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                        PACKAGING RESOURCES INCORPORATED
                                 SEVERANCE PLAN

                                    ARTICLE I
                                  INTRODUCTION

         1.1 PURPOSE. Packaging Resources Incorporated Severance Plan (the
"Plan") has been established by Packaging Resources Incorporated (the "Company")
to provide severance pay to certain employees who "terminate" employment with
the Company or an affiliate of the Company under certain circumstances.

         1.2 EFFECTIVE  DATE. The effective date of the Plan (the "Effective
Date") is April 20, 2000.

                                   ARTICLE II
                                   DEFINITIONS

         2.1 "CAUSE" means personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties or willful violation of any law, rule or
regulation or final cease-and-desist order which results in a material loss to
an Employer.

         2.2 "CHANGE OF CONTROL" shall be deemed to occur upon the consummation
by the Company of a reorganization, merger or consolidation or a sale or other
disposition of all or substantially all of the assets of the Company or of a
majority of the voting stock of the Company which has been approved or
recommended by individuals who, as of the date hereof, constitute the Board of
Directors of the Company.

         2.3 "COVERED EMPLOYEES" means the Tier I Employees and the Tier II
Employees.

         2.4 "EMPLOYER" means the Company and any successors or assigns of any
of the foregoing.

         2.5 "GOOD REASON" shall exist if, without the Covered Employee's
express written consent:

             (a) an Employer reduces the nature, scope, level or extent of the
         Covered Employee's responsibilities from the nature, scope, level or
         extent of such responsibilities prior to the Change of Control, or an
         Employer fails to provide the Covered Employee with adequate office
         facilities and support services to perform the nature, scope, level or
         extent of the Covered Employee's responsibilities;

             (b) an Employer reduces the Covered Employee's salary below his or
         her salary in effect as of the date of the Change of Control;

             (c) an  Employer requires the Covered Employee to relocate the
         Covered Employee's principal business office or principal place of
         residence from its location on the Effective Date, or assigns to the
         Eligible Employee duties that would reasonably require such relocation;
         or

             (d) an Employer fails to continue in effect any cash or stock-based
         incentive or bonus plan, pension plan, welfare benefit plan, or other
         benefit plan, program or arrangement,


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         unless the aggregate value (as computed by an independent employee
         benefits consultant selected by an Employer) of all such compensation,
         pension and welfare benefit plans, programs and arrangements provided
         to the Covered Employee is not materially less than their aggregate
         value as of the date of the Change of Control.

         2.6 "SEVERANCE PAY" means the amount of a Covered Employee's  severance
pay as identified on SCHEDULES A and B to the Plan.

         2.7 "TIER I EMPLOYEE" means the employees identified on SCHEDULE A
to the Plan.

         2.8 "TIER II EMPLOYEES" means the employees identified on SCHEDULE B to
the Plan.

                                   ARTICLE III
                                    BENEFITS

         3.1 COVERED TERMINATIONS. A Tier I Employee is eligible to receive
Severance Pay upon a Change of Control. A Tier II Employee whose employment with
an Employer is terminated within six months of a Change of Control by such
Employer for any reason except as listed in SECTION 3.2 or by such Tier II
Employee for Good Reason is eligible to receive Severance Pay under the Plan.

         3.2 TERMINATIONS NOT COVERED. In no event shall a Tier II Employee who
is terminated because of a voluntary resignation (other than for Good Reason) or
discharge for Cause be eligible to receive Severance Pay under the Plan.
Notwithstanding anything to the contrary herein, in no event shall a Covered
Employee who receives, or is eligible to receive, benefits under the Packaging
Resources Change of Control Plan be eligible to receive Severance Pay under the
Plan.

         3.3 AMOUNT OF SEVERANCE PAY. A Covered Employee who is eligible to
receive Severance Pay under the Plan shall receive the amount of Severance Pay
identified opposite such Covered Employees name on SCHEDULE A or SCHEDULE B to
the Plan, as applicable. Severance pay under the Plan shall be in addition to
accrued but unpaid vacation benefits payable in connection with the Covered
Employee's termination of employment.

         3.4 PAYMENT OF SEVERANCE PAY. A Tier I Employee's Severance Pay under
the Plan shall be paid to him in a single sum immediately upon the occurrence of
a Change of Control, subject to the provisions of SECTION 3.2. A Tier II
Employee's Severance Pay under the Plan shall be paid to him or her in a single
sum immediately upon his or her termination of employment with an Employer,
subject to the provisions of SECTION 3.2.

                                   ARTICLE IV
                                 ADMINISTRATION

         4.1 ADMINISTRATOR; POWERS AND DUTIES. The Company shall administer the
Plan. The Company shall have the following powers, duties and discretion, in
addition to all other powers and discretion otherwise provided by the Plan and
applicable law:

             (a) to make, amend and enforce such rules and regulations as it
         deems necessary or proper for the administration of the Plan;



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             (b) to construe and interpret the provisions of the Plan;

             (c) to decide all questions concerning the Plan and the eligibility
         of any person to receive benefits under the Plan, and to determine the
         amount, manner and time of any benefits under the Plan;

             (d) to prepare, file with appropriate governmental agencies and
         distribute to Covered Employees in such manner as it considers
         appropriate information, disclosures, descriptions and reporting
         documents regarding the Plan; and

             (e) to allocate and delegate its responsibilities under the Plan
         and to designate other persons to carry out any of its responsibilities
         under the Plan, any such allocation, delegation or designation to be in
         writing.

         4.2 CLAIMS PROCEDURE. All disputes shall be filed in writing with the
Company. The Company shall decide all disputes under the Plan within 30 days. If
special circumstances require, the Company shall notify the claimant in writing
within 30 days and decide the claimant's claim within 90 days. Any denial by the
Company of a claim for benefits shall be stated in writing and shall set forth
the specific reasons for the denial. In addition, the Company shall afford a
reasonable opportunity to any claimant whose claim for benefits has been denied
a review of the decision denying the claim.

                                    ARTICLE V
                            AMENDMENT AND TERMINATION

         The Board of Directors of the Company may amend, abandon or terminate
the Plan in whole or in part from time to time; PROVIDED, HOWEVER, that no
amendment, abandonment or termination may reduce the amount of benefits payable
to any Covered Employee under ARTICLE III or the circumstances under which such
benefits are payable, unless each affected Covered Employee agrees in writing to
the modification, waiver or discharge.

                                   ARTICLE VI
                                  MISCELLANEOUS

         6.1 NO CONTRACT OF EMPLOYMENT. The Plan shall not constitute an
employment contract and shall not expand a person's employment rights with an
Employer. All Employees are "at will" employees of an Employer unless otherwise
specified in a written agreement signed on behalf of such Employer.

         6.2 GOVERNING LAW. THE PLAN SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS TO THE EXTENT NOT INCONSISTENT
WITH FEDERAL LAW.

         6.3 CONSTRUCTION.  The masculine gender, where appearing in the Plan,
shall be deemed to include the feminine gender.



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         IN WITNESS WHEREOF, the Company has caused the Plan to be executed as
of the Effective Date.


                             PACKAGING RESOURCES INCORPORATED

                             By: /s/ Howard P. Hoeper
                                 Name: Howard P. Hoeper
                                 Title: President and Chief Executive Officer




                                Schedule A

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                                Schedule B

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