IVEX PACKAGING CORP /DE/, 10-Q, 1996-08-13

IVEX PACKAGING CORP /DE/
10-Q, 1996-08-13
PLASTICS, FOIL & COATED PAPER BAGS

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<PAGE> 1
================================================================================

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

--------------------------------

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

--------------------------------

For the Quarter Ended June 30, 1996 Commission File Number 33-60714

IVEX PACKAGING CORPORATION
(Exact name of registrant as specified in its charter)

Delaware 76-0171625
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)

100 Tri-State Drive
Lincolnshire, Illinois 60069
(Address of Principal Executive Office) (Zip Code)

Registrant's Telephone number, including area code: (847) 945-9100

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days.

Yes X No
----- -----
At August 14, 1996, there were 1,072,246 shares of common stock, par
value $0.01 per share, outstanding.

================================================================================
<PAGE> 2

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

IVEX PACKAGING CORPORATION

CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
ASSETS
JUNE 30, DECEMBER 31,
1996 1995
---- ----
<S> <C> <C>
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . $ 4,440 $ 4,830
Accounts receivable trade, net of allowance . . . . . . . . . 45,249 46,077
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 44,848 44,050
Prepaid expenses and other . . . . . . . . . . . . . . . . . . 4,565 5,417
--------- ---------
Total current assets . . . . . . . . . . . . . . . . . . . . 99,102 100,374
--------- ---------
Property, Plant and Equipment:
Buildings and improvements . . . . . . . . . . . . . . . . . . 47,200 47,108
Machinery and equipment . . . . . . . . . . . . . . . . . . . 210,637 208,820
Construction in progress . . . . . . . . . . . . . . . . . . . 9,874 4,159
--------- ---------
267,711 260,087
Less - Accumulated depreciation . . . . . . . . . . . . . . . (112,920) (102,098)
--------- ---------
154,791 157,989
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,504 7,504
--------- ---------
Total property, plant and equipment . . . . . . . . . . . . 162,295 165,493
--------- ---------
Other assets:
Goodwill, net of accumulated amortization . . . . . . . . . . 13,704 13,938
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 14,375 15,106
--------- ---------
Total other assets . . . . . . . . . . . . . . . . . . . . . 28,079 29,044
--------- ---------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . $ 289,476 $ 294,911
========= =========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
Current installments of long-term debt . . . . . . . . . . . . $ 5,126 $ 5,128
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 23,739 27,256
Accrued salary and wages . . . . . . . . . . . . . . . . . . . 6,660 7,781
Self insurance reserves . . . . . . . . . . . . . . . . . . . 6,674 6,339
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . 1,726 1,747
Other accrued expenses . . . . . . . . . . . . . . . . . . . . 15,292 14,033
--------- ---------
Total current liabilities . . . . . . . . . . . . . . . . . 59,217 62,284
--------- ---------
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . 349,850 353,717
--------- ---------
Other Long-Term Liabilities . . . . . . . . . . . . . . . . . . . 6,247 6,472
--------- ---------
Deferred Income Taxes . . . . . . . . . . . . . . . . . . . . . . 8,770 8,770
--------- ---------
Stockholders' Deficit:
Ivex Packaging Corporation common stock, $.01 par value -
2,000,000 shares authorized; and 1,072,246 shares
issued and outstanding . . . . . . . . . . . . . . . . . . . 11 11
Paid in capital in excess of par value . . . . . . . . . . . . 177,375 177,375
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . (310,510) (312,234)
Foreign currency translation adjustment . . . . . . . . . . . (1,484) (1,484)
--------- ---------
Total stockholders' deficit . . . . . . . . . . . . . . . . (134,608) (136,332)
--------- ---------
Total Liabilities and Stockholders' Deficit . . . . . . . . . . . $ 289,476 $ 294,911
========= =========
</TABLE>

The accompanying notes are an integral part of this statement.

2
<PAGE> 3

IVEX PACKAGING CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
------------------------- -----------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . $ 106,227 $ 114,653 $ 210,443 $ 227,543
Cost of goods sold . . . . . . . . . . . . . . . . 81,904 93,000 164,668 184,986
----------- ----------- ----------- ---------
Gross profit . . . . . . . . . . . . . . . . . . . 24,323 21,653 45,775 42,557
----------- ----------- ----------- ---------
Operating expenses:
Selling . . . . . . . . . . . . . . . . . . . . 4,923 4,759 9,599 9,500
Administrative . . . . . . . . . . . . . . . . . 6,091 6,407 12,533 12,426
Amortization of intangibles . . . . . . . . . . 118 1,389 258 1,674
Write-off of goodwill . . . . . . . . . . . . . 13,471 13,471
----------- ----------- ----------- ---------
Total operating expenses . . . . . . . . . . . . . 11,132 26,026 22,390 37,071
----------- ----------- ----------- ---------
Income (loss) from operations . . . . . . . . . . . 13,191 (4,373) 23,385 5,486
Interest expense . . . . . . . . . . . . . . . . . 10,457 10,837 21,221 21,206
----------- ----------- ----------- ---------
Income (loss) before income taxes . . . . . . . . . 2,734 (15,210) 2,164 (15,720)
Income tax provision . . . . . . . . . . . . . . . (219) (213) (440) (624)
----------- ----------- ---------- --------
Net income (loss) . . . . . . . . . . . . . . . . . $ 2,515 $ (15,423) $ 1,724 $ (16,344)
========== =========== =========== =========
</TABLE>

The accompanying notes are an integral part of this statement.

3
<PAGE> 4

IVEX PACKAGING CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
(DOLLARS IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
Ivex Packaging
Corporation Paid in Foreign
Common Stock Capital Currency
-------------- In Excess of Accumulated Translation Stockholders'
Shares Amount Par Value Deficit Adjustment Deficit
-------- ------ ------------ --------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 . . . . . . . . . . 1,072,246 $11 $177,375 $(287,750) $(902) $(111,266)
Foreign currency translation adjustment . . (582) (582)
Net loss . . . . . . . . . . . . . . . . . .
(24,484) (24,484)
--------- ---- -------- --------- ------- ---------
Balance at December 31, 1995 . . . . . . . . . . 1,072,246 11 177,375 (312,234) (1,484) (136,332)
Net income . . . . . . . . . . . . . . . . . 1,724 1,724
--------- ---- -------- --------- ------- ---------
Balance at June 30, 1996 . . . . . . . . . . . . 1,072,246 $11 $177,375 $(310,510) $(1,484) $(134,608)
========= ==== ======== ========= ======= =========
</TABLE>

The accompanying notes are an integral part of this statement.

4
<PAGE> 5

IVEX PACKAGING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
----------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,724 $(16,344)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation of properties . . . . . . . . . . . . . . . . . . . . . . 11,045 10,413
Amortization of intangibles and debt issue costs . . . . . . . . . . . 951 16,151
Non-cash interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,139 5,430
-------- --------
19,859 15,650
Change in operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . 828 (870)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (798) (5,049)
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . 852 (927)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,517) (8,594)
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . 227 (277)
-------- --------
Net cash from (used by) operating activities . . . . . . . . . . . . . 17,451 (67)
-------- --------
Cash flows from financing activities:
Payment of senior credit facility . . . . . . . . . . . . . . . . . . . . . (2,500) (4,048)
Proceeds from revolving credit facility . . . . . . . . . . . . . . . . . . 8,500
Payment of revolving credit facility . . . . . . . . . . . . . . . . . . . . (7,500)
Payment of debt issue costs . . . . . . . . . . . . . . . . . . . . . . . . (191) (217)
-------- --------
Net cash from (used by) financing activities . . . . . . . . . . . . . (10,191) 4,235
-------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment . . . . . . . . . . . . . . . . . (7,996) (6,700)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346 (397)
-------- --------
Net cash used by investing activities . . . . . . . . . . . . . . . . (7,650) (7,097)
--------- --------
Net decrease in cash and cash equivalents . . . . . . . . . . . . . . . . . . . (390) (2,929)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . 4,830 6,289
-------- --------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . $ 4,440 $ 3,360
======== ========

Supplemental cash flow disclosures:
Cash paid during the year for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,410 $ 14,835
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 742 754
Supplemental schedule of non-cash investing and financing activities:
Issuance of non-current note for accounts receivable . . . . . . . . . . . 1,000
</TABLE>

The accompanying notes are an integral part of this statement.

5
<PAGE> 6
IVEX PACKAGING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)

NOTE 1 - ACCOUNTING AND REPORTING POLICIES:

In the opinion of management, the information in the accompanying
unaudited financial statements reflects all adjustments necessary for a fair
statement of results for the interim periods. These interim financial
statements should be read in conjunction with the financial statements and the
notes thereto included in the Annual Report on Form 10-K for the year ended
December 31, 1995 (the "Form 10-K") of Ivex Packaging Corporation (formerly
named Ivex Holdings Corporation) ("Ivex" or the "Company").

The Company is the sole stockholder of its operating subsidiary, IPC,
Inc. ("IPC"). The Company is a holding company with no operations of its own
and is dependent on the operating cash flow of IPC and its subsidiaries in
order to pay principal and interest on its debt; however, IPC has no
contractual obligations to distribute any such cash flow to the Company.

The Company's accounting and reporting policies are summarized in Note 2
of the Ivex Form 10-K.

Accounts Receivable

Accounts receivable at June 30, 1996 and December 31, 1995 consist of the
following:

<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---- ----
<S> <C> <C>
Accounts receivable . . . . . . . . . . . . . . . $ 47,531 $ 48,089
Less -- Allowance for doubtful accounts . . . . . (2,282) (2,012)
------- --------
$ 45,249 $ 46,077
======== =========
</TABLE>

Inventories

Inventories at June 30, 1996 and December 31, 1995 consist of the
following:

<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---- ----
<S> <C> <C>
Raw materials . . . . . . . . . . . . . . . . . . $ 22,691 $ 24,148
Finished goods . . . . . . . . . . . . . . . . . 22,157 19,902
-------- ---------
$ 44,848 $ 44,050
======== =========
</TABLE>

NOTE 2 - INCOME TAXES

Income taxes are provided at the estimated annual effective tax rate
which differs from the federal statutory rate of 35% primarily due to the
utilization of net operating loss carryovers and state income taxes that are
not offset by net operating loss carryovers.

6
<PAGE> 7

IVEX PACKAGING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)

NOTE 3 - GOODWILL

During 1995, a portion of the Industrial Packaging businesses (such
portion having been acquired primarily in the 1989 acquisition of Ivex Coated
Products Corporation (formerly L&CP Corporation)) had experienced less sales
volume growth and lower profitability than anticipated. As a consequence, and
in response to dynamic market conditions, during the second quarter of 1995 the
Company realigned the management of these businesses based on three distinct
operating units - masking, graphics and other protective products.

Consistent with its accounting policy for goodwill and long-lived
assets, the Company made a reassessment of its remaining goodwill, all of which
pertains to the above operating units, during the second quarter of 1995 and
revised its projections to more accurately reflect expected future results at
that time. The Company segregated the assets and cash flows of these three
operating units in its 1995 assessment of the recoverability of its goodwill
because such segregation is the lowest level for which cash flows are
identifiable and independent of one another as of the second quarter of 1995.
In order to evaluate its goodwill impairment as of June 30, 1995, the Company
projected the cash flows allocable to these businesses over the estimated
remaining goodwill amortization periods of approximately 34 years. The Company
then discounted such cash flows at a rate of 16-1/2% which it believed was
commensurate with the risk involved. The Company selected a pre-tax weighted
average cost of capital (reflective of other comparable companies within its
industry) for purposes of discounting its cash flows. The discounted cash
flows of each business were then compared to the sum of the business group's
working capital and net book value of fixed assets. Impairment of goodwill was
then measured by comparing the remaining discounted cash flow to the net book
value of the business groups' goodwill. Upon comparison, the discounted cash
flows for the graphics and other protective products businesses were
insufficient to recover each of such businesses' goodwill. Accordingly, the
Company recorded an impairment of $13,471 during the second quarter of 1995.

The 1995 revised projections for this portion of the Company's business
were extrapolated from the market conditions and competitive pressures existing
at that time and were based upon, among other things, the assumptions that
growth of operating income before depreciation and amortization would range
from 2-6% per year through 1999, from 1-3% per year from 2000-2010 and 0% per
year from 2011-2029. The growth assumptions for the graphics and other
protective products businesses were lower than the masking business. The
projections assumed that capital expenditures would generally be consistent
with depreciation over the long term. The Company believes that its revised
projections based on the June 1995 existing historic financial trends and
market conditions, were its best estimate at that time of its future
performance and that performance at such projected levels would not
substantially detract from the Company's future earnings. However, there can
be no assurances that such estimates will be indicative of future results,
which ultimately may be less than or greater than these estimates.

7
<PAGE> 8

IVEX PACKAGING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)

NOTE 4 - LONG-TERM DEBT

At June 30, 1996 and December 31, 1995 the long-term debt of Ivex and
its wholly owned subsidiary, IPC, was as follows:

<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---- ----
<S> <C> <C>
Senior credit facility . . . . . . . . . . . . . . . . $ 58,500 $ 68,500
Industrial revenue bonds . . . . . . . . . . . . . . . 38,293 38,293
12-1/2% IPC Notes, net of discount . . . . . . . . . . 157,285 157,229
13-1/4% Company Discount Debentures, net of discount . 99,477 93,338
Other . . . . . . . . . . . . . . . . . . . . . . . . . 1,421 1,485
---------- ----------
Total debt outstanding . . . . . . . . . . . . . . 354,976 358,845
Less - Current installments of long-term debt . . . . . (5,126) (5,128)
--------- ---------
Long-term debt . . . . . . . . . . . . . . . . . . $ 349,850 $ 353,717
========== ==========
</TABLE>

8
<PAGE> 9

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

References to the Company or Ivex herein reflect the consolidated
results of Ivex Packaging Corporation.

RESULTS OF OPERATIONS - FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND JUNE 30,
1995

Net Sales

The Company's net sales decreased by 7.3% during the second quarter of
1996 over the Company's net sales during the corresponding period in 1995
primarily as a result of selling price decreases (primarily related to lower
raw material costs) in substantially all product groups and unit volume
decreases in certain product lines (primarily the Company's recycled and
specialty papers). The following table sets forth information with respect to
net sales of the Company's product groups for the period presented:

<TABLE>
<CAPTION>
Three Months Ended
---------------------------------------------
June 30, June 30,
1996 % 1995 %
-------- ------- --------- ------
<S> <C> <C> <C> <C>
Consumer Packaging . . . . . . . . . . . . . . $ 53,557 50.4 $ 54,815 47.8
Industrial Packaging . . . . . . . . . . . . . 52,670 49.6 59,838 52.2
-------- ----- -------- ------
Total . . . . . . . . . . . . . . . . . . $106,227 100.0 $ 114,653 100.0
======== ===== ========= =====
</TABLE>

Consumer Packaging net sales decreased by 2.3% during the second quarter
of 1996 from the corresponding period in 1995. The decrease is primarily the
result of decreased selling prices of extruded sheet and film (primarily
related to lower raw material costs) offset by increased unit sales volume of
extruded sheet. During the second quarter of 1996, pounds of extruded sheet
increased 25.4% while the average selling price per pound of extruded sheet
decreased 18.8% compared to the results of the corresponding period in 1995.
Net sales of converted plastic and paper products during the second quarter of
1996 were generally consistent with the corresponding period in 1995.

Industrial Packaging net sales decreased by 12.0% during the second
quarter of 1996 from the corresponding period in 1995, primarily due to selling
price and volume decreases of the Company's recycled and specialty papers and
volume decreases of the Company's coated paper for stamp applications. The unit
sales volume of recycled and specialty paper decreased 8.9% and 25.7%,
respectively, principally reflecting decreased market demand. The average
selling price of the Company's recycled and specialty paper decreased 18.8%
during the second quarter of 1996 compared to the corresponding period in the
prior year, principally as a result of decreases in raw material costs and
weakened demand for the Company's recycled and specialty paper. The second
quarter decrease in net sales was partially offset by incremental sales volume
from the Company's third quarter 1995 acquisition of Packaging Products, Inc.
("PPI") and increased unit sales of the Company's masking products.

Gross Profit

The Company's gross profit increased 12.3% during the second quarter
compared to the corresponding period in the prior year primarily as a result of
the incremental gross profit from the Company's third quarter 1995 acquisition
of PPI and increased volume of extruded sheet. The increase in gross profit
was partially offset by decreased unit sales volume of the Company's recycled
and specialty paper and the Company's coated paper for stamp applications and
decreased profitability of the Company's polymerization operations. Gross
profit margin increased during the second quarter of 1996 to 22.9% from the
corresponding period's level of 18.9% primarily as a result of decreases in the
cost of the Company's raw materials (including styrene, polystyrene,
polyethylene, old corrugated containers ("OCC") and doublelined kraft clippings
("DLK")).

9
<PAGE> 10

Operating Expenses

Selling and administrative expenses decreased 1.4% during the second
quarter of 1996 and as a percentage of net sales increased to 10.4% during the
second quarter of 1996 compared to 9.7% during the same period in the prior
year. The increase in selling and administrative expenses as a percentage of
net sales is primarily the result of the decrease in the Company's net sales
during the second quarter of 1996 as discussed above.

Amortization of intangibles decreased during the second quarter of 1996
compared to the same period in 1995 as a result of the accelerated non-cash
write-off of a non-compete agreement and the write-off of goodwill in the
second quarter of 1995.

Goodwill Write-off

During 1995, a portion of the Industrial Packaging businesses (such
portion having been acquired primarily in the 1989 acquisition of Ivex Coated
Products Corporation (formerly L&CP Corporation) had experienced less sales
volume growth and lower profitability than anticipated. As a result, the
Company recorded an impairment of $13,471 during the second quarter of 1995.
See "Financial Statements -- Note 3" to the Company's Consolidated Financial
Statements.

Income from Operations

Income from operations was $13.2 million during the second quarter of
1996 compared to a loss from operations of $4.4 million during the second
quarter of 1995. The increase in income from operations during the second
quarter of 1996 is primarily a result of the goodwill write- off recorded
during the second quarter of 1995, the decreased amortization of intangibles
and the improved gross profit.

Interest Expense

Interest expense during the second quarter of 1996 was $10.5 million
compared to $10.8 million during the same period in 1995. The decrease
reflects lower average interest rates during 1996 partially offset by increased
interest expense on the Company's 13-1/4% Discount Debentures.

Income taxes

The Company's tax provisions for the quarters ended June 30, 1996 and
1995 primarily reflect provisions for state taxes.

Net income (loss)

Net income was $2.5 million during the second quarter of 1996 compared
to a net loss of $15.4 million in the prior year. The increase in net income
is primarily due to increased income from operations.

EBITDA (before nonrecurring charges)

EBITDA (before nonrecurring charges) includes income from operations
adjusted to exclude depreciation and amortization expenses and goodwill
write-off. Ivex believes that EBITDA (before nonrecurring charges) provides
additional information for determining its ability to meet future debt service
requirements. However, EBITDA (before nonrecurring charges) is not a defined
term under generally accepted accounting principles ("GAAP") and is not
indicative of operating income or cash flow from operations as determined under
GAAP.

10
<PAGE> 11

The following table sets forth information with respect to EBITDA
(before nonrecurring charges) of the Company's product groups for the period
presented.

<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------------
June 30, % of June 30, % of
1996 Net Sales 1995 Net Sales
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Consumer Packaging . . . . . . . . . . . . . . $ 10,388 19.4 $ 10,062 18.4
Industrial Packaging . . . . . . . . . . . . . 9,809 18.6 7,277 12.2
Corporate Expense . . . . . . . . . . . . . . . (1,433) - (1,363) -
-------- ---------
Total . . . . . . . . . . . . . . . . . . $ 18,764 17.7 $ 15,976 13.9
======== ========
</TABLE>

The Company's EBITDA (before nonrecurring charges) increased 17.5% from
$16.0 million to $18.8 million and EBITDA (before nonrecurring charges) margin
increased from 13.9% to 17.7% during the second quarter of 1996 compared to the
same period in 1995. The 3.2%, or $.3 million, increase in Consumer
Packaging's EBITDA (before nonrecurring charges) in the current quarter is
primarily attributable to the improved gross margin on converted plastic and
paper products due to reduced raw material costs and improved operating
performance and additional unit sales volume of extruded sheet offset by the
decreased profitability of the Company's polymerization operations. The
increase in Industrial Packaging's EBITDA (before nonrecurring charges) of
34.8% or $2.5 million, is primarily due to the incremental EBITDA (before
nonrecurring charges) from the Company's third quarter 1995 acquisition of PPI
and decreased raw material costs for the Company's recycled and specialty
papers offset by decreased unit sales volume of the Company's recycled and
specialty papers.

RESULTS OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995

Net Sales

The Company's net sales decreased by 7.5% during the six months ended
June 30, 1996 over the Company's net sales during the corresponding period in
1995 primarily as a result of selling price decreases (primarily related to
lower raw material costs) in substantially all product groups and unit volume
decreases in certain product lines (primarily the Company's recycled and
specialty papers). The following table sets forth information with respect to
net sales of the Company's product groups for the period presented:

<TABLE>
<CAPTION>
Six Months Ended
---------------------------------------------
June 30, June 30,
1996 % 1995 %
-------- ------- --------- ------
<S> <C> <C> <C> <C>
Consumer Packaging . . . . . . . . . . . . . . $103,495 49.2 $ 107,262 47.1
Industrial Packaging . . . . . . . . . . . . . 106,948 50.8 120,281 52.9
-------- ----- --------- ------
Total . . . . . . . . . . . . . . . . . . $210,443 100.0 $ 227,543 100.0
======== ===== ========= =====
</TABLE>

Consumer Packaging net sales decreased by 3.5% during the six months
ended June 30, 1996 from the corresponding period in 1995. The decrease is
primarily the result of decreased selling prices of extruded sheet and film
(primarily related to lower raw material costs) offset by increased unit sales
of extruded sheet. During the six months ended June 30, 1996, pounds of
extruded sheet and film sold increased 7.1% and the average selling price per
pound of extruded sheet decreased 17.2% over the results of the corresponding
period in 1995. Net sales of converted plastic and paper products during the
six months ended June 30, 1996 were comparable with net sales during the
corresponding period in 1995.

11
<PAGE> 12

Industrial Packaging's net sales decreased by 11.1% during the six
months ended June 30, 1996 from the corresponding period in 1995, primarily
due to selling price and volume decreases of the Company's recycled and
specialty papers and volume decreases of the Company's coated paper for stamp
applications. The unit sales volume of recycled and specialty paper decreased
12.9% and 31.6%, respectively, principally reflecting decreased market demand.
The average net selling price of the Company's recycled and specialty paper
decreased 11.3% during the six months ended June 30, 1996 compared to the
corresponding period in the prior year, principally as a result of decreases
in raw material costs and weakened demand for the Company's recycled and
specialty paper. The six month period decrease in net sales was partially
offset by incremental sales volume from the Company's third quarter 1995
acquisition of PPI and increased unit sales of the Company's masking products.

Gross Profit

The Company's gross profit increased 7.6% during the six months ended
June 30, 1996 compared to the corresponding period in the prior year primarily
as a result of the incremental gross profit from the Company's third quarter
1995 acquisition of PPI and increased volume of extruded sheet. The increase
in gross profit was partially offset by decreased unit sales volume of the
Company's recycled and specialty paper and the Company's coated paper for
stamp applications and decreased profitability of the Company's polymerization
operations. Gross profit margin increased during the first six months of 1996
to 21.8% from the corresponding period's level of 18.7% primarily as a result
of decreases in the cost of the Company's raw materials (including styrene,
polystyrene, polyethylene, OCC and DLK).

Operating Expenses

Selling and administrative expenses increased .9% during the first six
months of 1996 and as a percentage of net sales increased to 10.5% during the
first six months of 1996, compared to 9.6% during the same period in the prior
year. The increase in selling and administrative expenses as a percentage of
net sales is primarily the result of the decrease in the Company's net sales
during the six month period ended June 30, 1996 as discussed above.

Amortization of intangibles decreased $1.4 million during the six month
period ended June 30, 1996 compared to the same period in 1995 as a result of
the accelerated non-cash write-off of a non-compete agreement and the write-off
of goodwill in the first six months of 1995.

Goodwill Write-off

See "Results of Operations -- for the Three Months Ended June 30, 1996
and June 30, 1995 -- Goodwill Write-off."

Income from Operations

Income from operations and operating margin were $23.4 million and
11.1%, respectively, during the six months ended June 30, 1996 compared to $5.5
million and 2.4%, respectively, during the same period in 1995. The increase
is primarily attributable to the $13.5 million write-off of goodwill and the
accelerated amortization of a non-compete agreement of $1.1 million recorded
during 1995.

Interest Expense

Interest expense during the first six months of 1996 was comparable to
the same period in 1995 reflecting lower interest rates offset by increased
interest expense on the Company's 13-1/4% Discount Debentures.

12
<PAGE> 13

Income taxes

The Company's tax provisions for the six months ended June 30, 1996 and
1995 primarily reflect provisions for state taxes.

Net income (loss)

Net income was $1.7 million during the six months ended June 30, 1996
compared to a net loss of $16.3 million in the prior year. The increase in net
income is primarily due to increased income from operations.

EBITDA (before nonrecurring charges)

EBITDA (before nonrecurring charges) includes income from operations
adjusted to exclude depreciation and amortization expenses and goodwill
write-off. Ivex believes that EBITDA (before nonrecurring charges) provides
additional information for determining its ability to meet future debt service
requirements. However, EBITDA (before nonrecurring charges) is not a defined
term under GAAP and is not indicative of operating income or cash flow from
operations as determined under GAAP.

The following table sets forth information with respect to EBITDA
(before nonrecurring charges) of the Company's product groups for the periods
presented.

<TABLE>
<CAPTION>
Six Months Ended
-----------------------------------------------
June 30, % of June 30, % of
1996 Net Sales 1995 Net Sales
-------- --------- --------- ----------
<S> <C> <C> <C> <C>
Consumer Packaging . . . . . . . . . . . . . . $ 19,167 18.5 $ 17,877 16.7
Industrial Packaging . . . . . . . . . . . . . 18,452 17.3 15,857 13.2
Corporate Expense . . . . . . . . . . . . . . . (2,931) - (2,690) -
--------- ---------
Total . . . . . . . . . . . . . . . . . . $ 34,688 16.5 $ 31,044 13.6
======== =========
</TABLE>

The Company's EBITDA (before nonrecurring charges) increased 11.7% from
$31.0 million to $34.7 million and EBITDA (before nonrecurring charges) margin
increased from 13.6% to 16.5% during the first six months of 1996. The 7.2%,
or $1.3 million, increase in Consumer Packaging's EBITDA (before nonrecurring
charges) in the current six month period is primarily attributable to the
improved gross margin on converted plastic and paper products due to reduced
raw material costs and improved operating performance and additional unit sales
volume of extruded sheet offset by decreased profitability of the Company's
polymerization operations. The increase in Industrial Packaging EBITDA (before
nonrecurring charges) of 16.4%, or $2.6 million, is primarily due to the
incremental EBITDA from the Company's third quarter 1995 acquisition of PPI and
decreased raw material costs for the Company's recycled and specialty papers
offset by decreased unit sales volume of the Company's recycled and specialty
papers.

Liquidity and Capital Resources

The Company conducts business through IPC and has no operations of its
own. The primary asset of the Company is the common stock of IPC which has
been pledged to secure the obligations of IPC and IPC's subsidiaries under
IPC's senior credit facility. The Company is dependent on the cash flow of IPC
and its subsidiaries in order to pay the principal and interest on the 13-1/4%
Senior Discount Debentures due March 15, 2005 (the "13-1/4% Company Discount
Debentures"); however, IPC has no contractual obligations to distribute any
such cash flow to the Company. In addition, IPC's senior credit facility
contains provisions that (except for certain limited exceptions) prohibit the
payment of dividends and distributions by IPC to the Company. Moreover, the
indenture governing the 12-1/2% Senior Subordinated Notes due 2002 (the
"12-1/2% Subordinated Note Indenture") contains provisions that limit IPC's
ability to pay dividends and make distributions to the Company.

13
<PAGE> 14

The Company's long-term debt, less current installments, decreased to
$349.8 million at June 30, 1996 from $353.7 million at December 31, 1995
reflecting revolving credit facility payments of $7.5 million and $2.5 million
of scheduled debt reductions offset by $6.1 million of accretion on the 13-1/4%
Company Discount Debentures. The Company's long-term debt consists primarily
of the 13-1/4% Company Discount Debentures, with an accreted value of $99.5
million at June 30, 1996. The long-term debt of the Company's wholly-owned
subsidiary, IPC, consists primarily of the $157.3 million of IPC's 12-1/2%
Senior Subordinated Notes (the "12-1/2% IPC Notes"), term loans of $57.5
million under IPC's senior credit facility, $38.3 million of industrial revenue
bonds and revolving credit facility borrowings of $1.0 million.

At June 30, 1996, IPC had cash and cash equivalents of $4.4 million and
$52.2 million available under the revolving credit portion of IPC's senior
credit facility. IPC's working capital at June 30, 1996 was $39.9 million.

The Company's primary long-term cash requirements are for the debt
service relating to the 13-1/4% Company Discount Debentures. Commencing on
September 15, 2000, cash interest on the 13-1/4% Company Discount Debentures
will be payable semi-annually and on March 15, 2005, the 13-1/4% Company
Discount Debentures will mature and the aggregate principal amount then
outstanding will become due and payable. The Company will be dependent on the
cash flow of IPC and IPC's subsidiaries in order to meet its debt service
obligations. Significant contractual and other restrictions exist on the
payment of dividends and the making of loans by IPC to the Company. In
addition, as a result of the goodwill write-offs in 1993 and 1995, IPC's
ability to make distributions to the Company under the 12-1/2% Subordinated
Note Indenture has been impaired; consequently this Indenture will require
modification before any such distributions to the Company can be made.
Regardless, IPC and IPC's subsidiaries may not generate sufficient cash flows
to distribute to the Company in order for the Company to service the cash
interest payments on the 13-1/4% Company Discount Debentures that commence in
September 2000 or to retire the $160 million principal amount of 13-1/4%
Company Discount Debentures upon their maturity in 2005. Consequently, all or
a portion of the 13-1/4% Company Discount Debentures may require refinancing
prior to such dates. The Company believes that distributions from IPC and its
access to debt financing in the public and private markets should be sufficient
to enable it to retire all or a portion of the principal amount of the 13-1/4%
Company Discount Debentures and to refinance any remaining principal amount of
the 13-1/4% Company Discount Debentures upon their maturity in 2005, although
there can be no assurance that this will be the case. In the event that the
Company is unable to service the cash interest payments on or to retire or
refinance the 13-1/4% Company Discount Debentures or unable to obtain any
required consents from the holders of the 12-1/2% IPC Notes to make interest
payments on the 13-1/4% Company Discount Debentures, the Company may be
required to, among other things, seek appropriate waivers from such creditors
or recapitalize its capital structure. During the period prior to September
15, 2000, the Company does not expect to have significant cash requirements.

The primary short-term and long-term operating cash requirements for
IPC, the Company's wholly owned operating subsidiary, are for debt service,
working capital and capital expenditures. The Company expects IPC to rely on
cash generated from IPC's and IPC's subsidiaries' operations, supplemented by
revolving credit facility borrowings under IPC's senior credit facility (at
June 30, 1996, $52.2 million was available under the revolving credit portion
of IPC's senior credit facility), to fund IPC's principal short-term and
long-term cash requirements. The Company believes that IPC and IPC's
subsidiaries should generate sufficient cash flows to service the cash interest
payments on the 12-1/2% IPC Notes from 1996 to their maturity in 2002, although
there can be no assurances that such cash flows, if any, will be adequate to
service these interest payments. However, IPC and IPC's subsidiaries may not
generate sufficient cash flows to retire the $158.0 million principal amount of
12-1/2% IPC Notes prior to or upon their maturity in 2002. Consequently, all
or a portion of the 12-1/2% IPC Notes may require refinancing prior to the
maturity thereof. IPC believes that its consolidated cash flow from operations
and access to debt financing in the public and private markets should be
sufficient to enable it to retire all or a portion of the principal amount of
the 12-1/2% IPC Notes and to refinance any remaining principal amount of the
12-1/2% IPC Notes prior to or upon their maturity, although there can be no
assurance that this will be the case. In the event that IPC is unable to
retire or refinance the 12-1/2% IPC Notes, IPC may be required to, among other
things, seek appropriate waivers from such creditors or recapitalize its
capital structure. IPC is required to maintain certain financial ratios and
levels of net worth and, among other things, future indebtedness and dividends
are restricted under these facilities.

14
<PAGE> 15

The 12-1/2% IPC Notes require semi-annual interest payments on June 15
and December 15 and are subordinated in right of payment to all existing and
future senior indebtedness of IPC. The 12-1/2% IPC Notes are redeemable at the
option of IPC, in whole or in part, on or after December 15, 1997 at the
following redemption prices (expressed in percentages of the principal amount
thereof), plus accrued interest to the date of redemption. If redeemed during
the twelve-month period beginning December 15,

<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106.250%
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.125%
1999 and thereafter . . . . . . . . . . . . . . . . . . . . . . . 100.000%
</TABLE>

Each holder of the 12-1/2% IPC Notes may require IPC to repurchase such
holders' 12-1/2% IPC Notes in the event of a change of control at 101% of
principal amount thereof, plus accrued interest to the date of repurchase. The
indenture under which the 12-1/2% IPC Notes are issued contains certain
covenants that, among other things, limit the ability of IPC to incur
additional indebtedness, pay dividends or repurchase stock.

IPC's senior credit facility is comprised of $57.5 million in term
loans, a $45.0 million letter of credit facility and a $55.0 million revolving
credit facility of which approximately $52.2 million was available at June 30,
1996. The term loans require quarterly payments of $1.3 million from March 31,
1996 through September 30, 1997; $1.9 million from December 31, 1997 through
September 30, 1998; $3.0 million from December 31, 1998 through September 30,
1999; $3.5 million from December 31, 1999 through September 30, 2000; $4.1
million from December 31, 2000 through June 30, 2001; and $5.4 million on
September 30, 2001. At the option of IPC, the term loans and borrowings on the
revolving credit facility accrue interest at the LIBOR reserve adjusted rate,
as defined in IPC's senior credit facility, plus 2.25% or the prime rate plus
1.0%. Such rates are subject to change based on IPC's ability to achieve
certain financial ratios as defined in IPC's senior credit facility. The
Company's actual interest rate on the term loans and the revolving credit
facility at June 30, 1996 was the LIBOR reserve adjusted rate, as defined, plus
2.00%. IPC pays a fee of 0.5% on the unused portion of the revolving credit
facility. Borrowings are secured by substantially all the assets of IPC and
its subsidiaries and the stock of IPC and IPC's subsidiaries. Under IPC's
senior credit facility, IPC is required to maintain certain financial ratios
and levels of net worth while future indebtedness and dividends are restricted.

Beginning January 6, 1996, IPC entered into interest rate swap
agreements for the term loans for notional amounts totaling $60.0 million
through January 19, 1999. Such agreements effectively fix IPC's LIBOR base
rate at 5.33% and income or expense related to settlements under the swap
agreements are recorded as adjustments to interest expense in IPC's financial
statements.

IPC's industrial revenue bonds require monthly interest payments and are
due in varying amounts and dates through 2009. Certain letters of credit under
IPC's senior credit facility provide credit enhancement for IPC's industrial
revenue bonds.

Primarily as a consequence of the Company's 1993 and 1995 goodwill
write-offs, as of June 30, 1996, the Company's recorded assets are less than
its recorded liabilities by approximately $134.6 million. The Company believes
that its negative net worth will not have any material consequences on its
operations or its ability to obtain trade credit or financing.

The Company made capital expenditures of $8.0 million and $6.7 million
for each of the six months ended June 30, 1996 and 1995, respectively, and
expects that its capital expenditures in 1996 will approximate $16.0 million to
$18.0 million. The Company was not committed under any material contractual
obligations for capital expenditures as of June 30, 1996.

15
<PAGE> 16

On May 17, 1996, IPC and Package Acquisition, Inc., a wholly-owned
subsidiary of IPC, entered into an Agreement and Plan of Merger with CFI
Industries, Inc. ("CFI") and Equity Holdings, CFI's majority stockholder.
Subject to the satisfaction of certain conditions, Ivex expects that on or
about August 16, 1996 Packaging Acquisition, Inc. will merge with and into CFI
with CFI surviving the merger as a wholly-owned subsidiary of IPC (the
"Merger"). CFI, through its wholly-owned subsidiary, Plastofilm Industries,
Inc., is an integrated custom thermoformer of plastic packaging for the
medical, electronics and consumer markets.

Subject to the terms and conditions of the Merger Agreement, at the
effective time of the Merger, the outstanding shares of common stock of CFI
will be converted into the right to receive approximately $13.9 million in the
aggregate and IPC will assume approximately $4.5 million of indebtedness. IPC
expects to finance the acquisition and all other fees and expenses associated
with the Merger through cash from operations and borrowings under IPC's
revolving credit facility.

Special Note Regarding Forward-Looking Statements

Certain statements in " Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of the Company to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the Company's actual performance and highly
leveraged financial condition (see "-- Liquidity and Capital Resources" above).

16
<PAGE> 17

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time Ivex and its subsidiaries are involved in various
litigation matters arising in the ordinary course of business. Ivex believes
that none of the matters in which IPC or its subsidiaries are currently
involved, either individually or in the aggregate, is material to the Company
or IPC.

ITEM 5. OTHER INFORMATION.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits:

<TABLE>
<CAPTION>
Incorporated by
Reference From
--------------------------------
Exhibit Registration No.
Exhibit No. Description of Document Number or Report
---------- ------------------------------------------------ ------- -------------------
<S> <C> <C> <C>
*10.14 Amended and Restated Employment Agreement,
dated as of May 30, 1996, between IPC, Inc. and
George V. Bayly

*10.15 Amendment No. 2 to Employment Agreement,
dated May 30, 1996, between IPC, Inc. and
Frank V. Tannura

*10.16 Form of Amended and Restated IPC, Inc. Stock
Option and Purchase Agreement and Amended
Restated Ivex Packaging Corporation Stock
Option and Purchase Agreement, each dated as
of January, 1996

10.54 Agreement and Plan of Merger, dated as of A-1 CFI Industries Inc.'s
May 17, 1996 (as amended), among IPC, Inc., Proxy Statement
Package Acquisition Inc., CFI Industries and dated July 22, 1996
Equity Holding

27 Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for information only and not filed.

---------------
*Filed herewith
</TABLE>

17
<PAGE> 18

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

IVEX PACKAGING CORPORATION

By: /s/ Frank V. Tannura
----------------------------
Frank V. Tannura
Vice President and
Principal Financial Officer

August 14, 1996
- ---------------
( Date )

18
<PAGE> 19

EXHIBIT INDEX
TO
FORM 10-Q
OF
IVEX PACKAGING CORPORATION

<TABLE>
<CAPTION>
Sequentially
Exhibit Number
No. Description of Document Page
----------- --------------------------------------------------------------------- -------------
<S> <C> <C>
10.14 Amended and Restated Employment Agreement, dated as of May 30,
1996, between IPC, Inc. and George V. Bayly

10.15 Amendment No. 2 to Employment Agreement, dated May 30, 1996,
between IPC, Inc. and Frank V. Tannura

10.16 Form of Amended and Restated IPC, Inc. Stock Option and Purchase
Agreement and Amended and Restated Ivex Packaging Corporation
Stock Option and Purchase Agreement, each dated as of January 1, 1996

10.54 Agreement and Plan of Merger, dated as of May 17, 1996 (as
amended), among IPC, Inc., Package Acquisition, Inc, CFI
Industries, Inc. and Equity Holdings
</TABLE>

<PAGE> 1
EXHIBIT 10.14

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT, dated as of this ________ day of ____________,
1996, between IPC, Inc. (formerly Ivex Packaging Corporation), a Delaware
corporation, (the "Company") and George V. Bayly (the "Executive").

The Executive is currently employed by the Company under an Employment
Agreement dated as of January 28, 1991 (the "1991 Agreement"), and the Company
and the Executive desire to enter into this Agreement with respect to the
Executive's continuing employment by the Company on the terms and conditions
set forth herein, amending and restating in its entirety the 1991 Agreement.

Accordingly, the parties agree as follows:

1. Employment, Duties and Acceptance

1.1 Employment by the Company; Duties. The Company hereby
agrees to continue to employ the Executive for a current term expiring at the
end of the day on December 31, 2000, unless earlier terminated as herein
provided. Beginning on January 1, 1998, the term of this Agreement shall be
extended automatically for one (1) additional day for each day which has then
elapsed since December 31, 1997 unless, at any time after December 31, 1997,
either the Board of Directors of the Company (the "Board"), on behalf of the
Company, or the Executive gives written notice to the other, in accordance with
Section 14.2, below, that such automatic extension of the term of this
Agreement shall cease. Any such notice shall be effective immediately upon
delivery. The current term of this Agreement, plus any extension by operation
of this Section 1, shall be hereinafter referred to as the "Term." During the
Term, the Executive shall at all times serve in the capacity of Chairman,
President and Chief Executive Officer of the Company. In addition, the Company
agrees that the Executive shall serve during the Term as a director of the
Company and as a director and chairman of the board of directors of Ivex
Packaging Corporation, the holding company for the Company ("Ivex"). During
the Term, the Executive shall devote his best efforts and substantially all his
business time and services to the Company and Ivex, subject to the direction of
the Board.

1.2 Acceptance of Employment by the Executive. The Executive
hereby accepts such continuing employment and shall render the services and
perform the duties described above.

2. Compensation and Other Benefits

2.1 Annual Salary. The Company shall pay to the Executive an
annual salary (the "Annual Salary") in accordance with the following schedule:
four hundred and twenty thousand dollars ($420,000) during the year ending
December 31, 1996; four hundred and forty-one thousand

<PAGE> 2

dollars ($441,000) during the year ending December 31, 1997; four hundred and
sixty-three thousand dollars ($463,000) during the year ending December 31,
1998; four hundred and eighty-six thousand dollars ($486,000) during the year
ending December 31, 1999; and five hundred and ten thousand dollars ($510,000)
for the year ending December 31, 2000. The Annual Salary may be increased from
time to time at the sole discretion of the Board. The Annual Salary shall be
payable in accordance with the payroll policies of the Company as from time to
time in effect, but in no event less frequently than twice each month, less
such deductions as shall be required to be withheld by applicable law and
regulations.

2.2 Bonuses. The Company shall pay to the Executive an
annual performance bonus based upon the terms and provisions of the Company's
Senior Management Incentive Compensation Plan. The Executive may also receive
such additional bonuses as shall, in the discretion of the Board, be awarded to
him.

2.3 Vacation Policy. The Executive shall be entitled to paid
vacation in accordance with the vacation policy of the Company; provided,
however, that the Executive shall be entitled to at least four (4) weeks paid
vacation during each year of the Term.

2.4 Benefits. The Company agrees to permit the Executive
during the Term, if and to the extent eligible, to participate in any group
life, hospitalization or disability insurance plan, health program, pension or
retirement plan, savings plan, similar benefit plan or other so-called "fringe
benefits" of the Company (collectively "Benefits") which may be available to
other senior executives of the Company, with the Executive's participation to
be on terms no less favorable to the Executive than the terms provided to such
other executives.

2.5 Supplemental Benefits. During the Term, the Company will
pay an aggregate amount of one hundred and fifty thousand dollars ($150,000)
each year to purchase a combination of (a) life insurance and disability
insurance covering the Executive and (b) investments intended to provide
non-qualified retirement benefits for the Executive. The benefits provided
under this Section 2.5 shall be hereinafter referred to as the "Supplemental
Benefits." The Company will consult with the Executive prior to making such
purchases, and the specific decisions by the Company about such purchases will
be subject to approval by the Executive as reasonable and satisfactory. The
particular arrangements for providing such insurance and non-qualified
retirement benefits shall be designed to minimize the extent to which such
benefits are currently taxable to the Executive, unless otherwise agreed in
writing by the Company and the Executive.

2.6 General Business Expenses. The Company shall pay or
reimburse the Executive for all expenses reasonably and necessarily incurred by
the Executive during the Term in the performance of the Executive's services
under this Agreement. Such payment shall be made upon presentation of such
documentation as the Company customarily requires of its senior executive
employees prior to making such payments or reimbursements. In addition, the
Company shall provide the Executive with appropriate office space, office
furniture and supplies and the services of a secretary in the Chicago area.

2
<PAGE> 3

2.7 Company Car and Country Club Membership. During the
Term, the Company shall provide for the Executive, at the Company's expense, a
late model automobile for the Executive's use in the performance of his
services under the Agreement. In addition, the Company shall reimburse the
Executive for any annual membership fees of a country club to be designated by
the Executive during the Term.

3. Investment Opportunities. The rights of the Executive under
the following agreements shall continue in full force and effect and shall not
be diminished in any way by this Agreement: (a) the "Ivex Packaging
Corporation Stock Option and Purchase Agreement" entered into as of January 1,
1993; (b) the "Ivex Holdings Corporation Stock Option and Purchase Agreement"
entered into as of January 1, 1993; (c) the "Ivex Packaging Corporation Special
Incentive Agreement" entered into as of January 1, 1993; and (d) the "Stock
Option Agreement" entered into as of January 22, 1991.

4. Non-Competition

4.1 Covenants Against Competition. The Executive
acknowledges that: (a) the Company, through its subsidiaries, is currently
engaged in the business of (1) manufacturing and selling coated and laminated
papers, films and foil which are used in a wide range of industrial and
commercial applications, (2) manufacturing, thermoforming and distributing
polystyrene, oriented polystyrene sheet, oriented polystyrene film, high impact
polystyrene sheet and related polystyrene products that have been developed or
produced by the Company and its subsidiaries, (3) manufacturing and selling of
thermoformed plastic containers and parts including, without limitation, food
packaging applications, (4) manufacturing and selling of Kraft and crepe papers
and (5) manufacturing and selling of converted paper products including,
without limitation, single-faced corrugated paper products, shipping and
mailing envelopes and fluted paper packaging products, and the Company may,
during the Term, enter into other related types of businesses (collectively,
the "Company Business"); provided, however, that the term "Company Business"
shall not include the folding carton business; (b) the Company Business is
conducted throughout the United States and Canada; (c) his work for the Company
will give him access to trade secrets of and confidential information
concerning the Company and its subsidiaries; (d) the agreements and covenants
contained in this Agreement are essential to protect the business and goodwill
of the Company; and (e) he has means to support himself and his dependents
other than by engaging in the Company Business and the provisions of this
Agreement will not impair such ability. Accordingly, the Executive covenants
and agrees as follows:

4.1.1 Non-Compete. The Executive shall not during
the Restricted Period (as defined below) in the United States, Canada or any
other place where the Company and its affiliates conduct substantial
manufacturing operations related to the Company Business, directly or
indirectly (except in the Executive's capacity as an officer of the Company or
any of its affiliates), (a) engage or participate in the Company Business; (b)
enter the employ of, or render any other services to, any person engaged in the
Company Business; or (c) become interested in any such person in any capacity,
including, without limitation, as an individual partner, shareholder, lender,

3
<PAGE> 4

officer, director, principal, agent or trustee; provided, however, that the
Executive may own, directly or indirectly, solely as an investment, securities
of any entity traded on any national securities exchange or listed on the
National Association of Securities Dealers Automated Quotation System if the
Executive is not a controlling person of, or a member of a group which
controls, such entity and the Executive does not, directly or indirectly, own
five percent (5%) or more of any class of equity securities, or securities
convertible into or exercisable or exchangeable for five percent (5%) or more
of any class of equity securities, of such entity. As used herein, the
"Restricted Period" shall mean a period commencing on January 28, 1991 and
terminating upon the first to occur of (w) the date on which the Company
terminates the Executive's employment without Cause, (x) the date on which the
Executive terminates his employment for Good Reason, (y) the date of
termination of this Agreement, or (z) the date on which a Change of Control (as
defined in Section 10, below) occurs; provided, however, that if the Company
shall have terminated the Executive's employment with the Company for Cause or
if the Executive shall have terminated his employment with the Company without
Good Reason, the Restricted Period shall end on the first anniversary of such
termination of employment.

4.1.2 Confidential Information; Personal
Relationships. The Executive acknowledges that the Company has a legitimate
and continuing proprietary interest in the protection of its confidential
information and that it has invested substantial sums and will continue to
invest substantial sums to develop, maintain and protect confidential
information. The Executive agrees that, during and after the Restricted
Period, the Executive shall keep secret and retain in strictest confidence, and
shall not use for the benefit of himself or others, all confidential
information directly relating to the Company Business including, without
limitation, financial information, trade secrets, customer lists, details of
client or consultant contracts, pricing policies, operational methods,
marketing plans or strategies, product development techniques or plans,
business acquisition plans, new personnel acquisition plans, methods of
manufacture, technical processes, designs and design projects, inventions and
research projects of the Company, its affiliates, or any other entity which may
hereafter become an affiliate thereof, learned by the Executive heretofore or
hereafter unless otherwise in the public domain other than as a result of
disclosure by the Executive.

4.1.3 Property of the Company. All memoranda, notes,
lists, records, engineering drawings, technical specifications and related
documents and other documents or papers (and all copies thereof) relating to
the Company, including such items stored in computer memories, microfiche or by
any other means, made or compiled by or on behalf of the Executive since
January 28, 1991, or made available to the Executive after that date relating
to the Company, its affiliates or any entity which may hereafter become an
affiliate thereof, shall be the property of the Company, and shall be delivered
to the Company promptly upon the termination of the Executive's employment with
the Company or at any other time upon request.

4.1.4 Original Material. The Executive agrees that
any inventions, discoveries, improvements, ideas, concepts or original works of
authorship relating directly to the Company Business, including without
limitation computer apparatus, programs and manufacturing techniques, whether
or not protectable by patent or copyright, that have been originated, developed

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or reduced to practice by the Executive alone or jointly with others during the
Executive's employment with the Company shall be the property of and belong
exclusively to the Company. The Executive shall promptly and fully disclose to
the Company the origination or development by the Executive of any such
material and shall provide the Company with any information that it may
reasonably request about such material.

4.1.5 Employees of the Company and its Affiliates.
During the Restricted Period, the Executive shall not, directly or indirectly,
(a) hire or solicit, or cause others to hire or solicit, for employment by any
person other than the Company or any affiliate or successor thereof, any
employee of, or person employed within the two (2) years preceding the
Executive's hiring of such person or solicitation of such person by, the
Company and its affiliates or successors or (b) encourage any such employee to
leave his or her employment.

4.1.6 Customers of the Company. During the
Restricted Period, the Executive shall not, except by reason of and in his
capacity as an officer of the Company, directly or indirectly request or advise
a customer of the Company or its subsidiaries to curtail or cancel such
customer's business relationship with the Company.

4.2 Rights and Remedies Upon Breach. If the Executive
breaches, or threatens to commit a breach of, any of the provisions contained
in Section 4.1 of this Agreement (the "Restrictive Covenants"), the Company
shall have the following rights and remedies, each of which rights and remedies
shall be independent of the others and severally enforceable, and each of which
is in addition to, and not in lieu of, any other rights and remedies available
to the Company under law or in equity:

4.2.1 Specific Performance. The right and remedy to
have the Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to the Company and that
money damages would not provide an adequate remedy to the Company.

4.2.2 Accounting. The right and remedy to require
the Executive to account for and pay over to the Company all compensation,
profits, monies, accruals, increments or other benefits derived or received by
the Executive as the result of any action constituting a breach of the
Restrictive Covenants.

4.3 Severability of Covenants. The Executive acknowledges
and agrees that the Restrictive Covenants are reasonable and valid in duration
and geographical scope and in all other respects. If any court determines that
any of the Restrictive Covenants, or any part thereof, is invalid or
unenforceable, the remainder of the Restrictive Covenants shall not thereby be
affected and shall be given full effect without regard to the invalid portions.

4.4 Blue-Pencilling. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of such provision,

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such court shall have the power to reduce the duration or scope of such
provision, as the case may be, and, in its reduced form, such provision shall
then be enforceable.

4.5 Enforceability in Jurisdictions. The Company and the
Executive intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographical scope of
such Restrictive Covenants. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants unenforceable by reason of the
breadth of such scope or otherwise, it is the intention of the Company that
such determination not bar or in any way affect the right of the Company to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of such Restrictive Covenants, as to breaches of such
Restrictive Covenants in such other respective jurisdictions, such Restrictive
Covenants as they relate to each jurisdiction being, for this purpose,
severable into diverse and independent covenants.

5. Termination

5.1 Termination upon Death. If the Executive dies during the
Term, this Employment Agreement shall terminate, except that the Executive's
legal representatives shall be entitled to receive the Annual Salary earned up
to the date of the Executive's death, plus (a) unpaid Benefits accrued up to
the date of Executive's death, (b) an amount equal to the Executive's target
annual performance bonus for the year in which his death occurs, multiplied by
a fraction, the numerator of which is the number of days that the Executive was
employed by the Company during that year and the denominator of which is three
hundred and sixty-five (365). In addition, the Company shall, for the
remainder of the Term, continue to provide the Executive's dependents with
Benefits at the levels that were applicable to the Executive and his dependents
on the date immediately prior to his death, or provide equivalent benefits
through separate insurance coverage.

5.2 Termination With Cause. The Company has the right, at
any time during the Term, subject to all of the provisions hereof, exercisable
by serving notice, effective on or after the date of service of such notice as
specified therein, to terminate the Executive's employment under this Agreement
and discharge the Executive for Cause. As used in this Section 5.2, the term
"Cause" shall mean and include (a) chronic alcoholism or drug addition, (b)
deliberate misappropriation of any material amount of money or other assets or
properties of the Company or any affiliate or successor thereof, (c) except
where the nonperformance is caused by the illness or other similar incapacity
or disability of the Executive, gross and continuing neglect in the substantial
performance of duties reasonably assigned to the Executive that is not
corrected promptly upon receipt by the Executive of written notice delivered at
the direction of the Board specifically identifying the manner in which it is
alleged that the Executive has not substantially performed his duties, (d) any
willful and material breach of any of the terms of this Agreement except where
the breach is caused by the illness or other similar incapacity or disability
of the Executive or (e) conviction of a misdemeanor involving moral turpitude
or conviction of a felony. If the Company terminates the Executive's
employment for Cause, the Company's obligation to the Executive shall be
limited solely to the payment of unpaid Annual Salary accrued and Benefits
vested up to the effective date specified in the Company's notice of
termination.

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5.3 Suspension upon Disability. If during the Term the
Executive becomes physically or mentally disabled, whether totally or
partially, as evidenced by the written statement of a competent physician
licensed to practice medicine in the United States who is mutually acceptable
to the Company and the Executive (or the Executive's designee or closest
relative, if the Executive is not then able to make such a choice), so that the
Executive is unable substantially to perform his services hereunder for (a) a
period of six (6) consecutive months or (b) for shorter periods aggregating
nine (9) months or more during any twelve (12)-month period, the Company may at
any time after the last day of the six (6) consecutive months of disability or
the day on which the shorter periods of disability equal an aggregate of nine
(9) months, by written notice to the Executive, suspend the term of the
Executive's employment hereunder and discontinue payments of the Annual Salary
for the duration of the disability; provided, however, that the Company may so
suspend the term of the Executive's employment hereunder only if the Executive
is then covered by a long-term disability plan of the Company (which may
include appropriate insurance) which the Executive has previously approved as
reasonable and satisfactory. The Executive shall be entitled to the full
compensation payable to him hereunder for periods of disability shorter than
the periods specified in parts (a) and (b) of the previous sentence. No action
permitted by this Section 5.3 shall be deemed to extend the Term or to
constitute a breach of this Agreement. Any other provision of this Section 5.3
notwithstanding, if the Executive is permanently disabled to such an extent
that he is unable to substantially perform his services hereunder, then the
Company shall, for the remainder of the Term, continue to provide the Executive
and his dependents with Benefits and Supplemental Benefits at the levels that
were applicable to the Executive and his dependents immediately prior to his
disability, or provide equivalent benefits through separate insurance coverage.

5.4 Termination Without Cause. The Company may, at any time
during the Term, terminate the Executive's employment without Cause by giving
the Executive notice of such termination, effective on or after the date of
service of such notice. In the event of such termination, the Executive shall
be entitled to receive the severance benefits described in Section 6, below.

5.5 Termination for Good Reason. The Executive may terminate
his employment hereunder for Good Reason at any time during the Term by giving
the Company notice of such termination, effective on or after the date of
service of such notice. For purposes of this Agreement, "Good Reason" shall
mean the continuation of any of the following (without the Executive's express
prior written consent) after written notice provided by the Executive and the
failure by the Company to remedy such event or condition within thirty (30)
days after receipt of such notice:

(a) A reduction in the Executive's Annual Salary, as in
effect pursuant to Section 2.1;

(b) Failure by the Company to pay to the Executive any bonus
which is payable pursuant to Section 2.2;

(c) A failure by the Company to provide, on terms no less
favorable to the Executive than the terms offered to other senior executives of
the Company, any benefit or compensation plan (including any pension, profit
sharing, life insurance, health, accidental death or dismemberment or

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<PAGE> 8

disability plan), or any substantially similar benefit or compensation plan,
which has been made available to such other executives; provided, however, that
nothing in this part (c) shall be construed to mean that the Company shall be
constrained from amending or eliminating any benefit or compensation plan as
such is applied to the Executive and to other senior executives of the Company;

(d) The assignment to the Executive of any duties materially
inconsistent with the Executive's position as Chairman, President and Chief
Executive Officer of the Company;

(e) A change in the Executive's title or the line of
authority through which the Executive is required to report, it being
understood that the Executive shall report directly to the Board but shall, on
occasion, be expected to perform tasks at the direction of one or more
executive officers of Acadia Partners, L.P.;

(f) Failure to elect the Executive as a director and chairman
of the Board of the Company or as a director and chairman of the board of Ivex;

(g) Failure by the Company to obtain, in accordance with
Section 13, below, the written agreement of any successor in interest to the
business of the Company to assume and perform the obligations of the Company
under this Agreement;

(h) The giving of notice by the Company to stop the automatic
extension of the Term which is provided for by Section 1.1 of this Agreement;

(i) Any other material breach of this Agreement by the
Company; or
(j) Any material breach of the agreements referred to in
Section 3, above.

Anything in this Agreement to the contrary notwithstanding, a
termination by the Executive for any reason during the period of three (3)
months which begins six (6) months after a Change of Control shall be deemed to
be a termination for Good Reason for all purposes of this Agreement. In the
event of any termination for Good Reason, the Executive shall be entitled to
receive the severance benefits described in Section 6, below.

5.6 Termination without Good Reason. The Executive may, at
any time during the Term, terminate his employment under this Agreement by
giving the Company at least thirty (30) days prior written notice of such
termination. In the event of such termination, the Company shall pay to the
Executive all Annual Salary, annual performance bonuses and Benefits which have
accrued as of the effective date of such termination but may discontinue
payment of any compensation or benefits accruing from and after such date.

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6. Severance Benefits. In the event the Executive becomes
entitled, under Section 5.4 or Section 5.5, above, to severance benefits under
this Section 6, he shall receive the following, in addition to payment of his
Annual Salary through the date of termination of his employment:

6.1 A lump sum, payable upon termination of employment,
equal to four (4) times the sum of (a) the Executive's Annual Salary for one
(1) year, at the rate in effect at the time of the termination of his
employment (or, if the Company has reduced the Executive's Annual Salary in
breach of this Agreement, at the Executive's Annual Salary rate without regard
to such reduction) and (b) the target amount of the Executive's annual
performance bonus for the year in which the termination of his employment
occurs;

6.2 Payment, upon termination of employment, of an annual
performance bonus for the year of termination, calculated by multiplying the
target amount of the Executive's annual performance bonus for the year by a
fraction, the numerator of which is the number of days that the Executive was
employed by the Company during that year and the denominator of which is three
hundred and sixty-five (365);

6.3 Payment in due course of any Benefits accrued to the
date of termination but previously unpaid; and

6.4 Continuation of Benefits and Supplemental Benefits
for the Executive and his dependents for four (4) years after the date of
termination of the Executive's employment, at the levels that were applicable
to the Executive and such dependents immediately prior to such termination, or
provision of equivalent benefits through separate insurance coverage; provided,
however, that the medical insurance coverage provided through such continuation
of Benefits will continue until the earlier of (a) the date on which the
Executive begins to be covered by comparable medical insurance provided by a
new employer or (b) the earliest date on which the Executive becomes eligible
for Medicare or a comparable governmental medical insurance program. Execution
of this Agreement by the Executive shall not be considered a waiver of any
rights or entitlements he may have under applicable law to continuation of
coverage under any group health plan maintained by the Company or any of its
affiliates.

7. No Duty to Mitigate. After a termination of the Executive's
employment under this Agreement, the Executive will not be obligated to
mitigate damages by seeking other comparable employment. If such termination
occurs after a Change of Control, any severance benefits payable to the
Executive under Section 6 of this Agreement will not be subject to reduction
for any compensation received from other employment. However, if such
termination is not preceded by a Change of Control, the severance benefits
payable to the Executive under Section 6.1, above, will be reduced by an amount
equal to fifty percent (50%) of the compensation received by the Executive from
other employment during the period of four (4) years after such termination.
For purposes of applying the immediately preceding sentence, a Change of
Control will be deemed to have preceded the termination of the Executive's
employment with the Company if that termination occurs within one hundred and
eighty (180) days prior to the Change of Control, unless it is reasonably

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demonstrated by the Company that such termination was for a substantial
business reason unrelated to the Change of Control.

8. Insurance. The Company may, from time to time, apply for and take
out, in its own name and at its own expense, naming itself or others as the
designated beneficiary (which it may change from time to time), policies for
life, health, accident, disability or other insurance upon the Executive in any
amount or amounts that it may deem necessary or appropriate to protect its
interest. The Executive agrees to aid the Company in procuring such insurance
by submitting to medical examinations and by filling out, executing and
delivering such applications and other instruments in writing as may reasonably
be required by an insurance company or companies to which any application or
applications for insurance may be made by or for the Company.

9. Indemnification.

9.1 The Company shall, to the extent not prohibited by law,
indemnify the Executive if he is made, or threatened to be made, a party to any
threatened, pending or completed, action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Company to procure a judgment in its favor (hereinafter a
"Proceeding"), by reason of the fact that the Executive is or was a director,
officer or employee of the Company, or is or was serving in any capacity at the
request of the Company for any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against judgments, fines,
penalties, excise taxes, amounts paid in settlement and costs, charges and
expenses (including attorneys' fees and disbursements).

9.2 The Company shall, from time to time, reimburse or
advance to the Executive the funds necessary for payment of expenses, including
attorneys' fees and disbursements, incurred in connection with any Proceeding,
in advance of the final disposition of such Proceeding; provided, however,
that, if required by the Delaware General Corporation Law, such expenses
incurred by or on behalf of the Executive may be paid in advance of the final
disposition of a Proceeding only upon receipt by the Company of an undertaking,
by or on behalf of the Executive, to repay any such amount so advanced if it
shall ultimately be determined by final judicial decision from which there is
no further right of appeal that the Executive is not entitled to be indemnified
for such expenses.

9.3 The right to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 9
shall not be deemed exclusive of any other rights which the Executive may have
or hereafter be entitled to under any law, by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding office.

9.4 The right to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 9
shall continue as to the Executive after he has ceased to be a director,
officer or employee and shall inure to the benefit of the heirs, executors and
administrators of the Executive.

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9.5 The Company shall have power to purchase and maintain
insurance on behalf of the Executive against any liability asserted against the
Executive or incurred by the Executive in his capacity as a director, officer,
employee or agent of the Company, or arising out of the Executive's status as
such, whether or not the Company would have the power to indemnify the
Executive against such liability under the provisions of this Section 9, the
by-laws of the Company or under Section 145 of the Delaware General Corporation
Law or any other provision of law.

9.6 The right to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 9
shall be enforceable by the Executive in any court of competent jurisdiction.
The burden of proving that such indemnification or reimbursement or advancement
of expenses is not appropriate shall be on the Company. Neither the failure of
the Company (including its board of directors, independent legal counsel, or
its stockholders) to have made a determination prior to the commencement of
such action that such indemnification or reimbursement or advancement of
expenses is proper in the circumstances nor an actual determination by the
Company (including its board of directors, independent legal counsel, or its
stockholders) that the Executive is not entitled to such indemnification or
reimbursement or advancement of expenses, shall constitute a defense to the
action or create a presumption that the Executive is not so entitled. The
Executive shall also be indemnified for any expenses incurred in connection
with successfully establishing his right to such indemnification or
reimbursement or advancement of expenses, in whole or in part, in any
proceeding.

9.7 If the Executive serves in any capacity (a) any affiliate
of the Company or (b) any employee benefit plan of the Company or any affiliate
of the Company, then he shall be deemed to be doing so at the request of the
Company.

9.8 The Executive may elect to have his right to
indemnification or reimbursement or advancement of expenses interpreted on the
basis of the applicable law in effect at the time of the occurrence of the
event or events giving rise to the applicable Proceeding, to the extent
permitted by law, or on the basis of the applicable law in effect at the time
such indemnification or reimbursement or advancement of expenses is sought.
Such election shall be made, by a notice in writing to the Company, at the time
indemnification or reimbursement or advancement of expenses is sought; provided
that if no such notice is given, the right to indemnification or reimbursement
or advancement of expenses shall be determined by the law in effect at the time
indemnification or reimbursement or advancement of expenses is sought.

10. Change of Control.

(a) Prior to an initial public offering of the stock of
Ivex Packaging Corporation, the holding company for the Company, ("Ivex") a
"Change of Control" shall be deemed to have occurred whenever any one of the
following conditions exists:

(i) Acadia Partners, L.P. (together with all
affiliates) owns less than twenty-five percent (25%) of either (A) the then
outstanding shares of common stock of Ivex (the

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"Outstanding Ivex Common Stock") or (B) the combined voting power of the then
outstanding voting securities of Ivex entitled to vote generally in the
election of directors (the "Outstanding Ivex Voting Securities");

(ii) Another individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") has beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of a
larger percentage than is owned by Acadia Partners, L.P. and its affiliates of
either (A) the Outstanding Ivex Common Stock or (B) the Outstanding Ivex Voting
Securities; or

(iii) Representatives of Acadia Partners, L.P. (and
its affiliates) cease to be a majority of the board of directors of the Company
or cease to be a majority of the board of directors of Ivex.

(b) After an initial public offering of the stock of
Ivex, a "Change of Control" shall mean:

(i) The acquisition by any Person of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of twenty percent (20%) or more of either the Outstanding Ivex Common Stock or
the Outstanding Ivex Voting Securities; provided, however, that for purposes of
this subsection (i), the following acquisitions shall not constitute a Change
of Control: (A) any acquisition directly from Ivex, (B) any acquisition by
Ivex, or (C) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by Ivex or any corporation controlled by Ivex; and
provided further that no acquisition shall constitute a Change of Control
unless, as a result thereof, a Person has beneficial ownership of a larger
percentage of the Outstanding Ivex Common Stock or the Outstanding Ivex Voting
Securities than is then beneficially owned by Acadia Partners, L.P. and its
affiliates; or

(ii) Individuals who, as of the date hereof,
constitute the board of directors of Ivex (the "Incumbent Ivex Board") cease
for any reason to constitute at least a majority of the board of directors of
Ivex; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the shareholders
of Ivex, was approved by a vote of at least a majority of the directors then
comprising the Incumbent Ivex Board shall be considered as though such
individual were a member of the Incumbent Ivex Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Incumbent Ivex Board; or

(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, (A) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding

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Ivex Common Stock and Outstanding Ivex Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly, at least
sixty percent (60%) of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or
more subsidiaries) in substantially the same proportions as their respective
ownership, immediately prior to such Business Combination, of the Outstanding
Ivex Common Stock and Outstanding Ivex Voting Securities; provided, however,
that the provisions of this Section 10(b) shall be applied, in connection with
and after any such Business Combination, as if all references to Ivex (except
in the definition of, and references to, the Ivex Incumbent Board) were
replaced by references to the corporation resulting from such Business
Combination and shall be applied, with respect to any subsequent Business
Combination, as if the reference in this subsection (iii) to "at least sixty
percent (60%)" were replaced by a reference to "at least ninety-five percent
(95%)"; or

(iv) Approval by the shareholders of the Company
or of Ivex of a complete liquidation or dissolution of the Company or of Ivex,
respectively; provided, however, that a Change of Control shall not result from
approval by the shareholders of Ivex of a dissolution of Ivex for the purpose
of making a pro rata distribution of shares of the Company to the shareholders
of Ivex; and provided further that, after any such distribution, the provisions
of this Section 10 shall be applied as if all references to Ivex (except in the
definition of, and references to, the Ivex Incumbent Board) were replaced by
references to the Company.

(c) If Acadia Partners, L.P. makes a pro rata
distribution of shares of common stock or other securities of Ivex to
individuals or other entities who are partners in Acadia Partners, L.P., then
the continued holding of such shares or other securities of Ivex by those
distributees shall be deemed, for purposes of this Section 10, to be continued
holding of those shares or other securities by Acadia Partners, L.P. and its
affiliates.

11. Certain Additional Payments by the Company.

11.1 Anything in this Agreement to the contrary
notwithstanding and except as set forth below, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 11) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended, (the "Code"), or if any
interest or penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, being
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any

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interest and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.

11.2 Subject to the provisions of Section 11.3, all
determinations required to be made under this Section 11, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by a nationally recognized certified public accounting firm designated by the
Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within fifteen (15) business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting a Change of Control, the Executive may appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). The Accounting Firm shall assist the Executive with the
preparation and filing of any income tax return required of the Executive which
relates to the period or periods in which Executive received a Payment or a
Gross-Up Payment. All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 11, shall be paid by the Company to the Executive within five (5) days
of the receipt of the Accounting Firm's determination. Any determination by
the Accounting Firm shall be binding upon the Company and the Executive. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 11.3 and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.

11.3 The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of a Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten (10) business days after the
Executive is informed in writing of such claim and shall apprise the Company of
the nature of such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the expiration of the
thirty (30)-day period following the date on which the Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that it desires
to contest such claim, the Executive shall:

(a) Give the Company any information reasonably
requested by the Company relating to such claim,

14
<PAGE> 15

(b) Take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company,

(d) Permit the Company to participate in any
proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Section 11.3, the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income
tax (including interest or penalties with respect thereto) imposed with respect
to such advance or with respect to any imputed income with respect to such
advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect
to which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

11.4 If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 11.3, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of Section 11.3)
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by the Company pursuant to
Section 11.3, a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to
the expiration of thirty (30) days after such determination, then such advance
shall be forgiven and shall not be required to be

15
<PAGE> 16

repaid and the amount of such advance shall offset, to the extent thereof, the
amount of any Gross-Up Payment required to be paid.

12. Payment of Attorneys' Fees. The Company shall pay promptly
upon receipt of proper invoices:

(a) All reasonable attorneys' fees and related expenses
incurred by the Executive in connection with the negotiation and preparation of
this Agreement; and

(b) To the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result of any
contest by the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment due pursuant to this Agreement), plus
in each case interest (from the date of any such disbursement by the Executive)
at the applicable federal rate provided for in Section 7872(f)(2)(A) of the
Internal Revenue Code of 1986, as amended; provided, however, that the Company
shall not be obligated to make such payment with respect to any contest in
which the Company prevails over the Executive.

13. Successors. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. For purposes of this Section 13, the term
"successor" shall include any entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) which has ultimate beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of at least fifty percent (50%) of any other entity or entities which succeed
to all or substantially all of the business and/or assets of the Company;
provided, however, that the term "successor" shall not include any partner or
stockholder who is a natural person. As used in this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to perform this
Agreement, by operation of law or otherwise.

14. Other Provisions.

14.1 Certain Definitions. As used in this Agreement, the
following terms have the following meanings unless the context otherwise
requires:

(i) "affiliate" with respect to any person means any
other person controlling, controlled by or under common control with,
or the parents, spouse, lineal descendants or beneficiaries of, such
person.

16
<PAGE> 17

(ii) "person" means any individual, corporation,
partnership, firm, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental or regulatory body or
other entity.

14.2 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid, or by reputable commercial
delivery service. Any such notice shall be deemed given when delivered as
follows:

(a) If to the Company, to:

IPC, Inc.
100 Tri-State Drive
Suite 200
Lincolnshire, Illinois 60069
Attention: Mr. Frank V. Tannura

With copies to:

IPC, Inc.
100 Tri-State Drive
Suite 200
Lincolnshire, Illinois 60069
Attention: G. Douglas Patterson, Esq.

and

Oak Hill Partners, Inc.
Park Avenue Tower
65 East 55th Street
New York, New York 10022
Attention: Mr. Tony Scotto

(b) If to the Executive, to:

George V. Bayly
544 Fletcher Circle
Lake Forest, Illinois 60045

17
<PAGE> 18

With a copy to:

Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street, Suite 2600
Chicago, Illinois 60601
Attention: Robert J. Stucker, Esq.

Any party may change its address for notice hereunder by
notice to the other party hereto.

14.3 Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and, in
amending and restating the 1991 Agreement, supersedes the 1991 Agreement and
(except for those certain agreements referred to in Section 3 hereof) all other
prior agreements, written or oral, with respect thereto.

14.4 Waivers and Amendments. This Agreement may be amended,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by the parties or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof. Nor shall any waiver on the part of any party of any such
right, power or privilege hereunder, nor any single or partial exercise of any
right, power or privilege hereunder, preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.

14.5 Governing Law and Enforcement. This Agreement shall be
governed by and construed in accordance with the laws of the State of Illinois,
where the employment of the Executive shall be deemed, in major part, to be
performed, and enforcement of this Agreement or any other legal action taken
with respect to this Agreement shall be taken in the courts of appropriate
jurisdiction in Lake County, Illinois.

14.6 Assignment. This Agreement, and any rights and
obligations hereunder, may not be assigned by the Executive.

14.7 Counterparts. This Agreement may be executed in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

14.8 Headings. The headings in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.

14.9 Confidentiality. The Executive hereby agrees to keep
the terms and provisions of this Agreement confidential.

18
<PAGE> 19

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

IPC, INC.

By:
--------------------------------------
Name:
-------------------------------
Title:
----------------------------

EXECUTIVE

-----------------------------------------
George V. Bayly

GUARANTEE

Ivex Packaging Corporation, the holding company for the Company,
hereby guarantees the payment of all compensation, payments and/or benefits due
to the Executive or his dependents or beneficiaries under this Agreement or any
of the plans, programs or arrangements referred to herein, if, as and when such
compensation, payments and/or benefits are not timely paid by the Company or
are not otherwise timely paid pursuant to any such plan, program or
arrangement.

IVEX PACKAGING CORPORATION

By:
------------------------------
Name:
--------------------------
Title:
--------------------------

<PAGE> 1
EXHIBIT 10.15

AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT

Amendment No. 2, dated May 30, 1996, between IPC, Inc. (formerly named
Ivex Packaging Corporation) (the "Company") and Frank V. Tannura (the
"Executive").

The Executive and the Company are parties to an Employment Agreement
dated as of December 31, 1992 and amended September 11, 1995 (as so amended,
the "Employment Agreement"). The Executive and the Company wish to amend the
Employment Agreement.

In consideration of the mutual covenants and agreements herein
contained, the parties hereto hereby agree to amend the Employment Agreement as
follows:

Section 1. Definitions.

Except as otherwise defined in this Amendment No. 2, capitalized terms
defined in the Employment Agreement are used herein as defined therein.

Section 2. Amendments.

2.1 Section 1.1 of the Employment Agreement is hereby amended
by deleting the first sentence thereof and by inserting the following
provisions in lieu thereof:

"The Company hereby agrees to employ the Executive for a term
commencing on December 31, 1992 and expiring on May 31, 1999,
unless earlier terminated as herein provided. Beginning on
June 1, 1996, the term of this Agreement shall be extended
automatically for one (1) additional day for each day which
has then elapsed since May 31, 1996 unless either the Board of
Directors of the Company (the "Board"), on behalf of the
Company, or the Executive gives written notice to the other
party, in accordance with Section 7.2, below, that such
automatic extension of the term of this Agreement shall cease.
Any such notice shall be effective immediately upon delivery.
The current term of this Agreement, plus any extension by
operation of this Section 1.1, shall be hereinafter referred
to as the "Term."

2.2 Section 2.2 of the Employment Agreement is hereby amended by
deleting the second sentence thereof and by inserting the following provisions
in lieu thereof:

"In addition, the Company shall pay to the Executive an annual
performance bonus based upon the terms and provisions of the
Company's Senior Management Incentive Compensation Plan (a
"Performance Bonus").

<PAGE> 2

2.3 Section 4.2.2 of the Employment Agreement is hereby amended by
deleting the first sentence thereof and by inserting the following provisions
in lieu thereof:

"If the Executive is terminated without Cause, the Company's
obligation to the Executive shall be limited solely to the
payment, at the times and upon the terms provided for herein,
of (i) at the Executive's option either (A) the Executive's
Annual Salary for the then remaining Term of this Agreement
had the Executive not been so terminated (the "Full Term"),
based on the Annual Salary of the Executive in effect on the
date of termination (or, if the Company has reduced the
Executive's Annual Salary in breach of this Agreement, the
Executive's Annual Salary before such reduction) and assuming
such Annual Salary would remain in effect for the Full Term,
or (B) the present value (calculated based upon a ten percent
(10%) annual interest rate) of the Executive's unpaid
aggregate Annual Salary for the Full Term, based upon the
Annual Salary of the Executive in effect on the date of
termination (or, if the Company has reduced the Executive's
Annual Salary in breach of this Agreement, the Executive's
Annual Salary before such reduction) and assuming such Annual
Salary would remain in effect for the Full Term, (ii) at the
Executive's option either (A) an annual Performance Bonus for
each year remaining in the Full Term, in an annual amount
equal to the target amount of the Executive's Performance
Bonus for the year in which the termination of his employment
occurs, each such annual Performance Bonus payment being due
at the same time that Performance Bonuses for the year in
question are to be paid (or would have been paid, if earned)
to continuing employees of the Company or (B) the present
value (calculated based upon a ten percent (10%) annual
interest rate) of three (3) times the target amount of the
Executive's Performance Bonus for the year in which the
termination of his employment occurs, (iii) an amount equal to
the Executive's Performance Bonus for the previous year
multiplied by a fraction, the numerator of which is the number
of days that the Executive has then been employed by the
Company in the then current year and the denominator of which
is three hundred and sixty-five (365), (iv) unpaid Benefits
accrued up to the date of termination and (v) additional
Benefits on the terms set forth in Section 4.5."

2.4 The Employment Agreement is hereby amended by deleting Section
4.2.3 thereof and by inserting the following provisions in lieu thereof:

"4.2.3 The Executive may, at any time during the Term,
terminate his employment under this Agreement by giving the
Company at least

2
<PAGE> 3

thirty (30) days prior written notice of such termination. In
the event of such termination, the Company shall pay to the
Executive all Annual Salary, Performance Bonuses and Benefits
which have accrued as of the effective date of such
termination but may discontinue payment of any compensation or
benefits accruing from and after such date."

2.5 Section 4.4 of the Employment Agreement is hereby amended by
deleting part (iv) thereof and by inserting the following provisions in lieu
thereof:

"(iv) The assignment to the Executive of any duties
materially inconsistent with the Executive's position as vice
president and chief financial officer of the Company, or the
substantial diminution of the Executive's duties or authority
from those which the Executive has on May 30, 1996;"

2.6 Section 4.4 of the Employment Agreement is hereby further
amended by deleting the word "or" at the end of part (viii), by adding the word
"or" at the end of part (ix), and by adding at the end of Section 4.4 the
following new part (x):

"(x) The giving of notice by the Company to stop the
automatic extension of the Term which is provided for by
Section 1.1 of this Agreement."

2.7 Section 4.4 of the Employment Agreement is hereby further
amended by deleting the last paragraph thereof and by inserting the following
provisions in lieu thereof:

If the Executive terminates this Agreement for Good Reason,
the Company's obligation to the Executive shall be limited
solely to the payment, at the times and upon the terms
provided for herein, of (i) at the Executive's option either
(A) the Executive's Annual Salary for the then remaining Term
of this Agreement had the Executive not been so terminated
(the "Full Term"), based on the Annual Salary of the Executive
in effect on the date of termination (or, if the Company has
reduced the Executive's Annual Salary in breach of this
Agreement, the Executive's Annual Salary before such
reduction) and assuming such Annual Salary would remain in
effect for the Full Term, or (B) the present value (calculated
based upon a ten percent (10%) annual interest rate) of the
Executive's unpaid aggregate Annual Salary for the Full Term,
based upon the Annual Salary of the Executive in effect on the
date of termination (or, if the Company has reduced the
Executive's Annual Salary in breach of this Agreement, the
Executive's Annual Salary before such reduction) and assuming

3
<PAGE> 4

such Annual Salary would remain in effect for the Full Term,
(ii) at the Executive's option either (A) an annual
Performance Bonus for each year remaining in the Full Term, in
an annual amount equal to the target amount of the Executive's
Performance Bonus for the year in which the termination of his
employment occurs, each such annual Performance Bonus payment
being due at the same time that Performance Bonuses for the
year in question are to be paid (or would have been paid, if
earned) to continuing employees of the Company or (B) the
present value (calculated based upon a ten percent (10%)
annual interest rate) of three (3) times the target amount of
the Executive's Performance Bonus for the year in which the
termination of his employment occurs, (iii) an amount equal to
the Executive's Performance Bonus for the previous year
multiplied by a fraction, the numerator of which is the number
of days that the Executive has then been employed by the
Company in the then current year and the denominator of which
is three hundred and sixty-five (365), (iv) unpaid Benefits
accrued up to the date of termination and (v) additional
Benefits on the terms set forth in Section 4.5."

2.8 The Employment Agreement is hereby amended by deleting Section
4.6 thereof and by inserting the following provisions in lieu thereof:

"4.6 No Duty to Mitigate. After a termination of the
Executive's employment under this Agreement, the Executive
will not be obligated to mitigate damages by seeking other
comparable employment. If such termination occurs after a
Change of Control, any severance benefits payable to the
Executive under Section 4.2.2 or Section 4.4 of this Agreement
will not be subject to reduction for any compensation received
from other employment. However, if such termination is not
preceded by a Change of Control, the severance benefits
payable to the Executive under this Agreement will be reduced
by an amount equal to fifty percent (50%) of the compensation
received by the Executive from other employment during the
period of three (3) years after such termination. For
purposes of applying the immediately preceding sentence, a
Change of Control will be deemed to have preceded the
termination of the Executive's employment with the Company if
that termination occurs within one hundred and eighty (180)
days prior to the Change of Control, unless it is reasonably
demonstrated by the Company that such termination was for a
substantial business reason unrelated to the Change of
Control."

4
<PAGE> 5

2.9 Section 7.2 of the Employment Agreement is hereby amended by
deleting the name "David G. Offensend" from part (i) thereof and by inserting
in lieu thereof the name "Tony Scotto."

2.10 Section 7.2 of the Employment Agreement is hereby amended by
deleting part (ii) thereof and by inserting the following provisions in lieu
thereof:

"(ii) if to the Executive, to:

Frank V. Tannura
19 Lake Ridge Club Court
Burr Ridge, IL 60521

with a copy to:

Vedder, Price, Kaufman & Kammholz
Suite 2600
222 North LaSalle Street
Chicago, IL 60601
Attention: Robert J. Stucker

2.11 Section 7.9 of the Employment Agreement is hereby amended by
deleting the current text and by inserting the following provisions in lieu
thereof:

"7.9 Attorneys' Fees. To the full extent permitted by law,
all legal fees and expenses which the Executive may reasonably
incur as a result of any contest by the Company, the Executive
or others of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by
the Executive about the amount of any payment due pursuant to
this Agreement), plus in each case interest (from the date of
any such disbursement by the Executive) at the applicable
federal rate provided for in Section 7872(f)(2)(A) of the
Internal Revenue Code of 1986, as amended; provided, however,
that the Company shall not be obligated to make such payment
with respect to any contest in which the Company prevails over
the Executive."

2.12 A new section 7.11, containing the following provisions, is
hereby added to the Employment Agreement:

"7.11 Successors. The Company will require any successor
(whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company

5
<PAGE> 6

to assume expressly and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
For purposes of this Section 7.11, the term "successor" shall
include any entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) which has ultimate beneficial
ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of at least fifty percent (50%) of any other
entity or entities which succeed to all or substantially all
of the business and/or assets of the Company; provided,
however, that the term "successor" shall not include any
partner or stockholder who is a natural person. As used in
this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this
Agreement, by operation of law or otherwise."

Section 3. Miscellaneous

Except as herein provided, the Employment Agreement shall remain
unchanged and in full force and effect. This Amendment No. 2 may be executed
in any number of counterparts, all of which taken together shall constitute one
and the same agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
2 to be duly executed and delivered as of the date above written.

IPC, INC.

By:
--------------------------------
George V. Bayly
Its President and
Chief Executive Officer

------------------------------------
Frank V. Tannura

6
<PAGE> 7

GUARANTEE

Ivex Packaging Corporation, the holding company for the Company,
hereby guarantees the payment of all compensation, payments and/or benefits due
to the Executive or his dependents or beneficiaries under the Employment
Agreement, as amended by this Amendment No. 2, or under any of the plans,
programs or arrangements referred to in the Employment Agreement as so amended,
if, as and when such compensation, payments and/or benefits are not timely paid
by the Company or are not otherwise timely paid pursuant to any such plan,
program or arrangement.

IVEX PACKAGING CORPORATION

By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------

<PAGE> 1
EXHIBIT 10.16

AMENDED AND RESTATED
IPC, INC.
(formerly named IVEX PACKAGING CORPORATION)
STOCK OPTION AND PURCHASE AGREEMENT

This Amended and Restated Stock Option and Purchase Agreement (this
"Agreement") is entered into as of January 1, 1996 (the "Amendment Date"),
among Ivex Packaging Corporation (formerly named Ivex Holdings Corporation), a
Delaware corporation ("Ivex Holdings"), IPC, Inc. (formerly named Ivex
Packaging Corporation), a Delaware corporation and a wholly-owned subsidiary of
Ivex Holdings (the "Company"), Acadia Partners, L.P., a Delaware limited
partnership ("Acadia"), Acadia Electra Partners, L.P., a Delaware limited
partnership ("Electra"), and the holders of options for shares of Common Stock
of the Company set forth on Exhibit A attached hereto (the "Management
Stockholders", which term shall include any Permitted Transferee thereof).
Acadia and Electra own substantially all of the issued and outstanding shares
of Common Stock of Ivex Holdings.

<PAGE> 2

RECITALS

WHEREAS, as part of the compensation of the Management Stockholders, Ivex
Holdings, the Company and certain employees of the Company, including the
Management Stockholders, entered into the Stock Option and Purchase Agreement,
dated as of January 1, 1993 (the "Original IPC Agreement"), pursuant to which
the Company granted to certain employees of the Company, including certain of
the Management Stockholders, certain options to purchase shares of common stock
of the Company;

WHEREAS, under the Original IPC Agreement, the Management Stockholders
became the beneficial owners of the number of Vested and Earned Options
exercisable for shares of the Common Stock of the Company set forth in Column 1
on Exhibit A attached hereto;

WHEREAS, the Management Stockholders desire to enter into an agreement
with the Company concerning, inter alia, the grant of additional options and
the disposition of all such options and shares held by the Management
Stockholders;

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

2
<PAGE> 3

1. Amendment and Restatement.

(a) The parties hereto agree that effective as of the Amendment Date,
the Original IPC Agreement shall be amended and restated as set forth herein.

(b) Definitions.

The following terms shall have the following definitions for the purposes of
this Agreement:

"Act" means the Securities Act of 1933, as amended, or any similar federal
statute, and the rules and regulations of the Commission thereunder, all as the
same shall at that time be in effect.

"Affiliate" of any person or entity is any other person or entity
controlling, controlled by or under common control with such person or entity.
For purposes of this Agreement, Keystone, Inc., each of the current partners of
Acadia and each of the current partners of the general partner of Acadia shall
be deemed an Affiliate of the Company, Ivex Holdings, Acadia and Electra.

"Board" means the Board of Directors of the Company.

"Change of Control" means (i) Acadia, Electra and their Affiliates and
their respective employees cease to have the power to elect a majority of the
directors to the board of Ivex Holdings or (ii) Ivex Holdings and its
Affiliates cease to have the

3
<PAGE> 4

power to elect a majority of the directors to the Board of Directors of the
Company.

"Closing" means the purchase and sale of the shares of Common Stock
hereunder.

"Closing Date" means the date of the Closing.

"Closing Price" for any day means the last sale price of the Common Stock
on such day, regular way, or if no sale takes place on such day, the average of
the closing bid and asked prices on such day, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Common Stock is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal National
Securities Exchange on which the Common Stock is listed or admitted to trading
or, if the Common Stock is not listed or admitted to trading on any National
Securities Exchange, the last quoted price on such day or, if not so quoted,
the average of the high bid and low asked prices on such day in the
over-the-counter market, as reported to the National Association of Securities
Dealers, Inc. Automated Quotation System or such other system then in use, or

4
<PAGE> 5

if not reported by such organization, the average of the closing bid and asked
prices on such day as furnished by a professional market maker making a market
in the Common Stock selected by the Board, or if no market maker is making a
market in the Common Stock, the fair market value per share of Common Stock as
reasonably determined in good faith by the Board.

"Commission" means the Securities and Exchange Commission.

"Common Stock" means the Company's common stock, par value $.01 per share,
as constituted on the date hereof, any stock into which such common stock shall
have been changed or any stock resulting from any reclassification of such
common stock, and all other stock of any class or classes (however designated)
of the Company the holders of which have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions of any
shares entitled to preference.

"Conversion Transaction" has the meaning specified in Section 12(b) hereof.

"Credit Agreement" means the Credit Agreement, dated as of December 7,
1995, among the Company, Ivex Holdings, the Company's subsidiaries, and
NationsBank, N.A., as agent, and the lenders identified therein, as the same
may be amended, supplemented,

5
<PAGE> 6

extended, renewed, restated, increased or otherwise modified from time to time,
together with all refinancings, refundings and replacements.

"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at that time.

"Earned" shall have the meanings set forth in Section 2(a) and 2(e) hereof.

"EBITDA" means, for any period, the sum of the amounts for such period,
determined on a consolidated basis in accordance with GAAP, of (a) consolidated
net income, plus (b) consolidated interest charges and deferred interest, plus
(c) consolidated charges for income taxes, plus (d) consolidated depreciation,
amortization and other similar non-cash charges, plus (e) any provision for
LIFO, plus (f) any loss from the disposition of any asset which is included in
consolidated net income, less (g) any gain from the disposition of any asset
which is included in consolidated net income, plus (h) any loss from any
extraordinary item which is included in consolidated net income, less (i) any
gain from any extraordinary item which is included in consolidated net income,
plus (j) any charge resulting from payments

6
<PAGE> 7

made under this Agreement or any other stock, option or long-term incentive
arrangements of the Company or Ivex Holdings (including, without limitation,
the Special Incentive Agreement, dated as of January 1, 1993) for the benefit
of the Management Stockholders that would be equitable or appropriate in order
to effectuate the intent of this Agreement as reasonably determined by the
Board, plus (k) any non-recurring charge that would be equitable or
appropriate in order to effectuate the intent of this Agreement as determined
by the Board in its sole discretion.

"Fair Market Value" of Common Stock as of a particular date means the
average value of the Common Stock for the ten (10) business day period
immediately preceding such date. Such average value shall be the average of
the daily Closing Prices of the Common Stock for each of such ten (10) days.

"GAAP" means the generally accepted accounting principles in the United
States of America which are applicable on the date hereof.

"Holdings Common Stock" means Ivex Holdings' common stock, par value $.01
per share, as constituted on the date hereof, any stock into which such common
stock shall have been changed or any stock resulting from any reclassification
of such common stock, and all other stock of any class or classes (however
designated)

7
<PAGE> 8

of Ivex Holdings the holders of which have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions of any
shares entitled to preference.

"Involuntary Transfer" means any transfer, proceeding or action (other than
to a Permitted Transferee or to a legal representative of the Management
Stockholder upon or occasioned by the incompetence or death of the Management
Stockholder) by or in which the Management Stockholder shall be deprived or
divested of any right, title or interest in or to any Shares, including,
without limitation, any seizure under levy of attachment or execution, any
foreclosure upon a pledge of such Shares, any transfer in connection with
bankruptcy (whether pursuant to the filing of a voluntary or an involuntary
petition under Title 11 of the United States Code or any modifications or
revisions thereto) or other court proceeding to a debtor in possession, trustee
in bankruptcy or receiver or other officer or agency, any transfer to a state
or to a public officer or agency pursuant to any statute pertaining to escheat
or abandoned property, or any transfer pursuant to a divorce or separation
agreement or a final decree of a court in a divorce action. The Management
Stockholder

8
<PAGE> 9

shall promptly notify the Company of the occurrence of an Involuntary
Transfer.

"IPO" means the effectiveness of a registration statement for the first
underwritten public offering of Holdings Common Stock or Common Stock but only
if there are sales, exchanges or other distributions pursuant to such
registration statement of shares of Holdings Common Stock or Common Stock
representing at least (i) 10% of the outstanding shares after giving effect to
such sales, exchanges or other distributions, or (ii) shares having an
aggregate offering price of at least fifty million dollars ($50,000,000.00).

"MS Committee" has the meaning specified in Section 16(k).

"Original Issuance Price" means the price at which the Shares are issued, as
adjusted for stock splits, stock dividends, recapitalization and
reclassification with respect to the Common Stock.

"Options" shall have the meaning set forth in Section 2(b). "Original IPC
Options" shall have the meaning set forth in Section 2(a).

"Original IPC Shares" shall have the meaning set forth in Section 2(a).

9
<PAGE> 10

"Performance Options" shall have the meaning set forth in Section 2(b).

"Performance Shares" shall have the meaning set forth in Section 2(b).

"Permanent Disability" means a disability that entitles the Management
Stockholder to benefits under either Title II of the Federal Social
Security Act or the Company's long-term disability plan, as then in effect
(provided that such disability is not due to a self-inflicted injury or
disease, including, without limitation, drug abuse or alcoholism).

"Permitted Transferee" means the spouse, any lineal ancestor or descendent,
any brother or sister or any personal representative, estate or executor under
the will of the Management Stockholder or any partnership or trust established
solely for the benefit of any of the forgoing and whose terms are not
inconsistent with the terms of this Agreement, provided in each such case that
the Permitted Transferee shall agree in writing to be bound by the terms of
this Agreement.

"Person" means an individual, partnership, corporation, trust or
unincorporated organization or a government or a political subdivision thereof.

10
<PAGE> 11

"Pro Rata Percentage" means a fraction, the numerator of which is the number
of Shares owned by a Management Stockholder as the result of exercising the
Options plus all Options for Shares held by such Management Stockholder on the
date of the Election Notice (as defined in Section 9(b)) or the Drag-Along
Notice (as defined in Section 10), and the denominator of which is the
aggregate number of shares of Common Stock owned by Ivex Holdings, Acadia,
Electra, their Affiliates and any co-investment partnerships of Acadia plus the
Shares owned and Options held by all of the Management Stockholders.

"Restricted Securities" means any Common Stock bearing the legend set forth
in Section 6.

"Senior Debentures" means the 13 1/4% Senior Discount Debentures due 2005 of
Ivex Holdings, as the same may be amended, supplemented, extended, renewed,
restated, increased, or otherwise modified from time to time, together with all
refinancings, refundings and replacements.

"Shares" means the shares of Common Stock acquired by the Management
Stockholders from the Company pursuant to this Agreement upon the exercise by
the Management Stockholders of the Options and all shares of capital stock or
other securities of the Company or any successor issued or issuable as a result
of

11
<PAGE> 12

any stock dividend on, or stock split or reclassification or conversion of, or
in exchange for, any such Common Stock, or issued or issuable with respect to
such Common Stock in connection with any merger or reorganization or similar
transaction involving the Company.

"Subordinated Notes" means the 12 1/2% Senior Subordinated Notes due 2002 of
the Company, as the same may be amended, supplemented, extended, renewed,
restated, increased, or otherwise modified from time to time, together with all
refinancings, refundings and replacements.

"Unallocated Performance Shares" means the Performance Shares set forth in
Column 2 on Exhibit A that are not allocated to a Management Stockholder on the
date hereof.

"Unearned" means, as of a particular date, the Options and Shares of Common
Stock issuable hereunder that are not "Earned".

"Unvested" means, as of a particular date, the Options and Shares of Common
Stock issuable hereunder that are not Vested.

"Vested" means, the (x) Original IPC Options granted under Section 2(a)
hereof and the Original IPC Shares exercisable therefor, and (y) following
aggregate percentages of the Performance Options granted under Section 2(b)
hereof and the Perfor

12
<PAGE> 13

mance Shares exercisable therefor from and after the following dates:

<TABLE>
<CAPTION>
Percent of
Date Vested Shares
---- -------------
<S> <C>
December 31, 1996 33 1/3%;
December 31, 1997 66 2/3%;
December 31, 1998 100%;
</TABLE>

provided, however, that:

(i) all Unvested Options and Shares issuable hereunder shall become
Vested upon the occurrence of a Change of Control, an IPO
or a Conve rsion Trans actio n;

(ii) all Earned but Unvested Options and Shares shall become Vested
upon the death or Permanent Disability of the Management Stockholder;
and

(iii) upon the sale, transfer or exchange by Ivex Holdings and/or any
of its Affiliates pursuant to Section 9 or 10 hereof, a Management
Stockholder shall automatically become Vested in a percentage of his
total Shares equal to the percentage of Ivex Holdings' and/or its
Affiliates' shares sold, exchanged or otherwise transferred pursuant
to such Sections; provided, however, that if a Management
Stockholder's Shares are Vested prior to such event, such Management
Stockholder shall not receive additional Vesting upon the occurrence
of such event except to the extent such additional Vesting is
necessary to equate such Management Stockholder's percentage of total
Vested Shares to the percentage of shares being sold, exchanged or
transferred by Ivex Holdings and/or its Affiliates; pro vided,
further, however, that the number of such Man agement Stockholder's
Shares subject to such additional Vesting shall not exceed the number
of Shares sold, transferred or exchanged by the Management
Stockholders pursuant to such transaction.

13
<PAGE> 14

2. Grant of Option and Sale and Purchase of Shares.

(a) The Company has heretofore irrevocably granted, and hereby confirms such
grant, to the Management Stockholders the right and option (hereinafter called
the "Original IPC Options") to purchase on the terms and conditions hereinafter
set forth an aggregate of Nine Thousand Four Hundred and Thirteen (9,413)
shares of Common Stock (the "Original IPC Shares") in the amounts set forth
opposite each of their respective names in Column 1 on Exhibit A hereto which
such aggregate number of Original IPC Shares represents seven and two/tenths
percent (7.2%) of the shares of Common Stock of the Company on a fully diluted
basis. All of such Original IPC Options and Original IPC Shares have become
Vested and Earned prior to the Amendment Date in accordance with the terms of
the Original IPC Agreement.

(b) The Company hereby irrevocably grants to the Management Stockholders
the right and option (hereinafter called the "Performance Options" and
collectively with the Original IPC Options, the "Options") to purchase on the
terms and conditions hereinafter set forth an aggregate of Six Thousand Nine
Hundred and Eight (6,908) shares of Common Stock (the "Performance Shares", and
collectively with the Original IPC Shares, the "Shares") in the amounts set
forth opposite each of their respective names in

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<PAGE> 15

Column 2 on Exhibit A hereto which such aggregate number of Performance Shares
represents five percent (5%) of the shares of Common Stock of the Company on a
fully diluted basis. Performance Options which are not allocated on the date
hereof or which are forfeited in accordance with the terms hereof may be
allocated or reallocated to current Management Stockholders or to current or
future employees who become Management Stockholders after the date hereof. No
Performance Option is exercisable unless the Performance Shares issuable
thereunder are Vested and Earned.

(c) Except as provided herein, the Options shall be exercisable at any
time, in whole or in part, prior to January 1, 2003 upon ten (10) days written
notice to the Company by the Management Stockholder with a closing to take
place at the end of such ten (10) day notice period (the "Closing") (such
number of Shares being subject to adjustment as provided in Paragraph 2(d)
hereof). At the Closing, the Company will deliver certificates for the Shares
purchased hereunder to the Management Stockholder at its offices at 100
Tri-State Drive, Suite 200, Lincolnshire, Illinois 60069 against payment of Six
Hundred Nineteen Dollars and 56/100 ($619.56) per Share to the Company therefor
in immediately available funds or certified or cashier's check. The

15
<PAGE> 16

Company will bear all expenses in connection with the preparation, issuance and
delivery of such Shares and the certificates therefor (except that the Company
shall not be responsible for any legal expenses incurred by the Management
Stockholders unless expressly approved by the Company).

(d) If the Options are exercised after any increase or decrease in the
outstanding shares of Common Stock, or a change of said outstanding shares of
Common Stock into, or an exchange of said outstanding shares or other
securities of the Company or of another corporation, by reason of
reorganization, merger, consolidation, recapitalization, reclassification,
debt-for-equity exchange, stock split, combination of shares, or dividend
payable in cash, capital stock or other property occurring after the date
hereof, as a result of which (x) shares of any class shall be issued in respect
of said outstanding shares of Common Stock or (y) cash or other property shall
be distributed to Ivex Holdings, the Board shall make an equitable and
appropriate adjustment in the number and kind of shares to be received, to the
end that the proportionate interest of the Management Stockholder shall be
maintained as before the occurrence of any such event; such adjustment in the
unexercised portion of the Options shall be made without change in the
aggregate exercise price

16
<PAGE> 17

applicable to the unexercised portion of the Options and with a corresponding
adjustment in the exercise price per share, except with respect to a
distribution in clause (y) above, where the aggregate exercise price and the
exercise price per share will be appropriately reduced.

(e)(i) Up to fifty percent (50.0%) of the Performance Shares issuable
hereunder shall be deemed Earned by the Management Stockholders on each of
December 31, 1996, and December 31, 1997 if the Company's EBITDA for each of
such years equals or exceeds the following "Minimum EBITDA" levels:

<TABLE>
<CAPTION>
Potential
Percentage
of Earned Minimum Maximum
Fiscal Year Ending Shares EBITDA EBITDA
- ------------------ ------ ------- -------
<S> <C> <C> <C>
1996 50% $68,400,000 $72,000,000

1997 50 71,100,000 79,200,000
</TABLE>

Fifty percent (50.0%) of the Performance Shares shall be deemed Earned by
the Management Stockholders if the Company obtains the "Maximum EBITDA" levels
set forth above and the percentage of such Performance Shares earned in any
fiscal year (to the extent less than 50%) shall be interpolated for EBITDA
falling within the Minimum EBITDA/Maximum EBITDA range set forth in the table
above. The parties acknowledge that the minimum

17
<PAGE> 18

EBITDA and maximum EBITDA levels set forth above may be adjusted by the Board
in its reasonable discretion to reflect the budgeted impact of any acquisitions
or divestitures closing after the Amendment Date.

(ii) All Performance Shares shall become Earned upon a Change of Control,
IPO or a Conversion Transaction that occurs on or before December 31, 1998. In
addition, upon the sale by Ivex Holdings and/or any of its Affiliates pursuant
to Section 9 or 10 hereof on or before December 31, 1998, a percentage of all
Performance Shares equal to the percentage of the Ivex Holdings' and/or
Affiliates' Shares being sold, exchanged or otherwise transferred pursuant to
such Sections shall automatically become Earned; provided, however, that if a
Management Stockholder's Performance Shares are Earned prior to such event, no
additional Performance Shares shall be Earned except to the extent necessary to
equate such Management Stockholder's percentage of total Earned Performance
Shares to the percentage of shares being sold, exchanged or transferred by Ivex
Holding and/or its Affiliates under Section 9 or 10 hereof; provided, further,
however, that the number of such Management Stockholders Performance Shares
available to be Earned pursuant to this sentence shall not exceed

18
<PAGE> 19

the number of Performance Shares sold, transferred or exchanged by the
Management Stockholder pursuant to such transaction.

(f) Within sixty (60) days after December 31, 1996, 1997 and 1998 the
Company shall deliver to each Management Stockholder an amended Exhibit A
setting forth the aggregate amount of Earned Performance Shares as of such
date.

3. Representations and Warranties of the Company. The Company represents
and warrants to the Management Stockholders as follows:

(a) Organization and Corporate Authority. The Company is duly organized and
validly existing as a corporation in good standing under the laws of the State
of Delaware and has full corporate power and authority to engage in the
business and activities to be conducted by it, and to enter into and consummate
the transactions contemplated by this Agreement. This Agreement has been
authorized by all necessary corporate action on the part of the Company, has
been duly executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company.

(b) Capitalization. The authorized capitalization of the Company consists
solely of Two Hundred Thousand (200,000) shares of Common Stock of which one
hundred twenty thousand eight

19
<PAGE> 20

hundred ninety and No/100 (120,890) shares of Common Stock are issued,
outstanding. Upon payment for the Shares being purchased by the Management
Stockholders hereunder, such Shares will be duly authorized, validly issued,
fully paid and nonassessable. Other than pursuant to this Agreement, there are
no:
(i) options, warrants or other rights with respect to the Capital Stock;

(ii) securities convertible into or exchangeable for shares of Capital
Stock; or

(iii) other commitments of any kind for the issuance of additional shares
of Capital Stock or options, warrants or other securities of the Company.

(c) Documents Delivered. The Management Stockholders have been provided
with or been provided access to all information concerning the Company and the
offering of the shares of Common Stock that has been provided to any
"accredited investor" (as that term is defined in Rule 501 of Regulation D
promulgated under the Act).

4. Representations and Warranties of the Management Stockholders. Each
Management Stockholder hereby severally (but not jointly) represents and
warrants to the Company as follows:

(a) Continuing Relationship with the Company. The Manage ment Stockholder:

20
<PAGE> 21

(i) is in charge of a principal business unit, division or function of, or
performs policy making functions with respect to, the Company or one of
its Affiliates;

(ii) holds the position with the Company or one of its Affiliates set
forth on the signature page to this Agreement; and

(iii) has been, and continues to be, intimately involved in the operations
of the Company or one its Affiliates and has had, and continues to have,
access to detailed information with respects to the business, financial
condition, results of the operations and prospects of the Company or one
of its Affiliates.

(b) Review of Documents. The Management Stockholder

(i) has received and carefully reviewed a copy of this Agreement;

(ii) has been given the opportunity to obtain any additional information
or documents from, and to ask questions and receive answers of, the
officers and representatives of the Company to the extent necessary to
evaluate the merits and risks (both economic and legal) related to his
investment in the Company;

(iii) as a result of his relationship with the Company or one of its
Affiliates, study of the aforementioned documents and prior overall
experience in financial matters, is properly able to evaluate the capital
structure of the Company (with particular reference to its high degree of
leverage), the business of the Company and the risks inherent therein; and

(iv) can afford to bear the economic risk of holding unregistered stock
and to suffer a complete loss of his investment in such stock.

21
<PAGE> 22

not been registered under the Act and represents and warrants to the
Company that:

(i) all Shares purchased or otherwise acquired by the Management
Stockholder pursuant hereto are being acquired for his own account for
investment and not with a view to distribution; and

(ii) he will not sell or otherwise dispose of any such Shares except in
compliance with the Act, the rules and regulations of the Commission
thereunder and the terms of this Agreement.

By making payment for, or taking delivery of, any Shares pursuant hereto
the Management Stockholder shall be deemed to have reaffirmed the
representations and warranties contained in this paragraph (c) as of the date
of such payment or delivery. The restriction on transfer contained in this
Section 4(c) shall be in addition to, and not by way of limitation of, any
other restrictions on transfer contained in any other Section of this Agreement.

(d) Reliance. The Management Stockholder acknowledges that the Company is
entering into this Agreement in reliance upon the representations and
warranties of the Management Stockholder contained herein.

(e) No Implied Right to Employment. Neither this Agreement nor any
provision hereof nor any action taken or omitted to be

22
<PAGE> 23

taken hereunder shall be construed as creating or conferring upon the
Management Stockholder any right to remain in the employ of the Company or any
of its Affiliates. The right of the Company or one of its Affiliates to
discipline or discharge an employee shall not be affected in any manner by
reason of such employee being a "Management Stockholder" hereunder.

5. Covenants Regarding Disposition of Shares by Management Stockholder.
Each Management Stockholder agrees that prior to making any voluntary
disposition of any Shares (other than a disposition to the Company or to other
Management Stockholders as permitted by this Agreement), he will give written
notice to the Company describing the manner of such proposed disposition. Each
Management Stockholder further agrees that such proposed disposition will not
be effected until:

(a) the Company has notified him that either:

(i) in the opinion of counsel reasonably acceptable to the Company, no
registration of such Shares under that Act is required in connection with
such proposed disposition; or

(ii) a registration statement under the Act covering such proposed
disposition has been filed by the Company with the Commission and has
become effective under the Act; and

(b) the Company has notified him that either:

(i) in the opinion of counsel reasonably acceptable to the Company, no
registration or qualification under the securi

23
<PAGE> 24

ties or "blue sky" laws of any state is required in connection with such
proposed disposition; or

(ii) compliance with applicable state securities or "blue sky" laws has
been effected.

The Company will use its best efforts to respond to any such notice from
the Management Stockholder within fifteen (15) days of receipt.

In the case of any proposed disposition under this Section 5, the Company
will use its best efforts to comply with any such applicable state securities
or "blue sky" laws, but shall in no event be required, in connection therewith,
to qualify to do business in any state where it is not then qualified to do
business or to take any action that would subject it to tax or to the general
service of process in any state where it is not then subject. The restrictions
on transfer contained in this Section 5 shall be in addition to, and not by way
of limitation of, any other restrictions on transfer contained in any other
Section of this Agreement.

6. Legend on Stock Certificates. Each certificate representing Shares
which are subject to this Agreement shall be endorsed with the following legend
(in addition to any legend required by applicable state securities or "blue sky"
laws):

24
<PAGE> 25

"The securities represented by this certificate were issued in a private
placement, without registration under the Securities Act of 1933, as amended
(the "Securities Act"), and in reliance upon the holder's representation that
such securities were being acquired for investment and not for sale. No sale,
gift or transfer or other disposition of such securities or of any interest
therein shall be valid or effective unless effected in compliance with the
Securities Act and any applicable state securities or "blue sky" laws and the
restrictions on transfer set forth in an Amended and Restated Stock Option and
Purchase Agreement dated as of January 1, 1996, and any amendments thereto, a
copy of which is available for inspection at the offices of IPC, Inc. (formerly
named Ivex Packaging Corporation). The Securities represented by this
certificate are subject to the right of IPC, Inc. (formerly named Ivex
Packaging Corporation) to repurchase such securities on the terms and
conditions set forth in the Amended and Restated Stock Option and Purchase
Agreement. No transfer of such securities will be made on the books of IPC,
Inc. unless accompanied by evidence of compliance with the terms of such
Amended and Restated Stock Option and Purchase Agreement."

25
<PAGE> 26

of, each Management Stockholder and all subsequent holders of Shares who
acquired the same directly or indirectly from a Management Stockholder in a
transaction or series of transactions not involving any public offering and not
involving a sale pursuant to Rule 144 under the Act. The Company agrees that
it will not transfer on its books any certificate for shares in violation of
the provisions of this Agreement.

7. Repurchase of Shares from the Management Stockholders Upon Termination of
Employment.

26
<PAGE> 27

Event up to and including the date thirty (30) days after the applicable Sale
Event, to elect to purchase any or all Options or Shares held by such Seller
and his Permitted Transferee which are designated in the Company Purchase
Notice. Each Company Purchase Notice shall state the number of Options or
Shares, if any, that the Company elects to purchase.

If the Company does not elect to purchase all of the Options or Shares of
the Seller pursuant to the foregoing first option, the Other Management
Stockholders shall thereupon have the second option (but not the obligation) to
purchase all or any portion of the remaining Options or Shares held by such
Seller and his Permitted Transferee. Such second option shall be exercisable
for a period of ten (10) days from the Other Management Stockholder's date of
receipt of the Company Purchase Notice. At any time during such ten (10) day
period, such Other Management Stockholder may elect, by written notice to the
Seller, the Company and the Other Management Stockholders (the "Second Purchase
Notice"), to purchase all or any portion of the Seller's remaining Options or
Shares. Each Second Purchase Notice shall state the number of Options and
Shares, if any, which such Other Management Stockholder elects to purchase. If
the aggregate number of Options and/or Shares which the Other Management

27
<PAGE> 28

Stockholders elect to purchase exceeds the number of Options and/or Shares
available for purchase, then the number of Options and/or Shares purchasable
pursuant to such second option shall be apportioned among such Other Management
Stockholders in proportion to their respective Pro Rata Percentages. The
failure of an Other Management Stockholder to deliver a Second Purchase Notice
within such ten (10) day period shall operate as a waiver of such Other
Management Stockholder's rights under this Section 7(a).

(b) Purchase Price for Shares and Options. The purchase price of any Shares
pursuant to Section 7(a) shall be (a) for Unvested Shares, the lower of (x) the
Original Issuance Price of such Shares, and (y) the Fair Market Value of such
Shares as of the date of the Sale Event; and (b) for Vested Shares, the Fair
Market Value of such Shares as of the date of the Sale Event.

The purchase price of any unexercised Options pursuant to this Section 7(a)
shall be (a) for Options exercisable for Vested Shares, the excess, if any, of
the Fair Market Value of the Vested Shares (issuable upon the exercise of such
Options) over the exercise price of such Options (the "Spread"), and (b) for
Options exercisable for Unvested Shares, zero dollars ($0.00). Such purchase
price shall be paid in cash or by certified or

28
<PAGE> 29

cashiers bank check at the closing provided for in subsection (c) below.

(c) Closing. Subject to subsection (e) below, the closing for all
purchases and sales of Options and Shares provided for in this Section 7 shall
be held at the principal executive offices of the Company at 10:30 A.M., local
time, as soon as practicable after the final determination of the Fair Market
Value. The final determination of Fair Market Value shall be made within sixty
(60) days of the applicable Sale Event of the Options and Shares to be
purchased. Notwithstanding the foregoing, if the Seller (or his Permitted
Transferee) is deceased on the closing date as aforesaid and such deceased
person's personal representative shall not have been appointed and qualified by
such date, then the closing shall be postponed until the tenth (10th) day after
the appointment and qualification of such personal representative (or if such
day is not a business day, then on the first business day thereafter). The
Seller of Options or Shares sold pursuant to this Section 7 shall cause such
Options and Shares to be delivered to the Company or to the Other Management
Stockholders at the aforesaid closing free and clear of all liens, claims,
options, charges, encumbrances or rights of others of any kind arising by,
through or under such Seller. The Seller

29
<PAGE> 30

hereby appoints the Company as attorney-in-fact to transfer such Options and
Shares on the books of the Company in the event of a sale pursuant to this
Section 7. Such Seller shall take all such actions as the Company or the Other
Management Stockholders shall reasonably request as necessary to vest in the
Company or the Other Management Stockholders at such Closing good and
marketable title to such Options and Shares, free and clear of all liens,
charges and encumbrances arising by, through or under such Seller.

(d) Options and Shares Not Repurchased. If Options or Shares subject to
this Section 7 are not repurchased by the Company or the Other Management
Stockholders in accordance with this Section 7, all such Options, Shares and
Shares issuable pursuant to unexercised Options shall be deemed Vested and
shall thereafter continue to be subject to the provisions of this Agreement
(including without limitation, the rights set forth in Sections 8, 9 and 10
hereof).

(e) Options and Shares Repurchased by the Company. The Company agrees to
sell to those Management Stockholders designated in writing by the MS
Representative any and all Options or Shares repurchased by the Company from a
Seller or an Offering Stockholder (as defined in Section 8) pursuant to
Sections 7 or 8

30
<PAGE> 31

of this Agreement at a purchase price equal to the purchase price paid by the
Company to such Seller or Offering Stockholder. Such purchase price shall be
paid to the Company in cash or by certified or cashiers' bank check at a
closing held at the principal executive offices of the Company on a date
acceptable to the Company, provided, that such date shall be on or before the
date of a Change of Control, an IPO, a transaction pursuant to Section 9 or 10
or the closing date of any transaction contemplated by a Conversion Notice or
Company Conversion Notice. The Company shall cause such Options or Shares to be
delivered to such Management Stockholder free and clear of all liens, claims,
options, charges, encumbrances or rights of others of any kind arising by,
through or under the Company (other than by reason of this Agreement).

8. Transfer Restrictions on Options and Shares; First Offer Rights.

31
<PAGE> 32

owned by him, except to a Permitted Transferee or as required or permitted by
this Agreement, or (ii) any Options (or any interest therein) or any
certificate representing the same, now or hereafter at any time owned by him,
except to a Permitted Transferee or as required or permitted by this Agreement.
Any transfer of the Shares or Options in violation of this subsection (a) shall
be void ab initio.

(b) Voluntary Transfers of "Shares" by the Management Stockholder. If a
Management Stockholder desires to transfer any Shares to any third party (other
than to the Company, an Other Management Stockholder or a Permitted Transferee
or pursuant to Rule 144 or an effective registration statement under the Act)
(the "Outside Party"), the selling Management Stockholder (the "Offering
Stockholder") shall give a notice in writing (the "First Option Notice") to the
Company, setting forth such desire, the price and the number of Shares to be
transferred. Upon the giving of such First Option Notice, the Company shall
have the first option (but not the obligation) to purchase all or any portion
of such Shares specified in the First Option Notice at the price specified in
the First Option Notice by giving a written notice (the "First Election
Notice") to the Offering Stockholder and to all of the Other Management
Stockholders

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<PAGE> 33

within thirty (30) business days after the receipt of the First Option Notice.
The First Election Notice shall state the number of offered Shares, if any,
which the Company elects to purchase. The failure by the Company to deliver a
First Election Notice within thirty (30) days after the date of receipt of the
First Option Notice shall operate as a waiver of the Company's rights under
this Section 8(b).

If the Company fails to elect to purchase all of the Shares described in the
First Option Notice pursuant to the foregoing first option, the Offering
Stockholder shall, no later than five (5) days after the earlier of (i) receipt
of the Company's First Election Notices or (ii) the end of the 30-day period
for giving such notice, give written notice (a "Second Option Notice") to all
of Other Management Stockholders stating the number of Shares with respect to
which such first option was not exercised. The Other Management Stockholders
shall thereupon have the second option (but not the obligation) to purchase all
or any portion of the remaining offered Shares described in the Second Option
Notice. Such second option shall be exercisable for a period of ten (10) days
from the date of receipt of the Second Option Notice. At any time during such
10-day period, an Other Management Stockholder may elect, by written notice to
the Offering

33
<PAGE> 34

Stockholder (a "Second Election Notice"), to purchase all or any portion of the
remaining offered Shares. Each Second Election Notice shall state the number
of shares of offered Shares, if any, which the Management Stockholder elects to
purchase. If the aggregate number of Shares which the Other Management
Stockholders elect to purchase exceeds the number of offered Shares specified
in the Second Option Notice, then, the number of Shares purchasable pursuant to
such second option shall be apportioned among the Other Management Stockholders
in proportion to their respective Pro Rata Percentages. The failure of an
Other Management Stockholder to exercise such second option within such 10-day
period shall operate as a waiver of such Other Management Stockholder's rights
under Section 8(b).

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<PAGE> 35

event the Offering Stockholder has not transferred such Shares to an
Outside Party within such three (3) month period, then such Shares
thereafter shall continue to be subject to all of the restrictions
contained in this Agreement as though no option notices had ever been
given; and provided, further, that a Management Stockholder may not deliver
more than three (3) such option notices in any calendar year.

If a Management Stockholder or the Company elects to purchase such Shares,
it shall be obligated to purchase, and the Offering Stockholder shall be
obligated to sell, such Shares. The closing of such purchase and sale shall be
held at the principal executive offices of the Company at such time as may be
mutually acceptable to the Offering Stockholder, the Company and each
participating Other Management Stockholder.

(c) No Waiver. No failure to exercise any rights under this Section 8
shall constitute a waiver of any Person's rights to receive an option notice
with respect to any subsequent proposed transfer to a third party.

(d) Involuntary Transfers of Options and Shares. Following any Involuntary
Transfer of Options or Shares, the Company and the Other Management
Stockholders shall have the same rights under Section 8(b) with respect to such
Options and Shares

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<PAGE> 36

(collectively, the "Transferred Shares") as if the Involuntary Transfer had
been a proposed transfer described in Section 8(a), except that:

(i) the periods within which such rights must be exercised shall run from
the date notice of the Involuntary Transfer is received from the Offering
Stockholder; and

(ii) such rights shall be exercised by notice to the involuntary
transferee rather than to the Offering Stockholder.

In the case of an unexercised Option exercisable for Vested Shares, the
Management Stockholders and the Company shall have the right to purchase from
the involuntary transferee (on the same terms and conditions as described in
Section 8(b) as to Shares) the unexercised Option at a price equal Spread;
provided, however, in the event such Options are exercisable for Unvested
Shares, then the Company and the Other Management Stockholders shall have the
right to purchase from the involuntary transferee the unexercised Option for
zero dollars ($0.00).

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<PAGE> 37

claims, options, charges, encumbrances of rights of others arising through the
action or inaction of the involuntary transferee (other than those arising
hereunder) and the involuntary transferee shall so represent and warrant, and
further represent and warrant that he is the beneficial owner of such Options
or Shares. The Other Management Stockholders or the Company shall deliver at
closing, by a certified or cashier's bank check, payment in full for such
Options or Shares. At such closing, all of the parties to the transaction
shall execute such additional documents as are otherwise reasonably necessary
or appropriate.

In the event that the provision of this Section 8(d) shall be held to be
unenforceable with respect to any particular Involuntary Transfer of Options or
Shares or if the Company and the Other Management Stockholders do not exercise
their rights to purchase the Options or Shares, then (a) the Company and the
Other Management Stockholders shall have a right of first offer as set forth in
Section (b) above if the involuntary transferee subsequently desires to
transfer such Options or Shares, (b) the Shares and the Shares issuable
pursuant to Options shall vest in accordance with the original vesting
schedule, and (c) all of the terms and conditions of this Agreement shall apply
to the invol-

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<PAGE> 38

untary transferee who shall agree in writing to be bound hereby as a condition
to transfer.

9. Tag-Along Rights of the Management Stockholder. If Ivex Holdings,
Acadia, Electra and/or any of their Affiliates propose to sell or exchange any
of the shares of Common Stock owned by it (a "Restricted Sale") at any time to
any non-Affiliate (a "Third Party Transferee"), the Management Stockholders
shall have the right to participate in such transfer to the Third Party
Transferee, in accordance with the procedures set forth below.

(a) Tag-Along Notice. If Ivex Holdings, Acadia, Electra and/or any of their
Affiliates propose to a make a Restricted Sale, Ivex Holdings shall deliver a
written notice to the Company and the Management Stockholders stating that Ivex
Holdings, Acadia, Electra and/or their Affiliates proposes to effect a
Restricted Sale, the name and address of the Third Party Transferee, the terms
and conditions of the Restricted Sale, including the number of shares of Common
Stock then owned by Ivex Holdings, Acadia, Electra and/or their Affiliates and
the purchase price per share, together with a copy of all writings, if any,
between Ivex Holdings, Acadia, Electra and/or their Affiliates and the Third
party Transferee necessary to establish the terms of the Restricted Sale (the
"Tag-Along Notice").

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<PAGE> 39

(b) Election to Participate. Each Management Stockholder shall have a
period of twenty (20) days after delivery by Ivex Holdings of the Tag-Along
Notice within which to deliver written notice (the "Election Notice") to Ivex
Holdings of his election to sell to the Third Party Transferee a number of
Shares up to the product of (x) the number of shares proposed to be sold to the
Third Party Transferee, and (y) the Management Stockholder's Pro Rata
Percentage. If the Management Stockholder fails to respond to Ivex Holdings
within such twenty (20) day period, such failure shall be regarded as an
election by the Management Stockholder not to participate in such sale. By
delivering the Election Notice to Ivex Holdings within the twenty (20) day
notice period, the Management Stockholder shall be obligated to sell to the
Third Party Transferee that number of Shares resulting from the formula set
forth above upon the terms and conditions contained in the Tag-Along Notice,
and the number of shares of Common Stock to be sold by Ivex Holdings, Acadia,
Electra and/or their Affiliates shall be reduced accordingly, provided,
however, that if the terms of the Restricted Sale as set forth in the Tag-Along
Notice shall have been altered subsequent to delivery of the Election Notice by
the Management Stockholder, Ivex Holdings shall deliver a revised Tag-Along
Notice (the

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<PAGE> 40

"Revised Tag-along Notice") to the Management Stockholders. If the
Management Stockholder fails to deliver a new Election Notice (the "New
Election Notice") to Ivex Holdings within ten (10) days of the delivery by Ivex
Holdings of the Revised Tag-Along Notice, such failure shall be regarded as an
election by the Management Stockholder to no longer participate in such sale.
By delivering the New Election Notice to Ivex Holdings within such ten (10) day
period, the Management Stockholder shall be obligated to sell to the Third
Party Transferee that number of Shares resulting from the formula set forth
above upon the terms and conditions contained in the Revised Tag-Along Notice,
and the number of shares of Common Stock to be sold by Ivex Holdings, Acadia,
Electra and/or their Affiliates shall be reduced accordingly. The Management
Stockholder shall be obligated pursuant to this Section 9(b) to sell to the
Third Party Transferee (i) first, Vested Shares held by the Management
Stockholder and (ii) next, Unvested Shares held by the Management Stockholder.
In the case of unexercised Options, a Management Stockholder shall,
concurrently with the closing of the Restricted Sale, exercise such Options and
participate in the sale.

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<PAGE> 41

the Shares as contemplated in Paragraph 9 hereof within sixty (60) days of the
date of written notice described hereinabove, then such Shares shall continue
subject to the terms herein as if no Tag-Along Notice had been delivered, and
the Management Stockholder shall continue to have all of his Tag-Along Rights
as provided in Paragraph 9 hereof.

10. Drag-Along Right. If Ivex Holdings, Acadia, Electra and/or any of their
Affiliates propose to make a bona fide sale of shares of Common Stock that in
the aggregate would result in the transfer of more than a majority of the
outstanding Common Stock to a non-Affiliate, the Company shall have the right,
exercisable upon thirty (30) days prior written notice, to require the
Management Stockholder (including any Permitted Transferee of the Management
Stockholder) to participate in such sale on the same terms of such third party
sale for a number of Shares equal to (x) the number of shares proposed to be
sold to the non-Affiliate and (y) the Management Stockholder's Pro Rata
Percentage; provided, that if Ivex Holdings, Acadia, Electra and/or any of
their Affiliates propose to transfer less than all of its Common Stock, in
determining whether Ivex Holdings, Acadia, Electra and/or such Affiliates are
proposing to transfer more than a majority of the outstanding Common Stock, the
Common

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<PAGE> 42

Stock to be transferred by the Management Stockholders shall be included;
provided, further, however, that the Company shall not be entitled to exercise
this right unless the Board determines in good faith that the Management
Stockholders will receive cash and/or securities equal to the fair market value
of their Shares as of the date of such sale. In the event Ivex Holdings,
Acadia, Electra and/or their Affiliates do not sell or exchange all the Shares
as contemplated in Paragraph 10 hereof within sixty (60) days of the date of
written notice described hereinabove, then the Shares of the Management
Stockholder shall continue to be subject to the terms herein as if no
Drag-Along Rights had been exercised, and the Management Stockholder shall
continue to have all of his Tag-Along Right as provided in Paragraph 9 hereof.
In the case of an unexercised Option, the Management Stockholder shall,
concurrently with the closing of the sale to the non-Affiliate, exercise the
Option and participate in the sale.

11. Issuances of Common Stock by the Company.

In the event the Company proposes to issue any shares of Common Stock, or
any security or obligation which is, by its terms, convertible into shares of
Common Stock or any warrant, option or other subscription or purchase right
with respect to shares of Common stock ("Common Stock Equivalents") other than

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<PAGE> 43

(i) in connection with public offerings of shares of Common Stock registered
under the Act, or (ii) in connection with any such issuance for Fair Market
Value as determined by the Board in good faith, each Management Stockholder
shall have the right to purchase his Pro Rata Percentage of such Common
Stock or Common Stock Equivalents ("Offered Securities") at the proposed
issuance price (including, but not limited to, participating in all related
aspects of the proposed transaction), which right shall be exercisable by
written notice to the Company (a "Purchaser Notice") given within thirty (30)
days after receipt by the Management Stockholder from the Company of written
notice of such proposed issuance. To the extent that any such Common Stock or
Common Stock Equivalents are issued in combination with any form of
indebtedness, the Management Stockholder shall have the right to purchase his
Pro Rata Percentage of such Common Stock or Common Stock Equivalents only if
the Management Stockholder shall also purchase his Pro Rata Percentage of the
related form of indebtedness. The failure of the Management Stockholder to
exercise such right within the thirty (30) day period shall be regarded as a
waiver of his right to participate in the purchase of the Offered Securities.
After such thirty (30) day period or upon receipt of the Purchaser Notices, the
Company may issue all

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<PAGE> 44

(but not less than all) of such securities, including the shares of Common
Stock purchased by the Management Stockholder, if any, at the price specified
by the Company in its notice to the Management Stockholder; provided, that such
issuance is bona fide and made within sixty (60) days after the date of such
notice. The closing of any purchase by the Management Stockholder under this
Section 11(a) shall be held at the principal office of the Company at 10:00
A.M. local time on the sixtieth (60th) day after the date on which the
Management Stockholder received notice of the proposed issuance, or at such
other time and place as the Company and the Stockholders may agree upon. At
such closing, the Management Stockholder participating in the purchase shall
deliver, by certified or official bank check, payment in full for such shares
of Offered Securities and all parties to the transaction shall execute such
documents as are otherwise appropriate.

12. Conversion Rights.

(a) Management Stockholders' Conversion Rights. Concurrently with (i) an
IPO or a Change in Control (other than a Change of Control of the Company
pursuant to which Ivex Holdings has given notice to exercise its Drag-Along
Rights under Section 10 hereof), or (ii) a "Restricted Sale" (as defined in
Section 9 of Ivex Packaging Corporation's Amended and Restated Stock Option

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<PAGE> 45

and Purchase Agreement attached hereto as Exhibit C (the "Holdings
Agreement")) by Acadia, Electra and/or their Affiliates of all or a portion of
their Holdings Common Stock (the transactions described in clauses (i) and (ii)
are hereinafter collectively referred to as a "Management Conversion
Transaction"), the Management Stockholders may elect to exchange all (but not
less than all) of their unexercised Options for (x) that number of shares of
Holdings Common Stock (the "New Holdings Shares") that are fully Vested and
Earned and that have a fair market value equal to the fair market value, as
reasonably determined by the Board in good faith, of the unexercised Options
being exchanged, and (y) newly issued options of Ivex Holdings (the "New
Holdings Options")that are fully Vested and Earned and that are exercisable (in
whole or in part on or prior to the tenth anniversary of the issue date
thereof) into the number of shares of Holdings Common Stock that is equal to
(subject to the proviso set forth below) four percent (4.0%) of the fully
diluted shares of Holdings Common Stock subsequent to the completion of the
Conversion Transaction, at an exercise price equal to the fair market value (as
reasonably determined by the Board in good faith) of the per share price of the
Holdings Common Stock implicit in the Conversion Transaction (the determination
of the number of New Holdings

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<PAGE> 46

Shares, the number of New Holdings Options and the exercise price of the New
Holdings Options are hereinafter collectively called the "Conversion"),
provided, however, that in connection with a Conversion Transaction that is not
an IPO, the Management Stockholders will be entitled to receive that number of
New Holdings Options equal to the product of (x) 4.0% of the fully diluted
shares of Holdings Common Stock subsequent to the completion of the Conversion
Transaction and (y) a fraction, the numerator of which is equal to (w) the
number of New Holdings Shares initially received by the Management Stockholders
in the Conversion Transaction minus (z) the number of New Holdings Shares sold
or otherwise disposed of for cash consideration equal to their fair market
value by the Management Stockholders in connection with the Conversion
Transaction, and the denominator of which is equal to the aggregate number of
New Holdings Shares initially received by the Management Stockholders in the
Conversion Transaction. An example of a Conversion is attached hereto as
Exhibit B. Upon the Management Stockholders' written request, the Company
shall obtain (at the Company's expense) and deliver to the Management
Stockholders an opinion of a nationally recognized investment bank that
confirms (x) that the fair market value of all of the New Holdings Shares to be
received by the Management Stockholders

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<PAGE> 47

equals the fair market value of all of the unexercised Options being
exchanged and (y) that the exercise price of the New Holdings Options
equals the fair market value of the per share price of the Holdings Common
Stock implicit in the Conversion Transaction. The Company, Acadia and Electra
agree not to consummate the Management Conversion Transaction until the
Holdings Agreement has been executed and the opinion (if any) has been
delivered to the Management Stockholders.

Any such election pursuant to this Section 12(a) shall be in writing (the
"Conversion Notice") and shall, as well as (1) any request for an investment
banking opinion, (2) any revocation of the Conversion Notice, and (3) any
election to deliver or revoke a Put Notice (as hereinafter defined), be
approved by the Management Stockholders holding at least a majority (by number)
of the Options.

In the event that the Management Stockholders elect to convert pursuant to
Section 12(a)(i) or (ii) above and either the Board or the investment bank
described above determines that Ivex Holdings cannot issue New Holdings Shares
to the Management Stockholders with a fair market value equal to the value of
the Options being converted, then either the Management Stockholders can (1)
revoke their Conversion Notice and continue to hold their

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<PAGE> 48

Options, or (2) upon delivery of written notice to the Company (the "Put
Notice"), put all or any portion of their Options to the Company in exchange
for (x) an amount of cash equal to their fair market value and (y) the New
Holdings Options. The closing of any purchase of Options by the Company from
the Management Stockholders pursuant to any Put Notice shall be held at the
principal office of the Company at 10:00 a.m. local time on the sixtieth (60th)
day after the date on which the Company received such Put Notice or at such
other time and place as the Company and the Management Stockholders may agree
upon.

In the event that the Management Stockholders elect to convert pursuant to
Section 12(a)(i) or (ii) above and either the Board or the investment bank
described above determines that Ivex Holdings would have to issue shares of
Holdings Common Stock equal to more than 49% of the fully diluted outstanding
shares of Holdings Common Stock subsequent to the completion of the Conversion
Transaction in order to provide the Management Stockholders with fair market
value equal to the fair market value of the Options being converted, then the
Company, in its sole discretion, may promptly deliver written notice to the
Management Stockholders permitting the Management Stockholders to convert their
Options, or if such written notice is not promptly deliv-

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<PAGE> 49

ered, the Management Stockholders can either (1) revoke their Conversion
Notice and continue to hold their Options, or (2) upon delivery of a Put Notice
to the Company, put all or any portion of their Options to the Company in
exchange for (x) an amount of cash equal to their fair market value and (y) the
New Holdings Options.

(b) The Company's Conversion Rights.

Upon (i) the occurrence of an IPO or a Change in Control, (ii) a sale of
Holdings Common Stock pursuant to Section 10 of the Holdings Agreement, or
(iii) a Management Stockholder's exercise of all or a portion of the Options
hereunder (other than an exercise in connection with a transaction under
Section 9 or 10 hereof) provided that upon the date of such exercise the
Company is prevented from issuing shares of Common Stock under the terms of the
Credit Agreement, the Senior Debentures, the Subordinated Notes or any other
such similar document or agreement (the transactions described in clauses (i),
(ii) and (iii) are hereinafter collectively referred to as a "Company
Conversion Transaction", and together with a Management Conversion Transaction,
a "Conversion Transaction"), then in any such case, the Company may require the
Management Stockholders to exchange all or any portion of their unexercised
Options for the New Holdings

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<PAGE> 50

Shares and the New Holdings Options, as described in Section 12(a) above. Any
such election pursuant to this Section 12(b) shall be in writing (the "Company
Conversion Notice") and shall be promptly delivered to the MS Committee.

In the event that the Company elects to convert pursuant to Section
12(b)(i), (ii) or (iii) above, and either the Board or the investment bank
described above determines that Ivex Holdings cannot issue New Holdings Shares
to the Management Stockholders with a fair market value equal to the value of
the Options being converted, then the Company Conversion Notice shall be
automatically canceled, the Management Stockholders shall continue to hold
their Options, and the transaction contemplated by Section 12(b) above shall
not be closed.

In the event that the Company elects to convert pursuant to Section
12(b)(i), (ii) or (iii) above, and either the Board or the investment bank
described above determines that Ivex Holdings would have to issue New Holdings
Shares equal to more than 49% of the fully diluted outstanding shares of
Holdings Common Stock subsequent to the completion of the Conversion
Transaction in order to provide the Management Stockholders with fair market
value equal to the fair market value of the Options being converted, then (1)
the Company can revoke the Company Conversion

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<PAGE> 51

Notice and the Management Stockholders shall continue to hold their Options, or
(2) the Company, in its sole discretion, may allow the Management Stockholders
to convert as described in Section 12(a).

(c) Each Management Stockholder's pro-rata percentage of the total number
of unexercised Options existing immediately prior to the delivery of the
Conversion Notice or a Company Conversion Notice shall be converted into an
identical percentage of New Holdings Shares and New Holdings Options.

As soon as possible after the delivery of the Conversion Notice to the
Company or the Company Conversion Notice to the MS Representative (unless
either are revoked as above described), Ivex Holdings shall deliver to (i) the
MS Committee, an officer's certificate certifying the aggregate number of New
Holdings Options and New Holdings Shares and the exercise price per share of
the New Holdings Options, all as reasonably determined in good faith by the
Board of Directors of Ivex Holdings in accordance the provisions of this
Section 12(a), and (ii) each Management Stockholder, a copy of a fully
completed Exhibit A to the Holdings Agreement evidencing such Management
Stockholders percentage ownership of the New Holdings Shares and New Holdings
Options issuable thereunder.

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<PAGE> 52

(d) Tax Indemnification Loan. (a) Tax Loan. The Company shall lend
each Management Stockholder an amount equal to the aggregate tax liability
incurred by the Management Stockholder upon the issuance to the Management
Stockholder of the New Holdings Shares. The principal amount of such loan (the
"Tax Loan"), together with accrued and unpaid interest thereon, shall be
payable in full upon the earlier to occur of (i) the termination of the
Management Stockholder's employment with the Company for any reason, but in no
event on or before the date the New Holdings Shares shall be registered under
the Act pursuant to a registration statement that has been declared effective,
and (ii) the tenth (10th) anniversary date of the Conversion. The Tax Loan
shall be evidenced by a promissory note and be non-recourse to the Management
Stockholder other than to the New Holdings Shares and the New Holdings Options
issued to the Management Stockholder and shall bear interest at the lowest
permissible per annum rate allowable without imputation of income under Section
7872 of the Internal Revenue Code, payable in arrears on each December 31,
commencing on the first December 31 occurring after the date of the Conversion
through maturity or earlier prepayment in full. The Tax Loan shall be
prepayable in whole or in part by the Management Stockholder without penalty
and shall be acceler-

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<PAGE> 53

ated by and to the extent of any cash proceeds (net of applicable federal,
state and local taxes) from sales (in whole or in part) by the Management
Stockholder, at any time or from time to time, of the New Holdings Shares.

(e) Interest/Tax Gross-Up. The Company shall pay the Management
Stockholder either, in the Company's discretion, cash compensation or a cash
bonus (collectively the "Interest Bonus") on or before the payment date of each
payment of interest by the Management Stockholder on the Tax Loan. The
Interest Bonus payable in connection with each interest payment on the Tax Loan
shall be in an amount equal to the sum of (i) the interest payment being made
by the Management Stockholder to the Company (the "Interest Component") plus
(ii) an amount (the "Gross-Up Amount") such that after payment by the
Management Stockholder of all federal, state and local income taxes on the
Interest Component and the Gross-Up Amount, the Management Stockholder retains
an amount of the Interest Bonus equal to the Interest Component.

13. Specific Performance. Due to the fact that the securi ties of the
Company and Ivex Holdings cannot be readily purchased or sold in the open
market, and for other reasons, the parties will be irreparably damaged in the
event that this Agreement is not specifically enforced. In the event of a
breach or threat-

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<PAGE> 54

ened breach of the terms, covenant and/or conditions of this Agreement by any
of the parties hereto, the other parties shall, in addition to all other
remedies, be entitled (without any bond or other security being required) to a
temporary and/or permanent injunction without showing any actual damage or that
monetary damages would not provide an adequate remedy, and/or a decree for
specific performance, in accordance with the provisions hereof.

14. Covenants and Representations to Survive Delivery Assignment. All
covenants, agreements, representations and warranties made herein shall survive
the delivery of the Shares and payment therefor.

15. Termination of Provisions of Agreement. All of the provisions contained
in Paragraphs 7, 8, 10 and 11 shall terminate immediately and be of no further
force and effect in the event of a Change of Control or an IPO. All of the
provisions contained in Paragraph 9 shall terminate immediately and be of no
further force and effect upon the later to occur of (x) a Change of control or
an IPO or (y) the first date (occurring after the acquisition by the partners
of Acadia of shares of the Common Stock or the Holdings Common Stock pursuant
to a distribution made in connection with the winding-up, liquidation or
dissolution of Acadia (an "Acadia Distribution")) on which none of the

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<PAGE> 55

partners of Acadia are a party to a written stockholders agreement or other
such similar written agreement that pertains to the voting or disposition of
the Common Stock or the Holdings Common Stock.

16. Miscellaneous.

(a) Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Delaware without
regard to principles of conflicts of law.

(b) Entire Agreement; Amendments. This writing constitutes the entire
agreement of the parties with respect to the subject matter hereof and may not
be modified or amended except by a written agreement signed by the Company and
a majority (by number) of the Management Stockholders; provided, however, that
no amendment or modification of this Agreement will, without the prior written
consent of the affected Management Stockholder, adversely alter, reduce, impair
or affect any such Management Stockholder except to the extent that such
amendment or modification similarly affects all the Management Stockholders.
Anything in this Agreement to the contrary notwithstanding, any modification or
amendment of this Agreement by a written agreement signed by, or binding upon,
the Management Stockholder shall be valid

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<PAGE> 56

and binding upon any and all persons or entities who may, at any time, have or
claim and rights under or pursuant to this Agreement (including all holders
hereunder) in respect of the Shares originally acquired by the Management
Stockholder.

(c) Waiver. No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature. Anything in
this Agreement to the contrary notwithstanding, any waiver, consent or other
instrument under or pursuant to this Agreement signed by, or binding upon, the
Management Stockholder shall be valid and binding upon any and all persons or
entities (other than the Company) who may, at any time, have or claim any
rights under or pursuant to this Agreement (including all holders hereunder) in
respect of the Shares originally acquired by the Management Stockholder.

(d) Assignments; Successors and Assigns. This Agreement, the Company's,
Ivex Holdings', Acadia's, Electra's and the Management Stockholder's rights and
obligations hereunder may not be assigned except as otherwise expressly
provided herein. Acadia's and Electra's rights and obligations hereunder may
not be assigned except to their respective partners pursuant to an Acadia
Distribution, provided, that no such transfer to a trans-

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<PAGE> 57

feree shall be deemed completed until such transferee shall have signed a
written counterpart to this Agreement. Except as otherwise expressly provided
herein, this Agreement shall be binding upon and inure to the benefit of the
Company and Ivex Holdings, their successors and permitted assigns, and the
Management Stockholder and his respective heirs, personal representatives,
successors and permitted assigns; provided, however, that (i) nothing contained
herein shall be construed as granting the Management Stockholder the right to
transfer any of his Shares or Options except in accordance with this Agreement,
and (ii) no party shall be deemed a Management Stockholder hereunder after he
ceases to own any Shares or Options.

(e) Severability. If any provision of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other severable provision of this Agreement, and this Agreement shall be
carried out as in any such invalid or unenforceable provision were not
contained herein.

(f) Headings. The section headings contained herein are for the purposes of
convenience only and are not intended to define or limit the contents of said
sections.

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<PAGE> 58

(g) Further Assurances. Each party here to shall cooperate and shall take
such further action and shall execute and deliver such further documents as may
be reasonably requested by any other party in order to carry out the provisions
and purposes of this Agreement.

(h) Gender. Whenever the pronouns "he" or "his" are used herein they shall
also be deemed to mean "she" or "hers" or it" or "its" whenever applicable.
Words in the singular shall be read and construed as though in the plural and
words in the plural shall be construed as though in the singular in all cases
where they would so apply.

(i) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute but one and same instrument.

(j) Notices. All notices or other communications provided for herein shall
be in writing and shall be deemed duly given and received on the third (3rd)
full business day following the day of the mailing thereof by registered or
certified mail, return receipt requested, or when delivered personally as
follows:

(i) if to the Company, at its principal executive offices at the time of
the giving of such notice, or at such other place as the Company shall
have designated by notice as herein provided to the Management
Stockholder; and

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<PAGE> 59

(ii) if to the Management Stockholder, at the address listed below his
signature, or at such other place as the Management stockholder shall have
designated by notice as herein provided to the Company.

(k) Management Stockholders' Committee. Each Management Stockholder
hereby appoints a committee (consisting of the Chief Executive Officer and the
Chief Financial Officer) to act as each Management Stockholder's
attorney-in-fact and representative (the "MS Committee") to allocate to the
Management Stockholders Options for any unallocated Performance Shares or to
reallocate any Performance Options or Performance Shares forfeited by a
Management Stockholder pursuant to the terms hereof. The MS Committee shall
act by unanimous written consent. In the event the MS Committee cannot be
formed in accordance with the terms hereof or cannot act as contemplated
hereby, the then existing Management Stockholders shall designate an
alternative committee or representatives. Each of the Management Stockholders
agrees that, effective upon the date of a demotion pursuant to which there is a
significant change in the Management Stockholder's duties and line of
authority, any Performance Shares allocated on Exhibit A hereto for the fiscal
years ending December 31, 1996 and 1997 but Unvested as of the date of such
demotion (that are subject to being Earned Sections 2(e)(i) and 2(e)(ii)
hereof) shall be, at the MS Committee's written direction, forfeited by

59
<PAGE> 60

such Management Stockholder and shall become unallocated Performance Shares
available for reallocation in accordance with this Section 16(k).

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Stock Purchase Agreement as of the date first above written.

IVEX PACKAGING CORPORATION (formerly named
IVEX HOLDINGS CORPORATION)

By:
---------------------------------------
Name: George V. Bayly
Title: President & CEO

IPC, INC. (formerly named
IVEX PACKAGING CORPORATION)

By:
---------------------------------------
Name: George V. Bayly
Title: President & CEO

MANAGEMENT STOCKHOLDERS:

------------------------------------------
Name: George V. Bayly
Title: President & Chief Executive Officer

Address: 544 Fletcher Court
Lake Forest, Illinois 60045

60
<PAGE> 61

------------------------------------------
Name: Thomas S. Ellsworth
Title: Vice President & General Manager
Paper Mill Division

Address: 1585 Woodcrest
Aurora, Illinois 60504

------------------------------------------
Name: Patrick J. Farrell
Title: Vice President

Address: 2970 Mendon Road
Unit 154
Cumberland, Rhode Island 02864

------------------------------------------
Name: Gene Gentili
Title: Vice President

Address: 845 Crabtree
Cary, Illinois 60013

------------------------------------------
Name: Roger A. Kurinsky
Title: Vice President

Address: One Condor Court
Hawthorne Woods, Illinois 60047

61
<PAGE> 62
------------------------------------------
Name: Jeremy S. Lawrence
Title: Vice President Human Resources

Address: 4310 Hideway Hollow
Racine, Wisconsin 53403

------------------------------------------
Name: G. Douglas Patterson
Title: Vice President & General Counsel

Address: 645 Buena Road
Lake Forest, Illinois 60045

------------------------------------------
Name: Frank V. Tannura
Title: Vice President & Chief Financial
Officer

Address: 16 Ridge Farm Road
Burr Ridge, Illinois 60521

------------------------------------------
Name: Eugene M. Whitacre
Title: Vice President
Polymerization & Extrusion Division

Address: 14 Grant Street
Sugarloaf, Pennsylvania 18249

------------------------------------------
Name: Donald C. Devine
Title: Vice President
Industrial Products

Address: 700 Sheffield Court
Lake Forest, Illinois 60045

62
<PAGE> 63

------------------------------------------
Name: Richard R. Cote
Title: Vice President and Treasurer

Address: 905 Jeremy Lane
Libertyville, Illinois 60048

63
<PAGE> 64

ACADIA PARTNERS, L.P.

By: Acadia FW Partners, L.P., its
General Partner

By: Acadia MGP, Inc., its Managing
General Partner

By:
---------------------------------------
Name:
Title: Vice President

ACADIA ELECTRA PARTNERS, L.P.

By: Acadia Partners, L.P., its
General Partner

By: Acadia FW Partners, L.P., its
General Partner

By: Acadia MGP, Inc., its Managing
General Partner

By:
---------------------------------------
Name:
Title: Vice President

64
<PAGE> 65
EXHIBIT C

IVEX PACKAGING CORPORATION
(formerly named IVEX HOLDINGS CORPORATION)
AMENDED AND RESTATED
STOCK OPTION AND PURCHASE AGREEMENT

This Amended and Restated Stock Option and Purchase Agreement (this
"Agreement") is entered into as of January 1, 1996, among Ivex Packaging
Corporation (formerly named Ivex Holdings Corporation), a Delaware corporation
("Ivex Holdings"), IPC, Inc. (formerly named Ivex Packaging Corporation), a
Delaware corporation and a wholly-owned subsidiary of Ivex Holdings (the
"Company"), Acadia Partners, L.P., a Delaware limited partnership ("Acadia"),
Acadia Electra Partners, L.P., a Delaware limited partnership ("Electra"), and
the holders of options for shares of common stock of the Company set forth in
Columns 1 and 2 on Exhibit A attached hereto (the "Management Stockholders",
which term shall include any Permitted Transferee thereof). Acadia and Electra
own substantially all of the issued and outstanding shares of Common Stock of
Ivex Holdings.
<PAGE> 66

RECITALS

WHEREAS, Ivex Holdings, the Company, Acadia, Electra and certain
employees of the Company, including certain of the Management Stockholders,
entered into the (x) Ivex Packaging Corporation Stock Option and Purchase
Agreement, dated as of January 1, 1993 (the "Original IPC Agreement"), pursuant
to which the Company granted to certain employees of the Company, including
certain of the Management Stockholders, certain options to purchase shares of
common stock of the Company (the "Original IPC Options") and (y) the Ivex
Holdings Corporation Stock Option and Purchase Agreement (the "Original IHC
Agreement"), dated as of January 1, 1993, relating to the grant of options
exercisable for shares of Common Stock of Ivex Holdings in exchange for the
Original IPC Options upon a conversion under the Original IPC Agreement;

WHEREAS, effective January 1, 1996, the Original IPC Agreement was
amended and restated (as so amended and restated, the "IPC Agreement") to,
among other things, grant to certain of the Management Stockholders certain
additional options to purchase shares of common stock of the Company (the
"Performance Options" and together with the Original IPC Options, collectively,
the "IPC Options");

2
<PAGE> 67

WHEREAS, the parties to the Original IHC Agreement desire to amend and
restate the Original IHC Agreement, upon the terms and conditions set forth
herein, to provide for, among other things, the grant of shares of Common Stock
of Ivex Holdings and the grant of options exercisable for shares of Common
Stock of Ivex Holdings in exchange for the IPC Options upon a Conversion under
the IPC Agreement;

WHEREAS, certain of the Management Stockholders currently hold shares
of Earned (as hereinafter defined) and Vested (as hereinafter defined) common
stock of Ivex Holdings as set forth in Column 3 on Exhibit A attached hereto;
and

NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

1.(a) Amendment and Restatement. The parties hereto agree that as of
January 1, 1996, the Original IHC Agreement shall be

3
<PAGE> 68

amended and restated as set forth herein (as so amended and restated, the
"Agreement").

(b) Definitions.

The following terms shall have the following definitions for
the purposes of this Agreement:

"Act" means the Securities Act of 1933, as amended, or any similar
federal statute, and the rules and regulations of the Commission thereunder,
all as the same shall at that time be in effect.

"Board" means the Board of Directors of the Company.

4
<PAGE> 69

"Closing" means the closing of the purchase and sale of the Option
Shares hereunder.

"Closing Date" means the date of the Closing.

"Closing Price" for any day means the last sale price of the Common
Stock on such day, regular way, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day, regular way, in either
case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Common Stock is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal National
Securities Exchange on which the Common Stock is listed or admitted to trading
or, if the Common Stock is not listed or admitted to trading on any National
Securities Exchange, the last quoted price on such day or, if not so quoted,
the average of the high bid and low asked prices on such day in the
over-the-counter market, as reported to the National Association of Securities
Dealers, Inc. Automated Quotation System or such other system then in use, or
if not reported by such organization, the average of the closing bid and asked
prices on such day as furnished by a professional

5
<PAGE> 70

market maker making a market in the Common Stock selected by the Board, or if
no market maker is making a market in the Common Stock, the fair market value
per share of Common Stock as reasonably determined in good faith by the Board.

"Commission" means the Securities and Exchange Commission.

"Common Stock" means Ivex Holdings' common stock, par value $.01 per
share, as constituted on the date hereof, any stock into which such common
stock shall have been changed or any stock resulting from any reclassification
of such common stock, and all other stock of any class or classes (however
designated) of Ivex Holdings the holders of which have the right, without
limitation as to amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of dividends and
distributions of any shares entitled to preference.

"Company Common Stock" means the Company's common stock, par value
$.01 per share, as constituted on the date hereof, any stock into which such
common stock shall have been changed or any stock resulting from any
reclassification of such common stock, and all other stock of any class or
classes (however designated) of the Company the holders of which have the
right, without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the

6
<PAGE> 71

payment of dividends and distributions of any shares entitled to preference.

"Conversion" means the date that the IPC Options are exchanged for the
New Holdings Shares and the New Holdings Options as contemplated by Section 12
of the IPC Agreement.

"Credit Agreement" means the Credit Agreement, dated as of December 7,
1995, among the Company and certain of its Affiliates, NationsBank, N.A., as
agent, and the lenders identified therein, as the same may be amended,
supplemented, extended, renewed, restated, increased or otherwise modified from
time to time, together with all refinancings, refundings and replacements.

"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at that time.

"Earned" shall have the meaning set forth in Section 2(d) hereof.

"Fair Market Value" of Common Stock as of a particular date means the
average value of the Common Stock for the ten (10) business day period
immediately preceding such date. Such

7
<PAGE> 72

average value shall be the average of the daily Closing Prices of the Common
Stock for each of such ten (10) days.

"GAAP" means the generally accepted accounting principles in the
United States of America which are applicable on the date hereof.

"Involuntary Transfer" means any transfer, proceeding or action (other
than to a Permitted Transferee or to a legal representative of the Management
Stockholder upon or occasioned by the death or incompetence of the Management
Stockholder) by or in which the Management Stockholder shall be deprived or
divested of any right, title or interest in or to any Shares, including,
without limitation, any seizure under levy of attachment or execution, any
foreclosure upon a pledge of such Shares, any transfer in connection with
bankruptcy (whether pursuant to the filing of a voluntary or an involuntary
petition under Title 11 of the United States Code or any modifications or
revisions thereto) or other court proceeding to a debtor in possession, trustee
in bankruptcy or receiver or other officer or agency, any transfer to a state
or to a public officer or agency pursuant to any statute pertaining to escheat
or abandoned property, any transfer pursuant to a divorce or separation
agreement or a final decree of a court in a divorce action. The Management
Stock-

8
<PAGE> 73

holder shall promptly notify Ivex Holdings of the occurrence of an Involuntary
Transfer.

"IPO" means the effectiveness of a registration statement for the
first underwritten public offering of the Common Stock or the Company Common
Stock but only if there are sales, exchanges or other distributions pursuant to
such registration statement of shares of the Common Stock or the Company Common
Stock representing at least (i) 10% of the outstanding shares after giving
effect to such sales, exchanges or other distributions, or (ii) shares having
an aggregate offering price of at least fifty million dollars ($50,000,000.00).

"IPC Agreement" means the Amended and Restated Stock Option and
Purchase Agreement, dated as of January 1, 1996 among Ivex Holdings, the
Company, Acadia, Electra and the Management Stockholders (to which this
Agreement is attached as Exhibit B).

"MS Committee" has the meaning specified in Section 16(k).

"New Holdings Options" and "Options" shall have the meaning set forth
in Section 2(b).

"New Holdings Shares" has the meaning specified in Section 2(a).

"Original Issuance Price" means the price at which the Option Shares
are issued, as adjusted for stock splits, stock

9
<PAGE> 74

dividends, recapitalization and reclassification with respect to the Common
Stock.

"Option Shares" shall have the meaning set forth in Section 2(b).

"Outstanding Shares" has the meaning set forth in the definition of
"Shares".

"Permanent Disability" means a disability that entitles the Management
Stockholder to benefits under either Title II of the Federal Social Security
Act or the Company's long-term disability plan, as then in effect (provided
that such disability is not due to a self-inflicted injury or disease,
including, without limitation, drug abuse or alcoholism).

"Permitted Transferee" means the spouse, any lineal ancestor or
descendent, any brother or sister or any personal representative, estate or
executor under the will of the Management Stockholder or any partnership or
trust established solely for the benefit of any of the forgoing and whose terms
are not inconsistent with the terms of this Agreement, provided in each such
case that the Permitted Transferee shall agree in writing to be bound by the
terms of this Agreement.

10
<PAGE> 75

"Person" means an individual, partnership, corporation, trust or
unincorporated organization or a government or a political subdivision thereof.

"Pro Rata Percentage" means a fraction, the numerator of which is the
number of Shares owned by a Management Stockholder whether as the result of
exercising the Options or otherwise plus all Options held by such Management
Stockholder on the date of the Election Notice (as defined in Section 9(b)) or
the Drag-Along Notice (as defined in Section 10), and the denominator of which
is the aggregate number of shares of Common Stock owned by the Acadia, Electra,
their Affiliates and any co-investment partnerships of Acadia plus the Shares
owned and Options held by all of the Management Stockholders.

"Restricted Securities" means any Common Stock bearing the legend set
forth in Section 6.

"Senior Debentures" means the 13 1/4% Senior Discount Debentures due
2005 of Ivex Holdings, as the same may be amended, supplemented, extended,
renewed, restated, increased, or otherwise modified from time to time, together
with all refinancings, refundings and replacements.

"Shares" means (i) the issued and outstanding shares of Common Stock
currently owned by the Management Stockholders as

11
<PAGE> 76

described in Column 3 on Exhibit A hereto (the "Outstanding Shares"), (ii) the
shares of Common Stock issued to the Management Stockholder from Ivex Holdings
pursuant to Section 2(a) of this Agreement, as described in Column 4 on Exhibit
A hereto (the "New Holdings Shares"), and (iii) the Option Shares issuable to
the Management Stockholder from the Corporation pursuant to Section 2(b) of
this Agreement upon the exercise by the Management Stockholder of the New
Holdings Options, as described in Column 5 on Exhibit A hereto, and all shares
of capital stock or other securities of Ivex Holdings or any successor issued
or issuable as a result of any stock dividend on, or stock split or
reclassification or conversion of, or in exchange for, any such Common Stock,
or issued or issuable with respect to such Common Stock in connection with any
merger or reorganization or similar transaction involving Ivex Holdings.

"Subordinated Notes" means the 12 1/2% Senior Subordinated Notes due
2002 of the Company, as the same may be amended, supplemented, extended,
renewed, restated, increased, or otherwise modified from time to time, together
with all refinancings, refundings and replacements.

12
<PAGE> 77

2. Grant of New Holdings Shares and Grant of New Holdings Options.

(a) Ivex Holdings hereby agrees to irrevocably issue to each
Management Stockholder the number of shares of Common Stock of Ivex Holdings
resulting from a Conversion Transaction under Section 12 of the IPC Agreement
(an example of a Conversion Transaction is attached as Exhibit B to the IPC
Agreement), and concurrently with the closing of the Conversion Transaction,
contemplated by Section 12 of the IPC Agreement, insert next to each Management
Stockholder's name on Column 4 on Exhibit A hereto (collectively, the "New
Holdings Shares") the appropriate number of shares of Common Stock of Ivex
Holdings resulting from the Conversion Transaction.

(b) Ivex Holdings hereby agrees to irrevocably grant to each
Management Stockholder the right and option (hereinafter called the "New
Holdings Options" or the "Options") to purchase on the terms and conditions
hereinafter set forth the number of shares of Common Stock of Ivex Holdings
(collectively "Option Shares") resulting from a Conversion Transaction under
Section 12 of the IPC Agreement (an example of a Conversion Transaction is
attached as Exhibit B to the IPC Agreement), and concurrently with the closing
of the Conversion Transaction contemplated by Section 12

13
<PAGE> 78

of the IPC Agreement, insert opposite each of their respective names in Column
5 on Exhibit A hereto the appropriate number of options exercisable for shares
of Common Stock of Ivex Holdings resulting from the Conversion Transaction.
Except as provided herein, the Options shall be exercisable at any time, in
whole or in part, prior to the tenth (10th) anniversary date of the Conversion
upon ten (10) days written notice to Ivex Holdings by the Management
Stockholder with a closing to take place at the end of such ten (10) day notice
period (the "Closing") (such number of Shares being subject to adjustment as
provided in Paragraph 2(c) hereof). At the Closing, Ivex Holdings will deliver
certificates for the Option Shares purchased hereunder to the Management
Stockholder at its offices at 100 Tri-State Drive, Suite 200, Lincolnshire,
Illinois 60069 against payment of the per Share exercise amount calculated in
accordance with Section 12 of the IPC Agreement (that shall, concurrently with
the closing of the Conversion contemplated by Section 12 of the IPC Agreement,
be set forth in Column 6 on Exhibit A hereto) to Ivex Holdings therefor in
immediately available funds or certified or cashier's check. Ivex Holdings
will bear all expenses in connection with the preparation, issuance and
delivery of such Shares and the certificates therefor (except that Ivex
Holdings shall

14
<PAGE> 79

not be responsible for any legal expenses incurred by the Management
Stockholders unless expressly approved by Ivex Holdings).

(c) If the Options are exercised after any increase or decrease in the
outstanding shares of Common Stock, or a change of said outstanding shares of
Common Stock into, or an exchange of said outstanding shares or other
securities of Ivex Holdings or of another corporation, by reason of
reorganization, merger, consolidation, recapitalization, reclassification,
debt-for-equity exchange, stock split, combination of shares, or dividend
payable in capital stock occurring after the date hereof, as a result of which
shares of any class shall be issued in respect of said outstanding shares of
Common Stock, the board of directors of Ivex Holdings shall make an equitable
and appropriate adjustment in the number and kind of shares to be received, to
the end that the proportionate interest of the Management Stockholder shall be
maintained as before the occurrence of any such event; such adjustment in the
unexercised portion of the Options shall be made without change in the
aggregate exercise price applicable to the unexercised portion of the Options
and with a corresponding adjustment in the exercise price per share.

(d) The Outstanding Shares, the New Holdings Shares, the New Holdings
Options and the Option Shares are fully and completely

15
<PAGE> 80

earned and vested and are not subject to cancellation, forfeiture, termination
or modification in any manner whatsoever, except, with respect to the New
Holdings Options and the Option Shares, for the equitable and appropriate
adjustments set forth in Section 2(c) hereof.

(e) Concurrently with the closing of the Conversion, Ivex Holdings
shall deliver to each Management Stockholder an amended and fully completed
Exhibit A accurately setting forth all of the information required to be set
forth therein as a result of the Conversion Transaction. The Principal
Stockholder hereby appoints Ivex Holdings as its attorney-in-fact to complete
Exhibit A and deliver a copy of such Exhibit to each Management Stockholder.

3. Representations and Warranties of Ivex Holdings. Ivex Holdings
represents and warrants to the Management Stockholders as follows:

(a) Organization and Corporate Authority. Ivex Holdings is duly
organized and validly existing as a corporation in good standing under the laws
of the State of Delaware and has full corporate power and authority to engage
in the business and activities to be conducted by it, and to enter into and
consummate the transactions contemplated by this Agreement. This

16
<PAGE> 81

Agreement has been authorized by all necessary corporate action on the part of
Ivex Holdings, has been duly executed and delivered by Ivex Holdings and
constitutes the legal, valid and binding obligation of Ivex Holdings.

(b) Capitalization. The authorized capitalization of Ivex Holdings
consists solely of Two Million (2,000,000) shares of Common Stock of which One
Million Seventy-Two Thousand Two Hundred Forty-Six and No/100 (1,072,246)
shares of Common Stock are issued, outstanding and One Million One Hundred
Fifty Thousand (1,150,000) shares of preferred stock none of which are issued
and outstanding. Upon payment for the Option Shares issuable upon exercise of
the New Holdings Options, such Option Shares will be duly authorized, validly
issued, fully paid and nonassessable and upon the issuance of the New Holdings
Shares and the Outstanding Shares such shares will be duly authorized, validly
issued, fully paid and non-assessable. Other than pursuant to this Agreement,
there are no:

(i) options, warrants or other rights with respect to the Capital
Stock;

(ii) securities convertible into or exchangeable for shares of Capital
Stock; or

(iii) other commitments of any kind for the issuance of additional
shares of Capital Stock or options, warrants or other securities of
Ivex Holdings.

17
<PAGE> 82

(c) Documents Delivered. The Management Stockholders have been
provided with or been provided access to all information concerning Ivex
Holdings and the offering of the shares of Common Stock that has been provided
to any "accredited investor" (as that term is defined in Rule 501 of Regulation
D promulgated under the Act).

4. Representations and Warranties of the Management Stockholders.
Each Management Stockholder hereby severally (but not jointly) represents and
warrants to Ivex Holdings as follows:

(a) Continuing Relationship with Ivex Holdings. The Management
Stockholder:

(i) is in charge of a principal business unit, division or function
of, or performs policy making functions with respect to, Ivex Holdings
or one of its Affiliates;

(ii) holds the position with Ivex Holdings or one of its Affiliates
set forth on the signature page to this Agreement; and

(iii) has been, and continues to be, intimately involved in the
operations of Ivex Holdings or one its Affiliates and has had, and
continues to have, access to detailed information with respects to the
business, financial condition, results of the operations and prospects
of Ivex Holdings or one of its Affiliates.

(b) Review of Documents. The Management Stockholder

(i) has received and carefully reviewed a copy of this Agreement;

18
<PAGE> 83

(ii) has been given the opportunity to obtain any additional
information or documents from, and to ask questions and receive
answers of, the officers and representatives of Ivex Holdings and the
Company to the extent necessary to evaluate the merits and risks (both
economic and legal) related to his investment in Ivex Holdings;

(iii) as a result of his relationship with Ivex Holdings or one of its
Affiliates, study of the aforementioned documents and prior overall
experience in financial matters, is properly able to evaluate the
capital structure of Ivex Holdings (with particular reference to its
high degree of leverage), the business of Ivex Holdings and the
Company and the risks inherent therein; and

(iv) can afford to bear the economic risk of holding unregistered
stock and to suffer a complete loss of his investment in such stock.

(c) Purchase for Investment. The Management Stockholder understands
that the Shares to be purchased pursuant hereto have not been registered under
the Act and represents and warrants to Ivex Holdings that:

(i) all Shares purchased or otherwise acquired by the Management
Stockholder pursuant hereto are being acquired for his own account for
investment and not with a view to distribution; and

(ii) he will not sell or otherwise dispose of any such Shares except
in compliance with the Act, the rules and regulations of the
Commission thereunder and the terms of this Agreement.

By making payment for, or taking delivery of, any Shares pursuant
hereto the Management Stockholder shall be deemed to have reaffirmed the
representations and warranties contained in

19
<PAGE> 84

this paragraph (c) as of the date of such payment or delivery. The restriction
on transfer contained in this Section 4(c) shall be in addition to, and not by
way of limitation of, any other restrictions on transfer contained in any other
Section of this Agreement.

(d) Reliance. The Management Stockholder acknowledges that Ivex
Holdings is entering into this Agreement in reliance upon the representations
and warranties of the Management Stockholder contained herein.

(e) No Implied Right to Employment. Neither this Agreement nor any
provision hereof nor any action taken or omitted to be taken hereunder shall be
construed as creating or conferring upon the Management Stockholder any right
to remain in the employ of the Company or any of its Affiliates. The right of
the Company or one of its Affiliates to discipline or discharge an employee
shall not be affected in any manner by reason of such employee being a
"Management Stockholder" hereunder.

20
<PAGE> 85

Ivex Holdings describing the manner of such proposed disposition. Each
Management Stockholder further agrees that such proposed disposition will not
be effected until:

(a) Ivex Holdings has notified him that either:

(i) in the opinion of counsel reasonably acceptable to Ivex Holdings
no registration of such Shares under that Act is required in
connection with such proposed disposition; or

(ii) a registration statement under the Act covering such proposed
disposition has been filed by Ivex Holdings with the Commission and
has become effective under the Act; and

(b) Ivex Holdings has notified him that either:

(i) in the opinion of counsel reasonably acceptable to Ivex Holdings
no registration or qualification under the securities or "blue sky"
laws of any state is required in connection with such proposed
disposition; or

(ii) compliance with applicable state securities or "blue sky" laws
has been effected.

Ivex Holdings will pay for all expenses of counsel referred to above
and use its best efforts to respond to any such notice from the Management
Stockholder within fifteen (15) days of receipt.

In the case of any proposed disposition under this Section 5, Ivex
Holdings will use its best efforts to comply with any such applicable state
securities or "blue sky" laws, but shall in no event be required, in connection
therewith, to qualify to do

21
<PAGE> 86

business in any state where it is not then qualified to do business or to take
any action that would subject it to tax or to the general service of process in
any state where it is not then subject. The restrictions on transfer contained
in this Section 5 shall be in addition to, and not by way of limitation of, any
other restrictions on transfer contained in any other Section of this
Agreement.

"The securities represented by this certificate were issued in a
private placement, without registration under the Securities Act of 1933, as
amended (the "Securities Act"), and in reliance upon the holder's
representation that such securities were being acquired for investment and not
for sale. No sale, gift or transfer or other disposition of such securities or
of any interest therein shall be valid or effective unless effected in
compliance with the Securities Act and any applicable state securities or "blue
sky" laws and the restrictions on transfer set forth in an Amended and Restated
Stock Option and Purchase Agreement dated as of January 1, 1996, and any
amendments thereto, a copy of which is available for inspection at the offices
of Ivex Packaging Corporation (formerly named Ivex Holdings Corporation). The
Securities represented by this certificate are subject to the right of Ivex
Packaging Corporation (formerly named Ivex Holdings Corporation) to repurchase
such securities on the terms and conditions set forth in the Amended and
Restated Stock Option and Purchase Agreement. No transfer of such securities
will be made on the books of Ivex Packaging Corporation unless accompanied by
evidence of compli-

22
<PAGE> 87

ance with the terms of such Amended and Restated Stock Option and Purchase
Agreement."

Any stock certificate issued at any time in exchange or substitution
for any certificate bearing such legend (except a new certificate issued upon
the completion of a public distribution of securities of Ivex Holdings
represented thereby) shall also bear such legend, unless the restrictions
contained in Sections 5 and 8 (and in Section 7, if applicable) of this
Agreement are no longer in effect or, in the opinion of counsel, reasonably
acceptable to Ivex Holdings, the Shares represented thereby need no longer be
subject to restrictions contained in Sections 5 and 8 of this Agreement. The
provisions of Sections 5 and 8 of this Agreement shall be binding upon, and
shall inure to the benefit of, each Management Stockholder and all subsequent
holders of Shares who acquired the same directly or indirectly from a
Management Stockholder in a transaction or series of transactions not involving
any public offering and not involving a sale pursuant to Rule 144 under the
Act. Ivex Holdings agrees that it will not transfer on its books any
certificate for shares in violation of the provisions of this Agreement.

23
<PAGE> 88

7. Repurchase of Outstanding Shares from the Management Stockholders
Upon Termination of Employment.

(a) Sale Event. In the event of the termination of a Management
Stockholder's employment with the Company and its Affiliates for any reason,
including, without limitation, termination for cause or not for cause,
termination for good reason or not for good reason, retirement or Permanent
Disability (other than a termination arising out of an Involuntary Transfer)
(such termination being referred to herein as a "Sale Event"), but in each case
subject to subsection (d) below, Ivex Holdings shall have the option (but not
the obligation), exercisable by written notice (a "Holdings Purchase Notice")
delivered to the Management Stockholder (herein called the "Seller") and to all
the other Management Stockholders (collectively, the "Other Management
Stockholders"), at any time from and after the date of the Sale Event up to and
including the date thirty (30) days after the applicable Sale Event, to elect
to purchase any or all Outstanding Shares held by such Seller and his Permitted
Transferee which are designated in the Holdings Purchase Notice. Each Holdings
Purchase Notice shall state the number of Outstanding Shares, if any, that Ivex
Holdings elects to purchase.

24
<PAGE> 89

(b) Purchase Price for Outstanding Shares. The purchase price of any
Outstanding Shares pursuant to Section 7(a) shall be the Fair Market Value of
such Outstanding Shares as of the date of the Sale Event.

(c) Closing. Subject to subsection (e) below, the closing for all
purchases and sales of Outstanding Shares provided for in this Section 7 shall
be held at the principal executive offices of Ivex Holdings at 10:30 A.M.,
local time, as soon as practicable after the final determination of the Fair
Market Value. The final determination of Fair Market Value shall be made
within sixty (60) days of the applicable Sale Event of the Outstanding Shares
to be purchased. Notwithstanding the foregoing, if the Seller (or his
Permitted Transferee) is deceased on the closing date as aforesaid and such
deceased person's personal representative shall not have been appointed and
qualified by such date, then the closing shall be postponed until the tenth
(10th) day after the appointment and qualification of such personal
representative (or if such day is not a business day, then on the first
business day thereafter). The Seller of the Outstanding Shares sold pursuant
to this Section 7 shall cause such Outstanding Shares to be delivered to Ivex
Holdings at the aforesaid closing free and clear of all liens, claims, options,
charges,

25
<PAGE> 90

encumbrances or rights of others of any kind arising by, through or under such
Seller. The Seller hereby appoints Ivex Holdings as attorney- in-fact to
transfer such Outstanding Shares on the books of Ivex Holdings in the event of
a sale pursuant to this Section 7. Such Seller shall take all such actions as
Ivex Holdings shall reasonably request as necessary to vest in Ivex Holdings at
such Closing good and marketable title to such Outstanding Shares, free and
clear of all liens, charges and encumbrances arising by, through or under such
Seller.

(d) Outstanding Shares Not Repurchased. If Outstanding Shares subject
to this Section 7 are not repurchased by Ivex Holdings in accordance with this
Section 7, all such Outstanding Shares issuable pursuant to unexercised Options
shall thereafter continue to be subject to the provisions of this Agreement
(including without limitation, the rights set forth in Sections 8, 9, 10 and 11
hereof).

(e) Outstanding Shares Repurchased by Ivex Holdings. Ivex Holdings
agrees to sell to those Management Stockholders designated in writing by the MS
Representative any and all Outstanding Shares repurchased by Ivex Holdings from
a Seller or an Offering Stockholder (as defined in Section 8) pursuant to
Sections 7 or 8 of this Agreement at a purchase price equal to the purchase
price

26
<PAGE> 91

paid by Ivex Holdings to such Seller or Offering Stockholder. Such purchase
price shall be paid to Ivex Holdings in cash or by certified or cashiers' bank
check at a closing held at the principal executive offices of Ivex Holdings on
a date acceptable to Ivex Holdings, provided, that such date shall be on or
before the date of a Change of Control, an IPO, or a transaction pursuant to
Section 9 or 10. Ivex Holdings shall cause such Outstanding Shares to be
delivered to such Management Stockholder free and clear of all liens, claims,
options, charges, encumbrances or rights of others of any kind arising by,
through or under Ivex Holdings (other than by reason of this Agreement).

8. Transfer Restrictions on Options and Shares; First Offer Rights.

(a) Transfers of Options and Shares Void. Each Management Stockholder
agrees that he will not, directly or indirectly, sell, pledge, give, transfer,
assign or in any other way whatsoever encumber or dispose of (hereinafter
collectively called "transfer") any (i) Shares (or any interest therein) or any
stock certificate representing the same, now or hereafter at any time owned by
him, except to a Permitted Transferee or as required or permitted by this
Agreement, or (ii) any Options (or any interest therein) or any certificate
representing the same, now or hereaf-

27
<PAGE> 92

ter at any time owned by him, except to a Permitted Transferee or as required
or permitted by this Agreement. Any transfer of the Shares or Options in
violation of this subsection (a) shall be void ab initio.

(b) Voluntary Transfers of Shares by the Management Stockholder. If a
Management Stockholder desires to transfer any Shares to any third party (other
than to Ivex Holdings, an Other Management Stockholder or a Permitted
Transferee or pursuant to an effective registration statement under the Act
(the "Outside Party"), the selling Management Stockholder (the "Offering
Stockholder") shall give a notice in writing (the "First Option Notice") to the
Company, setting forth such desire, the price and the number of Shares to be
transferred. Upon the giving of such First Option Notice, the Company shall
have the first option (but not the obligation) to purchase all or any portion
of such Shares specified in the First Option Notice at the price specified in
the First Option Notice by giving a written notice (the "First Election
Notice") to the Offering Stockholder and all of the Other Management
Stockholders within thirty (30) business days after the receipt of the First
Option Notice. The First Election Notice shall state the number of offered
Shares, if any, which the Company elects to purchase. The failure by the
Company to

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<PAGE> 93

deliver a First Election Notice within thirty (30) days after the date of
receipt of the First Option Notice shall operate as a waiver of the Company's
rights under this Section 8(b).

If the Company fails to elect to purchase all of the Shares described
in the First Option Notice pursuant to the foregoing first option, the Offering
Stockholder shall, no later than five (5) days after the earlier of (i) receipt
of the Company's First Election Notices or (ii) the end of the 30-day period
for giving such notice, give written notice (a "Second Option Notice") to all
of the Other Management Stockholders stating the number of Shares with respect
to which such first option was not exercised. The Other Management
Stockholders shall thereupon have the second option (but not the obligation) to
purchase all or any portion of the remaining offered Shares described in the
Second Option Notice. Such second option shall be exercisable for a period of
ten (10) days from the date of receipt of the Second Option Notice. At any
time during such 10-day period, an Other Management Stockholder may elect, by
written notice to the Offering Stockholder (a "Second Election Notice"), to
purchase all or any portion of the remaining offered Shares. Each Second
Election Notice shall state the number of shares of offered Shares, if any,
which an Other Management Stockholder elects to purchase.

29
<PAGE> 94

If the aggregate number of Shares which the Other Management Stockholders elect
to purchase exceeds the number of offered Shares specified in the First Option
Notice, then, the number of Shares purchasable pursuant to such first option
shall be apportioned among the Other Management Stockholders in proportion to
their respective Pro Rata Percentages. The failure of an Other Management
Stockholder to exercise such second option within such 10-day period shall
operate as a waiver of such Other Management Stockholder's rights under Section
8(b).

If all of the notices required to be given by the Offering Stockholder
under this Section shall have been duly given, and if all of the offered
Shares shall not have been purchased by Ivex Holdings and the Other Management
Stockholders pursuant to the foregoing options, then the Offering Stockholder,
at any time within a period of three (3) months from the giving of the Second
Option Notice, may transfer all of the Shares specified in the First Option
Notice to an Outside Party at the price (or a higher price) specified in such
notice; provided, however, that in the event the Offering Stockholder has not
transferred such Shares to an Outside Party within such three (3) month period,
then such Shares thereafter shall continue to be subject to all of the
restrictions contained in this Agreement as though no option

30
<PAGE> 95

notices had ever been given; and provided, further, that a Management
Stockholder may not deliver more than three (3) such option notices in any
calendar year.

If a Management Stockholder or Ivex Holdings elects to purchase such
Shares, it shall be obligated to purchase, and the Offering Stockholder shall
be obligated to sell, such Shares. The closing of such purchase and sale shall
be held at the principal executive offices of Ivex Holdings at such time as may
be mutually acceptable to the Offering Stockholder, Ivex Holdings and each
participating Other Management Stockholder.

(c) No Waiver. No failure to exercise any rights under this Section
8 shall constitute a waiver of any Person's rights to receive an option notice
with respect to any subsequent proposed transfer to a third party.

(d) Involuntary Transfers of Options and Shares. Following any
Involuntary Transfer of Options or Shares, Ivex Holdings and the Other
Management Stockholders shall have the same rights under Section 8(b) with
respect to such Options and Shares (collectively, the "Transferred Options or
Shares") as if the Involuntary Transfer had been a proposed transfer described
in Section 8(a), except that:

31
<PAGE> 96

(i) the periods within which such rights must be exercised shall run
from the date notice of the Involuntary Transfer is received from the
Offering Stockholder; and

(ii) such rights shall be exercised by notice to the involuntary
transferee rather than to the Offering Stockholder.

In the case of an unexercised Option, Ivex Holdings and the Management
Stockholders shall have the right to purchase from the involuntary transferee
(on the same terms and conditions as described in Section 8(b) as to Shares)
the unexercised Option at a price equal Spread.

At the closing of any purchase under this Section 8(d) the involuntary
transferee shall deliver certificates representing the Transferred Options or
Shares being purchased by the Other Management Stockholders and/or Ivex
Holdings duly endorsed for transfer and accompanied by all requisite stock
transfer taxes, and such Transferred Options or Shares shall be free and clear
of any liens, claims, options, charges, encumbrances of rights of others
arising through the action or inaction of the involuntary transferee (other
than those arising hereunder) and the involuntary transferee shall so represent
and warrant, and further represent and warrant that he is the beneficial owner
of such Transferred Options or Shares. The Other Management Stockholders or
Ivex Holdings shall deliver at closing, by a certified or

32
<PAGE> 97

cashier's bank check, payment in full for such Transferred Options or Shares.
At such closing, all of the parties to the transaction shall execute such
additional documents as are otherwise reasonably necessary or appropriate.

In the event that the provision of this Section 8(d) shall be held to
be unenforceable with respect to any particular Involuntary Transfer of Options
or Shares or if the Other Management Stockholders and Ivex Holdings do not
exercise their rights to purchase the Options or Shares, then (a) the Other
Management Stockholders and Ivex Holdings shall have a right of first offer as
set forth in Section (b) above if the involuntary transferee subsequently
desires to transfer such Options or Shares, and (b) all of the terms and
conditions of this Agreement shall apply to the involuntary transferee who
shall agree in writing to be bound hereby as a condition to transfer.

9. Tag-Along Rights of the Management Stockholder. If Acadia,
Electra and/or any of their Affiliates propose to sell or exchange any of the
shares of Common Stock owned by it (a "Restricted Sale") at any time to any
non-Affiliate (a "Third Party Transferee"), the Management Stockholders shall
have the right to participate in such transfer to the Third Party Transferee,
in accordance with the procedures set forth below.

33
<PAGE> 98

(a) Tag-Along Notice. If Acadia, Electra and/or any of their
Affiliates propose to a make a Restricted Sale, Acadia shall deliver a written
notice to Ivex Holdings and the Management Stockholders stating that Acadia,
Electra and/or their Affiliates propose to effect a Restricted Sale, the name
and address of the Third Party Transferee, the terms and conditions of the
Restricted Sale, including the number of shares of Common Stock then owned by
Acadia, Electra and/or their Affiliates and the purchase price per share,
together with a copy of all writings, if any, between Acadia, Electra and/or
their Affiliates and the Third Party Transferee necessary to establish the
terms of the Restricted Sale (the "Tag-Along Notice").

(b) Election to Participate. Each Management Stockholder shall have a
period of twenty (20) days after delivery by Acadia of the Tag- Along Notice
within which to deliver written notice (the "Election Notice") to Ivex Holdings
of his election to sell to the Third Party Transferee a number of Shares up to
the product of (x) the number of shares proposed to be sold to the Third Party
Transferee, and (y) the Management Stockholder's Pro Rata Percentage. If the
Management Stockholder fails to respond to Ivex Holdings within such twenty
(20) day period, such failure shall be regarded as an election by the
Management Stockholder

34
<PAGE> 99

not to participate in such sale. By delivering the Election Notice to Ivex
Holdings within the twenty (20) day notice period, the Management Stockholder
shall be obligated to sell to the Third Party Transferee that number of Shares
resulting from the formula set forth above upon the terms and conditions
contained in the Tag-Along Notice, and the number of shares of Common Stock to
be sold by Acadia, Electra and/or their Affiliates shall be reduced
accordingly, provided, however, that if the terms of the Restricted Sale as set
forth in the Tag-Along Notice shall have been altered subsequent to delivery of
the Election Notice by the Management Stockholder, Acadia shall deliver a
revised Tag-Along Notice (the "Revised Tag-along Notice") to the Management
Stockholders. If the Management Stockholder fails to deliver a new Election
Notice (the "New Election Notice") to Ivex Holdings within ten (10) days of the
delivery by Acadia of the Revised Tag-Along Notice, such failure shall be
regarded as an election by the Management Stockholder to no longer participate
in such sale. By delivering the New Election Notice to Ivex Holdings within
such ten (10) day period, the Management Stockholder shall be obligated to sell
to the Third Party Transferee that number of Shares resulting from the formula
set forth above upon the terms and conditions contained in the Revised
Tag-Along Notice, and the

35
<PAGE> 100

number of shares of Common Stock to be sold by Acadia, Electra and/or their
Affiliates shall be reduced accordingly. In the case of unexercised Options, a
Management Stockholder shall concurrently with the closing of the Restricted
Sale exercise such Options and participate in the sale.

(c) Failure to Close. In the event Acadia, Electra and/or their
Affiliates do not sell or exchange any of the Shares as contemplated in
Paragraph 9 hereof within sixty (60) days of the date of written notice
described hereinabove, then such Shares shall continue subject to the terms
herein as if no Tag-Along Notice had been delivered, and the Management
Stockholder shall continue to have all of his Tag-Along Rights as provided in
Paragraph 9 hereof.

10. Drag-Along Right. If Acadia, Electra or any of their Affiliates
propose to make a bona fide sale of shares of Common Stock that in the
aggregate would result in the transfer of more than a majority of the
outstanding Common Stock to any non-Affiliate, Ivex Holdings shall have the
right, exercisable upon thirty (30) days prior written notice ("Drag-Along
Notice"), to require the Management Stockholder (including any Permitted
Transferee of the Management Stockholder) to participate in such sale on the
same terms of such third party sale for a number of

36
<PAGE> 101

Shares equal to (x) the number of shares proposed to be sold to the
non-Affiliate and (y) the Management Stockholder's Pro Rata Percentage;
provided, that if Acadia, Electra or any of their Affiliates propose to
transfer less than all of its Common Stock, in determining whether Acadia,
Electra and/or such Affiliates are proposing to transfer more than a majority
of the outstanding Common Stock, the Common Stock to be transferred by the
Management Stockholders shall be included; provided, further, however, that
Ivex Holdings shall not be entitled to exercise this right unless the board
determines in good faith that the Management Stockholders will receive cash
and/or securities equal to the fair market value of their Shares as of the date
of such sale. In the event Acadia, Electra and/or their Affiliates do not sell
or exchange all the Shares as contemplated in Paragraph 10 hereof within sixty
(60) days of the date of written notice described hereinabove, then the Shares
of the Management Stockholder shall continue to be subject to the terms herein
as if no Drag-Along Rights had been exercised, and the Management Stockholder
shall continue to have all of his Tag-Along Right as provided in Paragraph 9
hereof. In the case of an unexercised Option, the Management Stockholder
shall, concurrently with the sale to the non-Affiliate, exercise the Option and
participate in the sale.

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<PAGE> 102

11. Issuances of Common Stock by Ivex Holdings.

In the event Ivex Holdings proposes to issue any shares of Common
Stock, or any security or obligation which is, by its terms, convertible into
shares of Common Stock or any warrant, option or other subscription or purchase
right with respect to shares of Common stock ("Common Stock Equivalents") other
than (i) in connection with public offerings of shares of Common Stock
registered under the Act, or (ii) in connection with any such issuance for Fair
Market Value as determined by the board in good faith, each Management
Stockholder shall have the right to purchase his Pro Rata Percentage of such
Common Stock or Common Stock Equivalents ("Offered Securities") at the proposed
issuance price (including, but not limited to, participating in all related
aspects of the proposed transaction), which right shall be exercisable by
written notice to Ivex Holdings (the "Purchaser Notice") given within thirty
(30) days after receipt by the Management Stockholder from Ivex Holdings of
written notice of such proposed issuance. To the extent that any such Common
Stock or Common Stock Equivalents are issued in combination with any form of
indebtedness, the Management Stockholder shall have the right to purchase his
Pro Rata Percentage of such Common Stock or Common Stock Equivalents only if
the Management Stockholder shall

38
<PAGE> 103

also purchase his Pro Rata Percentage of the related form of indebtedness. The
failure of the Management Stockholder to exercise such right within the thirty
(30) day period shall be regarded as a waiver of his right to participate in
the purchase of the Offered Securities. After such thirty (30) day period or
upon receipt of the Purchaser Notice, Ivex Holdings may issue all (but not less
than all) of such securities, including the shares of Common Stock purchased by
the Management Stockholder, if any, at the price specified by Ivex Holdings in
its notice to the Management Stockholder; provided, that such issuance is bona
fide and made within sixty (60) days after the date of such notice. The
closing of any purchase by the Management Stockholder under this Section 11(a)
shall be held at the principal office of Ivex Holdings at 10:00 A.M. local time
on the sixtieth (60th) day after the date on which the Management Stockholder
received notice of the proposed issuance, or at such other time and place as
Ivex Holdings and the Stockholders may agree upon. At such closing, the
Management Stockholder participating in the purchase shall deliver, by
certified or official bank check, payment in full for such shares of Offered
Securities and all parties to the transaction shall execute such documents as
are otherwise appropriate.

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<PAGE> 104

12. Registration Rights of the Management Stockholders. Ivex
Holdings agrees to register the Management Stockholder's Shares of Common Stock
(to the extent such Shares have not been previously registered under the Act
pursuant to a registration statement on Form S-8 (or any successor form) that
has been declared effective) concurrently with Ivex Holdings' registration of
any shares of Common Stock for the Holders of the Registerable Securities under
the then effective Registration Rights Agreement (the "Registration Agreement")
between Ivex Holdings, Acadia Partners, L.P., Acadia Electra Partners, L.P. and
the other parties thereto (collectively, the "Holders of Registrable
Securities"). Such registration of the Management Stockholder's Shares shall
be on the same terms and conditions as are applicable to the Holders of
Registrable Securities under the Registration Agreement.

13. Tax Loan Indemnification Loan. (a) Tax Loan. Ivex Holdings
agrees to cause the Company to loan each Management Stockholder an amount equal
to the aggregate tax liability reasonably expected to be incurred by the
Management Stockholder upon the issuance to the Management Stockholder of the
New Holdings Shares. The principal amount of such loan (the "Tax Loan"),
together with accrued and unpaid interest thereon, shall

40
<PAGE> 105

be payable in full upon the earlier to occur of (i) the termination of the
Management Stockholder's employment with the Company for any reason (but in no
event on or before the date the New Holdings Shares shall be registered under
the Act pursuant to a registration statement that has been declared effective),
and (ii) the tenth (10th) anniversary date of the Conversion. The Tax Loan
shall be evidenced by a promissory note and be non-recourse to the Management
Stockholder other than to the New Holdings Shares and the New Holdings Options
issued to the Management Stockholder and shall bear interest at the lowest
permissible per annum rate allowable without imputation of income under Section
7872 of the Internal Revenue Code, payable in arrears on each December 31,
commencing on the first December 31 occurring after the Conversion, through
maturity or earlier prepayment in full. The Tax Loan shall be prepayable in
whole or in part by the Management Stockholder without penalty and shall be
accelerated by and to the extent of any cash proceeds (net of applicable
federal, state and local taxes) from sales (in whole or in part) by the
Management Stockholder, at any time or from time to time, of the New Holdings
Shares.

(b) Interest/Tax Gross-Up. Ivex Holdings agrees to cause the Company
to pay each Management Stockholder either, in the

41
<PAGE> 106

Company's discretion, cash compensation or a cash bonus (collectively the
"Interest Bonus") on or before the payment date of each payment of interest by
the Management Stockholder on the Tax Loan. The Interest Bonus payable in
connection with each interest payment on the Tax Loan shall be in an amount
equal to the sum of (i) the interest payment being made by the Management
Stockholder to the Company (the "Interest Component") plus (ii) an amount (the
"Gross-Up Amount") such that after payment by the Management Stockholder of all
federal, state and local income taxes on the Interest Component and the
Gross-Up Amount, the Management Stockholder retains an amount of the Interest
Bonus equal to the Interest Component.

14. Specific Performance. Due to the fact that the securities of the
Company and Ivex Holdings cannot be readily purchased or sold in the open
market, and for other reasons, the parties will be irreparably damaged in the
event that this Agreement is not specifically enforced. In the event of a
breach or threatened breach of the terms, covenant and/or conditions of this
Agreement by any of the parties hereto, the other parties shall, in addition to
all other remedies, be entitled (without any bond or other security being
required) to a temporary and/or permanent injunction without showing any actual
damage or that monetary

42
<PAGE> 107

damages would not provide an adequate remedy, and/or a decree for specific
performance, in accordance with the provisions hereof.

15. Covenants and Representations to Survive Delivery Assignment. All
covenants, agreements, representations and warranties made herein shall survive
the delivery of the Shares and payment therefor.

16. Termination of Provisions of Agreement. All of the provisions
contained in Paragraphs 7, 8, 10, 11 and 17(k) shall terminate immediately and
be of no further force and effect in the event of a Change of Control or an
IPO. All of the provisions contained in Paragraph 9 shall terminate
immediately and be of no further force and effect upon the later to occur of
(x) a Change of Control or an IPO or (y) the first date (occurring after the
acquisition by the partners of Acadia of shares of the Common Stock or the
Company Common Stock pursuant to a distribution made in connection with the
winding-up, liquidation or dissolution of Acadia (an "Acadia Distribution")) on
which none of the partners of Acadia are a party to a written stockholders
agreement or such similar written agreement pertaining to the voting or
disposition of the Common Stock or the Company Common Stock. Also, the
provisions of Paragraph 7 shall terminate

43
<PAGE> 108

immediately and be of no further force and effect upon a Conversion.

17. Miscellaneous.

(a) Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Delaware
without regard to principles of conflicts of law.

44
<PAGE> 109

ment (including all holders hereunder) in respect of the Shares originally
acquired by the Management Stockholder.

(c) Waiver. No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature. Anything in
this Agreement to the contrary notwithstanding, any waiver, consent or other
instrument under or pursuant to this Agreement signed by, or binding upon, the
Management Stockholder shall be valid and binding upon any and all persons or
entities (other than Ivex Holdings) who may, at any time, have or claim any
rights under or pursuant to this Agreement (including all holders hereunder) in
respect of the Shares originally acquired by the Management Stockholder.

(d) Assignments; Successors and Assigns. Ivex Holdings', Acadia's,
Electra's and the Management Stockholder's rights and obligations hereunder may
not be assigned except as otherwise expressly provided herein. Acadia's and
Electra's rights and obligations hereunder may not be assigned except to their
respective partners pursuant to an Acadia Distribution, provided, that no such
transfer to a transferee shall be deemed completed until the transferee shall
have signed a written counterpart to this Agreement. Except as otherwise
expressly provided herein, this

45
<PAGE> 110

Agreement shall be binding upon and inure to the benefit of the Company and
Ivex Holdings, their successors and permitted assigns, and the Management
Stockholder and his respective heirs, personal representatives, successors and
permitted assigns; provided, however, that (i) nothing contained herein shall
be construed as granting the Management Stockholder the right to transfer any
of his Options or Shares except in accordance with this Agreement, and (ii) no
party shall be deemed a Management Stockholder hereunder after he ceases to own
any Options or Shares.

(e) Severability. If any provision of this Agreement shall be invalid
or unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other severable provision of this Agreement, and this Agreement shall be
carried out as in any such invalid or unenforceable provision were not
contained herein.

(f) Headings. The section headings contained herein are for the
purposes of convenience only and are not intended to define or limit the
contents of said sections.

(g) Further Assurances. Each party here to shall cooperate and shall
take such further action and shall execute and deliver

46
<PAGE> 111

such further documents as may be reasonably requested by any other party in
order to carry out the provisions and purposes of this Agreement.

(h) Gender. Whenever the pronouns "he" or "his" are used herein they
shall also be deemed to mean "she" or "hers" or it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in the
plural and words in the plural shall be construed as though in the singular in
all cases where they would so apply.

(i) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute but one and same instrument.

(j) Notices. All notices or other communications provided for herein
shall be in writing and shall be deemed duly given and received on the third
(3rd) full business day following the day of the mailing thereof by registered
or certified mail, return receipt requested, or when delivered personally as
follows:

(i) if to Ivex Holdings, at its principal executive offices at the
time of the giving of such notice, or at such other place as Ivex
Holdings shall have designated by notice as herein provided to the
Management Stockholder; and

(ii) if to the Management Stockholder, at the address listed below his
signature, or at such other place as the Management stockholder shall
have designated by notice as herein provided to Ivex Holdings.

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<PAGE> 112

IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Stock Purchase Agreement as of the date first above written.

IVEX PACKAGING CORPORATION (formerly named
IVEX HOLDINGS CORPORATION)

By: _________________________________
Name: George V. Bayly
Title: President & CEO

48
<PAGE> 113

IPC, INC. (formerly named
IVEX PACKAGING CORPORATION)

By: _________________________________
Name: George V. Bayly
Title: President & CEO

MANAGEMENT STOCKHOLDERS:

______________________________________
Name: George V. Bayly
Title: President & Chief Executive Officer

Address: 544 Fletcher Court
Lake Forest, Illinois 60045

______________________________________
Name: Thomas S. Ellsworth
Title: Vice President & General Manager
Paper Mill Division

Address: 1585 Woodcrest
Aurora, Illinois 60504

______________________________________
Name: Patrick J. Farrell
Title: Vice President

Address: 2970 Mendon Road
Unit 154
Cumberland, Rhode Island 02864

49
<PAGE> 114

______________________________________
Name: Gene Gentili
Title: Vice President

Address: 845 Crabtree
Cary, Illinois 60013

______________________________________
Name: Roger A. Kurinsky
Title: Vice President

Address: One Condor Court
Hawthorne Woods, Illinois 60047

______________________________________
Name: Jeremy S. Lawrence
Title: Vice President Human Resources

Address: 4310 Hideaway Hollow
Racine, Wisconsin 53403

______________________________________
Name: G. Douglas Patterson
Title: Vice President & General Counsel

Address: 645 Buena Road
Lake Forest, Illinois 60045

50
<PAGE> 115

______________________________________
Name: Frank V. Tannura
Title: Vice President & Chief Financial Officer

Address: 16 Ridge Farm Road
Burr Ridge, Illinois 60521

______________________________________
Name: Eugene M. Whitacre
Title: Vice President
Polymerization & Extrusion Division

Address: 14 Grant Street
Sugarloaf, Pennsylvania 18249

______________________________________
Name: Donald C. Devine
Title: Vice President
Industrial Products

Address: 700 Sheffield Court
Lake Forest, Illinois 60045

______________________________________
Name: Richard R. Cote
Title: Vice President and Treasurer

Address: 905 Jeremy Lane
Libertyville, Illinois 60048

51
<PAGE> 116

ACADIA PARTNERS, L.P.

By: Acadia FW Partners, L.P., its
General Partner

By: Acadia MGP, Inc., its Managing
General Partner

By: _____________________________________
Name:
Title: Vice President

ACADIA ELECTRA PARTNERS, L.P.

By: Acadia Partners, L.P., its
General Partner

By: Acadia FW Partners, L.P., its
General Partner

By: Acadia MGP, Inc., its Managing
General Partner

By: _____________________________________
Name:
Title: Vice President

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT JUNE 30, 1996 (UNAUDITED) AND THE CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED) AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
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0
0
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</TABLE>