FORBEARANCE AGREEMENT
This Forbearance Agreement (this "Agreement") is entered into as of
________, 2000, by and among Packaging Resources Group, Inc. ("Group") and the
other signatories hereto (collectively, the "Consenting Holders").
RECITALS:
WHEREAS, the Consenting Holders hold or are advisors to entities which
hold certain 13% Senior Notes due June 30, 2003 (the "Group Notes"), issued by
Group pursuant to that certain Indenture dated as of June 30, 1993, and amended
and restated as of September 24, 1996, by and between Group and Trustee (as
further amended, restated, supplemented and otherwise modified from time to
time, the "Group Indenture") and certain other ancillary documents related
thereto (collectively with the Group Indenture, the "Indenture Documents");
WHEREAS, Group owns all of the common stock of Packaging Resources
Incorporated ("PRI"); and
WHEREAS, PRI has issued certain 11 5/8% Senior Notes due May 1, 2003
(the "PRI Notes") pursuant to that certain Indenture dated as of May 17, 1996,
by and between PRI and Banc One, N.A., as successor trustee to LaSalle National
Bank (as amended, restated, supplemented and otherwise modified from time to
time, the "PRI Indenture"); and
WHEREAS, certain defaults have occurred, are continuing and have
matured into events of default under the PRI Indenture and other Defaults have
occurred, are continuing and are anticipated to mature into Events of Default
under the Group Indenture; and
WHEREAS, the Consenting Holders are willing to forbear from enforcing
their rights that arise because of the Existing Defaults or the Anticipated
Defaults for a limited period of time, provided that Group complies with the
terms of this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
1.1 All capitalized terms used herein and not otherwise defined shall
have the meanings assigned to such terms in the Group Indenture.
1.2 The following terms used in this Agreement shall have the meanings
set forth below:
"Anticipated Defaults" means any Default or Event of Default that has
occurred, or occurs in the future, as a result of Group's failure to pay
interest on the Group Notes due and payable on May 31, 2000.
"Bank Default" means a Default or Event of Default under the Loan
Documents, as each such terms is defined in the Credit Agreement.
"Credit Agreement" means that certain Credit Agreement dated as of May
17, 1996, by and among, PRI, LaSalle National Bank, as agent and lender, and the
other lender named therein, as amended, restated, supplemented or otherwise
modified.
"Existing Defaults" means the defaults that have occurred as a result
of PRI's failure to pay interest on the PRI Notes otherwise due and payable on
May 1, 2000, and any resulting events of default.
"Forbearance Default" means (a) the occurrence of any Default or Event
of Default other than the Existing Defaults or the Anticipated Defaults; (b) the
occurrence of a Bank Default other than a Bank Default which is the subject of a
valid and binding forbearance agreement; (c) the failure of Group to comply with
any term, condition or covenant set forth in this Agreement, (d) any
representation made by Group under or in connection with this Agreement shall
prove to be materially false as of the date when made or (e) the filing of any
petition (voluntary or involuntary) under the insolvency or bankruptcy laws of
the United States or any state with respect to Group, its affiliates, or any of
its or their subsidiaries.
"Loan Documents" has the meaning assigned to such terms in the Credit
Agreement.
"Termination Date" means the earlier to occur of (a) the sale of all or
substantially all of the assets of PRI or Group or a majority of the equity
interests in PRI or Group, (b) July 31, 2000 or (c) the date upon which a
Forbearance Default occurs.
SECTION 2. AGREEMENT TO FORBEAR
2.1 Provided that no Forbearance Default occurs, the Consenting Holders
hereby agree to refrain through the Termination Date from exercising (including
by giving all necessary instructions permitted in accordance with the Group
Indenture to the Trustee) any of their rights and remedies under the Group
Indenture or any of the other Indenture Documents that may exist by virtue of
the Existing Defaults or the Anticipated Defaults.
2.2 Nothing in this Agreement shall be construed as a waiver of or
acquiescence of any Existing Default or Anticipated Default, which shall
continue in existence subject only to the agreement of the Consenting Holders,
as set forth herein, not to enforce their remedies for a limited period of time.
Except as expressly provided herein, the execution and delivery of this
Agreement shall not: (a) constitute an extension, modification, or waiver of any
aspect of the Group Indenture or the other Indenture Documents; (b) extend the
terms of the Group Indenture or the due date of any of the principal or interest
payments due on the Group Notes; (c) give rise to any obligation on the part of
the Consenting Holders to extend, modify or waive any term or condition of the
Group Indenture or any of the other Indenture Documents; or (d) give rise to any
defenses or counterclaims to the right of the Consenting Holders to compel
payment of the principal or interest payments due on the Group Notes or to
otherwise enforce their rights and
remedies under the Group Indenture and the other Indenture Documents. Except as
expressly limited herein, the Consenting Holders hereby expressly reserves all
of their rights and remedies under the Group Indenture and the other Indenture
Documents and under applicable law with respect to such Existing Defaults and
Anticipated Defaults. From and after the Termination Date, the Consenting
Holders shall be entitled to enforce the Group Indenture and the other Indenture
Documents according to the terms of the Group Indenture and the other Indenture
Documents.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In consideration of the agreement of the Consenting Holders to the
forbearance herein contained, Group hereby represents and warrants to the
Consenting Holders as of the date hereof:
3.1 In connection with the execution of this Agreement, and as of the
date of the execution of this Agreement, Group has made full disclosure to
Trustee as is required under Sections 6.4, 9.15 and 9.17 of the Group Indenture.
3.2 The execution, delivery and performance of this Agreement by Group
are within its corporate power and have been duly authorized by all necessary
corporate action on its part, and this Agreement constitutes a valid and binding
Agreement.
3.3 All Indenture Documents, including, without limitation, the Group
Indenture, constitute valid and legally binding obligations of Group and are
enforceable against Group and the Collateral in accordance with the terms
thereof.
SECTION 4. COVENANTS
In consideration of the agreement of the Consenting Holders to the
forbearance herein contained, Group hereby covenants and agrees with the
Consenting Holders as follows:
4.1 Group shall, upon reasonable notice from the Consenting Holders,
make its officers and other management personnel available for meetings with the
Consenting Holders and their consultants, including, without limitation, any
auditors, consultants, appraisers, investment bankers or other professionals
designated by the Consenting Holders to discuss the financial condition, the
Collateral, and the operations of Group. Group acknowledges and agrees that all
fees, costs and expenses incurred by the Consenting Holders in connection with
the engagement of such auditors, consultants, appraisers, investment bankers and
other professionals shall be payable within five (5) Business Days of the
Consenting Holders' demand upon Group, subject to such limitations and other
terms and conditions as Group and any such professional agree to.
4.2 Group agrees that it will use all commercially reasonable efforts
to consummate a sale of all or substantially all of the assets of Group or PRI
or a majority of the equity interests in Group or PRI as promptly as
practicable.
4.3 Group will cooperate fully, and cause its officers, accountants and
consultants, to cooperate fully, in furnishing information as and when
reasonably requested by the Consenting Holders regarding the Collateral and
Group's affairs, finances, financial condition and business operations. Group
authorizes the Consenting Holders to meet and/or have discussions with any of
Group's officers, managers, accountants, investment bankers and employees from
time to time to discuss any reasonable matters regarding the Collateral and
Group's affairs, finances, financial condition and business operations, and
shall direct and authorize all such persons and entities to fully disclose to
the Consenting Holders all information reasonably requested by the Consenting
Holders regarding the Collateral and Group's affairs, finances, financial
conditions and business operations. Group waives and releases any such
consultant, investment banker or accountant from the operation and provisions of
any confidentiality agreement with Group to which such entity is a party so that
such entity is not prohibited from providing information to the Consenting
Holders. Group shall promptly, when and as requested by the Consenting Holders,
provide the Consenting Holders with access to Group's original books and records
and permit the Consenting Holders to make copies thereof.
4.4 Group shall throughout the term of this Agreement continue to make
a full and complete disclosure of all material aspects of its financial
condition and business operations.
4.5 Group shall continue to perform and observe all terms and
conditions contained in the Indenture Documents that are not specifically
mentioned in this Agreement.
SECTION 5. MISCELLANEOUS
5.1 HEADINGS. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
5.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
5.3 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
5.4 CONTINUED EFFECTIVENESS. Except as expressly set forth in this
Agreement, the terms of the Group Indenture and each of the other Indenture
Documents remain unchanged, and all such Indenture Documents shall remain in
full force and effect and are hereby confirmed and ratified.
5.5 NO NOVATION. This Agreement shall not be deemed or construed to be
a satisfaction, reinstatement, novation or release of the Group Indenture or of
any of the other
Indenture Documents or, except as expressly provided herein, a waiver by any
Consenting Holder of any of their rights and remedies under the Group Indenture
or any of the other Indenture Documents, at law or in equity.
5.6 REAFFIRMATION. Group hereby reaffirms each and every covenant,
condition, obligation and provision set forth in the Indenture Documents, as
modified hereby.
5.7 CONSTRUCTION. Group acknowledge that it has been represented by its
own legal counsel in connection with the Indenture Documents and this Agreement,
that it has exercised independent judgment with respect to the Indenture
Documents and this Agreement, and that it has not relied on the Consenting
Holders or on the Consenting Holders' counsel for any advice with respect to the
Indenture Documents or this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date set forth above, by the respective duly authorized
officers.
Packaging Resources Group, Inc.
By:
Name:
Title:
[Consenting Holder],
as a Consenting Holder
By:
Name:
Title:
[Consenting Holder],
as a Consenting Holder
By:
Name:
Title:
[Consenting Holder],
as a Consenting Holder
By:
Name:
Title:
