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The following is an excerpt from a DEF 14A SEC Filing, filed by AMERICAN PAD & PAPER CO on 3/29/1999.
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APRIL 27, 1999



The accompanying proxy is solicited on behalf of the Board of Directors (the "Board of Directors" or the "Board") of American Pad & Paper Company, a Delaware corporation (the "Company"), for use at the annual meeting of stockholders of the Company to be held on April 27, 1999, (the "Annual Meeting") and any adjournments thereof. This Proxy Statement and the related proxy card are being mailed to holders of the Company's common stock, par value $.01 per share (the "Common Stock"), commencing on or about March 31, 1999. Neither the Company's officers or directors who held office during the last year ended December 31, 1998, nor any nominee or associate of any of the aforementioned persons, has any interest, direct or indirect, in the matters to be voted upon, other than election to office and as otherwise disclosed herein.

The Board of Directors requests that you execute and return the proxy promptly, whether or not you plan to attend the Annual Meeting. In addition, if you plan to attend the Annual Meeting in person, please so indicate in the appropriate space on the proxy card. Each properly executed proxy not revoked will be deemed to grant authority to vote and, unless a contrary instruction is indicated on the proxy, will be voted (i) for the nominees for Director named in this Proxy Statement; (ii) for approval of the appointment of PricewaterhouseCoopers LLP to be the independent accountants of the Company and its subsidiaries for fiscal year 1999; (iii) for approval of the 1999 Key Employees Stock Incentive Plan; and (iv) in accordance with the best judgment of the persons named in the enclosed proxy, or their substitutes, for any other matters which properly come before the Annual Meeting or any adjournment thereof. Returning your completed proxy will not prevent you from voting in person at the Annual Meeting should you be present and desire to do so. In addition, the proxy may be revoked at any time prior to its exercise either by giving written notice to the Company or by advising the Inspector of Election of the revocation at the meeting; however, presence at the meeting will not automatically revoke the proxy and revocation during the meeting will not affect any votes previously taken. The signing of the proxy grants discretionary authority to vote upon matters which may properly come before the Annual Meeting from the floor or at such a late date as to prohibit additional notice. Other than approval of the minutes of the 1998 Annual Meeting of Stockholders, no such matter is known to management.


Stockholders of record of the Company's Common Stock as of the close of business on March 9, 1999, will be entitled to vote at the Annual Meeting. On that date, the Company had outstanding 27,724,045 shares of Common Stock. A list of the Company's stockholders will be available for examination by stockholders, for any purpose germane to the meeting, at the Company's headquarters for a period of ten


days prior to the meeting. Each share of Common Stock entitles the holder thereof to one vote on all matters submitted to stockholders. At the Annual Meeting, inspectors of election shall determine the presence of a quorum and shall tabulate the results of the stockholders' voting. The holders of a majority of the total number of outstanding shares of Common Stock entitled to vote must be present in person or by proxy to constitute the necessary quorum for any business to be transacted at the Annual Meeting. In accordance with the General Corporation Law of the State of Delaware (the "DGCL"), properly executed proxies marked "abstain" as well as proxies held in street name by brokers that are not voted on all proposals to come before the Annual Meeting ("broker non-votes"), will be considered "present" for the purposes of determining whether a quorum has been achieved at the Annual Meeting. The Board of Directors recommends that the stockholders vote FOR Proposals 1, 2 and 3.

The three nominees for Director receiving the greatest number of votes cast at the Annual Meeting in person or by proxy shall be elected. Consequently, any shares of Common Stock present in person or by proxy at the Annual Meeting but not voted for any reason have no impact in the election of Directors, except to the extent that the failure to vote for an individual may result in another individual receiving a larger number of votes. All other matters to be considered at the Annual Meeting require, for approval, the favorable vote of a majority of the shares entitled to vote at the meeting either in person or by proxy. Stockholders have no right to cumulative voting as to any matter, including the election of Directors. If any proposal at the Annual Meeting must receive a specific percentage of favorable votes for approval, abstentions in respect of such proposal are treated as present and entitled to vote under the DGCL and therefore have the effect of a vote against such proposal. Broker non-votes in respect of any proposal are not counted for purposes of determining whether such proposal has received the requisite approval under the DGCL.



The Board of Directors is currently comprised of ten Directors divided into three classes. Directors in each class serve a term of three years with the term of each class expiring in different years. Each Director shall be elected to hold office until the expiration of his term or until his earlier death, resignation, retirement, disqualification or removal from office for cause.

Subject to rights of holders of any series of preferred stock to fill such newly created directorships or vacancies, any newly created directorships resulting from an increase in the authorized number of Directors or any vacancies on the Board of Directors may be filled by a vote of 50% of the total number of the remaining Directors then in office.


The Board of Directors held eight meetings during 1998.

The Board of Directors has three standing committees: the Executive Committee, the Audit Committee and the Compensation Committee.

The Executive Committee is authorized to review the Company's strategic planning process and has the power to exercise the authority of the Board on specific matters assigned to it by the Board from time to time. The Executive Committee for 1998 was comprised of Messrs. Gay, Gard and Wolpow. Mr. Charles G. Hanson III was a member of the Executive Committee until his resignation from the Board on July 7, 1998. The Executive Committee met one time in 1998.

The Audit Committee for 1998 was composed of three Directors: Messrs. Edgerley, Kohn and Watterson. The Audit Committee met two times in 1998, and all members were in attendance. The functions of the Audit Committee include:
recommending the engagement of independent accountants for the Company and, with them, the plan and scope of the audit, its status during the year, the results when completed and the fees for services performed; discussing with management and the independent


accountants the adequacy of internal accounting controls and, if deemed necessary or appropriate, discussing with each of them, independently of the other, any recommendations on matters which any of them considers to be of importance; reviewing the Company's accounting and financial reporting principals, policies and practices; and reviewing, prior to publication, the annual audited financial statements as well as such other Company financial information or releases as the Committee deems desirable.

The Compensation Committee was composed of two Directors in 1998: Messrs. Gay and Wolpow. The Compensation Committee met five times in 1998, and all members were in attendance. The Compensation Committee is authorized to provide a general review of the Company's compensation and benefit plans to ensure compliance with corporate objectives. See "Compensation of Executive Officers-- Compensation Committee Report on Executive Compensation," below, for a description of the functions of the Compensation Committee.

During 1998, each of the current Directors attended more than 75% of the combined meetings of the Board of Directors and committees of which such Director is a member.

The Company does not have a Nominating Committee. The entire Board of Directors is responsible for filling vacancies on the Board as they occur and recommending candidates for election as Directors at the annual meetings of stockholders. The Board will consider individuals recommended for nominations by stockholders of the Company. Such recommendations should be submitted in writing to the Chairman of the Board, who will submit them to the entire Board for its consideration. The recommendation must be accompanied by the consent of the individual nominated to be elected and to serve.

In addition, the Amended and Restated By-Laws of the Company (the "By-Laws") require that advance notice of nominations for the election of Directors to be made by a stockholder (as distinguished from a stockholder's recommendation to the Board) be given to the Secretary of the Company (i) in the case of an annual meeting, no later than 60 days and no more than 90 days before an annual meeting of stockholders, provided, that in the event that the date of the annual meeting is changed by more than 30 days from the first anniversary date of the preceding year's annual meeting, notice by stockholders must be received no later than the close of business on the tenth (10th) day following the earlier of the date on which this notice was mailed or public announcement of the meeting was made, and
(ii) in the case of a special meeting at which Directors are to be elected, not later than the close of business on the 10th day following the earlier of the day on which notice of the date of the meeting was mailed or public announcement of the meeting was made. Such notice must include (i) as to each person whom the stockholder proposes to nominate for election as a Director at such meeting, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (ii) as to the stockholder giving the notice, (A) the name and address, as they appear on the Company's books, of such stockholder, and (B) the class and number of shares of the Company which are beneficially owned by such stockholder and also which are owned of record by such stockholder; and (iii) as to the beneficial owner, if any, on whose behalf the nomination is made, (A) the name and address of such person and (B) the class and number of shares of the Company which are beneficially owned by such person.

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