Document:

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EXHIBIT 10.30

                         FAIRPOINT COMMUNICATIONS, INC.
                         2000 EMPLOYEE STOCK OPTION PLAN

1.       PURPOSES.

         The purpose of the Plan (as such term and any other capitalized term
used herein without definition are defined in Section 2) is to foster and
promote the long-term financial success of the Company and Subsidiaries and
materially increase shareholder value by (A) motivating superior performance by
means of performance-related incentives, (B) encouraging and providing for the
acquisition of an ownership interest in the Company by Employees and (C)
enabling the Company and Subsidiaries to attract and retain the services of an
outstanding management team upon whose judgment, interest and special effort the
successful conduct of its and their operations is largely dependent.

2.       DEFINITIONAL MATTERS.

         (a)      CERTAIN DEFINITIONS. Capitalized terms used herein without
definition shall have the respective meanings set forth below:

                  ACT means the Securities Exchange Act of 1934, as amended.

                  BOARD means the Board of Directors of the Company.

                  CAUSE: (I) the refusal or neglect of the Participant to
         perform substantially his or her lawful employment-related duties,
         following written notice from the Company describing in reasonable
         detail such refusal or neglect and an opportunity for 30 days to cure
         the condition which is the subject of such notice, (II) the
         Participant's personal dishonesty, willful misconduct or breach of
         fiduciary duty, (III) the Participant's conviction of or entering a
         plea of guilty or NOLO CONTENDERE to a crime constituting a felony or
         his or her willful violation of any law, rule, or regulation (other
         than a traffic violation or similar offense or violation which in no
         way adversely affects the Company or its reputation or the ability of
         the Participant to perform his or her employment-related duties or to
         represent the Company) or (IV) the breach by the Participant of any
         written covenant or agreement with the Company or any of its
         subsidiaries not to disclose any material information pertaining to the
         Company or such subsidiary or not to compete or interfere with the
         Company or such subsidiary; PROVIDED THAT, with respect to any
         Participant who is party to an employment agreement with the Company,
         "Cause" shall have the meaning specified in such Participant's
         employment agreement (but not any severance agreement) or, in the case
         of any such Participant who is not party to an employment agreement but
         is a party to the

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         Stockholders Agreement, "Cause" shall have the meaning specified in the
         Stockholders Agreement.

                  CHANGE IN CONTROL means the occurrence of any of the following
events:

                  (1) the members of the Board at the beginning of any
         consecutive twenty-four calendar month period (the "INCUMBENT
         DIRECTORS") cease for any reason to constitute at least a majority of
         the members of the Board; PROVIDED THAT any director whose election, or
         nomination for election, by the Company's stockholders was approved by
         a vote of at least a majority of the members of the Board then still in
         office who were members of the Board at the beginning of such
         twenty-four calendar month period other than as a result of a proxy
         contest, or any agreement arising out of an actual or threatened proxy
         contest, shall be treated as an Incumbent Director; or

                  (2) any "person," including a "group" (as such terms are used
         in Sections 13(d) and 14(d)(2) of the Act), but excluding Kelso, THL,
         the Company, any Subsidiary or any employee benefit plan of the Company
         or any Subsidiary, is or becomes the "beneficial owner" (as defined in
         Rule 13(d)(3) under the Act), directly or indirectly, of securities of
         the Company representing 20% or more of the combined voting power of
         the Company's then outstanding securities; or

                  (3) the stockholders of the Company approve a definitive
         agreement (A) for the merger or other business combination of the
         Company with, or into, another corporation, a majority of the directors
         of which were not directors of the Company immediately prior to the
         merger and in which the stockholders of the Company immediately prior
         to the effective date of such merger own a percentage of the voting
         power that is less than one-half of the percentage of the voting power
         they owned in the Company immediately prior to such transaction, or (B)
         for the sale or other disposition of all or substantially all of the
         assets of the Company; PROVIDED, in each case, that such transaction
         shall have been consummated; or

                  (4) the purchase of 20% or more of Common Stock pursuant to
         any tender or exchange offer made by any "person," including a "group"
         (as such terms are used in Sections 13(d) and 14(d)(2) of the Act)
         other than Kelso, THL, the Company, any Subsidiary or an employee
         benefit plan of the Company or any Subsidiary.

         Notwithstanding the foregoing, a Change in Control shall not be deemed
         to occur in the event the Company files for bankruptcy, liquidation or
         reorganization under the United States Bankruptcy Code.

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                  CHANGE IN CONTROL PRICE means the highest price per share of
         Common Stock offered in conjunction with any transaction resulting in a
         Change in Control (as determined in good faith by the Committee if any
         part of the offered price is payable other than in cash), or, in the
         case of a Change in Control occurring solely by reason of a change in
         the composition of the Board, the highest Fair Market Value of the
         Common Stock on any of the 30 trading days immediately preceding the
         date on which a Change in Control occurs.

                  CODE means the Internal Revenue Code of 1986, as amended.

                  COMMITTEE means the Compensation Committee of the Board or
         such other committee as the Board may from time to time designate to
         administer the Plan (or, in the absence of any such designation, the
         Board); PROVIDED THAT, following the Public Offering, any such
         committee shall consist of two or more members, each of whom shall be a
         "Non-Employee Director" within the meaning of Rule 16b-3, as
         promulgated under the Act, and an "outside director" within the meaning
         of Section 162(m) of the Code.

                  COMMON STOCK means the Class A common stock of the Company,
         par value $0.01 per share.

                  COMPANY means Fair Point Communications, Inc. a Delaware
         corporation, and any successor thereto.

                  DISABILITY: the termination of the employment of any
         Participant by the Company or any of its subsidiaries shall be deemed
         to be by reason of a "Disability" if, as a result of such Participant's
         incapacity due to reasonably documented physical or mental illness,
         such Participant shall have been unable for more than six months within
         any 12-month period to perform his or her duties with the Company or
         such subsidiary on a full-time basis and within 90 days after written
         notice of termination has been given to such Participant such
         Participant shall not have returned to the full time performance of his
         or her duties. The date of termination in the case of a termination for
         "Disability" shall be deemed to be the last day of the aforementioned
         90-day period. Notwithstanding the foregoing, with respect to any
         Participant who is a party to an employment agreement (but not any
         severance agreement) with the Company, "Disability" shall have the
         meaning, if any, specified in such Participant's employment agreement.

                  EMPLOYEE means any full-time employee of the Company or any
         Subsidiary.

                  EXECUTIVE OFFICER means any Employee that is subject to
         Section 16(b) of the Exchange Act with respect to equity securities of
         the Company.

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                  FAIR MARKET VALUE means (i) if no Public Offering has
         occurred, the fair market value of a share of Common Stock as
         determined in accordance with Sections 3.4 and 3.5 of the Stockholders
         Agreement; PROVIDED THAT for the purpose of such determination all
         outstanding Options hereunder shall be deemed to be outstanding shares
         of Common Stock; or, following a Public Offering, the average of the
         closing sales prices for a share of Common Stock as reported on a
         national securities exchange for each of the ten business days
         preceding the date of determination or the average of the last
         transaction prices for a share of Common Stock as reported on a
         nationally recognized system of price quotation for each of the ten
         business days preceding the date of determination. In the event that
         there are no Common Stock transactions reported on such exchange or
         system on such date, Fair Market Value shall mean the closing price on
         the immediately preceding date on which Common Stock transactions were
         so reported.

                  KELSO means, collectively, Kelso Investment Associates V, L.P.
         and Kelso Equity Partners V, L.P.

                  OPTION means the right to purchase Common Stock at a stated
         price for a specified period of time. For purposes of the Plan, an
         Option may be either (I) an "Incentive Stock Option" (ISO) within the
         meaning of Section 422 of the Code or (II) a "Nonstatutory Stock
         Option" (NSO). Unless the Committee shall otherwise specify at the time
         of grant, any Option granted hereunder shall be a Nonstatutory Stock
         Option.

                  PARTICIPANT means any Employee designated by the Committee to
         receive an Option under the Plan.

                  PLAN means this Fair Point Communications, Inc. 2000 Employee
         Stock Option Plan, as set forth herein and as the same may be amended
         from time to time in accordance with its terms.

                  PRIOR PLAN means the Amended and Restated Stock Option Plan of
         the Company, adopted by the Company pursuant to the Board's resolutions
         dated August 20, 1998, as in effect on the date of adoption of this
         Plan.

                  PUBLIC OFFERING means the Company's offering of common stock
         to the general public through a registration statement filed with the
         Securities and Exchange Commission that covers (together with prior
         effective registrations) (I) not less than 50% of the then outstanding
         shares of common stock of the Company on a fully diluted basis and
         treating all outstanding Options hereunder as outstanding shares of
         Common Stock or (II) shares of Common Stock of the Company that will be
         traded on any of the New York Stock Exchange, the

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         American Stock Exchange or the National Association of Securities
         Dealers Automated Quotation System after the close of any such general
         public offering.

                  RETIREMENT means termination of a Participant's employment on
         or after the date the Participant attains age 65.

                  STOCKHOLDERS AGREEMENT means the Stockholders Agreement, dated
         as of January 20, 2000, among the Company and holders of the Common
         Stock, as amended and in effect from time to time.

                  SUBSIDIARY means any corporation in which the Company owns,
         directly or indirectly, stock representing 50% or more of the voting
         power of all classes of stock entitled to vote and any other business
         organization, regardless of form, in which the Company possesses
         directly or indirectly 50% or more of the total combined equity
         interests.

                  THL means Thomas H. Lee Equity Fund IV, L.P. and the parties
         listed on Schedule A to Stockholders Agreement.

         (b)      GENDER AND NUMBER. Except when otherwise indicated by the
context, words in the masculine gender used in the Plan shall include the
feminine gender, the singular shall include the plural, and the plural shall
include the singular.

3.       POWERS OF THE COMMITTEE

         The Committee shall be responsible for the administration of the Plan,
including, without limitation, determining which Employees receive Options, what
kind of Options are granted under the Plan and for what number of shares, and
the other terms and conditions of each such Option. The Committee may establish
different terms and conditions for different types of Options, for different
Participants receiving the same type of Option and for the same Participant for
each Option such Participant may receive, whether or not granted at different
times. The Committee shall have the responsibility of construing and
interpreting the Plan and of establishing and amending such rules and
regulations as it may deem necessary or desirable for the proper administration
of the Plan. Any decision or action made or taken or to be taken by the
Committee in connection with the construction, administration, interpretation
and effect of the Plan and of the Committee's rules and regulations, shall, to
the maximum extent permitted by applicable law, be within the Committee's
absolute discretion (except as otherwise specifically provided herein) and shall
for all purposes be final, conclusive and binding upon the Company, all
Participants and any person claiming under or through any Participant, and shall
be given deference in any proceeding with respect to, or arising out of, the
Plan. The Committee may consult with legal counsel, who may be counsel to the

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Company, and shall not incur any liability for any action taken in good faith in
reliance upon the advice of counsel.

4.       COMMON STOCK SUBJECT TO PLAN

         (a)      NUMBER. Subject to the provisions of Section 4(b) and (c), the
number of shares of Common Stock subject to Options under the Plan may not
exceed a sum of 10,019,200 shares of Common Stock plus the number of shares of
Common Stock available for grant under the Prior Plan on the date this Plan is
adopted and the shares (if any) which, after the effective date of the Plan,
become available for Options under this Plan in accordance with Section 4(b)
below. The maximum number of shares of Common Stock subject to Options granted
to any single Participant in any calendar year is 1,500,000 shares of Common
Stock. Without limiting the generality of the foregoing, whenever shares are
received by the Company in connection with the exercise of any Option granted
under the Plan, only the net number of shares actually issued shall be counted
against the foregoing limit. The shares to be delivered under the Plan may
consist, in whole or in part, of treasury Common Stock or authorized but
unissued Common Stock not reserved for any other purpose.

         (b)      CANCELED, TERMINATED, OR FORFEITED OPTIONS. Any shares of
Common Stock subject to any Option granted hereunder or under the Prior Plan
which for any reason is canceled, terminated or otherwise settled without the
issuance of any Common Stock shall be available for further Options under the
Plan.

         (c)      ADJUSTMENT IN CAPITALIZATION. In the event of any Common Stock
dividend or Common Stock split, recapitalization (including, without limitation,
the payment of an extraordinary cash dividend), merger, consolidation,
combination, spin-off, distribution of assets to stockholders, exchange of
shares, or other similar corporate change or other similar event that affects
the Common Stock such that an adjustment is required to preserve, or to prevent
enlargement of, the benefits or potential benefits made available under this
Plan, the Committee shall, in such manner as the Committee shall deem equitable,
adjust any or all of (I) the number and kind of shares of capital stock which
thereafter may be offered and sold under the Plan (including, without
termination, adjusting the limits on the number and types of Options that may be
made under the Plan), (II) the number and kinds of shares of capital stock
subject to outstanding Options and (III) the exercise price with respect to any
of the foregoing. Additionally, the Committee may make provisions for a cash
payment to a Participant or a person who has an outstanding Option in lieu of,
or as a part of, such adjustment. However, the number of shares of capital stock
subject to any Option shall always be a whole number.

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5.       STOCK OPTIONS

         (a)      GRANT OF OPTIONS. Options may be granted to Participants at
such time or times as shall be determined by the Committee. Options granted
under the Plan may be of two types: (I) Incentive Stock Options and (ii)
Nonstatutory Stock Options, PROVIDED that no Incentive Stock Option shall be
granted to any Employee who is not eligible to receive such an Option under
Section 422 of the Code and the regulations thereunder. The Committee shall have
complete discretion in determining the number of Options, if any, to be granted
to a Participant. Without limiting the foregoing, the Committee may grant
Options containing provisions for the issuance to the Participant, upon exercise
of such Option and payment of the exercise price therefore with previously owned
shares of Common Stock, of an additional Option for the number of shares so
delivered. Each Option shall be evidenced by an option agreement that shall
specify the type of Option granted, the exercise price, the duration of the
Option, the number of shares of Common Stock to which the option pertains, and
such other terms and conditions not inconsistent with the Plan as the Committee
shall determine.

         (b)      OPTION PRICE. Unless otherwise determined by the Committee at
the time of grant, Options granted pursuant to the Plan shall have an exercise
price which is not less than the Fair Market Value of a share of Common Stock on
the date the Option is granted.

         (c)      EXERCISE OF OPTIONS. Subject to Section 8(e), Options awarded
under the Plan shall be exercisable at such times, and shall be subject to such
restrictions and conditions, including the performance of a minimum period of
service or the satisfaction of performance goals, as the Committee may impose,
either at or after the time of grant of such Options; PROVIDED THAT no Option
shall be exercisable on or after the tenth anniversary of the date on which it
is granted.

         (d)      PAYMENT. The Committee shall establish procedures governing
the exercise of Options which shall require that (X) as a condition to the
issuance of any shares of Common Stock upon the exercise of the Options prior to
a Public Offering, the Participant become a party to the Stockholders Agreement
with respect to such shares and (Y) written notice of exercise be given to the
Company. No shares shall be delivered pursuant to any exercise of an Option
unless arrangements satisfactory to the Committee have been made to ensure full
payment of the option price. Without limiting the generality of the foregoing,
the Committee may provide, on such terms and conditions as the Committee deems
appropriate, that payment of the option price may be made (I) in cash or its
equivalent, (II) at any time following a Public Offering by exchanging shares of
Common Stock (which are not subject to any pledge or other security interest or
encumbrance) owned by the optionholder for at least six months (or such longer
period as is required by applicable accounting standards to avoid a charge to
earnings) having an aggregate Fair Market Value on the date of exercise equal to
such aggregate Option

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exercise price or in a combination of cash and such unencumbered shares of
Common Stock, (III) at any time following a Public Offering, through an
arrangement with a broker approved by the Company whereby payment of the
exercise price is accomplished with the proceeds of the sale of Stock or (IV) by
any combination of the foregoing, PROVIDED THAT the combined value of all cash
and cash equivalents paid and the Fair Market Value of any Common Stock so
tendered to the Company, valued as of the date of such tender, is at least equal
to such option price.

         (e)      TERMINATION OF EMPLOYMENT. Unless otherwise determined by the
Committee at the time of grant, upon termination of a Participant's employment
for any reason, any Options which have not become exercisable in accordance with
the terms thereof shall be cancelled upon such termination of employment.

         (f)      TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY OR
RETIREMENT. Unless otherwise determined by the Committee at the time of grant,
in the event a Participant's employment terminates by reason of death,
Disability or Retirement, any Options granted to such Participant which are
exercisable at the date of his or her death, Disability or Retirement may be
exercised at any time prior to the earlier of the expiration of the term of the
Options and the first anniversary of the Participant's termination of employment
(or such other period as the Committee shall determine at the time of grant).

         (g)      TERMINATION OF EMPLOYMENT FOR ANY OTHER REASON. Unless
otherwise determined by the Committee at or after the time of grant, in the
event the employment of the Participant shall terminate for any reason other
than those specified in Section 5(f), any Options granted to such Participant
which are exercisable at the date of the Participant's termination of employment
may be exercised at any time prior to the earlier of the expiration of the term
of the Options and the sixtieth day following the Participant's termination of
employment; PROVIDED that, if a Participant's employment is terminated for
Cause, all Options granted to such Participant which are then outstanding shall
be immediately forfeited (whether or not then exercisable).

         (h)      INCENTIVE STOCK OPTIONS. Notwithstanding anything in the Plan
to the contrary, no term of the Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code.

         (i)      BUYOUT. The Committee may at any time offer to buy out an
Option previously granted for a payment in cash, based on such terms and
conditions as the Committee shall establish and communicate to the optionholder
at the time that such offer is made. In addition, prior to a Public Offering,
unless otherwise provided in the applicable Option Agreement evidencing the
Option, upon any termination of a Participant's employment with the Company, the
Company may repurchase all or any portion of the vested Options then held by
such Participant as of the date of such

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termination for a cash payment equal to the excess, if any, of (I) the Fair
Market Value of the shares of Common Stock subject to such Option (or to the
portion thereof so purchased), over (II) the aggregate Option exercise price for
such shares and on such other terms and conditions as the Committee shall
establish at the date of grant.

6.       CHANGE IN CONTROL

         (a)      ACCELERATED VESTING AND PAYMENT. Subject to the provisions of
Section 6(b) below, in the event of a Change in Control, each Option shall be
canceled in exchange for a payment in cash of an amount equal to the excess, if
any, of the Change in Control Price over the exercise price for such Option.

         (b)      ALTERNATIVE OPTIONS. Notwithstanding Section 6(a), no
cancellation, acceleration of exercisability, vesting, cash settlement or other
payment shall occur with respect to any Option if the Committee reasonably
determines in good faith prior to the occurrence of a Change in Control that
such Option shall be honored or assumed, or new rights substituted therefor
(such honored, assumed or substituted option hereinafter called an "Alternative
Option"), by a Participant's employer (or the parent or a Subsidiary of such
employer) immediately following the Change in Control, provided that any such
Alternative Option must:

                  (i)      provide such Participant (or each Participant in a
         class of Participants) with rights and entitlements substantially
         equivalent to or better than the rights, terms and conditions
         applicable under such Option, including, but not limited to, an
         identical or better exercise or vesting schedule and identical or
         better timing and methods of payment;

                  (ii)     have substantially equivalent economic value to such
         Option (determined at the time of the Change in Control);

                  (iii)    have terms and conditions which provide that in the
         event that the Participant's employment is involuntarily terminated or
         constructively terminated, any conditions on a Participant's rights
         under, or any restrictions on transfer or exercisability applicable to,
         each such Alternative Option shall be waived or shall lapse, as the
         case may be.

For this purpose, a constructive termination shall mean a termination by a
Participant following a material reduction in the Participant's base salary or a
Participant's incentive compensation opportunity or a material reduction in the
Participant's responsibilities, in any such case without the Participant's
written consent.

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7.       AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN

         (a)      The Board at any time may terminate or suspend the Plan, and
from time to time may amend or modify the Plan, EXCEPT THAT no amendment,
modification, or termination of the Plan shall in any manner adversely affect
Rights of a holder of any Option theretofore granted under the Plan, without the
consent of the Participant to whom such Option was granted. Notwithstanding the
foregoing, the Board may not increase the total number of shares of Common Stock
subject to the Plan without shareholder approval (except pursuant to Section
4(c)).

8.       MISCELLANEOUS PROVISIONS

         (a)      NONTRANSFERABILITY OF OPTIONS. Unless the Committee shall
permit (on such terms and conditions as it shall establish) a Nonstatutory Stock
Option to be transferred to a member of the Participant's immediate family or to
a trust or similar vehicle for the benefit of such immediate family members
(collectively, the "PERMITTED TRANSFEREES"), no Option shall be assignable or
transferable except by will or the laws of descent and distribution, and, except
to the extent required by law, no right or interest of any Participant in, and
to, any Option granted under the Plan shall be subject to any lien, obligation
or liability of the Participant. All rights with respect to Options granted to a
Participant under the Plan shall be exercisable during his lifetime only by such
Participant or, if applicable, the Permitted Transferees. The rights of a
Permitted Transferee shall be limited to the rights conveyed to such Transferee,
who shall be subject to, and bound by, the terms of the agreement or agreements
between the Participant and the Company.

         (b)      BENEFICIARY DESIGNATION. Each Participant under the Plan may
from time to time name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under the Plan is to be paid
or by whom any right under the Plan is to be exercised in case of such
Participant's death. Each designation will revoke all prior designations by the
same Participant, shall be in a form prescribed by the Committee, and will be
effective only when filed by the Participant in writing with the Committee
during his lifetime. In the absence of any such designation, benefits remaining
unpaid at the Participant's death shall be paid to, or exercised by, the
Participant's surviving spouse, if any, or otherwise to, or by, his estate.

         (c)      NO GUARANTEE OF EMPLOYMENT OR PARTICIPATION. Nothing in the
Plan shall be deemed to interfere with or limit in any way the right of the
Company or any Subsidiary to terminate any Participant's employment at any time,
or to confer upon any Participant any right to continue in the employ of the
Company or any Subsidiary. No Employee shall have a right to be selected as a
Participant, or, having been so selected, to receive any future Option grants.

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         (d)      TAX WITHHOLDING. The Company shall have the right to deduct
from all amounts paid to a Participant in cash (whether under this Plan or
otherwise) any taxes required by law to be withheld in respect of Options under
this Plan. No shares of Common Stock shall be issued pursuant to any Option
unless and until arrangements satisfactory to the Committee shall have been made
to satisfy any withholding tax obligations with respect to such Option. Without
limiting the generality of the foregoing, the Company shall have the right to
retain, and the Committee may, subject to such terms and conditions as it may
establish from time to time, permit Participants to elect to tender, Common
Stock (including Common Stock issuable in respect of an Option) to satisfy, in
whole or in part, the amount required to be withheld.

         (e)      COMPLIANCE WITH LEGAL AND EXCHANGE REQUIREMENTS. The Plan, the
granting and exercising of Options thereunder, and the other obligations of the
Company under the Plan shall be subject to all applicable Federal and State
laws, rules, and regulations and to such approvals by any regulatory or
governmental agency as may be required. The Company, in its discretion, may
postpone the granting and exercising of Options, the issuance or delivery of
Common Stock under any Option or any other action under the Plan for as long as
necessary to permit the Company, with reasonable diligence, to complete stock
exchange listing or registration or qualification of such Common Stock or other
action required under any Federal or State law, rule or regulation and may
require any Participant to make such representations and furnish such
information as it may consider appropriate in connection with the issuance or
delivery of Common Stock in compliance with applicable laws, rules, and
regulations. The Company shall not be obligated by virtue of any provision of
the Plan to recognize the exercise of any Option or to otherwise sell or issue
Common Stock in violation of any such laws, rules, or regulations; and any
postponement of the exercise of any Option under this provision shall not extend
the term of such Options, and neither the Company nor its directors or officers
shall have any obligation or liability to the Participant with respect to any
Option (or Common Stock issuable thereunder) that shall lapse because of such
postponement.

         (f)      INDEMNIFICATION. Each person who shall be or shall have been a
member of the Committee or of the Board shall be indemnified for, and held
harmless by the Company against, any loss, cost, liability, or expense that may
be imposed upon, or reasonably incurred by, him in connection with, or resulting
from, any claim, action, suit, or proceeding to which he may be made a party or
in which he may be involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by him in
settlement thereof, with the Company's approval, or paid by him in satisfaction
of any judgment in any such action, suit, or proceeding against him; PROVIDED
such person shall give the Company an opportunity, at its own expense, to handle
and defend the same before he undertakes to handle and defend it on his own
behalf. The foregoing right of indemnification shall not be exclusive and shall
be independent of any other rights of indemnification to which such persons may
be entitled

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under the Company's Articles of Incorporation or By-laws, by contract, as a
matter of law, or otherwise.

         (g)      EFFECTIVE DATE. Subject to the approval of the shareholders of
the Company, the Plan shall be effective on April 1, 2000. No Options may be
granted under the Plan after April 1, 2010.

         (h)      NO LIMITATION ON COMPENSATION. Nothing in the Plan shall be
construed to limit the right of the Company or Subsidiaries to establish other
plans or to pay compensation to the Employees, in cash or property, in a manner
which is not expressly authorized under the Plan.

         (i)      DEFERRALS. The Committee may postpone the exercising of
Options, the issuance or delivery of Common Stock under any Option or any action
permitted under the Plan in order to prevent the Company's or any Subsidiary's
being denied a Federal income tax deduction with respect to any Option other
than an Incentive Stock Option.

         (j)      GOVERNING LAW. The Plan shall be construed in accordance with,
and governed by, the laws of the State of New York, without reference to
principles of conflict of laws which would require application of the law of
another jurisdiction, except to the extent that the corporate law of the State
of Delaware specifically and mandatorily applies.

         (k)      NO IMPACT ON BENEFITS. Except as may otherwise be specifically
stated under any employee benefit plan, policy or program, no amount payable in
respect of any Option shall be treated as compensation for purposes of
calculating an Employee's right under any such plan, policy or program.

         (l)      NO CONSTRAINT ON CORPORATE ACTION. Nothing in this Plan shall
be construed (I) to limit, impair or otherwise affect the Company's right or
power to make adjustments, reclassifications, reorganizations or changes of its
capital or business structure, or to merge or consolidate, or dissolve,
liquidate, sell, or transfer all or any part of its business or assets or (II)
except as provided in Section 7, to limit the right or power of the Company, or
any Subsidiary to take any action which such entity deems to be necessary or
appropriate.

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                  FORBEARANCE AND FIFTEENTH AMENDMENT AGREEMENT

         This FORBEARANCE AND FIFTEENTH AMENDMENT AGREEMENT (this "AGREEMENT")
is entered into as of this 23rd day of June, 2000, by and among Packaging
Resources Group, Inc., a Delaware corporation ("Group"), Packaging Resources
Incorporated, a Delaware corporation (the "Borrower"), the lender signatories
hereto ("Lenders") and LaSalle Bank National Association, a national banking
association, f/k/a/ LaSalle National Bank ("LaSalle"), as agent for such Lenders
(LaSalle, in such capacity "Agent"). Unless otherwise specified herein,
capitalized terms used in this Agreement shall have the meanings ascribed to
them in the Credit Agreement (as hereinafter defined).

                                    RECITALS

         WHEREAS, the Borrower, the Lenders and the Agent have entered into that
certain Credit Agreement dated as of May 17, 1996, as amended by that certain
First Amendment to Credit Agreement, dated December 12, 1996, by and among the
Borrower, the Lenders and the Agent, by that certain Second Amendment to Credit
Agreement, dated as of April 24, 1997, by and among the Borrower, the Lenders
and the Agent, by that certain Third Amendment to Credit Agreement, dated August
27, 1997, by and among the Borrower, the Lenders and the Agent, by that certain
Fourth Amendment to Credit Agreement, dated as of April 30, 1998, by and among
the Borrower, the Lenders and the Agent, by that certain Fifth Amendment to
Credit Agreement and First Amendment to Security Agreement, dated August 5,
1998, by and among the Borrower, the Lenders and the Agent, by that certain
Sixth Amendment to Credit Agreement, dated as of February 25, 1999, by and among
the Borrower, the Lenders and the Agent, by that certain Seventh Amendment to
Credit Agreement, dated April 27, 1999, by and among the Borrower, the Lenders
and the Agent, by that certain Eighth Amendment to Credit Agreement, dated May
18, 1999, by and among the Borrower, the Lenders and the Agent, by that certain
Ninth Amendment to Credit Agreement, dated August 25, 1999, by and among the
Borrower, the Lenders and the Agent, by that certain Tenth Amendment to Credit
Agreement, dated October 7, 1999, by and among the Borrower, the Lenders and the
Agent, by that certain Eleventh Amendment to Credit Agreement, dated as of
November 15, 1999, by and among the Borrower, the Lenders and the Agent, by that
certain Twelfth Amendment to Credit Agreement, dated as of February 17, 2000, by
and among the Borrower, the Lenders and the Agent, by that certain Thirteenth
Amendment to Credit Agreement, dated as of March 10, 2000, by and among the
Borrower, the Lenders and the Agent, and by that certain Fourteenth Amendment to
Credit Agreement, dated as of May 10, 2000, by and among the Borrower, the
Lenders and the Agent (said Credit Agreement, as amended, is hereinafter
referred to as the "Credit Agreement");

         WHEREAS, the Events of Default listed on EXHIBIT A hereto (the
"EXISTING DEFAULTS") have occurred and are continuing under the Credit
Agreement;

         WHEREAS, the Borrower has requested that Agent and Lenders forbear from
exercising their rights against the Borrower under the Credit Agreement and the
other Loan Documents on account of the Existing Defaults upon the terms and
conditions set forth herein; and

<PAGE>

         WHEREAS, Agent and Lenders have agreed to forbear and to continue to
advance funds on the terms and conditions set forth herein.

         NOW, THEREFORE, in consideration of the mutual execution hereof and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

SECTION 1. DEFINITIONS.

         As used herein, the following terms shall have the meanings set forth
below:

         "EFFECTIVE DATE" means the date on which all of the conditions
precedent to the effectiveness of this Agreement set forth in SECTION 15 hereof
shall have been met to the satisfaction of Agent.

         "FORBEARANCE DEFAULT" means (a) the occurrence of any breach of any
representation, warranty, covenant or agreement by the Borrower under this
Agreement or the Forbearance Agreement dated as of May 31, 2000 among the
Borrower, Group and the holders of the Senior Notes signatory thereto
(collectively, the "Consenting Noteholders") or (b) the occurrence of any Event
of Default OTHER THAN the Existing Defaults.

         "FORBEARANCE PERIOD" means the period of time from the Effective Date
until the occurrence of a Termination Event.

SECTION 2. CONFIRMATION OF OBLIGATIONS AND EXISTING DEFAULTS.

         (a) The Borrower acknowledges and agrees that as of June 6, 2000, the
aggregate amount of the principal balance of the outstanding Obligations under
the Credit Agreement included the following principal amounts:

                 Revolving Loan                              $ 24,000,000

                 Equipment Loan                              $  8,441,600

                 Total outstanding principal amount of       $ 32,441,600
                 Obligations

The foregoing amounts do not include all of the interest, fees and expenses to
which Agent and Lenders are entitled. The Obligations listed above are
outstanding, and the Borrower acknowledges and agrees that it has no right of
offset, defense, or counterclaim with respect to such Obligations.

         (b) This Agreement constitutes notice by Agent and Lenders to the
Borrower pursuant to the terms of the Credit Agreement of the occurrence of the
Existing Defaults set forth on EXHIBIT A hereto. The Borrower acknowledges and
agrees that such Existing Defaults have

                                       2
<PAGE>

occurred and are continuing and the Borrower anticipates that such Existing
Defaults will continue through the Forbearance Period.

SECTION 3. FORBEARANCE PERIOD; ACCELERATION OF OBLIGATIONS.

         (a) All rights and remedies of Agent and Lenders in connection with the
Existing Defaults are reserved, but, except as otherwise specifically provided
herein, Agent and Lenders agree to forbear from exercising their rights and
remedies against the Borrower that arise solely as a result thereof until the
earliest to occur of: (i) June 30, 2000, or (ii) the occurrence of any
Forbearance Default (each of (i) and (ii), a "TERMINATION EVENT"), including,
without limitation, their right to impose the default rate of interest set forth
in Section 2.6(c) of the Credit Agreement based solely on the Existing Defaults
and their rights set forth in Sections 10.1 and 10.2 of the Credit Agreement
based solely on the Existing Defaults.

         (b) The Borrower further agrees and acknowledges that no action taken
by Agent or Lenders prior to the date hereof shall: (i) create any obligation to
make any further advances or to continue to defer enforcement action after a
Termination Event, (ii) constitute a waiver or modification of any term or
condition of the Credit Agreement or any other Loan Document, or (iii)
constitute a waiver of any Event of Default, any unsatisfied condition precedent
or otherwise prejudice any rights or remedies which Agent or Lenders now have or
may have in the future under the Credit Agreement, the other Loan Documents,
applicable law or otherwise, including, without limitation, all rights and
remedies in connection with the Existing Defaults. Nothing contained herein
shall in any way be deemed to limit or prevent Agent or Lenders from, upon the
occurrence of a Termination Event, accelerating the Obligations, commencing any
action or actions to collect the Obligations, foreclosing or otherwise realizing
on the Collateral, or taking any other enforcement action against the Borrower
to the extent permitted under the Loan Documents. Without limiting the
generality of the foregoing, subject only to the agreement of Agent and Lenders
to forbear during the Forbearance Period, Agent and Lenders expressly reserve
all rights and remedies which they now have or may have in the future under the
Credit Agreement, the other Loan Documents, applicable law or otherwise,
including, without limitation, all rights and remedies in connection with the
Existing Defaults.

SECTION 4. SALE OF THE BORROWER OR ITS ASSETS.

         To induce the forbearance described herein, the Borrower and Group
hereby agree:

         (a) to use all commercially reasonable efforts to consummate a sale of
all or substantially all of the assets of the Borrower or Group or a majority of
the equity interests in the Borrower or Group as promptly as practicable; and

         (b) to provide Agent with reasonable access to the Borrower's
investment banker and investment and financial advisors and all information in
their possession concerning the proposed transaction described in clause (a)
above.

                                       3
<PAGE>

SECTION 5. SPECIAL COMMITMENT PERIOD LOANS. Agent and Lenders have agreed to
amend the Credit Agreement as set forth herein to, among other things, increase
the advance rate on Eligible Inventory and increase the Revolving Credit
Facility Commitment in exchange for, among other things, the following covenants
and agreements by the Borrower. The Borrower covenants and agrees that (i) upon
execution of this Agreement, Agent shall be deemed to have fully earned a
special commitment fee from the Borrower in the amount of $300,000, which fee
shall be paid by the Borrower to Agent at the conclusion of the Special
Commitment Period and shall be non refundable; and (ii) failure of the Borrower
to pay such fee when due shall be deemed an immediate Event of Default under the
Credit Agreement with no cure period whatsoever.

SECTION 6. ACTIONS BY HOLDERS OF SENIOR NOTES OR INDENTURE TRUSTEE. The Borrower
hereby agrees that it shall be an immediate breach of this Agreement and an
immediate Event of Default under the Credit Agreement if any action is taken by
any holder of Senior Notes or the indenture trustee to enforce any right or
remedy under the Senior Note Documents.

SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE BORROWER.

         The Borrower represents and warrants that:

         (a) the execution, delivery and performance by the Borrower of this
Agreement and all documents and instruments delivered in connection herewith
have been duly authorized and this Agreement and all documents and instruments
delivered in connection herewith are legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms;

         (b) except for the Existing Defaults, each of the representations and
warranties contained in the Credit Agreement is true and correct in all material
respects on and as of the date hereof as if made on the date hereof, except to
the extent that such representations and warranties expressly relate to an
earlier date;

         (c) neither the execution, delivery and performance of this Agreement
or any documents and instruments delivered in connection herewith nor the
consummation of the transactions contemplated hereby does or shall contravene,
result in a breach of, or violate (i) any provision of the Borrower's articles
of incorporation, bylaws or other governing documents, (ii) any law or
regulation, or any order or decree of any court or government instrumentality
known to the Borrower, or (iii) any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which the Borrower or any of its subsidiaries
is a party or by which the Borrower or any of its subsidiaries or any of their
property is bound; and

         (d) the Consenting Noteholders hold at least 71.6% of the outstanding
principal amount of the Senior Notes.

SECTION 8. AMENDMENTS TO CREDIT AGREEMENT.

                                       4

<PAGE>

         (a) SECTION 1.1 of the Credit Agreement is hereby amended by deleting
the definition of "Applicable Margin" in its entirety and replacing it with the
following:

                   "APPLICABLE MARGIN" shall mean: (i) with respect to
             Eurodollar Revolving Advances, three percentage points (3%); (ii)
             with respect to Base Rate Revolving Advances, one and one-half
             percentage points (1 1/2%); (iii) with respect to Eurodollar
             Equipment Advances, three and one-quarter percentage points
             (3 1/4%); and (iv) with respect to Base Rate Equipment Advances,
             one and three-quarters percentage points (1 3/4%).

         (b) SECTION 1.1 of the Credit Agreement is hereby further amended by
deleting the definition of "Borrowing Base" in its entirety and replacing it
with the following:

                   "BORROWING BASE" shall mean, (a) during the Special
             Commitment Period, an amount equal to (i) the sum of (A) sixty-five
             percent (65%) of the Net Amount of Eligible Inventory and (B)
             eighty-five percent (85%) of the Net Amount of Eligible
             Receivables, in each case as determined by reference to and as set
             forth in the most recent Borrowing Base Certificate delivered to
             the Agent by the Borrower as of such time pursuant to Section
             8.1(i) hereof, MINUS (ii) the Miner Tax Reserve (if any), MINUS
             (iii) any reserves established by Agent, in its reasonable
             discretion, from time to time which reserves shall be established
             to insure future payment of the Obligations; and (b) as of any time
             other than the Special Commitment Period, an amount equal to (i)
             the sum of sixty percent (60%) of the Net Amount of Eligible
             Inventory and eighty-five percent (85%) of the Net Amount of
             Eligible Receivables, in each case as determined by reference to
             and as set forth in the most recent Borrowing Base Certificate
             delivered to the Agent by the Borrower as of such time pursuant to
             Section 8.1(i) hereof, MINUS (ii) the Miner Tax Reserve (if any),
             MINUS (iii) any reserves established by Agent, in its reasonable
             discretion, from time to time which reserves shall be established
             to insure future payment of the Obligations.

         (c) SECTION 1.1 of the Credit Agreement is hereby further amended by
deleting the definition of "Dominion Account" in its entirety and replacing it
with the following:

                   "DOMINION ACCOUNT" shall mean lockbox account No. 1466,
             account No. 2306052, account No. 2306063 and/or account No.
             5800022575 or such other accounts as designated by LaSalle Bank
             National Association in the name of the Agent, for its benefit and
             the ratable benefit of Lenders, established by the Borrower
             pursuant to the Agreement at LaSalle Bank National Association,
             over which Agent shall have sole and exclusive access and control
             for withdrawal purposes.

         (d) SECTION 1.1 of the Credit Agreement is hereby further amended by
the following definitions after the "Fixed Charge Coverage Ratio" definition:

                                       5
<PAGE>

                   "FORBEARANCE AGREEMENT" shall mean the Forbearance and
             Fifteenth Amendment Agreement dated as of June 23, 2000 among the
             Borrower, Agent and Lenders.

                   "FORBEARANCE PERIOD" shall have the meaning set forth in the
             Forbearance Agreement.

         (e) SECTION 1.1 of the Credit Agreement is hereby further amended by
adding the following definition after the "Solvent" definition:

                   "SPECIAL COMMITMENT PERIOD" shall mean the period commencing
             on the effective date of the Forbearance Agreement and ending on
             the earlier of the date on which the Borrower's stock or assets are
             sold or October 31, 2000.

         (f) SECTION 2.2(a) of the Credit Agreement is hereby amended by
deleting such Section in its entirety and replacing it with the following:

                   Section 2.2 REVOLVING CREDIT FACILITY COMMITMENT AND
             BORROWING LIMit.

                   (a) The Revolving Loan shall not any time, when taken
             together with the Letter of Credit Usage at such time (after giving
             effect to any concurrent reimbursement of a Letter of Credit with
             the proceeds of a Revolving Advance pursuant to Section 4A.1(c)
             hereof) exceed the least of (i) the "Revolving Credit Facility
             Commitment" (as defined below), (ii) the Borrowing Base as of such
             time and (iii) the maximum amount permitted by the Senior Note
             Documents (the least of (i), (ii) and (iii) being the "Borrowing
             Limit"). The Revolving Credit Facility Commitment shall equal
             Twenty-Six Million Dollars ($26,000,000) during the Special
             Commitment Period, and Twenty-Four Million Dollars ($24,000,000) at
             all other times.

         (g) SECTION 2.2 of the Credit Agreement is hereby further amended by
adding the following new SUBSECTION 2.2(d) to the end thereof:

                   (d) The Borrower hereby authorizes Agent, in Agent's sole
             discretion, to charge the Borrower's accounts or to advance
             Revolving Advances to make any payments of principal, interest,
             fees, costs and/or expenses required by this Agreement, the
             Forbearance Agreement, or any other Loan Document.

         (h) SECTION 2.7 of the Credit Agreement is hereby amended by deleting
such Section in its entirety and replacing it with the following:

                   Section 2.7 CONVERSION OF BORROWINGS; RENEWAlS. (a) Unless
             otherwise prohibited under Section 2.10 or Section 2.11 hereof, in
             the sole discretion of Agent, Agent may permit the Borrower to,
             from time to time following the

                                       6
<PAGE>

             Closing Date and prior to the Maturity Date, convert (i) all or a
             portion of its outstanding Base Rate Advances to one or more
             Eurodollar Advances in aggregate amounts of $1,000,000 or any
             integral multiple of $200,000 in excess of $1,000,000, or (ii)
             all or a portion of its outstanding Eurodollar Advances to one or
             more Base Rate Advances so long as the aggregate principal
             balance of the portion of the Eurodollar Advances made to such
             Borrower not being converted, if any, is $1,000,000 or an
             integral multiple of $200,000 in excess of $1,000,000; PROVIDED,
             HOWEVER, that the Borrower shall not be entitled to convert any
             Eurodollar Advance, or portion thereof, to a Base Rate Advance
             unless all accrued interest on the Eurodollar Advance or portion
             thereof, as the case may be, to be converted through the date of
             such conversion shall have been paid in full. Each request for
             conversion by the Borrower of any Advance or portion thereof
             (other than a conversion pursuant to Section 2.10 or 2.11 hereof)
             shall be made not later than 11:00 a.m. (Chicago time) on a
             Business Day on at least three Business Days' prior Written
             Notice or telephonic notice from an Authorized Representative
             confirmed promptly in writing to the Agent (which shall promptly
             notify each Lender thereof in writing or by telephone confirmed
             promptly in writing) from the Borrower. Each such request (which
             request shall be irrevocable) shall specify (i) the date of the
             conversion and the amount to be converted, and the type of
             Advance into which such Advance is to be converted, (ii) the
             particular Advance, or portion thereof, to be converted, and
             (iii) in the case of conversion of any Advance, or portion
             thereof, to a Eurodollar Advance, the duration of the Interest
             Period for such Eurodollar Advance. If Agent does not consent in
             writing to such request within such three Business Day period,
             such request is deemed denied. Notwithstanding the above, the
             Borrower shall not be entitled to convert any Advance, or portion
             thereof, to a Eurodollar Advance if a Default or Event of Default
             shall have occurred and be continuing. Except as provided in
             Section 2.12 hereof, any conversion of a Eurodollar Advance, or
             portion thereof, to a Base Rate Advance shall be made only on the
             last day of the Interest Period with respect to such Eurodollar
             Advance.

                   (b) In the sole discretion of Agent, Agent may permit the
             Borrower to renew an outstanding Eurodollar Advance or portion
             thereof (in an amount of $1,000,000 or an integral multiple of
             $200,000 in excess of $1,000,000) after receipt by Agent of a
             notice of request for renewal by the Borrower (Agent shall notify
             each Lender thereof on the same day as Agent receives such notice
             in writing or by telephone confirmed promptly in writing) given not
             later than 11:00 a.m. (Chicago time) on the third Business Day
             prior to the last day of the Interest Period just ending for such
             Eurodollar Advance. Each request (which request shall be
             irrevocable) by the Borrower for the renewal of a Eurodollar
             Advance or portion thereof, shall be in writing or by telephone
             from an Authorized Representative of the Borrower confirmed
             promptly in writing and shall specify (i) the amount of such
             renewal of the Eurodollar Advance or portion thereof and (ii) the
             duration of the Interest Period for such renewal; PROVIDED,
             HOWEVER, that if the Borrower fails to select the duration of any
             Interest Period for

                                       7
<PAGE>

             the renewal of such Eurodollar Advance or portion thereof (in an
             amount of $1,000,000 or an integral multiple of $200,000 in
             excess of $1,000,000), the duration of such Interest Period shall
             be one month. If Agent does not consent in writing to such
             request within such three Business Day period, such request is
             deemed denied. Notwithstanding the above, the Borrower shall not
             be entitled to renew a Eurodollar Advance or a portion thereof,
             (i) if Agent has not given Borrower Agent's prior written
             consent, (ii) if at the time of the selection of such renewal
             there shall exist a Default or an Event of Default, or (ii) to
             the extent such renewal would be prohibited by Section 2.10 or
             2.11 hereof.

                   (c) Any Eurodollar Advance or portion thereof as to which the
             Agent shall not have (a) received a proper notice of request for
             conversion or renewal as provided in Section 2.7(a) or 2.7(b)
             hereof by 11:00 a.m. (Chicago time) at least three Business Days
             prior to the last day of the Interest Period just ending for such
             Eurodollar Advance or (b) consented to the conversion or renewal
             thereof in writing, shall (whether or not any Default or Event of
             Default has occurred) automatically be converted to a Base Rate
             Advance on the last day of the Interest Period for such Eurodollar
             Advance.

         (i) SECTION 8.16 of the Credit Agreement is hereby amended by adding
the following new SUBSECTION 8.16(d) to the end thereof:

                   EBITDA: As of the last day of each fiscal month listed below,
             EBITDA shall equal or exceed the amount set forth opposite such
             fiscal period in the following schedule:

<TABLE>
<CAPTION>

                  FISCAL MONTH                                 AMOUNT
                  ------------                                 ------
                  <S>                                          <C>
                  April, 2000                                  $ 1,000,000
                  May, 2000                                    $ 1,000,000
                  June, 2000                                   $ 1,200,000
                  July, 2000                                   $ 1,200,000
                  August, 2000                                 $ 1,500,000
                  and each fiscal month thereafter
</TABLE>

         (j) SECTION 8.17 of the Credit Agreement is hereby amended by deleting
such Section in its entirety and replacing it with the following:

                   Section 8.17 MAINTENANCE OF DOMINION ACCOUNT(S). (a) The
             Borrower shall direct all of its account debtors to make all
             payments on the Receivables directly to a post office box (the
             "LOCK BOX") designated by, and under the exclusive control of
             Agent. All payments received in the Lock Box shall be deposited
             into the Dominion Account(s), and the Borrower will also
             immediately deposit into the Dominion Account(s) all

                                       8
<PAGE>

             payments received by the Borrower for Inventory or services in the
             identical form in which such payments were received, whether by
             cash or check. If the Borrower, any Affiliate or Subsidiary, or
             any shareholder, officer, director, employee or agent of the
             Borrower or any Affiliate or Subsidiary, or any other Person
             acting for or in concert with the Borrower shall receive any
             monies, checks, notes, drafts or other payments relating to or as
             proceeds of Receivables or other Collateral, the Borrower and
             each such Person shall receive all such items in trust for, and
             as the sole and exclusive property of, Agent and, immediately
             upon receipt thereof, shall remit the same (or cause the same to
             be remitted) in kind to the Dominion Account(s). The Borrower
             agrees that all payments made to such Dominion Account(s) or
             otherwise received by Agent, whether in respect of the
             Receivables or as proceeds of other Collateral or otherwise, will
             be applied on account of the Obligations by Agent on a daily
             basis in accordance with the terms of this Agreement. The
             Borrower agrees to pay all fees, costs and expenses which Agent
             incurs in connection with opening and maintaining the Dominion
             Account(s) and depositing for collection by Agent any check or
             other item of payment received by Agent on account of the
             Obligations. All such fees, costs and expenses shall constitute
             Revolving Advances hereunder, shall be payable to Agent by the
             Borrower upon demand, and, until paid, shall bear interest at the
             highest rate then applicable to Loans hereunder. All checks,
             drafts, instruments and other items of payment or proceeds of
             Collateral shall be endorsed by the Borrower to Agent, and, if
             such an endorsement of any such item shall not be made for any
             reason, Agent is hereby irrevocably authorized to endorse the
             same on the Borrower's behalf. For the purposes of this Section,
             the Borrower irrevocably hereby makes, constitutes and appoints
             Agent (and all Persons designated by Agent for that purpose) as
             the Borrower's true and lawful attorney and agent-in-fact (i) to
             endorse the Borrower's name upon said items of payment and/or
             proceeds of Collateral and upon any Chattel Paper, Document,
             Instrument, invoice or similar document or agreement relating to
             any Receivables of the Borrower or Goods pertaining thereto; (ii)
             to take control of, in any manner, any item of payment or
             proceeds thereof, and (iii) to have access to any lock box or
             postal box into which the Borrower's mail is deposited, and open
             and process all mail addressed to the Borrower and deposited
             therein.

                   (b) For purposes of calculating interest and determining the
             amount of Revolving Advances available for borrowing purposes, (i)
             checks and/or (ii) cash or other immediately available funds from
             collections of items of payment and proceeds of any Collateral
             shall be applied in whole against the Obligations, in such order as
             Agent shall determine in its sole discretion in good faith on a
             basis consistent with the

                                       9
<PAGE>

             terms and provisions of this Agreement, on the day of receipt,
             subject to actual collection.

         (k) SECTION 9.9 of the Credit Agreement is hereby amended by deleting
such Section in its entirety and replacing it with the following:

                   Section 9.9 MANAGEMENT FEES AND OTHER PAYMENTS. Pay, directly
             or indirectly, any management, consulting or similar fees to, or
             make any other payments of any kind in respect of employment,
             management, consulting, servicing or similar services or in respect
             of any non-competition or similar agreement to, or make any other
             payment (excluding salary and other compensation to full-time
             employees in the ordinary course of business) to any officers,
             directors, general or limited partners of, or other management of,
             or any stockholders of, the Borrower or any Affiliate of the
             Borrower, except that (a) during each Fiscal Year prior to Fiscal
             Year 2000, the Borrower may pay an aggregate amount equal to the
             lesser of $1,000,000 or the amount permitted under the Indenture to
             HPH or an Affiliate thereof for management fees and services, (b)
             during the period from March 1, 2000 through May 31, 2000, the
             Borrower may pay the aggregate amount equal to the lesser of
             $300,000 or the amount permitted under the Indenture to HPH or an
             Affiliate thereof for management fees and services, (c) during the
             period from June 1, 2000 through February 28, 2001, the Borrower
             may accrue BUT NOT PAY aggregate amount equal to the lesser of
             $1,000,000 or the amount permitted under the Indenture to HPH or an
             Affiliate thereof for management fees or services and (d) during
             each Fiscal Year thereafter, commencing with Fiscal Year
             thereafter, commencing with Fiscal Year 2001, the Borrower may
             accrue BUT NOT PAY an aggregate amount equal to the lesser of
             $1,000,000 or the amount permitted under the Indenture to HPH or an
             Affiliate thereof for management fees and services.

SECTION 9. REFERENCE TO AND EFFECT UPON THE CREDIT AGREEMENT.

         (a) Except as specifically modified herein, the Credit Agreement and
the other Loan Documents shall remain in full force and effect and are hereby
ratified and confirmed.

         (b) The execution, delivery and effectiveness of this Agreement and all
documents and instruments delivered in connection herewith shall not operate as
a waiver of any right, power or remedy of Agent or Lenders under the Credit
Agreement or any other Loan Document, nor constitute a waiver of any provision
of the Credit Agreement or any other Loan Document, except as specifically set
forth herein. Upon the effectiveness of this Agreement, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
of similar import shall mean and be a reference to the Credit Agreement as
modified hereby.

SECTION 10. COSTS AND EXPENSES. As provided in Section 12.5 of the Credit
Agreement, the Borrower agrees to reimburse Agent for all fees, costs and
expenses, including

                                       10
<PAGE>

the reasonable fees, costs and expenses of counsel or other advisors for advice,
assistance, or other representation in connection with the negotiation,
documentation and enforcement of this Agreement and all documents executed in
connection herewith or otherwise contemplated hereby.

SECTION 11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS PROVISIONS)
OF THE STATE OF ILLINOIS.

SECTION 12. 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 purposes.

SECTION 13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed an original, but
all such counterparts shall constitute one and the same instrument.

SECTION 14. RECITALS INCORPORATED. The Recitals are hereby incorporated herein
by reference.

SECTION 15. EFFECTIVENESS. This Agreement shall become effective only upon the
satisfaction of all of the following conditions precedent on the date hereof or
on such other date as is set forth below:

         (a) AGREEMENT. Executed signature pages for this Agreement signed by
Agent, Lenders and the Borrower shall have been delivered to Agent.

         (b) REPRESENTATIONS. The representations and warranties contained
herein shall be true and correct in all respects.

         (c) FEE. Agent shall have received from the Borrower a collateral
management fee in the amount of $50,000, which shall be deemed fully earned and
nonrefundable when paid.

         (d) CONSENTING NOTEHOLDERS STANDSTILL. The Consenting Noteholders and
the Borrower shall have entered into a forbearance or standstill agreement
through June 30, 2000, and shall have delivered to Agent an executed original of
such agreement in form and substance satisfactory to Agent.

         (e) INVENTORY APPRAISAL. Agent shall have received a copy of the Hilco
inventory appraisal or an inventory appraisal from another appraiser acceptable
to Agent, which appraisal shall provide for a net orderly liquidation value of
the Eligible Inventory equal to at least 70% of the Net Amount of the Eligible
Inventory.

         (f) EQUIPMENT LOAN PREPAYMENT. Agent shall have received a prepayment
of $200,000 to be applied to the principal amount of the Equipment Loan.

                                       11
<PAGE>

         IN WITNESS WHEREOF, the parties hereto hereupon set their hands as of
the date first written above.

PACKAGING RESOURCES INCORPORATED,            LASALLE BANK NATIONAL ASSOCIATION,
as Borrower                                  as Agent and Lender

By:  Jerry J. Corirossi                      By: Mitch Raskey
    ----------------------------                ---------------------------
    Name:                                       Name:
          ----------------------                     ----------------------
    Title: Exec. VP-Finance &                   Title: Vice President
           Administration                            ----------------------
           ---------------------

PACKAGING RESOURCES GROUP, INC.

By:  Jerry J. Corirossi
    ----------------------------------------
    Name:  ---------------------------------
    Title: Exec. VP-Finance & Administration
           ---------------------------------

                                       12
<PAGE>

                                    EXHIBIT A

                                EXISTING DEFAULTS

         Any Defaults or Events of Default resulting from: (i) the Borrower's
failure to pay interest on the Senior Notes due and payable on May 1, 2000,
(ii) the failure of Packaging Resources Group, Inc. to pay interest on its
Senior Notes due and payable on May 31, 2000, (iii) the failure of the Borrower
to cause an unqualified opinion of its independent public accountants to be
delivered with respect to its financial statements for the Fiscal Year ended
February 29, 2000, and (iv) provided that the pension plan deficiency
(including, without limitation, excise taxes and other penalties) is at all
times less than $1 million in the aggregate, the failure of the Borrower to
make the contribution of $913,678.46 due on June 15, 2000 in respect of the
Borrower's money purchase pension plan (otherwise known as the Packaging
Resources Incorporated Retirement Plan) for the plan year ended September 30,
1999.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00011-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00011-of-00352.parquet"}]]