Exhibit 10.2
 
AMENDMENT NO. 1 TO FORBEARANCE AGREEMENT
 
AMENDMENT NO. 1 (the “Amendment”), dated as of February 14, 2008, to the
Forbearance Agreement (the “Agreement”)1 dated as of January 16, 2008 by and
among Tekni-Plex, Inc. (the “Company”), each of the Company’s subsidiaries
identified on the signature pages thereof (the “Subsidiaries”), the Holders of
the Company’s 12 3/4% Senior Subordinated Notes due 2010 (the “Notes”) that were
issued pursuant to that certain Indenture, dated as of June 21, 2000 (as
supplemented on May 6, 2002, August 22, 2002, and April 25, 2005, the
“Indenture”), that are signatories thereto (each a “Noteholder,” and
collectively, the “Noteholders,” and together with the Company, the “Parties”)
and U.S. Bank National Association, as successor indenture trustee (the
“Indenture Trustee”) under the Indenture.
 
RECITALS
 
WHEREAS, the parties hereto are desirous of extending the Agreement on the terms
set forth herein;
 
WHEREAS, the Noteholders continue to collectively hold not less than
$286,650,000 in aggregate principal amount of the Notes, representing not less
than 91% of the aggregate principal amount of the Notes that are outstanding,
and not less than $184,250,000 in aggregate principal amount of the Second Lien
Notes, representing not less than 67% of the aggregate principal amount of the
Second Lien Notes that are outstanding.
 
 

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1  Each capitalized term used but not defined herein shall have the meaning
ascribed to it in the Agreement (and to the extent not defined therein, the
meaning ascribed to it in the Indenture).
 

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NOW THEREFORE, in consideration of the premises and the respective covenants and
agreements set forth in this Agreement, the Parties, each intending to be
legally bound, agree as follows:
 
1.  Forbearance.  Section 1(c) of the Agreement is hereby amended and restated
in its entirety as follows:
 
“(c)  As used herein, the term “Forbearance Period” shall mean the period
beginning on January 17, 2008 and ending upon the occurrence of a Termination
Event.  As used herein, “Termination Event” shall mean the earliest to occur of
(i) March 17, 2008; (ii) four Business Days after the delivery by Paul, Weiss,
as counsel to the Noteholder Group, to the Company and the Indenture Trustee of
a written notice terminating the Forbearance Period (the “Termination Notice”),
which notice may be delivered at any time but only upon or after the occurrence
of any Forbearance Default (as defined below); provided, however, that
notwithstanding the foregoing, this Agreement shall immediately terminate upon
the occurrence of a Forbearance Default under subsection (G) below, without the
need for delivery of the Termination Notice or any other notice.  As used
herein, the term “Forbearance Default” shall mean: (A) the valid acceleration of
obligations arising under (i) the 8 3/4% Senior Secured Notes due 2013 (the
“Second Lien Notes”) issued pursuant to that certain indenture dated as of
November 21, 2003 (the “Second Lien Indenture”); (ii) the 10 7/8 % Senior
Secured Notes due 2012 (the “First Lien Notes”) issued pursuant to that certain
indenture dated as of June 10, 2005 (the “First Lien Indenture”); or (iii) the
Credit Agreement dated as of June 10, 2005, between the Company, as borrower,
Citicorp USA, Inc. as administrative
 
 
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agent, General Electric Capital Corporation as syndication agent, and the
lenders and issuers party thereto (as amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”); (B) the Company’s
payment of or entry into an agreement to pay the fees or expenses of any ad-hoc
group of holders of First Lien Notes or Second Lien Notes (other than the
Noteholder Group); (C) the failure of the Company, after four business days’
written notice from Paul, Weiss, Rifkind, Wharton & Garrison LLP (“Paul Weiss”,
together with Houlihan, Lokey, Howard & Zukin Capital, Inc. (“Houlihan Lokey”),
the “Advisors”) as counsel to the Noteholder Group alleging such a failure, to
(i) engage in good faith negotiations with the Noteholder Group regarding a
potential restructuring transaction, which determination shall be made by the
holders of a majority in principal amount of the Notes in good faith and their
reasonable discretion or (ii) engage in good faith efforts to produce
documentation and due diligence materials reasonably requested by the Advisors,
which determination shall be made by the holders of a majority in principal
amount of the Notes in good faith and their reasonable discretion; (D) the
occurrence of any Event of Default other than the Interest Default; (E) the
failure of the Company to comply with any material term, condition, covenant or
agreement set forth in this Agreement; (F) the failure of any representation or
warranty made by the Company under this Agreement to be true and correct in all
material respects as of the date when made; (G) the commencement by or against
the Company or any Subsidiary that is a Significant Subsidiary as defined in the
Indenture of a case under title 11 of the United States Code; (H) the Company
engages in any material asset sales (other than the disposition of inventory),
material sale-leaseback, or material financing transaction (including any
increase in commitment under the Credit Agreement) without
 
 
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the consent of a majority in principal amount of the Notes held by the
Noteholder Group; (I) the Company pays any management, sponsor or consulting
fees to its preferred stockholders or their affiliates; (J) from and after
February 14, 2008, the Company enters into any material amendment, restatement,
supplement or modification to or under the Credit Agreement without the consent
of a majority in principal amount of the Notes held by the Noteholder Group
(except to the extent that such requirement that the Company obtain such consent
would violate Section 6.8 of the Credit Agreement); or (K) the failure of the
Company to deliver to the Advisors on or before February 22, 2008 a preliminary
valuation report prepared by Rothschild Inc.”
 
2.  Limitation on and Notice of Transfers of Notes.  Section 15 of the Agreement
is hereby amended by:
 
(a)  adding the following proviso at the end of the first sentence of such
section:
 
“; provided, however, that each of Barclays Bank, PLC, Glenview Capital
Management, LLC (and any funds for which it is an investment advisor) and Morgan
Stanley & Co., Inc. may sell, assign, pledge, hypothecate or otherwise transfer
Notes (or any rights in respect thereof, including the right to vote) held by
such Noteholder as of the execution date of this Agreement, each in an amount of
up to the amount of Notes disclosed in writing to the Advisors and the Company
on February 14, 2008, without complying with the foregoing restrictions or the
notice requirements set forth below.”; and
 
(b)  adding the following sentence at the end of such section:
 
 
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“Notwithstanding anything contained herein to the contrary, each of Barclays
Bank PLC, Glenview Capital Management, LLC (and any funds for which it is an
investment advisor) and Morgan Stanley & Co., Inc. may sell, assign, pledge,
hypothecate or otherwise transfer any Notes (or any rights in respect thereof,
including the right to vote) that such Noteholder acquired from and after
February 14, 2008 from any person who is not a Noteholder, without complying
with any of the restrictions or notice requirements contained in this Section
15.”
 
3.  Amendments.  Section 6 of the Agreement is hereby amended by deleting the
first sentence thereof and replacing it with the following sentence:
 
“This Agreement constitutes the full agreement between the Parties with respect
to the subject matter hereof, and it may not be modified or amended except by a
written instrument, signed by each of the Parties, expressing such amendment or
modification; provided, however, that any extension of this Agreement on or
after March 17, 2008 shall be effective only as to those Noteholders that are
signatory thereto.”
 
4.  Effectiveness.  This Amendment shall become effective on the first date on
which each of the following conditions is satisfied and evidence of its
satisfaction has been delivered to counsel to the Noteholder Group:
 
(a)  execution and delivery of counterparts of this Agreement by the
Noteholders, the Company and the Subsidiaries;
 
(b)  execution and delivery of an amendment and restatement of the Credit
Agreement substantially in the form delivered to the Advisors on February 13,
2008.
 
 
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(c)  execution and delivery of Houlihan Lokey’s engagement letter by the
Company; and
 
(d)  payment of the third monthly fee of $150,000 to Houlihan Lokey for the
period through March 14, 2008.
 
This Amendment shall be effective as to the Noteholders, the Company and the
Subsidiaries in accordance with Section 4 hereof regardless of whether the
Indenture Trustee executes this Agreement.  This Amendment shall be effective as
to the Indenture Trustee upon the Indenture Trustee becoming a signatory hereto.
 
5.  Representations, Warranties and Covenants.
 
(a)  The Company and the Subsidiaries represent, warrant and covenant as
follows:
 
(i)  Except for the Interest Default, no other Default or Event of Default has
occurred and is continuing.
 
(ii)  The execution, delivery and performance by the Company and the
Subsidiaries of this Agreement:
 
(1)  are within their corporate powers;
 
(2)  have been duly authorized by all necessary corporate action;
 
(3)  do not and will not (A) contravene their certificate of incorporation or
by-laws or limited partnership or other constituent documents, (B) violate any
(i) applicable material requirement of law or (ii) material order or decree of
any governmental authority or arbitrator applicable to them, (C) materially
conflict with or result in the breach of, or constitute a default under, or
result in or permit the termination or acceleration of, any material contractual
obligation of the Company or the Subsidiaries, or (D) result in the creation or
imposition of any material lien or encumbrance upon any of the material property
of the Company or the Subsidiaries; and
 
 
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(4)  do not and will not require the consent of, authorization by, approval of
any governmental authority.
 
(b)  The Noteholders represent as follows:
 
(i)  As of the date hereof, based on the representations of each of the
individual Noteholders, the Noteholders, in the aggregate, hold, with all
rights, including without limitation the right to vote, not less than
$286,650,000 in principal amount of the Notes, representing not less than 91% of
the aggregate principal amount of the Notes outstanding.
 
 
(ii)  As of the date hereof, based on the representations of each of the
individual Noteholders, the Noteholders, in the aggregate, hold, with all
rights, including without limitation the right to vote, not less than
$184,250,000 in principal amount of the Second Lien Notes, representing not less
than 67% of the aggregate principal amount of the Second Lien Notes outstanding.
 
6.  Ratification of Liability.  The Company and its Subsidiaries hereby ratify
and reaffirm all of their payment and performance obligations and obligations to
indemnify, contingent or otherwise, under the Indenture.
 
7.  Complete Integration; Amendments.  This Amendment, together with the
Agreement – which remains in full force and effect except as expressly modified
by this Amendment – constitutes the full and final agreement between the Parties
with respect to the subject matter hereof, and may not be modified or amended
except by a written instrument, signed by each of the Parties, expressing such
amendment or modification.  The Parties warrant, promise and represent that in
executing this Amendment, each Party is not relying upon any oral
representation, promise or statement made by any other Party hereto and that
each Party is not relying upon any promise, statement or representation
contained in any other written instrument.
 
 
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8.  No Other Amendments; Reservation of Rights, No Waiver.  Other than as
otherwise expressly provided herein, this Amendment shall not be deemed to
operate as an amendment or waiver of, or to prejudice, any right, power,
privilege or remedy of the Noteholders or the Indenture Trustee, as applicable,
under the Indenture or applicable law, nor shall the entering into this
Amendment preclude the Noteholders from refusing to enter into any further
amendments or forbearances with respect to the Indenture.  Other than as
expressly provided herein, this Amendment shall not constitute a forbearance
with respect to (i) any failure by the Company to comply with any covenant or
other provision in the Indenture or (ii) the occurrence or continuance of any
present or future Event of Default.
 
9.  Counterparts/Facsimile Transmission.  This Amendment may be signed in
counterparts, each of which, when taken together, shall be deemed an
original.  Execution of this Amendment is effective if a signature is delivered
by facsimile transmission or electronic (e.g., “pdf”) transmission.
 
10.  Successors and Assigns.  This Amendment shall be binding upon and inure to
the benefit of the Parties hereto and each of their respective successors,
assigns, heirs and personal representatives.
 
11.  Authority.  Any person signing this Amendment in a representative capacity
(i) represents and warrants that he/she is authorized to sign this Amendment on
behalf of the Party he/she represents and that his/her signature upon this
Amendment will bind the represented Party to the terms of this Amendment, and
(ii) acknowledges that the other Party to this Amendment has relied upon such
representation and warranty.
 
 
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12.  Governing Law.  This Amendment shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its choice
of law provisions.
 
13.  Direction to Indenture Trustee.  The Noteholders’ agreement to forbear as
provided in the Agreement as amended by this Amendment shall constitute a
direction from such Noteholders to the Indenture Trustee to similarly forbear
during the Forbearance Period as extended hereby.

 
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IN WITNESS WHEREOF, each of the Parties hereto has caused this Amendment to be
duly executed and delivered as of the date first above written.

 
Tekni-Plex, Inc.,
     
By:
/s/ James E. Condon
   
Name:
James E. Condon
   
Title:
Chief Financial Officer
 

 
SUBSIDIARIES
 
PURETEC CORPORATION
NATVAR HOLDINGS, INC.
TRI-SEAL HOLDINGS, INC.
PLASTIC SPECIALTIES AND TECHNOLOGIES, INC.
BURLINGTON RESINS, INC.
PLASTIC SPECIALTIES AND TECHNOLOGIES
INVESTMENTS, INC.
DISTRIBUTORS RECYCLING, INC.
TPI ACQUISITION SUBSIDIARY, INC.
TP/ELM ACQUISITION SUBSIDIARY, INC.,
collectively, as Guarantors 
   
By:
/s/ James E. Condon
   
Name:
James E. Condon
   
Title:
Chief Financial Officer
 

 
 

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THE NOTEHOLDERS
 
AVENUE INVESTMENTS, L.P.
     
By:
Avenue Partners, LLC,
its General Partner
       
By:
/s/ Sonia Gardner
   
Name:
Sonia Gardner
   
Title:
Member
 

AVENUE-CDP GLOBAL OPPORTUNITIES FUND, L.P. 
   
By:
Avenue Global Opportunities Fund GenPar, LLC,
its General Partner
       
By:
/s/ Sonia Gardner
   
Name:
Sonia Gardner
   
Title:
Member
 

AVENUE INTERNATIONAL MASTER, L.P. 
   
By:
Avenue International Master GenPar, Ltd.,
its General Partner
       
By:
/s/ Sonia Gardner
   
Name:
Sonia Gardner
   
Title:
Member
 

AVENUE SPECIAL SITUATIONS FUND IV, L.P.
     
By:
Avenue Capital Partners IV, LLC, its General Partner
 
By:
GL Partners IV, LLC,
its General Partner
       
By:
/s/ Sonia Gardner
   
Name:
Sonia Gardner
   
Title:
Member
 

 
 

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AVENUE SPECIAL SITUATIONS FUND V, L.P.
     
By:
Avenue Capital Partners V, LLC,
its General Partner
 
By:
GL Partners V, LLC,
its General Partner
       
By:
/s/ Sonia Gardner
   
Name:
Sonia Gardner
   
Title:
Member
 

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BARCLAYS BANK, PLC
     
By:
/s/ Brian Berman
   
Name:
Brian Berman
   
Title:
Managing Director
 

 
 

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GLENVIEW CAPITAL MANAGEMENT, LLC,
as investment adviser for GCM Little Arbor Partners, L.P.,
GCM Little Arbor Institutional Partners, L.P., and
GCM Little Arbor Master Fund, Ltd.
     
By:
/s/ Mark Horowitz
   
Name:
Mark Horowitz
   
Title:
Chief Operating Officer and General Counsel
 

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MORGAN STANLEY & CO., INC
     
By:
/s/ Andrew Brenner
   
Name:
Andrew Brenner
   
Title:
Managing Director
 

 
 

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OAKTREE CAPITAL MANAGEMENT, L.P.,
on behalf of itself and certain funds and accounts managed
by it or its affiliates
     
By:
/s/ Ken Liang
   
Name:
Ken Liang
   
Title:
Managing Director
         
By:
/s/ Aaron Bendikson
   
Name:
Aaron Bendikson
   
Title:
Senior Vice President
 

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