . . . 18
Charging Payments and Distributions. . . . . . . . . . . . . . . . . 20
Monthly Adjustment of Participants' Accounts . . . . . . . . . . . . 20
Statement of Accounts. . . . . . . . . . . . . . . . . . . . . . . . 21
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

ARTICLE 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Distribution of Account Balances. . . . . . . . . . . . . . . . . . . . 22
Retirement, Death or Disability. . . . . . . . . . . . . . . . . . . 22
Resignation or Dismissal . . . . . . . . . . . . . . . . . . . . . . 23
Forfeitures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Method of Benefit Payment. . . . . . . . . . . . . . . . . . . . . . 24
Time of Benefit Payment. . . . . . . . . . . . . . . . . . . . . . . 25
Payment of Small Amounts . . . . . . . . . . . . . . . . . . . . . . 25
Payment by Annuity Purchase. . . . . . . . . . . . . . . . . . . . . 26
Distributions to Alternate Payees. . . . . . . . . . . . . . . . . . 26
Designated Beneficiaries . . . . . . . . . . . . . . . . . . . . . . 26
Payments to Substitute Beneficiaries . . . . . . . . . . . . . . . . 27
Direct Rollover of Eligible Rollover Distributions . . . . . . . . . 28

ARTICLE 6A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Reemployment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Rehired Employee or Participant. . . . . . . . . . . . . . . . . . . 29
Reinstatement of Forfeitures . . . . . . . . . . . . . . . . . . . . 30

ARTICLE 7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Hardship Withdrawals and Loans During Employment. . . . . . . . . . . . 31
Hardship Withdrawal of Employer and Salary Reduction
Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Loans to Participants. . . . . . . . . . . . . . . . . . . . . . . . 32
No Representation Regarding Tax Effects of Withdrawals . . . . . . . 32

-ii-
<PAGE>

TABLE OF CONTENTS (cont'd)

Page
----

ARTICLE 8. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Maximum Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 33
Contribution Limitations . . . . . . . . . . . . . . . . . . . . . . 33
Participant Covered by Defined Contribution Plan Only. . . . . . . . 34
Participant Covered by Defined Contribution Plan and
Defined Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . 35
Distribution of Excess Deferrals . . . . . . . . . . . . . . . . . . 36
Highly Compensated Employee. . . . . . . . . . . . . . . . . . . . . 37
Limitations on Elective Contributions. . . . . . . . . . . . . . . . 37
Limitation on Employee and Matching Contributions. . . . . . . . . . 40
Multiple Use Limitation. . . . . . . . . . . . . . . . . . . . . . . 44

ARTICLE 9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
General Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Examination of Plan Documents. . . . . . . . . . . . . . . . . . . . 45
Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Nonalienation of Plan Benefits . . . . . . . . . . . . . . . . . . . 45
Payment with Respect to Incapacitated Participants or
Beneficiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . 46
No Employment or Benefit Guaranty. . . . . . . . . . . . . . . . . . 46
Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Gender and Number. . . . . . . . . . . . . . . . . . . . . . . . . . 48
Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Fiduciary Responsibilities . . . . . . . . . . . . . . . . . . . . . 48
Supplements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
USERRA Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . 49

ARTICLE 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Relating to Plan Administration . . . . . . . . . . . . . . . . . . . . 49
Plan Administrator's Duties. . . . . . . . . . . . . . . . . . . . . 49
Information Required for Plan Administration . . . . . . . . . . . . 51
Decision of Plan Administrator Final . . . . . . . . . . . . . . . . 51
Review of Benefit Determinations . . . . . . . . . . . . . . . . . . 52
Uniform Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Plan Administrator's Expenses. . . . . . . . . . . . . . . . . . . . 52
Interested Committee Member. . . . . . . . . . . . . . . . . . . . . 53
Action by Committee. . . . . . . . . . . . . . . . . . . . . . . . . 53
Resignation or Removal of Committee Member . . . . . . . . . . . . . 54
Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . 54

-iii-
<PAGE>

TABLE OF CONTENTS (cont'd)

Page
----

ARTICLE 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Relating to the Employers . . . . . . . . . . . . . . . . . . . . . . . 55
Action by an Employer. . . . . . . . . . . . . . . . . . . . . . . . 55
Additional Employers . . . . . . . . . . . . . . . . . . . . . . . . 55
Subsidiary, Related Company, Stone Container Companies . . . . . . . 55
Restrictions as to Reversion of Trust Fund to the Employers. . . . . 56

ARTICLE 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Amendment and Termination . . . . . . . . . . . . . . . . . . . . . . . 57
Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Plan Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Notice of Amendment, Termination or Plan Merger. . . . . . . . . . . 57
Nonforfeitability on Termination . . . . . . . . . . . . . . . . . . 57

ARTICLE 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Top-Heavy Plan Rules. . . . . . . . . . . . . . . . . . . . . . . . . . 58
Key Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Top-Heavy Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Aggregation Groups . . . . . . . . . . . . . . . . . . . . . . . . . 60
Special Minimum Contributions. . . . . . . . . . . . . . . . . . . . 60
Vesting Requirements . . . . . . . . . . . . . . . . . . . . . . . . 61

SUPPLEMENT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A1
SUPPLEMENT B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B1

-iv-
<PAGE>

STONE CONTAINER CORPORATION
DEFERRED INCOME SAVINGS PLAN

(As Amended and Restated Effective as of January 1, 1997)

INDEX OF DEFINED TERMS

Term Page
---- ----

Accounting date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Accounting period. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Active participant . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Adjusted net worth . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Aggregate limit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Annual addition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Defined benefit limitation amount. . . . . . . . . . . . . . . . . . . . 36
Defined contribution limitation amount . . . . . . . . . . . . . . . . . 36
Determination date . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Direct rollover. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Distributee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Effective date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Elective contribution. . . . . . . . . . . . . . . . . . . . . . . . . . 38
Eligible retirement plan . . . . . . . . . . . . . . . . . . . . . . . . 29
Eligible rollover distribution . . . . . . . . . . . . . . . . . . . . . 28
Employee contributions . . . . . . . . . . . . . . . . . . . . . . . . . 41
Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
employer contributions account . . . . . . . . . . . . . . . . . . . . . 13
Employers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
employment commencement date . . . . . . . . . . . . . . . . . . . . . . 3
Excess aggregate contributions . . . . . . . . . . . . . . . . . . . . . 43
Excess contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
forfeiture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
highly compensated employee. . . . . . . . . . . . . . . . . . . . . . . 37
Highly compensated employees . . . . . . . . . . . . . . . . . . . . . . 38
hour of service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Inactive participant . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Investment funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Key employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Leased employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
leave of absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Limitation year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Matching contributions . . . . . . . . . . . . . . . . . . . . . . . . . 41
Multiple use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

-v-
<PAGE>

INDEX OF DEFINED TERMS

Term Page
---- ----

Non-highly compensated group . . . . . . . . . . . . . . . . . . . . . . 38
officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
one-year break in service. . . . . . . . . . . . . . . . . . . . . . . . 24
permanent disability . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Permissive aggregation group of plans. . . . . . . . . . . . . . . . . . 60
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Plan administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Plan year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
qualifying rollover contribution . . . . . . . . . . . . . . . . . . . . 11
Related company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Required aggregation group of plans. . . . . . . . . . . . . . . . . . . 60
rollover account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
salary reduction contribution. . . . . . . . . . . . . . . . . . . . . . 9
salary reduction contributions account . . . . . . . . . . . . . . . . . 13
settlement date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
severance from service date. . . . . . . . . . . . . . . . . . . . . . . 3
Stone Container Companies. . . . . . . . . . . . . . . . . . . . . . . . 55
Stone Container Company. . . . . . . . . . . . . . . . . . . . . . . . . 56
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Top-heavy plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Total compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
USERRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
years of service . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

-vi-
<PAGE>

STONE CONTAINER CORPORATION DEFERRED INCOME SAVINGS PLAN
---------------------------------------------------------
(As Amended and Restated Effective as of January 1, 1997)

ARTICLE 1

INTRODUCTION

1.1 PURPOSE OF THE PLAN, EFFECTIVE DATE. Stone Container Corporation
Deferred Income Savings Plan (the "plan") was established effective as of
October 1, 1983 by Stone Container Corporation (the "company"). The plan as set
forth herein constitutes an entire amendment and restatement of the plan,
effective as of January 1, 1997 (the "effective date") or other dates as
provided herein with respect to certain designated provisions. The purpose of
the plan is to enable eligible employees of the company and eligible employees
of any subsidiaries (as defined in 11.3) or any related companies (as defined in
11.3) of the company which adopt the plan with the consent of the company in
accordance with the provisions of section 11.2 (the company and such
subsidiaries or related companies which adopt the plan shall be referred to as
the "employers" or individually as an "employer") to share in the profits of the
employers and to accumulate funds and thereby assist such employees in providing
for their future security.

1.2 PLAN ADMINISTRATOR, PLAN YEAR. The plan is administered by the
company (the "plan administrator"). The plan is administered on the basis of a
plan year (the "plan year"). For years prior to January 1, 1990, the plan year
is the calendar year. The plan year beginning January 1, 1990 shall end on
September 30, 1990 followed by a short plan year beginning October 1, 1990 which
shall end on December 31, 1990. Subsequent plan years shall begin on January 1
of each year and end on the next following December 31. Article 10 describes
certain powers,

<PAGE>

duties and responsibilities of the plan administrator with respect to the
administration of the plan.

1.3 FUNDING OF PLAN BENEFITS. Amounts contributed under the plan are
held and invested by one or more trustees (the "trustee") appointed by the
company in accordance with the terms of a trust agreement between the company
and the trustee which implements and forms a part of the plan.

1.4 PLAN BENEFITS FOR PARTICIPANTS WHO TERMINATED EMPLOYMENT PRIOR TO
JANUARY 1, 1997. The benefits provided hereunder with respect to any
participant who retired or whose employment with the employers otherwise
terminated prior to January 1, 1997, will, except as otherwise provided herein,
be governed in all respects by the terms of the plan as in effect on the date of
the participant's retirement or other termination of employment.

ARTICLE 2

PLAN PARTICIPANTS

2.1 ELIGIBILITY. Each employee of an employer will be eligible to
become a participant in the plan on the first January 1 or July 1, or on any
subsequent January 1 or July 1, as of which he or she is a salaried employee of
an employer to whom the plan has been extended. An eligible employee will
become a participant on the date as of which he or she has elected to make
salary reduction contributions to the plan by filing with the plan administrator
a written election to make such contributions on such forms, in such manner and
at such time as the plan administrator shall require. Notwithstanding anything
in this section 2.1 to the contrary, no employees who are (i) "leased employees"
as set forth in Section 414(n) of the Internal Revenue Code of 1986, as amended
(the "Code") or (ii) nonresident aliens who receive no earned income from
sources within the United States

-2-
<PAGE>

(within the meaning of Code Section 861(a)(3)), shall be eligible to participate
in the plan.

2.2 YEARS OF SERVICE. A participant shall be granted "years of
service" equal to his or her period of employment (in full and fractional years)
by the Stone Container Companies (as defined in section 11.3) commencing with
his or her employment commencement date and ending with his or her severance
from service date.

(a) An employee's "employment commencement date" shall be the
date the employee first performs an hour of service (as defined in
section 2.3) for a Stone Container Company (as defined in section
11.3) and his or her "severance from service date" shall be the
earlier of the date his or her employment with all of the Stone
Container Companies terminates on account of resignation, retirement,
discharge or death or the first anniversary of the first day of a
period during which the employee is absent from service with the Stone
Container Companies (with or without pay) for any reason other than
resignation, retirement, discharge, death or leave of absence on
account of military service (as described in section 2.4(a)) provided
the employee returns to service within the period provided by
applicable law.

(b) If an employee terminates his or her employment with the
Stone Container Companies and is later rehired by the Stone Container
Companies within one year of his or her termination of employment (or
earlier absence from service for reason other than a termination) he
or she shall not be considered to have incurred such prior termination
of employment for purposes of determining his or her years of service
under this section 2.2.

(c) Solely for purposes of determining whether an employee has
incurred a break in service for purposes of sections 6.3 and 6A.1, the
severance from service date of an employee who is on a maternity or
paternity leave of absence (as described in subsection 2.4(b)) shall
be the earlier of the date his or her employment terminates on account
of resignation, retirement, discharge or death or the second
anniversary of the first day of his or her absence.

-3-
<PAGE>

(d) Service performed under a predecessor plan shall be
determined in accordance with the provisions of such predecessor plan
on the day immediately prior to the date such employee becomes a
covered employee hereunder.

2.3 HOURS OF SERVICE. An "hour of service" as used in the plan
means:

(a) Each hour for which an employee is directly or indirectly
compensated or entitled to be compensated for his performance of
duties for any Stone Container Company as an employee (with each
overtime hour being taken into account as if it were a normal work
hour);

(b) Each hour for which an employee is directly or indirectly
compensated or entitled to be compensated by a Stone Container Company
with respect to a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated)
due to vacation, holiday, illness, incapacitation (including
disability), layoff, military duty or leave of absence (as defined in
section 2.4); and

(c) Each other hour required by federal law to be counted as an
"hour of service", including each such hour for which back pay,
irrespective of mitigation of damages, is either awarded or agreed to
by a Stone Container Company.

2.4 LEAVE OF ABSENCE. A "leave of absence" as used in the plan
means:

(a) A leave of absence required by law or granted by a Stone
Container Company on account of service in military or governmental
branches described in any applicable statute granting reemployment
rights to employees who enter such branches or any other military or
governmental branch designated by a Stone Container Company;

(b) A leave of absence for any period the employee is absent
from work by reason of the employee's pregnancy, the birth of the
child of the employee, the placement of a child with the employee in
connection with the adoption of the child by the employee or the
caring for the child for a period

-4-
<PAGE>

beginning immediately after such birth or placement; and

(c) Any other absence from active employment with a Stone
Container Company that is approved by such Stone Container Company and
not treated by it as a termination of employment.

Leaves of absence granted by a Stone Container Company shall be governed by
rules uniformly applied to all employees of that Stone Container Company
similarly situated.

2.5 CESSATION OF ACTIVE PARTICIPATION. Once an employee has become
an active participant in the plan in accordance with section 2.1 above, such
employee shall remain a participant in the plan until the date that the
participant's entire account balances under the plan have been distributed to
him or her or on his or her behalf in accordance with the plan. During a period
of employment with the employers while a participant has elected to make salary
reduction contributions, a participant shall be considered for all purposes of
the plan to be an "active participant". During all other periods of
participation, including periods of restricted participation pursuant to section
4.5, a participant shall be considered an "inactive participant". Only those
participants who are active participants with respect to a pay period are
entitled to make participant contributions for that pay period. Beneficiaries
of deceased participants will be treated as inactive participants for purposes
of the plan (provided that such beneficiaries may not designate additional
beneficiaries in accordance with section 6.9 and, accordingly, any unpaid
benefits remaining upon the death of a designated beneficiary of a deceased
participant shall be distributed in accordance with the provisions of section
6.10).

2.6 RESUMPTION OF ACTIVE PARTICIPATION, TRANSFERS. Any employee of
the employers who was previously an active participant in the plan will be
eligible to elect to become an

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active participant effective as of the next January 1 or July 1 following the
participant's voluntary suspension of his or her salary reduction contributions.
Any employee of the employer who was previously an hourly employee who is
transferred to a salaried position will be eligible to elect to become an active
participant effective as of the first day of any month by properly completing
and filing the written election described in section 2.1 with respect to such
date.

2.7 NOTICE OF PARTICIPATION. Each employee will be notified of the
date he or she becomes a plan participant and each participant and other person
receiving benefits under the plan will be furnished with a copy of a summary
plan description.

2.8 OFFICERS. The participation of any officer of the company in the
plan shall, in addition to satisfying applicable requirements of the plan, be
subject to compliance with Rule 16b-3 under the Securities Exchange Act of 1934,
as amended from time to time (the "Exchange Act"). The term "officer" shall
mean an officer of the company within the meaning of Section 16 of the Exchange
Act. The rules applicable to the participation of an officer, including,
without limitation, the level of and changes in salary reduction contributions
and the investment and distribution of account balances, shall be as set forth
in uniform rules established by the plan administrator.

ARTICLE 3

EMPLOYER CONTRIBUTIONS

3.1 EMPLOYER CONTRIBUTIONS. Subject to the conditions and
limitations of this Article 3 and Article 8, for each plan year each employer
will make a contribution under the plan on behalf of each participant employed
by it during that plan year in an amount equal to the sum of the following:

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(a) EMPLOYER MATCHING CONTRIBUTIONS. With respect to each
participant who is employed by the employer on the last day of the
plan year, or who first incurs a permanent disability (as defined in
section 6.1) during the plan year, or whose employment with all of the
Stone Container Companies terminated during the plan year on account
of death or account of retirement under the Stone Container
Corporation Salaried Employees Retirement Plan (and with respect to
which he or she is receiving or has properly elected to receive his or
her early, or normal retirement benefits under such plan), the
employer shall make a matching contribution equal to 50 percent of the
first 5% of such participant's compensation contributed to the plan
for the plan year pursuant to section 4.1.

(b) SALARY REDUCTION CONTRIBUTIONS. 100 percent of the salary
reduction contributions (as defined in section 4.1) elected by the
participant for the plan year.

3.2 PAYMENT OF EMPLOYER MATCHING CONTRIBUTIONS. Employer matching
contributions under the plan to be made in accordance with subsection 3.1(a)
above shall be paid to the trustee, without interest, as soon as practicable
after the end of the calendar year within which the plan year ends but no later
than 60 days after the end of such calendar year. The company may, at its
discretion, make all or any part of any employer matching contribution under
subsection 3.1(a) above in shares of common stock of the company rather than in
cash. The shares of company stock so contributed may be treasury shares or may
be purchased by the company on the open market or in a private purchase and
shall have a fair market value equal to the amount of such employer matching
contribution (or portion thereof). For purposes of this section 3.2, the fair
market value of a share of company common stock shall be the mean between the
highest and lowest quoted selling price per share for a 100 share lot of common
stock of the company on the composite tape of New York Stock Exchange issues on
the date of payment to the trustee.

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<PAGE>

3.3 PROFIT AND DEDUCTION LIMITATIONS. Each employer's aggregate
contributions under the plan for any plan year in no event shall exceed an
amount equal to the maximum amount deductible on account thereof by the employer
as an expense for purposes of federal taxes on income for the fiscal year of the
employer for which such deduction is taken.

3.4 ALLOCATION OF EMPLOYER MATCHING CONTRIBUTIONS. Subject to the
limitations of this Article 3 and Article 8, employer matching contributions
made for the benefit of participants employed by such employer (plus any
forfeitures applied to reduce such contributions) shall be allocated as of the
last day of the plan year among the employer contributions accounts of the
participants who are employed by such employer as of the last day of the plan
year (and who are not on an unpaid leave of absence from such employer on such
date), based on such participant's basic salary reduction contributions.

3.5 VERIFICATION OF EMPLOYER CONTRIBUTIONS. The certificate of an
independent accountant selected by the company as to the correctness of any
amounts or calculations relating to an employer's contributions under the plan
for any plan year shall be conclusive on all persons.

3.6 COMPENSATION. For purposes of the plan, a participant's
"compensation" means his or her total compensation for services rendered to an
employer as an employee, including overtime, bonuses and commissions but
excluding:

(a) Any deferred compensation, including any amounts contributed
by the employers for the participant's benefit under this plan or any
other profit sharing, pension or other retirement or benefit plan
maintained by an employer; provided that the salary reduction
contributions elected by the participant and made to this plan and to
any other plan qualified under Section 401(k) or Section 125 of the
Code shall be included in his or her compensation;

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<PAGE>

(b) Any reimbursements for travel expenses, relocation
allowances, educational assistance allowances or other special
allowances and awards;

(d) Any severance pay received as a result of participant's
termination of employment;

(e) Any compensation paid or payable to the participant, or to
any governmental body or agency on account of the participant, under
the terms of any state, federal or foreign law requiring the payment
of such compensation because of the participant's voluntary or
involuntary termination of employment with an employer; and

(f) All compensation in excess of $160,000, or such other
maximum amount as may be determined from time to time by the Secretary
of the Treasury or his or her delegate or by law.

ARTICLE 4

PARTICIPANT CONTRIBUTIONS

4.1 PARTICIPANT ELECTED SALARY REDUCTION CONTRIBUTIONS. Subject to
the conditions and limitations of this Article 4 and Article 8, with respect to
each plan year each active participant may elect to reduce his or her
compensation from his or her employer by an amount equal to not less than one
percent nor more than ten percent (in whole multiples of one percent) of his or
her compensation for such plan year, and his or her employer shall, in
accordance with subsection 3.1(b), contribute the amount of each such reduction
to the plan on his or her behalf as a "salary reduction contribution".
Notwithstanding any other provision of the plan to the contrary, a participant
may not make salary reduction contributions to the plan in any plan year which,
when aggregated with salary reduction contributions or other elective deferrals
under all other plans, con-

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<PAGE>

tracts or arrangements maintained by a Stone Container Company in which such
participant participates, are in excess of $9,500 (or such other maximum amount
as may be permitted from time to time by the Secretary of the Treasury or the
Secretary's delegate or by law with respect to such plan year), or such lesser
amount as may be determined by the plan administrator in order to ensure
compliance with section 8.4. Salary reduction contributions made on behalf of a
participant for a plan year which are not in excess of five percent of his or
her compensation for such plan year shall be eligible for the employer matching
contribution provided for in subsection 3.1(a). Each participant shall
initially elect his or her rate of salary reduction contributions pursuant to
the participant's written election described in section 2.1. A participant may
elect to discontinue making salary reduction contributions as of any pay day or
to change the rate of his or her salary reduction contributions (within the
limits specified above) as of any January 1 or July 1 by filing a superseding
written election with the plan administrator on such form, in such manner and at
such time as the plan administrator shall require. A participant who has
discontinued making salary reduction contributions may elect to resume making
salary reduction contributions as of the next following January 1 or July 1 by
filing a superseding written election with the plan administrator on such form,
in such manner and at such time as the plan administrator shall require. A
participant who is reemployed by an employer shall be permitted to resume making
salary reduction contributions to the plan on the first date of the next
enrollment period following the date of his or her resumption of employment by
filing an election with the plan administrator on such form, in such manner and
at such time as the plan administrator shall require. Notwithstanding anything
in the plan to the contrary, a participant may initially elect his or her rate
of salary reduction contributions or to discontinue or resume

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<PAGE>

making salary reduction contributions or to change the rate of his or her salary
reduction contributions by means of authorized telephonic voice response
followed by filing a written election with the plan administrator on such form,
in such manner and at such time as the plan administrator shall require.

4.2 PAYMENT OF PARTICIPANT CONTRIBUTIONS. A participant's salary
reduction contributions may be made by regular payroll deductions (in multiples
of one percent) or in any other way approved by the plan administrator; provided
that all participant contributions for a plan year must be made no later than 30
days after the end of that plan year. Participant salary reduction
contributions will be paid to the trust fund as soon as practicable after the
date made or deducted.

4.3 ROLLOVER CONTRIBUTIONS. The plan administrator may, in
accordance with Section 402(c) of the Code, permit any employee of an employer
to make a qualifying rollover contribution to the plan. For distributions
received by the employee on and after January 1, 1993, a "qualifying rollover
contribution" means the contribution to the plan by an employee of a portion or
all of an eligible rollover distribution (as defined in Section 402(f)(2)(A) or
as referred to in Section 401(a)(31)(c) of the Code). (With respect to
distributions received prior to January 1, 1993, a qualifying rollover
distribution means the contribution to the plan by an employee of a portion or
all of a qualifying total distribution (as defined in Section 401(a)(5)(E)(i))
or Rollover Contribution (as defined prior to January 1, 1993 in Section
408(d)(7) of the Code). A qualifying rollover contribution to be made by an
employee must be made to the trust, in care of the plan administrator, by not
later than the sixtieth day following the day upon which the employee received
the distribution with respect to which the qualifying rollover contribution is
made. The plan administrator shall refuse to permit the contribution to the
plan of property other

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than money (and shall require instead that the property be sold and the proceeds
contributed). If an employee makes a qualifying rollover contribution on a date
other than an accounting date (as defined in section 5.2), a segregated account
shall be established on such date on his behalf until the next accounting date
under the plan to reflect the income, losses appreciation and depreciation
attributable thereto until such accounting date. A participant's qualifying
rollover contribution shall be credited to the participant's rollover account
(defined in section 5.1(c)) as of the accounting date coincident with or next
following the date the contribution is made.

4.4 TRANSFERRED BENEFITS. If an employee of an employer had
previously participated in any other qualified pension, profit sharing, stock
bonus or other retirement or employee benefit plan and such other plan permits
the transfer to this plan of the vested portion of such employee's benefits
under such other plan, and if so directed by the plan administrator in its
discretion, the trustee shall accept a transfer of cash to this plan equal to
the vested benefits of such employee under such other plan which are being
transferred to this plan. No amounts shall be transferred to this plan from any
other plan if the accrued benefit payable to the employee under such other plan
must be provided in the form of a qualified joint and survivor annuity or if a
qualified preretirement survivor annuity must be provided to the surviving
spouse of such employee with respect to such accrued benefit unless a supplement
is adopted for the purposes of preserving the optional forms of payment that are
applicable to such transferred amount. If the date on which such transferred
benefit is received by the trustee is not an accounting date, a segregated
account shall be established on such date on behalf of the covered employee
until the next accounting date under the plan to reflect the income, losses,
appreciation and depreciation attributable thereto until such accounting date.

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<PAGE>

The participant's transferred benefits (as adjusted to reflect the investment
experience of a segregated account, if initially credited to a segregated
account) shall be credited to his rollover account (or any other applicable
account as designated by the plan administrator) as of the accounting date
coincident with or next following the date the transfer is made.

4.5 RESTRICTED PARTICIPATION. For purposes of the plan, a
participant with respect to whom a qualifying rollover contribution or a
transfer of benefits is made in accordance with section 4.3 or 4.4,
respectively, shall not be eligible to make salary reduction contributions or
have employer contributions made on his or her behalf before becoming an active
participant for all purposes of the plan in accordance with section 2.1 of the
plan.

ARTICLE 5

PLAN ACCOUNTING AND INVESTMENT FUNDS

5.1 SEPARATE PARTICIPANT ACCOUNTS. The plan administrator will
establish and maintain the following separate accounts with respect to plan
participants:

(a) An "employer contributions account" shall be maintained in
the name of each participant which will reflect the employer matching
contributions made on his or her behalf to the plan and the income,
losses, appreciation and depreciation attributable thereto.

(b) A "salary reduction contributions account" shall be
maintained in the name of each participant which will reflect his or
her salary reduction contributions made to the plan, and the income,
losses, appreciation and depreciation attributable thereto.

(c) A "rollover account" shall be maintained on behalf of a plan
participant, including a participant whose participation is restricted
in accordance with section 4.5, which shall reflect the rollover
contributions and transferred benefits made to the plan for

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<PAGE>

his or her benefit in accordance with section 4.3 or 4.4 of the plan.

The plan administrator also may maintain such other accounts in the names of
participants as it considers desirable. Unless the context indicates otherwise,
reference in the plan to a participant's accounts or account balances shall
refer to all accounts maintained in his or her name under the plan. The
maintenance of separate accounts as provided above shall not require any
physical segregation of the trust fund with respect to such accounts.
Participants shall at all times have 100 percent vested and nonforfeitable
interests in their salary reduction contributions account and rollover account
and shall have vested and nonforfeitable interests in their employer
contributions account as provided in section 6.2 of the plan.

5.2 ACCOUNTING DATES. An "accounting date" is the last day of each
month, the date of the termination or any partial termination of the plan and
any other date designated as such by the plan administrator. The one month
period (or shorter period in the case of a special accounting date) ending on
each accounting date is sometimes referred to herein as an "accounting period".

5.3 DATE OF CREDITING CONTRIBUTIONS AND FORFEITURES. All participant
contributions made for any pay period ending during an accounting period will be
considered to have been made in cash and will be credited to the proper
participant's accounts on the accounting date which ends that accounting period,
regardless of when such contributions are actually paid to the trust fund;
provided that if the trustee or an investment manager with respect to an
investment fund (as described in section 5.4) maintains participants' accounts
and credits contributions received more frequently than monthly, contributions
invested in that investment fund will be considered made and will be credited as
provided in accordance with the accounting rules in effect with

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<PAGE>

respect to that investment fund. All employer contributions made for any plan
year will be credited to the proper participant's accounts on the accounting
date which coincides with the end of the plan year, regardless of when such
contributions are actually paid to the trust. Each forfeiture arising in any
plan year (as described in section 6.3) shall be used to reinstate the
forfeitures of any reemployed participant (as described in section 6A.2) and, to
the extent there are any amounts in excess of the amount necessary for
reinstating the forfeitures of reemployed participants for any plan year, such
excess forfeitures shall be used to fund the employer matching contributions for
the plan year.

5.4 INVESTMENT FUNDS. From time to time the company may cause one or
more investment funds (the "investment funds") to be established within the
trust fund for the investment of participants' accounts. The continued
availability of any investment fund is necessarily conditioned upon the terms
and conditions of the applicable investment management agreements and other
investment arrangements, and the continued availability of investment funds
established cannot be assured on the same terms and conditions as may apply from
time to time. As of the effective date, the following investment funds are
being maintained hereunder:

(a) SHORT TERM INVESTMENT FUND. This fund is invested in such
short term investments as shall be chosen by the trustee.

(b) FIXED INVESTMENT FUND. This fund is invested in fixed
investments as shall be chosen by the company or by such investment
manager selected by the company.

(c) EQUITY FUND. This fund is invested in such common stocks
and other securities as shall be chosen by the company or by such
investment manager(s) selected by the company.

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<PAGE>

(d) COMPANY STOCK FUND. This fund is invested solely in common
stock of the company. No fractional shares of common stock are held.

(e) BALANCED FUND. This fund is invested in such common stocks,
preferred stocks and corporate and government bonds as chosen by the
company or by such investment manager(s) selected by the company.

(f) INTERNATIONAL EQUITY FUND. This fund is invested in such
common stocks of companies located primarily outside of the United
States as shall be chosen by the company or by such investment
manager(s) selected by the company.

(g) SMALL COMPANY GROWTH FUND. This fund is invested in such
common stocks and other securities as shall be chosen by the company
or by such investment manager(s) selected by the company.

The company may direct the establishment of additional investment funds or may
terminate any investment fund as it deems appropriate and in the best interest
of plan participants.

5.5 INVESTMENT ELECTIONS. Except as provided below, each participant
may elect, in accordance with uniform rules established by the plan
administrator and on a form provided by it or by any other procedure established
by the plan administrator for this purpose (including, without limitation, by
authorized telephonic voice response), to have his or her account balances as of
that date (after all adjustments as of that date have been made) invested in
accordance with his or her election entirely in one of the investment funds or
partially in each of two or more of the investment funds (so that a multiple of
one percent of each of his or her account balances is invested as of such date
in each investment fund); provided, however, that a participant may not elect to
invest his or her accounts in the Short-Term Investment Fund; and provided,
further, that a participant's investment in the Small Company Growth Fund is
limited to

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twenty-five (25%) of his or her account balance under the plan. Investment
directions may be changed or revoked effective as of the first day of any
calendar month, by filing a written election on such form, in such manner and at
such time as the plan administrator may prescribe or by any other procedure
established by the plan administrator for this purpose (including, without
limitation, by authorized telephonic voice response), and such direction shall
be implemented, based on a participant's account balances valued as of the next
following accounting date, as soon as practicable after such accounting date.
Similarly, as of the first day of any calendar month, and subject to the
limitations set forth in this section 5.5, each participant may elect, in
accordance with uniform rules established by the plan administrator and on a
form provided by it or by any other procedure established by the plan
administrator for this purpose (including, without limitation, by authorized
telephonic voice response), to have his or her future contributions made on his
or her behalf (prior to any subsequent election such participant may make)
invested in accordance with his or her election entirely in one of the
investment funds or partially in each of two or more of the investment funds (so
that a multiple of one percent of each of his or her account balances is
invested as of such date in each of the investment funds). During any period
for which a participant has not made an investment election, his or her accounts
and contributions made on his or her behalf shall be invested in the Fixed
Investment Fund. Notwithstanding the foregoing or any other provision of the
plan to the contrary: (a) an employer matching contribution for any plan year
made in common stock of the company shall be invested in the Company Stock Fund
(and an employer matching contribution for any plan year made in cash shall be
held in the Short Term Investment Fund until it is administratively feasible for
the trustee to invest such cash contributions (and earnings thereon) in the
Company

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<PAGE>

Stock Fund) and no such contributions or any amounts attributable thereto shall
be subject to any investment election by the participant until the participant
attains age fifty-five, and (b) the trustee may at the trustee's sole discretion
invest some or all of a participant's contributions to the plan in the
Short-Term Investment Fund until it is administratively feasible to allocate
such contributions among the other investment funds in accordance with the
participant's investment election or, in the absence of the participant's
investment election, to the Fixed Investment Fund. The plan is intended to
constitute a plan described in Section 404(c) of the Employee Retirement Income
Security Act of 1974, as amended, and Title 29 of the CODE OF FEDERAL
REGULATIONS Section 2550.404c-1. As such, the participant or beneficiary will
be provided, or have the opportunity to obtain, sufficient information, as
required by such regulations, to make informed decisions with regard to
investment alternatives under the plan and incidents of ownership appurtenant to
such investments, from the plan fiduciary.

5.6 INVESTMENT RISKS. Completion of any investment election by a
participant shall constitute an agreement by such participant to assume
responsibility for the risk of investment of his account in accordance with such
investment election, it being expressly understood that all of the investment
funds involve some measure of investment risk including the risk of diminution
or loss of the principal amount of any investment. All fiduciary responsibility
with respect to the allocation of participant accounts between various funds
shall be considered to be delegated to the participant who directs the
investment of participant's contributions and accounts.

5.7 VOTING OF COMPANY COMMON STOCK AND OTHER RIGHTS. Company common
stock shall be held by the trustee subject to the following rules and
conditions:

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(a) GENERALLY. A participant is entitled to direct the exercise
of voting rights or other rights with respect to the whole shares of
stock allocated to said participant's account. The company shall
provide to each participant materials pertaining to the exercise of
such rights containing all the information distributed to shareholders
as part of its distribution of such information to shareholders. A
participant shall have the opportunity to exercise any such rights
within the same time period as shareholders of the company. Each
participant will have the right to direct the trustee in writing as to
the manner in which the shares of common stock held by the trustee and
allocated to the participant's account are to be voted at each meeting
of the shareholders of the company, and the trustee shall vote such
shares in accordance with such direction. If the trustee does not
receive instructions with respect to voting such shares of common
stock, the trustee will vote such stock in the same proportion as the
shares of common stock with respect to which it has received
instruction, and the trustee will have no discretion in such matters.
In the exercise of voting rights, votes representing fractional shares
of stock and shares of stock held in unallocated inventory shall be
voted in the same ratio for the election of directors and for and
against each issue as the applicable vote directed by participants
with respect to whole shares of stock. The instructions received by
the trustee will be held by the trustee in confidence and shall not be
divulged or released to any person, including officers or employees of
the company.

(b) STOCK DIVIDENDS, SPLITS, RIGHTS, WARRANTS, OPTIONS AND OTHER
CAPITAL REORGANIZATIONS. Any securities received by the trustee as a
stock split or dividend or as a result of a reorganization or other
recapitalization of the company shall be allocated as of each
accounting date in the same manner as the stock to which it is
attributable is then allocated. In the event any rights, warrants or
options are issued on common shares or other securities of the company
held in the trust, the trustee shall exercise them for the acquisition
of additional common shares or other securities of the company to the
extent that cash is then available. Any common shares or other
securities of the company acquired in this fashion shall be treated as
common shares or other securities of the company bought by the trustee
for the net price paid.

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Any rights, warrants, options, common shares, or other securities of
the company which cannot be exercised for lack of cash may be sold by
the trustee and the proceeds treated as a current cash dividend
received on common shares or other securities of the company.

(c) TENDER OFFER FOR COMPANY COMMON STOCK. The company will
notify each participant and utilize its best efforts to timely
distribute or cause to be distributed to him or her such information
as will be distributed to stockholders of the company in connection
with any such tender or exchange offer. Each participant will have
the right to instruct the trustee in writing as to the manner in which
to respond to a tender or exchange offer for any or all shares of
common stock credited to such participant's account, and the trustee
shall act in accordance with such direction. If the trustee does not
receive instructions from a participant regarding any such tender or
exchange offer for the common stock, the trustee shall have no
discretion in such matter and shall take no action with respect
thereto except to the extent required by law. Unallocated shares of
common stock will be tendered or exchanged by the trustee in the same
proportion as shares with respect to which participants have the right
of discretion are tendered or exchanged.

5.8 CHARGING PAYMENTS AND DISTRIBUTIONS. All payments, withdrawals
or other distributions made to or on behalf of a participant or his or her
beneficiary will be charged to the participant's accounts when made.

5.9 MONTHLY ADJUSTMENT OF PARTICIPANTS' ACCOUNTS. As of each
accounting date, the plan administrator shall adjust the account balances of
plan participants to reflect payments and monthly withdrawals of benefits,
adjustments in the values of the investment funds and the employer's and
participants' contributions, as follows:

(a) First, all payments, withdrawals and transfers of benefits
that have not been charged previously shall be charged to the proper
accounts;

(b) Next, participants' salary reduction contributions, if any,
that are to be credited as of that

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date shall be credited to the proper participants' salary reduction
contributions accounts;

(c) Next, the employer's contributions and forfeitures that are
to be credited as of that date shall be credited to the proper
participants' employer contributions accounts; and

(d) Next, the accounts of each participant shall be credited
with his or her pro rata share of any increase, or charged with his or
her pro rata share of any decrease, since the next preceding
accounting date in the value of the adjusted net worth (as defined
below) of each investment fund in which he or she has an interest as
of that date (after taking into account any charges in accordance with
subsection (a) next above); provided that if contributions invested in
any particular investment fund are credited more frequently than
monthly, each participant's accounts will be credited with increases
or decreases in the adjusted net worth of that investment fund in
accordance with the accounting rules in effect with respect to that
investment fund.

The "adjusted net worth" of an investment fund as of any date means the then net
worth of the investment fund as determined by the trustee, less an amount equal
to the sum of any employer contributions and participants' salary reduction
contributions to be credited as of such date but not yet credited to the
accounts of participants.

5.10 STATEMENT OF ACCOUNTS. As soon as practicable after the last day
of each plan year, and at such other times as the plan administrator considers
desirable, each participant will be furnished with a statement reflecting the
condition of his or her accounts as of that date including (i) the amount of
company stock and the cash dividends thereon credited to the participant's
account at the beginning of such plan year, (ii) any change in the amount of
company common stock credited to such account during such plan year and (iii)
the amount of company stock credited to the participant's account at the end of
such plan year. No participant, except the plan administrator, shall

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have the right to inspect the records reflecting the accounts of any other
participant. Neither the maintenance of accounts, the allocation of credits to
the accounts, nor the statement of accounts will operate to vest in any
participant any right or interest in or to any assets of the trust except as the
plan and trust specifically provide.

5.11 EXPENSES. To the extent not paid by the company, all costs and
expenses incurred in connection with the general administration of the plan
shall be allocated among the investment funds proportionately based on the
amount invested in all funds as of the accounting date preceding the date of
allocation. All costs and expenses directly identifiable to one fund shall be
allocated to that fund.

ARTICLE 6

DISTRIBUTION OF ACCOUNT BALANCES

6.1 RETIREMENT, DEATH OR DISABILITY. If a participant's employment
with the Stone Container Companies is terminated because of retirement at or
after he or she has attained age 65, or death while in the employ of the Stone
Container Companies, or if a participant ceases to be actively employed with the
Stone Container Companies because of such participant's permanent disability (as
defined below), the balance in his or her plan accounts as of the accounting
date coincident with or next following his or her termination date (after all
adjustments required under the plan as of that date have been made, but subject
to any further adjustments required under the plan prior to complete
distribution of the participant's accounts) along with any contributions made
previously by or on behalf of such participant but not credited to his or her
accounts, shall be fully vested and nonforfeitable and shall be distributable to
the participant or, in the event of the participant's death, to his

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or her beneficiary in accordance with section 6.4. For purposes of the plan, a
participant shall be deemed to have incurred a "permanent disability" if the
participant is qualified to receive disability income benefits under an
employer's long-term disability income plan.

6.2 RESIGNATION OR DISMISSAL. If a participant resigns or is
dismissed from the employ of the Stone Container Companies before attainment of
age 65 and before his or her death or permanent disability, the balance of the
participant's salary reductions account, rollover account, if any, and his or
her vested and nonforfeitable interest in his or her employer contributions
account, as of the accounting date coincident with or next following the date of
his or her termination of employment (after all adjustments required under the
plan as of that date have been made, but subject to any further adjustments
required under the plan prior to complete distribution of his or her accounts),
along with any contributions made by him or her previously but not credited to
an appropriate account shall be distributable to the participant in accordance
with section 6.4. A participant's vested and nonforfeitable interest in his or
her employer contributions account shall be the product of (i) the balance of
his or her employer contributions account and (ii) the vested percentage
determined in accordance with the following table based upon the participant's
years of service (as defined in section 2.2):

If the participant's His or her vested
number of full years and nonforfeitable
of service equals: percentage shall be:
------------------ --------------------

Less than five 0%
Five or more 100%

Notwithstanding the foregoing, the vested and nonforfeitable interest of each
participant who completes at least one hour of

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service as a covered employee on or after January 1, 1997 and has at least three
years of service as of March 2, 1997 (determined without regard to the
exceptions in Code Section 411(a)(4)) in his employer contributions account,
shall at all times be 100 percent, and the vested and nonforfeitable interest of
each participant who completes at least one hour of service as a covered
employee on or after January 1, 1997 with respect to his or her account balance
attributable to employer contributions determined as of January 1, 1997 shall at
all times be 100 percent.

6.3 FORFEITURES. If a participant resigns or is dismissed from the
employ of the Stone Container Companies before he or she is fully vested (and
before his or her attainment of age 65, death or permanent disability) the
portion of his or her employer contributions account to which he or she is not
entitled shall be a "forfeiture". Forfeitures shall be used to reduce the
employer matching contributions to the plan. If the participant with respect to
whom a forfeiture arose is reemployed by a Stone Container Company before he or
she incurs five consecutive one-year breaks in service, the forfeiture shall be
reinstated as provided in section 6A.2 out of forfeitures arising in the year of
the participant's reemployment or, if such forfeitures are insufficient for this
purpose, out of a special employer contribution made for this purpose. A
"one-year break in service" shall occur on the last day of a 12-month period
commencing on a participant's severance from service date and ending on the day
prior to his or her date of reemployment with a Stone Container Company.

6.4 METHOD OF BENEFIT PAYMENT. A participant's account balances
which are distributable under section 6.1 or 6.2 shall be paid to or for the
benefit of the participant or his or her beneficiary as soon as practicable
following the last day of the accounting period in which his or her employment
with the

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Stone Container Companies terminates for any reason (the "settlement date") by
payment in a lump sum consisting of cash and/or company common stock. To the
extent a participant's account balance is invested in the Company Stock Fund at
a settlement date, all full shares credited to the participant's account will be
transferred to his or her name, or, in the event of his or her death to the name
of his or her beneficiary. All fractional shares credited to a participant's
account shall be liquidated at fair market value on the appropriate settlement
date and the proceeds, together with such full shares of company common stock
shall be distributed in accordance with this section.

6.5 TIME OF BENEFIT PAYMENT. Payment of a participant's benefits
to a participant or his or her beneficiary normally will be made within a
reasonable period of time after a participant's death or request for
distribution by a participant after his or her settlement date, but not later
than 60 days after the end of the plan year in which occurs the participant's
death or the later of the participant's termination of employment or his or
her attainment of age 65 years; provided that payment of his or her account
balances must commence no later than April 1 of the calendar year following
the calendar year in which he or she attains age 70 1/2 years. No
distribution of any benefit shall be made prior to the participant's
attainment of age 65 unless (i) the participant gives his or her written
consent to such distribution or (ii) the value of participant's total accrued
benefit is $3,500 or less.

6.6 PAYMENT OF SMALL AMOUNTS. If as of the accounting date
immediately preceding a participant's settlement date the participant's account
balance is $3,500 or less, then such account balance shall be immediately paid
to such participant or beneficiary in a lump sum; provided, that with respect to
plan years commencing on and after January 1, 1998, the term "$5,000"

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<PAGE>

shall be substituted for the term "$3,500" in the first part of this sentence.

6.7 PAYMENT BY ANNUITY PURCHASE. The purchase for a participant,
contingent annuitant or beneficiary and distribution to that person of an
annuity contract or annuity certificate to provide such person's benefits shall
constitute the complete payment of that person's benefits under the plan.

6.8 DISTRIBUTIONS TO ALTERNATE PAYEES. Notwithstanding the foregoing
provisions of Article 6, in the event that the plan administrator determines
that benefits are payable to an alternate payee pursuant to the terms of a court
order determined to be a qualified domestic relations order (in accordance with
section 9.3), the amounts so payable shall be determined and, unless otherwise
directed in such court order, shall be paid in a lump sum as soon as practicable
thereafter.

6.9 DESIGNATED BENEFICIARIES. A participant may from time to time
designate a beneficiary or beneficiaries to whom the participant's benefits will
be distributed in the event of the participant's death prior to complete payment
of his or her benefits under the plan. A participant may designate contingent
or successive beneficiaries and may name individuals, legal persons or entities,
trusts, estates, trustees or other legal representatives as beneficiaries.
Notwithstanding the foregoing or any beneficiary designation filed by a
participant, if a participant is legally married at the date of his or her
death, the participant's surviving spouse will be his or her designated
beneficiary for all purposes of the plan unless the surviving spouse consents in
writing to the participant's designation of another beneficiary. Beneficiary
designations must be completed and filed with the plan administrator during the
participant's lifetime. A beneficiary designation properly completed and filed
will cancel all such designations filed earlier. The consent of a surviving
spouse to the participant's designation of another beneficiary

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<PAGE>

must be in writing, must designate a beneficiary or a form of benefit which may
not be changed without further spousal consent unless the consent expressly
permits designations to participant without further spousal consent, must
acknowledge the effect of such designation, and must be witnessed by a plan
representative or a notary public.

6.10 PAYMENTS TO SUBSTITUTE BENEFICIARIES. If a participant fails to
designate a beneficiary before his or her death or if the beneficiary designated
by a participant dies before the date of the participant's death or before
complete payment of the participant's benefits, the plan administrator in its
discretion may direct the trustee to pay the participant's benefits to either
one or more of the participant's relatives by blood, adoption or marriage, in
such proportions as the plan administrator determines, or to the legal
representative or representatives of the estate of the last to die of the
participant and his or her designated beneficiary. Each participant and any
other person entitled to benefits under the plan must from time to time file
with the plan administrator in writing his or her current post office address.
Neither the employers nor the plan administrator is required to search for or
locate any participant or other person entitled to benefits under the plan. If
the plan administrator notifies a person entitled to benefits under the plan
that he or she is entitled to a payment at his or her last post office address
filed with the plan administrator and the participant or other person entitled
to benefits fails to claim his or her benefits or make his or her whereabouts
known to the plan administrator within three years after the notification, his
or her benefits will be disposed of, to the extent permitted by federal law, as
follows:

(a) If the whereabouts of the participant then is unknown to the
plan administrator, but the whereabouts of the participant's
designated beneficiary then is

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<PAGE>

known to the plan administrator, payment may be made to such
designated beneficiary.

(b) If the whereabouts of the participant and his or her
designated beneficiaries then is unknown to the plan administrator,
but the whereabouts of one or more relatives by blood, adoption or
marriage of the participant is known to the plan administrator,
payment may be made to any one or more of such relatives and in such
proportions as the plan administrator determines.

Notwithstanding the foregoing, if a participant's benefits cannot be paid as
provided above they shall be forfeited by allocating such benefits to the other
participants, but such benefits nevertheless will be reinstated if a claim is
made by the participant or beneficiary.

6.11 DIRECT ROLLOVER OF ELIGIBLE ROLLOVER DISTRIBUTIONS.

(a) With respect to distributions made on or after January 1,
1993, notwithstanding any provision of the plan to the contrary that
would otherwise limit a distributee's election under this Article, a
distributee may elect, at the time and in the manner prescribed by the
plan administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by
the distributee in a direct rollover.

(b) An "eligible rollover distribution" is any distribution of
all or any portion of the balance to the credit of the distributee,
except that an eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or
life expectancy) of the distributee or the joint lives (or joint life
expectancies) of the distributee and the distributee's designated
beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Section
401(a)(9) of the Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion
for net unrealized appreciation with respect to employer securities).

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<PAGE>

(c) An "eligible retirement plan" is an individual retirement
account described in Section 408(a) of the Code, an individual
retirement annuity described in Section 408(b) of the Code, an annuity
plan described in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However, in the case of
an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual
retirement annuity.

(d) A "distributee" includes an employee or former employee. In
addition, the employee's or former employee's surviving spouse and the
employee's or former employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined
in Section 414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.

(e) A "direct rollover" is a payment by the plan to the eligible
retirement plan specified by the distributee.

ARTICLE 6A
REEMPLOYMENT
6A.1 REHIRED EMPLOYEE OR PARTICIPANT. If an employee or a participant
who has no vested benefit under the plan terminates employment with all of the
Stone Container Companies and is subsequently reemployed by a Stone Container
Company, his or her years of service accrued prior to his or her termination of
employment shall not be reinstated for purposes of sections 2.1 or 6.2 if the
number of consecutive one-year breaks in service within such period exceeds
five. In all other cases, an employee's or participant's prior years of service
shall be reinstated as of the date he or she is reemployed by a Stone Container
Company. In no event shall years of service occurring after a participant
incurs five consecutive one-year breaks in service be used to determine the
vested and nonforfeitable interest of such participant in his or her employer
contribution

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<PAGE>

account as of his or her prior termination of employment which has become a
forfeiture. A rehired employee shall become a participant and a rehired
participant shall again become a participant as of the date he or she meets or
again meets the requirements of section 2.1.

6A.2 REINSTATEMENT OF FORFEITURES. If a participant whose employment
had terminated because of resignation or dismissal is reemployed by a Stone
Container Company prior to having incurred five consecutive one-year breaks in
service (as defined in section 6.3), any forfeiture which resulted from his or
her prior resignation or dismissal shall be reinstated out of forfeitures
arising in the year of the participant's reemployment or, if such forfeitures
are insufficient for this purpose, out of a special employer contribution to his
or her employer contributions account as of the accounting date coincident with
or next following his or her date of rehire. If such participant subsequently
terminates employment because of resignation or dismissal and the participant is
not entitled to the full balance in his or her accounts, the amount to be
distributed under section 6.2 from his or her employer contributions account
will be determined in accordance with the following:

(a) First, the amount of the distribution received by the
participant from his or her employer contributions account because of
his or her prior resignation or dismissal shall be added to the
balance in his or her employer contributions account as of the
accounting date coincident with or next preceding his or her
subsequent employment termination date.

(b) Next, the amount determined under subsection (a) above shall
be multiplied by the vesting percentage applicable at his or her
subsequent employment termination date under section 6.2.

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<PAGE>

amount of the distribution received by the participant from his or her
employer contributions account because of his or her prior resignation
or dismissal.

The remaining portion of the participant's employer contributions account will
be treated as a forfeiture and will be subject to the provisions of section 6.3.

ARTICLE 7

HARDSHIP WITHDRAWALS AND LOANS DURING EMPLOYMENT

7.1 HARDSHIP WITHDRAWAL OF EMPLOYER AND SALARY REDUCTION
CONTRIBUTIONS. A participant who is experiencing a financial hardship may
request and obtain a withdrawal of all or any portion of the vested portion of
his or her employer matching contributions account and salary reduction
contributions account as of December 31, 1988 plus his or her aggregate salary
reduction contributions, but not earnings thereon, made on or after January 1,
1989, by filing a written request with the plan administrator; provided, that no
such withdrawal may be made from the portion of a participant's accounts which
is invested in the Company Stock Fund on the date of the withdrawal. Each such
request must describe the hardship for which the withdrawal is requested. A
withdrawal shall be conclusively considered on account of financial hardship if
it is necessary in light of the participant's immediate and heavy financial need
to cover the following expenses:

(a) expenses for medical care described in Code Section 213(d)
previously incurred by the employee, the employee's spouse or any
dependents of the employee (as defined in Code Section 152) or
necessary for these persons to obtain medical care described in Code
Section 213(d);

(b) costs directly related to the purchase of the employee's
principal residence (but not regular mortgage payments);

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<PAGE>

(c) tuition and related educational fees for the next twelve
months of post-secondary education for the employee, spouse or
dependents;

(d) preventing foreclosure on or eviction from the employee's
principal residence.

Further, the hardship withdrawal cannot exceed the amount needed nor
be less than $500.00, and the employee must have obtained all distributions and
all nontaxable loans currently available under all plans maintained by the
employer. The participant's contributions under all plans are suspended for a
12-month period after the hardship withdrawal. The maximum permissible amount
of pretax contributions for the calendar year following the withdrawal is
furthermore reduced by the amount of pretax contributions made during the year
in which the hardship withdrawal occurred. No participant withdrawals will be
permitted more frequently than once in any twelve-month period. The plan
administrator will have discretion to grant or deny any such requests for
withdrawals in accordance with the foregoing and to establish rules or
guidelines in responding to such requests as it considers appropriate.

7.2 LOANS TO PARTICIPANTS. It is the purpose of the plan to provide
funds for participants when they leave the employ of the employers, and no
participant loans from the plan are permitted.

7.3 NO REPRESENTATION REGARDING TAX EFFECTS OF WITHDRAWALS. Neither
the employers, the plan administrator, the trustee nor any other person shall be
construed as representing the tax effects of any withdrawals in accordance with
this Article. It shall be the responsibility of participants requesting
withdrawals to consider the tax effects of such withdrawals.

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<PAGE>

ARTICLE 8

MAXIMUM CONTRIBUTIONS

8.1 CONTRIBUTION LIMITATIONS. Section 415 of the Code imposes
certain limitations on the amount of contributions that may be allocated to a
participant under a defined contribution plan (as defined in Section 414(i) of
the Code) maintained by his or her employer. If a participant in a defined
contribution plan maintained by his or her employer also is a participant in a
defined benefit plan (as defined in Section 414(j) of the Code) maintained by
such employer, Section 415 of the Code imposes certain combined limitations as
to the aggregate amount of contributions and benefits that may be provided for
the participant under both types of plans. This plan is a defined contribution
plan and, therefore, each participant in the plan shall be subject to the
maximum contribution and benefit limitations set forth in section 8.2 or section
8.3, if applicable, irrespective of any other provisions of the plan. For
purposes of Section 415 of the Code and this Article 8, the "limitation year"
with respect to this plan is the plan year, and a participant's "total
compensation" means, with respect to any limitation year, the compensation
(within the meaning of Section 415 of the Code and regulations promulgated
thereunder) paid to the participant during that year for services rendered to
the employer. In applying the limitations set forth in sections 8.2 and 8.3,
reference to the plan shall mean the plan and all other defined contribution
plans (whether or not terminated) maintained by the employer and reference to a
defined benefit plan maintained by the employer shall mean that plan and all
other defined benefit plans (whether or not terminated) maintained by the
employer. For purposes of this Article 8, the term "employer", shall include
the company and any other member of a controlled group of corporations or

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<PAGE>

trades or businesses under common control (as defined at Section 414(b), (k) or
(m) of the Code) of which the company is a member.

8.2 PARTICIPANT COVERED BY DEFINED CONTRIBUTION PLAN ONLY. If a
participant in the plan is not covered by a defined benefit plan maintained by
his or her employer, the annual addition (as defined below) which is allocated
to his or her accounts under this plan and under any other defined contribution
plans maintained by his or her employer shall not exceed the lesser of $30,000
(or such other maximum amount as may be permitted from time to time by the
Secretary of the Treasury or his or her delegate or by law effective January 1
of each year) or 25 percent of the participant's total compensation. In
applying the preceding limitation, the annual addition to a participant's
accounts under any such other defined contribution plan will be limited before
the annual addition to his or her account under this plan is limited. A
participant's "annual addition" for any plan year means the sum for that year of
(i) the contributions of his or her employer and forfeitures, if any, credited
to his or her accounts under the plan, and (ii) his or her contributions to his
or her accounts under the plan. Any excess contributions resulting from the
allocation of forfeitures, a reasonable error in estimating a participant's
annual earnings or such other limited facts and circumstances as the
Commissioner of the Internal Revenue Service may prescribe and not allocable to
a participant's accounts under the plan by reason of the limitations of this
section 8.2 or section 8.3 shall be disposed of as follows:

(a) If the participant is covered by the plan at the end of the
limitation year, the excess amount will be used to reduce the employer
contributions for such participant in the next limitation year, and
each succeeding limitation year if necessary;

(b) If after the application of subsection (a) above an excess
amount still exists and the participant is not covered by the plan at
the end of the limitation year, the excess amount shall be held
unallocated in a

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<PAGE>

suspense account and the suspense account shall be applied without
earnings to reduce future employer contributions for all remaining
participants in the next limitation year, and each succeeding
limitation year if necessary.

A participant's "annual addition" for any plan year means the sum for that year
of the following:

(a) EMPLOYER CONTRIBUTIONS. Employer contributions (including
elective contributions) credited to the participant's account under
the plan;

(b) FORFEITURES. Forfeitures credited to the participant's
account under the plan;

(c) PARTICIPANT VOLUNTARY CONTRIBUTIONS. The amount of the
participant's voluntary contributions to any related contribution or
defined benefit plan maintained by the employer (determined without
regard to rollover contributions, if any); and

(d) CERTIFIED MEDICAL EXPENSES FOR KEY EMPLOYEES. Contributions
allocated to any individual medical account which is part of a pension
or annuity plan. An individual medical account means any separate
account (i) which is established for a participant under a pension or
annuity plan and (ii) from which benefits described in Code Section
401(h) are payable solely to such participant, participant's spouse or
participant's dependents. In the case of key employees, any amount
attributable to a Code Section 419A(d) separate account for post
retirement medical or life insurance benefits for key employees shall
be treated as an annual addition to the plan for purposes of Code
Section 415(c). However, Code Section 415(c)(1) shall not apply to
any amount treated as an annual addition under the preceding sentence.

8.3 PARTICIPANT COVERED BY DEFINED CONTRIBUTION PLAN AND DEFINED
BENEFIT PLAN. If a participant in the plan also is a participant in a defined
benefit plan maintained by his or her employer, the contributions made on behalf
of the participant and the benefits payable to the participant shall be
determined in a manner consistent with Section 415 of the Code, as follows:

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<PAGE>

(a) A fraction shall be determined indicating the ratio of the
participant's annual additions under the defined contribution plans of
his or her employer for each plan year to the aggregate of the
"defined contribution limitation amount" in effect for each year of
the participant's employment by his or her employer. The "defined
contribution limitation amount" for any year shall be the lesser of
(i) 1.25 multiplied by the dollar limitation in effect under Section
415(c)(1)(A) of the Code for such year, provided that in any year in
which the plan would be a top-heavy plan if 90 percent were
substituted for 60 percent in section 13.2, 1.0 shall be substituted
for 1.25, or (ii) 1.4 multiplied by 25 percent of the participant's
total compensation for such year.

(b) A fraction shall also be determined which will equal the
benefits accrued or payable to or for such participant under the
defined benefit plans of his or her employer as of the end of the plan
year divided by the "defined benefit limitation amount" in effect for
that year. The "defined benefit limitation amount" for any plan year
shall be the lesser of (i) 1.25 multiplied by the dollar limitation in
effect under Section 415(b)(1)(A) of the Code for such year, provided
that in any year in which the plan would be a top-heavy plan if 90
percent were substituted for 60 percent in section 13.2, 1.0 shall be
substituted for 1.25, or (ii) 1.4 multiplied by 100 percent of the
participant's average annual total compensation for the three
consecutive plan years during which he or she actively participated in
a defined benefit plan of his or her employer and in which his or her
aggregate total compensation was the greatest; provided that such
amount shall be appropriately adjusted if necessary as provided in
Section 415(b) of the Code.

(c) The contributions under this plan and under any other
defined contribution plans of the employer will be adjusted to the
extent necessary (by first adjusting the contributions under such
other plans) so that the sum of the fractions determined with respect
to any participant in accordance with subsections (a) and (b) above
will not exceed 1.0 (or such other applicable maximum amount permitted
by law).

8.4 DISTRIBUTION OF EXCESS DEFERRALS. If, not later than the March 1
next following the end of a calendar year, a

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<PAGE>

participant notifies the plan administrator that the participant has made salary
deferral contributions to this plan and one or more other plans (whether
maintained by an employer or an unrelated company) in excess of $9,500 (or such
other maximum amount as may be permitted by law for such calendar year) during
such calendar year, and further notifies the plan administrator of the amount of
such excess allocated to this plan, such excess amount shall be paid to such
participant (along with any income allocable thereto) as soon as practicable
following such notification, but in any event by the April 15 following the
calendar year with respect to which such excess deferrals were made.

8.5 HIGHLY COMPENSATED EMPLOYEE. The term "highly compensated
employee" includes highly compensated active employees and highly compensated
former employees. A highly compensated active employee includes any employee
who performs service for the employer during the determination year and who
(i) for the preceding year, received compensation from the employer in excess of
$80,000 (as adjusted by the Secretary of the Treasury) and was in the top-paid
group of employees, or (ii) was a five-percent owner at any time during the
determination year or the preceding plan year. A highly compensated former
employee includes any employee who separated from service (or was deemed to have
separated) prior to the determination year, performs no service for the employer
during the determination year, and was a highly compensated active employee for
either the separation year or any determination year ending on or after the
employee's 55th birthday. The determination of who is a highly compensated
employee, including the determinations of the number and identity of employees
in the top-paid group, and the compensation that is considered, will be made in
accordance with Section 414(q) of the Code and the regulations thereunder.

8.6 LIMITATIONS ON ELECTIVE CONTRIBUTIONS. Elective contributions
shall be subject to the following nondiscrimination

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<PAGE>

standards and shall be adjusted, as provided below and after any adjustment
pursuant to section 8.4 above, to the extent necessary to comply with the
limitations set forth in Section 401(k) of the Code and the regulations
thereunder. For purposes of this section, the term "elective contribution"
shall mean any employer contribution made to the plan that (i) is subject to a
cash or deferred arrangement (as defined in Section 1.401(k)-1(a)(3) of the
Treasury regulations) and (ii) is immediately nonforfeitable. The salary
deferral contributions made pursuant to section 3.1 are elective contributions
for purposes of this section. The employer shall maintain records demonstrating
compliance with this section.

(a) ACTUAL DEFERRAL PERCENTAGE LIMITATION. In any plan year,
the actual deferral percentage for the group of eligible employees who
are highly compensated employees (the "highly compensated employees")
may not exceed the greater of the following:

(i) the actual deferral percentage of the group of eligible
employees who are not highly compensated employees (the
"non-highly compensated group") multiplied by 1.25, or

(ii) the lesser of the actual deferral percentage for the
non-highly compensated group multiplied by two or the actual
deferral percentage of the non-highly compensated group plus two
percentage points.

(b) ACTUAL DEFERRAL PERCENTAGE. The actual deferral percentage
for a specified group of eligible employees for any plan year shall be
the average of the ratios (computed, to the nearest one-hundredth of
one percent, separately for each participant in such group) of the
elective contributions, and amounts treated as elective contributions,
for such employee for such year to the employee's compensation taken
into account for such plan year during which the participant was an
eligible employee. For purposes of this section the following
additional rules shall apply:

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<PAGE>

(i) An elective contribution shall be taken into account
only if it relates to compensation that either (A) would have
been received by the participant in the plan year but for the
deferral election or (B) is attributable to services performed by
the participant in the plan year and would have been received by
the participant within 2 1/2 months after the close of the plan
year but for the deferral election. An elective contribution
that does not meet the foregoing requirements will not be tested
under Section 401(k) of the Code but must separately satisfy
Section 401(a)(4) of the Code for the plan year of allocation as
if it was the only nonelective employer contribution for the
year.

(ii) In the event this plan satisfies the requirement of
Sections 401(k), 401(a)(4) or 410(b) of the Code only if
aggregated with one or more other plans, or if one or more other
plans satisfy the requirements of such sections of the Code only
if aggregated with this plan, then this section shall be applied
by determining the actual deferral percentage of employees as if
all such plans were a single plan. In accordance with applicable
Treasury regulations, plans of the employers may be aggregated in
order to satisfy Section 401(k) of the Code but only if such
plans as aggregated satisfy the requirement of Section 410(b) of
the Code and provided that each plan has the same plan year.

(iii) Except as provided in applicable Treasury regulations,
the actual deferral percentage of a highly compensated employee
will be determined by treating all cash or deferred arrangements
of the employer (or an entity that is required to be aggregated
with the employer under Sections 414(b), (c), (m) or (o) of the
Code) under which the highly compensated employee is eligible as
a single arrangement. If the cash or deferral arrangements have
different plan years, all such arrangements ending with or within
the same calendar year will be treated as a single arrangement.

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<PAGE>

sated group does not satisfy one of the tests in subsection (a) above,
the plan administrator shall reduce the elective contributions of some
or all of the participants in the highly compensated group until one
of the tests is satisfied. Such reduction shall be made in accordance
with Code Section 401(k)(8)(c) and Section 1.401(k)-1(f)(2) of the
Treasury regulations, as modified by Notice 97-2, I.R.B. 1997-2, on
the basis of the amount of contributions by, or on behalf of, each
such participant. The portion of any participant's elective
contribution which is reduced pursuant to this procedure shall be
referred to as the "excess contributions".

(d) DISTRIBUTION OF EXCESS CONTRIBUTIONS. If in any plan year
the elective contributions of one or more of the participants who are
highly compensated employees must be reduced in accordance with
subsection (c) above, the plan administrator shall distribute the
amount of the excess contributions, plus the income allocable thereto,
as soon as practicable following the determination of such excess but
in any event by the last day of the plan year following the end of the
plan year in which the excess contributions were made. Under Section
4979 of the Code a ten percent tax is imposed on the employer for any
such excess contributions which are distributed more than 21/2 months
after the last day of the plan year in which the excess contributions
were made. In the event of distribution of any elective deferrals to
which matching contributions are attributable, the matching
contributions attributable to such elective deferrals shall be
forfeited. A distribution of the excess contributions may be made
without regard to any notice or consent otherwise required under the
plan. The amount of excess contributions distributed under this
subsection for a plan year shall be reduced by any excess deferrals
previously distributed for the employee's taxable year ending with or
within the plan year. Excess contributions shall be treated as annual
additions for purposes of Section 415 of the Code.

8.7 LIMITATION ON EMPLOYEE AND MATCHING CONTRIBUTIONS. Employee and
matching contributions shall be subject to the following nondiscrimination
standards and such amounts shall be adjusted, as provided below, to the extent
necessary to comply with the limitations set forth in Section 401(m) of the Code
and

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the regulations thereunder. The term "employee contributions" shall include any
mandatory or voluntary contribution to the plan that is treated as an after-tax
employee contribution and is allocated to a separate account to which earnings
and losses are allocated. The term "matching contributions" means any employer
contribution made to the plan on account of an elective contribution or employee
contribution, and any forfeitures that are allocated to the participant on the
basis of employee contributions, matching contributions or elective
contributions. The employer matching contributions described in section 3.1(a)
are matching contributions for purposes of this section. The employer shall
maintain records demonstrating compliance with this section.

(a) CONTRIBUTION PERCENTAGE LIMITATIONS. In any plan year, the
contribution percentage for the group of eligible employees who are
highly compensated employees may not exceed the greater of the
following:

(i) the actual contribution percentage of the group of
eligible employees who are not highly compensated employees (the
"non-highly compensated group") multiplied by 1.25, or

(ii) the lesser of the contribution percentage for the
non-highly compensated group multiplied by two or the
contribution percentage of the non-highly compensated group plus
two percentage points.

(b) CONTRIBUTION PERCENTAGE. The contribution percentage of a
specified group of participants shall be the average of the
contribution percentages (computed separately, to the nearest
one-hundredth of one percent) for each employee in the group. The
contribution percentage for each employee shall equal the sum of the
employee and matching contributions allocated to the participant's
account for the plan year divided by the participants' compensation
taken into account for such plan year during which the participant was
an eligible employee. For purposes of this section, the following
additional rules shall apply:

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(i) A matching contribution will be taken into account for
purposes of this section for a given plan year only if (A) it is
made on account of the participant's elective or employee
contributions (reduced by the amount of any excess contributions
distributable to the participant for that plan year) for that
plan year, (B) it is allocated to the participant's account
during that plan year and (C) it is paid to the trust by the end
of the twelfth month following the close of that plan year. A
matching contribution that does not meet the foregoing
requirements will not be tested under Section 401(m) of the Code
but must separately satisfy Section 401(a)(4) of the Code for the
plan year of allocation as if it were the only employer
allocation for that plan year. An employee contribution will be
taken into account for purposes of this section only if such
contribution is paid to the trust during the plan year or paid to
an agent of the plan and transmitted to the trust within a
reasonable period after the end of the plan year.

(ii) In the event this plan satisfies the requirement of
Sections 401(m), 401(a)(4) or 410(b) of the Code only if
aggregated with one or more other plans, or if one or more other
plans satisfy the requirements of such sections of the Code only
if aggregated with this plan, then this section shall be applied
by determining the contribution percentage of employees as if all
such plans were a single plan. In accordance with applicable
Treasury regulations, plans of the employers may be aggregated in
order to satisfy Section 401(m) of the Code but only if such
plans as aggregated satisfy the requirement of Section 410(b) of
the Code and provided that each plan has the same plan year.

(iii) Except as provided in applicable Treasury
regulations, the contribution percentage of a highly compensated
employee who is eligible to participate in more than one plan of
the employer in which employee or matching contributions are made
will be determined by treating all the plans of the employer (or
an entity that is required to be aggregated with the employer
under Sections 414(b), (c), (m) or (o) of the Code) in which the
highly compensated employee is eligible

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as a single plan. If the highly compensated employee
participates in two or more plans that have different plan years,
all such plans ending with or within the same calendar year will
be treated as a single plan.

(iv) At the discretion of the plan administrator, and in
accordance with applicable Treasury regulations, any elective
contributions made for such plan year may be taken into account
in computing the participant's contribution percentage; provided,
that the elective contributions satisfy the requirements of
section 8.6 both with and without the inclusion of contributions
used to satisfy the requirements of this section.

(c) EXCESS AGGREGATE CONTRIBUTIONS. If in any plan year the
contribution percentage for the highly compensated group does not
satisfy one of the tests in subsection (a) above, the plan
administrator shall reduce the employee contributions and matching
contributions of some or all of the participants in the highly
compensated group until one of the tests is satisfied. Such
reductions shall be made in accordance with Code Section 401(m)(6)(C)
and Section 1.401(m)-1(e)(2) of the Treasury regulations, as modified
by Notice 97-2, I.R.B. 1997-2, on the basis of the amount of
contributions by, or on behalf of, each such participant. The amounts
so reduced shall be referred to as the "excess aggregate
contributions". (If there are employee and matching contributions, the
employee contributions shall be reduced first to the level of such
contributions which are matched. If the test is not satisfied by
reducing the employee contributions, then the matching contributions
and any unreduced employee contributions shall be reduced in tandem.)
The determination of excess aggregate contributions will be made after
first determining the excess deferral amount and the excess
contribution amount.

(d) DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS. Except as
provided below, if in any plan year the employee or matching
contributions of one or more of the participants in the highly
compensated group must be reduced in accordance with subsection (c)
above, the plan administrator shall distribute the amount of the
excess aggregate contributions, plus the income allocable thereto, as
soon as practicable following the determination of such excess but in
any

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event by the last day of the plan year following the end of the plan
year for which such contributions were made. Under Section 4979 of
the Code a ten percent tax is imposed on the employer for any such
excess aggregate contribution which are distributed after more than
2 1/2 months after the last day of the plan year for which such
contributions were made. In the event the participant is not fully
vested in the excess aggregate contribution, the non-vested portion of
such excess aggregate contribution shall be forfeited by the
participant and shall be allocated among the participants who had
matching contributions credited on their behalf during the plan year
and whose matching contributions were not reduced. Such allocation
shall be in accordance with the ratio each such participant's matching
contributions for the plan year bears to the total amount of matching
contributions made by all the participants whose matching
contributions were not reduced. A distribution of the excess
aggregate contribution may be made without regard to any notice or
consent otherwise required by the plan. In the event of distribution
of any elective deferrals to which matching contributions are
attributable, the matching contributions attributable to such elective
deferrals shall be forfeited. Excess aggregate contributions,
including forfeited matching contributions, are treated as employer
contributions for purposes of Sections 404 and 415 of the Code.

8.8 MULTIPLE USE LIMITATION. Notwithstanding the limitations
required by sections 8.6 and 8.7, a participant's elective contributions,
employee contributions and matching contributions may be limited under this
section in order to prevent "multiple use" under Sections 401(k) and 401(m) of
the Code, as set forth below. The multiple use limitation shall apply if the
sum of the actual deferral percentage and contribution percentage for the group
of highly compensated employees exceeds the "aggregate limit". The aggregate
limit shall be the greater of (i) and (ii) below:

(i) the sum of (A) 1.25 times the greater of the actual
deferral percentage or the contribution percentage for the
non-highly compensated group and (B) two percentage points plus
the lesser of the actual deferral percentage or the contribution

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percentage for non-highly compensated group (which amount shall
not exceed twice the lesser of such percentages),

(ii) the sum of (A) 1.25 times the lesser of the actual
deferral percentage or the contribution percentage for the
non-highly compensated group and (B) two percentage points plus
the greater of the actual deferral percentage or the contribution
percentage for the non-highly compensated group (which amount
shall not exceed twice the greater of such percentages).

The application of the multiple use limitation shall be made in accordance with
Section 1.401(m)-2 of the Treasury regulations. If the multiple use limitation
applies, then the actual deferral percentage or contribution percentage of the
highly compensated participants shall be reduced (in the manner described in
sections 8.6 or 8.7) until such limit shall be satisfied. Alternatively, the
employer may satisfy the multiple use limitation by making qualified nonelective
contributions to plan participants in accordance with applicable Treasury
regulations.

ARTICLE 9

GENERAL PROVISIONS

9.1 EXAMINATION OF PLAN DOCUMENTS. Copies of the plan and any
amendments thereto will be on file at the principal office of the employers
where they may be examined by any participant or any other person entitled to
benefits under the plan.

9.2 NOTICES. Any notice or document relating to the plan required to
be given to or filed with the plan administrator or the employers shall be
considered as given or filed if delivered or mailed by registered or certified
mail, postage prepaid, to the plan administrator, in care of the company, at
150 North Michigan Avenue, Chicago, Illinois 60601.

9.3 NONALIENATION OF PLAN BENEFITS. The rights or interests of any
participant or any participant's beneficiaries

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<PAGE>

to any benefits or future payments under the plan shall not be subject to
attachment or garnishment or other legal process by any creditor of any such
participant or beneficiary, nor shall any such participant or beneficiary have
any right to alienate, anticipate, commute, pledge, encumber or assign any of
the benefits or rights which he or she may expect to receive (contingently or
otherwise) under the plan, except as may be required by the tax withholding
provisions of the Internal Revenue Code or of a state's income tax act or
pursuant to a qualified domestic relations order (as defined in Section 414(p)
of the Internal Revenue Code).

9.4 PAYMENT WITH RESPECT TO INCAPACITATED PARTICIPANTS OR
BENEFICIARIES. If any person entitled to benefits under the plan is under a
legal disability or, in the plan administrator's opinion, is incapacitated in
any way so as to be unable to manage his or her financial affairs, the plan
administrator may direct the payment of such benefits to such person's legal
representative or to a relative or friend of such person for such person's
benefit, or the plan administrator may direct the application of such benefits
for the benefit of such person in any manner which the plan administrator may
select that is permitted by federal law and is consistent with the plan. Any
payments made in accordance with the foregoing provisions of this section shall
be a full and complete discharge of any liability for such payments.

9.5 NO EMPLOYMENT OR BENEFIT GUARANTY. None of the establishment of
the plan, any modification thereof, the creation of any fund or account, or the
payment of any benefits shall be construed as giving to any participant or other
person any legal or equitable right against the employers, the plan
administrator or the trustee except as provided herein. Under no circumstances
shall the maintenance of this plan constitute a contract of employment or shall
the terms of employment of any participant be modified or in any way affected
hereby. Accordingly, participa-

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<PAGE>

tion in the plan will not give any participant a right to be retained in the
employ of the employers. Neither the plan administrator nor the employers in
any way guarantees any assets of the plan from loss or depreciation or any
payment to any person. The liability of the plan administrator or the employers
as to any payment or distribution of benefits under the plan is limited to the
available assets of the trust fund.

9.6 LITIGATION. In any action or proceeding regarding any plan
assets, any plan benefits or the administration of the plan, employees or former
employees of the employers, their beneficiaries and any other persons claiming
to have an interest in the plan shall not be necessary parties and shall not be
entitled to any notice of process. Any final judgment which is not appealed or
appealable and which may be entered in any such action or proceeding shall be
binding and conclusive on the parties hereto and on all persons having or
claiming to have any interest in the plan. To the extent permitted by law, if a
legal action is begun against the plan administrator, the employers, or the
trustee by or on behalf of any person and such action results adversely to such
person, or if a legal action arises because of conflicting claims to a
participant's or other person's benefits, the cost of the employers, the plan
administrator, or the trustee of defending the action will be charged to the
sums, if any, which were involved in the action or were payable to the
participant or the other person concerned. Acceptance of participation in the
plan shall constitute a release of the employers, the plan administrator, any
trustee and their agents from any and all liability and obligation not involving
willful misconduct or gross negligence to the extent permitted by applicable
law. If the plan administrator is required by a final court order to distribute
the benefits of a participant other than in a manner required under the plan,
then the plan administrator shall cause the participant's benefits to be
distributed in a manner consis-

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<PAGE>

tent with such final court order; provided, however, that the plan administrator
shall make no distribution which would cause the plan to be disqualified or to
violate any provision of law, and the plan administrator shall not be required
to comply with the requirements of a final court order in an action in which the
plan administrator, the trustee, the plan or the trust was not a party, except
to the extent such a final court order is a qualified domestic relations order.

9.7 EVIDENCE. Evidence required of anyone under the plan shall be
signed, made or presented by the proper party or parties and may be by
certificate, affidavit, document or other information which the person acting
thereon considers pertinent and reliable.

9.8 GENDER AND NUMBER. Words denoting the masculine gender shall
include the feminine and neuter genders, the singular shall include the plural
and the plural shall include the singular wherever required by the context.

9.9 WAIVER OF NOTICE. Any notice required under the plan may be
waived by the person entitled to notice.

9.10 APPLICABLE LAW. The plan shall be construed in accordance with
the provisions of the Employee Retirement Income Security Act of 1974 and other
applicable federal laws and, to the extent not inconsistent with such laws, with
the laws of the state of Illinois.

9.11 SEVERABILITY. If any provisions of the plan shall be held
illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining provisions of the plan, and the plan shall be construed and
enforced as if such illegal and invalid provisions had never been set forth in
the plan.

9.12 FIDUCIARY RESPONSIBILITIES. It is specifically intended that all
provisions of the plan shall be applied so that all fiduciaries with respect to
the plan shall be required to meet the prudence and other requirements and
responsibilities of

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<PAGE>

applicable law to the extent such requirements or responsibilities apply to
them. No provisions of the plan are intended to relieve a fiduciary from any
responsibility, obligation, duty or liability imposed by applicable law. In
general, a fiduciary shall discharge his or her duties with respect to the plan
solely in the interests of participants and other persons entitled to benefits
under the plan and with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise of like
character and with like aims.

9.13 SUPPLEMENTS. From time to time supplements may by amendment be
attached to and form a part of this plan. Such supplements may modify or
supplement the provisions of the plan as they apply to particular groups of
employees or groups of participants, shall specify the persons affected by such
supplements and shall supersede the other provisions of the plan to the extent
necessary to eliminate inconsistencies between the plan provisions and the
provisions of such supplements.

9.14 USERRA COMPLIANCE. Notwithstanding any provision of the plan to
the contrary, contributions, benefits and service credit with respect to
qualified military service shall be provided in accordance with Code Section
414(u) and the Uniformed Services Employment and Reemployment Rights Act of 1994
("USERRA").

ARTICLE 10

RELATING TO PLAN ADMINISTRATION

10.1 PLAN ADMINISTRATOR'S DUTIES. Except as otherwise specifically
provided herein and in addition to the powers, rights and duties specifically
given to the plan administrator

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<PAGE>

elsewhere in the plan, the plan administrator shall have the following powers,
rights and duties:

(a) To construe and interpret the plan, to decide all questions
of plan eligibility, to determine the amount, manner and time of
payment of any benefits under the plan, and to remedy ambiguities,
inconsistencies or omissions.

(b) To adopt such rules of procedure as may be necessary for the
efficient administration of the plan and as are consistent with its
terms and such rules.

(c) To make determination as to the right of any person to a
benefit, to afford any person dissatisfied with such determination the
right to a hearing thereon, and to direct payments or distributions
from the trust fund in accordance with the provision of the plan.

(d) To furnish the employers with such information as may be
required by them for tax or other purposes in connection with the
plan.

(e) To enroll participants in the plan, distribute and receive
plan administration forms and comply with all applicable governmental
reporting and disclosure requirements.

(f) To employ agents, attorneys, accountants, actuaries or other
persons (who also may be employed by the employers, the trustee, or
any investment manager or managers) and to allocate or delegate to
them such powers, rights and duties as the plan administrator
considers necessary or advisable to properly carry out the
administration of the plan, provided that any such allocation or
delegation and the acceptance thereof must be in writing.

(g) To report at least annually to the employers as to the
administration of the plan, any significant problems which have
developed in connection with the administration of the plan and any
recommendations which the plan administrator may have as to the
amendment of the plan or the modification of plan administration.

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<PAGE>

Notwithstanding the foregoing, the company shall appoint a committee consisting
of not less than three persons to which the plan administrator may delegate any
or all of its powers, rights and duties. The Secretary of the company shall
certify from time to time the appointment to/and termination from, office of
each member of the committee and the person, if any, who is selected as
Secretary of the committee. The committee shall have no power to add to,
subtract from or modify any of the terms of the plan, nor to change or add to
any benefits provided by the plan, nor to waive or fail to apply any
requirements of eligibility for benefits under the plan except as expressly
provided by appropriate delegation of any such powers by the company.

10.2 INFORMATION REQUIRED FOR PLAN ADMINISTRATION. The employers
shall furnish the plan administrator with such data and information as it
considers necessary or desirable to perform its duties with respect to plan
administration. The records of the employers as to an employee's or
participant's period or periods of employment, termination of employment and
reason therefor, leaves of absence, reemployment and compensation will be
conclusive on all persons unless determined to the satisfaction of the plan
administrator to be incorrect. Participants and other persons entitled to
benefits under the plan also shall furnish the plan administrator with such
evidence, data or information as the plan administrator considers necessary or
desirable for the plan administrator to perform its duties with respect to plan
administration.

10.3 DECISION OF PLAN ADMINISTRATOR FINAL. Subject to applicable law
and the provisions of this Article 10, any interpretation of the provisions of
the plan and any decision on any matter within the respective authority of the
plan administrator including determinations regarding plan terms and eligibility
made by the plan administrator in good faith shall be made at the sole
discretion of the plan administrator, and shall

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<PAGE>

be binding on all persons. A misstatement or other mistake of fact shall be
corrected when it becomes known and the plan administrator shall make such
adjustment on account thereof as the plan administrator considers equitable and
practicable.

10.4 REVIEW OF BENEFIT DETERMINATIONS. If a claim for benefits made
by a participant or his or her beneficiary is denied, the plan administrator
shall within 90 days (or 180 days if special circumstances require an extension
of time) after the claim is made furnish the person making the claim with a
written notice specifying the reasons for the denial. Such notice shall also
refer to the pertinent plan provisions on which the denial is based, describe
any additional material or information necessary for properly completing the
claim and explain why such material or information is necessary, and explain the
plan's claim review procedures. If requested in writing, the plan administrator
shall afford each claimant whose claim has been denied a full and fair review of
the plan administrator's decision and, within 60 days (120 days if special
circumstances require additional time) of the request for reconsideration of the
denied claim, the plan administrator shall notify the claimant in writing of the
plan administrator's final decision. The plan administrator's final decision
shall be binding on all persons.

10.5 UNIFORM RULES. The plan administrator and the committee shall
perform their respective duties with respect to plan administration on a
reasonable and nondiscriminatory basis and shall apply uniform rules to all
participants similarly situated.

10.6 PLAN ADMINISTRATOR'S EXPENSES. All costs, charges and expenses
reasonably incurred by the plan administrator or the committee will be paid by
the employers; provided that no compensation will be paid to a committee member
as such.

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<PAGE>

10.7 INTERESTED COMMITTEE MEMBER. If a committee member is also a
participant in the plan, he or she may not decide or determine any matter or
questions concerning his or her benefits unless such decision or determination
could be made by him or her under the plan if he or she were not a committee
member.

10.8 ACTION BY COMMITTEE. Action by the committee will be subject to
the following special rules:

(a) MEETINGS AND DOCUMENTS. The committee may act by meeting or
by document signed without meeting and documents may be signed through
the use of a single document or concurrent documents.

(b) ACTION BY MAJORITY. The committee shall act by a majority
decision which action shall be as effective as if such action had been
taken by all committee members, provided that by majority action one
or more committee members or other persons may be authorized to act
with respect to particular matters on behalf of all committee members.

(c) DISSENTING VOTES. Any proposal made by one committee member
which relates to the administration of the plan shall be deemed to be
approved by each other committee member not expressing disapproval in
writing within 30 days after receipt of a copy of such proposal
together with a request for any indication of such disapproval. Once
a proposal has been disapproved the committee members making the
proposal may no longer seek approval of such proposal pursuant to the
process described in this subsection (c) unless such person previously
receives written notices indicating that all prior disapprovals of the
proposals have ceased.

(d) RESOLVING DEADLOCKS. If there is an equal division among
the committee members with respect to any question a disinterested
party may be selected by a majority vote to decide the matter. Any
decision by such disinterested party will be binding.

(e) CERTIFICATE OF SECRETARY. The committee may, but is not
required to, select a secretary and the certificate of such secretary
that the committee has

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<PAGE>

taken or authorized any action shall be conclusive in favor of any
person relying upon such certificate.

(f) ABSTENTIONS. Any committee member shall refrain or abstain
from acting to decide or determine any matter concerning distributions
under the plan in which such committee member may have an interest as
a plan participant except that no participant shall be prevented by
operation of this subsection from making any decision or election
which he or she could make simply as a plan participant even if he or
she were not serving as a committee member.

10.9 RESIGNATION OR REMOVAL OF COMMITTEE MEMBER. Any person serving
as a committee member may be removed by the company at any time by written
notice to such member and to the other members of the committee. The company
shall fill any vacancy in the membership of the committee as soon as
practicable. Until any such vacancy is filled, the remaining members may
exercise all of the powers, rights and duties conferred on the committee.

10.10 INDEMNIFICATION. To the extent permitted by law, no person
(including the employers, the trustee, any present or former plan administrator,
any present or former member of the committee, and any present or former
employee of the employers) shall be personally liable for any act done or
omitted to be done in good faith in the administration of the plan or the
investment of the trust fund. To the extent permitted by law, each present or
former employee of the employers and each present or former member of the
committee to whom the plan administrator or the employers has delegated any
portion of its responsibilities under the plan and each present or former plan
administrator shall be indemnified and saved harmless by the employers (to the
extent not indemnified or saved harmless under any liability insurance or other
indemnification arrangement with respect to the plan) from and against any and
all claims of liability to which they are subjected by reason of any act done or
omitted to be done in

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<PAGE>

good faith in connection with the administration of the plan or the investment
of the trust fund, including all expenses reasonably incurred in their defense
if the employers fail to provide such defense.

ARTICLE 11

RELATING TO THE EMPLOYERS

11.1 ACTION BY AN EMPLOYER. Any action required or permitted of an
employer under the plan shall be by resolution of its Board of Directors or by a
person or persons authorized by resolution of such Board of Directors.

11.2 ADDITIONAL EMPLOYERS. Any subsidiary or other related company
that is not an employer may adopt the plan with the consent of the company and
become an employer thereunder by filing with the plan administrator a certified
copy of a resolution of the Board of Directors of the subsidiary or other
related company providing for its adoption of the plan and a certified copy of a
resolution of the directors of the company consenting to such adoption.

11.3 SUBSIDIARY, RELATED COMPANY, STONE CONTAINER COMPANIES. For this
purpose, a "subsidiary" means any corporation 80 percent or more of the voting
stock of which is directly or indirectly owned by the company and a "related
company" means any corporation which directly or indirectly owns 80 percent or
more of the voting stock of the company and any corporation (other than the
company and its subsidiaries) 80 percent or more of the voting stock of which is
directly or indirectly owned by any corporation which directly or indirectly
owns 80 percent or more of the voting stock of the company. The term "Stone
Container Companies" includes the employers and any trade or business which is
not an employer under the plan, but is either (i) a member of a controlled group
of corporations (within

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<PAGE>

the meaning of Section 414(b) of the Code), which contains an employer under the
plan, (ii) a member of a group of trades or businesses (whether or not
incorporated) under common control (within the meaning of Section 414(c) of the
Code) which contains an employer under the plan, or (iii) a member of an
affiliated service group (within the meaning of Section 414(m) of the Code)
which contains an employer under the plan, for purposes of certain
determinations as to employment with the Stone Container Companies (and each
such corporation is sometimes referred to herein individually as a "Stone
Container Company"). The terms "subsidiary" and "related company" shall also
include a foreign affiliate of the company if the company and such foreign
affiliate have entered into an agreement under Section 3121(1) of the Code, and
if such foreign affiliate adopts the plan, benefits can be provided under the
plan for persons who are citizens or residents of the United States and who are
employees of such foreign affiliate.

11.4 RESTRICTIONS AS TO REVERSION OF TRUST FUND TO THE EMPLOYERS. The
employers shall have no right, title or interest in the assets of the plan, nor
will any part of the assets of the plan at any time revert or be repaid to the
employers, directly or indirectly, provided that if a contribution or a portion
of a contribution is made by an employer as a result of a mistake of fact, such
contribution or portion of a contribution shall not be considered to have been
contributed under the plan by such employer and, after having been reduced by
any losses of the trust fund allocable thereto, shall be returned to such
employer within one year of the date the amount is contributed under the plan.

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<PAGE>

ARTICLE 12

AMENDMENT AND TERMINATION

12.1 AMENDMENT. While the company expects and intends to continue the
plan, the company must necessarily reserve and hereby does reserve the right, to
amend the plan from time to time, except that the duties and liabilities of the
plan administrator cannot be changed substantially without its consent and no
amendment shall reduce the value of a participant's benefits to less than the
amount he or she would be entitled to receive if he or she had resigned from the
employ of the employers on the day of the amendment.

12.2 TERMINATION. The plan will terminate on any date specified by
the company.

12.3 PLAN MERGER. In no event shall there be any merger or
consolidation of the plan with, or transfer of assets or liabilities to, any
other plan unless each participant in the plan would (if the plan then
terminated) receive a benefit immediately after the merger, consolidation or
transfer which is equal to or greater than the benefit the participant would
have been entitled to receive immediately before the merger, consolidation or
transfer (if the plan had then terminated).

12.4 NOTICE OF AMENDMENT, TERMINATION OR PLAN MERGER. Participants
affected thereby will be notified of an amendment, termination, merger or
consolidation of the plan within a reasonable time.

12.5 NONFORFEITABILITY ON TERMINATION. As provided in section 5.1,
the rights of all affected employees in their account balances shall remain
nonforfeitable on termination or partial termination of the plan.

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<PAGE>

ARTICLE 13

TOP-HEAVY PLAN RULES

13.1 KEY EMPLOYEES. An employee or former employee shall be a "key
employee" for any plan year if during such plan year or during any of the four
preceding plan years the employee is or was:

(a) An officer of an employer having an annual compensation
greater than 50 percent of the amount in effect under
Section 415(b)(1)(A) of the Code for any such plan year;

(b) One of the ten employees of an employer having annual
compensation from an employer of more than the limitation in effect
under Section 415(c)(1)(A) of the Code and owning (or considered as
owning within the meaning of Section 318 of the Code) both more than
one-half percent interest and the largest interests in the employer;

(c) Any person who owns (or is considered as owning within the
meaning of Section 318 of the Code) more than five percent of the
outstanding stock of the employer or stock possessing more than five
percent of the total combined voting power of all the employer's
stock; or

(d) Any person having annual compensation in excess of $150,000
who owns (or is considered as owning within the meaning of Section 318
of the Code) more than one percent of the outstanding stock of the
employer or stock possessing more than one percent of the total
combined voting power of all the employer's stock.

For purposes of subsection (a) above, if the number of officers exceeds 50, only
the 50 officers with the highest compensation shall be considered key employees
and if the number of officers is less than 50, the number of officers considered
key employees shall not exceed the greater of three such officers or ten percent
of all employees. For purposes of subsections (c) and (d) above, Section
318(a)(2)(C) of the Code shall be applied by

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<PAGE>

substituting "five percent" for the reference to "50 percent" therein and the
rules of Section 414(b), (c) and (m) of the Code shall not apply for determining
ownership in the employer. For purposes of this section 13.1 and section 13.3,
the term "employer" includes all corporations which are members of a controlled
group of corporations which includes the company under Section 414(b) of the
Code, all trades or businesses (whether or not incorporated) which are under
common control with the company under Section 414(c) of the Code and any service
or other organization which is a member of an affiliated service group with the
company under Section 414(m) of the Code. The beneficiary of a key employee
shall be considered a key employee.

13.2 TOP-HEAVY PLAN. The plan will be considered a "top-heavy plan"
for any plan year if, as of the last day of the preceding plan year (the last
day of the initial plan year, in the case of that year) (the "determination
date"), the sum of (i) the present value of the aggregate cumulative accrued
benefits for key employees under all defined benefit plans in an aggregation
group of plans (as described in section 13.3), and (ii) the aggregate of the
accounts of all key employees under the plan and all other defined contribution
plans (determined as of a valuation date which shall be the same as the
determination date) in an aggregation group of plans, exceeds 60 percent of such
sum determined for all participants under all such plans, excluding participants
who are former key employees. There shall be included in the determination of a
participant's accrued benefits and accounts under such plans any amounts
distributed to such participant during the preceding five-year period.
Notwithstanding the foregoing, if any individual has not performed services for
the company or related companies at any time during the five-year period ending
on the determination date, any accrued benefits for such individual (and the
accounts of such individual) shall not be included for purposes of this section.

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<PAGE>

Furthermore, a rollover contribution initiated by a participant and made to any
plan in an aggregation group of plans shall not be taken into account for
purposes of determining whether the plan is a top-heavy plan. Solely for the
purpose of this section, the accrued benefit of an employee other than a key
employee shall be determined under (i) the method, if any, that uniformly
applies for accrual purposes under all plans of the employer, or (ii) if there
is no such method, as if such benefit accrued not more rapidly than the slowest
accrual rate permitted under the fractional accrual rate of Section 411(b)(1)(C)
of the Code.

13.3 AGGREGATION GROUPS. All employer plans in a required aggregation
group of plans shall be considered to be top-heavy plans if either the required
or permissive aggregation group of plans is determined to be top-heavy under
section 9.2. If the required or permissive aggregation group of plans is not a
top-heavy group, no employer plans in the group shall be considered to be
top-heavy plans. A "required aggregation group of plans" shall include each
employer plan (whether or not terminated) in which a key employee participates
and any other employer plan which enables any plan in which a key employee
participates to meet the nondiscrimination and coverage requirements of Sections
401(a)(4) or 410 of the Code. A "permissive aggregation group of plans" shall
include all plans in the required aggregation group plus any other employer
plans which satisfy the requirements of Sections 401(a)(4) and 410 of the Code
when considered together with the required aggregation group of plans.

13.4 SPECIAL MINIMUM CONTRIBUTIONS. Except as otherwise provided
below, the employer contributions and forfeitures allocated on behalf of any
participant who is not a key employee shall not be less than the lesser of three
percent of such participant's compensation (as defined in Section 414(q) of the

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<PAGE>

Code, without regard to Sections 125, 402(E)(3) and 402(h)(1)(B)), or in the
case where the employer has no defined benefit plan which designates this plan
to satisfy Section 401 of the Code, the largest percentage of employer
contributions and forfeitures, as a percentage of the first $160,000, as
adjusted pursuant to Code Section 401(a)(17), or such other amount as may be
permitted from time to time by the Secretary of the Treasury or its delegate or
by law, of the key employee's compensation, allocated on behalf of any key
employee for that year. The minimum allocation is determined without regard to
any Social Security contribution. This minimum allocation shall be made even
though, under other plan provisions, the participant would not otherwise be
entitled to receive an allocation, or would have received a lesser allocation
for the year because of (i) the participant's failure to complete 1,000 hours of
service (or any equivalent provided in the plan), or (ii) the participant's
compensation being less than a stated amount. The minimum contribution
provision shall not apply to any participant who was not employed by the
employer on the last day of the plan year; provided, however, that in the case
of an employee covered under this plan and a defined benefit plan maintained by
the employer, for each plan year for which this plan and such defined benefit
plans are considered top-heavy plans, if such employee receives the top-heavy
minimum contribution specified in such defined benefit plan, such employee need
not receive the top-heavy minimum contribution under this section.

13.5 VESTING REQUIREMENTS. In any plan year the plan is determined to
be top-heavy under section 13.1, a participant's vested interest in his account
balance shall continue to be one hundred percent (100%) as set forth in section
5.1.

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<PAGE>

SUPPLEMENT A
OF
STONE CONTAINER CORPORATION
DEFERRED INCOME SAVINGS PLAN

A-1. PURPOSE. The purpose of this Supplement A is to provide for the
merger, effective as of April 16, 1987, of the Southwest Forest Industries, Inc.
Savings Plan (the "Southwest plan"), a qualified plan formerly maintained by
Southwest Forest Industries, Inc. ("Southwest"), into this plan. This
Supplement A is intended to preserve certain features of the Southwest plan for
the benefit of participants under this Supplement A.

A-2. USE OF TERMS. Except where the context of this Supplement A
expressly indicates to the contrary, terms used and defined in the plan shall
have the same meanings for purposes of this Supplement A. As used in this
Supplement A, the term "Supplement A" shall include only this Supplement A, and
references to the "plan" shall include all provisions of the plan and any other
supplements attached to and forming a part of the plan, but shall not include
this Supplement A.

A-3. CONFLICTS BETWEEN PLAN AND THIS SUPPLEMENT A. This Supplement A,
together with the plan, comprises the plan with respect to participants in this
Supplement A. In case of any conflict between the provisions of the plan and
this Supplement A, the terms and provisions of this Supplement A shall govern to
the extent necessary to eliminate such conflict.

A-4. PARTICIPANTS. This Supplement A shall be applicable to those
participants in the plan who, immediately prior to April 16, 1987, were
participants in the Southwest plan ("Supplement A participants"). No other
employees of an employer

-A1-
<PAGE>

under the plan will be eligible to become Supplement A participants.

A-5. MERGER OF SOUTHWEST PLAN. Effective as of April 16, 1987, the
Southwest plan shall be merged into the plan and all assets and liabilities of
the Southwest plan shall be transferred to the plan as soon as administratively
feasible after April 16, 1987.

A-6. FULL VESTING OF ACCOUNT BALANCES. Supplement A participants
shall at all times have a 100 percent vested and nonforfeitable interest in
their account balances under the Southwest plan as of April 15, 1987. Such
account balances will be merged into the plan and will continue to be maintained
with respect to each Supplement A participant.

A-7. PARTICIPANT LOANS. Loans which were made to a Supplement A
participant under the Southwest plan must be continued to be repaid in
accordance with the terms of the notes that evidence such loans. The terms of
any such outstanding loan may not be modified. No new loans may be made to a
Supplement A participant under this plan.

A-8. HARDSHIP WITHDRAWAL. A Supplement A participant who is
experiencing a financial hardship may not obtain a hardship withdrawal pursuant
to section 7.1 unless such Supplement A participant has withdrawn all amounts
attributable to his or her After-Tax Balance (as defined in section A-11).

A-9. WITHDRAWALS OF AFTER-TAX CONTRIBUTIONS. A Supplement A
participant whose After-Tax Balance (as defined in section A-11) under the
Southwest plan was transferred to this plan may, with the written consent of his
or her spouse, elect to

-A2-
<PAGE>

withdraw all or any portion of his or her After-Tax Balance (except for earnings
on his or her After-Tax Contributions (as defined in the Southwest plan), in
minimum amounts of $1,000 or, if less, the remaining amount of his or her
After-Tax Contributions. A Supplement A participant who has withdrawn 100% of
his or her After-Tax Contributions may elect to withdraw all or a portion of the
earnings on his or her After-Tax Contributions. Such elections may be made at
any time and shall be effective on the last day of the month following 20 days
after filing the election with the plan administrator. Amounts withdrawn
hereunder may not be repaid to the plan.

A-10. INVESTMENT FUNDS. As of April 16, 1997, the company shall
cause a Money Market Fund to be established within the trust fund for the
investment of each Supplement A participant's After-Tax Balance (as defined in
section A-11), if any, and the income and appreciation attributable thereto.
The Money Market Fund shall be invested primarily in such short-term
interest-bearing securities, money market mutual fund securities, savings
accounts, certificates of deposit, collective investment funds concentrating in
liquid assets, or other similar investment vehicles as shall be chosen by the
investment manager selected by the company. No new contributions or, except as
described in the first sentence of this section A-10, existing account balances
may be invested in the Money Market Fund.

A-11. LIMITATIONS ON INVESTMENT OF ACCOUNTS. As of April 16, 1987,
each Supplement A participant who had an After-Tax Contribution (as defined in
the Southwest plan) account balance as of April 15, 1987 under the Southwest
plan (the "After-Tax Balance"), shall have such After-Tax Balance invested in
the Money Market Fund under this plan. Thereafter, no investment elections of a
participant, a beneficiary thereof or

-A3-
<PAGE>

an alternative payee shall be given effect to the extent they require investment
of new contributions or the transfer of existing account balances under the plan
into the Money Market Fund. However, account balances initially invested in the
Money Market Fund and amounts attributable thereto may continue to be invested
in that fund or may be transferred to the Fixed Investment Fund under this plan.
As of January 1, 1998, account balances initially invested in the Money Market
Fund and amounts attributable thereto may continue to be invested in that fund
or may be transferred to other investment funds under the plan pursuant to
proper investment elections.

A-12. OPTIONAL FORMS OF BENEFIT. Subject to section A-13, a
Supplement A participant may elect to have his account distributed as follows:
(i) in a lump sum payment, (ii) by the purchase and distribution of an annuity
(not extending beyond the life of the participant and, if applicable, the
participant's spouse in the form of (A) a single life annuity; (B) a 75% joint
and survivor spousal annuity; or (C) a 100% joint and survivor spousal annuity.
However, the plan administrator shall distribute to the participant in a lump
sum the value of his or her account if the value of the participant's entire
account does not exceed, and has never exceeded, $3,500; provided, that with
respect to plan years commencing on and after January 1, 1998, the term "$5,000"
shall be substituted for the term "$3,500" in the first part of this sentence.

A-13. QUALIFIED JOINT AND SURVIVOR ANNUITY REQUIREMENTS.
Notwithstanding the other provisions of this plan, the distribution requirements
of this section A-13 shall apply if a Supplement A participant elects to have
his or her account distributed in the form of an annuity. If the participant is
married as of his or her settlement date, the account shall be

-A4-
<PAGE>

paid in the form of a qualified joint and 50% survivor annuity unless the
participant waives the qualified joint and 50% survivor annuity with the consent
of his or her spouse and elects an optional form of benefit. An unmarried
participant's account shall be paid in the form of a life annuity unless the
participant elects an optional form of benefit. Within a reasonable period
prior to the commencement of benefits, the plan administrator shall provide each
Supplement A participant electing the annuity option with respect to their
account, a written explanation of: (1) the terms and conditions of a qualified
joint and 50% survivor annuity; (2) the participant's rights to make, and the
effect of, an election to waive the qualified joint and 50% survivor annuity
form of benefit; (3) the rights of the participant's spouse; and (4) the right
to make, and the effect of, a revocation of a previous election to waive the
qualified joint and 50% survivor annuity.

-A5-
<PAGE>

SUPPLEMENT B
OF
STONE CONTAINER CORPORATION
DEFERRED INCOME SAVINGS PLAN

B-1. PURPOSE. The purpose of this Supplement B is to provide for the
merger, effective as of January 1, 1996, of Stone Container Corporation Frozen
Savings Plan (the "Frozen Savings plan"), a qualified plan maintained by the
company, into the plan. This Supplement B is intended to preserve certain
features of the Frozen Savings plan for the benefit of participants in the
Frozen Savings plan who become participants under this Supplement B.

B-2. USE OF TERMS. Except where the context of this Supplement B
expressly indicates to the contrary, terms used and defined in the plan shall
have the same meanings for purposes of this Supplement B. As used in this
Supplement B, the term "Supplement B" shall include only this Supplement B, and
references to the "plan" shall include all provisions of the plan and any other
supplements attached to and forming a part of the plan, but shall not include
this Supplement B.

B-3. CONFLICTS BETWEEN PLAN AND THIS SUPPLEMENT B. This Supplement B,
together with the plan, comprises the plan with respect to participants in this
Supplement B. In case of any conflict between the provisions of the plan and
this Supplement B, the terms and provisions of this Supplement B shall govern to
the extent necessary to eliminate such conflict.

B-4. PARTICIPANTS. This Supplement B shall be applicable to those
participants in the plan who, immediately prior to

-B1-
<PAGE>

January 1, 1996, were participants in the Frozen Savings plan ("Supplement B
participants"). No other employees of an employer under the plan will be
eligible to become Supplement B participants.

B-5. MERGER OF FROZEN SAVINGS PLAN. Effective as of January 1, 1996,
the Frozen Savings plan shall be merged into the plan and all assets and
liabilities of the Frozen Savings plan shall be transferred to the plan as soon
as administratively feasible after January 1, 1996.

B-6. FULL VESTING OF ACCOUNT BALANCES. Supplement B participants
shall at all times have a 100 percent vested and nonforfeitable interest in
their account balances under the Frozen Savings plan as of December 31, 1995.
Such account balances will be merged into the plan and will continue to be
maintained with respect to each Supplement B participant ("Frozen Savings plan
accounts").

B-7. LIMITATIONS ON INVESTMENT OF ACCOUNTS. As of January 1, 1996,
each Supplement B participant who had a Supplemental After-Tax Contribution
Account (as defined in the Frozen Savings plan) balance as of December 31, 1995
under the Frozen Savings plan ("After-Tax Balance"), shall have such balance
invested in the Fixed Investment Fund under this plan. Thereafter, account
balances initially invested in the Fixed Investment Fund and amounts
attributable thereto may continue to be invested in that fund or may be
transferred to other investment funds under the plan pursuant to proper
investment elections.

B-8. HARDSHIP WITHDRAWAL. A Supplement B participant who is
experiencing a financial hardship may not obtain a hard-

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<PAGE>

ship withdrawal pursuant to section 7.1 unless such Supplement B participant has
withdrawn all of his or her account balances attributable to his or her
After-Tax Balance.

B-9. WITHDRAWAL OF AMOUNTS ATTRIBUTABLE TO AFTER-TAX BALANCE. Each
Supplement B participant who had his or her After-Tax Balance under the Frozen
Savings plan transferred to this plan may elect to withdraw all or any portion
of his or her account attributable to such After-Tax Balance, by filing a
written election with the plan administrator. Such elections may be made at any
time and shall be effective as of the last day of the calendar month following
15 days after the election is filed with the plan administrator.

-B3-

<PAGE>

[LETTERHEAD]
EXHIBIT 5

December 10, 1997

Stone Container Corporation
150 North Michigan Avenue
Chicago, Illinois 60601

Re: 5,000,000 shares of Common Stock, $.01 par value per share, and
5,000,000 Preferred Stock Purchase Rights.
---------------------------------------------------------------
Dear Ladies and Gentlemen:

I refer to the Registration Statement on Form S-8 (the "Registration
Statement") being filed by Stone Container Corporation, a Delaware corporation
(the "Company"), with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act"), relating to
(i) the participations (the "Participations") in the Stone Container Corporation
Deferred Income Savings Plan (the "Plan"), and (ii) 5,000,000 shares of Common
Stock, $.01 par value per share (the "Registered Common Stock"), together with
5,000,000 preferred stock purchase rights (the "Registered Rights") associated
therewith, in connection with the Plan. The terms of the Rights are set forth
in the Rights Agreement dated as of July 25, 1988, as amended by the Amendment
to Rights Agreement dated as of July 23, 1990 and the Amendment to Rights
Agreement dated as of May 16, 1996 (collectively, the "Rights Agreement")
between the Company and The First National Bank of Chicago.

I am familiar with the proceedings to date with respect to the Plan
and the Registration Statement, and have examined such records, documents and
matters of law, and satisfied myself as to such matters of fact, as I have
considered relevant for the purposes of this opinion.

Based on the foregoing, I am of the opinion that:

1. The Company is duly incorporated and validly existing under the
laws of the State of Delaware.

2. The Participations will be legally issued and non-assessable,
provided: (i) the Registration Statement, as it may be amended, shall have
become effective under the Act and the Prospectus then in use by the Company
shall comply with the Act and the Rules and Regulations of the Commission
thereunder; and (ii) the Participations shall have been duly issued and paid for
in accordance with the terms of the Plan.

<PAGE>

Stone Container Corporation
December 10,1997
Page 2

3. Any shares of the Registered Common Stock which are newly issued
in connection with the Plan will constitute shares of Common Stock of the
Company which have been duly authorized and validly issued and are fully paid
and non-assessable when (i) the Registration Statement shall have become
effective under the Securities Act; (ii) the Company's Board of Directors or a
duly authorized committee thereof shall have duly adopted final resolutions
authorizing the issuance of such shares as contemplated by the Plan; and (iii)
certificates representing such shares shall have been duly executed,
countersigned and registered and duly delivered upon payment of the agreed
consideration therefor (not less than the par value thereof) determined in
accordance with the terms of the Plan.

4. The Registered Rights associated with the newly issued shares of
Registered Common Stock referred to in paragraph 3 will be legally issued when
(i) such Registered Rights shall have been duly issued in accordance with the
terms of the Rights Agreement and (ii) such associated shares shall have been
duly issued and paid for as set forth in paragraph 3.

This opinion is limited to the General Corporation Law of the State of
Delaware and the federal laws of the United States of America.

I do not find it necessary for the purposes of this opinion, and
accordingly I express no opinion as to, the application of the securities or
"Blue Sky" laws of the various states.

I have assumed, for the purpose of this opinion, that the Board of
Directors of the Company adopted the Rights Agreement on an informed basis after
reasonable investigation, in the good faith exercise of business judgment in
furtherance of what the Board of Directors honestly and reasonably believed to
be necessary and appropriate to protect the Company from coercive acquisition
techniques and in the best interests of the Company and its stockholders.

I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement.

Very truly yours,

/s/ Leslie T. Lederer
---------------------
Leslie T. Lederer

<PAGE>

EXHIBIT 23

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 10, 1997, except as to Note
2, which is as of February 14, 1997, appearing in Stone Container Corporation's
Annual Report on Form 10-K for the year ended December 31, 1996. We also
consent to the incorporation by reference of our report on the Financial
Statement Schedule dated February 10, 1997, which appears in such Annual Report
on Form 10-K. We also consent to the incorporation by reference in the
Registration Statement of our report dated June 23, 1997 appearing in the Annual
Report of the Stone Container Corporation Deferred Income Savings Plan on Form
11-K for the year ended December 31, 1996.

/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP

Chicago, Illinois
December 5, 1997