<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to / /240.14a-11(c) or / /240.14a-12
STONE CONTAINER CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
STONE CONTAINER CORPORATION
150 North Michigan Avenue
Chicago, IL 60601-7568
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MONDAY, MAY 17, 1999
To the Holders of Series E Cumulative
Convertible Exchangeable Preferred Stock of
Stone Container Corporation:
You are cordially invited to attend the Annual Meeting of Stockholders
of Stone Container Corporation (the "Company") to be held on Monday, May 17,
1999 at the Company's Headquarters Office, 150 North Michigan Avenue,
Chicago, Illinois, at 10:00 a.m. (C.S.T.) for the following purposes:
1. To elect three ordinary directors to serve until the next succeeding
Annual Meeting of Stockholders or until their respective successors
are elected and qualified;
2. To elect two additional directors to be elected solely by the holders
of the Company's Series E Cumulative Convertible Exchangeable
Preferred Stock (the "Preferred Stock"), voting as a separate class,
to serve until the next succeeding Annual Meeting of Stockholders or
until their respective successors are elected and qualified, or, if
earlier, the date on which the full dividends accumulated on all
outstanding shares of the Preferred Stock have been declared and paid
or set apart for payment; and
3. To transact such other business as may properly come before the Annual
Meeting and/or any adjournment or postponement thereof.
Even though you may now plan to attend the Annual Meeting in person, please
complete, date, sign and promptly return the enclosed Proxy in the envelope
enclosed for that purpose, which requires no postage if mailed in the United
States. If you attend the Annual Meeting and desire to withdraw your Proxy and
vote in person, you may do so.
Only stockholders of record at the close of business on March 29, 1999 will
be entitled to vote at the Annual Meeting and/or any adjournment or postponement
thereof.
By order of the Board of Directors.
CRAIG A. HUNT,
SECRETARY
Chicago, Illinois
April 14, 1999
<PAGE>
STONE CONTAINER CORPORATION
150 N. Michigan Avenue
Chicago, Illinois 60601-7568
_____
P R O X Y S T A T E M E N T
FOR 1999 ANNUAL MEETING OF STOCKHOLDERS
BACKGROUND
Pursuant to an Agreement and Plan of Merger dated as of May 10, 1998, as
amended (the "Merger Agreement"), by and among JSC Acquisition Corporation, a
Delaware corporation ("JSC Acquisition"), Jefferson Smurfit Corporation, a
Delaware corporation now known as Smurfit-Stone Container Corporation
("SSCC"), and Stone Container Corporation, a Delaware corporation (the
"Company"), JSC Acquisition was merged (the "Merger") with and into the
Company on November 18, 1998. As a result of the Merger and pursuant to the
terms of the Merger Agreement, among other things:
(a) each issued and outstanding share of common stock of the Company was
converted into the right to receive .99 shares of common stock, $.01 par
value, of SSCC (the "SSCC Common Stock");
(b) each of the 100 issued and outstanding shares of common stock of JSC
Acquisition was converted into 1,100,000 shares of common stock, $.01 par
value, of the Company (the "Common Stock"), the result of which was that
SSCC became the owner of 100% of the Common Stock;
(c) each issued and outstanding share of Series E Cumulative Convertible
Exchangeable Preferred Stock, $.01 par value, of the Company (the
"Preferred Stock") remained outstanding and became convertible pursuant to
its terms into the number of shares of SSCC Common Stock that its holder
would have received in the Merger had such holder converted each share of
Preferred Stock immediately prior to the effective time of the Merger; and
(d) the Restated Certificate of Incorporation of the Company (the
Certificate") was amended to provide that, except as otherwise required by
law, the holders of Preferred Stock would be entitled, in addition to their
then existing voting rights, to one vote per share upon all matters upon
which holders of Common Stock have the right to vote.
The Certificate provides that in the event that the Company shall have failed to
declare and pay or set apart for payment in full the dividends accumulated on
the outstanding shares of Preferred Stock for any six quarterly dividend payment
periods, the number of directors of the Company shall be increased by two and
the holders of the Preferred Stock, voting as a class, shall be entitled to
elect such two additional directors (the "Preferred Directors") until the full
dividends accumulated on all outstanding shares of the Preferred Stock have been
declared and paid or set apart for payment. More than six quarterly dividends
remain unpaid, and the Company is presently unable to declare or pay dividends
on the Preferred Stock as a result of covenants in certain of its credit
agreements; accordingly, the holders of the Preferred Stock, voting as a class,
are entitled to elect the Preferred Directors.
1
<PAGE>
Prior to the Merger, the Board of Directors of the Company consisted of 12
members (the "Pre-Merger Board"), including William F. Aldinger, Dionisio
Garza, Richard A. Giesen, James J. Glasser, Jack M. Greenberg, John D.
Nichols, Jerry K. Pearlman, Richard J. Raskin, Phillip B. Rooney, Ira N.
Stone, James H. Stone, and Roger W. Stone.
Pursuant to the Merger Agreement, the directors of JSC Acquisition, which were
Richard W. Graham and Patrick J. Moore, became the directors of the Company at
the time of the Merger. Immediately following the Merger, Mr. Graham resigned,
and Mr. Moore, as the sole remaining director, established the size of the Board
of Directors at three and named Ray M. Curran and Roger W. Stone to fill their
existing vacancies. On March 8, 1999 the Board was expanded to five members,
and David Gale and Mark A. Weissman were appointed to fill the newly created
vacancies to represent the holders of the Preferred Stock. Subsequently, Leslie
T. Lederer was appointed to fill the vacancy created by Mr. Stone's resignation
effective as of March 31, 1999.
VOTING AND PROXY
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of the Company, for use at the 1999 Annual
Meeting of Stockholders to be held on Monday, May 17, 1999 at 10:00 a.m.
(C.S.T.) at 150 North Michigan Avenue, Chicago, Illinois (the "Annual
Meeting"). The Board of Directors of the Company urges that your proxy be
executed and returned promptly in the enclosed envelope. If the Proxy is
properly executed and returned, the shares of Preferred Stock represented
thereby will be voted in accordance with the instructions thereon at the
Annual Meeting. Such Proxy, if given, may be revoked by the stockholder
executing it any time prior to its being voted by giving written notice of
such revocation to the Secretary of the Company or by attending the Annual
Meeting and requesting its revocation at the beginning of the Annual Meeting.
The only matters which the Company's management intends to present are those
set forth in accompanying Notice. Management knows of no other matters that
will be presented at the Annual Meeting. Should any other matters properly
come before the Annual Meeting, it is the intention of the persons named in
the enclosed Proxy to act upon them according to their best judgment.
The close of business on March 29, 1999 has been fixed as the record date for
determining stockholders entitled to notice of and to vote at the Annual
Meeting. On that day, the issued and outstanding voting securities of the
Company consisted of 110,000,000 shares of Common Stock and 4,599,300 shares
of Preferred Stock. The Company first sent this Proxy Statement and enclosed
Proxy to stockholders entitled to notice and to vote at the Annual Meeting on
or about April 14, 1999. Each stockholder has one vote for each share of
Common Stock and Preferred Stock held. The holders of a majority of the
shares of Common Stock and Preferred Stock issued and outstanding and
entitled to vote at the Annual Meeting, present in person or by proxy, will
constitute a quorum for the transaction of business.
At the Annual Meeting, two directors are to be elected by a vote of the
holders of Preferred Stock (the "Preferred Directors"), voting as a separate
class, and three by a vote of the holders of Common Stock and Preferred Stock
voting on a combined basis (the "Ordinary Directors"). As noted under
"Principal Stockholders", SSCC owns 100% of the outstanding Common Stock, and
has sufficient votes, without any additional votes of the holders of the
Preferred Stock, to elect the three nominees for Ordinary Director.
2
<PAGE>
Each stockholder is entitled to cumulate his or her votes for the election of
Ordinary Directors. Under cumulative voting, each stockholder entitled to
vote is entitled to vote as many votes as shall equal the number of shares of
Common Stock and Preferred Stock owned multiplied by the number of directors
to be elected (three). Each stockholder may cast all of such votes for a
single candidate or distribute them among the number of director positions to
be filled or among any two or more candidates as such stockholder may see
fit. Except as otherwise instructed by a stockholder, each properly executed
and returned Proxy that grants authority to vote for one or more of the
nominees proposed by the Company named below will authorize the proxies to
cumulate all votes for Ordinary Directors that the stockholder is entitled to
cast and to allocate such votes among such nominees as such proxies
determine, in their sole and absolute discretion. If individuals other than
the nominees proposed by the Company named below are nominated for director
of the Company, the proxies intend to distribute the number of votes as to
which they have discretionary authority with respect to cumulative voting in
such manner as will assure the election of all nominees for Ordinary
Directors proposed by the Company named below or, if they shall have
insufficient votes for such purpose, the election of as many of such nominees
as is possible. Holders of Preferred Stock are not entitled to cumulate
votes in the election of Preferred Directors.
If a quorum is present at the Annual Meeting, the three candidates for
Ordinary Directors and the two candidates for Preferred Directors receiving
the greatest number of votes will be elected. Except as otherwise instructed
by a stockholder, each properly executed and returned Proxy will be voted FOR
the election of the nominees proposed by the Company named below. The
enclosed Proxy permits each stockholder to withhold authority to vote for one
or more of such nominees, but withholding authority to vote for a director
nominee will not prevent such nominee from being elected. In the election of
directors, abstentions and broker non-votes will not affect the outcome,
except in determining the presence of a quorum and in the sense that such
proxies will not count towards the votes required for any nominee's election.
ELECTION OF DIRECTORS
Ordinary Directors are to be elected to serve until the next succeeding
Annual Meeting of Stockholders or until their successors are elected and
qualified. Preferred Directors are to be elected to serve until the earlier
of the next succeeding Annual Meeting of Stockholders, their successors are
elected and qualified or the date on which all accumulated dividends on the
shares of Preferred Stock have been declared and paid or set aside for
payment in full. It is intended that the Proxy, if given, and unless
otherwise specified thereon, will be voted for the persons proposed by the
Company named below. In case any of the named nominees proposed by the
Company is not a candidate at the Annual Meeting, an event which management
does not anticipate, it is intended that the enclosed Proxy, if given, and
unless it is otherwise specified thereon, may be voted for a substitute
nominee and will be voted for the other nominees named by the Company.
3
<PAGE>
<TABLE>
<CAPTION>
NOMINEES FOR ELECTION AS ORDINARY DIRECTORS
NUMBER OF SHARES
BENEFICIALLY OWNED
(a)
----------------------
YEAR FIRST SSCC
ELECTED A PREFERRED COMMON
NAME PRINCIPAL OCCUPATION DIRECTOR STOCK STOCK
- - ------------- ------------------------------- ----------- --------- --------
<S> <C> <C> <C> <C>
Ray M. Curran.......... President and Chief Executive Officer of 1998 0 90,000
the Company and Smurfit-Stone Container
Corporation
Leslie T. Lederer...... Vice President - Strategic Investment 1999 0 115,012
Dispositions of the Company and Smurfit-
Stone Container Corporation
Patrick J. Moore....... Vice President and Chief Financial 1998 0 336,016
Officer of the Company and Smurfit-Stone
Container Corporation
</TABLE>
NOMINEES FOR ELECTION AS PREFERRED DIRECTORS
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED
(a)
----------------------
YEAR FIRST SSCC
ELECTED A PREFERRED COMMON
NAME PRINCIPAL OCCUPATION DIRECTOR STOCK STOCK
- - ----------- --------------------------------- ---------- ---------- -------
<S> <C> <C> <C> <C>
David Gale............... President of Delta Dividend Group, 1999 24,500 (b) 0
Inc.
Mark A. Weissman......... Manager of Corporate Bond Trading 1999 4,605 (c) 0
of Mariner Investment Group, Inc.
</TABLE>
(a) All of the shares of Common Stock are owned by SSCC. Each person has sole
voting and investment power with respect to the shares listed. Shares are
shown as of March 1, 1999. All amounts represent less than one percent of
the outstanding Preferred Stock and SSCC Common Stock, respectively. Shares
shown as beneficially owned include the number of shares of SSCC Common
Stock that directors and executive officers have the right to acquire
within 60 days after March 1, 1999 pursuant to exercisable options under
the stock option plans maintained by the Company and SSCC. Shares of SSCC
Common Stock shown include the number of shares held in the Savings Plan
maintained by the Company and SSCC as of December 31, 1998, which the
executive officers have the right to vote.
(b) Includes 23,500 shares of Preferred Stock owned by Delta Dividend Group,
Inc.
(c) Excludes 426,600 shares of Preferred Stock owned by Mariner Investment
Partners, an affiliate of Mr. Weissman, as to which beneficial ownership is
disclaimed.
4
<PAGE>
INFORMATION AS TO DIRECTORS
The following information indicates the principal occupation and employment for
the Directors for the last five years, unless otherwise indicated. All
Executive Officers of the Company serve in the same capacity for SSCC and
certain of its other subsidiaries. Except where noted, the executive officers
of Jefferson Smurfit Corporation ("JSC") assumed similar positions with the
Company and SSCC at the time of the Merger.
PREFERRED DIRECTORS:
The following individuals were appointed to serve as Preferred Directors as of
March 8, 1999 pursuant to the terms of a Memorandum of Understanding setting
forth the terms of the settlement of a consolidated class action brought against
the Company and SSCC in the Delaware Chancery Court on behalf of all holders of
Preferred Stock in connection with the Merger.
DAVID GALE, born February 22, 1959, has been President of Delta Dividend
Group, Inc. since 1992. He also serves as a director of Preferred Income
Funds.
MARK A. WEISSMAN, born February 14, 1961, has been Manager of Corporate
Bond Trading of Mariner Investment Group, Inc. since 1996. Prior to that,
he was a managing director with Bear, Stearns & Co., Inc. from 1988 to
1994, and was with Cantor Fitzgerald & Co. from 1994 to 1996.
ORDINARY DIRECTORS:
RAY M. CURRAN, born May 13, 1946, was named to succeed Roger M. Stone as
President and Chief Executive Officer of SSCC as of April 1, 1999. He was
Executive Vice President and Deputy Chief Executive Officer from November
1998 until March 31, 1999. Prior to that time he was Financial Director of
Jefferson Smurfit Group plc ("JS Group") since 1996, and Chief Financial
Officer of JS Group from 1992 to 1996. JS Group beneficially owns
approximately 33% of the SSCC Common Stock.
LESLIE T. LEDERER, born July 20, 1948, has been Vice President - Strategic
Investment Dispositions of SSCC since November 1998. He was Vice
President, Secretary and General Counsel of the Company from 1987 to
November 1998.
PATRICK J. MOORE, born September 7, 1954, was named Vice President and
Chief Financial Officer of JSC in October 1996. He was Vice President and
General Manager - Industrial Packaging Division of JSC from December 1994
to October 1996. He served as Vice President and Treasurer of JSC from
February 1993 to December 1994 and was Treasurer of JSC from October 1990
to February 1993. He joined JSC in 1987 as Assistant Treasurer.
5
<PAGE>
BOARD AND BOARD COMMITTEE MEETINGS,
COMMITTEE FUNCTIONS AND COMPOSITION
During 1998, the Pre-Merger Board met nine times. As to meetings of the
Committees of the Pre-Merger Board, the Audit Committee met one time, the
Compensation Committee met three times, and the Nominating Committee and the
Finance Committee did not meet. None of the current directors were a member of
the Pre-Merger Board or any of its Committees. Following the Merger, the Board
of Directors has acted only by written consent without a meeting, and there are
currently no Committees of the Board of Directors.
CERTAIN TRANSACTIONS
During 1998, the Company paid approximately $233,000 to Decade Films, Inc.
for production services related to the Company's BREAKTIME video, an internal
employee communication presentation produced quarterly. Lauren Stone,
daughter of Roger Stone, is President of Decade Films, Inc.
At December 31, 1998, Sunland Sales Company owed the Company approximately
$361,000 as a result of sales made by the Company of kraft paper to Sunland.
Avery Stone owns the controlling interest in Sunland and is the brother of
Roger Stone.
During 1996 and 1997, the Company made loans to Randolph Read, an executive
officer of the Company prior to the Merger, in the aggregate amount of
$611,384 in connection with Mr. Read's relocation to Chicago upon his
assuming his duties with the Company. The loans had no stated interest rate.
Since April 14, 1998, the date of the Company's last proxy statement, the
Company forgave approximately $341,000 of the loans made to Mr. Read. In
connection with the loan forgiveness, which must be accounted for as income
by Mr. Read, the Company paid Mr. Read $250,000 to offset the related tax
liability. In connection therewith, the Company purchased Mr. Read's
California residence for an amount equal to the outstanding mortgage thereon.
On September 4, 1998 the Company announced that its Canadian subsidiary,
Stone Container (Canada) Inc. ("Stone Canada") purchased a 50% partnership
interest in MacMillan-Bathurst, Ltd. ("MBI"), a Canadian corrugated box
company, from MacMillan Bloedel Inc. for $185 million (Cdn.). Stone Canada,
which already owned 50% of MBI, immediately resold the newly acquired 50%
interest to a subsidiary of JS Group for the same price.
6
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than ten
percent of any class of the company's voting stock, to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission ("SEC"). Executive officers, directors and greater than ten percent
beneficial owners are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on a review of the
copies of such forms furnished to the Company and written representations from
the Company's executive officers and directors, the Company believes that during
the period from January 1, 1998 through March 29, 1999, its executive officers,
directors and greater than ten percent beneficial owners complied with all
Section 16(a) filing requirements applicable to them, except on one occasion
there was a failure to file a Form 4, Statement of Changes in Beneficial
Ownership, on a timely basis with the SEC by Mr. William Klaisle, an executive
officer of the Company prior to the Merger, in connection with a sale of Common
Stock.
PRINCIPAL STOCKHOLERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of March 29, 1999, the following person was known to the Company to own
beneficially more than 5% of the outstanding Common Stock of the Company. No
stockholder owned beneficially more than 5% of the outstanding Preferred Stock
of the Company.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON STOCK PERCENT OF
BENEFICIALLY COMMON STOCK
NAME AND ADDRESS OWNED OUTSTANDING
- - ------------------------ ------------- ------------
<S> <C> <C>
Smurfit-Stone Container Corporation............. 110,000,000 100.0%
150 North Michigan Avenue
Chicago, IL 60601-7658
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
As of March 1, 1999, the directors and executive officers as a group
beneficially owned 29,105 shares of Preferred Stock, which represents less
than one percent of the issued and outstanding shares of Preferred Stock, and
3,976,051 shares of SSCC Common Stock, which represents 1.8 percent of the
issued and outstanding shares of SSCC Common Stock.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation earned by, as well as the
number of shares of SSCC Common Stock underlying options granted to each of
the Company's named executive officers during the past three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------ LONG-TERM
COMPENSATION AWARDS
OTHER ---------------------- ALL
ANNUAL SECURITIES OTHER
COMPEN- RESTRICTED UNDERLYING COMPEN-
SALARY BONUS SATION STOCK OPTIONS SATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($)(a) (#)(a) ($)(b)
- - --------------------------------- ----- -------- ------ ------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Roger W. Stone (c) 1998 $850,000 $ 0 $ 0 $1,897,836 297,000 $ 4,000
Former President and 1997 858,475 0 0 0 283,301 0
Chief Executive Officer 1996 934,000 0 0 0 276,051 0
Matthew S. Kaplan (d) 1998 406,667 0 0 204,576 102,564 25,472
Former Vice President and 1997 331,970 0 0 0 56,033 0
General Manager - Container 1996 274,000 0 0 0 55,088 0
Division
Gordon L. Jones (e) 1998 269,167 0 0 99,226 143,389 14,151
Former Vice President and 1997 258,489 0 0 0 23,977 0
General Manager - 1996 229,639 74,900 0 0 23,790 0
Containerboard Marketing
Division
Leslie T. Lederer 1998 223,333 106,000 0 84,405 83,339 17,766
Vice President - Strategic 1997 205,000 13,800 0 22,714 27,316 0
Investment Disposition 1996 202,500 0 0 45,324 27,023 0
John M. Riconosciuto 1998 194,167 32,550 0 51,325 80,995 6,730
Vice President and General 1997 164,025 23,950 0 16,422 25,395 0
Manager - Bag Packaging 1996 150,259 0 0 0 14,856 0
Division
Randolph C. Read (f) 1998 332,396 0 0 0 67,583 2,285,935
Former Senior Vice President 1997 363,951 0 0 0 55,372 0
1996 419,000 0 0 0 99,000 0
Harold P. Wright (g) 1998 299,167 0 0 66,390 67,583 74,582
Former Senior Vice President 1997 313,171 0 0 0 55,372 0
1996 335,000 0 0 0 59,949 0
</TABLE>
8
<PAGE>
(a) All awards of restricted stock and options of the Company were vested at
the time of the Merger and were converted into shares or options to acquire
shares of SSCC Common Stock, adjusted to reflect the .99 to one exchange
ratio set forth in the Merger Agreement.
(b) Amounts shown under All Other Compensation for 1998 include: a $4,000
Company contribution to the Company's Savings Plan for each Named Executive
Officer (other than Mr. Riconosciuto); extended insurance benefit for Mr.
Kaplan ($21,222), Mr. Jones ($10,151), Mr. Lederer ($13,516), Mr.
Riconosciuto ($5,376) and Mr. Wright ($53,442); imputed interest on
personal loans for Mr. Riconosciuto ($1,354), Mr. Read ($15,201) and Mr.
Wright ($16,890); a change in control payment to Mr. Read in the amount of
$1,675,534; a payment to Mr. Read of $591,000 related to the forgiveness of
his personal loan and the related tax liability thereon; and parking fees
paid for Mr. Kaplan ($250), Mr. Lederer ($250), Mr. Read ($200) and Mr.
Wright ($250).
(c) Roger W. Stone retired as of March 31, 1999. Ray M. Curran was named to
succeed Mr. Stone as President and Chief Executive Officer of SSCC as of
April 1, 1999. Upon his retirement, Mr. Stone received a payment of
$5,833,747 under his Severance Agreement with the Company.
(d) Matthew S. Kaplan resigned as of March 31, 1999. Peter F. Dages was named
to succeed Mr. Kaplan as Vice President and General Manager - Corrugated
Container Division of SSCC as of April 1, 1999. Mr. Kaplan received a
payment of $2,005,182 under his Severance Agreement with the Company.
(e) Gordon L. Jones resigned as of April 15, 1999. Mr. Jones will receive a
payment of $1,261,111 under his Severance Agreement with the Company.
(f) Randolph C. Read resigned as of November 18, 1998. Mr. Read received a
payment of $1,675,534 under his Severance Agreement with the Company.
(g) Harold P. Wright is now employed by the Company pursuant to the terms of an
employment agreement in a non-executive capacity. See "Employment
Contracts and Severance Arrangements".
9
<PAGE>
OPTIONS GRANTS IN THE LAST FISCAL YEAR --The following table provides
information with respect to option grants made during 1998 to each of the
executives named in the Summary Compensation Table. All options are
exercisable for SSCC Common Stock.
<TABLE>
<CAPTION>
OPTION GRANTS IN 1998
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO EXERCISE POTENTIAL REALIZABLE VALUE OF
UNDERLYING EMPLOYEES PRICE STOCK PRICE APPRECIATION FOR
OPTIONS IN FISCAL ($ PER EXPIRATION OPTION TERMS ($)(c)
NAME GRANTED(a) YEAR (b) SHARE) DATE 5% 10%
- - ----------------------------- ---------- ----------- ------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Roger W. Stone............... 297,000 18.5% $11.87 1/19/08 $2,217,099 $5,618,564
Matthew S Kaplan............. 102,564 6.4% 11.87 1/19/08 765,638 1,940,277
Gordon L. Jones.............. 68,389 4.3% 11.87 1/19/08 510,522 1,293,764
Leslie T. Lederer............ 33,339 2.1% 11.87 1/19/08 248,875 630,698
Leslie T. Lederer............ 50,000 1.0% 12.81 12/29/08 402,886 1,020,991
John M. Riconosciuto......... 30,995 1.9% 11.87 1/19/08 231,377 586,355
John M. Riconosciuto......... 50,000 1.0% 12.81 12/29/08 402,886 1,020,991
Randolph C. Read............. 67,583 4.2% 11.87 1/19/08 504,506 1,278,516
Harold P. Wright............. 67,583 4.2% 11.87 1/19/08 544,564 1,380,033
</TABLE>
___________
(a) Reflects options granted prior to the Merger and, for Mr. Lederer and Mr.
Riconosciuto, options to acquire SSCC Common Stock granted subsequent to
the Merger. The options granted prior to the Merger were initially
exercisable for shares of common stock of the Company and which, pursuant
to the Merger, were converted into options to acquire that number of shares
of SSCC Common Stock determined by multiplying the number of shares of
common stock of the Company subject to such options by 0.99 at an exercise
price equal to the exercise price in effect immediately prior to the Merger
divided by 0.99.
(b) Reflects percentage of total options granted to employees in 1998 under
each of Stone's and SSCC's option plans, as applicable.
(c) The dollar amounts under these columns are the result of calculations at 5%
and 10% rates, as set by the Securities and Exchange Commission's executive
compensation disclosure rules. Actual gains, if any, on stock option
exercises depend on future performance of the SSCC Common Stock and overall
stock market conditions. No assurance can be made that the amounts
reflected in these columns will be achieved.
As of December 31, 1998, there were approximately 36,500,000 shares of SSCC
Common Stock reserved for issuance under the stock incentive plans of SSCC and
the Company, including approximately 4,500,000 shares available for future
grants.
10
<PAGE>
OPTION EXERCISES AND YEAR-END VALUE TABLE --The following table provides
information with respect to the number of securities underlying unexercised
options held at the end of 1998 by the executives named in the Summary
Compensation Table. All options are exercisable for SSCC Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF
SHARES SECURITIES UNDERLYING VALUE OF UNEXERCISED
ACQUIRED UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
ON VALUE JANUARY 1, 1999 (#)(a) JANUARY 1, 1999 ($)(b)
EXERCISE REALIZED ------------------------------ ------------------------------
NAME (#) ($) EXERCISABLE / UNEXERCISABLE EXERCISABLE / UNEXERCISABLE
- - ----------------------------- --------- -------- ------------ ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Roger W. Stone............. 0 0 1,056,035 / 0 $2,280,351 / $ 0
Matthew S. Kaplan.......... 0 0 254,591 / 0 624,914 / 0
Gordon L. Jones............ 0 0 134,189 / 0 364,502 / 0
Leslie T. Lederer.......... 0 0 107,181 / 50,000 239,345 / 150,000
John M. Riconosciuto....... 0 0 81,867 / 50,000 198,877 / 150,000
Randolph C. Read........... 0 0 221,956 / 0 587,005 / 0
Harold P. Wright........... 0 0 193,597 / 0 497,090 / 0
</TABLE>
(a) Reflects options that initially were exercisable for shares of common stock
of the Company and which, pursuant to the Merger, were converted into
options to acquire that number of shares of SSCC Common Stock determined by
multiplying the number of shares of common stock of the Company subject to
such options by 0.99 at an exercise price equal to the exercise price in
effect immediately prior to the Merger divided by 0.99.
(b) The closing market value of the SSCC Common Stock on December 31, 1998 was
$15.81 per share. On that date, the exercise prices per share for
outstanding options held by the named executive officers ranged from $11.87
to $29.29.
PENSION PLAN
The Stone Container Corporation Salaried Employees Retirement Plan (the
"Retirement Plan") provides for the payment of a monthly pension to retiring
salaried employees equal to the larger of (a) 1.67% of his or her average
monthly compensation based on the highest 60 consecutive months compensation
(within the last 180 months) for each year of service to a maximum of 30 years
of service, reduced by 3/4 of 1% of the employee's covered compensation under
social security or (b) 1% of such average monthly compensation (not greater than
$900) for each year of service. This benefit is then reduced, if applicable, by
the monthly retirement income that could be provided on an actuarial equivalent
basis from the employee's participation in certain previously sponsored
retirement plans of the Company. Employees become vested for retirement income
benefits after completion of 5 years of service or, if earlier, upon reaching
age 65. The payment or accrual in respect of any specified person is not and
cannot readily be separately or individually calculated by the actuaries for
this defined benefit plan. The following table shows the estimated annual
benefits payable upon retirement to persons in specified remuneration and
years-of-service classifications.
11
<PAGE>
ILLUSTRATIVE PROJECTED ANNUAL RETIREMENT BENEFIT
FOR SELECTED REMUNERATION AND YEARS OF SERVICE CLASSIFICATIONS(a)
<TABLE>
<CAPTION>
YEARS OF SERVICE AT RETIREMENT
-------------------------------------------------
REMUNERATION (b) 15 20 25 30 35
---------------- ------- -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C>
$ 100,000 $25,050 $33,400 $41,750 $50,100 $50,100
150,000 37,575 50,100 62,625 75,150 75,150
200,000 50,100 66,800 83,500 100,200 100,200
250,000 62,625 83,500 104,375 125,250 125,250
300,000 75,150 100,200 125,250 150,300 150,300
400,000 100,200 133,600 167,000 200,400 200,400
600,000 150,300 200,400 250,500 300,600 300,600
800,000 200,400 267,200 334,000 400,800 400,800
1,000,000 250,500 334,000 417,500 501,000 501,000
</TABLE>
(a) Benefit shown would be reduced by 3/4 of 1% of the retiree's covered
compensation under social security while employed by the Company, as
defined in the Retirement Plan, and would be limited to the extent required
by the provisions of the Internal Revenue Code of 1986. Under federal law,
an employee's benefits under a qualified pension plan such as the
Retirement Plan are limited to certain maximum amounts. The Company
maintains the Stone Container Corporation Excess Benefit Plan, which
supplements the benefits of any participant in the qualified pension plan
by direct payment of a lump sum or by an annuity, on an unfunded basis, of
the amount by which any participant's benefits under the pension plan are
limited by law. The table illustrates the amount of annual pension without
regard to such limitations for an employee retiring in 1998 calculated on a
single life annuity basis.
(b) In estimating the annual benefit, it is assumed that the five year average
monthly compensation is equal to 1998 earnings.
The compensation covered by the Retirement Plan includes salary and any bonus
earned. The years of service as of January 1, 1999 for the executive officers
named in the Summary Compensation Table are: 42 for Mr. Stone; 29 for
Mr. Wright; 3 for Mr. Read; 20 for Mr. Kaplan; 15 for Mr. Jones; 21 for
Mr. Lederer; and 17 for Mr. Riconosciuto.
COMPENSATION OF DIRECTORS
In 1998, non-employee directors received an annual retainer of $30,000 payable
$20,000 in cash and $10,000 in Common Stock of the Company valued at the date of
the Annual Meeting of Stockholders. In addition, the Chairmen of the various
committees of the Board of Directors received an additional $3,000 per year
retainer. The directors received a meeting fee for attendance at Board Meetings
or Committee Meetings of $1,500 per meeting. Under the Company's unfunded
deferred director fee plan, a director could elect to defer payment of his
director's fees to the year following the director's retirement from the Board
of Directors, plus earnings on the deferred amounts under various options. In
addition, the Company maintained a policy pursuant to which it appointed a
director with five or more years of service as a consultant to the Company for a
number of years equal to the number of years the director served on the Board
and paid an annual consulting fee equal to the director's retainer in effect at
the date of such director's retirement. Following the Merger, non-employee
directors are paid an annual retainer of $5,000, which in the case of Preferred
Directors is prorated for any partial year during which they serve on the Board
of Directors.
12
<PAGE>
EMPLOYMENT CONTRACTS AND SEVERANCE ARRANGEMENTS
The Company has entered into Severance Agreements for corporate and
divisional officers providing for lump sum payment of salary and bonus (based
upon the average bonus for the last three calendar years) plus the payment of
certain fringe benefits, in the event of termination of employment of the
executive by the Company without cause or by the executive for good reason
(as defined in the Agreement) after a change in control (as defined in the
Agreement) which occurred as a result of the Merger. The Company has entered
into such Agreements with each of the individuals named in the Summary
Compensation Table. The benefits received by Messrs. Stone and Kaplan upon
their resignation as of March 31, 1999 and by Mr. Read upon his resignation
in December, 1998 are shown in the footnotes to the Summary Compensation
Table. The other individuals named in the Summary Compensation Table (other
than Mr. Wright) would receive benefits under their Agreements equal to
approximately two times salary and bonus. SSCC has entered into an
Employment Agreement with Mr. Wright dated November 18, 1998, which has a
term through April 30, 2000, and contains provisions similar to those
provided in the Severance Agreements for the other individuals named in the
Summary Compensation Table, with benefits equal to three times salary and
bonus.
The Company entered into consulting agreements in 1974 with each of Messrs.
Jerome H. Stone, Marvin N. Stone (deceased) and Norman H. Stone (deceased),
under which each serves or was to serve as a consultant to the Company for a
fee of $80,000 per annum during his lifetime and, should he die leaving a
widow, $40,000 per annum to such widow during her lifetime. Mr. Norman H.
Stone died in 1985 and Marvin N. Stone died in 1999, and their respective
widows receive the specified payments. The consulting fees are in addition to
the retirement benefits previously noted.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Pre-Merger Board was an
officer, former officer or employee of the Company or any of its
subsidiaries. No executive officer of the Company served as a member of (i)
the Compensation Committee of another entity in which one of the executive
officers of such entity served on the Company's Compensation Committee of the
Pre-Merger Board, (ii) the Board of Directors of another entity in which one
of the executive officers of such entity served on the Compensation Committee
of the Pre-Merger Board, or (iii) the Compensation Committee of another
entity in which one of the executive officers of such entity served as a
member of the Pre-Merger Board.
13
<PAGE>
REPORT OF THE PRE-MERGER COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Pre-Merger Board, which consisted of Richard
A. Giesen, as Chairman, William F. Aldinger, Dionisio Garza, and Jack
M. Greenberg, previously provided the following Board Compensation Committee
Report on Executive Compensation prior to the Merger.
COMPENSATION POLICY
Prior to the Merger, under the direction of the Compensation Committee of the
Board of Directors, the Company's executive compensation program was based upon
a "pay for performance" philosophy and was designed to attract and retain highly
qualified, key executives by offering competitive base compensation supplemented
with performance-based incentives linked to corporate performance factors and
position within the Company. The Company designed and administered executive
compensation programs so that compensation was linked to Company performance and
so that the interests of executives were aligned with the interests of
stockholders. This philosophy was articulated in the following guiding
principles of the Company's compensation programs:
- - - A significant percentage of compensation was determined by the Company's
annual and long-term financial performance, including the creation of
stockholder value.
- - - Compensation programs were designed to encourage and balance the attainment
of short-term operational goals and long-term strategic goals.
- - - Total compensation was targeted at competitive levels to allow the Company
to attract, retain and motivate highly qualified employees; however, a
greater percentage of compensation was performance-based and variable
(versus fixed compensation) than competitive practices might suggest.
- - - Compensation programs were designed to encourage stock ownership by
executives. In 1996, the Company instituted a program which required key
employees to maintain prescribed minimum stock ownership based on the level
of the key employee by the year 2001, which is no longer effective as a
result of the Merger.
There were three elements to the Company's compensation program, each
consistent with its compensation philosophy: annual base salary, annual cash
bonus incentives and long-term incentives. Both the annual and the longer
term incentives were directed toward specific financial measures, including
earnings growth and total return to stockholders, with each of the targets
calling for progressively excellent results. The total compensation package
was designed to be competitive with compensation programs offered to
comparable executive officers in a hybrid model group consisting of a pool of
executive officers who are currently employed in similar positions in
comparable paper companies and with other companies with sales in excess of
$1 billion (the "Peer Group"). The Company believed that its total
compensation practices would have been competitive if the Company performed
within the targets established by the Company both on the basis of short-term
and long-term goals. In 1998, the Company did not achieve either its
short-term or long-term goals.
BASE SALARIES
All executive officer base salaries were reviewed and adjustments, if any,
were approved annually by the Compensation Committee. The Company's executive
officers' base salaries were targeted to be in the 50th percentile of the
average base salaries of similarly situated executive officers within the
Peer Group, and a salary range was established for each position with the
midpoint of the range being set at such 50th percentile level. Any adjustment
in an executive officer's base salary was made each year based upon an
evaluation of individual performance subject to corporate salary budget
guidelines and the relationship of current salary level to the midpoint of
the applicable salary range. Although competitive practices were
14
<PAGE>
viewed as important, the Company and the Compensation Committee concurred in
the view that the more important considerations in setting annual
compensation were individual merit and the Company's financial performance.
SHORT-TERM INCENTIVE AWARDS
The short-term incentive award component of the Company's executive
compensation program was based on the Company's consolidated operating
division profits and the Company's consolidated net income for the fiscal
year just completed. The program provided for the payment of cash incentive
awards to participants to the extent that actual consolidated operating
division profits or operating division profits, as applicable, and the
Company's consolidated net income met or exceeded certain target levels.
Early in the calendar year, the Committee established targeted consolidated
operating division profit at four distinct levels which trigger incentive
payouts. The target levels for operating division executives were established
based upon budgeted consolidated operating division profits for the fiscal
year. For staff executives, the target levels were based upon consolidated
net income. To the extent that the Company attained a targeted performance
level, each participant was entitled to receive a cash incentive award. Such
cash awards were based upon the performance level attained and each
participant's level of responsibility within the Company, ranging from 40% to
100% of the participant's base salary multiplied by the incentive payout
percentage established for the targeted performance level attained. The four
levels of targeted profit were competent, commendable, excellent, and
distinguished. A participant earned anywhere from 0% to 100% depending on the
target level attained. In the event, however, that the Company did not have
positive consolidated net income for the relevant year executive officers
would not receive bonuses. None of the other executive officers prior to the
Merger earned a short-term incentive award for 1998.
EQUITY-BASED COMPENSATION
An important consideration in the design of the Company's compensation
program was the use of equity-based compensation to encourage stock ownership
by management. Equity-based compensation of executive officers was determined
by the Compensation Committee of the Pre-Merger Board. In 1998, 50
individuals were eligible to receive grants of stock options under the 1995
Long-Term Incentive Plan (the "1995 Plan").
In January 1998, options were granted under the 1995 Plan at an exercise
price equal to fair market value of the Company's Common Stock on the close
of business on the date of the grant and vested over a period of five years
after the date of grant of the option, subject to earlier termination of the
option upon voluntary termination of employment or termination of employment
for cause and subject to automatic acceleration of vesting upon death,
disability or retirement of the optionee or a change in control of the
Company. All options granted under the 1995 Plan expire ten years from the
date of grant, unless previously terminated or unless a shorter term is
provided in the option agreement. Executives were granted options to
correlate the amount of long-term incentive compensation to be received to
the performance of the Company following the date of grant. Options granted
to each executive were granted based upon the executive's "job value" at the
75th percentile, multiplied by such executive's "opportunity percentage"
divided by the present value of the stock price of the Company on the grant
date. All options issued were non-qualified options.
During 1998, recommendations for grants of options to individual executive
officers were made based upon a market analysis of grants made to officers at
similar levels of responsibility by other companies, and also in comparison
to certain other companies in the paper industry with comparable product
lines. The Compensation Committee, as administrator of the 1995 Plan,
determined stock option awards for executive officers of the Company based on
a comparison of what officers in comparable positions at other
15
<PAGE>
companies receive in terms of the face value of the options at the time of
grant, expressed as an annualized award size as a multiple of base salary.
The value of the options would increase as the price of the Company's Common
Stock increased, which while not assured, was intended to have a correlative
relationship to the Company's long-term performance.
The Compensation Committee awarded options to executive officers under the 1995
Plan in accordance with the goals of the 1995 Plan, and upon a review of each
officer's individual performance goals, achievements, and long-term potential to
the Company. During fiscal year 1998, grants were awarded under the 1995 Plan to
50 employees, including each of the officers named in the Summary Compensation
Table. Roger W. Stone received 300,000 options to purchase shares under the 1995
Plan in 1998, based upon a 100% opportunity percentage.
As often as seemed appropriate, but at least annually, the Compensation
Committee studied the Company's executive compensation programs to judge their
consistency with the Company's compensation philosophy, their support of the
Company's strategic and financial objectives and their market competitiveness.
The Company's performance targets were changed from time to time so as to
maintain the most effective relationship between performance and compensation.
The limitation on the tax deductibility of executive compensation in excess of
$1 million under the Omnibus Budget Reconciliation Act of 1993 might have
impacted the Company. The Company received stockholder approval of the 1995
Long-Term Incentive Plan and the 1995 Key Executive Short-Term Incentive Plan
and the Company believes that these plans provide qualified performance-based
compensation. Accordingly, compensation in excess of $1 million paid under these
plans would be deductible.
COMPENSATION COMMITTEE
Richard A. Giesen, Chairman
William F. Aldinger
Dionisio Garza
Jack Greenberg
Following the Merger, the salary and benefits of the Chief Executive Officer of
the Company and certain other executives will be determined by the Compensation
Committee of the SSCC Board of Directors.
INDEPENDENT AUDITORS
Effective November 18, 1998, and in connection with the consummation of the
Merger, the Company dismissed PricewaterhouseCoopers LLP
("PricewaterhouseCoopers") as its independent accountants.
The reports of PricewaterhouseCoopers on the financial statements of the Company
for the past two fiscal years contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principles. In connection with its audits for the two most recent
fiscal years and through November 18, 1998, there have been no disagreements
with PricewaterhouseCoopers on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of PricewaterhouseCoopers,
would have caused them to make reference thereto in their report on the
financial statements for such years.
16
<PAGE>
Effective November 18, 1998, the Board of Directors appointed Ernst & Young
LLP as the Company's independent accountants for the year ended December 31,
1998. Ernst & Young has also been selected by the Board of Directors to serve
as the Company's independent accountants for the year ending December 31,
1999. Ernst & Young LLP has advised the Company that neither it, nor any of
its partners, has or has had any direct or indirect financial interest in the
Company or any of its subsidiaries. Ernst & Young LLP also serves as the
independent accountants of SSCC. It is expected that a representative of
Ernst & Young LLP will be present at the Annual Meeting of Stockholders.
Such representative may make a statement if he or she desires to do so, and
is expected to be available to respond to appropriate questions.
DISCRETIONARY AUTHORITY
While the notice of the Annual Meeting of Stockholders calls for the transaction
of such other business as may properly come before the meeting, management is
not aware of any matters to be presented for action by the stockholders at the
meeting other than as set forth in this Proxy Statement. The enclosed Proxy
gives discretionary authority, however, in the event that any additional matters
should be presented.
OTHER MATTERS
The Company will bear the costs of its solicitation of proxies. In addition to
the use of the mails, proxies may be solicited by personal interview, telephone,
telegram and telefax by the directors, officers and employees of the Company.
Arrangements will also be made with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of solicitation material to the
beneficial owners of stock held of record by such persons, and the Company may
reimburse such custodians, nominees and fiduciaries for reasonable out-of-pocket
expenses incurred by them in connection therewith. In addition, D.F. King &
Co., Inc., 77 Water Street, New York, NY 10005 has been engaged to solicit
proxies for the Company. The anticipated fees of D.F. King & Co., Inc. are
approximately $3,500, plus certain expenses.
Stockholders are referred to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998, which has been mailed to stockholders, for
financial and other information about the activities of the Company for such
fiscal year. The Annual Report is not to be deemed incorporated in the Proxy
Statement nor is it to be deemed a part of the proxy solicitation material.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING OF STOCKHOLDERS
Under the rules of the SEC, in order to be considered for inclusion in the
Company's Proxy Statement for the 2000 Annual Meeting of Stockholders, a
stockholder proposal must be received by the Secretary of the Company at the
offices of the Company at 150 N. Michigan Avenue, Chicago, IL 60601-7568 no
later than the close of business on December 16, 1999 as well as meet other SEC
requirements.
By order of the Board of Directors.
Stone Container Corporation
Craig A. Hunt, Secretary
Chicago, Illinois, April 14, 1999
17
<PAGE>
PREFERRED STOCKHOLDERS
PROXY
STONE CONTAINER CORPORATION
ANNUAL MEETING MAY 17, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned stockholder of Stone Container Corporation, a Delaware
corporation (the "Company"), appoints CRAIG A. HUNT and PATRICK J. MOORE, or
either of them, with full power to act alone, the true and lawful
attorneys-in-fact of the undersigned, with full power of substitution and
revocation, to vote all shares of stock of the Company which the undersigned
is entitled to vote at the Annual Meeting of Stockholders to be held at the
Company's Headquarters Office, 150 North Michigan Avenue, Chicago, IL, on May
17, 1999 at 10:00 a.m. (C.S.T.) and at any adjournment or postponement
thereof, with all the powers the undersigned would possess if personally
present, as indicated on the reverse hereof.
(NOTE: If authority is granted to vote for one or more nominees for Ordinary
Director, unless otherwise specified below, this proxy will authorize the
Proxies to cumulate all votes represented hereby and to allocate such votes
among such nominees as the Proxies shall determine, in their sole and
absolute discretion, in order to maximize the number of such nominees
elected. To specify a different manner of cumulative voting, write "Cumulate
For", the name(s) of the nominee(s) for Ordinary Director(s) and the number
of votes in the space indicated on the reverse hereof. See "Voting and Proxy"
in the accompanying proxy statement for further information.)
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
FOLD AND DETACH HERE
<PAGE>
1. ELECTION OF ORDINARY DIRECTORS: Please mark
your votes as /X/
indicated in this
example
FOR all WITHHOLD
nominees listed below AUTHORITY
(except as marked to to vote for all
the contrary below) nominees listed below
/ / / /
Ray M. Curran, Leslie T. Lederer and Patrick J. Moore
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line below. To cumulate votes for a
particular nominee, see instructions on the reverse hereof.
- - -----------------------------------------------------------------------------
2. ELECTION OF PREFERRED DIRECTORS:
FOR all WITHHOLD
nominees listed below AUTHORITY
(except as marked to to vote for all
the contrary below) nominees listed below
/ / / /
David Gale and Mark A. Weissman
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line below.
(YOU ARE REQUESTED TO COMPLETE, SIGN, AND RETURN THIS PROXY PROMPTLY)
- - -----------------------------------------------------------------------------
FOLD AND DETACH HERE
- - -----------------------------------------------------------------------------
On any other matter that may properly be
submitted to a vote of stockholders.
This proxy will be voted "FOR" Items 1 and 2 if
no instruction to the contrary is indicated. If
any other business is presented at the meeting,
this proxy will be voted in accordance with the
recommendation of management. Please date, sign
and mail this proxy in the enclosed envelope.
No postage is required.
Dated ___________________________________, 1999
_______________________________________________
_______________________________________________
Please sign name or names exactly as appearing
on this proxy. If signing as a representative,
please include capacity.
- - -----------------------------------------------------------------------------
