IVEX PACKAGING CORP /DE/, S-1, 1998-04-28

IVEX PACKAGING CORP /DE/
S-1, 1998-04-28
PLASTICS, FOIL & COATED PAPER BAGS

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<PAGE> 1

As Filed with the Securities and Exchange Commission on April 28, 1998.

Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
IVEX PACKAGING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------

<TABLE>
<S> <C> <C>
DELAWARE 2679 76-0171625
(State or other jurisdiction of (Primary Standard Industrial (IRS employer identification number)
incorporation or organization) Classification Code)
</TABLE>

100 TRI-STATE DRIVE, SUITE 200, LINCOLNSHIRE, ILLINOIS 60069
(847) 945-9100

(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

G. DOUGLAS PATTERSON, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
IVEX PACKAGING CORPORATION
100 TRI-STATE DRIVE, SUITE 200
LINCOLNSHIRE, ILLINOIS 60069
TELEPHONE NO.: (847) 945-9100

(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------

WITH COPIES TO:

<TABLE>
<S> <C>
WILLIAM R. KUNKEL, ESQ. PAUL W. THEISS, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS) MAYER, BROWN & PLATT
333 W. WACKER DRIVE 190 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60606 CHICAGO, ILLINOIS 60603
TELEPHONE NO.: (312) 407-0700 TELEPHONE NO.: (312) 782-0600
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement has become effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
=========================================================================================================================
PROPOSED MAXIMUM PROPOSED
TITLE OF SECURITIES TO NUMBER OF SHARES OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
BE REGISTERED TO BE REGISTERED PER SHARE OFFERING PRICE(1)(2) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$0.01 per share....... 6,118,000 $25 11/16 $157,156,125 $46,362
=========================================================================================================================
</TABLE>

(1) Includes options granted to the Underwriters by Ivex Packaging Corporation
to cover over-allotments, if any.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933, as amended.
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus: one to be
used in connection with an offering in the United States and Canada (the "U.S.
Prospectus") and one to be used in a concurrent international offering outside
the United States and Canada (the "International Prospectus"). The complete U.S.
Prospectus follows immediately. Following the U.S. Prospectus are certain pages
of the International Prospectus, which include an alternate front cover page, an
alternate underwriting section and an alternate back cover page. All other pages
of the U.S. Prospectus and the International Prospectus are identical.
<PAGE> 3

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE OR JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE OR JURISDICTION.

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED APRIL 28, 1998
PROSPECTUS

5,320,000 SHARES

IVEX LOGO

IVEX PACKAGING CORPORATION
COMMON STOCK
------------------------

Of the 5,320,000 shares of Common Stock, $.01 par value (the "Common
Stock"), of Ivex Packaging Corporation, a Delaware corporation (the "Company" or
"Ivex"), being offered hereby, 500,000 shares are being offered by the Company
and 4,820,000 shares are being offered by certain selling stockholders of the
Company (the "Selling Stockholders"). The Company will not receive any of the
proceeds from the sale of shares of Common Stock by the Selling Stockholders.
See "Principal and Selling Stockholders."

Of the 5,320,000 shares of Common Stock offered hereby, 4,256,000 shares are
being offered initially in the United States and Canada by the U.S. Underwriters
(the "U.S. Offering"), and 1,064,000 shares are being offered initially in a
concurrent international offering outside the United States and Canada by the
International Managers (the "International Offering") (the U.S. Offering, and
together with the International Offering, the "Offerings"). The public offering
price and the underwriting discount per share are identical for each of the
Offerings. See "Underwriting."

The Common Stock is listed on the New York Stock Exchange (the "NYSE") under
the symbol "IXX." On April 27, 1998, the last reported sale price of the Common
Stock on the NYSE was $25 11/16 per share. See "Price Range of Common Stock."

SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
=============================================================================================================================
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
Per Share............ $ $ $ $
- -----------------------------------------------------------------------------------------------------------------------------
Total(3)............. $ $ $ $
=============================================================================================================================
</TABLE>

(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including certain
liabilities under the Securities Act of 1933, as amended. See
"Underwriting."

(2) Before deducting expenses of the Offerings payable by the Company estimated
at $620,000.

(3) The Company has granted to the U.S. Underwriters and the International
Managers options to purchase up to an additional 638,400 shares and 159,600
shares of Common Stock, respectively, in each case exercisable within 30
days of the date hereof, solely to cover over-allotments, if any. If such
options are exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."
------------------------

The shares of Common Stock are being offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to the approval of certain legal matters by counsel for the Underwriters and to
certain other conditions. The Underwriters reserve the right to withdraw, cancel
or modify such offer and to reject orders in whole or in part. It is expected
that delivery of the shares of Common Stock will be made in New York, New York,
on or about , 1998.
------------------------

MERRILL LYNCH & CO.
BT ALEX. BROWN
LEHMAN BROTHERS
SALOMON SMITH BARNEY
------------------------
The date of this Prospectus is April , 1998.
<PAGE> 4

The following photographs depict applications of the Company's plastic and paper
packaging products. The Company is not the exclusive provider of packaging
products to the companies whose name-branded products appear below.

[photo of man]

Medical Packaging
[photo of woman]

Supermarket Deli Containers

[photo of food]

Home Meal Replacement Packaging
[photo of car]

Surface Protection

CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE STABILIZING, THE PURCHASE OF COMMON STOCK TO COVER
SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE> 5

PROSPECTUS SUMMARY

This summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements and
notes thereto appearing elsewhere in this Prospectus. Except where the context
otherwise requires, all references in this Prospectus to the "Company" or "Ivex"
are to Ivex Packaging Corporation and its direct and indirect wholly owned
subsidiaries, and all references to "IPC" are to IPC, Inc. and its direct and
indirect wholly owned subsidiaries. IPC is the only direct subsidiary of Ivex
and is wholly owned. All share and per share data in this Prospectus assume no
exercise of the Underwriters' over-allotment options. See "Underwriting."
Special Note: Certain statements set forth below constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. See
"Special Note Regarding Forward-Looking Statements."

THE COMPANY

Ivex is a vertically integrated specialty packaging company that designs
and manufactures value-added plastic and paper-based flexible packaging
products. The Company believes that it is the leading provider of customized
packaging in specialty markets, ranking first or second in markets representing
approximately 65% of the Company's revenues. Ivex has increased sales and
profitability by focusing on niche markets that provide attractive margins and
growth and where the Company's integrated manufacturing capabilities enhance its
competitive position. Ivex serves a variety of markets, providing packaging for
food, medical devices and electronic goods and protective packaging for
industrial products.

Over the past several years, the Company has executed a comprehensive
growth strategy based upon (i) achieving internal growth through product
extensions and further penetration into higher growth markets and (ii) growth
through strategic acquisitions. The Company has completed eight acquisitions
since 1995. Since 1994, Adjusted EBITDA and Adjusted EBIT (as defined herein)
have increased at compound annualized growth rates of 17.8% and 23.9%,
respectively.

MARKETS

Consumer Packaging. The Consumer Packaging product group designs and
manufactures plastic and paper-based products for food packaging applications
and for applications in the medical and electronics industries. The Company
produces a broad array of items, including plastic containers for prepared
foods, produce and baked goods; specialty paper products such as fluted baking
cups and liners for cookies and other baked goods; microwaveable packaging
materials; and protective packaging for medical devices and electronics
products. The Consumer Packaging product group markets its products to a variety
of end users, including national wholesale bakeries, supermarket chains,
foodservice distributors, fast-food chains, major agricultural growers, medical
equipment suppliers and electronics manufacturers. The Company also manufactures
a variety of plastic sheet and film products from several different resins for
internal use and sales to third party converters. Ivex is the leading producer
of oriented polystyrene ("OPS") sheet in North America and, with its acquisition
of Ultra Pac, Inc. in April 1998, is a leading producer of polyethylene
terephthalate ("PET") food packaging in North America. The Consumer Packaging
product group represented approximately 59% of the Company's net sales and 62%
of the Company's Adjusted EBITDA during the 12 months ended March 31, 1998.

Industrial Packaging. The Industrial Packaging product group manufactures
and coats film, paper and foil products for protective packaging and specialty
papers. The Company produces products for some of the fastest growing
applications in the protective packaging industry, including film and paper
maskings and self-sealing coated packaging applications. These products are
marketed primarily to consumer durable goods manufacturers, automotive
companies, other industrial manufacturers and integrated paper producers. The
Company also manufactures a variety of recycled kraft paper made from
post-consumer and post-industrial fibers and specialty lightweight paper made
primarily from virgin pulp for internal use and sales to third party converters.
The Industrial Packaging product group represented approximately 41% of the
Company's net sales and 38% of the Company's Adjusted EBITDA during the 12
months ended March 31, 1998.

3
<PAGE> 6

BUSINESS STRATEGY

Ivex seeks to differentiate itself from other packaging providers by
offering customized packaging that addresses the specialized needs of its
customers. The Company's goal is to be the number one or number two provider of
customized packaging in its markets. Ivex believes it has a number of key
strengths that support its ability to implement this strategy:

Focus on Niche Markets. Ivex focuses primarily on markets with attractive
margin and growth characteristics. The Company's markets include the in-store
bakery, delicatessen and prepared food sections of supermarkets; foodservice
outlets; medical equipment and electronics goods manufacturers; and users of
industrial protective masking. The Company believes that these markets have been
among the fastest growing for packaging products over the past several years.
Each of these is characterized by few competitors, technological barriers to
entry, significant customer service requirements and attractive growth
potential.

Broad Product Range. Ivex manufactures a broad range of plastic and
paper-based stock and customized packaging products to provide a full service
approach to fulfilling its customers' packaging needs. Through its multi-resin
extrusion and thermoforming capabilities, Ivex is able to offer its customers a
variety of plastic packaging solutions. The Company believes its breadth of
product range and customization capabilities are competitive advantages that
allow it to be more responsive to, and provide a single supply source for, many
of its customers' packaging needs. Further, these capabilities enhance the
Company's ability to adapt to changing market preferences.

Flexible Design and Engineering. Ivex seeks to maximize opportunities
within niche markets by providing its customers with lower-cost product
development and shorter lead times than its competitors. The Company delivers
these benefits through research and development and technical expertise such as
computer-aided design and manufacturing and extensive in-house mold-making
capabilities.

Vertical Integration. Ivex pursues a vertically integrated operating
strategy in order to maximize product quality, minimize the influence of
external commodity price fluctuations and maintain its low-cost position. Within
Consumer Packaging, the Company operates two polymerization, eight extrusion and
thirteen thermoforming facilities. In 1997, the Company produced 37% of its
polystyrene needs and 100% of its OPS sheet needs internally, resulting in a
significant advantage over competitors that purchase these materials in the open
market. Within Industrial Packaging, the Company's polyethylene film and paper
facilities provide important source products and product development
capabilities for many of the Company's protective packaging products.

Proprietary Technology. Ivex's proprietary technology strengthens its
product quality, market position and growth prospects in existing markets as
well as new product and geographic markets. Examples of the Company's
proprietary technology used by Consumer Packaging include extensive extrusion
process technology, low residual monomer polymerization technology and the
capability to manufacture OPS film to a gauge of less than one-thousandth of an
inch. Because of its proprietary production technology, the Company's OPS is
recognized as having a high level of quality within the industry. Within
Industrial Packaging, the Company utilizes many customized adhesive and cohesive
formulations in its surface protection and self-sealing products which
strengthen its market position and product development capabilities.

Broad Distribution Network. The geographic breadth of Ivex's manufacturing
and distribution network, including 28 plants in North America and Europe and an
extensive network of sales representatives, is another significant advantage
over the Company's competitors, which are often smaller and regionally based.
Ivex's distribution network allows it to meet the broad geographic needs of its
larger customers from a single source, which is an advantage as customers seek
to reduce their number of suppliers. Extensive geographic coverage also reduces
transportation costs and contributes to the Company's cost competitiveness.

GROWTH STRATEGY

4
<PAGE> 7

compound annualized growth rates of 17.8% and 23.9%, respectively, and,
excluding such acquisitions, of 10.9% and 17.2%, respectively. The Company
believes it can continue growing sales and earnings through its growth strategy
as well as through utilizing excess cash flow to reduce debt and interest
expense.

Internal Growth. Ivex intends to utilize its business strategy and strong
market position to capitalize on a number of emerging industry trends. As
supermarkets, bakeries and foodservice distributors consolidate packaging
vendors to create efficiencies, the Company plans to use its broad product
offerings and distribution capabilities to capture market share through
increased sales to these customers. Consumer trends toward convenient,
ready-to-eat food products and the increased utilization of clear plastic
packaging for more appealing presentation within the delicatessen, bakery and
produce sections of supermarkets are resulting in increasing use of OPS sheet.
As the leading producer of OPS sheet in North America, Ivex believes that it
will experience increased production and sales of OPS sheet. In addition,
manufacturers are increasingly realizing the quality and cost/benefit advantage
of using protective packaging and masking to protect products from damage or
breakage during manufacturing, handling, storage and shipping. This trend
creates additional demand for the Company's protective masking products and
corrugated cushioning materials.

Acquisitions. Ivex has pursued a disciplined acquisition program of
"bolt-on" acquisitions that are easily integrated into the Company's operations
and that meet certain defined strategic and financial return criteria. Since
1995, Ivex has completed eight acquisitions that achieve a number of strategic
objectives:

- apply existing technology to new products and markets (the acquisitions
of Plastofilm Industries, Inc. and Crystal Thermoplastics, Inc. added
medical and electronics end markets);

- fill out or extend existing product lines and markets (the acquisition of
Trio Products, Inc. added multi-resin capabilities, the acquisition of
Packaging Products, Inc. expanded surface protection product offerings
and the acquisition of Ultra Pac, Inc. expanded the Company's presence in
PET packaging products);

- expand geographical presence (the acquisitions of M&R Plastics, Inc. and
AVPEX International in Canada and the European OPS business of Viskase
Limited extended operations outside the United States); and

- create rationalization opportunities (the integration of Plastofilm's
extrusion operation into Trio created a lower-cost operation).

As a market leader with a broad range of products and proven capabilities, the
Company believes that it is well positioned to continue to successfully apply
its acquisition and operating expertise to take advantage of consolidation
opportunities within the highly fragmented specialty packaging market.

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

The Company's principal executive offices are located at 100 Tri-State
Drive, Suite 200, Lincolnshire, Illinois 60069, and its telephone number is
(847) 945-9100.

ULTRA PAC ACQUISITION

On April 23, 1998, Ivex acquired all of the common stock of Ultra Pac, Inc.
("Ultra Pac"), a Rogers, Minnesota based specialty packaging company, for
approximately $67 million. Ultra Pac is a leading North American producer of PET
food packaging that designs and manufactures plastic containers and packaging
for the food industry, including supermarkets, distributors of food packaging,
wholesale bakeries, produce growers, delicatessens, food processors and
foodservice companies. Ultra Pac had net sales of approximately $56.7 million in
its fiscal year ended January 31, 1998.

The acquisition is a continuation of Ivex's "bolt-on" acquisition strategy
and represents the Company's eighth acquisition in the past three years. The
integration of the Ultra Pac business into Ivex will further expand Ivex's
leadership position in the specialty food packaging market. Because PET is
highly complementary to OPS, Ultra Pac will broaden Ivex's product offerings in
various thermoforming markets. This broader product offering should benefit
customers by providing more raw material alternatives and greater product

5
<PAGE> 8

selection, thereby enabling Ivex to achieve deeper market penetration. The
combination will also provide the opportunity for various cost structure
improvement synergies.

RISK FACTORS

Purchasers of Common Stock in the Offerings should carefully consider the
factors set forth under the caption "Risk Factors" and other information
included in this Prospectus prior to making an investment decision. In
particular, such factors include the Company's highly leveraged condition,
historical losses, the Company's dependence on subsidiary distributions,
volatility of raw material pricing, cyclical demand for certain of the Company's
products, highly competitive markets, risks associated with the Company's growth
strategy, environmental matters, limitation on use of net operating losses,
anti-takeover provisions, restrictions on the ability of the Company to pay
dividends, shares eligible for future sale and dilution and tangible net worth
deficiency. See "Risk Factors."

THE OFFERINGS

<TABLE>
<S> <C>
Common Stock offered by the Company.................. 500,000 shares(1)
Common Stock offered by the Selling
Stockholders....................................... 4,820,000 shares
Common Stock to be outstanding after the Offerings... 20,931,268 shares(1)(2)
Use of Proceeds...................................... To repay a portion of the borrowings under the
revolving credit portion of the Credit Facility
(as defined herein), including a portion of the
indebtedness which the Company incurred in
connection with its acquisition of Ultra Pac.
See "Description of Certain Indebtedness -- The
Credit Facility" and "Use of Proceeds."
NYSE Symbol.......................................... IXX
</TABLE>

- -------------------------
(1) Assumes no exercise of the over-allotment options granted by the Company to
the Underwriters.

(2) Excludes options exercisable for 812,461 shares of Common Stock issued under
the 1993 Stock Option Plan (as defined herein) and 2,000,000 shares of
Common Stock reserved for issuance under the 1997 Stock Incentive Plan (as
defined herein).

6
<PAGE> 9

SUMMARY SELECTED CONSOLIDATED FINANCIAL DATA

The following summary selected consolidated financial data presented below
for, and as of the end of, each of the years in the five year period ended
December 31, 1997, are derived from and should be read in conjunction with the
consolidated audited financial statements of the Company. The data as of and for
the three months ended March 31, 1997 and 1998 are derived from the consolidated
unaudited interim financial statements and include, in the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the data for such periods. The financial data of
Ivex reflect the following acquisitions as of the respective acquisition dates:
Packaging Products, Inc. ("PPI") as of September 11, 1995; Plastofilm
Industries, Inc. ("Plastofilm") as of August 16, 1996; Trio Products, Inc.
("Trio") as of September 11, 1996; the OPS business based in the United Kingdom
(the "European OPS Business") as of January 17, 1997; M&R Plastics Inc. ("M&R")
as of February 21, 1997; AVPEX International Corporation ("AVP") as of August 8,
1997; and Crystal Thermoplastics, Inc. ("Crystal") as of November 3, 1997. The
following summary selected financial data do not reflect the impact of any pro
forma adjustments for the transactions contemplated hereby.

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------------------------------------- --------------------
1993 1994 1995 1996 1997 1997 1998
--------- --------- --------- --------- -------- --------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales........................ $ 366,851 $ 390,975 $ 451,569 $ 451,807 $538,475 $ 127,864 $136,168
Gross profit..................... 72,213 74,271 85,160 100,383 119,660 26,370 31,497
Selling and administrative....... 39,274 41,662 42,567 47,462 58,924 14,419 15,824
Amortization of intangibles(1)... 4,372 1,140 1,904 621 1,111 171 316
Write-off of goodwill(1)......... 113,859 13,471
Acquisition related expense(2)... 1,100
Restructuring and special
charges(3)..................... 4,350 4,960 53,329
--------- --------- --------- --------- -------- --------- --------
Income (loss) from operations.... (90,742) 31,469 22,258 52,300 6,296 11,780 15,357
Interest expense................. 37,179 39,820 43,270 42,732 41,889 11,129 6,497
--------- --------- --------- --------- -------- --------- --------
Income (loss) before income taxes
and extraordinary item......... (127,921) (8,351) (21,012) 9,568 (35,593) 651 8,860
Income tax provision (benefit)... 1,177 942 1,113 900 (26,053) 327 3,545
--------- --------- --------- --------- -------- --------- --------
Income (loss) before
extraordinary item............. (129,098) (9,293) (22,125) 8,668 (9,540) 324 5,315
Extraordinary item(4)............ (2,359) (26,730)
--------- --------- --------- --------- -------- --------- --------
Net income (loss)................ $(129,098) $ (9,293) $ (24,484) $ 8,668 $(36,270) $ 324 $ 5,315
========= ========= ========= ========= ======== ========= ========
Earnings (loss) per share --
basic and diluted:
Income (loss) before
extraordinary item........... $ (12.63) $ (.90) $ (2.14) $ .84 $ (0.75) $ 0.03 $ 0.26
========= ========= ========= ========= ======== ========= ========
Net income (loss).............. $ (12.63) $ (.90) $ (2.37) $ .84 $ (2.85) $ 0.03 $ 0.26
========= ========= ========= ========= ======== ========= ========
OTHER OPERATING DATA:
Cash flow from (used by)
operating activities........... $ 22,157 $ 15,647 $ 22,746 $ 49,202 $ 36,475 $ (2,407) $ 3,657
Cash flow used by investing
activities..................... (8,261) (13,057) (29,871) (38,136) (68,191) (36,141) (6,953)
Cash flow from (used by)
financing activities........... (5,823) (6,102) 5,666 (13,074) 34,883 43,034 4,056
Adjusted EBIT(5)................. 28,567 31,469 41,828 52,300 59,625 11,780 15,357
Depreciation and
amortization(1)................ 137,837 22,189 35,871 22,724 27,179 6,224 7,220
Adjusted EBITDA(6)............... 52,545 53,658 63,089 75,024 86,804 18,004 22,577
Capital expenditures............. 9,528 16,769 19,385 17,633 25,364 5,479 6,652
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
-------------------------------------------------------- --------------------
1993 1994 1995 1996 1997 1997 1998
--------- --------- --------- --------- -------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital(7)............... $ 34,729 $ 32,853 $ 38,090 $ 32,539 $ 41,741 $ 50,607 $ 50,557
Total assets..................... 297,674 304,246 294,911 315,901 427,723 366,251 438,874
Long-term debt................... 330,201 330,768 353,717 352,893 319,055 398,988 325,201
Stockholders' deficit............ (101,579) (111,266) (136,332) (127,344) (12,169) (126,818) (8,274)
</TABLE>

7
<PAGE> 10

(1) Depreciation and amortization for the year ended December 31, 1995 includes
the accelerated non-cash write-off of goodwill of $13,471 and the
accelerated non-cash write-off of a non-compete agreement of $1,139.
Depreciation and amortization for the year ended December 31, 1993 includes
the accelerated non-cash write-off of goodwill totaling $113,859.

(2) Acquisition related expense totaling $1,100 was incurred during 1993 in
connection with an acquisition attempt.

(3) Operating results for the year ended December 31, 1997 include a
nonrecurring non-cash compensation charge of $53,329 in connection with the
Company's conversion, concurrently with the 1997 Common Stock Offering (as
defined herein) pursuant to the Amended and Restated Stock Option and
Purchase Agreement (the "1993 Stock Option Plan"), dated as of January 1,
1993, of certain key executives' stock options which were exercisable for
16,321 shares of IPC's common stock (the "IPC Options") into 2,114,133 newly
issued shares of Common Stock and newly issued stock options exercisable for
817,067 shares of Common Stock. The nonrecurring compensation charge
consists of (i) a non-cash compensation charge of $33,826 associated with
the conversion of the IPC Options into shares of Common Stock and (ii) a
non-cash compensation charge of $19,503 associated with the accrual of
future Company payments to senior management of an amount which (after
taxes) will enable such management to pay interest on the loans made to them
by the Company. Operating results for the year ended December 31, 1995
include the following special charges: $2,250 associated with IPC's special
incentive agreement with certain executive officers, $1,950 of costs related
to an attempted initial public equity offering and a reduction of land value
of $760 associated with a donation of certain land to the Village of Chagrin
Falls, Ohio. Operating results for the year ended December 31, 1993 include
restructuring and special charges of $4,350, reflecting a $1,500 non-cash
write-down of certain property held for sale and costs of $2,850 related to
the reorganization of the Consumer Packaging product group, which include,
among other things, severance, transition and relocation expenses.

(4) During 1997, the Company recorded an extraordinary loss of $26,730 (net of
tax of $15,035) associated with the refinancing of substantially all of its
debt. In connection with the 1995 refinancing of IPC's credit facility, the
Company wrote off deferred financing costs of $2,359.

(5) Adjusted EBIT for the year ended December 31, 1997 includes income from
operations adjusted to exclude a special charge of $53,329. Adjusted EBIT
includes income from operations adjusted to exclude goodwill write-offs of
$13,471 and $113,859 for the years ended December 31, 1995 and 1993,
respectively, and acquisition related expenses of $1,100, restructuring
charges of $2,850 and special charges of $1,500 for the year ended December
31, 1993. In addition, Adjusted EBIT for the year ended December 31, 1995
excludes the accelerated write-off of a non-compete agreement of $1,139 and
special charges of $4,960. Ivex believes that Adjusted EBIT provides
additional information for determining its ability to meet future debt
service requirements. However, Adjusted EBIT is not a defined term under
generally accepted accounting principles ("GAAP").

(6) Adjusted EBITDA includes income from operations adjusted to exclude
depreciation and amortization expenses, goodwill write-offs of $13,471 and
$113,859 for the years ended December 31, 1995 and 1993, respectively, and
acquisition related expenses of $1,100, restructuring charges of $2,850 and
special charges of $1,500 for the year ended December 31, 1993. In addition,
Adjusted EBITDA for the years ended December 31, 1997 and 1995 excludes
special charges of $53,329 and $4,960, respectively. Ivex believes that
Adjusted EBITDA provides additional information for determining its ability
to meet future debt service requirements. However, Adjusted EBITDA is not a
defined term under GAAP and is not indicative of operating income or cash
flow from operations as determined under GAAP.

(7) Working capital is determined to be the excess of current assets over
current liabilities (including the current portion of long-term debt).

8
<PAGE> 11

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Prospectus, including, without
limitation, statements containing the words "believes," "anticipates," "expects"
and words of similar import, constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "PSLRA").
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements
of the Company, or industry results, 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 following:
international, national and local general economic and market conditions;
demographic changes; the size and growth of the paper and plastic packaging
markets for both consumer and industrial uses; the ability of the Company to
sustain, manage or forecast its growth; the ability of the Company to
successfully make and integrate acquisitions; the size, timing and mix of
purchases of the Company's products; raw material costs and availability; new
product development and introduction; existing government regulations and
changes in, or the failure to comply with, government regulations; adverse
publicity; contingent liabilities and other claims asserted against the Company;
competition; the loss of significant customers or suppliers; fluctuations and
difficulty in forecasting operating results; changes in business strategy or
development plans; business disruptions; the ability to attract and retain
qualified personnel; the ability to protect technology; the use of proceeds from
the Offerings; and other factors referenced in this Prospectus. Certain of these
factors are discussed in more detail elsewhere in this Prospectus, including,
without limitation, under the captions "Risk Factors," "Use of Proceeds,"
"Capitalization," "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business." Given these uncertainties, prospective purchasers are cautioned not
to place undue reliance on such forward-looking statements. The Company
disclaims any obligation to update any such factors or to publicly announce the
result of any revisions to any of the forward-looking statements contained
herein to reflect future events or developments.

RISK FACTORS

Prospective purchasers should consider carefully the specific risk factors
set forth below before determining whether to purchase the shares of Common
Stock offered hereby.

LEVERAGE

Ivex is significantly leveraged. The Company's future operating performance
and ability to service or refinance its indebtedness will be subject to future
economic conditions and to financial, business and other factors, many of which
are beyond its control, and consequently the Company may be unable to service
all of its debt in the future. There can be no assurance that the Company's
future operating performance and the availability under the Credit Facility will
be sufficient to service such indebtedness or that the Company will be able to
refinance its indebtedness in whole or in part.

The Credit Facility contains covenants imposing certain operating and
financial restrictions. The covenants under the Credit Facility prohibit the
payment of dividends by the Company and limit, among other things, the
incurrence of additional indebtedness by the Company, IPC and IPC's
subsidiaries, the payment of dividends or other distributions by IPC and IPC's
subsidiaries, the redemption of capital stock of the Company, IPC and IPC's
subsidiaries or the making of other restricted payments, transactions with
affiliates, the use of proceeds from the disposal of assets, the incurrence of
liens, and the merger, consolidation or sale of all or any substantial part of
the assets of the Company, IPC and IPC's subsidiaries. In addition, the Credit
Facility requires the Company, IPC and IPC's subsidiaries, on a consolidated
basis, to maintain specified financial ratios and levels, including those
relating to interest coverage, fixed charge coverage, net worth and maximum
leverage. See "Description of Certain Indebtedness -- The Credit Facility." The
ability of the Company, IPC and IPC's subsidiaries to comply with the covenants
contained in the Credit Facility will depend on, among other things, IPC's
future performance, which will, in part, be subject to prevailing economic,
financial and business factors beyond IPC's control. The failure to comply with
such financial

9
<PAGE> 12

provisions could result in a default under the Credit Facility which if not
cured or waived, could have a material adverse effect on the Company. See
"Description of Certain Indebtedness -- The Credit Facility."

The degree to which the Company is leveraged could have important
consequences to holders of the Common Stock, including the following: (i) the
Company's ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions, general corporate purposes or other
purposes may be limited; (ii) a substantial portion of the Company's cash flow
from operations will be dedicated to the payment of the principal of and
interest on its existing indebtedness, thereby reducing funds available for
operations; (iii) the Credit Facility contains certain restrictive covenants,
including certain covenants that prohibit the payment of dividends by the
Company and limit the payment of dividends and other distributions by IPC and
IPC's subsidiaries; (iv) borrowings under the Credit Facility are subject to
floating rates of interest, causing the Company to be vulnerable to increases in
interest rates; and (v) the Company's substantial degree of leverage could make
it more vulnerable to a downturn in general economic conditions. The Company's
ability to make scheduled payments of the principal of or interest on, or to
refinance, its indebtedness will depend on its future operating performance and
cash flow, which are subject to prevailing economic conditions, primarily
interest rate levels and financial, competitive, business and other factors,
many of which are beyond its control. See "Description of Certain Indebtedness."

HISTORICAL LOSSES

Although the Company had net income of $8.7 million in 1996, the Company
has experienced substantial net losses in the past, principally as a result of
the significant interest charges, certain non-cash goodwill write-offs and other
nonrecurring charges. These net losses were $24.5 million and $36.3 million for
the years ended December 31, 1995 and 1997, respectively.

DEPENDENCE ON SUBSIDIARY DISTRIBUTIONS

The Company conducts business through IPC and IPC's subsidiaries and has no
operations of its own. The primary asset of the Company is the capital stock of
IPC. The Company has no cash flow other than from dividends and other
distributions from IPC. The right of the Company to participate in any
distribution of earnings or assets of IPC and IPC's subsidiaries is subject to
the prior claims of the creditors of IPC and such subsidiaries. In addition, the
Credit Facility contains certain restrictive covenants, including certain
covenants that prohibit the payment of dividends by the Company and limit the
payment of dividends and other distributions by IPC and IPC's subsidiaries. In
addition, under Delaware law, IPC is permitted to pay cash dividends to the
Company only (i) out of IPC's capital surplus (the excess of net assets over
stated capital) or (ii) out of the net income of IPC for the fiscal year in
which the dividend is declared and/or the preceding fiscal year.

VOLATILITY OF RAW MATERIAL PRICING

Styrene monomer, polystyrene, PET, polyethylene, polypropylene and
polyvinyl chloride are the basic raw materials used in the manufacture of most
of Consumer Packaging's plastic products. The prices of these raw materials are
a function of, among other things, the manufacturing capacity for such raw
materials and the price for the petrochemical feed stocks of such materials.
Similarly, the prices for virgin pulp and recycled fiber which are the basic raw
materials used directly in the manufacture of many of the Company's specialty
kraft (non-bleached) papers and indirectly in the manufacture of many of
Consumer Packaging's and Industrial Packaging's paper packaging products, are a
function of, among other things, pulp manufacturing capacity, the price for pulp
wood and wood chips and the price for old corrugated containers ("OCC"),
double-lined kraft ("DLK") and other recycled paper materials. In the event of
cost increases for raw materials, failure to achieve corresponding sales price
increases in a timely manner, sales price erosion without a corresponding
reduction in raw material costs or failure to renegotiate favorable raw material
supply contracts could have a material adverse effect on the Company.

10
<PAGE> 13

CYCLICAL DEMAND FOR THE COMPANY'S PRODUCTS

Demand and pricing for certain of Industrial Packaging's protective
packaging products and specialty papers are cyclical in nature and are subject
to general economic conditions that affect market demand. Demand for paper has
historically corresponded to changes in the rate of growth in the U.S. economy
and demand for protective packaging is driven by trends in the building,
construction, automotive and durable goods markets. Growth in the U.S. economy
generally stimulates demand for these products. Conversely, a weakening in the
U.S. economy tends to decrease demand for these products, thereby adversely
affecting the Company's profitability and its ability to satisfy its debt
service obligations. Consequently, adverse economic conditions could have a
material adverse effect on the condition of the Company.

COMPETITION

The markets in which the Company operates are highly competitive. The
Company's competitors range from the largest packaging companies in the U.S. to
small, emerging companies. Many of the companies that compete with the Company
have greater financial and other resources than the Company, while others are
significantly smaller with lower fixed costs and greater operating flexibility.
See "Business -- Competition."

RISKS ASSOCIATED WITH GROWTH STRATEGY

The Company's future growth will depend in part on additional acquisitions
of plastic and paper packaging businesses. There can be no assurance that the
Company will be able to locate or acquire other suitable acquisition candidates
on acceptable terms or that the Company will be able to fund future acquisitions
because of limitations contained in its instruments and agreements governing its
indebtedness or otherwise. See "Description of Certain Indebtedness" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources." In pursuing its strategy of
growth through acquisitions, the Company will face risks including difficulty in
assimilating the operations and personnel of the acquired businesses, disruption
of the Company's ongoing business, dissipation of the Company's limited
management resources, and impairment of relationships with employees and
customers of the acquired business as a result of changes in ownership and
management. Moreover, additional indebtedness incurred to make acquisitions
could adversely affect the Company's liquidity and financial stability, and the
issuance of Common Stock to effect acquisitions could result in dilution to the
Company's stockholders.

ENVIRONMENTAL MATTERS PERTAINING TO THE COMPANY

The past and present business operations of the Company and the past and
present ownership and operations of real property by the Company are subject to
extensive and changing federal, state, local and foreign environmental laws and
regulations pertaining to the discharge of materials into the environment, the
handling and disposition of wastes (including solid and hazardous wastes) or
otherwise relating to protection of the environment. The Company is currently
involved with environmental remediation and on-going maintenance at certain of
its facilities and from time to time is involved in regulatory proceedings and
inquiries relating to compliance with environmental laws and permits and other
environmental matters. In the future, the Company may be identified as a
potentially responsible party ("PRP") and be subject to liability under
applicable law. No assurance can be given that additional environmental issues
relating to the presently known matters or identified sites or to other sites or
matters related to the Company or to regulatory proceedings or inquiries will
not require future expenditures. Various federal, state, local and foreign
regulatory authorities from time to time have considered enacting and, on a
number of occasions, have enacted, legislation regarding solid waste disposal,
packaging recovery, recycling requirements and the use and content of plastic
packaging. There can be no assurance that such legislation will not have a
material adverse effect on the Company. See "Business -- Environmental Matters
and Government Regulation."

LIMITATION ON USE OF NET OPERATING LOSSES

Section 382 ("Section 382") of the Internal Revenue Code of 1986, as
amended (the "Code"), imposes limitations on a corporation's ability to use net
operating loss ("NOL") carryforwards if the corporation

11
<PAGE> 14

experiences a more-than-50-percent ownership change over a three-year testing
period. In general, if such an ownership change occurs, Section 382 limits the
amount of NOL carried over from pre-ownership change years that can be used in
any one post-change year to an amount equal to the product of the value of the
corporation's stock (with certain adjustments) at the time of the change
multiplied by an interest rate determined by the Internal Revenue Service (the
"IRS") for the month of the change.

The 1997 Common Stock Offering (as defined herein), together with the
conversion of the IPC Options, resulted in a more-than-50-percent ownership
change of the Company for purposes of Section 382, resulting in the imposition
of Section 382 limitations on the use of the Company's NOL carryforwards
existing as of the date of such ownership change. In addition, Ivex incurred a
significant NOL attributable to the period after such ownership change resulting
from certain one-time charges incurred as a result of the refinancing
transactions associated with the 1997 Common Stock Offering. Consequently, if
another more-than-50-percent ownership change takes place after the consummation
of the 1997 Common Stock Offering, such ownership change could result in the
imposition of Section 382 limitations on such NOL. The Company does not believe
that the consummation of the Offerings will result in such an ownership change.

ANTI-TAKEOVER PROVISIONS

The Company's Amended and Restated Certificate of Incorporation (the
"Amended Certificate") and Amended and Restated By-Laws (the "Amended By-Laws")
contain certain provisions that may have the effect of discouraging, delaying or
making more difficult a change in control of the Company or preventing the
removal of incumbent directors even if a majority of the Company's stockholders
were to deem such an attempt to be in the best interest of the Company. Among
other things, the Amended Certificate provides for a classified Board of
Directors and allows the Board of Directors to issue up to 5,000,000 shares of
preferred stock and to fix the rights, privileges and preferences of those
shares without any further vote or action by the stockholders. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of any preferred stock that may be issued in the
future. Any such issuance of shares of preferred stock could have the effect of
making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company. In addition, the Amended By-Laws, among
other things, limits the manner in which directors may be nominated by
stockholders and limit the manner in which proposals may be made at stockholder
meetings. The Company is also subject to Section 203 of the Delaware General
Corporation Law (the "Delaware GCL"), which could have the effect of delaying or
preventing a change of control of the Company. To the extent that these
provisions discourage takeover attempts, they could deprive stockholders of
opportunities to realize takeover premiums for their shares or could depress the
market price of the Common Stock. See "Description of Capital Stock -- Certain
Charter and By-Law Provisions" and "-- Certain Statutory Provisions."

RESTRICTIONS ON THE PAYMENT OF DIVIDENDS

The Company currently intends to retain future earnings to fund the
development and growth of its business and to repay indebtedness and, therefore,
does not anticipate paying any cash dividends in the foreseeable future. In
addition, the Credit Facility prohibits the payment of dividends by the Company
and contains restrictions on the ability of IPC and IPC's subsidiaries to pay
dividends or make distributions. See "Description of Certain Indebtedness -- The
Credit Facility."

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offerings (assuming the Underwriters' over-allotment
options are exercised in full) 21,729,268 shares of the Common Stock will be
outstanding. Of such shares, 4,304,309 shares were acquired by existing
stockholders without registration under the Securities Act of 1933, as amended
(the "Securities Act") and are "restricted securities" for purposes of the
Securities Act. Such shares may be sold in the future under Rule 144 promulgated
under the Securities Act. Sales of substantial amounts of the Common Stock or
the availability of such shares in the public markets could adversely affect
prevailing market prices for the Common Stock. See "Shares Eligible for Future
Sale."

12
<PAGE> 15

DILUTION AND TANGIBLE NET WORTH DEFICIENCY

The deficit in net tangible book value of the Company at March 31, 1998 was
$48.6 million or $2.38 per share. The purchasers of the Common Stock offered
hereby will experience an immediate dilution in net tangible book value of
$27.46 per share of the Common Stock purchased as a result of the purchase of
their shares at such price. See "Dilution." After giving pro forma effect to the
Offerings as if they had occurred on March 31, 1998, the Company would have had
a tangible net worth deficiency of $37.1 million.

RECENT DEVELOPMENTS

ULTRA PAC ACQUISITION

On March 23, 1998, the Company entered into a definitive agreement to merge
a subsidiary of IPC with and into Ultra Pac, a Minnesota corporation. On March
26, 1998, the Company commenced a tender offer for all of the issued and
outstanding common stock (the "UP Stock"), including the associated preferred
share purchase rights (the "Rights" and together with the UP Stock, the "UP
Shares"), of Ultra Pac. On April 23, 1998, the Company acquired all of the
outstanding UP Shares for approximately $67 million. The Company financed this
acquisition with borrowings under the revolving credit portion of the Credit
Facility (the "Revolving Credit Facility").

Ultra Pac is a leading North American producer of PET food packaging that
designs and manufactures plastic containers and packaging for the food industry,
including supermarkets, distributors of food packaging, wholesale bakeries,
produce growers, delicatessens, food processors and foodservice companies. Ultra
Pac had net sales of approximately $56.7 million in its fiscal year ended
January 31, 1998.

1997 COMMON STOCK OFFERING

On October 6, 1997, the Company completed its initial public offering with
the sale of 7,960,000 shares of Common Stock (the "1997 Common Stock Offering")
as part of a comprehensive refinancing strategy of the Company to significantly
lower its interest expense, strengthen its balance sheet and provide financial
flexibility to enable Ivex to continue to pursue investment opportunities. In
connection with the 1997 Common Stock Offering, IPC entered into a Credit
Facility (the "Credit Facility") that refinanced its then existing credit
facility. The Company used the proceeds of the 1997 Common Stock Offering
together with borrowings under the Credit Facility to refinance substantially
all of its then existing indebtedness. Specifically, IPC retired the entire $158
million of aggregate principal amount of its 12 1/2% Senior Subordinated Notes
due 2002 (the "12 1/2% Subordinated Notes") and the Company retired the entire
$160 million aggregate principal amount of its 13 1/4% Senior Discount
Debentures due 2005 (the "13 1/4% Discount Debentures").

USE OF PROCEEDS

The net proceeds to the Company (after deducting the underwriting discount
and estimated expenses) from the sale of the 500,000 shares of Common Stock
offered by the Company in the Offerings at an assumed public offering price of
$25.69 are estimated to be approximately $11.6 million ($31.1 million assuming
the Underwriters' over-allotment options are exercised in full). The Company
intends to use the proceeds of the Offerings to reduce a portion of the
outstanding principal amount under the Revolving Credit Facility, including a
portion of the indebtedness which was incurred in connection with the Company's
acquisition of

13
<PAGE> 16

Ultra Pac. The Revolving Credit Facility matures on September 30, 2003 and, as
of March 31, 1998, bears an interest rate at LIBOR (as defined therein) plus
1.375%.

PRICE RANGE OF COMMON STOCK

The Common Stock is listed on the NYSE under the symbol "IXX". On April 27,
1998, the last reported sale price for the Common Stock on the NYSE was
$25 11/16 per share. The following table sets forth the high and low sales
prices for the Common Stock for the periods indicated, as reported by the NYSE.

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C> <C> <C>
1997
Fourth Quarter............................................ $24 $19 9/16
1998
First Quarter............................................. $25 1/4 $19 5/8
Second Quarter (through April 27_, 1998).................. $29 1/2 $24 3/8
</TABLE>

DIVIDEND POLICY

The Company has not declared or paid any cash dividends on its Common
Stock. The Company currently intends to retain future earnings to fund the
development and growth of its businesses and to repay indebtedness, and,
therefore, does not anticipate paying any cash dividends in the foreseeable
future. The Company's principal source of cash from which to make dividend
payments will be dividends distributed by IPC. The Credit Facility contains
provisions that prohibit the payment of dividends by the Company and limit the
ability of IPC and IPC's subsidiaries to pay dividends and make distributions.
See "Description of Certain Indebtedness." Any future determination to declare
and pay dividends will be made by the Board of Directors of the Company in light
of the Company's earnings, financial position, capital requirements, credit
agreements and such other factors as the Board of Directors deems relevant.
Under Delaware law, the Company is permitted to pay cash dividends to its
stockholders only (i) out of its capital surplus (the excess of net assets over
its stated capital) or (ii) out of its net profits for the fiscal year in which
the dividend is declared and/or the preceding fiscal year.

14
<PAGE> 17

DILUTION

The deficit in net tangible book value of the Company as of March 31, 1998
was $48.6 million or $2.38 per share. Deficit in net tangible book value per
share of Common Stock is determined by dividing the net tangible book value of
the Company (tangible assets less total liabilities) by the number of shares of
Common Stock outstanding. After giving effect to the sale of 500,000 shares of
Common Stock offered by the Company hereby, the application of the estimated net
proceeds thereof, as described in "Use of Proceeds," the pro forma deficit in
net tangible book value of the Company at March 31, 1998 would have been $37.1
million, or $1.77 per share. This represents an immediate increase in net
tangible book value of $0.61 per share to existing stockholders and an immediate
dilution in net tangible book value of $27.46 per share to purchasers in the
Offerings. Dilution to purchasers in the Offerings is determined by subtracting
net tangible book value per share, after giving effect to the Offerings. The
following table illustrates this dilution on a per share basis as of March 31,
1998.

<TABLE>
<S> <C> <C>
Public offering price per share............................. $25.69
Deficit in net tangible book value per share before the
Offerings................................................. $(2.38)
Increase in net tangible book value per share attributable
to purchasing stockholders................................ $ .61
------
Pro forma deficit in net tangible book value per share after
the Offerings............................................. (1.77)
------
Dilution per share to purchasing stockholders............... $27.46
======
</TABLE>

The following table summarizes, on a pro forma basis as of March 31, 1998,
the number of shares of Common Stock purchased from the Company, the total
consideration paid and the average price paid per share by the existing
stockholders and the purchasers in the Offerings:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------- ----------------------- PRICE
NUMBER % AMOUNT % PER SHARE
------ - ------ - ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)................ 20,426,666 97.6% $254,472,000 95.2% $12.46
Purchasing stockholders................. 500,000 2.4 12,843,750 4.8 25.69
---------- ----- ------------ -----
20,926,666 100.0% $267,315,750 100.0%
========== ===== ============ =====
</TABLE>

- -------------------------
(1) Sales by the Selling Stockholders in the Offerings will reduce the number of
shares held by existing stockholders to 15,606,666 or approximately 74.6% of
the total number of shares of Common Stock outstanding after the Offerings
(or approximately 71.8% if the Underwriters' over-allotment options are
exercised in full), and will increase the number of shares held by new
investors to 5,320,000, or approximately 25.4% of the total number of shares
of Common Stock outstanding after the Offerings (or 6,118,000 shares and
approximately 28.2% if the Underwriters' over-allotment options are
exercised in full).

15
<PAGE> 18

CAPITALIZATION

The following table sets forth (i) the actual consolidated capitalization
of the Company as of March 31, 1998, and (ii) the consolidated capitalization of
the Company as adjusted to reflect the transactions contemplated hereby. This
presentation should be read in conjunction with the consolidated financial
statements and other financial information appearing elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1998
-------------------------------
HISTORICAL PRO FORMA(1)
---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Current maturities of long-term debt........................ $ 21,561 $ 21,561
========= =========
Long-term debt:
Credit Facility........................................... $ 285,950 $ 274,368
Industrial revenue bonds.................................. 37,725 37,725
Other debt................................................ 1,526 1,526
--------- ---------
Total long-term debt................................. 325,201 313,619
--------- ---------
Stockholders' equity (deficit):
Common Stock, $0.01 par value -- 45,000,000 shares
authorized and 20,426,666 (20,926,666 pro forma) shares
issued and outstanding................................. 204 209
Paid in capital in excess of par value.................... 328,285 339,862
Accumulated deficit....................................... (334,521) (334,521)
Accumulated other comprehensive income (loss)............. (2,242) (2,242)
--------- ---------
Total stockholders' equity (deficit)................. (8,274) 3,308
--------- ---------
Total capitalization........................................ $ 316,927 $ 316,927
========= =========
</TABLE>

- -------------------------
(1) Adjusted for the issuance and sale of shares of Common Stock by the Company
(assuming a stock price of $25.69 and net proceeds of $11,582) as if such
issuance had occurred on March 31, 1998 and application of net proceeds. The
pro forma adjustments do not include indebtedness which the Company incurred
in connection with the acquisition of Ultra Pac, the refinancing of Ultra
Pac's indebtedness and related expenses. After giving effect to the
completion of the Offerings, application of net proceeds and the incurrence
of indebtedness related to the acquisition of Ultra Pac, the Company would
have had total long-term debt of $401,619.

16
<PAGE> 19

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data presented below for, and
as of the end of, each of the years in the five year period ended December 31,
1997, are derived from and should be read in conjunction with the consolidated
audited financial statements of the Company. The data as of and for the three
months ended March 31, 1997 and 1998 are derived from the consolidated unaudited
interim financial statements and include, in the opinion of management, all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the data for such periods. The financial data of Ivex reflect the
following acquisitions as of the respective acquisition dates: PPI as of
September 11, 1995; Plastofilm as of August 16, 1996; Trio as of September 11,
1996; the European OPS Business as of January 17, 1997; M&R as of February 21,
1997; AVP as of August 8, 1997; and Crystal as of November 3, 1997. The
following summary selected financial data do not reflect the impact of any pro
forma adjustments for the transactions contemplated hereby.

17
<PAGE> 20

(2) Acquisition related expense totaling $1,100 was incurred during 1993 in
connection with an acquisition attempt.

(3) Operating results for the year ended December 31, 1997 include a
nonrecurring non-cash compensation charge of $53,329 in connection with the
Company's conversion, concurrently with the 1997 Common Stock Offering,
pursuant to the 1993 Stock Option Plan, of the IPC Options into 2,114,133
newly issued shares of Common Stock and newly issued stock options
exercisable for 817,067 shares of Common Stock. The nonrecurring
compensation charge consists of (i) a non-cash compensation charge of
$33,826 associated with the conversion of the IPC Options into shares of
Common Stock and (ii) a non-cash compensation charge of $19,503 associated
with the accrual of future Company payments to senior management of an
amount which (after taxes) will enable such management to pay interest on
the loans made to them by the Company. Operating results for the year ended
December 31, 1995 include the following special charges: $2,250 associated
with IPC's special incentive agreement with certain executive officers,
$1,950 of costs related to an attempted initial public equity offering and a
reduction of land value of $760 associated with a donation of certain land
to the Village of Chagrin Falls, Ohio. Operating results for the year ended
December 31, 1993 include restructuring and special charges of $4,350,
reflecting a $1,500 non-cash write-down of certain property held for sale
and costs of $2,850 related to the reorganization of the Consumer Packaging
product group, which include, among other things, severance, transition and
relocation expenses.

(7) Working capital is determined to be the excess of current assets over
current liabilities (including the current portion of long-term debt).

18
<PAGE> 21

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The following discussion addresses the information and financial data
contained in "Selected Consolidated Financial Data."

The Company is the sole stockholder of its operating subsidiary, 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. References to Ivex or the Company
herein reflect the consolidated results of Ivex Packaging Corporation.

RESULTS OF OPERATIONS -- FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998

Net Sales

The Company's net sales increased by 6.5% during the first quarter of 1998
over the Company's net sales during the corresponding period in 1997 primarily
as a result of the first quarter 1997 acquisition of M&R, the third quarter 1997
acquisition of AVP and the fourth quarter 1997 acquisition of Crystal. The
following table sets forth information with respect to net sales of the
Company's product groups for the periods presented:

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------------------
% OF % OF
1997 NET SALES 1998 NET SALES
---- --------- ---- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Consumer Packaging.................................... $ 72,048 56.3 $ 81,383 59.8
Industrial Packaging.................................. 55,816 43.7 54,785 40.2
-------- ----- -------- -----
Total............................................ $127,864 100.0 $136,168 100.0
======== ===== ======== =====
</TABLE>

Consumer Packaging net sales increased by 13.0% during the first quarter of
1998 from the corresponding period in 1997, primarily from incremental sales
associated with the 1997 acquisitions. Additionally, the sales increase is the
result of increased unit sales volume of extruded sheet and film, offset by
decreased average selling prices in 1998 compared to 1997. Sales of converted
plastic and paper products for food applications, excluding the sales relating
to the 1997 acquisitions, increased approximately 6.5% during 1998 compared to
the prior year.

Industrial Packaging net sales decreased by 1.8% during the first quarter
of 1998 from the corresponding period in 1997, primarily due to decreased unit
volume of the Company's protective packaging products and slightly decreased
pricing on the Company's surface protection products (primarily associated with
lower raw material costs). The number of tons and average net selling price of
recycled and specialty paper during the first quarter of 1998 was consistent
with the prior year.

Gross Profit

The Company's gross profit increased 19.4% during the first quarter of 1998
compared to the corresponding period in the prior year primarily as a result of
the increased sales volume, the incremental effects from the 1997 acquisitions
and strong cost control across all businesses. Gross profit margin increased to
23.1% during the first quarter of 1998 compared to 20.6% during the first
quarter of 1997. The increase in gross profit margin resulted from improved
absorption and a favorable product mix associated with the 1997 acquisitions,
improved cost control across all businesses and reduced energy costs for the
Company's recycled and specialty paper business. The gross profit margin
increase was partially offset by the severe weather in Canada during January,
downtime on the European extrusion line for a planned upgrade and decreased
profitability of the Company's polymerization operations.

19
<PAGE> 22

Operating Expenses

Selling and administrative expenses increased 10.6% during the first
quarter of 1998 primarily as a result of the 1997 acquisitions. As a percentage
of net sales, selling and administrative expenses increased to 11.9% during the
first quarter of 1998 compared to 11.4% during the same period in the prior year
primarily because of the higher selling and administrative expenses associated
with the Company's 1997 acquisitions and reduced sales of the Company's
protective packaging products.

Amortization of intangibles increased 84.8% during the first quarter of
1998 compared to the same period in 1997 as a result of increased goodwill and
non-compete agreement amortization associated with the 1997 acquisitions.

Income from Operations

Income from operations was $15.4 million during the first quarter of 1998
compared to $11.8 million during the first quarter of 1997. The increase in
income from operations is primarily a result of the 1997 acquisitions and
improved gross profit. Operating margin was 11.3% for the first quarter of 1998
compared to operating margin of 9.2% during the first quarter of 1997. The
increase in operating margin is primarily due to the increased gross profit
margin partially offset by increased selling and administrative expenses as a
percentage of net sales.

Interest Expense

Interest expense during the first quarter of 1998 was $6.5 million compared
to $11.1 million during the same period in 1997. The decrease is the result of
lower outstanding aggregate indebtedness and lower interest rates associated
with the 1997 Common Stock Offering and debt refinancing.

Income Taxes

The Company's effective tax rate for the first quarter of 1998 was 40%
reflecting an effective federal tax provision of 35% and an effective state tax
provision approximating 5%. The Company's income tax provision during the first
quarter of 1997 reflects primarily state and foreign tax and federal alternative
minimum tax (due to federal net operating loss carryforwards).

Net Income

Net income increased to $5.3 million during the first quarter of 1998
compared to net income of $0.3 million in the prior year. The increase in net
income is the result of the improved income from operations and decreased
interest expense.

Earnings per share

Diluted earnings per share increased to $0.26 during the first quarter of
1998 compared to $0.03 during the first quarter of 1997. The increase is the
result of the increased net income partially offset by a greater number of
shares outstanding associated with the 1997 Common Stock Offering.

Adjusted EBITDA

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

20
<PAGE> 23

The following table sets forth information with respect to Adjusted EBITDA
of the Company's product groups for the periods presented.

<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------------------
% OF % OF
1997 NET SALES 1998 NET SALES
---- --------- ---- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Consumer Packaging....................... $11,220 15.6 $15,147 18.6
Industrial Packaging..................... 8,327 14.9 9,103 16.6
Corporate Expense........................ (1,543) -- (1,673) --
------- -------
Total.................................. $18,004 14.1 $22,577 16.6
======= =======
</TABLE>

The Company's Adjusted EBITDA increased 25.4% from $18.0 million to $22.6
million and Adjusted EBITDA margin increased from 14.1% to 16.6% during the
first quarter of 1998 compared to the same period in 1997. The 35.0%, or $3.9
million, increase in Consumer Packaging's Adjusted EBITDA in the current quarter
is primarily attributable to the incremental Adjusted EBITDA from the Company's
1997 acquisitions and a favorable mix of extruded sheet and film products. The
increase was partially offset by reduced Adjusted EBITDA associated with the
severe weather in Canada during January, downtime on the European extrusion line
for a planned upgrade and decreased profitability of the Company's
polymerization operations. The increase in Industrial Packaging's Adjusted
EBITDA of 9.3%, or $776,000, is primarily due to decreased energy costs in the
Company's recycled and specialty paper business.

RESULTS OF OPERATIONS -- FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997

Net Sales

The Company's net sales increased by 19.2% during the year ended December
31, 1997 over the Company's net sales during the corresponding period in 1996
primarily as a result of incremental sales volume associated with recently
completed acquisitions, including the 1997 acquisitions (the European OPS
Business, M&R, AVP and Crystal) and the 1996 acquisitions (Plastofilm and Trio).
Net sales for the year ended December 31, 1996 were consistent with 1995, as
incremental sales from the 1996 acquisitions and unit volume increases were
offset by lower average selling prices. The following table sets forth
information with respect to net sales of the Company's product groups for the
periods presented.

<TABLE>
<CAPTION>
% OF % OF % OF
1995 NET SALES 1996 NET SALES 1997 NET SALES
---- --------- ---- --------- ---- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Consumer Packaging................. $219,806 48.7 $234,584 51.9 $313,695 58.3
Industrial Packaging............... 231,763 51.3 217,223 48.1 224,780 41.7
-------- ----- -------- ----- -------- -----
Total......................... $451,569 100.0 $451,807 100.0 $538,475 100.0
======== ===== ======== ===== ======== =====
</TABLE>

Consumer Packaging's net sales increased by 33.7% in 1997 from 1996 levels
and 6.7% in 1996 from 1995 levels. The increase in 1997 net sales compared to
1996 is primarily the result of incremental sales volume associated with the
1997 acquisitions and a full year effect of the 1996 acquisitions. Additionally,
the 1997 increase is the result of increased unit sales volume of extruded sheet
and film and converted plastic and paper products partially offset by decreased
average selling prices. The increase in 1996 compared to 1995 is the result of
increased unit sales volume of extruded sheet and film and the third quarter
1996 acquisitions of Plastofilm and Trio partially offset by a decrease in
average selling prices of substantially all products (primarily related to lower
raw material costs during 1996). Late in 1995, Consumer Packaging increased OPS
extrusion capacity with the completion of a new extrusion line in Manteno,
Illinois. With this increased capacity, the Company sold 16.9% more pounds of
extruded sheet and film during 1996 than during 1995. The 1996 increases in
volume were partially offset by a decrease of 15.5% in the average selling price
per pound of OPS in 1996 compared to 1995 (primarily related to lower raw
material costs during 1996). Net sales of converted plastic and paper products
were consistent during 1996 compared to 1995 reflecting slightly

21
<PAGE> 24

increased unit volume offset by decreased average selling prices (primarily
related to lower raw material costs during 1996).

Industrial Packaging's net sales increased by 3.5% in 1997 from 1996 and
decreased by 6.3% in 1996 from 1995. The increase in 1997 from 1996 is
attributable to increased unit sales volume of recycled and specialty
lightweight paper and protective packaging (primarily surface protection masking
products). The 1997 increase was partially offset by a decline in the unit sales
volume of coated and laminated products and decreased average selling prices for
the Company's recycled and specialty lightweight paper. During 1997, the unit
sales volume of recycled and specialty lightweight paper increased 9.8% but the
average selling price decreased 4.0%. The decrease in net sales in 1996 from
1995 is primarily attributable to a decrease in the unit sales volume and
average selling price of the Company's recycled and specialty lightweight paper
and a significant decrease in the net sales volume of coated paper for stamp
applications, partially offset by increased net sales of protective packaging
products. During 1996, the unit sales volume of recycled and specialty
lightweight paper decreased 9.1% and the average selling price decreased 13.0%
due to declining raw material costs and aggressive competitive pricing in the
industry. The 1996 decrease in net sales volume was partially offset by
increased net sales of protective packaging products, primarily associated with
the third quarter 1995 acquisition of PPI and increased net sales of masking and
cohesive products for applications in the automotive, housing and mail order
industries.

Gross Profit

The Company's gross profit increased 19.2% during 1997 compared to 1996
primarily as a result of the recently completed acquisitions and the increased
unit sales volume. The increased gross profit during 1997 was partially offset
by decreased margins in the Company's recycled and specialty paper operations
and in the Company's polymerization operations. Gross profit margin was 22.2% in
both 1997 and 1996.

The Company's gross profit increased 17.9% during 1996 compared to 1995
primarily as a result of the acquisitions and increased unit sales volume
discussed above, the increased profitability of the Company's converted plastic
and converted paper operations, the incremental effects of the Trio, Plastofilm
and PPI acquisitions and decreased raw material costs (including styrene
monomer, polystyrene, OCC, DLK and virgin pulp). These increases were offset, in
part, by the decreased profitability of the Company's polymerization operations
and specialty and lightweight paper operations. Gross profit margin increased to
22.2% in 1996 from 18.9% in 1995. The gross profit margin increase during 1996
is primarily attributable to cost decreases for certain of the Company's raw
materials and improved operational efficiencies as a result of greater unit
volume of extruded sheet and film.

Operating Expenses

Selling and administrative expenses increased 24.1% during 1997 compared to
1996 primarily as a result of the recently completed acquisitions. As a
percentage of net sales, selling and administrative expenses increased to 10.9%
in 1997 compared to 10.5% in 1996 primarily due to the higher selling and
administrative expenses associated with the Company's recently acquired medical
and electronics packaging products group and the additional management committed
to the Company's surface protection products group. Such increase was partially
offset by a reduction in incentive compensation.

Selling and administrative expenses increased 11.5% during 1996 compared to
1995 and as a percentage of net sales increased to 10.5% during 1996 compared to
9.4% in 1995. The increase in selling and administrative expenses is primarily
attributable to the PPI, Plastofilm and Trio acquisitions. The increase as a
percentage of net sales is attributable to the decreases in the Company's
average selling price as discussed above.

Amortization of intangibles increased during 1997 compared to 1996 as a
result of the incremental goodwill amortization associated with the recent
acquisitions. Amortization of intangibles decreased during 1996 compared to 1995
as a result of the accelerated write-off of a non-compete agreement of $1.1
million during 1995.

22
<PAGE> 25

During 1995, the Company wrote off $13.5 million of the goodwill associated
with a portion of its Industrial Packaging businesses. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Results of Operations -- For the Years Ended December 31, 1997, 1996 and 1995 --
Goodwill Write-off."

During the third quarter of 1997, the Company recorded a nonrecurring
non-cash compensation charge of $53.3 million in connection with the Company's
conversion, pursuant to the IPC Option Plan, of the IPC Options into 2,114,133
newly issued shares of the Company's common stock and newly issued stock options
exercisable for 817,067 shares of the Company's common stock. The nonrecurring
compensation charge consists of (i) a non-cash compensation charge of $33.8
million associated with the conversion of the IPC Options into shares of the
Company's common stock and (ii) a non-cash compensation charge of $19.5 million
associated with the accrual of future Company payments to senior management of
an amount which (after taxes) will enable such management to pay interest on the
loans made to them by the Company. Such loans were made to senior management
pursuant to the IPC Option Plan to enable them to pay their individual income
taxes payable in connection with the conversion of the IPC Options.

The $5.0 million of special charges taken in 1995 is comprised of the
following: a $2.3 million charge associated with cash payments made under IPC's
long-term special incentive agreement with senior management; a $2.0 million
charge associated with the costs related to the Company's attempted public
equity offering during the fourth quarter of 1995; and a reduction of land value
of $760,000 associated with the Company's donation of a portion of its Chagrin
Falls, Ohio paper mill site to the Village of Chagrin Falls.

Goodwill Write-off

During 1995, a portion of the Industrial Packaging businesses (such portion
having been acquired primarily in the 1989 acquisition of 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 at that time, the
Company made a reassessment of the goodwill for these businesses as of the
second quarter of 1995 and concluded that the goodwill for the graphics and
protective products businesses was impaired. Accordingly, the Company recorded
an impairment of $13.5 million during the second quarter of 1995. See Notes 2
and 15 to the Company's consolidated financial statements.

Income from Operations

Income from operations and operating margin were $6.3 million and 1.2%,
respectively, during 1997, compared to $52.3 million and 11.6%, respectively,
during 1996 and $22.3 million and 4.9%, respectively, during 1995. The decrease
in the income from operations in 1997 compared with 1996 is the result of the
special charge recorded in 1997. Without this special charge, operating income
and margin would have been $59.6 million and 11.1%, respectively in 1997. The
increase in 1997 operating income (before special charge) is primarily the
result of the recently completed acquisitions and the decrease in the 1997
operating margin (before special charge) is the result of the increased
operating expenses as a percentage of net sales. The increase in 1996 income
from operations and operating margin compared to 1995 primarily results from the
$13.5 million goodwill write-off and $5.0 million of special charges recorded
during 1995. Without these special charges during 1995, operating income and
operating margin would have been $40.7 million and 9.0%, respectively, in 1995.
The increase in 1996 income from operations and operating margin over 1995
income from operations and operating margin (before the 1995 write-off of
goodwill and the special charges) was attributable to the improved gross profit
and gross profit margin discussed above.

Interest Expense

Interest expense during 1997 was $41.9 million compared to $42.7 million
and $43.3 million during 1996 and 1995, respectively. The decrease in 1997
interest compared to 1996 is the result of the 1997 Common Stock Offering and
refinancing completed during the fourth quarter of 1997. The decrease in 1996
from 1995

23
<PAGE> 26

primarily results from lower interest rates during 1996 as a result of the
Company's refinancing of its senior credit facility during the fourth quarter of
1995. The Company's interest expense should be reduced in 1998 as a result of
the refinancing associated with the 1997 Common Stock Offering.

Income Taxes

The Company's tax benefit for 1997 reflects the deferred benefit of the
pre-tax loss recorded in 1997 and a $13.2 million deferred benefit associated
with the reversal of a portion of the Company's valuation allowance for deferred
tax assets. During the third quarter of 1997, the Company determined that it was
more likely than not that a portion of its deferred tax assets (comprised
primarily of net operating loss carryforwards) would be realizable given the
1997 Common Stock Offering and refinancing. The Company's tax provisions during
1996 and 1995 primarily reflect provisions for federal alternative minimum tax
and state taxes.

Extraordinary Loss

The extraordinary loss in 1997 of $26.7 million (net of tax of $15.0
million) consists of $32.3 million of premiums paid to retire the 13 1/4%
Discount Debentures and the 12 1/2% Subordinated Notes, the write-off of $8.2
million of deferred financing costs related to the retired debt and the
refinancing of the Company's senior credit facility, and $1.2 million of
expenses incurred to retire the debt and the existing credit facility.

The extraordinary loss in 1995 reflects the write-off of deferred loan
costs of $2.4 million written off in connection with the refinancing of IPC's
existing credit facility with a $160 million senior credit facility during the
fourth quarter of 1995.

Net Income/Loss

Net loss was $36.3 million in 1997 compared to net income of $8.7 million
in 1996. The net loss during 1997 is primarily the result of the special charge
and extraordinary loss recorded during 1997.

Net income was $8.7 million in 1996 compared to a net loss of $24.5 million
in 1995. The improved net income during 1996 is primarily the result of the
Company's improved gross profit during 1996 and the $13.5 million goodwill
write-off and $5.0 million of special charges recorded during 1995.

Adjusted EBITDA

The following table sets forth information with respect to Adjusted EBITDA
of the Company's product groups for the periods presented.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
% OF % OF % OF
1995 NET SALES 1996 NET SALES 1997 NET SALES
---- --------- ---- --------- ---- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Consumer Packaging.................... $36,954 16.8 $43,776 18.7 $56,704 18.1
Industrial Packaging.................. 31,744 13.7 37,694 17.4 36,118 16.1
Corporate expenses.................... (5,609) -- (6,446) -- (6,018) --
------- ------- -------
Total............................ $63,089 14.0 $75,024 16.6 $86,804 16.1
======= ======= =======
</TABLE>

The Company's Adjusted EBITDA increased by $11.8 million to $86.8 million
in 1997, an Adjusted EBITDA margin of 16.1%, compared to 1996 Adjusted EBITDA of
$75.0 million and an Adjusted EBITDA margin of 16.6%. The increase in Consumer
Packaging's Adjusted EBITDA during 1997 is primarily

24
<PAGE> 27

attributable to the incremental Adjusted EBITDA from the recently completed
acquisitions and the improved profitability associated with the increased sales
volume of extruded sheet and film and converted plastic and paper products. The
1997 increase was partially offset by decreased profitability of the Company's
polymerization operations and poor European thermoforming operating performance.
The decrease in Industrial Packaging's Adjusted EBITDA during 1997 is the result
of weak margins in the Company's recycled and specialty paper operations and
increased operating expenses in the Company's surface protection business.
Corporate expense decreased 6.6% from $6.4 million to $6.0 million primarily as
a result of reduced incentive compensation.

The Company's Adjusted EBITDA increased by $11.9 million to $75.0 million
in 1996, an Adjusted EBITDA margin of 16.6%, compared to 1995 Adjusted EBITDA of
$63.1 million and an Adjusted EBITDA margin of 14.0%. The increase in Consumer
Packaging's Adjusted EBITDA during 1996 is primarily attributable to the
increased gross profit associated with the extruded sheet and film volume
increases, improved operating performance of converted plastic and paper
operations and incremental Adjusted EBITDA from Plastofilm. Such increases were
partially offset by decreased profitability of the Company's polymerization
operations. The increase in Industrial Packaging's Adjusted EBITDA during 1996
is primarily the result of the incremental Adjusted EBITDA from PPI and the
improved sales volume of protective packaging products. Corporate expenses
increased 14.9% from $5.6 million to $6.4 million primarily as the result of
increased incentive compensation.

LIQUIDITY AND CAPITAL RESOURCES

Recent Developments

The Company intends to use the proceeds of the Offerings to reduce a
portion of the borrowing under the Revolving Credit Facility, including a
portion of the indebtedness which the Company incurred in connection with the
acquisition of Ultra Pac, the refinancing of Ultra Pac's indebtedness and
related expenses. After giving effect to the completion of the Offerings and the
incurrence of indebtedness related to the acquisition of Ultra Pac, at March 31,
1998, the Company would have borrowed approximately $89.6 million under its
$175.0 million Revolving Credit Facility and would have had approximately $39.2
million available under its Revolving Credit Facility (taking into account
letters of credit issued under the Revolving Credit Facility). The Company is
currently considering a variety of financing alternatives to increase its
borrowing capacity, although there can be no assurance that the Company will
successfully obtain such additional capacity.

Historical Liquidity and Capital Resources

At March 31, 1998, the Company had cash and cash equivalents of $6.7
million and $115.6 million was available under the revolving credit portion of
the Credit Facility. IPC's working capital at March 31, 1998 was $50.6 million.

The primary short-term and long-term operating cash requirements for the
Company are for debt service, working capital, acquisitions and capital
expenditures. The Company expects to rely on cash generated from operations
supplemented by the Revolving Credit Facility borrowings to fund the Company's
principal short-term and long-term cash requirements.

The Credit Facility is comprised of a $150.0 million Term A Loan (the "Term
A Loan"), a $150.0 million Term B Loan (the "Term B Loan" and, collectively with
the Term A Loan, the "Term Loan Facility") and the $175.0 million Revolving
Credit Facility (up to $65.0 million of which may be in the form of letters of
credit). The Term A Loan is required to be repaid in quarterly payments totaling
$3.75 million in 1997, $16.25 million in 1998, $21.25 million in 1999, $25.0
million in 2000, $26.25 million in 2001, $31.25 million in 2002 and $26.25
million in 2003 and the Term B Loan is required to be repaid in quarterly
payments totaling $1.5 million per annum through September 30, 2003 and four
installments of $35.25 million on December 31, 2003, March 31, 2004, June 30,
2004 and September 30, 2004. The interest rate of the Credit Facility can be, at
the election of IPC, based upon LIBOR or the Adjusted Base Rate, as defined
therein, and is subject to certain performance pricing adjustments. The Term A
Loan and loans under the Revolving Credit Facility bear interest at rates up to
LIBOR plus 1.625% or the Adjusted Base Rate plus
25
<PAGE> 28

0.625%. As of March 31, 1998, such rates are LIBOR plus 1.375%. The Term B Loan
bears interest at rates up to LIBOR plus 2.00% or the Adjusted Base Rate plus
1.00%. As of March 31, 1998, such rate is LIBOR plus 1.75%. Borrowings are
secured by substantially all the assets of the Company and its subsidiaries. The
Revolving Credit Facility and Term A Loan will terminate on September 30, 2003
and the Term B Loan will terminate on September 30, 2004. Under the Credit
Facility, IPC is required to maintain certain financial ratios and levels of net
worth and future indebtedness and dividends are restricted, among other things.
The Company believes it is currently in compliance with the terms and conditions
of the Credit Facility in all material respects.

During 1997, the Company entered into interest rate swap agreements with a
group of banks having notional amounts totaling $100.0 million through November
5, 2002. These agreements effectively fix a portion of the Company's LIBOR base
rate at 6.12% during this period. Concurrently with the implementation of the
swap agreements, the Company also entered into no cost interest rate collar
agreements with a group of banks having notional amounts totaling $100.0 million
through November 5, 2002. These collar agreements effectively fix the LIBOR base
rate at a maximum of 7.00% and allow for the Company to pay the market LIBOR
from a floor of 5.55% to the maximum rate. If LIBOR falls below 5.55%, the
Company is required to pay the floor rate of 5.55%. During 1996, the Company
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 the Company's LIBOR base rate at 5.33% during this period.
Income or expense related to settlements under these agreements are recorded as
adjustments to interest expense in the Company'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
the Credit Facility provide credit enhancement for IPC's industrial revenue
bonds.

The Company made capital expenditures of $6.7 million, $25.4 million, $17.6
million and $19.4 million in the three months ended March 31, 1998 and the years
1997, 1996 and 1995, respectively. The Company was not committed under any
material contractual obligations for capital expenditures as of March 31, 1998.

The Company is currently undergoing an enterprise-wide assessment of its
Year 2000 expenses. Currently the Company does not anticipate encountering
significant problems in adapting its system to the Year 2000 nor are the
incremental costs associated with becoming Year 2000 compliant considered to be
material, although there can be no assurance that this will be the case.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Disclosures about Segments of an Enterprise and Related Information

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information," which established standards for
reporting information about operating segments in annual financial statements
and interim financial reports. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
SFAS No. 131 is effective for fiscal years beginning after December 15, 1997 and
requires presentation of prior period financial statements for comparability
purposes. The Company is currently evaluating its required disclosures under
SFAS No. 131 and expects to adopt this standard during the year ended December
31, 1998.

26
<PAGE> 29

BUSINESS

GENERAL

Ivex is a vertically integrated specialty packaging company that designs
and manufactures value-added plastic and paper-based flexible packaging
products. The Company believes that it is the leading provider of customized
packaging in selected specialty markets, ranking first or second in markets
representing approximately 65% of the Company's revenues. Ivex has increased
sales and profitability by focusing on niche markets that provide attractive
margins and growth and where the Company's integrated manufacturing capabilities
enhance its competitive position. Ivex serves a variety of markets, providing
packaging for food, medical devices and electronic goods and protective
packaging for industrial products.

Over the past several years, the Company has executed a comprehensive
growth strategy based upon (i) achieving internal growth through product
extensions and further penetration into higher growth markets and (ii) growth
through strategic acquisitions. The Company has completed eight such
acquisitions since 1995. Since 1994, Adjusted EBITDA and Adjusted EBIT have
increased at compound annualized growth rates of 17.8% and 23.9%, respectively.

The core businesses of the Company were acquired between 1988 and 1991. The
acquisitions of four established companies, Kama Corporation, Ivex Corporation,
L&CP Corporation and IPMC, Inc. were part of an overall strategic plan to create
a vertically integrated specialty packaging company. In December 1992, in
connection with the incorporation of IPC, the Company changed its name from Ivex
Packaging Corporation to Ivex Holdings Corporation and IPC changed its name from
New Packaging Corporation to Ivex Packaging Corporation. In August 1995, the
Company changed its name from Ivex Holdings Corporation to Ivex Packaging
Corporation and IPC changed its name from Ivex Packaging Corporation to IPC,
Inc. Since August 1995, the Company has augmented its core businesses through
the acquisitions of PPI, Plastofilm, Trio, the European OPS Business, M&R, AVP,
Crystal and Ultra Pac.

MARKETS

Consumer Packaging. The Consumer Packaging product group designs and
manufactures plastic and paper-based products for food packaging applications
and for applications in the medical and electronics industries. The Company
produces a broad array of items, including plastic containers for prepared
foods, produce and baked goods; specialty paper products such as fluted baking
cups and liners for cookies and other baked goods; microwaveable packaging
materials; and protective packaging for medical devices and electronics
products. The Consumer Packaging product group markets its products to a variety
of end users, including national wholesale bakeries, supermarket chains,
foodservice distributors, fast-food chains, major agricultural growers, medical
equipment suppliers and electronics manufacturers. The Company also manufactures
a variety of plastic sheet and film products from several different resins for
internal use and sales to third party converters. Ivex is the leading producer
of OPS sheet in North America and, with its acquisition of Ultra Pac in 1998, is
a leading producer of PET food packaging in North America. The Consumer
Packaging product group represented approximately 59% of the Company's net sales
and 62% of the Company's Adjusted EBITDA during the 12 months ended March 31,
1998. The Company's Consumer Packaging product group is hereinafter sometimes
referred to as "Consumer Packaging".

27
<PAGE> 30

The following table illustrates the wide variety of products that Ivex
manufactures:

<TABLE>
<CAPTION>
12 MONTHS ENDED
MARCH 31, 1998
----------------------
ADJUSTED
PRODUCT GROUP NET SALES EBITDA PRODUCTS CUSTOMERS END PRODUCT USES
------------- --------- -------- -------- --------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Consumer Packaging..... $323,030 $60,631 Plastic containers, Supermarkets, Plastic hinged and
corrugated paper foodservice two-piece containers,
liners and specialty distributors, fast trays for deli foods,
paper products, OPS food chains, bakery salads, cookies,
sheet and film, HIPS and confectionery berries and cakes,
sheet, PET sheet, PP companies, food film for envelope and
sheet, PVC sheet and processors, plastic box windows,
HDPE sheet converters, envelope protective plastic
and folding carton packaging for medical
manufacturers, medical and electronics
device and supply applications, paper
companies and liners for cookies,
electronics microwaveable
manufacturers packaging materials,
fluted bakery cups and
specialty paper
products

Industrial Packaging... 223,749 36,894 Protective packaging, Automotive companies, Paper and film
including coated paper consumer durables protective masking
and plastic, single manufacturers, other materials, cohesive
face corrugated paper, industrial self-sealing packaging
shippers and mailers manufacturers, paper papers, coated papers
and manufactured distributors and for stamps, labels and
paper, including kraft manufacturers of business forms, single
papers and specialty postage stamps, face corrugated paper
lightweight virgin business forms and for packaging,
papers paper converters shippers and mailers,
grocery and food bags,
specialty lightweight
papers for fast food
and candy wrappers
Corporate Expenses..... (6,148)
-------- -------
Total.................. $546,779 $91,377
======== =======
</TABLE>

BUSINESS STRATEGY

28
<PAGE> 31

packaging solutions. The Company believes its breadth of product range and
customization capabilities are competitive advantages that allow it to be more
responsive to, and provide a single supply source for, many of its customers'
packaging needs. Further, these capabilities enhance the Company's ability to
adapt to changing market preferences.

GROWTH STRATEGY

Over the past several years, Ivex has executed a comprehensive growth
strategy based upon (i) internal growth through product extensions and further
penetration into higher growth markets and (ii) growth through strategic
acquisitions. Since 1994, Adjusted EBITDA and Adjusted EBIT have increased at
compound annualized growth rates of 17.8% and 23.9%, respectively, and,
excluding such acquisitions, of 10.9% and 17.2%, respectively. The Company
believes it can continue growing sales and earnings through its growth strategy
as well as through utilizing excess cash flow to reduce debt and interest
expense.

29
<PAGE> 32

- apply existing technology to new products and markets (the acquisitions
of Plastofilm and Crystal added medical and electronics end markets);

- fill out or extend existing product lines and markets (the acquisition of
Trio added multi-resin capabilities, the acquisition of PPI expanded
surface protection product offerings and the acquisition of Ultra Pac
expanded the Company's presence in PET);

- expand geographical presence (the acquisitions of M&R and AVP in Canada
and the European OPS Business in the United Kingdom extended operations
outside the United States); and

- create rationalization opportunities (the integration of Plastofilm's
extrusion operation into Trio created a lower-cost operation).

CONSUMER PACKAGING

General. The Consumer Packaging product group is an integrated manufacturer
of plastic and paper products for use in a wide array of food applications and
medical and electronics packaging applications. The food packaging products are
typically used for items sold in supermarkets, wholesale and retail bakeries,
fast-food restaurants and institutional foodservice outlets. The Company's
medical packaging products typically are used by the major medical supply
companies for sterility packaging and its electronics packaging products
generally are used by electronics manufacturers as cushioning materials.

Products. Consumer Packaging's products consist primarily of thermoformed
plastic containers used in food, medical and electronics markets and paper
products used in food packaging applications. Thermoformed plastic packaging
includes hinged and two-piece containers, trays for delicatessen foods, salads,
cookies, cakes and other items, sterility packaging for medical applications and
cushioning products for the electronics industry. Paper products consist of
single face corrugated paper liners for cookies and other baked goods,
microwaveable materials, fluted cups for baking and other specialty paper
products.

As part of its integrated operations, Ivex is the largest manufacturer of
OPS sheet in North America, and also produces OPS film, high impact polystyrene
("HIPS") sheet, PET sheet, polypropylene ("PP") sheet, high density polyethylene
("HDPE") sheet and polyvinyl chloride ("PVC") sheet. OPS sheet is widely used in
packaging applications where clarity, rigidity and material yield are
significant considerations. HIPS sheet is used in similar applications where
clarity is not as important, but where additional stress or crack resistance is
required. PET, PP, HDPE and PVC sheet are also typically used in applications
that require stress or crack resistance. OPS film is a thinner gauge version of
OPS sheet with applications primarily in windows for envelopes and folding
cartons as well as labels. The Company is one of the largest producers of OPS
film in North America and believes that it is the only company in North America
able to manufacture OPS film to a thickness of one-thousandth of an inch. The
Company's OPS sheet and film, HIPS sheet, PET sheet, PP sheet, HDPE sheet and
PVC sheet are marketed under the Company's Kama(R) and Ultra Pac(R) brand names.

Markets. The principal markets for Ivex's food packaging products include
supermarkets, particularly in-store bakery, delicatessen, and prepared food
sections; national wholesale bakeries; and foodservice outlets, particularly
fast-food restaurants and institutions such as schools, hospitals and corporate
cafeterias. The Company's position in these markets results from the quality of
its OPS sheet, its customized product development capabilities, its ability to
provide both plastic and paper products and its long-term relationships with key
accounts. The Company believes the supermarket and foodservice segments have
been two of the fastest growing markets for food packaging products over the
past several years. This growth has been fueled by the expansions of bakery,
delicatessen and take-out departments and by increased merchandising efforts by

30
<PAGE> 33

supermarkets in other areas such as produce and floral. Growing customer demand
for freshness and convenience has increased the use of plastic packaging. In
addition, in the foodservice area, the Company's historical relationships with
fast-food operators enable it to leverage its reputation as new packaging
opportunities arise in this market segment. The principal markets for the
Company's medical and electronics packaging include medical device and supply
manufacturers and electronics manufacturers.

Ivex employs a national sales force to service each of the specific market
segments that it targets. Approximately half of the packaging customers are
serviced through distributors, with the balance serviced directly by the
Company's national account sales representatives. The Company markets to
end-users served by its distributors, such as small and regional supermarkets
and convenience food outlets, in order to establish "pull-through" demand
through this distribution channel. Brokers are also used to further penetrate
specific geographic markets and access prospective customers.

Manufacturing. The Company's plastic packaging products are manufactured
internally at the Company's two polystyrene polymerization, eight extrusion and
thirteen thermoforming facilities. Polystyrene polymerization is the process of
converting liquid styrene monomer into polystyrene through heat and agitation
under high pressure. The Company produces high quality polystyrene as measured
by the polystyrene's low residual monomer levels. The Company believes that its
low residual monomer OPS affords it a quality advantage in certain areas of the
food packaging industry where undesirable odor and taste transfer associated
with high residual monomer levels are a concern.

Extrusion is the process of converting plastic resin into plastic sheet and
film used in the thermoforming process. In 1997, the Company produced
approximately 77 million pounds of polystyrene resin and purchased approximately
104 million pounds of polystyrene resin and approximately 32 million pounds of
other plastic resin from third-party sources. The Company is one of only two OPS
producers that have polystyrene polymerization manufacturing facilities. This
capability results in a competitive cost and quality advantage. Because of the
Company's vertical integration and the technology employed in its extrusion
operations, the Company believes it is one of the lowest cost producers of OPS
in North America.

Ivex's plastic thermoforming and paper converting operations are
principally conducted in fourteen facilities located throughout North America
and Europe. The Company's broad geographic coverage enables the Company to
provide better customer service and reduce transportation costs. The Company's
flexible manufacturing and engineering capabilities enable it to work with its
customers to design custom packages. The Company believes that its strategically
located manufacturing facilities, flexible manufacturing capabilities, in-house
product engineering services and quality production expertise are all important
competitive strengths.

INDUSTRIAL PACKAGING

General. The Industrial Packaging product group is an integrated
manufacturer and coater of a variety of film, paper and foil products for
protective packaging and a manufacturer and coater of various grades of papers.

Products. Protective packaging products include protective paper and film
maskings; self-sealing coated packaging papers, films and corrugated paper; and
heavy-duty mailing envelopes marketed under the brand names Jet-Lite(R),
Jet-Cor(TM) and Jet-Pak(R). The Company's manufactured papers include
post-consumer and post-industrial recycled paper products (including lightweight
kraft paper for grocery and food bags and heavyweight crepe kraft paper for bag
closures), and specialty lightweight papers from virgin pulp used in the
flexible packaging and food packaging industries. The Company's coated papers
include water-activated gummed papers used for postage stamps, labels, and
envelopes, release papers used for high-pressure decorative laminates, and
laminations used for lottery ticket stock and decorative labels.

Markets. The Company's industrial packaging products are used in a wide
variety of commercial and industrial applications.

Ivex believes that it is one of the largest producers of industrial
protective masking materials in North America. Management believes its strong
position within the industrial protective masking market is a result
31
<PAGE> 34

of its chemical adhesive formulations and production technology. The Company's
products in this market range from adhesive coated paper and films to coextruded
films with adhesive properties. These paper and film maskings are used to
protect surfaces during manufacturing, handling, storage and shipping. The
Company's products must meet specifications for a broad array of surfaces
requiring protection, including glass, plastic, wood, polished and painted
metals, automotive trim, plastic laminates, furniture and marble.

Ivex applies adhesive and cohesive coatings to paper, films and single face
corrugated paper products for high-speed, high-volume, self-sealing packaging
applications. A cohesive package is designed to stick to itself and not to the
contents. The Company uses proprietary formulations of adhesive and cohesive
materials to meet specialized customer requirements. Typical end-users of
self-sealing packaging systems are the major U.S. automotive parts manufacturers
and book publishers. The Company also produces water-activated gummed printing
papers used for labels, commercial and postage stamps and business forms and
release papers that are used in the manufacture of high pressure decorative
laminates.

All of Ivex's low density polyethylene film is used internally in the
production of its film masking and self-sealing packaging products and
approximately 25% of the Company's recycled kraft paper is used internally in
the production of single face corrugated paper, cohesive coated paper and
mailing envelopes. Principal third-party markets for the Company's manufactured
paper products are food packaging, industrial packaging, bag converting and
industrial converting, including grocery and food bags; envelopes; bag closures
in pet food, seed, and fertilizer packaging; and fast-food and candy wrappers.
These markets require high service levels, including fast delivery and the
ability to produce a variety of colors, weights and formulations. Customers for
the Company's manufactured paper products include large, integrated paper
producers as well as packaging companies.

Manufacturing. Ivex's primary raw materials for protective packaging
products, principally low density polyethylene, specialty chemicals and paper,
are obtained from external sources as well as from the Company's low density
polyethelyne extrusion facility and recycled paper mill operations.

Ivex's coating and paper converting operations are conducted at eleven
facilities throughout the U.S. and Canada. The Company believes that its
extensive geographic coverage reduces transportation costs and contributes to
the cost competitiveness of the Company's packaging products.

All of the paper produced at three of the Company's four paper mills is
made entirely from post-consumer and post-industrial fibers, including OCC and
DLK. The Company was among the first to use 100% recycled post-industrial fibers
at one of its mills. Recycled paper accounts for approximately 65% of the total
output of the Company's paper operations. The products at the Company's fourth
mill in Detroit, Michigan are principally produced from virgin pulp and
post-industrial recycled fiber. The Company has installed recycling equipment at
its mill in Detroit, Michigan which enables the mill to substitute recycled
material for a portion of the higher-cost virgin pulp. Ivex believes that its
equipment provides greater flexibility than many larger competitors' machinery,
enabling it to serve a large number of relatively small, niche markets.

COMPETITION

The Company operates in markets that are highly competitive and faces
substantial competition throughout all of its product lines from numerous
national and regional companies. Many of these competitors are considerably
larger than the Company and have substantially greater financial and other
resources than the Company, while others are significantly smaller with lower
fixed costs and greater operating flexibility. In addition to price, competition
with respect to many of the Company's products is based on quality, supplier
response time, service and timely and complete order fulfillment.

The Company's main competitor in the supermarket and foodservice segments
is Tenneco Packaging. In the bakery area, the Company competes primarily with
Detroit Forming Inc. in plastic products and Fort James Corporation in paper
products. The Company competes with several manufacturers of OPS sheet,
including Detroit Forming and Plastic Suppliers, Inc. In the medical and
electronics markets, the Company competes with many regional thermoformers,
including Prent Corporation and Placon Corp. The Company competes primarily with
the Dow Chemical Company in the OPS film market. Ivex's major competitors in

32
<PAGE> 35

protective masking include a joint venture between Minnesota Mining and
Manufacturing Company and Sealed Air Corporation, American Biltrite, Inc. and
Main Tape Company, Inc. The Company competes primarily with Sealed Air
Corporation and AVI Products, Inc. in the mailing envelope market.

EMPLOYEES

As of March 31, 1998, the Company had 24 employees at its Lincolnshire,
Illinois corporate headquarters and had 3,195 employees at plant locations, of
which 717 were salaried and 2,478 were hourly. Of the hourly workers,
approximately 1,078 were members of unions. The Company has collective
bargaining agreements with nine unions in effect with respect to certain hourly
employees at the Company's Joliet, Peoria, Chagrin Falls, Detroit, Troy, Newton,
Avenel, Grove City, Elyria, Newcastle and Laval facilities. There have been no
significant interruptions or curtailments of operations due to labor disputes in
the last five years, and the Company believes that relations with its employees
are good. The collective bargaining agreements at the Company's Newcastle,
Chagrin Falls and Avenel facilities will expire in 1998; the collective
bargaining agreement at the Company's Troy facility will expire in 1999; the
collective bargaining agreements at the Company's facilities in Laval, Joliet,
Peoria and Elyria will expire in 2000; the collective bargaining agreement at
the Company's facilities in Grove City and Detroit will expire in 2001; and the
collective bargaining agreement at the Company's Newton facility will expire in
2002.

RAW MATERIALS

Styrene monomer, polystyrene, PET, polyethylene, polypropylene, polyvinyl
chloride and various paper-based commodities (including recycled and virgin
fiber) constitute the principal raw materials used in the manufacture of the
Company's products. Generally, these raw materials are readily available from a
wide variety of suppliers. Costs for all of the significant raw materials used
by the Company tend to fluctuate with various economic factors which generally
affect the Company and its competitors. The availability of raw materials was
adequate in 1997 and the first three months of 1998 and is expected to remain
adequate throughout the remainder of 1998, although prices for certain items
such as styrene monomer, polystyrene, OCC, DLK and virgin fiber have been
volatile and may continue to fluctuate, in some instances adversely to the
Company.

TRADEMARKS, PATENTS AND LICENSES

While the Company has registered and unregistered trademarks for many of
its product lines, these trademarks, other than the Company's rights to the
trademarks "Ivex(R)", "Plastofilm(R)", "Kama(R)" and "Ultra Pac(R)", are not
considered material to the conduct of the Company's business. The Company owns
or licenses a number of patents but such patents and licenses are not considered
material to the conduct of the Company's business and the Company does not
believe that any of its businesses are substantially dependent on patent
protection. The Company's material proprietary technologies are considered by
the Company to be trade secrets and know-how and are not protected by patents or
licenses.

CUSTOMERS, SALES AND BACKLOG

No material portion of the Company's business is dependent upon a single or
very few customers, except that the Company's extruded OPS film is sold
principally to one customer with which the Company believes that it has a good
relationship. No one customer accounted for more than 10% of the Company's
aggregate net sales for the fiscal year ended December 31, 1997. In general, the
backlog of orders is not significant or material to an understanding of the
Company's businesses.

ENVIRONMENTAL MATTERS AND GOVERNMENT REGULATION

33
<PAGE> 36

protection of the environment. As is the case with manufacturers in general, if
a release of hazardous substances occurs on or from the Company's properties or
any associated offsite disposal location, or if contamination from prior
activities is discovered at any of the Company's properties, the Company may be
held liable. From time to time, the Company is involved in regulatory
proceedings and inquiries relating to compliance with environmental laws,
permits and other environmental matters.

The Company is currently involved with environmental remediation and
on-going maintenance at certain of its facilities. The Company believes that the
costs of such remediation have been adequately reserved for and that such costs
are unlikely to have a material adverse effect on the Company. No assurance can
be given, however, that additional environmental issues relating to the
presently known remediation matters or identified sites or to other sites or
matters will not require additional investigation, assessment or expenditures.
The Company has a reserve of approximately $2.1 million as of March 31, 1998 for
its known future environmental remediation costs. Because an environmental
reserve is not established until a liability is determined to be probable and
reasonably estimable, all potential future remedial costs may not be covered by
this reserve. The Company has made and will continue to make capital
expenditures to maintain compliance with environmental requirements. The Company
does not expect its 1998 and 1999 spending on environmental capital projects to
be material.

During 1991, the Company responded to an information request regarding the
Global Landfill, New Jersey site and since such time has not received any
further notifications regarding such site. During 1993, the Company was named a
PRP at the Delta Chemicals, Pennsylvania Superfund site and in 1995 the Company
paid a de minimis settlement of less than $20,000 at that site. During 1995, the
Company paid $500 in connection with a de minimis consent order relating to the
American Chemical Service site. In addition, over the past few years, the
Company has received notices of potential liability relating to three Superfund
sites for which the Company believes a former owner of the facilities subject to
such notices will be responsible, and the Company has forwarded such notices to
such former owner and has had no further involvement at those sites. In
addition, during 1996 the Company answered a complaint regarding the Huth Oil,
Ohio Superfund site, and during 1997 this claim was voluntarily dismissed by the
plaintiffs in the action. Although the Company endeavors to carefully manage its
waste, because Superfund liability is strict and retroactive, it is possible
that in the future the Company may be identified as a PRP with respect to other
waste disposal sites.

The plastics industry, in general, and the Company also are subject to
existing and potential federal, state, local and foreign legislation designed to
reduce solid wastes by requiring, among other things, plastics to be degradable
in landfills, minimum levels of recycled content, various recycling
requirements, disposal fees and limits on the use of plastic products. In
addition, various consumer and special interest groups have lobbied from time to
time for the implementation of these and other such similar measures. Although
the Company believes that the legislation promulgated to date and such
initiatives to date have not had a material adverse effect on the Company, there
can be no assurance that any such future legislative or regulatory efforts or
future initiatives would not have a material adverse effect on the Company.

The United States Food and Drug Administration (the "FDA") regulates the
content of direct-contact food containers and packages, including containers and
packages made from recycled OPS and paper products. The FDA currently limits the
amount of recycled materials that can be used in such containers and packages.
To comply with these regulations, the Company has instituted various compliance
programs.

PROPERTIES

The Company and its subsidiaries use various owned and leased plants,
warehouses, and other facilities in their operations. The facilities are
considered to be suitable and adequate for the conduct of the businesses
involved although the machinery, plant and equipment at such facilities are,
from time to time, subject to scheduled and unscheduled maintenance. As of April
23, 1998, the Company had 28 non-warehouse facilities, 21 of which are located
in the U.S., five in Canada and two in the United Kingdom and, except as noted

34
<PAGE> 37

below, all are owned by IPC or a subsidiary of IPC. With certain limited
exceptions, all of the owned real estate is subject to mortgages securing IPC's
indebtedness under the Company's existing credit facility.

<TABLE>
<CAPTION>
LOCATION FUNCTION SQUARE FOOTAGE
-------- -------- --------------
<S> <C> <C>
DOMESTIC
- ------------------------------------------
Avenel, NJ(1)............................. Extrusion 55,000
Bellwood, IL.............................. Paper Converting and Film Coating 71,000
Bellwood, IL(2)........................... Paper Converting 71,000
Bridgeview, IL............................ Paper Converting 115,000
Chagrin Falls, OH......................... Paper Mill 120,000
Cumberland, RI............................ Thermoforming 60,000
Detroit, MI............................... Paper Mill 255,000
Elyria, OH(3)............................. Extrusion 80,000
Grant Park, IL............................ Thermoforming/Engineering 184,000
Grove City, PA(4)......................... Thermoforming/Paper Converting 236,000
Hazleton, PA(5)........................... Polymerization/Extrusion 166,000
Joliet, IL................................ Paper Mill/Paper Converting 410,000
Madison, GA............................... Thermoforming/Paper Converting 141,000
Manteno, IL............................... Extrusion 105,000
Newton, MA(6)............................. Paper and Film Converting/Coating 225,000
Peoria, IL................................ Paper Mill 234,000
Rogers, MN(7)............................. Extrusion/Thermoforming 450,000
Sparks, NV(8)............................. Thermoforming 40,000
Troy, OH.................................. Paper Converting/Coating 320,000
Visalia, CA............................... Thermoforming/Paper Converting 144,000
Wheaton, IL............................... Thermoforming/Engineering 120,000

INTERNATIONAL
- ------------------------------------------
Enniskillen, Northern Ireland(9).......... Thermoforming/Engineering 16,000
Laval, Quebec............................. Thermoforming/Extrusion/Engineering 60,000
Longueuil, Quebec......................... Thermoforming/Paper Converting 32,000
Newcastle, Ontario........................ Extrusion 45,000
Sedgefield, England....................... Thermoforming/Extrusion 48,000
Summerstown, Ontario...................... Thermoforming 55,000
Toronto, Ontario.......................... Paper Converting 54,000
</TABLE>

- -------------------------
(1) Leased facility, with its lease expiring on December 31, 2003, subject to
IPC's right to extend the lease for two successive five-year periods upon
IPC's written notice to the lessor thereof not more than 12 nor less than 6
months prior to the end of the then current lease term.
(2) Leased facility, with its lease expiring on January 8, 2003.
(3) Leased facility, with its lease expiring on September 30, 2001, subject to
IPC's right to extend the lease for an additional five-year period and, upon
specified terms and conditions, to purchase the property.
(4) This facility is held subject to an installment sales contract with Grove
City Industrial Development Corporation that holds title to the facility.
(5) Leased facility, with its lease expiring on October 4, 1998, subject to
IPC's right to extend the lease for two successive five-year periods upon
IPC's written notice to lessor not more than 24 nor less than 6 months prior
to the end of the then current lease term. This Lease was recently extended
for an additional five year period ending October 2003.
(6) Leased facility, with its lease expiring on December 5, 2001, with three
one-year options to extend.
(7) Owned and leased facility, with the leased portions thereof expiring on July
31, 1999, January 1, 2002, December 31, 2008 and February 1, 2010.
(8) Leased facility, with its lease expiring on December 31, 1999.
(9) Leased facility, with its lease expiring on May 10, 2016.

LITIGATION

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

35
<PAGE> 38

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

Set forth below are the name, age, positions and offices held (as of the
date hereof) and a brief account of the business experience for each executive
officer and director of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
George V. Bayly......... 55 Director, Chairman of the Board, President and Chief
Executive Officer of the Company since January 1991.
Frank V. Tannura........ 41 Director of the Company since August 1995. Vice President
and Chief Financial Officer of the Company since October
1989.
Richard R. Cote......... 46 Vice President and Treasurer of the Company since August
1994. Mr. Cote was Assistant Vice President and Treasurer
of the Company from March 1992 to August 1994.
Robert W. Crichton...... 41 Vice President and General Manager of the Company since
February 1998. From February 1997 to February 1998, Mr.
Crichton was Vice President and General Manager of the
Company's surface protection business and prior to 1997,
President of Sonoco Products Company's Flexible Packaging
Division.
Thomas S. Ellsworth..... 52 Vice President and General Manager of the Company since
1994. Mr. Ellsworth was Vice President of the Company's
paper mill operations from 1992 to 1994.
Robert W. George........ 50 Vice President and General Manager of the Company since
August 1996. From 1993 to 1996, Mr. George was President
and Chief Executive Officer of Plastofilm Industries, Inc.
and prior to 1993, President of Nitrobar Incorporated.
Gene J. Gentili......... 50 Vice President and General Manager of the Company since
1994. Vice President of Sales of the Company from 1993 to
1994. Mr. Gentili was director of national accounts for the
Company from 1991 to 1993.
Roger A. Kurinsky....... 47 Vice President and General Manager of the Company since
1994. Vice President of Marketing of the Company from 1991
to 1994.
Jeremy S. Lawrence...... 46 Vice President of Human Resources of the Company since May
1991.
G. Douglas Patterson.... 40 Vice President and General Counsel of the Company since
June 1991.
David E. Wartner........ 31 Corporate Controller of the Company since 1994. Prior to
1994, Mr. Wartner was associated with Price Waterhouse LLP.
Eugene M. Whitacre...... 41 Vice President and General Manager of the Company since
February 1991.
Glenn R. August......... 36 Director of the Company since March 1993 and a Managing
Director of Oak Hill Partners, Inc. (investment advisor of
Acadia Partners L.P. ("Acadia")) and its predecessor since
1987. Since August 1996, Mr. August has served as President
of Oak Hill Advisors, Inc., the exclusive advisor to the
Oak Hill Securities Fund, L.P., a $1.75 billion investment
partnership.
Anthony P. Scotto....... 50 Director of the Company since August 1995. Managing
Director of Oak Hill Partners, Inc. (Acadia's investment
advisor) and its predecessor since March 1988. Mr. Scotto
is also a director of Specialty Foods Corporation and
Holophane Corporation.
</TABLE>

36
<PAGE> 39

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
William J. White........ 59 Director of the Company since December 1, 1997. Mr. White
has been a professor at Northwestern University since
January 1998 and served as Chairman of the Board of Bell &
Howell Company from February 1993 to December 1997 and of
Bell & Howell Operating Company from February 1990 to
December 1997. He served as Chief Executive Officer of Bell
& Howell Company from February 1993 to December 1997 and of
Bell & Howell Operating Company from February 1990 to
December 1997. He is also a director of Bell & Howell
Company, Readers Digest Association, Inc. and the Chicago
Stock Exchange.
R. James Comeaux........ 60 Director of the Company since December 1, 1997. Mr. Comeaux
has served as President of Petrochemical Management Inc.
since 1993 and as President and Chief Executive Officer of
Arcadian Corporation from 1989 to 1993. Mr. Comeaux is also
a director of Energy BioSystems Corporation.
</TABLE>

All members of the Board of Directors of the Company serve until a
successor is elected. All officers of the Company serve at the pleasure of the
Company's Board of Directors.

The Board of Directors of the Company is divided into three classes, as
nearly equal in number as possible, having terms expiring at the annual meeting
of the Company's stockholders in 1998 (comprised of Messrs. Tannura and August),
1999 (comprised of two independent directors, Messrs. Comeaux and White) and
2000 (comprised of Messrs. Bayly and Scotto). At each annual meeting of
stockholders, successors to the class of directors whose term expires at such
meeting will be elected to serve for three-year terms and until their successors
are elected and qualified. Messrs. White and Comeaux each received options to
purchase 2,000 shares of Common Stock at an exercise price of $16.00 per share
during 1997, will receive an annual retainer of approximately $25,000 and will
be reimbursed for out-of-pocket expenses incurred in connection with attending
meetings. No retainer or other compensation has been paid to employees of the
Company or to employees of Oak Hill Partners, Inc. for their service as a
director.

The Company does not have a nominating committee.

37
<PAGE> 40

EXECUTIVE COMPENSATION

Summary Compensation Table. The following table sets forth the compensation
paid by the Company to the Company's chief executive officer and each of the
four most highly compensated officers of the Company whose aggregate cash
compensation exceeds $100,000, in each case for all services rendered during the
fiscal years 1997, 1996 and 1995:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION(4)
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------- ---------- -------
NUMBER OF
SECURITIES
UNDERLYING
OTHER ANNUAL OPTIONS/ LTIP ALL OTHER
SALARY BONUS COMPENSATION SARS PAYOUTS COMPENSATION
YEAR ($)(1) ($)(2) ($)(3) (#)(5) ($)(6) ($)(7)
---- ------ ------ ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
George V. Bayly................ 1997 457,667 700,000 206,930 123,575 -- 13,239,290
President and Chief 1996 420,000 600,000 -- 103,729 765,938 314,721
Executive Officer 1995 400,000 400,000 -- 79,399 237,500 14,938
Frank V. Tannura............... 1997 263,200 300,000 70,857 34,335 -- 5,266,519
Vice President and 1996 249,100 290,000 -- 48,410 282,188 40,368
Chief Financial Officer 1995 211,667 235,000 -- 32,040 87,500 28,885
Eugene M. Whitacre............. 1997 247,500 60,000 -- 34,335 -- 3,657,577
Vice President and 1996 236,250 230,000 -- 34,593 201,563 7,500
General Manager 1995 225,000 168,750 -- 21,777 62,500 13,741
Thomas S. Ellsworth............ 1997 250,000 50,000 -- 17,500 -- 3,653,047
Vice President and 1996 250,000 100,000 -- 34,593 -- 25,813
General Manager 1995 229,000 168,750 -- 21,777 -- 16,185
G. Douglas Patterson........... 1997 193,600 100,000 -- 10,000 -- 1,762,988
Vice President and 1996 180,400 140,000 -- 13,817 129,000 23,296
General Counsel 1995 164,000 105,600 -- 11,564 40,000 11,997
</TABLE>

- -------------------------
(1) Includes amounts deferred pursuant to the Company's Retirement Plan and
Trust and under the Company's Executive Deferred Compensation Plan.

(2) Includes (i) annual bonus awards for services rendered in 1997, 1996 and
1995 that were paid under the Company's Executive Incentive Bonus Plan and
(ii) special one-time bonuses of $250,000, $150,000 and $50,000 which were
paid to Messrs. Bayly, Tannura and Patterson, respectively, in 1997 in
connection with the Company's completion of the 1997 Common Stock Offering.
The Executive Incentive Compensation Plan provides the executive officers of
the Company with annual awards for outstanding individual performance
contributing to the present and future success of the Company. Prior to the
formation of the Corporation's Compensation Committee, this Plan was
administered by the President in consultation with the Board of Directors
and, beginning in 1998, will be administered by the Board's Compensation
Committee. Awards are based upon the Company's achievement of, among other
things, certain predetermined financial objectives such as minimum EBITDA
and earnings per share targets as well as the attainment of key individual
strategic and operational goals. Under the provisions of the Plan,
participants have target incentive compensation of 40% to 50% of that year's
base salary, although the actual incentive compensation paid in any given
year may be significantly less than or greater than the target level based
upon the extent of the Company's under-achievement or over-achievement of
such predetermined financial objectives.

(3) The 1997 Other Annual Compensation column includes payments made to Messrs.
Bayly and Tannura to reimburse them (on an after tax basis) for initiation
fees and dues associated with certain country club memberships.

(4) The column designated by the Commission pursuant to the applicable
regulations for the reporting of "Restricted Stock Awards" has been deleted
because no restricted stock of the Company was awarded to any of the named
executive officers in any of the reported calendar years. See "Executive
Compensation and Other Information -- Summary Compensation Table" (footnote
5) for a description of the restricted shares of Common Stock received by
the named executive officers in exchange for their stock options exercisable
for common stock of IPC.

38
<PAGE> 41

Based on the December 31, 1997 closing market price of $24.00 per share, the
value of each named executive officer's shares of restricted common stock of
the Company held as of December 31, 1997 and the number of such shares as of
such date (including the 1993 Plan Shares described in footnote 5 below)
would be as follows: Mr. Bayly's 824,973 shares -- $19,799,352; Mr.
Tannura's 356,681 shares -- $8,560,344; Mr. Whitacre's 237,906 shares --
$5,709,744; Mr. Ellsworth's 235,010 shares -- $5,640,240 and Mr. Patterson's
132,635 shares -- $3,183,240. All of such shares of the Company's Common
Stock are vested and the Company has no present intentions to pay dividends
on such shares.

(5) The options reported for 1995 and 1996 in this column were originally
granted under IPC's Stock Option and Purchase Agreement, dated as of January
1, 1993, as amended and restated as of January 1, 1996 (the "1993 Stock
Option Plan"), pursuant to which options exercisable into an aggregate of
24,178 shares of IPC's common stock were originally granted to certain
executive officers (including the named executive officers), 16,321 of such
options were earned and vested (the "IPC Options") and 7,857 of such options
were not earned and were canceled.

In connection with the Company's 1997 Common Stock Offering, the executive
officers participating under the 1993 Stock Option Plan, including the named
executive officers, exchanged all of the IPC Options for (i) 2,114,133
shares of the Company's Common Stock (the "1993 Plan Shares") and (ii)
options exercisable for 817,067 shares of the Company's Common Stock (the
"1993 Plan Options") at an exercise price equal to $16.00 per share (the
initial offering price of the Common Stock in the 1997 Common Stock
Offering). Consequently, the options reported for 1995, 1996 and 1997 in
this column reflect each named executive officer's portion of the 1993 Plan
Options allocable to 1995, 1996 and 1997 (the 1997 reported amounts also
include 93,500, 30,000, 30,000, 17,500 and 10,000 of options granted to
Messrs. Bayly, Tannura, Whitacre, Ellsworth and Patterson, respectively,
under the 1997 Ivex Packaging Corporation Long-Term Stock Incentive Plan).
In addition, in connection with this exchange, Messrs. Bayly, Tannura,
Whitacre, Ellsworth and Patterson received 805,663, 324,095, 224,872,
224,872 and 107,773, respectively, shares of the 1993 Plan Shares, and based
on the December 31, 1997 closing market price of $24.00 per share, the value
as of December 31, 1997 of these shares received in this exchange would be
as follows: $19,335,912; $7,778,280; $5,396,928; $5,396,928; and $2,586,552,
respectively. See "Principal Stockholders."

(6) The amounts in this column represent the amounts paid to the named executive
officers during the years ended December 31, 1995 and 1996 under IPC's
Special Incentive Plan, dated as of January 1, 1993. Pursuant to such plan,
upon the occurrence of certain "Payment Events" (therein defined), IPC was
obligated to pay to certain executive officers an aggregate cash award up to
a maximum amount of $2.25 million. During 1995 and 1996, IPC paid to certain
executive officers (including the named executive officers) $550,000 and
$1.7 million, respectively, under such plan. The 1995 and the 1996 payments
under such plan were made by IPC notwithstanding the fact that there was not
a Payment Event during 1995 or 1996, this condition having been waived by
IPC. The IPC Special Incentive Plan was terminated in 1996 after the final
payments thereunder were made.

(7) The 1997 All Other Compensation column includes (i) the Company's
contributions (excluding employee earnings reduction contributions) under
the Company's Retirement Plan and Trust and under the Company's Executive
Deferred Compensation Plan during fiscal 1997 as follows: $67,133 to Mr.
Bayly; $28,663 to Mr. Tannura; $22,844 to Mr. Whitacre; $16,811 to Mr.
Ellsworth; and $19,180 to Mr. Patterson; (ii) insurance premiums with
respect to the Company's Executive Disability Income Coverage paid by the
Company during 1997 as follows: $7,221 for Mr. Bayly; $2,323 for Mr.
Tannura; $3,582 for Mr. Ellsworth; and $2,809 for Mr. Patterson; (iii) the
Company's payment during 1997 of $150,000 of nonqualified retirement
benefits to Mr. Bayly pursuant to the terms of his Amended and Restated
Employment Agreement, dated as of May 30, 1996; (iv) the following amounts
of taxable compensation which were realized by the named executive officers
as a result of their receipt of their portion of the 1993 Plan Shares: Mr.
Bayly -- $12,890,608; Mr. Tannura -- $5,185,520; Mr. Whitacre -- $3,597,952;
Mr. Ellsworth -- $3,597,952; and Mr. Patterson -- $1,724,368; and (v) the
Company's payment to the named executive officers of the following amounts
to enable them to make (on an after tax basis) the 1997 interest payments on
their respective promissory notes payable to the Company: Mr. Bayly --
$124,328; Mr. Tannura -- $50,014; Mr. Whitacre -- $36,781; Mr. Ellsworth --
$34,702; and Mr. Patterson -- $16,631. See "Certain Relationships and
Related Transactions."

39
<PAGE> 42

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATE OF
SECURITIES OPTIONS/SARS EXERCISE STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM(3)
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME GRANTED (#)(1) FISCAL YEAR(2) ($/SH) DATE 5% ($) 10% ($)
---- -------------- -------------- -------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
George V. Bayly............ 123,575 24.0 16.00 9/30/07 1,243,450 3,151,148
President and Chief
Executive Officer
Frank V. Tannura........... 34,335 6.7 16.00 9/30/07 345,490 875,538
Vice President and Chief
Financial Officer
Eugene M. Whitacre......... 34,335 6.7 16.00 9/30/07 345,490 875,538
Vice President and
General Manager
Thomas S. Ellsworth........ 17,500 3.4 16.00 9/30/07 176,090 446,248
Vice President and
General Manager
G. Douglas Patterson....... 10,000 1.9 16.00 9/30/07 100,623 254,999
Vice President and
General Counsel
</TABLE>

- -------------------------
(1) The options specified in this column reflect each named executive officer's
portion of the Company's non-qualified stock options issued under the Ivex
Packaging Corporation 1997 Long-Term Stock Incentive Plan (the "1997 Plan
Options") and their portion of the 1993 Plan Options allocable to 1997. The
1993 Plan Options are fully vested and the 1997 Plan Options vest 33 1/3%
over the first three years of the ten-year option term. The 1993 Plan
Options and the 1997 Plan Options were granted at the initial public
offering price of $16.00 per share in connection with the Company's 1997
Common Stock Offering.

(2) Reflects the percentage of all options granted to all employees during the
calendar year ended on December 31, 1997.

(3) The potential realized dollar values shown above represent the potential
gains based upon annual compound price appreciation of 5% and 10% from the
date of grant through the full option term. The dollar amounts under these
columns are the result of calculations at the 5% and 10% rates established
by the Commission and therefore are not intended to forecast possible future
appreciation, if any, of the stock price of the Company.

40
<PAGE> 43

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS OPTIONS/SARS
ACQUIRED ON VALUE AT FY-END AT FY-END
EXERCISE REALIZED EXERCISABLE(1)/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE(2) UNEXERCISABLE(3)
---- ----------- -------- ---------------- ----------------
<S> <C> <C> <C> <C>
George V. Bayly....................... -- -- 324,356/93,500 $2,594,848/748,000
President and Chief Executive
Officer
Frank V. Tannura...................... -- -- 129,548/30,000 1,036,384/240,000
Vice President and Chief Financial
Officer
Eugene M. Whitacre.................... -- -- 91,236/30,000 729,888/240,000
Vice President and General Manager
Thomas S. Ellsworth................... -- -- 86,908/17,500 695,264/140,000
Vice President and General Manager
G. Douglas Patterson.................. -- -- 41,652/10,000 333,216/ 80,000
Vice President and General Counsel
</TABLE>

- -------------------------
(1) The 1993 Plan Options specified in this column were received by the named
executive officers on September 30, 1997 in connection with the Company's
1997 Common Stock Offering in exchange for each such named executive
officer's portion of the IPC Options which were originally granted under
IPC's 1993 Stock Option Agreement. See "Executive Compensation and Other
Information -- Summary Compensation Table". These options are fully vested.
These options were granted at the initial public offering price of $16.00
per share in connection with the Company's 1997 Common Stock Offering.

(2) The 1997 Plan Options specified in this column were granted under the Ivex
Packaging Corporation 1997 Long-Term Stock Incentive Plan. These options
vest 33 1/3% per year during the first three years of the ten year option
term. These options were granted at the initial public offering price of
$16.00 per share in connection with the Company's 1997 Common Stock
Offering.

(3) The value of the unexercised options is based upon the difference between
the closing price of $24.00 per share of Common Stock on the New York Stock
Exchange on December 31, 1997 (the last trading day in 1997) and the option
exercise price.

CERTAIN EMPLOYMENT ARRANGEMENTS

Mr. Bayly has an amended and restated employment agreement with the
Company, pursuant to which (i) the Company agrees to employ Mr. Bayly through
December 31, 2000 (provided that beginning on January 1, 1998, the term thereof
is automatically extended for one additional day for each day which has then
elapsed since December 31, 1997 unless on or after December 31, 1997 either the
Company's Board of Directors or Mr. Bayly gives notice that the automatic
extension shall cease) as Chairman, President and Chief Executive Officer and to
cause Mr. Bayly's election as a director of IPC, (ii) Mr. Bayly receives a base
salary of $491,000 during 1997, $515,550 during 1998, $541,327 during 1999 and
$568,393 during 2000 (subject to increase at the discretion of the Board of
Directors), (iii) Mr. Bayly is entitled to an aggregate of $150,000 per year for
life insurance, disability insurance and nonqualified retirement benefits, (iv)
Mr. Bayly is eligible for an annual performance bonus based upon the achievement
of predetermined financial objectives, and (v) Mr. Bayly will receive certain
severance benefits if his employment is terminated without cause or if Mr. Bayly
terminates the agreement for good reason (including the giving of notice by the
Board of Directors of the Company to stop the automatic extension of the term
thereof and a termination by Mr. Bayly for any reason during the period of three
months which begins six months after a change of control (as therein

41
<PAGE> 44

defined)). These severance benefits include the payment of a lump sum equal to
four times the sum of (x) the annual salary then in effect and (y) the target
amount of the annual performance bonus for the year in which the termination
occurs, plus the continuation of all benefits and supplemental benefits for four
years after the date of termination. The agreement restricts Mr. Bayly from
competing with the Company during his employment and, in certain circumstances,
for an additional one-year period after the termination of Mr. Bayly's
employment. In addition, the Company has agreed to gross-up payments to Mr.
Bayly for certain taxes, interest and penalties that may be imposed by certain
sections of the Code.

Mr. Tannura has an amended employment agreement with the Company, pursuant
to which (i) the Company agrees to employ Mr. Tannura through May 31, 1999
(provided that beginning on June 1, 1996, the term thereof is automatically
extended for one additional day for each day which has then elapsed since May
31, 1996 unless either the Board of Directors of the Company or Mr. Tannura
gives notice that the automatic extension shall cease) as Vice President and
Chief Financial Officer, (ii) Mr. Tannura is entitled to receive a base salary
of $235,000 per year (subject to increase at the discretion of the Board of
Directors), (iii) Mr. Tannura is eligible to receive an annual performance bonus
based upon the achievement of predetermined financial objectives, and (iv) Mr.
Tannura will receive certain severance benefits if his employment is terminated
without cause or if Mr. Tannura terminates the agreement for good reason
(including the giving of notice by the Board of Directors of the Company to stop
the automatic extension of the term thereof) in an amount equal to (i) at Mr.
Tannura's option, either (A) his annual salary for the remaining term thereof or
(B) the present value (based upon a 10% interest rate) of the aggregate unpaid
annual salary for the full term thereof, plus (ii) at Mr. Tannura's option,
either (C) an annual bonus for each year remaining in the term in an amount
equal to the target amount of his performance bonus for the year in which his
termination of employment occurs, or (D) the present value of three times the
target amount of his performance bonus for the year in which the termination of
his employment occurs plus (iii) a pro rata portion of his performance bonus for
the year in which his employment is terminated, plus (iv) unpaid benefits
accrued up to the date of termination, plus (v) the continuation of all benefits
for the full term.

The Company has entered into severance agreements with the other named
executive officers, pursuant to which such officers receive a severance payment
equal to one year's salary if their employment is terminated other than for
death, disability or cause.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Until December 1, 1997, the Company's Board of Directors did not have a
compensation committee (or other board committee performing equivalent
functions). The members of the Board of Directors of the Company, in
consultation with Mr. Bayly, the President of the Company, performed the
functions normally performed by a compensation committee and participated in
deliberations concerning executive officer compensation. No executive officer of
the Company served as a member of the compensation committee (or other board
committee performing equivalent functions) or as a member of the Board of
another entity, one of whose executive officers served on the Board of Directors
of the Company. On December 1, 1997, the Board of Directors formed the
Compensation Committee and elected Messrs. William J. White (chairman) and
Anthony P. Scotto as its members.

IVEX PACKAGING CORPORATION 1997 LONG-TERM STOCK INCENTIVE PLAN

In connection with the 1997 Common Stock Offering, Ivex adopted the Ivex
Packaging Corporation 1997 Long-Term Stock Incentive Plan (the "1997 Stock
Incentive Plan" or the "LTIP"). The following is a summary of the material
features of the plan.

Purpose. The purpose of the plan is to promote the interests of the Company
and its stockholders by (i) attracting and retaining exceptional officers,
employee-directors and other key employees of the Company; (ii) motivating such
individuals by means of performance-related incentives to achieve longer-range
performance goals; and (iii) enabling such individuals to participate in the
long-term growth and financial success of the Company.

42
<PAGE> 45

Administration. The plan will be administered by the Compensation Committee
of the Board (the "Committee" or the "Compensation Committee").

Number of Shares Authorized Under the Plan. The plan authorizes the grant
of awards to participants with respect to a maximum of 2,000,000 shares of the
Company's Common Stock ("Shares"), which awards may be made in the form of (i)
nonqualified stock options; (ii) stock options intended to qualify as incentive
stock options under Section 422 of the Code; (iii) stock appreciation rights;
(iv) restricted stock and/or restricted stock units; (v) performance awards and
(vi) other stock-based awards; provided that the maximum number of Shares with
respect to which stock options and stock appreciation rights may be granted to
any participant in the plan in any calendar year may not exceed 200,000. If,
after the effective date of the plan, any Shares covered by an award granted
under the plan, or to which such an award relates, are forfeited, or if an award
has expired, terminated or been canceled for any reason whatsoever (other than
by reason of exercise or vesting) and in either such case a participant has
received no benefits of ownership with respect to the forfeited Shares or the
Shares to which such expired, terminated or canceled award relates (other than
voting rights and dividends that were forfeited in connection with such
forfeiture, expiration, termination or cancellation), then the Shares covered by
such award shall again be, or shall become, Shares with respect to which awards
may be granted under the plan.

Terms and Conditions of Awards Under the Plan. Non-qualified and incentive
stock options granted under the plan shall be subject to such terms, including
exercise price and conditions and timing of exercise, as may be determined by
the Committee and specified in the applicable award agreement or thereafter;
provided that stock options that are intended to qualify as incentive stock
options will be subject to terms and conditions that comply with such rules as
may be prescribed by Section 422 of the Code. Payment in respect of the exercise
of an option granted under the plan may be made in cash, or its equivalent, or,
if and to the extent permitted by the Committee, by exchanging Shares owned by
the optionee (which are not the subject of any pledge or other security interest
and which have been owned by such optionee for at least six months), or by a
combination of the foregoing, provided that the combined value of all cash and
cash equivalents and the fair market value of such Shares so tendered to the
Company as of the date of such tender is at least equal to the aggregate
exercise price of the option.

Stock appreciation rights granted under the plan shall be subject to such
terms, including grant price and the conditions and limitations applicable to
exercise thereof, as may be determined by the Committee and specified in the
applicable award agreement or thereafter; provided that stock appreciation
rights may not be exercisable earlier than six months after the date of grant.
Stock appreciation rights may be granted in tandem with another award, in
addition to another award, or freestanding and unrelated to another award. A
stock appreciation right shall entitle the participant to receive an amount
equal to the excess of the fair market value of a Share on the date of exercise
of the stock appreciation right over the grant price thereof. The Committee
shall determine whether a stock appreciation right shall be settled in cash,
Shares or a combination of cash and Shares.

Restricted stock and restricted stock units granted under the plan shall be
subject to such terms and conditions including, without limitation, the duration
of the period during which, and the conditions under which, the restricted stock
and restricted stock units may be forfeited to the Company, as may be determined
by the Committee in its sole discretion. Each restricted stock unit shall have a
value equal to the fair market value of a Share. Restricted stock units shall be
paid in cash, Shares, other securities or other property, as determined in the
sole discretion of the Committee, upon the lapse of the restrictions applicable
thereto, or otherwise in accordance with the applicable award agreement.
Dividends paid on any Shares of restricted stock may be paid directly to the
participant, or may be reinvested in additional Shares of restricted stock or in
additional restricted stock units, as determined by the Committee in its sole
discretion.

Performance awards granted under the plan shall consist of a right which is
(i) denominated in cash or Shares, (ii) valued, as determined by the Committee,
in accordance with the achievement of such performance goals during such
performance periods as the Committee shall establish, and (iii) payable at such
time and in such form as the Committee shall determine. Subject to the terms of
the plan and any applicable award agreement, the Committee shall determine the
performance goals to be achieved during any

43
<PAGE> 46

performance period, the length of any performance period, the amount of any
performance award and the amount and kind of any payment or transfer to be made
pursuant to any performance award. Performance awards may be paid in a lump sum
or in installments following the close of the performance period or, in
accordance with procedures established by the Committee, on a deferred basis.

In addition to the foregoing types of awards, the Committee shall have
authority to grant to participants an "other stock-based award," which shall
consist of any right which is (i) not a stock option, stock appreciation right,
restricted stock or restricted unit award or performance award and (ii) an award
of Shares or an award denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares (including, without
limitation, securities convertible into Shares), as deemed by the Committee to
be consistent with the purposes of the plan; provided that any such rights must
comply, to the extent deemed desirable by the Committee, with Rule 16b-3 and
applicable law. Subject to the terms of the plan and any applicable award
agreement, the Committee shall determine the terms and conditions of any such
other stock-based award, including the price, if any, at which securities may be
purchased pursuant to any other stock-based award granted under this plan.

In addition, in the sole and complete discretion of the Committee, an
award, whether made as an other stock-based award or as any other type of award
issuable under the plan, may provide the participant with dividends or dividend
equivalents, payable in cash, Shares, other securities or other property on a
current or deferred basis.

Amendment to Plan. The Board may amend, alter, suspend, discontinue, or
terminate the plan or any portion thereof at any time; provided that no such
amendment, alteration, suspension, discontinuation or termination shall be made
without stockholder approval if such approval is necessary to comply with any
tax or regulatory requirement, including for these purposes any approval
requirement which is a prerequisite for exemptive relief from Section 16(b) of
the Exchange Act. Notwithstanding anything to the contrary herein, the Committee
may amend the plan in such manner as may be necessary so as to have the plan
conform with local rules and regulations in any jurisdiction outside the United
States.

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of March 31, 1998, by each person (other than
Selling Stockholders) known by the Company to be the beneficial owner of more
than 5% of the outstanding shares of Common Stock.

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of April 27, 1998 by (i) each of the directors
of the Company, (ii) each of the named executive officers of the Company, (iii)
all directors and executive officers of the Company as a group, and (iv) each of
the Selling Stockholders.

44
<PAGE> 47

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERINGS AFTER OFFERINGS(1)
----------------------------- NUMBER OF SHARES -----------------------------
NUMBER OF SHARES OF COMPANY NUMBER OF SHARES
NAME AND ADDRESS OF THE COMPANY'S PERCENTAGE COMMON STOCK SOLD OF THE COMPANY'S PERCENTAGE
OF BENEFICIAL OWNER COMMON STOCK(2) OF CLASS IN THE OFFERINGS COMMON STOCK(2) OF CLASS
------------------- ---------------- ---------- ----------------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
G. Douglas Patterson.................. 174,288(4) * 21,039 153,249(5) *
Glenn R. August(6)(7)(8).............. 183,101 * 91,551 91,550 *
Anthony P. Scotto(7)(8)............... 69,067 * 34,534 34,533 *
R. James Comeaux...................... 3,000 * 0 3,000 *
William J. White...................... 1,000 * 0 1,000 *
Richard R. Cote....................... 57,323(4) * 10,000 47,323(5) *
Robert W. George...................... 35,921(4) * 15,907 20,014(5) *
Gene J. Gentili....................... 73,098(4) * 12,720 60,378(5) *
Roger A. Kurinsky..................... 73,098(4) * 13,180 59,918(5) *
Jeremy S. Lawrence.................... 162,460(4) * 13,034 149,426(5) *
All directors and executive officers
as a group(9)....................... 3,123,824 14.7% 714,551 2,409,273 11.1%
Other Selling Stockholders(8)
Keystone, Inc.(10).................... 1,107,567 5.2% 553,784 553,783 2.5%
Overseas Assets Holdings, Inc. ....... 407,350 1.9% 407,350 --
The Equitable Life Assurance Society
of the United States................ 1,559,605 7.3% 350,000 1,209,605 5.6%
Umpawaug I Corp. ..................... 331,813 1.6% 331,813 --
Robert M. Bass........................ 519,613 2.4% 259,807 259,806 1.2%
Mitsui Leasing Capital Corporation.... 242,358 1.1% 242,358 --
Bondo FTW, Inc. ...................... 223,219 1.1% 223,219 --
Acadia Electra Partners, L.P. ........ 210,910 * 210,910 --
Xerox Credit Corporation.............. 176,453 * 176,453 --
The Bank of New York Company, Inc. ... 144,186 * 144,186 --
Umpawaug II Corporation............... 134,488 * 134,488 --
Wells Fargo & Company................. 117,823 * 117,823 --
Neuville Company, Inc. ............... 117,389 * 117,389 --
Capital Partnership................... 228,756 1.1% 114,378 114,378 *
Daniel L. Doctoroff................... 166,972 * 79,691 87,281 *
Steven B. Gruber...................... 165,883 * 79,146 86,737 *
Great American Insurance Company...... 78,605 * 78,605 --
Paribas North America, Inc. .......... 70,582 * 70,582 --
John Hancock Mutual Life Insurance
Company............................. 68,692 * 68,692 --
World Wildlife Fund, Inc. ............ 49,066 * 49,066 --
American Empire Surplus Lines
Insurance Company................... 47,163 * 47,163 --
Oak Hill Partners, Inc. .............. 39,888 * 39,888 --
David M. Schwarz...................... 79,660 * 39,830 39,830 *
Ronald N. Beck........................ 73,579 * 30,000 43,579 *
J. Taylor Crandall.................... 36,259 * 18,130 18,129 *
Neal K. Aronson....................... 15,539 * 15,539 --
Anchor Property Corporation........... 12,577 * 12,577 --
FWHY-88 Investors, L.P. .............. 19,631 * 9,816 9,815 *
Templeton Global Bond Fund............ 9,814 * 9,814 --
SBOS, L.P. ........................... 9,814 * 9,814 --
Acadia MGP, Inc.(6)................... 18,380 * 9,190 9,190 *
David G. Offensend.................... 43,749 * 9,109 34,640 *
Oak Hill Profit-Sharing Plan F/B/O
Daniel L. Doctoroff................. 7,591 * 7,591 --
Oak Hill Profit-Sharing Plan F/B/O
Steven B. Gruber.................... 7,591 * 7,591 --
</TABLE>

45
<PAGE> 48

- -------------------------
* Represents less than 1% of such Common Stock.

(1) The Company has granted the Underwriters 30-day options to purchase up to
798,000 shares of the Company's Common Stock. The table does not reflect
the possible sale of additional shares if the Underwriters' over-allotment
options are exercised.

(2) To the knowledge of the Company, each stockholder has sole voting and
investment power as to the shares shown unless otherwise noted, although
certain executive officers of the Company and certain Selling Shareholders
are parties to the Voting Agreement. See "Certain Relationships and Related
Transactions."

(3) The shares shown as beneficially owned by Alliance Capital Management L.P.
are based upon a Schedule 13G filed by the Alliance Capital Management
L.P., Alpha Assurances Vie Mutuelle, AXA Assurances I.A.R.D. Mutuelle, AXA
Assurances Vie Mutuelle, AXA Courtage Assurance Mutuelle, AXA-UAP and
Equitable Companies Inc. on February 13, 1998.

(4) Represents shares of outstanding Common Stock in the amounts of 825,074,
356,782, 237,907, 235,011, 132,636, 41,553, 25,908, 52,722, 52,722 and
120,808 that are owned by Messrs. Bayly, Tannura, Whitacre, Ellsworth,
Patterson, Cote, George, Gentili, Kurinsky and Lawrence, respectively, and
vested and earned options that are currently exercisable in the amounts of
324,356, 129,584, 91,236, 86,908, 41,652, 15,770, 10,013, 20,376, 20,376
and 41,652 that are owned by Messrs. Bayly, Tannura, Whitacre, Ellsworth,
Patterson, Cote, George, Gentili, Kurinsky and Lawrence, respectively.

(5) Represents shares of outstanding Common Stock in the amounts of 525,074,
324,196, 167,907, 135,011, 111,597, 31,553, 10,001, 40,002, 39,542 and
107,774 that are owned by Messrs. Bayly, Tannura, Whitacre, Ellsworth,
Patterson, Cote, George, Gentili, Kurinsky and Lawrence, respectively, and
vested and earned options that are currently exercisable in the amounts of
324,356, 129,584, 91,236, 86,908, 41,652, 15,770, 10,013, 20,376, 20,376
and 41,652 that are owned by Messrs. Bayly, Tannura, Whitacre, Ellsworth,
Patterson, Cote, George, Gentili, Kurinsky and Lawrence, respectively.

(6) Mr. August is an officer and director of Acadia MGP, Inc.

(7) The address of such individuals is c/o Oak Hill Partners, Inc., 65 East
55th Street, New York, New York 10022-3219.

(8) Certain of the Selling Stockholders have received, or will receive, their
shares of Common Stock from Acadia Partners, L.P. or one of its affiliates
or co-investment partnerships pursuant to a distribution, declared on April
17, 1998, of assets from Acadia Partners, L.P. or such other entity.

(9) All directors and executive officers as a group hold shares of outstanding
Common Stock in the aggregate amount of 2,341,901 and vested and earned
options that are currently exercisable for 781,923 shares of Common Stock,
and will hold shares of outstanding Common Stock after the Offerings in the
aggregate amount of 1,627,530 and vested and earned options that are
currently exercisable for 781,923 shares of Common Stock.

(10) Robert M. Bass owns all of the outstanding voting common stock of Keystone,
Inc.

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<PAGE> 49

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In connection with the Company's 1997 Common Stock Offering, Acadia and
certain officers of the Company entered into a Voting Agreement pursuant to
which they agreed to vote all of their outstanding shares of Common Stock, for
so long as they own such shares, for the director nominees proposed according to
the terms thereof. The Voting Agreement obligates the parties thereto to vote
their shares to cause the Board of Directors to consist of six members, two of
whom will be designated by Acadia, two of whom will be designated by Mr. Bayly
(or a successor management employee) and two of whom will be independent
directors mutually acceptable to the parties. Acadia has the right (until
Acadia's ownership of the outstanding Common Stock falls below 20.0%) to
increase the size of the Board to nine members and designate an additional two
directors. During the time that Acadia owns more than 12.5% and less than 20.0%
of the outstanding Common Stock, Acadia will be entitled to designate two
directors (if the Board of Directors has six directors) or three directors (if
the Board of Directors has more than nine directors), and during the time that
Acadia owns more than 5.0% and less than 12.5% of the outstanding Common Stock,
Acadia has the right to designate one director. During the time that Ivex's
management owns 7.5% or more of the outstanding Common Stock, Mr. Bayly (or a
successor management employee) has the right to designate two directors, and
during the time that Ivex's management owns more than 5.0% and less than 7.5%
such management has the right to designate one director. The term of the Voting
Agreement is ten years, subject to earlier termination upon the occurrence of
certain events, including the point at which Acadia's holdings of Common Stock
fall below 5.0% of the outstanding Common Stock of the Company. The Voting
Agreement will be terminated upon consummation of the Offerings.

In connection with the 1997 Common Stock Offering and pursuant to the 1993
Stock Option Plan, certain executive officers, including the named executive
officers, exchanged all of the IPC Options for (a) 2,114,133 shares of the
Company's Common Stock and (b) vested and earned options exercisable at any time
on or prior to September 30, 2007 into an aggregate of 817,067 shares of the
Company's Common Stock at an exercise price of $16.00 per share, the initial
public offering price per share of Common Stock in the 1997 Common Stock
Offering. See "Executive Compensation -- Summary Compensation Table" and
"Principal and Selling Stockholders." These executive officers, including the
named executive officers, have the right to have their shares of Company Common
Stock registered by the Company in the event that Acadia's shares of Common
Stock are registered under the Registration Rights Agreement that the Company
entered into with Acadia and certain related investors concurrently with the
1997 Common Stock Offering. The Company has registered with the Securities and
Exchange Commission on Form S-8 (i) all of the 2,114,133 1993 Plan Shares and
all of the 817,067 shares of Common Stock that are issuable upon exercise of the
1993 Plan Options which the Company's senior management received in exchange for
their IPC Options pursuant to the 1993 Stock Option Plan and (ii) all of the
shares issuable upon the exercise of the options under the Ivex Packaging
Corporation 1997 Long-Term Stock Incentive Plan.

Also, in accordance with the terms of the 1993 Stock Option Plan and
concurrently with the closing of the 1997 Common Stock Offering, the Company
extended loans to certain executive officers (including the named executive
officers) in an amount equal to the aggregate tax liability incurred by each of
them as a result of their receipt of the 1993 Plan Shares in exchange for their
respective IPC Options. Each such loan is evidenced by a non-recourse promissory
note (recourse only to each such officer's 1993 Plan Shares) which bears
interest at the minimum permissible rate per annum allowable under the Internal
Revenue Code without imputation of income, payable in arrears on each December
31, and is payable in full upon the sale of such 1993 Plan Shares or upon the
earlier to occur of (i) September 30, 2007 and (ii) the termination of the
executive officer's employment with the Company for any reason, but in no event
on or before the date such shares of Common Stock are registered pursuant to a
registration statement that has been declared effective. As a consequence of
these loans, as of March 31, 1998, Messrs. Bayly, Tannura, Whitacre, Ellsworth
and Patterson are indebted to the Company in the following respective amounts:
$5,647,684, $2,271,900, $1,620,094, $1,576,349 and $755,487. The promissory
notes obligate the Company to gross-up the executive officers' compensation to
enable them to make (on an after-tax basis) the required interest payments on
their promissory notes.

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<PAGE> 50

On or about December 17, 1992, Penobscot-MB Partners (an affiliate of
Acadia) and the Company entered into a consulting agreement. Under this
consulting agreement, the Company agreed to pay Penobscot-MB Partners $400,000
per year and Penobscot-MB Partners agreed to provide to the Company certain
general financial advisory and other consulting services customarily provided by
merchant banks. In addition, the Company agreed to indemnify Penobscot-MB
Partners against certain liabilities in connection with its services to the
Company. Upon consummation of the 1997 Common Stock Offering, the consulting
agreement was terminated and a one-time final termination fee of $500,000 was
paid by the Company to Penobscot-MB Partners.

On or about December 17, 1992, IPC, its subsidiaries and the Company
entered into a tax sharing agreement pursuant to which IPC and its subsidiaries
will pay to the Company their respective shares of the Company's consolidated
tax liability.

Mr. Bayly and Mr. Tannura each have an employment agreement with the
Company. See "Executive Compensation and Other Information -- Certain Employment
Arrangements."

Pursuant to a consulting agreement, dated October 29, 1996, Nicolaus Paper
Inc. ("Nicolaus") paid to the Company a performance-based consulting fee in an
annual amount equal to $350,000 for certain services rendered to Nicolaus by the
Company during 1997. Certain executive officers and directors of the Company
together with certain members of management of Oak Hill Partners, Inc. (Acadia's
investment advisor) own all of the outstanding common stock of Nicolaus. During
1997, the Company purchased certain grades of paper from Nicolaus at market
prices for use in IPC's paper converting operations.

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 45,000,000 shares
of Common Stock, par value $.01 per share and 5,000,000 shares of preferred
stock, par value $.01 per share. At April 24, 1998, the Company had 20,431,268
shares of Common Stock issued and outstanding, held of record by approximately
257 stockholders and no shares of the preferred stock issued and outstanding.

The following description of the capital stock of the Company and certain
provisions of the Company's Certificate of Incorporation, as amended (the
"Amended Certificate"), and its Amended By-laws (the "Amended By-laws") is a
summary and is qualified in its entirety by the Amended Certificate and Amended
By-laws, copies of which are exhibits to the Registration Statement of which
this Prospectus is a part.

COMMON STOCK

All of the issued and outstanding shares of Common Stock are, and upon
completion of the Offerings the shares of Common Stock offered hereby will be,
fully paid and non-assessable. Holders of Common Stock are entitled to one vote
for each share on all matters voted upon by stockholders and have no preemptive
or other rights to subscribe for additional securities of the Company. Subject
to preferences that may be applicable to any then outstanding preferred stock,
each share of Common Stock has an equal and ratable right to receive dividends
when, as and if declared by the Board of Directors out of assets legally
available therefor. The Credit Facility prohibits the payment by the Company of
dividends to holders of Common Stock. See "Risk Factors -- Substantial
Leverage," "Dividend Policy" and "Description of Certain Indebtedness." In the
event of a liquidation, dissolution or winding up of the Company, the holders of
Common Stock will be entitled to share equally and ratably in the distribution
of all of the Company's assets remaining available for distribution after
satisfaction of all its liabilities and the payment of the liquidation
preference of any then outstanding preferred stock, if any.

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<PAGE> 51

PREFERRED STOCK

The Amended Certificate authorizes the Board of Directors to issue
preferred stock in classes or series and to establish the designations,
preferences, qualifications, limitations or restrictions of any class or series
with respect to the rate and nature of dividends, the price and terms and
conditions on which shares may be redeemed, the terms and conditions for
conversion or exchange into any other class or series of the stock, voting
rights and other terms. The Company may then issue, without approval of the
holders of Common Stock, preferred stock which has voting, dividend or
liquidation rights superior to the Common Stock and which may adversely affect
the rights of holders of Common Stock. The issuance of preferred stock, while
providing flexibility in connection with possible acquisitions and other
corporate purposes, could, among other things, adversely affect the voting power
of the holders of Common Stock and could have the effect of delaying or
preventing a change in control of the Company. The Company has no present plan
to issue any shares of preferred stock.

CERTAIN CHARTER AND BY-LAW PROVISIONS

As permitted by the Delaware GCL, the directors are indemnified against
certain expenses and liabilities incurred in their capacities as directors of
the Company when acting in good faith and cannot be held personally liable for
certain breaches of their fiduciary duty of care, as described below.

The Amended Certificate provides for the Board of Directors to be divided
into three classes, with staggered three-year terms. As a result, only one class
of directors will be elected at each annual meeting of stockholders of the
Company, with the other classes continuing for the remainder of their respective
terms.

The Amended Certificate also provides that directors may be removed from
office only for cause and only by the affirmative vote of the holders of at
least two-thirds of the total outstanding voting stock of the Company. Vacancies
on the Board of Directors, including those resulting from an increase in the
number of directors, may be filled only by the remaining directors, not by
stockholders.

Any action required or permitted to be taken by the stockholders of the
Company may be effected only at an annual or special meeting of stockholders and
will not be permitted to be taken by written consent in lieu of a meeting
(except that stockholders may take action by written consent in lieu of a
meeting during the time period that the Stockholders Agreement remains in
effect). The Amended Certificate and the Amended By-Laws also provide that
special meetings of stockholders may be called by a majority of the Board of
Directors of the Company. Except in the case of a Substantial Holder (as defined
in the Amended By-Laws) calling a special meeting of the Board of Directors to
increase the number of directors and to fill any vacancy created thereby or to
fill any other vacancy, stockholders will not be permitted to call a special
meeting or to require that the Board of Directors call a special meeting of
stockholders.

Certain provisions contained in the Amended Certificate, including those
relating to the size and classification of the Board of Directors, the removal
of directors, the prohibition on action by written consent and the calling of
special meetings, may only be amended by the affirmative vote of the holders of
at least two-thirds of the total outstanding voting stock of the Company. In
addition, the Amended Certificate provides that the Amended By-Laws may only be
amended by the affirmative vote of the holders of at least two-thirds of the
outstanding voting stock of the Company or by a vote of two-thirds of the
members of the Board of Directors in office.

The Amended Certificate and the Amended By-Laws establish an advance notice
procedure for nomination, other than by or at the direction of the Board of
Directors or a Substantial Holder, of candidates for election as directors, as
well as for other stockholder proposals to be considered at annual meetings of
stockholders. In general, notice of intent to nominate a director or raise
business at such meeting must be received by the Company not less than 60 nor
more than 90 days prior to the scheduled annual meeting, and must contain
certain specified information concerning the person to be nominated or the
matter to be brought before the meeting.

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<PAGE> 52

The foregoing provisions could have the effect of discouraging, delaying or
making more difficult certain attempts to acquire the Company or to remove
incumbent directors even if a majority of the Company's stockholders were to
deem such an attempt to be in the best interests of the Company and its
stockholders.

PERSONAL LIABILITY OF DIRECTORS

The Delaware GCL authorizes a Delaware corporation to eliminate or limit
the personal liability of a director to the corporation and its stockholders for
monetary damages for breach of certain fiduciary duties as a director and,
accordingly, the Company's Amended Certificate includes a provision eliminating
liability for monetary damages for any breach of fiduciary duty as a director,
except to the extent such exemption is not permitted under the Delaware GCL.
Pursuant to the Delaware GCL, directors of the Company are not insulated from
liability for breach of their duty of loyalty (requiring that, in making a
business decision, directors act in good faith and in the honest belief that the
action taken was in the best interest of the corporation), or for claims arising
under the Federal securities laws. The foregoing provision of the Amended
Certificate may reduce the likelihood of derivative litigation against directors
and may discourage or deter stockholders or management from bringing a lawsuit
against directors for breaches of their fiduciary duties, even though such an
action, if successful, might otherwise have benefitted the Company and its
stockholders. In addition, the Amended Certificate provides that such provision
may only be amended by the affirmative vote of the holders of at least 80% of
the outstanding voting stock of the Company.

CERTAIN STATUTORY PROVISIONS

Section 203 of the Delaware GCL contains certain provisions that may make
more difficult the acquisition of control of the Company by means of a tender
offer, open market purchase, proxy fight or otherwise. These provisions are
designed to encourage persons seeking to acquire control of the Company to
negotiate with the Board of Directors. However, these provisions could have the
effect of discouraging a prospective acquiror from making a tender offer or
otherwise attempting to obtain control of the Company. To the extent that these
provisions discourage takeover attempts, they could deprive stockholders of
opportunities to realize takeover premiums for their shares or could depress the
market price of shares. Set forth below is a description of the relevant
provisions of Section 203 of the Delaware GCL. The description is intended as
summary only and is qualified in its entirety by reference to Section 203 of the
Delaware GCL.

Section 203 of the Delaware GCL prohibits certain "business combination"
transactions between a publicly held Delaware corporation, such as the Company,
and any "interested stockholder" for a period of three years after the date on
which such stockholder became an interested stockholder, unless (i) the board of
directors approves, prior to such date, either the proposed business combination
or the proposed acquisition of stock which resulted in the stockholder becoming
an interested stockholder, (ii) upon consummation of the transaction in which
the stockholder becoming an interested stockholder, the interested stockholder
acquires at least 85% of those shares of the voting stock of the corporation
which are not held by the directors, officers or certain employee stock plans or
(iii) on or subsequent to the consummation date, the business combination with
the interested stockholder is approved by the board of directors and also
approved at a stockholders' meeting by the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the corporation's voting stock
other than shares held by the interested stockholder. For purposes of Section
203, a "business combination" includes a merger, asset sale or other transaction
resulting in a financial benefit to the interested stockholder, and an
"interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years, did own) 15% or more of the
corporation's voting stock. A corporation may, at its option, exclude itself
from the coverage of Section 203 by amending its charter or by-laws by action of
its stockholders to exempt itself from coverage, provided that such by-law or
charter amendment shall not become effective until 12 months after the date it
is adopted. The Company has not elected to opt out of Section 203 of the
Delaware GCL pursuant to its terms.

TRANSFER AGENT AND REGISTRAR

The transfer agent, dividend paying agent and registrar for the Common
Stock is First Chicago Trust Company of New York.
50
<PAGE> 53

DESCRIPTION OF CERTAIN INDEBTEDNESS

The following summaries of the agreements governing the outstanding
long-term indebtedness of the Company and its subsidiaries are intended to
describe all relevant material provisions thereof; however, such summaries are
qualified in their entirety by reference to the various agreements described
herein, copies of which have been filed with the Commission. Capitalized terms
used but not defined herein have the meanings ascribed to them in the applicable
agreement.

THE CREDIT FACILITY

The Credit Facility provides for aggregate maximum borrowings by IPC of an
aggregate principal amount originally of up to $475 million to be provided by
the several banks thereunder, consisting of (i) term loans in an original
aggregate amount of up to $300 million, consisting of the Term A Loan and the
Term B Loan; and (ii) the Revolving Credit Facility providing for borrowings by
IPC of revolving loans of up to $175 million, up to $65 million of which may be
in the form of letters of credit (the "Revolving Loans"). The Term Loan Facility
and the Revolving Loans are collectively referred to herein as the "Loans."

A commitment fee of up to 0.375% per annum is payable on the committed but
unused portions of the Revolving Credit Facility. This percentage is initially
set at 0.25% per annum and is subject to adjustment, based upon the ratio of the
Company's Funded Debt to EBITDA (each as defined in the Credit Facility). The
interest rate of the Loans can be, at the election of IPC, based upon LIBOR or
the Adjusted Base Rate (each as defined in the Credit Facility) and are, subject
to certain performance pricing adjustments, based upon the ratio of the
Company's Funded Debt to EBITDA. The Term A Loan and the Revolving Loans that
are LIBOR loans bear interest at rates up to LIBOR plus 1.625% per annum. As of
March 31, 1998, these rates are set at LIBOR plus 1.375% per annum. The Term B
Loans that are LIBOR loans bear interest at rates up to LIBOR plus 2.00% per
annum. As of March 31, 1998, this rate is set at LIBOR plus 1.75% per annum. The
Revolving Loans and the Term A Loans that are Adjusted Base Rate Loans bear
interest at rates up to the Base Rate plus 0.625% per annum. As of March 31,
1998, these rates are set at the Base Rate plus 0.375% per annum. The Term B
Loans that are Adjusted Base Rate Loans bear interest at rates up to the Base
Rate plus 1.00% per annum. As of March 31, 1998, this rate is set at the Base
Rate plus 0.75% per annum.

The Term A Loan is required to be repaid in quarterly payments totalling
$3.75 million in 1997, $16.25 million in 1998, $21.25 million in 1999, $25.0
million in 2000, $26.25 million in 2001, $31.25 million in 2002 and $26.25
million in 2003, and the Term B Loan is required to be repaid in quarterly
payments totalling $1.5 million per annum and four installments of $35.25
million on December 31, 2003, March 31, 2004, June 30, 2004 and September 30,
2004. The Revolving Credit Facility and the Term A Loan will terminate on or
about September 30, 2003 and the Term B Loan will terminate on or about
September 30, 2004. IPC may prepay the Term Loan Facility in accordance with the
terms of the Credit Facility. Subject to the provisions of the Credit Facility,
IPC will be able to, from time to time, borrow, repay and reborrow under the
Revolving Credit Facility.

All Net Cash Proceeds (as defined in the Credit Facility) from the sale of
assets of IPC and its subsidiaries and 75% of Excess Cash Flow (as defined in
the Credit Facility) (which percentage is subject to adjustment based upon the
ratio of the Company's Funded Debt to EBITDA) must, with certain exceptions, be
applied to repay the Credit Facility. Any such mandatory prepayments of the
Credit Facility or the Term Loan Facility is to be applied first to the Term
Loan Facility, if any, and second to the permanent reduction of the Revolving
Credit Facility. In addition, other than the initial public offering of capital
stock, 50% of the net cash proceeds from the issuance of certain equity shall be
applied to repay the Credit Facility (up to a maximum of $50,000,000) and 100%
of the net cash proceeds of any debt issuance other than certain permitted debt
shall be applied to repay the Credit Facility.

The Credit Facility and the other obligations under the Credit Facility are
guaranteed by the Company and IPC's domestic subsidiaries and are to be secured
by (i) a pledge of the capital stock of IPC and each of IPC's domestic
subsidiaries and a pledge of certain shares of stock of certain foreign
subsidiaries; (ii) grants of security interests in substantially all of the
assets of IPC and its domestic subsidiaries; and (iii) mortgages on the real
property of IPC and its domestic subsidiaries. Certain obligations under certain
interest rate hedging
51
<PAGE> 54

arrangements with respect to the Term Loan Facility will be secured pari passu
with the Credit Facility and the other obligations under the Credit Facility.

The Credit Facility contains restrictive covenants typical in facilities of
its type, including, among others, the following: (i) delivery of financial
statements and other reports; (ii) compliance certificates; (iii) notices of
default, material litigation and material governmental and environmental
proceedings; (iv) compliance with laws; (v) payment of taxes; (vi) maintenance
of insurance; (vii) limitation on liens (to include standard exceptions and,
subject to certain limitations, to permit a receivables securitization
financing, if any); (viii) limitations on mergers, consolidations and sales of
assets (with the asset sale restriction to include standard exceptions and,
subject to certain limitations, to permit the receivables securitization
financing, if any); (ix) limitations on debt; (x) limitations on dividends and
stock redemptions; (xi) limitations on investments; (xiii) certain ERISA
covenants; (xiii) limitations on the use of proceeds and (xiv) restrictions on
transactions with affiliates.

In addition to the covenants described above, the Credit Facility contains
financial covenants with respect to, among others, (i) the ratio of EBITDA to
cash Interest Expense (as defined in the Credit Facility); (ii) the ratio of
EBITDA minus Capital Expenditures (as defined in the Credit Facility) to fixed
charges (as described in the Credit Facility); (iii) the ratio of Funded Debt to
EBITDA; and (iv) the Company's Net Worth (as defined in the Credit Facility).

The Credit Facility provides for events of default typical in facilities of
its type, including, among others, the following: (i) nonpayment of principal,
interest, fees or other amounts; (ii) violation of covenants; (iii) inaccuracy
of representations and warranties; (iv) cross-default of other indebtedness; (v)
bankruptcy and other similar events; (vi) material unsatisfied judgments; (vii)
certain ERISA events; (viii) invalidity of any loan documents or security
interests; and (ix) change in control (as defined in the Credit Facility).

OTHER INDEBTEDNESS

As of March 31, 1998, certain of the Company's subsidiaries have an
aggregate of approximately $41.8 million principal amount of indebtedness
(excluding indebtedness under the Credit Facility). Of this amount, $39.7
million in principal amount of such indebtedness relates to industrial
development revenue bonds ("IRBs") secured by letters of credit under the Credit
Facility. Interest on the IRBs is exempt from federal income taxation, and a
determination by the Internal Revenue Service that such exemption is no longer
applicable would cause the mandatory redemption of the IRBs with resulting draws
upon the letters of credit. Certain of the IRBs are secured by certain real
estate and other assets of the Company's subsidiaries.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offerings, 20,931,268 shares of Common Stock will be
outstanding. Of such shares, 4,304,309 shares were acquired by existing
stockholders without registration under the Securities Act and are "restricted
securities" for purposes of the Securities Act. Such shares may be sold in the
future under Rule 144 promulgated under the Securities Act which contains volume
and manner of sales limitations. See "Principal and Selling Stockholders." In
addition, officers of the Company beneficially own options currently exercisable
into 812,461 shares of the Common Stock.

In general, under Rule 144 as currently in effect, any person (or persons
whose shares are aggregated) (including affiliates of the Company) who has
beneficially owned restricted shares for at least one year, will be entitled to
sell in any three-month period a number of shares that does not exceed the
greater of (i) 1% of the then outstanding shares of Common Stock (approximately
209,000 shares immediately after the Offerings); or (ii) the average weekly
trading volume during the four calendar weeks immediately preceding the date on
which notice of the sale is filed with the Commission. Sales pursuant to Rule
144 are subject to certain requirements relating to the manner of sale, notice
and availability of current public information about the Company. A person (or
persons whose shares are aggregated) who has beneficially owned restricted
shares for at least two years and who is not an affiliate of the Company at any
time during the 90 days immediately preceding the sale is entitled to sell such
shares pursuant to Rule 144(k) without regard to the limitations

52
<PAGE> 55

described above. As defined in Rule 144, an "affiliate" of an issuer is a person
that directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, such issuer. Of the restricted
securities outstanding following the Offerings, approximately 4,178,226 shares
will have been held by persons other than "affiliates" of the Company for at
least one year and will be eligible for resale subject to the volume and other
limitations of Rule 144.

During March 1998, the Company filed a Registration Statement on Form S-8
to register the 2,114,133 shares of Common Stock comprising the 1993 Plan
Shares, the 817,067 shares of Common Stock issuable upon exercise of the 1993
Plan Options and the 2,000,000 shares of Common Stock issuable upon exercise of
the options granted under the 1997 Long-Term Stock Incentive Plan. Management is
selling 588,466 shares of Common Stock in the Offerings.

Sales of substantial amounts of Common Stock in the public market following
the Offerings, or the possibility that such sales may occur, may adversely
affect the prevailing market price of the Common Stock.

REGISTRATION RIGHTS

Pursuant to a Registration Rights Agreement entered into by and among the
Company and certain Selling Stockholders, certain Selling Stockholders owning at
least 5.0% of the outstanding shares of Common Stock have certain shelf, demand
and piggyback registration rights. The Registration Rights Agreement provides
such stockholders with the right to request one or more "shelf" registrations
(each, a "Shelf Registration") at any time after the Company is required to file
periodic reports under the Exchange Act. The Registration Rights Agreement also
provides that at any time when a Shelf Registration is not in effect or not
available for use by the holders of Common Stock, certain Selling Stockholders
owning at least 5.0% of the outstanding shares of Common Stock of the Company
have the right to make up to three requests (in the aggregate) for an
underwritten offering registered under the Securities Act (a "Demand
Registration") of all or part of such stockholders' Common Stock subject to the
Registration Rights Agreement. The Offerings constitute a Demand Registration.
In the event that a Demand Registration is not declared effective within 120
days after a request is delivered, stockholders then acquire the right to
request one additional Demand Registration. The Company may delay a Shelf
Registration or a Demand Registration otherwise required to be prepared and
filed under the Registration Rights Agreement for up to 180 days under certain
circumstances if such registration would, in the opinion of the Board of
Directors, interfere with any material acquisition or financing transaction then
being pursued by the Company. This right to delay registration may not be used
more than once in any twelve-month period.

In addition, in connection with any registration by the Company of its
Common Stock, the Company is required to notify the stockholders subject to the
Registration Rights Agreement of such registration and include in such
registration all registrable Common Stock with respect to which the Company has
received written requests for inclusion therein unless the underwriters
determine that the number of shares requested to be included in such
registration will have a material adverse effect on such registration, in which
case only stockholders' shares which may be sold without any such material
adverse effect will be included, on a pro-rata basis. Under the Registration
Rights Agreement, the Company is required to bear all costs and expenses of each
such registration (other than the underwriters' commissions or discounts which
are to be borne by the sellers), and the stockholders and the Company have
agreed to indemnify each other against certain liabilities, including
liabilities under the Securities Act.

Management also has the right to have their restricted shares of Common
Stock registered by the Company (on the same terms and conditions as such
Selling Stockholders as described above) in the event such Selling Stockholders'
shares of Common Stock are registered under the Registration Rights Agreement as
described above. See "Certain Relationships and Related Transactions --
Transactions with Management."

53
<PAGE> 56

CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS

The following is a general discussion of certain United States Federal tax
consequences of the acquisition, ownership, and disposition of Common Stock by a
holder that, for United States Federal income tax purposes, is not a "United
States person" (a "Non-United States Holder"). This discussion is based upon the
United States Federal tax law now in effect, which is subject to change,
possibly retroactively. For purposes of this discussion, a "United States
person" means a citizen or resident of the United States; a corporation,
partnership, or other entity created or organized in the United States or under
the laws of the United States or of any political subdivision thereof; an estate
whose income is includible in gross income for United States Federal income tax
purposes regardless of its source; or a "United States Trust." A United States
Trust is any trust if, and only if, (i) a court within the United States is able
to exercise primary supervision over the administration of the trust and (ii)
one or more United States trustees have the authority to control all substantial
decisions of the trust. This discussion does not consider any specific facts or
circumstances that may apply to a particular Non-United States Holder.
Prospective investors are urged to consult their tax advisors regarding the
United States Federal tax consequences of acquiring, holding, and disposing of
Common Stock, as well as any tax consequences that may arise under the laws of
any foreign, state, local, or other taxing jurisdiction.

DIVIDENDS

Dividends paid to a Non-United States Holder will generally be subject to
withholding of United States Federal income tax at the rate of 30% unless the
dividend is effectively connected with the conduct of a trade or business within
the United States by the Non-United States Holder (or if certain tax treaties
apply, is attributable to a United States permanent establishment maintained by
such Non-United States Holder), in which case the dividend will be subject to
the United States Federal income tax on net income on the same basis that
applies to United States persons generally. In the case of a Non-United States
Holder which is a corporation, such effectively connected income also may be
subject to the branch profits tax (which is generally imposed on a foreign
corporation on the repatriation from the United States of effectively connected
earnings and profits). Non-United States Holders should consult any applicable
income tax treaties that may provide for a lower rate of withholding or other
rules different from those described above. A Non-United States Holder may be
required to satisfy certain certification requirements in order to claim treaty
benefits or otherwise claim a reduction of or exemption from withholding under
the foregoing rules.

GAIN ON DISPOSITION

A Non-United States Holder will generally not be subject to United States
Federal income tax on gain recognized on a sale or other disposition of Common
Stock unless (i) the gain is effectively connected with the conduct of a trade
or business within the United States by the Non-United States Holder or, if tax
treaties apply, is attributable to a United States permanent establishment
maintained by the Non-United States Holder, (ii) in the case of a Non-United
States Holder who is a nonresident alien individual and holds the Common Stock
as a capital asset, such holder is present in the United States for 183 or more
days in the taxable year of disposition or either such individual has a "tax
home" in the United States or the gain is attributable to an office or other
fixed place of business maintained by such individual in the United States,
(iii) the Company is or has been a "United States real property holding
corporation" for United States Federal income tax purposes (which the Company
does not believe that it is or likely to become) and the Non-United States
Holder holds or has held, directly or indirectly, at any time during the
five-year period ending on the date of disposition, more than 5% of the Common
Stock or (iv) the Non-United States Holder is subject to tax pursuant to the
Internal Revenue Code of 1986, as amended, provisions applicable to certain
United States expatriates. Gain that is effectively connected with the conduct
of a trade or business within the United States by the Non-United States Holder
will be subject to the United States Federal income tax on net income on the
same basis that applies to United States persons generally (and, with respect to
corporate holders, under certain circumstances, the branch profits tax) but will
not be subject to withholding. Non-United States Holders should consult any
applicable treaties that may provide for different rules.

54
<PAGE> 57

FEDERAL ESTATE TAXES

Common Stock owned or treated as owned by an individual who is a Non-United
States Holder at the date of death will be included in such individual's estate
for United States Federal estate tax purposes, unless an applicable estate tax
treaty provides otherwise.

INFORMATION REPORTING AND BACKUP WITHHOLDING

The Company must report annually to the Internal Revenue Service and to
each Non-United States Holder the amount of dividends paid to, and the tax
withheld with respect to, such holder, regardless of whether any tax was
actually withheld. This information may also be made available to the tax
authorities of a country in which the Non-United States Holder resides.

Under the temporary United States Treasury regulations, United States
information reporting requirements and backup withholding tax at a rate of 31%
will generally apply to dividends paid on the Common Stock to a Non-United
States Holder and to payments by a United States office of a broker of the
proceeds of a sale of Common Stock to a Non-United States Holder unless the
holder certifies its Non-United States Holder status under penalties of perjury
or otherwise establishes an exemption. Information reporting requirements (but
not backup withholding) will also apply to payments of the proceeds of sales of
Common Stock by foreign offices of United States brokers, or foreign brokers
with certain types of relationships to the United States, unless the broker has
documentary evidence in its records that the holder is a Non-United States
Holder and certain other conditions are met, or the holder otherwise establishes
an exemption.

Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the Non-United
States Holder's United States Federal income tax liability, provided that the
required information is furnished to the Internal Revenue Service.

These information reporting and backup withholding rules are under review
by the United States Treasury, and their application to the Common Stock could
be changed by future regulations. On October 14, 1997, Treasury Regulations were
published in the Federal Register concerning the withholding of tax and
reporting for certain amounts paid to nonresident individuals and foreign
corporations. The Treasury Regulations will be effective for payments made after
December 31, 1999. After that date, Non-United States Holders claiming treaty
benefits or claiming that income is effectively connected will be required to
submit an appropriate version of Internal Revenue Service Form W-8 to the U.S.
withholding agent. New rules will apply to Non-United States Holders who invest
through intermediaries. Prospective investors should consult their tax advisors
concerning the Treasury Regulations and the potential effect on their ownership
of Common Stock.

55
<PAGE> 58

UNDERWRITING

Subject to the terms and conditions set forth in a purchase agreement (the
"U.S. Purchase Agreement"), among the Company, each of the Selling Stockholders
and each of the underwriters named below (the "U.S. Underwriters"), and
concurrently with the sale of 1,064,000 shares of Common Stock to the
International Managers (as defined below), the Company and the Selling
Stockholders have agreed to sell to the U.S. Underwriters, and each of the U.S.
Underwriters severally has agreed to purchase from the Company and the Selling
Stockholders, the number of shares of Common Stock set forth opposite its name
below.

<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITER SHARES
---------------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
BT Alex. Brown Incorporated.................................
Lehman Brothers Inc. .......................................
Smith Barney Inc. ..........................................
---------
Total.......................................... 4,256,000
=========
</TABLE>

Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), BT
Alex. Brown Incorporated, Lehman Brothers Inc. and Smith Barney Inc. are acting
as representatives (the "U.S. Representatives") for the U.S. Underwriters.

The Company and the Selling Stockholders have also entered into a purchase
agreement (the "International Purchase Agreement" and, together with the U.S.
Purchase Agreement, the "Purchase Agreements") with certain underwriters outside
the United States and Canada (collectively, the "International Managers" and,
together with the U.S. Underwriters, the "Underwriters") for whom Merrill Lynch
International, BT Alex. Brown International, Lehman Brothers International
(Europe) and Smith Barney Inc. are acting as representatives (the "International
Representatives" and, together with the U.S. Representatives, the
"Representatives"). Subject to the terms and conditions set forth in the
International Purchase Agreement, and concurrently with the sale of 4,256,000
shares of Common Stock to the U.S. Underwriters pursuant to the U.S. Purchase
Agreement, the Company and the Selling Stockholders have agreed to sell to the
International Managers, and the International Managers severally have agreed to
purchase from the Company and the Selling Stockholders, an aggregate of
1,064,000 shares of Common Stock. The public offering price per share of Common
Stock and underwriting discount per share of Common Stock are identical under
the U.S. Purchase Agreement and the International Purchase Agreement. The
respective percentages of Common Stock to be sold by each of the Company and the
Selling Stockholders will be identical in the U.S. Offering and the
International Offering.

In the U.S. Purchase Agreement and the International Purchase Agreement,
the several U.S. Underwriters and the several International Managers,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Common Stock being sold pursuant to
each such agreement if any of the shares of Common Stock being sold pursuant to
such agreement are purchased. Under certain circumstances involving a default by
an Underwriter, the commitments of non-defaulting U.S. Underwriters or
International Managers (as the case may be) may be increased or the U.S.
Purchase Agreement or the International Purchase Agreement (as the case may be)
may be terminated. The sale of shares of Common Stock to the U.S. Underwriters
is conditioned upon the sale of Common Stock to the International Managers and
vice versa.

The U.S. Underwriters and the International Managers have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") that provides for the
coordination of their activities. The Underwriters are permitted to sell shares
of Common Stock to each other for purposes of resale at the public offering
price, less an amount not greater than the selling concession. Under the terms
of the Intersyndicate Agreement, the U.S. Underwriters and any dealer to whom
they sell shares of Common Stock will not offer to sell or sell shares of Common
Stock to persons who are non-U.S. or non-Canadian persons or to persons they
believe intend to resell to persons who are non-U.S. or non-Canadian persons,
and the International Managers and any dealer to

56
<PAGE> 59

whom they sell shares of Common Stock will not offer to sell or sell shares of
Common Stock to U.S. persons or to Canadian persons or to persons they believe
intend to resell to U.S. or Canadian persons, except in the case of transactions
pursuant to the Intersyndicate Agreement.

The U.S. Representatives have advised the Company and the Selling
Stockholders that the U.S. Underwriters propose initially to offer the shares of
Common Stock to the public at the public offering price set forth on the cover
page of this Prospectus and to certain dealers at such price less a concession
not in excess of $ per share of Common Stock. The U.S. Underwriters may
allow, and such dealers may reallow, a discount not in excess of $ per share
of Common Stock on sales to certain other dealers. After the Offerings, the
public offering price, concession and discount may be changed.

The Company has granted an option to the U.S. Underwriters, exercisable for
30 days after the date of this Prospectus, to purchase up to an aggregate of
638,400 additional shares of Common Stock at the public offering price set forth
on the cover page of this Prospectus, less the underwriting discount. The U.S.
Underwriters may exercise this option only to cover over-allotments, if any,
made on the sale of the Common Stock offered hereby. To the extent that the U.S.
Underwriters exercise this option, each U.S. Underwriter will be obligated,
subject to certain conditions, to purchase a number of additional shares of
Common Stock proportionate to such U.S. Underwriter's initial amount reflected
in the foregoing table. The Company also has granted an option to the
International Managers, exercisable for 30 days after the date of this
Prospectus, to purchase up to an aggregate of 159,600 additional shares of
Common Stock to cover over-allotments, if any, on terms similar to those granted
to the U.S. Underwriters. If purchased, the Underwriters will offer such shares
on the same terms as those on which the 5,320,000 shares are being offered.

The Company, certain of its executive officers, its directors and certain
of the Selling Stockholders have agreed, subject to certain exceptions, not to
directly or indirectly (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant for the sale of or otherwise dispose of or transfer
any shares of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock, whether now owned or thereafter acquired by the
person executing the agreement or with respect to which the person executing the
agreement thereafter acquires the power of disposition, or file a registration
statement under the Securities Act with respect to the foregoing or (ii) enter
into any swap or other agreement that transfers, in whole or in part, the
economic consequence of ownership of the Common Stock whether any such swap or
transaction is to be settled by delivery of Common Stock or other securities, in
cash or otherwise, without the prior written consent of Merrill Lynch on behalf
of the Underwriters for a period of 90 days after the date of this Prospectus.

In connection with the Offerings, the Underwriters may engage in certain
transactions which stabilize, maintain or otherwise affect the price of the
Common Stock. Such transactions may include the purchase of shares of Common
Stock in the open market to cover short positions created by over-allotments or
to stabilize the price of the Common Stock. In general, purchases of a security
for the purpose of stabilization or to reduce a short position could cause the
price of the security to be higher than it might be in the absence of such
purchases. Neither the Company nor any of the Underwriters make any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Common Stock. In
addition, neither the Company nor any of the Underwriters make any
representation that the Underwriters will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.

The Underwriters do not intend to confirm sales of the Common Stock offered
hereby to any accounts over which they exercise discretionary authority.

The Company and the Selling Stockholders have agreed to indemnify the U.S.
Underwriters and the International Managers against certain liabilities,
including certain liabilities under the Securities Act or to contribute to
payments the Underwriters may be required to make in respect thereof.

George V. Bayly, the Company's President and Chief Executive Officer, is
the brother of Daniel Bayly, the head of investment banking at Merrill Lynch.
Lehman Brothers Inc. and its affiliates beneficially own approximately 6% of the
Common Stock as of April 27, 1998.

57
<PAGE> 60

EXPERTS

The consolidated financial statements of the Company as of December 31,
1996 and 1997 and for each of the three years in the period ended December 31,
1997 included in this Prospectus have been so included in reliance on the report
of Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.

LEGAL MATTERS

Certain legal matters in connection with the Offerings will be passed upon
for the Company by Skadden, Arps, Slate, Meagher & Flom (Illinois), Chicago,
Illinois and certain legal matters will be passed upon for the Underwriters by
Mayer, Brown & Platt, Chicago, Illinois.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 under the Act with respect to the shares of Common Stock being offered by
this Prospectus. This Prospectus does not contain all of the information set
forth in the Registration Statement and the exhibits thereto, certain portions
of which have been omitted as permitted by the Securities Act and the rules and
regulations of the Commission thereunder. For further information with respect
to the Company and the shares of Common Stock offered hereby, reference is made
to the Registration Statement, including the exhibits thereto, copies of which
may be obtained upon payment of the fees prescribed by the Commission or
examined without charge at (i) the Public Reference Section of the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
(ii) the Commission's regional offices located at Citicorp Center, 500 W.
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
Suite 1300, New York, New York 10048. Such reports and other information may
also be accessed through the Commission's electronic data gathering, analysis
and retrieval system via electronic means, including the Commission's web site
on the Internet (http://www.sec.gov). Statements contained in this Prospectus as
to the contents of any contract or other document are intended to discuss all
relevant material provisions thereof; however, in each instance where such
contract or other document is an exhibit to the Registration Statement,
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, and each such statement is qualified in
all respects by such reference.

58
<PAGE> 61

INDEX TO FINANCIAL STATEMENTS

IVEX PACKAGING CORPORATION:

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Audited Financial Statements:
Report of Independent Accountants......................... F-2
Consolidated Balance Sheets at December 31, 1996 and
1997................................................... F-3
Consolidated Statements of Operations for the years ended
December 31, 1995,
1996 and 1997.......................................... F-4
Consolidated Statements of Changes in Stockholders'
Deficit for the years ended December 31, 1995, 1996 and
1997................................................... F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1995,
1996 and 1997.......................................... F-6
Notes to Consolidated Financial Statements................ F-7
Unaudited Interim Financial Statements:
Consolidated Balance Sheets at December 31, 1997 and March
31, 1998............................................... F-20
Consolidated Statements of Operations for the three months
ended March 31, 1997 and 1998.......................... F-21
Consolidated Statements of Changes in Stockholders'
Deficit for the year ended December 31, 1997 and the
three months ended March 31, 1998...................... F-22
Consolidated Statements of Cash Flows for the three months
ended March 31, 1997 and 1998.......................... F-23
Notes to Consolidated Financial Statements................ F-24
</TABLE>

F-1
<PAGE> 62

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of Ivex Packaging Corporation:

In our opinion, the accompanying consolidated balance sheets and related
consolidated statements of operations, of changes in stockholders' deficit, and
of cash flows present fairly, in all material respects, the financial position
of Ivex Packaging Corporation ("the Company") and its subsidiaries at December
31, 1997 and 1996, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

Price Waterhouse LLP
Chicago, Illinois
January 20, 1998, except as to Note 2, "Comprehensive income," which is as of
April 28, 1998

F-2
<PAGE> 63

IVEX PACKAGING CORPORATION

CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1997
---- ----
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 2,822 $ 5,989
Accounts receivable trade, net of allowance............... 51,638 64,952
Inventories............................................... 49,023 59,706
Prepaid expenses and other................................ 5,395 5,759
--------- ---------
Total current assets................................... 108,878 136,406
--------- ---------
Property, Plant and Equipment:
Buildings and improvements................................ 49,038 56,336
Machinery and equipment................................... 231,526 272,602
Construction in progress.................................. 8,069 9,225
--------- ---------
288,633 338,163
Less -- Accumulated depreciation.......................... (123,957) (149,207)
--------- ---------
164,676 188,956
Land...................................................... 8,304 9,077
--------- ---------
Total property, plant and equipment.................... 172,980 198,033
--------- ---------
Other assets:
Goodwill, net of accumulated amortization................. 20,506 35,278
Deferred income taxes..................................... 36,647
Management receivable..................................... 11,135
Miscellaneous............................................. 13,537 10,224
--------- ---------
Total other assets..................................... 34,043 93,284
--------- ---------
Total Assets................................................ $ 315,901 $ 427,723
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Current installments of long-term debt.................... $ 5,921 $ 19,744
Accounts payable.......................................... 36,748 38,675
Accrued salary and wages.................................. 8,603 9,114
Self insurance reserves................................... 7,453 6,799
Accrued rebates and discounts............................. 3,824 4,596
Accrued interest.......................................... 1,680 4,191
Other accrued expenses.................................... 12,110 11,546
--------- ---------
Total current liabilities.............................. 76,339 94,665
--------- ---------
Long-Term Debt.............................................. 352,893 319,055
--------- ---------
Other Long-Term Liabilities................................. 5,243 21,868
--------- ---------
Deferred Income Taxes....................................... 8,770 4,304
--------- ---------
Commitments.................................................
--------- ---------
Stockholders' Deficit:
Common stock, $.01 par value -- 45,000,000 shares
authorized; 10,352,533 and 20,426,666 shares issued and
outstanding, respectively.............................. 11 204
Paid in capital in excess of par value.................... 177,375 328,322
Accumulated deficit....................................... (303,566) (339,836)
Accumulated other comprehensive income (loss)............. (1,164) (859)
--------- ---------
Total stockholders' deficit............................ (127,344) (12,169)
--------- ---------
Total Liabilities and Stockholders' Deficit................. $ 315,901 $ 427,723
========= =========
</TABLE>

The accompanying notes are an integral part of this statement.

F-3
<PAGE> 64

IVEX PACKAGING CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Net sales................................................ $451,569 $451,807 $538,475
Cost of goods sold....................................... 366,409 351,424 418,815
---------- ---------- ----------
Gross profit............................................. 85,160 100,383 119,660
---------- ---------- ----------
Operating expenses:
Selling................................................ 18,027 20,306 27,625
Administrative......................................... 24,540 27,156 31,299
Amortization of intangibles............................ 1,904 621 1,111
Write-off of goodwill.................................. 13,471
Special charges........................................ 4,960 53,329
---------- ---------- ----------
Total operating expenses................................. 62,902 48,083 113,364
---------- ---------- ----------
Income from operations................................... 22,258 52,300 6,296
Interest expense......................................... 43,270 42,732 41,889
---------- ---------- ----------
Income (loss) before income taxes and extraordinary
loss................................................... (21,012) 9,568 (35,593)
Income tax (benefit) provision........................... 1,113 900 (26,053)
---------- ---------- ----------
Income (loss) before extraordinary loss.................. (22,125) 8,668 (9,540)
Extraordinary loss....................................... (2,359) (26,730)
---------- ---------- ----------
Net income (loss)........................................ $(24,484) $ 8,668 $(36,270)
========== ========== ==========
Earnings (loss) per share:
Basic:
Income (loss) before extraordinary loss............. $ (2.14) $ 0.84 $ (0.75)
Extraordinary loss.................................. (0.23) (2.10)
---------- ---------- ----------
Net income (loss)................................... $ (2.37) $ 0.84 $ (2.85)
========== ========== ==========
Weighted average shares outstanding................. 10,352,533 10,352,533 12,747,029
========== ========== ==========
Diluted:
Income (loss) before extraordinary loss............. $ (2.14) $ 0.84 $ (0.75)
Extraordinary loss.................................. (0.23) (2.10)
---------- ---------- ----------
Net income (loss)................................... $ (2.37) $ 0.84 $ (2.85)
========== ========== ==========
Weighted average shares outstanding................. 10,352,533 10,352,533 12,747,029
========== ========== ==========
</TABLE>

The accompanying notes are an integral part of this statement.

F-4
<PAGE> 65

IVEX PACKAGING CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
PAID IN ACCUMULATED
COMMON STOCK CAPITAL OTHER
------------------- IN EXCESS OF ACCUMULATED COMPREHENSIVE STOCKHOLDERS' COMPREHENSIVE
SHARES AMOUNT PAR VALUE DEFICIT INCOME (LOSS) DEFICIT INCOME (LOSS)
------ ------ ------------ ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994... 1,072,246 $ 11 $177,375 $(287,750) $ (902) $(111,266)
Net loss..................... (24,484) (24,484) $(24,484)
Other comprehensive income
(foreign currency
translation adjustment).... (582) (582) (582)
--------
Comprehensive income
(loss)..................... $(25,066)
---------- ---- -------- --------- ------- --------- ========
Balance at December 31, 1995... 1,072,246 11 177,375 (312,234) (1,484) (136,332)
Net income................... 8,668 8,668 $ 8,668
Other comprehensive income
(foreign currency
translation adjustment).... 320 320 320
--------
Comprehensive income
(loss)..................... $ 8,988
---------- ---- -------- --------- ------- --------- ========
Balance at December 31, 1996... 1,072,246 11 177,375 (303,566) (1,164) (127,344)
Issuance of management
shares..................... 218,968 2 33,824 33,826
Common stock split........... 11,175,452 112 (112)
Issuance of common stock..... 7,960,000 79 117,235 117,314
Net loss..................... (36,270) (36,270) $(36,270)
Other comprehensive income
(foreign currency
translation adjustment).... 305 305 305
--------
Comprehensive income
(loss)..................... $(35,965)
---------- ---- -------- --------- ------- --------- ========
Balance at December 31, 1997... 20,426,666 $204 $328,322 $(339,836) $ (859) $ (12,169)
========== ==== ======== ========= ======= =========
</TABLE>

The accompanying notes are an integral part of this statement.

F-5
<PAGE> 66

IVEX PACKAGING CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)......................................... $ (24,484) $ 8,668 $(36,270)
Adjustments to reconcile net income (loss) to net cash
from operating activities:
Depreciation of properties........................... 20,496 22,103 26,068
Amortization of intangibles and debt issue costs..... 19,689 2,028 2,404
Non-cash interest.................................... 11,232 12,801 11,223
Non-cash special charge.............................. 53,329
Extraordinary loss................................... 26,730
Deferred income taxes................................ (28,433)
Write-down of property, plant and equipment, net..... 760
--------- -------- --------
27,693 45,600 55,051
Change in operating assets and liabilities:
Accounts receivable................................ (550) 528 (7,342)
Inventories........................................ 4,371 (743) (4,946)
Prepaid expenses and other assets.................. (930) 621 (212)
Accounts payable................................... (8,486) 1,516 (3,907)
Accrued expenses and other liabilities............. 648 1,680 (2,169)
--------- -------- --------
Net cash from operating activities................. 22,746 49,202 36,475
--------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of stock........................... 117,314
Proceeds from senior credit facility...................... 60,000 300,000
Payment of senior credit facility......................... (59,870) (5,000) (59,125)
Proceeds from revolving credit facility................... 8,500 1,000
Payment of revolving credit facility...................... (8,500)
Redemption of 13 1/4% Discount Debentures................. (117,363)
Redemption of 12 1/2% Subordinated Notes.................. (157,423)
Management loan........................................... (11,625)
Debt redemption costs..................................... (33,339)
Payment of debt issue costs............................... (2,779) (296) (4,303)
Other, net................................................ (185) 722 (253)
--------- -------- --------
Net cash from (used by) financing activities....... 5,666 (13,074) 34,883
--------- -------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment................. (19,385) (17,633) (25,364)
Proceeds from sale of real estate......................... 1,034
Acquisitions.............................................. (11,735) (20,786) (42,728)
Other, net................................................ 215 283 (99)
--------- -------- --------
Net cash used by investing activities.............. (29,871) (38,136) (68,191)
--------- -------- --------
Net increase (decrease) in cash and cash equivalents........ (1,459) (2,008) 3,167
Cash and cash equivalents at beginning of period............ 6,289 4,830 2,822
--------- -------- --------
Cash and cash equivalents at end of period.................. $ 4,830 $ 2,822 $ 5,989
========= ======== ========
Supplemental cash flow disclosures:
Cash paid during the year for:
Interest................................................ $ 30,004 $ 28,592 $ 28,761
Income taxes............................................ 1,052 1,199 1,561
Supplemental schedule of non-cash investing and financing
activities:
Issuance of non-current note for accounts receivable...... 1,000
The Company purchased all of the capital stock of CFI
Industries, Inc. In conjunction with the acquisition,
liabilities were assumed as follows:
Fair value of assets acquired........................... $ 27,127
Cash paid for the capital stock......................... (18,423)
--------
Liabilities assumed.................................. $ 8,704
========
</TABLE>

The accompanying notes are an integral part of this statement.

F-6
<PAGE> 67

IVEX PACKAGING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 1 -- ORGANIZATION:

Ivex Packaging Corporation (the "Company") owns 100% of the common stock of
IPC, Inc. ("IPC"). The Company is a holding company with no operations of its
own and IPC has no contractual obligations to distribute funds to the Company.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The preparation of financial statements in conformity with generally
accepted accounting principles ("GAAP") requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Nature of operations

IPC engages in the business of manufacturing plastic and paper packaging
products for different end-use packaging applications principally with customers
in North America and Europe. These applications include: (i) the integrated
production and conversion of oriented polystyrene sheet and other plastic sheet
into thermoformed packaging products and the sale of such sheet to other
packaging thermoformers; (ii) the manufacture and sale of coated and laminated
kraft paper and plastic materials and single face corrugated products as
protective materials in the packaging of industrial products; and (iii) the
manufacture and sale of unbleached kraft paper and various lightweight specialty
grades of paper for industrial and food service packaging applications.
Accordingly, the accompanying financial data are reported as a single segment.

Principles of consolidation

All the accounts of the wholly-owned subsidiaries of the Company have been
consolidated. All significant intercompany transactions and accounts have been
eliminated.

Revenue recognition

The Company recognizes revenue upon shipment of products.

Cash and cash equivalents

The Company considers all short-term deposits with initial maturities of
three months or less to be cash equivalents.

Accounts receivable

Accounts receivable at December 31, 1996 and 1997 consist of the following:

<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Accounts receivable........................................ $53,718 $67,496
Less -- Allowance for doubtful accounts.................... (2,080) (2,544)
------- -------
$51,638 $64,952
======= =======
</TABLE>

Accounts receivable from sales to customers are unsecured.

F-7
<PAGE> 68
IVEX PACKAGING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

Inventories

Inventories are stated at the lower of cost or market using the first-in,
first-out (FIFO) method to determine the cost of raw materials and finished
goods.

Inventories at December 31, 1996 and 1997 consist of the following:

<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Raw materials.............................................. $26,483 $32,200
Finished goods............................................. 22,540 27,506
------- -------
$49,023 $59,706
======= =======
</TABLE>

Property, plant and equipment

Depreciation of property, plant and equipment is computed using the
straight-line method over the estimated useful lives of the assets. Expenditures
for maintenance and repairs are charged to operations as incurred; major
improvements are capitalized.

Income taxes

The Company recognizes deferred tax assets and liabilities for the expected
future tax consequences of events that have been recognized in the Company's
financial statements or tax returns. In estimating future tax consequences, the
Company generally considers all expected future events other than enactments of
changes in the tax law or rates.

Employee benefit plans

IPC and its subsidiaries have defined contribution and defined benefit
plans covering substantially all employees. IPC's contributions to the defined
contribution plans are determined by matching employee contributions and by
discretionary contributions. Defined benefit plan contributions are determined
by independent actuaries and are generally funded in the minimum annual amount
required by the Employee Retirement Income Security Act of 1974.

IPC provides limited post retirement benefits to a select group of
employees. The current period cost and reserves related to these benefits are
not material.

Goodwill and other long-lived assets

Goodwill represents the excess purchase price over fair value of net assets
acquired and is being amortized using the straight-line method over a forty year
period. Accumulated amortization was $18,781 and $19,593 as of December 31, 1996
and 1997, respectively.

During 1996, the Company adopted SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
This statement requires that long-lived assets and certain identifiable
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of assets may not be
recoverable. If the expected future cash flows (undiscounted and without
interest charges) is less than the carrying amount of the asset an impairment
loss is recognized. The effect of adopting this new accounting standard did not
have an impact on the financial position of the Company. Prior to 1996, an
impairment was recognized if it was probable that the present value of expected
future cash flows (discounted and with interest charges) was less than the
carrying amounts of goodwill and other long-lived assets.

F-8
<PAGE> 69
IVEX PACKAGING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

Earnings per share

During 1997, the Company adopted SFAS No. 128, "Earnings per share," which
requires the presentation of basic and diluted earnings per share. Basic
earnings (loss) per share excludes dilution and is computed by dividing income
(loss) by the weighted average number of common shares outstanding during each
period. Diluted earnings (loss) per share reflects the potential dilution that
could occur if common stock options are exercised and is computed by dividing
income (loss) by the weighted average number of common shares outstanding,
including common stock equivalent shares, issuable upon exercise of outstanding
stock options, to the extent that they would have a dilutive effect on the per
share amounts. During the periods presented, the Company's common stock
equivalents did not have a dilutive effect on the earnings per share amounts.

Foreign currency translation

The financial statements of the Company's foreign subsidiaries are
maintained in local currency which is the functional currency. The balance
sheets of these subsidiaries are translated at exchange rates in effect at the
balance sheet date and the related statements of operations are translated at
weighted average rates of exchange for the year. Translation adjustments
resulting from this process are reflected in accumulated other comprehensive
income (loss). Gains and losses resulting from foreign exchange transactions are
recorded in the results from operations. Such amounts were not significant in
1995, 1996 and 1997.

Comprehensive income

During the quarter ended March 31, 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income," which requires the Company to disclose, in
financial statement format, all non-owner changes in equity. The Consolidated
Statements of Changes in Stockholders' Deficit for the years ended December 31,
1995, 1996 and 1997 have been reclassified to reflect the adoption of this
standard. All non-owner changes in equity resulted from foreign currency
translation adjustments.

Fair value of financial instruments

The carrying amount of financial instruments approximates their estimated
fair value based on market prices for the same or similar type of financial
instruments.

Reclassifications

Certain amounts in the consolidated balance sheet for 1996 have been
reclassified to conform to the 1997 presentation.

NOTE 3 -- INITIAL PUBLIC OFFERING AND REFINANCING:

On October 6, 1997, the Company completed an initial public offering (the
"Offering") of 9,660,000 shares of common stock of the Company. In connection
with the Offering, the Company increased its authorized capital stock to
45,000,000 shares of common stock and effected a 9.65-for-1 stock split of its
outstanding common stock. All share and per share data have been adjusted to
give effect to the increased authorized capital stock and stock split. In the
Offering, the Company sold to the underwriters 7,960,000 previously unissued
shares of common stock at an initial public offering price of $16.00 per share
yielding net proceeds of $117,314. Acadia Partners, L.P. and certain related
investors ("Acadia") sold to the underwriters 1,700,000 previously issued and
outstanding shares of common stock owned by them. The Company did not receive
any of the proceeds from the sale of shares of common stock by Acadia.

The Offering is a component of a comprehensive refinancing strategy of the
Company to significantly lower its interest expense, strengthen its balance
sheet and provide financial flexibility to enable Ivex to
F-9
<PAGE> 70
IVEX PACKAGING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

continue to pursue investment opportunities. As part of this refinancing,
simultaneously with the consummation of the Offering, the Company entered into a
new credit facility (the "New Credit Facility") that refinanced its existing
credit facility. The Company used the proceeds of the Offering together with
borrowings under the New Credit Facility to refinance substantially all of its
existing indebtedness. During the fourth quarter of 1997, the Company
repurchased all of its 12 1/2% Subordinated Notes due 2002 (the "12 1/2%
Subordinated Notes") and repurchased all of its 13 1/4% Discount Debentures due
2005 (the "13 1/4% Discount Debentures") .

In connection with the above repurchase of the 12 1/2% Subordinated Notes
and the 13 1/4% Discount Debentures, the Company paid premiums aggregating
$32,374. In connection with the refinancing, the Company incurred expense of
approximately $8,177 related to the write-off of previously capitalized debt
issuance costs and paid costs of $1,214 associated with the repurchase of
existing debt. See Note 12 -- Extraordinary loss from extinguishment of debt.

NOTE 4 -- MISCELLANEOUS OTHER ASSETS:

Miscellaneous other assets at December 31, 1996 and 1997 consist of the
following:

<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Deferred financing costs................................... $13,416 $ 5,065
Less -- Accumulated amortization........................... (4,370) (516)
------- -------
9,046 4,549
Other...................................................... 4,491 5,675
------- -------
$13,537 $10,224
======= =======
</TABLE>

Deferred financing costs are being amortized over the term of the related
debt.

NOTE 5 -- LONG-TERM DEBT:

Long-term debt comprised the following at December 31, 1996 and 1997:

<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Senior credit facility (A)............................... $ 55,000 $296,875
Industrial revenue bonds (B)............................. 38,293 39,736
12 1/2% Subordinated Notes, net of discount (C).......... 157,340
13 1/4% Discount Debentures, net of discount (D)......... 106,139
Other.................................................... 2,042 2,188
-------- --------
Total debt outstanding.............................. 358,814 338,799
Less -- Current installments of long-term debt........... (5,921) (19,744)
-------- --------
Long-term debt...................................... $352,893 $319,055
======== ========
</TABLE>

A. Senior Credit Facility -- On October 6, 1997, the Company refinanced its
existing credit facility with the New Credit Facility. The New Credit Facility
is comprised of a $150,000 Term A Loan, $150,000 Term B Loan and $175,000
revolving credit facility (up to $65,000 of which may be in the form of letters
of credit). The Term A Loan is required to be repaid in quarterly payments
totaling $3,750 in 1997, $16,250 in 1998, $21,250 in 1999, $25,000 in 2000,
$26,250 in 2001, $31,250 in 2002 and $26,250 in 2003 and the Term B Loan is
required to be repaid in quarterly payments totaling $1,500 per annum through
September 30, 2003 and installments of $35,250 on December 31, 2003, March 31,
2004, June 30, 2004 and September 30, 2004. The interest rate of the New Credit
Facility can be, at the election of the Company, based upon LIBOR or the
Adjusted Base Rate, as defined, and is subject to certain performance pricing
adjustments. The Term A Loan

F-10
<PAGE> 71
IVEX PACKAGING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

and loans under the revolving credit facility bear interest at rates up to LIBOR
plus 1.625% or the Adjusted Base Rate plus 0.625%. At December 31, 1997, such
rates are 1.375% plus LIBOR. The Term B Loan bears interest at rates up to LIBOR
plus 2.00% or the Adjusted Base Rate plus 1.0%. As of December 31, 1997, such
rates are 1.75% plus LIBOR. Borrowings are secured by substantially all the
assets of the Company and its subsidiaries. The revolving credit facility and
Term A Loan will terminate on September 30, 2003 and the Term B Loan will
terminate on September 30, 2004. Under the New Credit Facility, the Company is
required to maintain certain financial ratios and levels of net worth, and
future indebtedness and dividends are restricted, among other things.
Limitations on dividends, advances and loans between IPC and the Company, as
defined in the New Credit Facility, restrict substantially all of IPC's net
assets.

During 1997, the Company entered into interest rate swap agreements with a
group of banks having notional amounts totaling $100,000 through November 5,
2002. These agreements effectively fix a portion of the Company's LIBOR base
rate at 6.12% during this period. Concurrently, the Company also entered into
interest rate collar agreements with a group of banks having notional amounts
totaling $100,000 through November 5, 2002. These collar agreements effectively
fix the LIBOR base rate at a maximum of 7.00% and allow for the Company to pay
the market LIBOR from a floor of 5.55% to the maximum rate. If LIBOR falls below
5.55%, the Company is required to pay the floor rate of 5.55%. During 1996, the
Company entered into interest rate swap agreements for the term loans for
notional amounts totaling $60,000 through January 19, 1999. Such agreements
effectively fix the Company's LIBOR base rate at 5.33% during this period.
Income or expense related to settlements under these agreements are recorded as
adjustments to interest expense in the Company's financial statements.

B. Industrial Revenue Bonds -- Industrial Revenue Bonds requiring monthly
interest payments with average effective rates during 1997 and 1996 of 6.0% and
5.8%, respectively, are due in varying amounts and dates through 2009 and are
secured by certain assets of IPC. Letters of credit under the New Credit
Facility provide credit enhancement for the Industrial Revenue Bonds.

C. 12 1/2% Subordinated Notes -- IPC issued $158,000 of the 12 1/2%
Subordinated Notes on December 17, 1992. The 12 1/2% Subordinated Notes were
repurchased in connection with the initial public offering and refinancing
during the fourth quarter of 1997.

D. 13 1/4% Discount Debentures -- The Company issued $160,000 of the
13 1/4% Discount Debentures for an aggregate consideration of approximately
$65,000 on March 8, 1993. The 13 1/4% Company Discount Debentures were
repurchased in connection with the initial public offering and refinancing
during the fourth quarter of 1997.

Long-term debt principal maturities are as follows:

<TABLE>
<S> <C>
1998........................................................ $ 19,744
1999........................................................ 25,471
2000........................................................ 29,235
2001........................................................ 30,501
2002........................................................ 35,351
Thereafter.................................................. 198,497
--------
$338,799
========
</TABLE>

F-11
<PAGE> 72
IVEX PACKAGING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 6 -- INCOME TAXES:

The components of the income tax provision shown in the statement of
operations are as follows:

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Current provision:
Federal.......................................... $ 142 $ 415
State............................................ 971 485 $ 454
Foreign.......................................... 1,926
Deferred provision (benefit)....................... 9,029 (26,059)
Benefit of net operating loss carryovers........... (9,029) (2,374)
------ ------- --------
$1,113 $ 900 $(26,053)
====== ======= ========
</TABLE>

The provision recognized for income taxes differs from the amount
determined by applying the U.S. federal income tax rate of 35% due to the
following:

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Income (loss) before income taxes and
extraordinary loss............................. $(21,012) $ 9,568 $(35,593)
======== ======= ========
Computed expected provision (benefit) at the
statutory rate................................. $ (7,354) $ 3,349 $(12,458)
Adjustments to the computed expected provision
(benefit) resulting from:
Reduction of valuation allowance............... (13,200)
Amortization of goodwill....................... 4,862 77 151
Net operating loss carryover adjustments....... 2,701 (3,077) (2,374)
State income taxes, net........................ 610 417 713
Other, net..................................... 294 134 1,115
-------- ------- --------
$ 1,113 $ 900 $(26,053)
======== ======= ========
</TABLE>

U.S. federal deferred tax liabilities (assets) are comprised of the
following:

<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Depreciation............................................. $ 33,449 $ 34,323
Basis differences of acquired assets..................... 3,969 3,176
-------- --------
Total deferred tax liabilities......................... 37,418 37,499
-------- --------
Environmental reserves................................... (330) (320)
Non-compete agreements................................... (613) (263)
Self insurance reserves.................................. (1,979) (1,767)
Original issue discount accretion........................ (14,394)
Management compensation accrual.......................... (6,524)
Other.................................................... (2,727) (4,884)
Net operating loss carryover............................. (26,795) (62,688)
-------- --------
Total deferred tax assets.............................. (46,838) (76,446)
Valuation allowance on deferred tax assets............. 18,190 2,300
-------- --------
Net deferred tax assets............................. (28,648) (74,146)
-------- --------
Deferred tax liability (asset)........................... $ 8,770 $(36,647)
======== ========
</TABLE>

F-12
<PAGE> 73
IVEX PACKAGING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

The Company's foreign and state deferred tax liabilities of $4,304 arise
primarily due to differences between book and tax depreciation.

At December 31, 1997, the Company has U.S. federal net operating loss
carryovers, including the net operating loss carryovers of IPC, for income tax
reporting purposes of approximately $179,108. Approximately $95,500 of these
losses will be limited in their annual usage to approximately $11,000 per year
under Section 382 of the Internal Revenue Code. These carryovers expire between
2005 and 2012. In the event of a change in ownership of the Company these net
operating loss carryovers may be limited. During 1997, the Company determined
that it was more likely than not that a portion of its net operating loss
carryovers would be realized primarily as the result of the Offering and
refinancing. See Note 3 -- Initial Public Offering and Refinancing. Accordingly,
the valuation allowance recorded against certain of the net operating loss
carryovers was reduced by $13,200.

NOTE 7 -- EMPLOYEE BENEFIT PLANS:

Net periodic pension expense related to the defined benefit plans for the
years ended December 31, 1995, 1996 and 1997 is comprised of the following
components:

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Service cost component -- benefits earned by
employees for services during this period........ $ 265 $ 290 $ 279
Interest cost component -- increase in projected
benefit obligation due to the passage of time.... 1,070 1,208 1,248
Return on plan assets, net of administrative
expense.......................................... (1,926) (1,317) (1,645)
Net amortization and deferral...................... 1,084 372 568
------- ------- -------
Net periodic pension cost.......................... $ 493 $ 553 $ 450
======= ======= =======
</TABLE>

Plan assets are invested in money market, equity and bond funds. The
following table sets forth the funded status of these plans as of the date of
the latest available actuarial valuation.

<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Actuarial present value of vested benefit obligation....... $15,139 $16,558
======= =======
Actuarial present value of accumulated benefit
obligation............................................... $15,252 $16,871
======= =======
Fair value of the plans' assets............................ $14,202 $15,576
Actuarial present value of projected benefit obligation.... 15,357 16,990
------- -------
Fair value of the plans' assets less than the projected
benefit obligation....................................... (1,155) (1,414)
Unrecognized net transition obligation..................... 398 333
Unrecognized prior service cost............................ 952 834
Unrecognized net loss...................................... 650 1,580
------- -------
Prepaid pension expense.................................... $ 845 $ 1,333
======= =======
</TABLE>

The following table sets forth significant assumptions utilized in the
actuarial valuation.

<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Discount rate used to adjust for the time value of
money................................................ 8.5% 8.0%
Expected rate of increase in employee compensation
costs................................................ 0%-5% 0%-5%
Expected long-term rate of return on assets............ 9.0% 9.0%
</TABLE>

F-13
<PAGE> 74
IVEX PACKAGING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

The charge to operations under IPC's defined benefit and defined
contribution plans was approximately $2,063, $2,351 and $3,814 for the years
ended December 31, 1995, 1996 and 1997, respectively.

NOTE 8 -- STOCK OPTION AND INCENTIVE PLANS:

The 1997 Stock Incentive Plan

In connection with the initial public offering, the Company adopted the
Ivex Packaging Corporation 1997 Long-Term Stock Incentive Plan (the "1997 Stock
Incentive Plan") which authorizes the grant of stock awards, as defined, to
participants with respect to a maximum of 2,000,000 shares of the Company's
common stock.

Under the 1997 Stock Incentive Plan, the Company granted nonqualified
options to purchase 468,000 shares of its common stock at an exercise price of
$16.00 per share (fair market value on the date of grant). These options were
granted on September 30, 1997, vest over a three year period and expire in 2007.
As of December 31, 1997, all of these options were outstanding and none were
exercisable.

The IPC Option Plan

IPC and the Company established a stock option plan (the "IPC Option Plan")
for certain key executives, effective January 1, 1993. Pursuant to the IPC
Option Plan, IPC irrevocably granted options to purchase 17,270 shares of its
common stock at an exercise price of $619.56 per share approximating fair market
value (the "IPC Options"). The IPC Option Plan also provided IPC and the
participants with certain rights to exchange options to purchase IPC's common
stock for options to purchase the Company's common stock.

On January 1, 1996, the IPC Option Plan was amended and extended to grant
an additional 6,908 options subject to vesting over three years from January 1,
1996, and such options were available to be earned based on operating income, as
defined. The provisions of the options were substantially the same as the
previously issued options.

On September 30, 1997, earned and vested IPC Options exercisable for 16,321
shares of IPC's common stock (comprising all of the IPC Options outstanding on
such date) were exchanged for 2,114,133 newly issued shares of the Company's
common stock and newly issued nonqualified stock options exercisable for 817,067
shares of the Company's common stock at an option price of $16.00 (fair market
value at the date of grant). Such options expire in 2007 and, as of December 31,
1997, all of these options were outstanding and exercisable. The Company
recorded a nonrecurring compensation charge in connection with the above
exchange. See Note 9 -- Special Charges.

SFAS 123 Disclosures

The Company adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." Under the provisions of such
statement, the Company is required to at least disclose the pro forma impact of
recognizing compensation expense for the fair value of those options granted
since January 1, 1996. Under the provisions of SFAS No. 123, the Company has not
recognized any compensation cost for stock option plans. On a pro forma basis,
had compensation cost for the Company's stock option plan been determined based
on the fair value at the grant date for awards during 1997 and 1996 consistent
with the

F-14
<PAGE> 75
IVEX PACKAGING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

provisions of SFAS No. 123, the Company's net income (loss) and earnings (loss)
per share would have been as follows:

<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Net income (loss).......................................... $8,548 $(17,224)
====== ========
Earnings (loss) per share.................................. $0.83 $(1.35)
====== ========
</TABLE>

During 1997, the Company's pro forma net income was determined under the
assumption that options granted in exchange for the IPC Options were fully
earned and vested and the options granted under the 1997 Stock Incentive Plan
were fully earned with equal vesting over the three years from September 30,
1997. The fair value of the options granted was estimated on the date earned
using the Black-Scholes option-pricing model and utilized the following
weighted-average assumptions for options earned in 1997: dividend yield of
0.00%; expected volatility of 21.25%; risk-free interest rate of 5.91%; and
expected lives of 3 years.

During 1996, the Company's pro forma net income was determined under the
assumption that all applicable options were earned when available with equal
vesting over the three years from January 1, 1996. The fair value of the options
granted was estimated on the date earned using the Black-Scholes option-pricing
model and utilized the following weighted-average assumptions for options earned
in 1996: dividend yield of 0.00%; expected volatility of 22.63%; risk-free
interest rate of 5.28%; and expected lives of 3 years.

The Incentive Agreement

IPC also entered into a special incentive agreement (the "Incentive
Agreement") with certain key executives, effective January 1, 1993. The
Incentive Agreement provided for a special incentive payment of up to $2,250
upon the occurrence of certain events as defined in the Incentive Agreement.
During 1995, management earned all of the special incentive payment and,
accordingly, IPC recorded expense of $2,250. As of December 31, 1996, all
amounts to be paid pursuant to the terms of the Incentive Agreement have been
paid. See Note 9 -- Special Charges.

NOTE 9 -- SPECIAL CHARGES:

During the third quarter of 1997, the Company recorded a nonrecurring
non-cash compensation charge of $53,329 in connection with the Company's
conversion, pursuant to the IPC Option Plan, of the IPC Options into 2,114,133
newly issued shares of the Company's common stock and newly issued stock options
exercisable for 817,067 shares of the Company's common stock. The nonrecurring
compensation charge consists of (i) a non-cash compensation charge of $33,826
associated with the conversion of the IPC Options into shares of the Company's
common stock and (ii) a non-cash compensation charge of $19,503 associated with
the accrual of future Company payments to senior management of an amount which
(after taxes) will enable such management to pay interest on the loans made to
them by the Company. As of December 31, 1997, the balance of this management
compensation accrual is $18,641 (including the current portion of approximately
$2,000). Such loans were made to senior management pursuant to the IPC Option
Plan to enable them to pay their individual income taxes payable in connection
with the conversion of the IPC Options. These loans bear interest at the minimum
applicable federal rate at the date of funding (approximately 6.7%) and are
secured only by the newly issued shares of stock exchanged for the IPC options
and are nonrecourse to any other personal assets. As of December 31, 1997, the
Company had funded $11,135 of such loans.

During the fourth quarter of 1995, the Company recorded the following
special charges: $2,250 associated with the Incentive Agreement, $1,950 of costs
related to an attempted initial public equity offering and a reduction of land
value of $760 associated with a donation of land to the Village of Chagrin
Falls, Ohio.

F-15
<PAGE> 76
IVEX PACKAGING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 10 -- RELATED PARTY TRANSACTIONS:

The Company paid a management fee to Acadia of $400 in 1997, 1996 and 1995.
In addition, in connection with the Company's initial public offering, the
Company paid a one-time $500 fee to Acadia and certain related investors.

Pursuant to a consulting agreement, Nicolaus Paper Inc. ("Nicolaus") pays
IPC a performance-based consulting fee in an annual amount between $250 and $500
for certain services rendered to Nicolaus by IPC. During 1997, the Company
recorded consulting fee income of $350 related to this agreement. Additionally,
during 1997 the Company purchased $1,867 of paper at market prices from
Nicolaus. Certain executive officers and directors of the Company together with
certain members of management of Oak Hill Partners, Inc. (Acadia's investment
advisor) own substantially all of the outstanding common stock of Nicolaus.

NOTE 11 -- COMMITMENTS:

IPC leases certain of its facilities and equipment under non-cancelable
operating leases, some of which contain renewal options, escalation clauses and
requirements that IPC pay taxes, insurance and maintenance costs. Approximate
future minimum annual rental payments under non-cancelable operating lease
agreements are as follows:

<TABLE>
<S> <C>
1998........................................................ $4,598
1999........................................................ 4,268
2000........................................................ 3,306
2001........................................................ 8,336
2002........................................................ 793
Thereafter.................................................. 300
</TABLE>

Rent expense under operating leases included in the accompanying statement
of operations aggregated approximately $6,832, $4,954 and $4,339 during 1997,
1996 and 1995, respectively.

NOTE 12 -- EXTRAORDINARY LOSS FROM EXTINGUISHMENT OF DEBT:

An extraordinary loss of $26,730 (net of tax benefit of $15,035) was
recorded in the consolidated statements of operations for the year ended
December 31, 1997. This loss consists of $32,374 of premiums paid to retire the
13 1/4% Discount Debentures and the 12 1/2% Subordinated Notes, the write-off of
$8,177 of deferred financing costs related to the retired debt and the
refinancing of the Company's existing credit facility, and $1,214 of expenses
incurred to retire the debt.

Deferred financing costs of $2,359 written off in connection with the
refinancing of IPC's senior credit facility are presented as an extraordinary
item in the consolidated statement of operations for the year ended December 31,
1995.

NOTE 13 -- ACQUISITIONS:

On January 17, 1997, the Company purchased substantially all of the assets,
excluding accounts receivable, of the oriented polystyrene ("OPS") business of
Viskase Limited located in Sedgefield, England for $11,907. On February 21,
1997, the Company purchased all of the outstanding common stock of M&R Plastics,
Inc. ("M&R") located in Laval, Quebec for $18,651, including the repayment of
certain indebtedness of M&R and related acquisition fees and expenses. The OPS
business of Viskase and M&R are integrated producers and converters of OPS sheet
with primary applications in food packaging markets. On August 8, 1997, the
Company purchased all of the outstanding common stock of AVPEX International
Corporation ("AVP") located in Newcastle, Canada for $8,103, including the
repayment of certain indebtedness of AVP and related fees and expenses. AVP
extrudes and converts OPS film with applications

F-16
<PAGE> 77
IVEX PACKAGING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

primarily in windows for envelopes and folding cartons. On November 3, 1997, the
Company purchased all of the outstanding common stock of Crystal Thermoplastics,
Inc. ("Crystal") of Cumberland, Rhode Island for $4,067 (plus assumed debt of
$1,468). Crystal manufactures thermoformed plastic packaging for the medical and
electronics markets. The purchase price of M&R, AVP and Crystal may be increased
if certain performance targets are met over the next one to three years.

On August 16, 1996, IPC acquired CFI Industries, Inc. ("CFI" or
"Plastofilm") for an aggregate purchase price of $18,423, including the
repayment of certain indebtedness of CFI and related acquisition fees and
expenses. Through its subsidiary, Plastofilm Industries, CFI is a fully
integrated custom thermoformer of plastic packaging products for the medical,
electronic and personal care industries.

The acquired businesses were financed through revolving credit borrowings
under the Company's senior credit facility. All of these acquisitions were
accounted for as a purchase; accordingly, the purchase price was allocated to
the specific assets acquired and liabilities assumed based upon their fair value
at date of acquisition. The Company's consolidated financial statements for 1997
and 1996 include the results of operations and cash flows of these acquisitions
from the purchase date. Adjusting for the full year effect of the acquisitions,
unaudited pro forma net sales would have been approximately $18,000 and $81,000
higher than the Company's reported net sales in 1997 and 1996, respectively.
Unaudited pro forma net income (loss) before extraordinary loss and net income
(loss) are not materially different than the Company's reported results. The
unaudited pro forma results of operations were prepared as if these acquisitions
had occurred as of the beginning of 1996, after giving effect for certain
adjustments. These unaudited pro forma results were prepared for comparative
purposes only and do not purport to be indicative of what would have occurred
had the acquisition been made as of the beginning of the year, or of results
which may occur in the future.

NOTE 14 -- FOREIGN OPERATIONS:

The Company has operations in the United States, Canada and the United
Kingdom. The following table allocates net sales, operating income and
identifiable assets between U.S. operations and non U.S. operations.

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Net sales:
United States............................................. $431,356 $432,242 $469,323
Foreign subsidiaries...................................... 20,213 19,565 69,152
-------- -------- --------
$451,569 $451,807 $538,475
======== ======== ========
Operating income:
United States............................................. $ 21,395 $ 51,264 $ 1,289
Foreign subsidiaries...................................... 863 1,036 5,007
-------- -------- --------
$ 22,258 $ 52,300 $ 6,296
======== ======== ========
Identifiable assets:
United States............................................. $284,367 $302,755 $356,589
Foreign subsidiaries...................................... 10,544 13,146 71,134
-------- -------- --------
$294,911 $315,901 $427,723
======== ======== ========
</TABLE>

NOTE 15 -- GOODWILL:

F-17
<PAGE> 78
IVEX PACKAGING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

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 at
that time, the Company made a reassessment of its remaining goodwill, all of
which pertained to the above operating units, during the second quarter of 1995
and revised its projections to more accurately reflect expected future results.
The Company segregated the assets and cash flows of these three operating units
to the lowest level for which cash flows are identifiable and independent of one
another at that time. In order to evaluate its goodwill impairment, 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 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 groups' 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 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 the Company's
performance at such projected levels will 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.

F-18
<PAGE> 79
IVEX PACKAGING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 16 -- UNAUDITED QUARTERLY RESULTS:

Summarized unaudited quarterly data for the years ended December 31, 1997
and 1996 are as follows:

<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1997 1997 1997 1997(A)
--------- -------- ------------- ------------
<S> <C> <C> <C> <C>
Net sales....................................... $127,864 $136,170 $137,448 $136,993
Gross Profit.................................... 26,370 29,991 32,202 31,097
Income (loss) from operations................... 11,780 14,602 (36,710) 16,624
Income (loss) before extraordinary loss......... 324 2,363 (17,890) 5,663
Net income (loss)............................... 324 2,363 (17,890) (21,067)
Earnings (loss) per share: (b)
Income (loss) before extraordinary loss....... $0.03 $0.23 $(1.72) $0.28
Net income (loss)............................. $0.03 $0.23 $(1.72) $(1.06)
</TABLE>

<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
1996 1996 1996 1996
--------- -------- ------------- ------------
<S> <C> <C> <C> <C>
Net sales....................................... $104,216 $106,227 $118,652 $122,712
Gross Profit.................................... 21,452 24,323 26,589 28,019
Income from operations.......................... 10,194 13,191 14,194 14,721
Net income (loss)............................... (791) 2,515 3,289 3,655
Earnings (loss) per share:
Net income (loss)............................. $(0.07) $0.24 $0.32 $0.35
</TABLE>

- -------------------------
(a) Reflects the extraordinary loss on extinguishment of debt in the quarter
ended December 31, 1997 (see Note 12).

(b) As a result of the initial public offering in the quarter ended December 31,
1997, the sum of the earnings per share for the four quarters of 1997, which
is based on weighted average shares outstanding during each quarter, does
not equal earnings per share for the year.

NOTE 17 -- SUBSEQUENT EVENTS (UNAUDITED)

On April 23, 1998, Ivex acquired all of the common stock of Ultra Pac, Inc.
("Ultra Pac"), a Rogers, Minnesota based specialty packaging company, for
approximately $67,000. Ivex assumed approximately $18,700 of Ultra Pac
indebtedness and paid fees associated with the transaction of approximately
$2,300. Ultra Pac is a leading North American producer of PET food packaging
that designs and manufactures plastic containers and packaging for the food
industry, including supermarkets, distributors of food packaging, wholesale
bakeries, produce growers, delicatessens, food processors and foodservice
companies. Ultra Pac had net sales of approximately $56,700 in its fiscal year
ended January 31, 1998.

On April 23, 1998, the Company announced that it intends to file a
registration statement under the Securities Act of 1933, as amended, to register
approximately 500,000 shares of its common stock and approximately 4.5 million
shares of common stock owned by certain selling stockholders. The net proceeds
of the shares to be sold by the Company will be used to repay certain
indebtedness.

F-19
<PAGE> 80

IVEX PACKAGING CORPORATION

CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1998
------------ ---------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 5,989 $ 6,749
Accounts receivable trade, net of allowance............... 64,952 69,713
Inventories............................................... 59,706 66,306
Prepaid expenses and other................................ 5,759 4,625
--------- ---------
Total current assets............................... 136,406 147,393
--------- ---------
Property, Plant and Equipment:
Buildings and improvements................................ 56,336 57,099
Machinery and equipment................................... 272,602 272,700
Construction in progress.................................. 9,225 13,905
--------- ---------
338,163 343,704
Less -- Accumulated depreciation.......................... (149,207) (155,536)
--------- ---------
188,956 188,168
Land...................................................... 9,077 9,188
--------- ---------
Total property, plant and equipment................ 198,033 197,356
--------- ---------
Other Assets:
Goodwill, net of accumulated amortization................. 35,278 34,654
Deferred income taxes..................................... 36,647 34,449
Management receivable..................................... 11,135 14,761
Miscellaneous............................................. 10,224 10,261
--------- ---------
Total other assets................................. 93,284 94,125
--------- ---------
Total Assets................................................ $ 427,723 $ 438,874
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Current installments of long-term debt.................... $ 19,744 $ 21,561
Accounts payable.......................................... 38,675 38,833
Accrued salary and wages.................................. 9,114 9,105
Self insurance reserves................................... 6,799 6,812
Accrued rebates and discounts............................. 4,596 4,035
Accrued interest.......................................... 4,191 4,261
Other accrued expenses.................................... 11,546 12,229
--------- ---------
Total current liabilities.......................... 94,665 96,836
--------- ---------
Long-Term Debt.............................................. 319,055 325,201
--------- ---------
Other Long-Term Liabilities................................. 21,868 20,895
--------- ---------
Deferred Income Taxes....................................... 4,304 4,216
--------- ---------
Commitments.................................................
--------- ---------
Stockholders' Deficit:
Common stock, $.01 par value -- 45,000,000 shares
authorized; 20,426,666 shares issued and outstanding at
December 31, 1997 and March 31, 1998.................... 204 204
Paid in capital in excess of par value.................... 328,322 328,285
Accumulated deficit....................................... (339,836) (334,521)
Accumulated other comprehensive income (loss)............. (859) (2,242)
--------- ---------
Total stockholders' deficit........................ (12,169) (8,274)
--------- ---------
Total Liabilities and Stockholders' Deficit................. $ 427,723 $ 438,874
========= =========
</TABLE>

The accompanying notes are an integral part of this statement.

F-20
<PAGE> 81

IVEX PACKAGING CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31,
---------------------------
1997 1998
---- ----
<S> <C> <C>
Net sales................................................... $127,864 $136,168
Cost of goods sold.......................................... 101,494 104,671
---------- ----------
Gross profit................................................ 26,370 31,497
---------- ----------
Operating expenses:
Selling................................................... 6,137 7,286
Administrative............................................ 8,282 8,538
Amortization of intangibles............................... 171 316
---------- ----------
Total operating expenses.................................... 14,590 16,140
---------- ----------
Income from operations...................................... 11,780 15,357
Interest expense............................................ 11,129 6,497
---------- ----------
Income before income taxes.................................. 651 8,860
Income tax provision........................................ 327 3,545
---------- ----------
Net income.................................................. $ 324 $ 5,315
========== ==========
Earnings per share:
Basic:
Net income............................................. $ 0.03 $ 0.26
========== ==========
Weighted average shares outstanding.................... 10,352,533 20,426,666
========== ==========
Diluted:
Net income............................................. $ 0.03 $ 0.26
========== ==========
Weighted average shares outstanding.................... 10,352,533 20,651,819
========== ==========
</TABLE>

The accompanying notes are an integral part of this statement.

F-21
<PAGE> 82

IVEX PACKAGING CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
PAID IN ACCUMULATED
COMMON STOCK CAPITAL OTHER
------------------- IN EXCESS OF ACCUMULATED COMPREHENSIVE STOCKHOLDERS' COMPREHENSIVE
SHARES AMOUNT PAR VALUE DEFICIT INCOME (LOSS) DEFICIT INCOME (LOSS)
------ ------ ------------ ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996... 1,072,246 $ 11 $177,375 $(303,566) $(1,164) $(127,344)
Issuance of management
shares..................... 218,968 2 33,824 33,826
Common stock split........... 11,175,452 112 (112)
Issuance of common stock..... 7,960,000 79 117,235 117,314
Net loss..................... (36,270) (36,270) $(36,270)
Other comprehensive income
(foreign currency
translation adjustment).... 305 305 305
--------
Comprehensive income
(loss)..................... $(35,965)
---------- ---- -------- --------- ------- --------- ========
Balance at December 31, 1997... 20,426,666 204 328,322 (339,836) (859) (12,169)
Other........................ (37) (37)
Net income................... 5,315 5,315 $ 5,315
Other comprehensive income
(foreign currency
translation adjustment).... (1,383) (1,383) (1,383)
--------
Comprehensive income
(loss)..................... $ 3,932
---------- ---- -------- --------- ------- --------- ========
Balance at March 31, 1998...... 20,426,666 $204 $328,285 $(334,521) $(2,242) $ (8,274)
========== ==== ======== ========= ======= =========
</TABLE>

The accompanying notes are an integral part of this statement.

F-22
<PAGE> 83

IVEX PACKAGING CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1997 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 324 $ 5,315
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation of properties........................... 6,053 6,904
Amortization of intangibles and debt issue costs..... 536 494
Non-cash interest.................................... 3,425
Deferred income taxes................................ 2,198
-------- -------
10,338 14,911
Change in operating assets and liabilities:
Accounts receivable.................................. (6,796) (5,007)
Inventories.......................................... (2,150) (6,798)
Prepaid expenses and other assets.................... 1,034 1,133
Accounts payable..................................... (6,561) 330
Accrued expenses and other liabilities............... 1,728 (912)
-------- -------
Net cash from (used by) operating activities...... (2,407) 3,657
-------- -------
Cash flows from financing activities:
Payment of senior credit facility......................... (1,250) (4,125)
Proceeds from revolving credit facility................... 44,900 12,200
Management loan........................................... (3,626)
Payment of debt issue costs............................... (210) (140)
Other, net................................................ (406) (253)
-------- -------
Net cash from financing activities................ 43,034 4,056
-------- -------
Cash flows from investing activities:
Purchase of property, plant and equipment................. (5,479) (6,652)
Acquisitions.............................................. (30,558)
Other, net................................................ (104) (301)
-------- -------
Net cash used by investing activities............. (36,141) (6,953)
-------- -------
Net increase in cash and cash equivalents................... 4,486 760
Cash and cash equivalents at beginning of period............ 2,822 5,989
-------- -------
Cash and cash equivalents at end of period.................. $ 7,308 $ 6,749
======== =======
Supplemental cash flow disclosures:
Cash paid during the period for:
Interest............................................... $ 2,384 $ 6,474
Income taxes........................................... 349 1,875
</TABLE>

The accompanying notes are an integral part of this statement.

F-23
<PAGE> 84

IVEX PACKAGING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

NOTE 1 -- ACCOUNTING AND REPORTING POLICIES

In the opinion of management, the information in the accompanying unaudited
consolidated financial statements reflects all adjustments necessary for a fair
statement of results for the interim periods. These interim consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the notes thereto included in the Annual Report on Form
10-K for the year ended December 31, 1997 (the "Form 10-K") of Ivex Packaging
Corporation ("Ivex" or the "Company"). IPC, Inc. ("IPC") is the only direct
subsidiary of Ivex and is wholly owned.

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

Accounts Receivable

Accounts receivable at December 31, 1997 and March 31, 1998 consist of the
following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1998
------------ ---------
<S> <C> <C>
Accounts receivable................................... $67,496 $72,317
Less -- Allowance for doubtful accounts............... (2,544) (2,604)
------- -------
$64,952 $69,713
======= =======
</TABLE>

Inventories

Inventories at December 31, 1997 and March 31, 1998 consist of the
following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1998
------------ ---------
<S> <C> <C>
Raw materials........................................... $32,200 $32,192
Finished goods.......................................... 27,506 34,114
------- -------
$59,706 $66,306
======= =======
</TABLE>

NOTE 2 -- LONG-TERM DEBT

At December 31, 1997 and March 31, 1998, the long-term debt of the Company
was as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1998
------------ ---------
<S> <C> <C>
Senior credit facility.................................. $296,875 $304,950
Industrial revenue bonds................................ 39,736 39,720
Other................................................... 2,188 2,092
-------- --------
Total debt outstanding............................. 338,799 346,762
Less -- Current installments of long-term debt.......... (19,744) (21,561)
-------- --------
Long-term debt..................................... $319,055 $325,201
======== ========
</TABLE>

NOTE 3 -- COMPREHENSIVE INCOME

During the quarter ended March 31, 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income," which requires the Company to disclose, in
financial statement format, all non-

F-24
<PAGE> 85
IVEX PACKAGING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

owner changes in equity. As of the quarter ended March 31, 1998, all such
changes in equity resulted from foreign currency translation adjustments.

NOTE 4 -- SUBSEQUENT EVENTS

F-25
<PAGE> 86

[photo of man]

Protective Packaging
[photo of food]

Food Packaging

[photo of electronic packaging]

Electronic Packaging
[photo of boy]

Supermarket Bakery Packaging

The following trademarks used in this Prospectus are owned by Ivex
Packaging Corporation or one of its affiliates: Ivex(R), Kama(R), Plastofilm(R),
Ultra Pac(R), Jet-Pak(R), Jet-Lite(R) and Jet-Cor(TM).
<PAGE> 87

======================================================

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERINGS COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING STOCKHOLDER OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 3
Special Note Regarding Forward-Looking
Statements........................... 9
Risk Factors........................... 9
Recent Developments.................... 13
Use of Proceeds........................ 13
Price Range of Common Stock............ 14
Dividend Policy........................ 14
Dilution............................... 15
Capitalization......................... 16
Selected Consolidated Financial Data... 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 19
Business............................... 27
Management............................. 36
Principal and Selling Stockholders..... 44
Certain Relationships and Related
Transactions......................... 47
Description of Capital Stock........... 48
Description of Certain Indebtedness.... 51
Shares Eligible for Future Sale........ 52
Certain United States Federal Tax
Consequences to Non-United States
Holders.............................. 54
Underwriting........................... 56
Experts................................ 58
Legal Matters.......................... 58
Additional Information................. 58
Index to Financial Statements.......... F-1
</TABLE>

======================================================
======================================================

5,320,000 SHARES

IVEX LOGO

IVEX PACKAGING CORPORATION

COMMON STOCK
---------------------------
PROSPECTUS
---------------------------

MERRILL LYNCH & CO.
BT ALEX. BROWN
LEHMAN BROTHERS
SALOMON SMITH BARNEY

, 1998

======================================================
<PAGE> 88

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

PROSPECTUS

5,320,000 SHARES
IVEX LOGO

IVEX PACKAGING CORPORATION
COMMON STOCK
------------------------

Of the 5,320,000 shares of Common Stock offered hereby, 1,064,000 shares are
being offered initially outside the United States and Canada by the
International Managers (the "International Offering") and 4,256,000 shares are
being offered initially in a concurrent offering in the United States and Canada
by the U.S. Underwriters (the "U.S. Offering") (the International Offering, and
together with the U.S. Offering, the "Offerings"). The public offering price and
the underwriting discount per share are identical for each of the Offerings. See
"Underwriting."

SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
=============================================================================================================================
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDER
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
Per Share............ $ $ $ $
- -----------------------------------------------------------------------------------------------------------------------------
Total(3)............. $ $ $ $
=============================================================================================================================
</TABLE>

(1) The Company and the Selling Stockholder have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."

(2) Before deducting expenses of the Offerings payable by the Company estimated
at $620,000.

(3) The Company has granted the International Managers and the U.S. Underwriters
options to purchase up to an additional 159,600 shares and 638,400 shares of
Common Stock, respectively, in each case exercisable within 30 days of the
date hereof, solely to cover over-allotments, if any. If such options are
exercised in full, the total Price to Public, Underwriting Discount and
Proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."

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

MERRILL LYNCH INTERNATIONAL
BT ALEX. BROWN INTERNATIONAL
LEHMAN BROTHERS
SALOMON SMITH BARNEY INTERNATIONAL
------------------------

The date of this Prospectus is April , 1998.
<PAGE> 89

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

UNDERWRITING

Subject to the terms and conditions set forth in a purchase agreement (the
"International Purchase Agreement") among the Company, each of the Selling
Stockholders and each of the underwriters names below (the "International
Managers") and concurrently with the sale of 4,256,000 shares of Common Stock to
the U.S. Underwriters (as defined below), the Company and the Selling
Stockholders have agreed to sell to the International Managers, and each of the
International Managers severally has agreed to purchase from the Company and the
Selling Stockholders, the number of shares of Common Stock set forth opposite
its name below.

<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
---------------------- ---------
<S> <C>
Merrill Lynch International.................................
BT Alex. Brown International................................
Lehman Brothers International (Europe)......................
Smith Barney Inc............................................
---------
Total.......................................... 1,064,000
=========
</TABLE>

Merrill Lynch International, BT Alex. Brown International, Lehman Brothers
International (Europe) and Smith Barney Inc. are acting as representatives (the
"International Representatives") of the International Managers.

The Company and the Selling Stockholders have also entered into a purchase
agreement (the "U.S. Purchase Agreement" and, together with the International
Purchase Agreement, the "Purchase Agreements,") with certain underwriters in the
United States and Canada ( collectively, the "U.S. Underwriters," and together
with the International Managers, the "Underwriters") for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), BT Alex. Brown
Incorporated, Lehman Brothers Inc. and Smith Barney Inc. are acting as
representatives ("the U.S. Representatives" and, together with the International
Representatives, the "Representatives"). Subject to the terms and conditions set
forth in the U.S. Purchase Agreement, and concurrently with the sale of
1,064,000 shares of Common Stock to the International Managers pursuant to the
International Purchase Agreement, the Company and the Selling Stockholders have
agreed to sell to the U.S. Underwriters, and the U.S. Underwriters severally
have agreed to purchase from the Company and the Selling Stockholders, an
aggregate of 4,256,000 shares of Common Stock. The public offering price per
share of Common Stock and the underwriting discount per share of Common Stock
are identical under the International Purchase Agreement and the U.S. Purchase
Agreement. The respective percentages of the Common Stock to be sold by each of
the Company and the Selling Stockholders will be identical in the U.S. Offering
and the International Offering.

In the International Purchase Agreement and the U.S. Purchase Agreement,
the several International Managers and the several U.S. Underwriters,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Common Stock being sold pursuant to
each such agreement if any of the shares of Common Stock being sold pursuant to
such agreement are purchased. Under certain circumstances involving a default by
an Underwriter, the commitments of non-defaulting International Managers or U.S.
Underwriters (as the case may be) may be increased or the International Purchase
Agreement or the U.S. Purchase Agreement (as the case may be) may be terminated.
The sale of Common Stock to the International Managers is conditioned upon the
sale of common stock to the U.S. Underwriters and vice versa.

The International Managers and the U.S. Underwriters have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") providing for the
coordination of their activities. The Underwriters are permitted to sell shares
of Common Stock to each other for purposes of resale at the public offering
price, less an amount not greater than the selling concession. Under the terms
of the Intersyndicate Agreement, the International Managers and any dealer to
whom they sell shares of Common Stock will not offer to sell or sell shares of
Common Stock to U.S. persons or to Canadian persons or to persons they believe
intend to resell to U.S. or Canadian persons, the U.S. Underwriters and any
dealer to whom they sell shares of Common Stock

56
<PAGE> 90
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

will not offer to sell or sell shares of Common Stock to persons who are
non-U.S. or non-Canadian persons or to persons they believe intend to resell to
persons who are non-U.S. or non-Canadian persons, and except in the case of
transactions pursuant to the Intersyndicate Agreement.

The International Representatives have advised the Company and the Selling
Stockholders that the International Managers propose initially to offer the
shares of Common Stock to the public at the public offering price set forth on
the cover page of this Prospectus, and to certain dealers at such price less a
concession not in excess of $ per share of Common Stock. The International
Managers may allow, and such dealers may reallow, a discount not in excess of
$ per share of Common Stock on sales to certain other dealers. After the
Offerings, the public offering price, concession and discount may be changed.

Each International Manager has agreed that (i) it has not offered or sold
and, prior to the expiration of the period of six months from the Closing Date,
will not offer or sell any shares of Common Stock to persons in the United
Kingdom, except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which do not
constitute an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the Common Stock in, from or
otherwise involving the United Kingdom; and it has only issued or passed on and
will only issue or pass on in the United Kingdom any document received by it in
connection with the issuance of Common Stock to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996, as amended, or is a person to whom such
document may otherwise lawfully be issued or passed on.

Purchasers of the shares of Common Stock offered hereby may be required to
pay stamp taxes and other charges in accordance with the laws and practices of
the country of purchase, in addition to the offering price set forth on the
cover page hereof.

The Company has granted an option to the International Managers,
exercisable for 30 days after the date of this Prospectus, to purchase up to an
aggregate of 159,600 additional shares of Common Stock at the public offering
price set forth on the cover page of this Prospectus, less the underwriting
discount. The International Managers may exercise this option only to cover
over-allotments, if any, made on the sale of the Common Stock offered hereby. To
the extent that the International Managers exercise this option, each
International Manager will be obligated, subject to certain conditions, to
purchase a number of additional shares of Common Stock proportionate to such
International Manager's initial amount reflected in the foregoing table. The
Company has also granted an option to the U.S. Underwriters, exercisable for 30
days after the date of this Prospectus, to purchase up to an aggregate of
638,400 additional shares of Common Stock to cover over-allotments, if any, on
terms similar to those granted to the International Managers. If purchased, the
Underwriters will offer such additional shares on the same terms as those on
which the 5,320,000 shares are being offered.

57
<PAGE> 91
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

the price of the Common Stock. In general, purchases of a security for the
purpose of stabilization or to reduce a short position could cause the price of
the security to be higher than it might be in the absence of such purchases.
Neither the Company nor any of the Underwriters make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters make any representation that the
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.

The Underwriters do not intend to confirm sales of the Common Stock offered
hereby to any accounts over which they exercise discretionary authority.

The Company and the Selling Stockholders have agreed to indemnify the
International Managers and the U.S. Underwriters against certain liabilities,
including certain liabilities under the Securities Act, or to contribute to
payments the Underwriters may be required to make in respect thereof.

George V. Bayly, the Company's President and Chief Executive Officer, is
the brother of Daniel Bayly, the head of investment banking at Merrill Lynch.
Lehman Brothers Inc. and its affiliates beneficially owns approximately 6% of
the Common Stock as of April 27, 1998.

No action has been or will be taken in any jurisdiction (except in the
United States) that would permit a public offering of the shares of Common
Stock, or the possession, circulation or distribution of this Prospectus or any
other material relating to the Company, the Selling Stockholders or shares of
Common Stock in any jurisdiction where action for that purpose is required.
Accordingly, the shares of Common Stock may not be offered or sold, directly or
indirectly, and neither this Prospectus nor any other offering material or
advertisements in connection with the shares of Common Stock may be distributed
or published, in or from any country or jurisdiction except in compliance with
any applicable rules and regulations of any such country or jurisdiction.

EXPERTS

LEGAL MATTERS

58
<PAGE> 92
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

ADDITIONAL INFORMATION

59
<PAGE> 93
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

======================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERINGS COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING STOCKHOLDER OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

IN THE PROSPECTUS, REFERENCES TO "DOLLARS" AND "$" ARE TO UNITED STATES
DOLLARS.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary..................... 3
Special Note Regarding Forward-Looking
Statements........................... 9
Risk Factors........................... 9
Recent Developments.................... 13
Use of Proceeds........................ 13
Price Range of Common Stock............ 14
Dividend Policy........................ 14
Dilution............................... 15
Capitalization......................... 16
Selected Consolidated Financial Data... 17
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 19
Business............................... 27
Management............................. 36
Principal and Selling Stockholders..... 44
Certain Relationships and Related
Transactions......................... 47
Description of Capital Stock........... 48
Description of Certain Indebtedness.... 51
Shares Eligible for Future Sale........ 52
Certain United States Federal Tax
Consequences to Non-United States
Holders.............................. 54
Underwriting........................... 56
Experts................................ 58
Legal Matters.......................... 58
Additional Information................. 59
Index to Financial Statements.......... F-1
</TABLE>

======================================================
======================================================
5,320,000 SHARES

IVEX LOGO

IVEX PACKAGING CORPORATION

COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
MERRILL LYNCH INTERNATIONAL
BT ALEX. BROWN INTERNATIONAL
LEHMAN BROTHERS
SALOMON SMITH BARNEY INTERNATIONAL

, 1998
======================================================
<PAGE> 94

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses in connection with the registration of the shares of Common
Stock are estimated as follows:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 46,362
NASD filing fee............................................. 16,216
NYSE listing fee............................................ 5,000
Printing and engraving costs................................ 250,000
Legal fees and expenses..................................... 200,000
Accounting fees and expenses................................ 100,000
Blue sky qualifications and related legal fees and
expenses.................................................. 0
Miscellaneous............................................... 2,422
--------
Total.................................................. $620,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law (the "GCL") provides
that a Delaware corporation may, with certain limitations, indemnify any person
who was or is a party or is threatened to be made a party to any action, civil
or criminal, by virtue of the fact he is or was an officer, director, employee
or agent of the corporation.

Section 9.1 of the Company's Amended and Restated Certificate of
Incorporation provides as follows:

"To the fullest extent permitted by law, the Corporation shall
indemnify any person who is or was made, or threatened to be made, a party
to any threatened, pending or completed action, suit or proceeding (a
"Proceeding"), whether civil, criminal, administrative or investigative,
including without limitation, an action by or in the right of the
Corporation to procure a judgment in its favor, by reason of the fact that
such person, or a person of whom such person is the legal representative,
is or was a Director or officer of the Corporation, or is or was serving in
any capacity at the request of the Corporation for any other corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise (an "Other Entity"), against judgments, fines, penalties, excise
taxes, amounts paid in settlement and costs, charges and expenses
(including attorneys' fees and disbursements). Persons who are not
Directors or officers of the Corporation may be similarly indemnified in
respect of service to the Corporation or to an Other Entity to the extent
the Board of Directors at any time specifies that such persons are entitled
to the benefits of this Section 9."

Sections 1 through 9 of Article 8 of the Company's Amended By-Laws provide
as follows:

"To the fullest extent permitted by law, the Corporation shall
indemnify any person who is or was made, or threatened to be made, a party
to any threatened, pending or completed action, suit or proceeding (a
"Proceeding"), whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of the
Corporation to procure a judgment in its favor, by reason of the fact that
such person, or a person of whom such person is the legal representative,
is or was a Director or officer of the Corporation, or is or was serving in
any capacity at the request of the Corporation for any other corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise (an "Other Entity"), against judgments, fines, penalties, excise
taxes, amounts paid in settlement and costs, charges and expenses
(including attorneys' fees and disbursements). Persons who are not
Directors or officers of the Corporation may be similarly indemnified in
respect of service to the Corporation or to an Other Entity at the request
of the Corporation to the extent the Board at any time specifies that such
persons are entitled to the benefits of this Section 8."

"The Corporation shall, from time to time, reimburse or advance to any
Director or officer or other person entitled to indemnification hereunder
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 General Corporation Law, such expenses incurred by or on
behalf of any Director or officer or other person may be paid in advance of
the final disposition of a Proceeding only upon receipt by the Corporation
of an undertaking, by or on behalf

II-1
<PAGE> 95

of such Director or officer (or other person indemnified hereunder), 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
such Director, officer or other person is not entitled to be indemnified
for such expenses."

"The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 8 shall not be
deemed exclusive of any other rights to which a person seeking
indemnification or reimbursement or advancement of expenses may have or
hereafter be entitled under any statute, the Amended and Restated
Certificate of Incorporation, these By-laws, any agreement, any vote of
stockholders or disinterested Directors or otherwise, both as to action in
his or her official capacity and as to action in another capacity while
holding such office."

"The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 8 shall continue
as to a person who has ceased to be a Director or officer (or other person
indemnified hereunder) and shall inure to the benefit of the executors,
administrators, legatees and distributees of such person."

"The Corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a Director, officer, employee or
agent of the Corporation, or is or was serving at the request of the
Corporation as a Director, officer, employee or agent of an Other Entity,
against any liability asserted against such person and incurred by such
person in any such capacity, or arising out of such person's status as
such, whether or not the Corporation would have the power to indemnify such
person against such liability under the provisions of this Section 8, the
Amended and Restated Certificate of Incorporation or under Section 145 of
the General Corporation Law or any other provision of law."

"The provisions of this Section 8 shall be a contract between the
Corporation, on the one hand, and each Director and officer who serves in
such capacity at any time while this Section 8 is in effect and any other
person indemnified hereunder, on the other hand, pursuant to which the
Corporation and each such Director, officer or other person intend to be
legally bound. No repeal or modification of this Section 8 shall affect any
rights or obligations with respect to any state of facts then or
theretofore existing or thereafter arising or any proceeding theretofore or
thereafter brought or threatened based in whole or in part upon any such
state of facts."

"The rights to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 8 shall be
enforceable by any person entitled to such indemnification or reimbursement
or advancement of expenses 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 Corporation. Neither the
failure of the Corporation (including its Board of Directors, its
independent legal counsel and 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 Corporation (including
its Board of Directors, its independent legal counsel and its stockholders)
that such person is not entitled to such indemnification or reimbursement
or advancement of expenses shall constitute a defense to the action or
create a presumption that such person is not so entitled. Such a person
shall also be indemnified for any expenses incurred in connection with
successfully establishing his or her right to such indemnification or
reimbursement or advancement of expenses, in whole or in part, in any such
proceeding."

"Any Director or officer of the Corporation serving in any capacity
(a) another corporation of which a majority of the shares entitled to vote
in the election of its directors is held, directly or indirectly, by the
Corporation or (b) any employee benefit plan of the Corporation or any
corporation referred to in clause (a) shall be deemed to be doing so at the
request of the Corporation."

"Any person entitled to be indemnified or to reimbursement or
advancement of expenses as a matter of right pursuant to this Section 8 may
elect to have the 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 Corporation, at the time indemnification or
reimbursement or advancement of expenses is sought; provided, however, 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."

II-2
<PAGE> 96

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits:

<TABLE>
<CAPTION>
INCORPORATED BY
REFERENCE TO
THE FOLLOWING
EXHIBIT EXHIBIT REGISTRATION NO.
NO. DESCRIPTION OF DOCUMENT NO. OR REPORT
- ------- ----------------------- ------- ----------------
<C> <C> <S> <C> <C>
*1.1 -- Form of U.S. Purchase Agreement
*1.2 -- Form of International Purchase Agreement
3.1 -- Amended and Restated Certificate of
Incorporation of Ivex Packaging Corporation
("Holdings" or "Ivex") 3.3 Ivex Amendment No. 8 to
Form S-1
(Registration No. 33-95436)
3.2 -- Amended By-Laws of Ivex 3.4 Ivex Amendment No. 8 to
Form S-1
(Registration No. 33-95436)
3.3 -- Form of Certificate of Elimination of Senior
Cumulative Exchangeable Preferred Stock of
Ivex 3.5 Ivex Amendment No. 8 to
Form S-1
(Registration No. 33-95436)
4.1 -- Form of Registration Rights Agreement, dated
as of September 30, 1997, among Ivex, Acadia
Partners, L.P., and the other stockholders
party thereto 4.3 Ivex Amendment No. 8 to
Form S-1
(Registration No. 33-95436)
4.2 -- Amended and Restated Credit Agreement, dated
as of October 2, 1997, by and among IPC,
Ivex, NationsBank, N.A. and Bankers Trust, as
agents, and the guarantors and lenders
identified on the signature pages thereto 4.2 Ivex 1997 Form 10-K
(File No. 33-60714)
4.3 -- Amended and Restated Pledge Agreement, dated
as of October 2, 1997, among IPC, Ivex
certain of IPC's subsidiaries and
NationsBank, N.A. and Bankers Trust Company,
as agents 4.3 Ivex 1997 Form 10-K
(File No. 33-60714)
4.4 -- Form of Amended and Restated Security
Agreement, dated as of October 2, 1997, among
IPC, Ivex and certain of IPC's domestic
subsidiaries and NationsBank, N.A. and
Bankers Trust Company, as agents 4.4 Ivex 1997 Form 10-K
(File No. 33-60714)
4.5 -- Form of Amended and Restated Mortgage and
Security Agreement 4.5 Ivex 1997 Form 10-K
(File No. 33-60714)
*5.1 -- Opinion of Skadden, Arps, Slate, Meagher &
Flom (Illinois)
10.1 -- Form of Ivex Senior Management Annual
Incentive Plan 10.1 Ivex Amendment No. 8 to
Form S-1
(Registration No. 33-95436)
</TABLE>

II-3
<PAGE> 97

<TABLE>
<CAPTION>
INCORPORATED BY
REFERENCE TO
THE FOLLOWING
EXHIBIT EXHIBIT REGISTRATION NO.
NO. DESCRIPTION OF DOCUMENT NO. OR REPORT
- ------- ----------------------- ------- ----------------
<C> <C> <S> <C> <C>
10.2 -- Form of Executive Deferred Compensation Plan 10.3 IPC 1994 Form 10-K
(File No. 33-52150)
10.3 -- Form of Trust Agreement, dated October 17,
1996, between IPC, Inc. and the trustee
hereof relating to executive deferred
compensation 10.3 Ivex 1996 Form 10-K
(File No. 33-60714)
10.4 -- Form of IPC Stock Purchase and Option
Agreement, dated as of January 1, 1993, among
IPC, Ivex, Acadia Partners, L.P. and each of
certain senior managers of IPC with the Ivex
Stock Purchase and Option Agreement attached
thereto 10.2 IPC 1993 Form 10-K
(Registration No. 33-52150)
10.5 -- 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 10.16 Ivex 6/30/96 Form 10-Q
(File No. 33-60714)
10.6 -- IPC Retirement Plan and Trust, as amended and
Restated May 1, 1992 10.3 IPC Form S-1
(Registration No. 33-52150)
10.7 -- Amended and Restated Employment Agreement,
dated as of May 30, 1996, between George V.
Bayly and IPC 10.14 Ivex 6/30/96 Form 10-Q
(File No. 33-60714)
10.8 -- Employment Agreement, dated as of December
31, 1992, between IPC and Frank V. Tannura 10.30 IPC 6/30/93 Form 10-Q
(File No. 33-52150)
10.9 -- Amendment No. 1, dated as of September 11,
1995, to the Employment Agreement, dated as
of December 31, 1992, between IPC and Frank
V. Tannura 10.59 IPC 6/30/95 Form 10-Q
(File No. 33-52150)
10.10 -- Amendment No. 2 to Employment Agreement,
dated May 30, 1996, between IPC and Frank V.
Tannura 10.15 Ivex 6/30/96 Form 10-Q
(File No. 33-60714)
10.11 -- Form of Severance Agreement between the
Company and certain named executive officers 1.1 IPC 1994 Form 10-K
(File No. 33-52150)
10.12 -- Form of Ivex Packaging Corporation 1997 Long-
Term Stock Incentive Plan 10.45 Ivex Amendment No. 8 to
Form S-1
(Registration No. 33-95436)
10.13 -- Form of Senior Management's Promissory Note
to IPC 10.13 Ivex 1997 Form 10-K
(File No. 33-60714)
</TABLE>

II-4
<PAGE> 98

<TABLE>
<CAPTION>
INCORPORATED BY
REFERENCE TO
THE FOLLOWING
EXHIBIT EXHIBIT REGISTRATION NO.
NO. DESCRIPTION OF DOCUMENT NO. OR REPORT
- ------- ----------------------- ------- ----------------
<C> <C> <S> <C> <C>
10.14 -- Loan Agreement, dated as of December 1, 1987,
between the County of Kankakee, Illinois and
Ivex of Delaware, Inc. (n/k/a IPC, Inc.) 10.11 IPC Form S-1
(Registration No. 33-52150)
10.15 -- Loan Agreement, dated as of June 1, 1988,
between the Development Authority of Morgan
County and Ivex of Delaware Inc. (n/k/a IPC,
Inc.) 10.13 IPC Form S-1
(Registration No. 33-52150)
10.16 -- Loan Agreement, dated as of October 1, 1987,
between the County of Will, Illinois and LPX,
Inc. (n/k/a/ IPC, Inc.) 10.15 IPC Form S-1
(Registration No. 33-52150)
10.17 -- Loan Agreement, dated as of April 1, 1988,
between the Illinois Development Finance
Authority and Ivex of Delaware, Inc. (n/k/a
IPC, Inc.) 10.17 IPC Form S-1
(Registration No. 33-52150)
10.18 -- Indenture of Trust, dated as of March 1,
1989, between Marine Midland Bank, N.A. and
Ivex of Delaware, Inc. (n/k/a IPC, Inc.) 10.19 IPC Form S-1
(Registration No. 33-52150)
10.19 -- Loan Agreement, dated November 1, 1985,
between the Village of Bridgeview, Illinois
and L&CP Corporation (n/k/a IPC, Inc.) 10.21 IPC Form S-1
(Registration No. 33-52150)
10.20 -- Loan Agreement, dated as of June 1, 1988,
between City of Troy, Ohio and L&CP
Corporation (n/k/a IPC, Inc.) 10.23 IPC Form S-1
(Registration No. 33-52150)
10.21 -- Lease Agreement, dated as of December 5,
1996, between State Street Bank and Trust
Company and IPC 10.46 Ivex 1996 Form 10-K
(File No. 33-60714)
10.22 -- Lease, dated as of October 4, 1988, between
Seymour C. Graham and Kama Corporation (n/k/a
IPC, Inc.) 10.33 IPC Form S-1
(Registration No. 33-52150)
10.23 -- Amendment to Lease, dated as of December 20,
1988, between Seymour C. Graham and Kama
Corporation (n/k/a IPC, Inc.) 10.34 IPC Form S-1
(Registration No. 33-52150)
10.24 -- Lease, dated June 20, 1995, between Howard H.
Gelb and Eunice Gelb and Kama Corporation
(n/k/a IPC, Inc.) 10.44 Ivex 1995 Form 10-K
(File No. 33-60714)
</TABLE>

II-5
<PAGE> 99

<TABLE>
<CAPTION>
INCORPORATED BY
REFERENCE TO
THE FOLLOWING
EXHIBIT EXHIBIT REGISTRATION NO.
NO. DESCRIPTION OF DOCUMENT NO. OR REPORT
- ------- ----------------------- ------- ----------------
<C> <C> <S> <C> <C>
10.25 -- Industrial Building Lease, dated January 8,
1998, between Arapahoe Properties, L.L.C. and
Packaging Products, Inc. 10.25 Ivex 1997 Form 10-K
(File No. 33-60714)
10.26 -- Lease, dated as of September 11, 1996, by and
between Joseph P. Bennett and Trio Products,
Inc. 10.54 Ivex 1996 Form 10-K
(File No. 33-60714)
10.27 -- Installment Sales Agreement, dated as of
December 12, 1990, between Grove City
Industrial Development Corporation and Ivex
Converted Products Corporation
(n/k/a IPC, Inc.) 10.39 IPC Form S-1
(Registration No. 33-52150)
10.28 -- Tax Sharing Agreement, dated as of December
17, 1992, between Ivex and IPC and certain of
IPC's subsidiaries 10.40 Ivex Form S-4
(Registration No. 33-60714)
10.29 -- Agreement and Plan of Merger, dated as of May
17, 1996 (as amended), among IPC, CFI
Industries, Inc. and Equity Partners A-1 CFI Industries, Inc.'s
Proxy Statement dated
7/22/96
10.30 -- Form of Voting Agreement among Acadia,
certain related investors and certain members
of Ivex Management 10.47 Ivex Amendment No. 8 to
Form S-1
(Registration No. 33-95436)
10.31 -- Form of Agreement and Plan of Merger
Agreement, dated as of March 23, 1998, among
Ivex Packaging Corporation, Package
Acquisition, Inc. and Ultra Pac, Inc. (c)(1) Ivex Packaging Corporation
and Package Acquisition,
Inc. Schedule 14D-1 and
13D, dated as of March 26,
1998
*21.1 -- Subsidiaries of Ivex
*23.1 -- Consent of Price Waterhouse LLP
24.1 -- Powers of Attorney (included as signature
page)
</TABLE>

- -------------------------
* Filed herewith.

(B) REPORTS ON FORM 8-K.

None.

II-6
<PAGE> 100

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Lincolnshire, State of
Illinois, on April 28, 1998.
IVEX PACKAGING CORPORATION

By: /s/ G. DOUGLAS PATTERSON

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

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature to this
Registration Statement appears below hereby constitutes and appoints Frank V.
Tannura and G. Douglas Patterson, and each of them, as such person's true and
lawful attorneys-in-fact and agent with full power of substitution and
resubstitution for such person and in such person's name, place and stead, in
any and all capacities, to sign and to file with the Securities and Exchange
Commission any and all amendments and post-effective amendments to this
Registration Statement, with exhibits thereto and other documents in connection
therewith, and to file a new registration statement pursuant to rule 462(b) of
the Security Act of 1933 relating to the Offerings, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorney-in-fact and agent, or any substitute therefor, may lawfully do or cause
to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on April 28, 1998.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>

/s/ GEORGE V. BAYLY Director, Chairman of the Board, President and Chief
- --------------------------------------------- Executive Officer (Principal Executive Officer)
George V. Bayly

/s/ FRANK V. TANNURA Director, Vice President and Chief Financial Officer
- --------------------------------------------- (Principal Financial Officer)
Frank V. Tannura

/s/ DAVID E. WARTNER Corporate Controller (Principal Accounting Officer)
- ---------------------------------------------
David E. Wartner

/s/ ANTHONY P. SCOTTO Director
- ---------------------------------------------
Anthony P. Scotto

/s/ GLENN R. AUGUST Director
- ---------------------------------------------
Glenn R. August

/s/ WILLIAM J. WHITE Director
- ---------------------------------------------
William J. White

/s/ R. JAMES COMEAUX Director
- ---------------------------------------------
R. James Comeaux
</TABLE>

II-7
<PAGE> 101

IVEX PACKAGING CORPORATION

SCHEDULE I -- CONDENSED FINANCIAL INFORMATION
(PARENT COMPANY ONLY)

BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1997
---- ----
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 27 $ 9
--------- ---------
Total current assets................................... 27 9
Investment in subsidiary.................................... 73,418 73,418
Due from IPC, Inc........................................... 13,694
Debt issue costs, net....................................... 2,419
--------- ---------
Total assets........................................... $ 75,864 $ 87,121
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Long-term debt.............................................. $ 106,139 $
--------- ---------
Stockholders' equity (deficit):
Common stock, $.01 par value -- 45,000,000 shares
authorized; 20,426,666 and 10,352,533 shares issued and
outstanding............................................ 11 204
Paid in capital in excess of par value.................... 177,375 328,322
Accumulated deficit....................................... (207,661) (241,405)
--------- ---------
Total stockholders' equity (deficit)................... (30,275) 87,121
--------- ---------
Total liabilities and stockholders' equity (deficit)...... $ 75,864 $ 87,121
========= =========
</TABLE>

See Notes to Consolidated Financial Statements in Item 8.

S-1
<PAGE> 102

IVEX PACKAGING CORPORATION

SCHEDULE I -- CONDENSED FINANCIAL INFORMATION
(PARENT COMPANY ONLY)

STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Interest expense............................................ $ 11,508 $ 13,075 $ 11,447
-------- -------- --------
Loss before extraordinary loss.............................. (11,508) (13,075) (11,447)
Extraordinary loss.......................................... (22,297)
-------- -------- --------
Net loss.................................................... $(11,508) $(13,075) $(33,744)
======== ======== ========
</TABLE>

See Notes to Consolidated Financial Statements in Item 8.

S-2
<PAGE> 103

IVEX PACKAGING CORPORATION

SCHEDULE I -- CONDENSED FINANCIAL INFORMATION
(PARENT COMPANY ONLY)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK PAID IN CAPITAL STOCKHOLDERS'
-------------------- IN EXCESS OF ACCUMULATED EQUITY
SHARES AMOUNT PAR VALUE DEFICIT (DEFICIT)
------ ------ --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994......... 1,072,246 $ 11 $177,375 $(183,078) $ (5,692)
Net loss........................... (11,508) (11,508)
---------- ---- -------- --------- --------
Balance at December 31, 1995......... 1,072,246 11 177,375 (194,586) (17,200)
Net loss........................... (13,075) (13,075)
---------- ---- -------- --------- --------
Balance at December 31, 1996......... 1,072,246 11 177,375 (207,661) (30,275)
Issuance of management shares...... 218,968 2 33,824 33,826
Common stock split................. 11,175,452 112 (112)
Issuance of common stock........... 7,960,000 79 117,235 117,314
Net loss........................... (33,744) (33,744)
---------- ---- -------- --------- --------
Balance at December 31, 1997......... 20,426,666 $204 $328,322 $(241,405) $ 87,121
========== ==== ======== ========= ========
</TABLE>

See Notes to Consolidated Financial Statements in Item 8.

S-3
<PAGE> 104

IVEX PACKAGING CORPORATION

SCHEDULE I -- CONDENSED FINANCIAL INFORMATION
(PARENT COMPANY ONLY)

STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Cash flows used by operating activities:
Net loss.................................................. $(11,508) $(13,075) $ (33,744)
Adjustments to reconcile net loss to net cash used by
operating activities:
Amortization of debt issue costs.......................... 264 264 207
Non-cash interest......................................... 11,232 12,801 11,223
Extraordinary loss........................................ 22,297
-------- -------- ---------
(12) (10) (17)
Cash flows from financing activities:
Proceeds from issuance of stock........................... 117,314
Redemption of 13 1/4% discount debentures................. (117,363)
Debt redemption costs..................................... (20,084)
Transfer from IPC, Inc.................................... 20,132
-------- -------- ---------
Net cash used by financing activities................ (1)
-------- -------- ---------
Net decrease in cash and cash equivalents................. (12) (10) (18)
Cash and cash equivalents at beginning of period.......... 49 37 27
-------- -------- ---------
Cash and cash equivalents at end of period................ $ 37 $ 27 $ 9
======== ======== =========
</TABLE>

See Notes to Consolidated Financial Statements in Item 8.

S-4
<PAGE> 105

IVEX PACKAGING CORPORATION

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
BEGINNING ENDING
DESCRIPTION BALANCE ADDITIONS DEDUCTIONS BALANCE
----------- --------- --------- ---------- -------
<S> <C> <C> <C> <C>
Accounts receivable -- allowance for doubtful
accounts:
1995............................................. $ 1,445 $ 943 $ (376)(1) $ 2,012
1996............................................. 2,012 281 (213)(1) 2,080
1997............................................. 2,080 1,050 (586)(1) 2,544
Income Taxes -- valuation allowance:
1995............................................. 19,872 4,028 -- 23,900
1996............................................. 23,900 -- (5,710) 18,190
1997............................................. 18,190 -- (15,890)(2) 2,300
</TABLE>

- -------------------------
(1) Accounts charged off, less recoveries.

(2) Reflects the utilization of net operating loss carryovers for a portion of
1997 and the reversal of $13,200 of valuation allowance during the third
quarter of 1997.

S-5
<PAGE> 106

INDEX TO EXHIBITS

S-6
<PAGE> 107

<TABLE>
<CAPTION>
INCORPORATED BY
REFERENCE TO
THE FOLLOWING
EXHIBIT EXHIBIT REGISTRATION NO.
NO. DESCRIPTION OF DOCUMENT NO. OR REPORT
- ------- ----------------------- ------- ----------------
<C> <C> <S> <C> <C>
10.3 -- Form of Trust Agreement, dated October 17,
1996, between IPC, Inc. and the trustee
hereof relating to executive deferred
compensation 10.3 Ivex 1996 Form 10-K
(File No. 33-60714)
10.4 -- Form of IPC Stock Purchase and Option
Agreement, dated as of January 1, 1993, among
IPC, Ivex, Acadia Partners, L.P. and each of
certain senior managers of IPC with the Ivex
Stock Purchase and Option Agreement attached
thereto 10.2 IPC 1993 Form 10-K
(Registration No. 33-52150)
10.5 -- 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 10.16 Ivex 6/30/96 Form 10-Q
(File No. 33-60714)
10.6 -- IPC Retirement Plan and Trust, as amended and
Restated May 1, 1992 10.3 IPC Form S-1
(Registration No. 33-52150)
10.7 -- Amended and Restated Employment Agreement,
dated as of May 30, 1996, between George V.
Bayly and IPC 10.14 Ivex 6/30/96 Form 10-Q
(File No. 33-60714)
10.8 -- Employment Agreement, dated as of December
31, 1992, between IPC and Frank V. Tannura 10.30 IPC 6/30/93 Form 10-Q
(File No. 33-52150)
10.9 -- Amendment No. 1, dated as of September 11,
1995, to the Employment Agreement, dated as
of December 31, 1992, between IPC and Frank
V. Tannura 10.59 IPC 6/30/95 Form 10-Q
(File No. 33-52150)
10.10 -- Amendment No. 2 to Employment Agreement,
dated May 30, 1996, between IPC and Frank V.
Tannura 10.15 Ivex 6/30/96 Form 10-Q
(File No. 33-60714)
10.11 -- Form of Severance Agreement between the
Company and certain named executive officers 1.1 IPC 1994 Form 10-K
(File No. 33-52150)
10.12 -- Form of Ivex Packaging Corporation 1997 Long-
Term Stock Incentive Plan 10.45 Ivex Amendment No. 8 to
Form S-1
(Registration No. 33-95436)
10.13 -- Form of Senior Management's Promissory Note
to IPC 10.13 Ivex 1997 Form 10-K
(File No. 33-60714)
10.14 -- Loan Agreement, dated as of December 1, 1987,
between the County of Kankakee, Illinois and
Ivex of Delaware, Inc. (n/k/a IPC, Inc.) 10.11 IPC Form S-1
(Registration No. 33-52150)
</TABLE>

S-7
<PAGE> 108

<TABLE>
<CAPTION>
INCORPORATED BY
REFERENCE TO
THE FOLLOWING
EXHIBIT EXHIBIT REGISTRATION NO.
NO. DESCRIPTION OF DOCUMENT NO. OR REPORT
- ------- ----------------------- ------- ----------------
<C> <C> <S> <C> <C>
10.15 -- Loan Agreement, dated as of June 1, 1988,
between the Development Authority of Morgan
County and Ivex of Delaware Inc. (n/k/a IPC,
Inc.) 10.13 IPC Form S-1
(Registration No. 33-52150)
10.16 -- Loan Agreement, dated as of October 1, 1987,
between the County of Will, Illinois and LPX,
Inc. (n/k/a/ IPC, Inc.) 10.15 IPC Form S-1
(Registration No. 33-52150)
10.17 -- Loan Agreement, dated as of April 1, 1988,
between the Illinois Development Finance
Authority and Ivex of Delaware, Inc. (n/k/a
IPC, Inc.) 10.17 IPC Form S-1
(Registration No. 33-52150)
10.18 -- Indenture of Trust, dated as of March 1,
1989, between Marine Midland Bank, N.A. and
Ivex of Delaware, Inc. (n/k/a IPC, Inc.) 10.19 IPC Form S-1
(Registration No. 33-52150)
10.19 -- Loan Agreement, dated November 1, 1985,
between the Village of Bridgeview, Illinois
and L&CP Corporation (n/k/a IPC, Inc.) 10.21 IPC Form S-1
(Registration No. 33-52150)
10.20 -- Loan Agreement, dated as of June 1, 1988,
between City of Troy, Ohio and L&CP
Corporation (n/k/a IPC, Inc.) 10.23 IPC Form S-1
(Registration No. 33-52150)
10.21 -- Lease Agreement, dated as of December 5,
1996, between State Street Bank and Trust
Company and IPC 10.46 Ivex 1996 Form 10-K
(File No. 33-60714)
10.22 -- Lease, dated as of October 4, 1988, between
Seymour C. Graham and Kama Corporation (n/k/a
IPC, Inc.) 10.33 IPC Form S-1
(Registration No. 33-52150)
10.23 -- Amendment to Lease, dated as of December 20,
1988, between Seymour C. Graham and Kama
Corporation (n/k/a IPC, Inc.) 10.34 IPC Form S-1
(Registration No. 33-52150)
10.24 -- Lease, dated June 20, 1995, between Howard H.
Gelb and Eunice Gelb and Kama Corporation
(n/k/a IPC, Inc.) 10.44 Ivex 1995 Form 10-K
(File No. 33-60714)
10.25 -- Industrial Building Lease, dated January 8,
1998, between Arapahoe Properties, L.L.C. and
Packaging Products, Inc. 10.25 Ivex 1997 Form 10-K
(File No. 33-60714)
10.26 -- Lease, dated as of September 11, 1996, by and
between Joseph P. Bennett and Trio Products,
Inc. 10.54 Ivex 1996 Form 10-K
(File No. 33-60714)
</TABLE>

S-8
<PAGE> 109

- -------------------------
* Filed herewith.

S-9

<PAGE> 1

EXHIBIT 1.1

================================================================================

IVEX PACKAGING CORPORATION

(a Delaware corporation)

4,256,000 Shares of Common Stock

U.S. PURCHASE AGREEMENT

Dated: May __, 1998

================================================================================

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<S> <C>
U.S. PURCHASE AGREEMENT............................................... 1

SECTION 1. Representations and Warranties.......................... 4

(a) Representations and Warranties by the Company........... 4

(i) Compliance with Registration
Requirements................................... 4
(ii) Independent Accountants........................ 5
(iii) Financial Statements........................... 5
(iv) No Material Adverse Change in Business......... 6
(v) Good Standing of the Company................... 6
(vi) Good Standing of Subsidiaries.................. 6
(vii) Capitalization................................. 7
(viii) Authorization of Agreement..................... 7
(ix) Authorization and Description of
Securities..................................... 7
(x) Absence of Defaults and Conflicts.............. 8
(xi) Absence of Labor Dispute....................... 8
(xii) Compliance with ERISA.......................... 9
(xiii) Absence of Proceedings......................... 9
(xiv) Accuracy of Exhibits........................... 10
(xv) Possession of Intellectual Property............ 10
(xvi) Absence of Further Requirements................ 10
(xvii) Possession of Licenses and Permits............. 10
(xviii) Title to Property.............................. 11
(xix) Compliance with Cuba Act....................... 11
(xx) Investment Company Act......................... 11
(xxi) Environmental Laws............................. 11
(xxii) Registration Rights............................ 12
(xxiii) Taxes.......................................... 12
(xxiv) Maintenance of Adequate Insurance.............. 12
(xxv) Maintenance of Sufficient Internal
Controls....................................... 13

(b) Representations and Warranties by the Selling
Stockholders............................................ 13

(i) Accurate Disclosure................................ 13
(ii) Power of Attorney and Custody
</TABLE>

<PAGE> 3

Agreement....................................... 13
(iii) Authorization of Agreements..................... 14
(iv) Good and Marketable Title....................... 14
(v) Absence of Manipulation......................... 15
(vi) Absence of Further Requirements................. 15
(vii) Restriction on Sale of Securities............... 15
(viii) Certificates Suitable for Transfer.............. 15
(ix) No Association with NASD........................ 16

SECTION 2. Sale and Delivery to U.S. Underwriters;
Closing.................................................. 16

(a) Initial Securities.............................. 16
(b) U.S. Option Securities.......................... 17
(c) Payment......................................... 17
(d) Denominations; Registration..................... 18

SECTION 3. Covenants of the Company................................. 18

(a) Compliance with Securities Regulations and
Commission Requests............................. 19
(b) Filing of Amendments............................ 19
(c) Delivery of Registration Statements............. 19
(d) Delivery of Prospectuses........................ 20
(e) Continued Compliance with Securities Laws....... 20
(f) Blue Sky Qualifications......................... 20
(g) Rule 158........................................ 21
(h) Use of Proceeds................................. 21
(i) Listing......................................... 21
(j) Restriction on Sale of Securities............... 21
(k) Reporting Requirements.......................... 22

SECTION 4. Payment of Expenses...................................... 22

(a) Expenses........................................ 22
(b) Expenses of the Selling Stockholders............ 22
(c) Termination of Agreement........................ 23
(d) Allocation of Expenses.......................... 23

SECTION 5. Conditions of U.S. Underwriters' Obligations............. 23

<PAGE> 4

<TABLE>
<S> <C>
(a) Effectiveness of Registration Statement..................... 23
(b) Opinion of Counsel for Company.............................. 23
(c) Opinion of Counsel for the Selling Stockholders............. 24
(d) Opinion of Counsel for the U.S. Underwriters................ 24
(e) Officers' Certificate....................................... 24
(f) Certificate of Selling Stockholders......................... 25
(g) Accountant's Comfort Letter................................. 25
(h) Bring-down Comfort Letter................................... 25
(i) Approval of Listing......................................... 25
(j) No Objection................................................ 25
(k) Lock-up Agreements.......................................... 25
(l) Purchase of Initial International Securities................ 26
(m) Conditions to Purchase of U.S. Option
Securities.................................................. 26

(i) Officers' Certificate................................ 26
(ii) Opinion of Counsel for Company....................... 26
(iii) Opinion of Counsel for U.S. Underwriters............. 26
(iv) Bring-down Comfort Letter............................ 26

(n) Additional Documents........................................ 27
(o) Termination of Agreement.................................... 27

SECTION 6. Indemnification............................................. 27

(a) Indemnification of U.S. Underwriters by the
Company..................................................... 27
(b) Indemnification of the U.S. Underwriters
by the Selling Stockholders................................. 29
(c) Indemnification of Company, Directors and
Officers and Selling Stockholders........................... 29
(d) Actions against Parties; Notification....................... 30
(e) Settlement without Consent if Failure to
Reimburse................................................... 31
(e) Other Agreements with Respect to
Indemnification............................................. 31

SECTION 7. Contribution................................................ 31

SECTION 8. Representations, Warranties and Agreements
to Survive Delivery......................................... 33

SECTION 9. Termination of Agreement.................................... 33
</TABLE>

<PAGE> 5

<TABLE>
<S> <C>
(a) Termination; General....................................... 33
(b) Liabilities................................................ 34

SECTION 10. Default by One or More of the U.S.
Underwriters.............................................. 34

SECTION 11. Default by one or more of the Selling
Stockholders or the Company............................... 35

SECTION 12. Notices.................................................... 35

SECTION 13. Parties.................................................... 35

SECTION 14. GOVERNING LAW AND TIME..................................... 36

SECTION 15. Effect of Headings......................................... 36
</TABLE>

<PAGE> 6

<TABLE>
<S> <C>
SCHEDULES
Schedule A - List of Underwriters................................. Sch A-1
Schedule B - List of Selling Stockholders......................... Sch B-1
Schedule C - Pricing Information.................................. Sch C-1
Schedule D - List of Persons Subject to Lock-up................... Sch D-1

EXHIBITS
Exhibit A - Form of Opinion of Company's Counsel...................... A-1
Exhibit B - Form of Opinion for the Selling Stockholders.............. B-1
Exhibit C - Form of Lock-up Letter.................................... C-1
</TABLE>

<PAGE> 7

IVEX PACKAGING CORPORATION

(a Delaware corporation)

4,256,000 Shares of Common Stock

(Par Value $.01 Per Share)

U.S. PURCHASE AGREEMENT

May __, 1998

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
BT Alex. Brown Incorporated
Lehman Brothers Inc.
Smith Barney Inc.
as Representatives of the several U. S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209

Ladies and Gentlemen:

Ivex Packaging Corporation, a Delaware corporation (the "Company"), and
the persons listed in Schedule B hereto (the "Selling Stockholders"), confirm
their respective agreements with Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch") and each of the other U.S.
Underwriters named in Schedule A hereto (collectively, the "U.S. Underwriters,"
which term shall also include any underwriter substituted as hereinafter
provided in Section 10 hereof), for whom Merrill Lynch, BT Alex. Brown
Incorporated, Lehman Brothers Inc. and Smith Barney Inc. are acting as
representatives (in such capacity, the "U.S. Representatives"), with respect to
(i) the sale by the Company and the Selling Stockholders, acting

1
<PAGE> 8

severally and not jointly, and the purchase by the U.S. Underwriters, acting
severally and not jointly, of the respective numbers of shares of Common Stock,
par value $.01 per share, of the Company ("Common Stock") set forth in
Schedules A and B hereto and (ii) the grant by the Company to the U.S.
Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of 638,400 additional shares of
Common Stock to cover over-allotments, if any. The aforesaid 4,256,000 shares
of Common Stock (the "Initial U.S. Securities") to be purchased by the U.S.
Underwriters and all or any part of the 638,400 shares of Common Stock subject
to the option described in Section 2(b) hereof (the "U.S. Option Securities")
are hereinafter called, collectively, the "U.S. Securities."

It is understood that the Company and the Selling Stockholders are
concurrently entering into an agreement dated the date hereof (the
"International Purchase Agreement") providing for the offering by the Company
and the Selling Stockholders of an aggregate of 1,064,000 shares of Common
Stock (the "Initial International Securities") through arrangements with
certain underwriters outside the United States and Canada (the "International
Managers") for whom Merrill Lynch International, BT Alex. Brown International,
Lehman Brothers International (Europe) and Smith Barney International Limited
are acting as lead managers (the "Lead Managers") and the grant by the Company
to the International Managers, acting severally and not jointly, of an option
to purchase all or any part of the International Managers' pro rata portion of
up to 159,600 additional shares of Common Stock solely to cover over
allotments, if any (the "International Option Securities" and, together with
the U.S. Option Securities, the "Option Securities"). The Initial
International Securities and the International Option Securities are
hereinafter called the "International Securities." It is understood that (a)
neither the Company nor the Selling Stockholders are obligated to sell, and the
U.S. Underwriters are not obligated to purchase, any Initial U.S. Securities
unless all of the Initial International Securities are contemporaneously
purchased by the International Managers, and (b) neither the Company nor the
Selling Stockholders are obligated to sell, and the International Managers are
not obligated to purchase, any Initial International Securities unless all of
the Initial U.S. Securities are contemporaneously purchased by the U.S.
Underwriters.

2
<PAGE> 9

The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters," the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities," and the U.S. Securities and the International Securities
are hereinafter collectively called the "Securities."

The Underwriters will concurrently enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the
direction of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated (in such capacity, the "Global Coordinator").

The Company and the Selling Stockholders understand that the U.S.
Underwriters propose to make a public offering of the U.S. Securities as soon
as the U.S. Representatives deem advisable after this Agreement has been
executed and delivered.

The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-__________)
covering the registration of the Securities under the Securities Act of 1933,
as amended (the "1933 Act"), including the related preliminary prospectus or
prospectuses. Promptly after execution and delivery of this Agreement, the
Company will either (i) prepare and file a prospectus in accordance with the
provisions of Rule 430A ("Rule 430A") of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations") and paragraph (b) of
Rule 424 ("Rule 424(b)") of the 1933 Act Regulations or (ii) if the Company has
elected to rely upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare
and file a term sheet (a "Term Sheet") in accordance with the provisions of
Rule 434 and Rule 424(b). Two forms of prospectus are to be used in connection
with the offering and sale of the Securities: one relating to the U.S.
Securities (the "Form of U.S. Prospectus") and one relating to the
International Securities (the "Form of International Prospectus"). The Form of
International Prospectus is identical to the Form of U.S. Prospectus, except
for the front cover and back cover pages and the information under the caption
"Underwriting." The information included in such prospectus or in any such
Term Sheet, as the case may be, that was omitted from such registration
statement at the time it became effective but that is deemed to be part of such
registration statement at the

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<PAGE> 10

time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." The Form of U.S. Prospectus and Form of
International Prospectus used before such registration statement became
effective, and any prospectus that omitted, as applicable, the Rule 430A
Information or the Rule 434 Information, that was used after such effectiveness
and prior to the execution and delivery of this Agreement, is herein called a
"preliminary prospectus." Such registration statement, including the exhibits
thereto and schedules thereto at the time it became effective and including the
Rule 430A Information and the Rule 434 Information, as applicable, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final
Form of U.S. Prospectus and the final Form of International Prospectus in the
forms first furnished to the Underwriters for use in connection with the
offering of the Securities are herein called the "U.S. Prospectus" and the
"International Prospectus," respectively, and collectively, the "Prospectuses."
If Rule 434 is relied on, the terms "U.S. Prospectus" and "International
Prospectus" shall refer to the preliminary U.S. Prospectus dated May __, 1998
and preliminary International Prospectus dated May __, 1998, respectively, each
together with the applicable Term Sheet, and all references in this Agreement
to the date of the Prospectuses shall mean the date of the Term Sheet. For
purposes of this Agreement, all references to the Registration Statement, any
preliminary prospectus, the U.S. Prospectus, the International Prospectus or
any Term Sheet or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("EDGAR").

SECTION 1. Representations and Warranties.

(a) Representations and Warranties by the Company. The Company
represents and warrants to each U.S. Underwriter as of the date hereof, as of
the Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b) hereof, and agrees with each U.S.
Underwriter, as follows:

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<PAGE> 11

(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has become
effective under the 1933 Act and no stop order suspending the effectiveness
of the Registration Statement or any Rule 462(b) Registration Statement has
been issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with.

At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any U.S. Option Securities are
purchased, at the Date of Delivery), the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and did not and will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading. Neither of the Prospectuses nor any amendments or
supplements thereto, at the time the Prospectuses or any amendments or
supplements thereto were issued and at the Closing Time (and, if any U.S.
Option Securities are purchased, at the Date of Delivery), included or will
include an untrue statement of a material fact or omitted or will omit to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
If Rule 434 is used, the Company will comply with the requirements of Rule
434 and the Prospectuses shall not be "materially different," as such term
is used in Rule 434, from the prospectuses included in the Registration
Statement at the time it became effective. The representations and
warranties in this subsection shall not apply to statements in or omissions
from the Registration Statement or the U.S. Prospectus made in reliance upon
and in conformity with information furnished to the Company in writing by
any U.S. Underwriter through the U.S. Representatives expressly for use in
the Registration Statement or the U.S. Prospectus or any amendments or
supplements thereto.

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<PAGE> 12

Each preliminary prospectus and the prospectuses filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectuses delivered to the Underwriters
for use in connection with this offering was substantially identical to the
electronically transmitted copies thereof filed with the Commission pursuant
to EDGAR, except to the extent permitted by Regulation S-T.

(ii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act and
the 1933 Act Regulations.

(iii) Financial Statements. The financial statements included in the
Registration Statement and the Prospectuses, together with the related
schedules and notes, present fairly in all material respects the financial
position of the Company and its consolidated subsidiaries at the dates
indicated and the statement of operations, stockholders' equity and cash
flows of the Company and its consolidated subsidiaries for the periods
specified; said financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved, except as otherwise stated therein.
The supporting schedules included in the Registration Statement present
fairly in all material respects in accordance with GAAP the information
required to be stated therein. The selected financial data and the summary
financial information included in the Prospectuses present fairly in all
material respects the information shown therein and have been compiled on a
basis consistent with that of the audited financial statements included in
the Registration Statement. Pro forma financial statements and financial
information related to Ultra Pac, Inc. are not required to be included in
the Registration Statement and the Prospectuses in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements.

(iv) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the

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<PAGE> 13

Registration Statement and the Prospectuses except as otherwise stated
therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business (a "Material
Adverse Effect"), (B) there have been no transactions entered into by the
Company or any of its subsidiaries, other than those in the ordinary course
of business, which are material with respect to the Company and its
subsidiaries considered as one enterprise, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the Company
on any class of its capital stock.

(v) Good Standing of the Company. The Company has been duly organized
and is validly existing as a corporation in good standing under the laws of
the State of Delaware and has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under this
Agreement and under the International Purchase Agreement; and the Company is
duly qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good standing
would not result in a Material Adverse Effect.

(vi) Good Standing of Subsidiaries. Each "significant subsidiary" of
the Company (as such term is defined in Rule 1-02 of Regulation S-X)(each a
"Subsidiary" and, collectively, the "Subsidiaries") has been duly organized
and is validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectuses and is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure so
to qualify or to be in good standing would not result in a Material Adverse
Effect; except as otherwise disclosed in the Registration Statement, all of
the

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<PAGE> 14

issued and outstanding capital stock of each such Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and is owned
by the Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity;
none of the outstanding shares of capital stock of any Subsidiary was issued
in violation of the preemptive or similar rights of any securityholder of
such Subsidiary. The only subsidiaries of the Company are the subsidiaries
listed on Exhibit 21.1 to the Registration Statement.

(vii) Capitalization. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectuses in the column
entitled "Historical" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement or the
International Purchase Agreement, pursuant to reservations, agreements or
employee benefit plans referred to in the Prospectuses or pursuant to the
exercise of convertible securities or options referred to in the
Prospectuses). The shares of issued and outstanding capital stock, including
the Securities to be purchased by the U.S. Underwriters and the
International Managers from the Selling Stockholders, have been duly
authorized and validly issued and are fully paid and non-assessable; none of
the outstanding shares of capital stock, including the Securities to be
purchased by the U.S. Underwriters and the International Managers from the
Selling Stockholders, was issued in violation of the preemptive or other
similar rights of any securityholder of the Company.

(viii) Authorization of Agreement. This Agreement and the
International Purchase Agreement have been duly authorized, executed and
delivered by the Company.

(ix) Authorization and Description of Securities. The Securities to
be purchased by the U.S. Underwriters and the International Managers from
the Company have been duly authorized for issuance and sale to the U.S.
Underwriters pursuant to this Agreement and the International Managers
pursuant to the International Purchase Agreement and, when issued and
delivered by the Company pursuant to this Agreement and the International
Purchase Agreement, respectively, against payment of the consideration set
forth herein and therein, will be validly issued and fully paid and

8
<PAGE> 15

non-assessable; the Common Stock conforms in all material respects to all
statements relating thereto contained in the Prospectuses and such
description conforms in all material respects to the rights set forth in the
instruments defining the same; no holder of the Securities will be subject
to personal liability solely by reason of being such a holder; and the
issuance of the Securities is not subject to the preemptive or other similar
rights of any securityholder of the Company.

(x) Absence of Defaults and Conflicts. Neither the Company nor any of
its subsidiaries is in violation of its charter or by-laws or in default in
the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, lease or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which it or
any of them may be bound, or to which any of the property or assets of the
Company or any subsidiary is subject (collectively, "Agreements and
Instruments") except for such defaults that would not result in a Material
Adverse Effect; and the execution, delivery and performance of this
Agreement and the International Purchase Agreement and the consummation of
the transactions contemplated in this Agreement, the International Purchase
Agreement and in the Registration Statement (including the issuance and sale
of the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectuses under the caption "Use of
Proceeds") and compliance by the Company with its obligations under this
Agreement and the International Purchase Agreement have been duly authorized
by all necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any subsidiary
pursuant to, the Agreements and Instruments (except for such conflicts,
breaches, Repayment Events or defaults or liens, charges or encumbrances
that would not result in a Material Adverse Effect), nor will such action
result in any violation of the provisions of the charter or by-laws of the
Company or any subsidiary or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any

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<PAGE> 16

government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any subsidiary or any of their assets,
properties or operations except such violations that would not, individually
or in the aggregate, have a Material Adverse Effect. As used herein, a
"Repayment Event" means any event or condition which gives the holder of any
note, debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any
subsidiary.

(xi) Absence of Labor Dispute. No labor dispute with the employees of
the Company or any subsidiary exists or, to the knowledge of the Company, is
imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or any subsidiary's principal
suppliers, manufacturers, customers or contractors, which, in either case,
may reasonably be expected to result in a Material Adverse Effect.

(xii) Compliance with ERISA. The Company and each member of its
Control Group is in compliance in all material respects with all presently
applicable provisions of the U.S. Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and the regulations and published
interpretations thereunder; no "reportable event" (as defined in ERISA and
the regulations and published interpretations thereunder) has occurred with
respect to any material "pension plan" (as defined in ERISA and the
regulations and published interpretations thereunder) established or
maintained by the Company or any member of its Control Group; neither the
Company nor any member of its Control Group has incurred nor expects to
incur any material liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any "pension plan" or (ii) Section 412
or 4971 of the U.S. Internal Revenue Code of 1986, as amended (the "Code");
and each material "pension plan" established or maintained by the Company
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and has received a favorable
determination letter as to its qualification and nothing has occurred,
whether by action or failure to act, which would cause the loss of such
qualification. For purposes of this subsection, "Control Group' is defined
to include any entity

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<PAGE> 17

which is part of a group which includes the Company and is treated as a
single employer under Section 414 of the Code.

(xiii) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company, threatened, against or affecting the Company or any subsidiary,
which is required to be disclosed in the Registration Statement (other than
as disclosed therein), or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to materially
and adversely affect the properties or assets thereof or the consummation of
the transactions contemplated in this Agreement or the International
Purchase Agreement or the performance by the Company of its obligations
hereunder and thereunder; the aggregate of all pending legal or governmental
proceedings to which the Company or any subsidiary is a party or of which
any of their respective property or assets is the subject which are not
described in the Registration Statement, including ordinary routine
litigation incidental to the business, could not reasonably be expected to
result in a Material Adverse Effect.

(xiv) Accuracy of Exhibits. There are no contracts or documents which
are required to be described in the Registration Statement or the
Prospectuses or to be filed as exhibits thereto which have not been so
described and filed as required.

(xv) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks, trade names or other intellectual property (collectively,
"Intellectual Property") necessary to carry on the business now operated by
them, and neither the Company nor any of its subsidiaries has received any
notice or is otherwise aware of any infringement of or conflict with
asserted rights of others with respect to any Intellectual Property or of
any facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the

11
<PAGE> 18

interest of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling
or finding) or invalidity or inadequacy, singly or in the aggregate, would
result in a Material Adverse Effect.

(xvi) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency is
necessary or required for the performance by the Company of its obligations
under this Agreement or the International Purchase Agreement, in connection
with the offering, issuance or sale of the Securities hereunder or
thereunder or the consummation of the transactions contemplated by this
Agreement or the International Purchase Agreement, except such as have been
already made or obtained or will be made or obtained prior to Closing Time
or as may be required under the 1933 Act or the 1933 Act Regulations or
state securities laws.

(xvii) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them except where the
failure to possess the same would not, individually or in the aggregate,
have a Material Adverse Effect; the Company and its subsidiaries are in
compliance with the terms and conditions of all such Governmental Licenses,
except where the failure so to comply would not, singly or in the aggregate,
have a Material Adverse Effect; all of the Governmental Licenses are valid
and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect would not have a Material Adverse Effect; and neither
the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.

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<PAGE> 19

(xviii) Title to Property. The Company and its subsidiaries have good
and marketable title to all real property owned by the Company and its
subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described in the Prospectuses or (b) would not reasonably be expected to
have a Material Adverse Effect; and all of the leases and subleases material
to the business of the Company and its subsidiaries, considered as one
enterprise, and under which the Company or any of its subsidiaries holds
properties described in the Prospectuses, are in full force and effect, and
neither the Company nor any subsidiary has received any notice of any
material claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any subsidiary under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company or
such subsidiary to the continued possession of the leased or subleased
premises under any such lease or sublease.

(xix) Compliance with Cuba Act. The Company has complied with, and is
and will be in compliance with, the provisions of that certain Florida act
relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida statutes, and the rules and regulations thereunder
(collectively, the "Cuba Act") or is exempt therefrom.

(xx) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectuses
will not be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company Act
of 1940, as amended (the "1940 Act").

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<PAGE> 20

consent, decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to the release
or threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) the Company
and its subsidiaries have all material permits, authorizations and approvals
required under any applicable Environmental Laws and are each in compliance
with their requirements, (C) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation, investigation
or proceedings relating to any Environmental Law against the Company or any
of its subsidiaries and (D) there are no events or circumstances that might
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of its
subsidiaries relating to Hazardous Materials or any Environmental Laws.

(xxii) Registration Rights. Except as disclosed in the Registration
Statement, there are no persons with registration rights or other similar
rights to have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the 1933 Act.

(xxiii) Taxes. The Company and each of its subsidiaries have filed all
necessary material federal, state, local and foreign income, payroll,
franchise and other tax returns (after giving effect to extensions) and have
paid all material taxes shown as due thereon or with respect to any of its
properties, and there is no tax deficiency that has been, or to the
knowledge of the Company is likely to be, asserted against the Company, any
of its subsidiaries or any of their properties or assets that would result
in a Material Adverse Effect, except for taxes that are being contested in
good faith by appropriate proceedings and with respect to which the

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<PAGE> 21

Company has established adequate reserves in accordance with GAAP.

(xxiv) Maintenance of Adequate Insurance. The Company and each of its
subsidiaries is insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as is reasonably prudent
in the business in which it is engaged or proposed to engage after giving
effect to the transactions described in the Prospectuses; and the Company
does not have any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not result in a Material Adverse Effect.

(xxv) Maintenance of Sufficient Internal Controls. The Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

(b) Representations and Warranties by the Selling Stockholders. Each
Selling Stockholder severally represents and warrants to each U.S. Underwriter
as of the date hereof and as of the Closing Time, and agrees with each U.S.
Underwriter, as follows:

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<PAGE> 22

statements in or omissions from the Registration Statement or Prospectuses
made in reliance upon and in conformity with written information relating to
such Selling Stockholder furnished to the Company or the Underwriters by the
Selling Stockholder expressly for use in the Registration Statement or
Prospectuses.

(ii) Power of Attorney and Custody Agreement. Each Selling Stockholder
has duly executed and delivered in the form heretofore furnished by the U.S.
Underwriters, a power of attorney and custody agreement (the "Power of
Attorney and Custody Agreement") with ________________, as the
attorney-in-fact and the custodian (the "Attorney-in-Fact" and the
"Custodian", respectively); the Attorney-in-Fact is authorized to execute
and deliver this Agreement and the certificates referred to in Section 5(f)
or that may be required pursuant to Section 5(o) on behalf of such Selling
Stockholder, to determine the purchase price to be paid by the U.S.
Underwriters to such Selling Stockholder as provided in Section 2(a) hereof,
to authorize the delivery of the Securities to be sold by such Selling
Stockholder hereunder, to duly endorse (in blank or otherwise) the
certificate or certificates representing such Securities, to accept payment
therefor, and otherwise to act on behalf of such Selling Stockholder in
connection with this Agreement.

(iii) Authorization of Agreements. Each Selling Stockholder has the
full right, power and authority to enter into the Power of Attorney and
Custody Agreement, this Agreement and the International Purchase Agreement
and to sell, transfer and deliver the Securities to be sold by such Selling
Stockholder under this Agreement and the International Purchase Agreement.
The execution and delivery of the Power of Attorney and Custody Agreement,
this Agreement and the International Purchase Agreement and the sale and
delivery of the Securities to be sold by such Selling Stockholder and the
consummation of the transactions contemplated in this Agreement and the
International Purchase Agreement and compliance by such Selling Stockholder
with its obligations hereunder and thereunder have been duly authorized by
such Selling Stockholder and do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or constitute
a breach of, or default under, or (A) result in the creation or imposition
of any tax, lien,

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<PAGE> 23

charge or encumbrance upon the Securities to be sold by such Selling
Stockholder or any property or assets of such Selling Stockholder pursuant
to any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, license, lease or other agreement or instrument to which
such Selling Stockholder is a party or by which such Selling Stockholder may
be bound, or to which any of the property or assets of such Selling
Stockholder is subject, or (B) result in any violation of the provisions of
the charter or by-laws or other organizational instrument of such Selling
Stockholder, if applicable, or any applicable treaty, law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over such
Selling Stockholder or any of its properties except, in the case of clause
(A), for such conflicts, breaches, defaults, taxes, liens, charges or
encumbrances which could not reasonably be expected, individually or in the
aggregate, to have a material adverse effect on the consummation of the
transactions contemplated by this Agreement.

(iv) Good and Marketable Title. Such Selling Stockholder has and will
at the Closing Time have good and marketable title to the Securities to be
sold by such Selling Stockholder under this Agreement and the International
Purchase Agreement, free and clear of any security interest, mortgage,
pledge, lien, charge, claim, equity or encumbrance of any kind, other than
pursuant to this Agreement and the International Purchase Agreement; and
upon delivery of such Securities and payment of the purchase price therefor
as contemplated herein and therein, assuming each such Underwriter has no
notice of any adverse claim, each of the Underwriters will receive good and
marketable title to the Securities purchased by it from such Selling
Stockholder, free and clear of any security interest, mortgage, pledge,
lien, charge, claim, equity or encumbrance of any kind.

(v) Absence of Manipulation. Such Selling Stockholder has not taken,
and will not take, directly or indirectly, any action which is designed to
or which has constituted or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.

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<PAGE> 24

(vi) Absence of Further Requirements. No filing with, or consent,
approval, authorization, order, registration, qualification or decree of,
any court or governmental authority or agency, domestic or foreign, is
necessary or required for the performance by each Selling Stockholder of its
obligations under this Agreement and the International Purchase Agreement or
in connection with the sale and delivery of the Securities under this
Agreement and the International Purchase Agreement or the consummation of
the transactions contemplated hereunder or thereunder, except such as may
have previously been made or obtained or as may be required under the 1933
Act or the 1933 Act Regulations or state securities laws.

(vii) Restriction on Sale of Securities. During a period of 90 days
from the date of the U.S. Prospectus, such Selling Stockholder will not,
without the prior written consent of Merrill Lynch, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase
or otherwise transfer or dispose of, directly or indirectly, any share of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under the
1933 Act with respect to any of the foregoing or (ii) enter into any swap or
any other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Common
Stock, whether any such swap or transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities,
in cash or otherwise. The foregoing sentence shall not apply to the
Securities to be sold hereunder or under the International Purchase
Agreement.

(viii) Certificates Suitable for Transfer. Certificates for all of
the Securities to be sold by such Selling Stockholder pursuant to this
Agreement and the International Purchase Agreement, in suitable form for
transfer by delivery or accompanied by duly executed instruments of transfer
or assignment in blank with signatures guaranteed, will be placed in custody
with the Custodian who shall place them with First Chicago Trust Company of
New York by the close of business on May __, 1998 with irrevocable
conditional instructions to deliver such Securities to the U.S. Underwriters
and the

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<PAGE> 25

International Managers pursuant to this Agreement and the International
Purchase Agreement, respectively.

(ix) No Association with NASD. Except as described in the
Prospectuses, neither such Selling Stockholder nor any of its affiliates
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, or has any other association
with (within the meaning of Article I, Section 1(m) of the By-laws of the
National Association of Securities Dealers, Inc.), any member firm of the
National Association of Securities Dealers, Inc.

(c) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the U.S. Representatives or to
counsel for the U.S. Underwriters and the International Managers shall be
deemed a representation and warranty by the Company to each U.S. Underwriter
and each International Manager as to the matters covered thereby; and any
certificate signed by or on behalf of the Selling Stockholders as such and
delivered to the U.S. Representatives or to counsel for the U.S. Underwriters
and the International Managers pursuant to the terms of this Agreement and the
International Purchase Agreement shall be deemed a representation and warranty
by such Selling Stockholder to the U.S. Underwriters and the International
Managers as to the matters covered thereby.

SECTION 2. Sale and Delivery to U.S. Underwriters; Closing.

(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth,
the Company and each Selling Stockholder, severally and not jointly, agree to
sell to each U.S. Underwriter, severally and not jointly, and each U.S.
Underwriter, severally and not jointly, agrees to purchase from the Company and
each Selling Stockholder, at the price per share set forth in Schedule C, that
proportion of the number of Initial U.S. Securities set forth in Schedule B
opposite the name of the Company or such Selling Stockholder, as the case may
be, which number of Initial U.S. Securities set forth in Schedule A opposite
the name of such U.S. Underwriter, plus any additional number of Initial U.S.
Securities which such U.S. Underwriter may become obligated to purchase
pursuant to the provisions of Section 10 hereof, bears to the total number of
Initial U.S. Securities, subject, in each case, to such adjustments among the

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<PAGE> 26

U.S. Underwriters as the U.S. Representatives in their sole discretion shall
make to eliminate any sales or purchases of fractional securities.

(b) U.S. Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the U.S.
Underwriters, severally and not jointly, to purchase up to an additional
638,400 shares of Common Stock at the price per share set forth in Schedule C,
less an amount per share equal to any dividends or distributions declared by
the Company and payable on the Initial U.S. Securities but not payable on the
U.S. Option Securities. The option hereby granted will expire 30 days after
the date hereof and may be exercised in whole or in part from time to time only
for the purpose of covering over-allotments which may be made in connection
with the offering and distribution of the Initial U.S. Securities upon notice
by the Global Coordinator to the Company setting forth the number of U.S.
Option Securities as to which the several U.S. Underwriters are then exercising
the option and the time and date of payment and delivery for such U.S. Option
Securities. Any such time and date of delivery (a "Date of Delivery") shall be
determined by the Global Coordinator, but shall not be later than seven full
business days after the exercise of said option, nor in any event prior to the
Closing Time, as hereinafter defined. If the option is exercised as to all or
any portion of the U.S. Option Securities, each of the U.S. Underwriters,
acting severally and not jointly, will purchase that proportion of the total
number of U.S. Option Securities then being purchased which the number of
Initial U.S. Securities set forth in Schedule A opposite the name of such U.S.
Underwriter bears to the total number of Initial U.S. Securities, subject in
each case to such adjustments as the Global Coordinator in its discretion shall
make to eliminate any sales or purchases of fractional shares.

(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial U.S. Securities shall be made at the offices of
Mayer, Brown & Platt, 190 South LaSalle Street, Chicago, Illinois, or at such
other place as shall be agreed upon by the Global Coordinator, the Company and
the Selling Stockholders, at 9:00 A.M. (Eastern time) on the third (fourth, if
the pricing occurs after 4:30 P.M. (Eastern time) on any given day) business
day after the date hereof (unless postponed in accordance with the provisions
of Section 10), or such other time

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<PAGE> 27

not later than ten business days after such date as shall be agreed upon by the
Global Coordinator, the Company and the Selling Stockholders (such time and
date of payment and delivery being herein called "Closing Time").

In addition, in the event that any or all of the U.S. Option Securities
are purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, such U.S. Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Company, on each Date of Delivery as specified in
the notice from the Global Coordinator to the Company.

Payment shall be made to the Company and the Selling Stockholders by wire
transfer of immediately available funds to a bank account designated by the
Company and the Custodian pursuant to each Selling Stockholder's Power of
Attorney and Custody Agreement or directly to each of the Selling Stockholders,
if so instructed by the Custodian, as the case may be, against delivery to the
U.S. Representatives for the respective accounts of the U.S. Underwriters of
certificates for the U.S. Securities to be purchased by them. It is understood
that each U.S. Underwriter has authorized the U.S. Representatives, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Initial U.S. Securities and the U.S. Option Securities, if any,
which it has agreed to purchase. Merrill Lynch, individually and not as
representative of the U.S. Underwriters, may (but shall not be obligated to)
make payment of the purchase price for the Initial U.S. Securities or the U.S.
Option Securities, if any, to be purchased by any U.S. Underwriter whose funds
have not been received by the Closing Time or the relevant Date of Delivery, as
the case may be, but such payment shall not relieve such U.S. Underwriter from
its obligations hereunder.

(d) Denominations; Registration. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing Time or
the relevant Date of Delivery, as the case may be. The certificates for the
Initial U.S. Securities and the U.S. Option Securities, if any, will be made
available for examination and packaging by the U.S.

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<PAGE> 28

Representatives in The City of New York not later than 10:00 A.M. (Eastern
time) on the business day prior to the Closing Time or the relevant Date of
Delivery, as the case may be.

SECTION 3. Covenants of the Company. The Company covenants with each
U.S. Underwriter as follows:

(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule
430A or Rule 434, as applicable, and will notify the Global Coordinator as soon
as practicable, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectuses or any amended Prospectuses shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectuses or for additional information,
and (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to Rule 424(b) and
will take such steps as it deems necessary to ascertain promptly whether the
form of prospectus transmitted for filing under Rule 424(b) was received for
filing by the Commission and, in the event that it was not, it will promptly
file such prospectus. The Company will make every reasonable effort to prevent
the issuance of any stop order and,

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<PAGE> 29

if any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.

(b) Filing of Amendments. The Company will give the Global Coordinator
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), any Term Sheet or any
amendment, supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the Prospectuses,
will furnish the Global Coordinator with copies of any such documents a
reasonable amount of time prior to such proposed filing or use, as the case may
be, and will not file or use any such document to which the Global Coordinator
or counsel for the U.S. Underwriters shall not have given its consent which
shall not be unreasonably withheld.

(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the U.S. Representatives and counsel for the U.S. Underwriters,
without charge, signed copies of the Registration Statement as originally filed
and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and signed copies of all consents and
certificates of experts, and will also deliver to the U.S. Representatives,
without charge, a conformed copy of the Registration Statement as originally
filed and of each amendment thereto (without exhibits) for each of the U.S.
Underwriters. The copies of the Registration Statement and each amendment
thereto furnished to the U.S. Underwriters will be substantially identical to
the electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.

(d) Delivery of Prospectuses. The Company has delivered to each U.S.
Underwriter, without charge, as many copies of each preliminary prospectus as
such U.S. Underwriter reasonably requested, and the Company hereby consents to
the use of such copies for purposes permitted by the 1933 Act. The Company
will furnish to each U.S. Underwriter, without charge, during the period when
the U.S. Prospectus is required to be delivered under the 1933 Act or the
Securities Exchange Act of 1934 (the "1934 Act"), such number of copies of the
U.S. Prospectus (as amended or supplemented) as such U.S. Underwriter may
reasonably request. The U.S. Prospectus and any amendments or supplements
thereto furnished to the U.S. Underwriters will be substantially

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<PAGE> 30

identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the completion
of the distribution of the Securities as contemplated in this Agreement, the
International Purchase Agreement and in the Prospectuses. If at any time when
a prospectus is required by the 1933 Act to be delivered in connection with
sales of the Securities, any event shall occur or condition shall exist as a
result of which it is necessary, in the opinion of counsel for the U.S.
Underwriters or for the Company, to amend the Registration Statement or amend
or supplement the Prospectuses in order that the Prospectuses will not include
any untrue statements of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light
of the circumstances existing at the time it is delivered to a purchaser, or if
it shall be necessary, in the opinion of such counsel, at any such time to
amend the Registration Statement or amend or supplement the Prospectuses in
order to comply with the requirements of the 1933 Act or the 1933 Act
Regulations, the Company will promptly prepare and file with the Commission,
subject to Section 3(b), such amendment or supplement as may be necessary to
correct such statement or omission or to make the Registration Statement or the
Prospectuses comply with such requirements, and the Company will furnish to the
U.S. Underwriters such number of copies of such amendment or supplement as the
U.S. Underwriters may reasonably request.

(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the U.S. Underwriters, to qualify the Securities for offering
and sale under the applicable securities laws of such states and other
jurisdictions (domestic or foreign) as the Global Coordinator may designate and
to maintain such qualifications in effect for a period of time as may be
necessary to complete the distribution of the Securities; provided, however,
that the Company shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation or as a dealer in securities
in any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject. In each jurisdiction in

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<PAGE> 31

which the Securities have been so qualified, the Company will file such
statements and reports as may be required by the laws of such jurisdiction to
continue such qualification in effect for a period of time as may be necessary
to complete the distribution of the Securities.

(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.

(h) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Prospectuses
under "Use of Proceeds."

(i) Listing. The Company will use its best efforts to effect the listing
of the Common Stock (including the Securities) on the New York Stock Exchange.

(j) Restriction on Sale of Securities. During a period of 90 days from
the date of the Prospectuses, the Company will not, without the prior written
consent of Merrill Lynch, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or
otherwise transfer or dispose of any share of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or file any
registration statement under the 1933 Act with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Securities to be sold hereunder or under
the International Purchase Agreement, (B) any shares of Common Stock issued by
the Company upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and referred to in the Prospectuses, or
(C) any shares of Common Stock issued or options to purchase Common Stock
granted pursuant

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<PAGE> 32

to existing employee benefit plans of the Company referred to in the
Prospectuses.

(k) Reporting Requirements. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant to
the 1934 Act within the time periods required by the 1934 Act and the rules and
regulations of the Commission thereunder.

SECTION 4. Payment of Expenses.

(a) Expenses. The Company will pay or cause to be paid all expenses
incident to the performance of their obligations under this Agreement,
including (i) the preparation, printing and filing of the Registration
Statement (including financial statements and exhibits) as originally filed and
of each amendment thereto, (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the U.S. Underwriters,
including any stock or other transfer taxes and any stamp or other duties
payable upon the sale, issuance or delivery of the Securities to the U.S.
Underwriters, (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors, (v) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the
preparation, printing and delivery of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheets and of the Prospectuses and any
amendments or supplements thereto, (vii) the fees and expenses of any transfer
agent or registrar for the Securities, (viii) the filing fees incident to, and
the reasonable fees and disbursements of counsel to the Underwriters in
connection with, the review by the National Association of Securities Dealers,
Inc. (the "NASD") of the terms of the sale of the Securities and (ix) the fees
and expenses incurred in connection with the listing of the Securities on the
New York Stock Exchange.

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<PAGE> 33

(b) Expenses of the Selling Stockholders. The Selling Stockholders,
jointly and severally, will pay all expenses incident to the performance of
their respective obligations under, and the consummation of the transactions
contemplated by this Agreement, including (i) any stamp duties, capital duties
and stock transfer taxes, if any, payable upon the sale of the Securities to
the Underwriters, and their transfer between the Underwriters pursuant to an
agreement between such Underwriters, and (ii) the fees and disbursements of
their respective counsel and accountants.

(c) Termination of Agreement. If this Agreement is terminated by the
U.S. Representatives in accordance with the provisions of Section 5, Section
9(a)(i) or Section 11 hereof, the Company and the Selling Stockholders shall
reimburse the U.S. Underwriters for all of their reasonable out-of-pocket
expenses incurred in connection with the sale of the Securities, including the
reasonable fees and disbursements of counsel for the U.S. Underwriters.

(d) Allocation of Expenses. The provisions of this Section shall not
affect any agreement that the Company and the Selling Stockholders may have or
make for the sharing of such costs and expenses.

SECTION 5. Conditions of U.S. Underwriters' Obligations. The obligations
of the several U.S. Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Selling Stockholders
contained in Section 1 hereof or in certificates of any officer of the Company
or any subsidiary of the Company or on behalf of any Selling Stockholder
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:

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<PAGE> 34

Information shall have been filed with the Commission in accordance with Rule
424(b) (or a post-effective amendment providing such information shall have
been filed and declared effective in accordance with the requirements of Rule
430A) or, if the Company has elected to rely upon Rule 434, a Term Sheet shall
have been filed with the Commission in accordance with Rule 424(b).

(b) Opinion of Counsel for Company. At Closing Time, the U.S.
Representatives shall have received the favorable opinions, dated as of Closing
Time, of Skadden, Arps, Slate, Meagher & Flom (Illinois), special counsel for
the Company, and G. Douglas Patterson, Vice-President and General Counsel of
the Company in form and substance reasonably satisfactory to counsel for the
U.S. Underwriters, together with signed or reproduced copies of such letter for
each of the other U.S. Underwriters to the aggregate effect set forth in
Exhibit A hereto and to such further effect as counsel to the U.S. Underwriters
may reasonably request. In giving such opinion such counsel may rely, as to
all matters governed by the laws of jurisdictions other than the federal law of
the United States and the General Corporation Law of the State of Delaware,
upon the opinions of Skadden, Arps, Slate, Meagher & Flom LLP and such other
counsel satisfactory to the U.S. Representatives. Such counsel may also state
that, insofar as such opinion involves factual matters, they have relied, to
the extent they deem proper, upon certificates of officers of the Company and
its subsidiaries and certificates of public officials.

(c) Opinion of Counsel for the Selling Stockholders. At Closing Time,
the U.S. Representatives shall have received the favorable opinion, dated as of
Closing Time, of Paul, Weiss, Rifkind, Wharton & Garrison, counsel for the
Selling Stockholders, in form and substance satisfactory to counsel for the
U.S. Underwriters, together with signed or reproduced copies of such letter for
each of the other U.S. Underwriters to the effect set forth in Exhibit B hereto
and to such further effect as counsel to the U.S. Underwriters may reasonably
request.

(d) Opinion of Counsel for the U.S. Underwriters. At Closing Time, the
U.S. Representatives shall have received the favorable opinion, dated as of
Closing Time, of Mayer, Brown & Platt, counsel for the U.S. Underwriters,
together with signed or reproduced copies of such letter for each of the other
U.S.

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<PAGE> 35

Underwriters with respect to the matters set forth in clauses (i), (ii),
(v), (vi) (solely as to preemptive or other similar rights arising by operation
of law or under the charter or by-laws of the Company), (viii) through (x),
inclusive, (xii), (xiv) (solely as to the information in the Prospectus under
"Description of Capital Stock--Common Stock") and the penultimate paragraph of
Exhibit A hereto. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the State
of New York the federal law of the United States and the General Corporation
Law of the State of Delaware, upon the opinions of counsel satisfactory to the
U.S. Representatives. Such counsel may also state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company and its subsidiaries and
certificates of public officials.

(e) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectuses, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the U.S.
Representatives shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has been
no such material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to Closing Time, and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or are contemplated by the
Commission.

(f) Certificate of Selling Stockholders. At Closing Time, the U.S.
Representatives shall have received a certificate of each Selling Stockholder,
dated as of Closing Time, to the effect that (i) the representations and
warranties of each Selling Stockholder contained in Section 1(b) hereof are
true and correct in all respects with the same force and effect as though

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<PAGE> 36

expressly made at and as of Closing Time and (ii) each Selling Stockholder has
complied in all material respects with all agreements and all conditions on its
part to be performed under this Agreement at or prior to Closing Time.

(g) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the U.S. Representatives shall have received from Price Waterhouse
LLP a letter dated such date, in form and substance satisfactory to the U.S.
Representatives, together with signed or reproduced copies of such letter for
each of the other U.S. Underwriters containing statements and information of
the type ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectuses.

(h) Bring-down Comfort Letter. At Closing Time, the U.S. Representatives
shall have received from Price Waterhouse LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (g) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.

(i) Approval of Listing. At Closing Time, the Securities shall have been
approved for listing on the New York Stock Exchange, subject only to official
notice of issuance.

(j) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.

(k) Lock-up Agreements. At the date of this Agreement, the U.S.
Representatives shall have received an agreement substantially in the form of
Exhibit C hereto signed by the persons listed on Schedule D hereto.

(l) Purchase of Initial International Securities. Contemporaneously with
the purchase by the U.S. Underwriters of the Initial U.S. Securities under this
Agreement, the International Managers shall have purchased the Initial
International Securities under the International Purchase Agreement.

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<PAGE> 37

(m) Conditions to Purchase of U.S. Option Securities. In the event that
the U.S. Underwriters exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the U.S. Option Securities, the representations
and warranties of the Company contained herein and the statements in any
certificates furnished by the Company and any subsidiary of the Company
hereunder shall be true and correct as of each Date of Delivery and, at the
relevant Date of Delivery, the U.S. Representatives shall have received:

(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of the
chief financial or chief accounting officer of the Company confirming that
the certificate delivered at the Closing Time pursuant to Section 5(e)
hereof remains true and correct as of such Date of Delivery.

(ii) Opinion of Counsel for Company. The favorable opinion of
Skadden, Arps, Slate, Meagher & Flom (Illinois), counsel for the Company, in
form and substance reasonably satisfactory to counsel for the U.S.
Underwriters, dated such Date of Delivery, relating to the U.S. Option
Securities to be purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Section 5(b) hereof.

(iii) Opinion of Counsel for U.S. Underwriters. The favorable opinion
of Mayer, Brown & Platt, counsel for the U.S. Underwriters, dated such Date
of Delivery, relating to the U.S. Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion required by
Section 5(d) hereof.

(iv) Bring-down Comfort Letter. A letter from Price Waterhouse LLP
satisfactory to the U.S. Representatives and dated such Date of Delivery,
substantially in the same form and substance as the letter furnished to the
U.S. Representatives pursuant to Section 5(h) hereof, except that the
"specified date" in the letter furnished pursuant to this paragraph shall be
a date not more than five days prior to such Date of Delivery.

(n) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the U.S. Underwriters shall have been furnished with such documents
and opinions as they may reasonably

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<PAGE> 38

require for the purpose of enabling them to pass upon the issuance and sale of
the Securities as herein contemplated, or in order to evidence the accuracy of
any of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company and the
Selling Stockholders in connection with the issuance and sale of the Securities
as herein contemplated shall be reasonably satisfactory in form and substance
to the U.S. Representatives and counsel for the U.S. Underwriters.

(o) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of the U.S. Option
Securities on a Date of Delivery which is after the Closing Time, the
obligations of the several U.S. Underwriters to purchase the relevant U.S.
Option Securities, may be terminated by the U.S. Representatives by notice to
the Company at any time at or prior to Closing Time or such Date of Delivery,
as the case may be, and such termination shall be without liability of any
party to any other party except as provided in Section 4 and except that
Sections 1, 6, 7 and 8 shall survive any such termination and remain in full
force and effect.

SECTION 6. Indemnification.

(a) Indemnification of U.S. Underwriters by the Company. (1) The Company
agrees to indemnify and hold harmless each U.S. Underwriter and each person, if
any, who controls any U.S. Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act to the extent and in the manner set
forth in clauses (i), (ii) and (iii) below.

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<PAGE> 39

preliminary prospectus or the Prospectuses (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;

(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section 6(d)
below) any such settlement is effected with the written consent of the
Company and the Selling Stockholders; and

(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Merrill Lynch), reasonably
incurred in investigating, preparing or defending against any litigation, or
any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii) above;

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of any U.S. Underwriter through the U.S. Representatives expressly
for use in the Registration Statement (or any amendment thereto), including the
Rule 430A Information and the Rule 434 Information, if applicable, or any
preliminary prospectus or the U.S. Prospectus (or any amendment or supplement
thereto). The foregoing indemnity with respect to any untrue statement
contained in or any omission from the Registration Statement shall not inure to
the benefit of any U.S. Underwriter from whom the person asserting any such
loss, liability, claim, damage or expense purchased any of the Securities that
are the subject thereof if the Company shall sustain the burden of proving that
(i) the untrue statement or omission contained in the

33
<PAGE> 40

Registration Statement was corrected and (ii) such person was not sent or given
a copy of the U.S. Prospectus which corrected the untrue statement or omission
at or prior to the written confirmation of the sale of such Securities to such
persons.

(b) Indemnification of the U.S. Underwriters by the Selling Stockholders.
Each Selling Stockholder shall indemnify and hold harmless each U.S.
Underwriter, its officers and employees, and each person, if any, who controls
any U.S. Underwriter within the meaning of the Securities Act, from and against
any loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of Stock), to which that
U.S. Underwriter, officer, employee or controlling person may become subject,
under the Securities Act or otherwise, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any Preliminary Prospectus
or the U.S. Prospectus (or any amendment or supplement thereto) in reliance
upon and in conformity with written information relating to the Selling
Stockholder furnished to the Company or the U.S. Underwriters through the U.S.
Representatives expressly for use in the Registration Statement (or any
amendment thereto), or any Preliminary Prospectus or the U.S. Prospectus (or
any amendment or supplement thereto). The foregoing indemnity agreement is in
addition to any liability which the Selling Stockholder may otherwise have to
any U.S. Underwriter or any officer, employee or controlling person of that
U.S. Underwriter.

34
<PAGE> 41

(c) Indemnification of Company, Directors and Officers and Selling
Stockholders. Each U.S. Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
and each Selling Stockholder and each person, if any, who controls any Selling
Stockholder within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a)(1) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary U.S. prospectus or the U.S.
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such U.S. Underwriter through the U.S. Representatives expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary
prospectus or the U.S. Prospectus (or any amendment or supplement thereto).

(d) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve
such indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this
indemnity agreement. In the case of parties indemnified pursuant to Section
6(a)(1) above, counsel to the indemnified parties shall be selected by Merrill
Lynch, and, in the case of parties indemnified pursuant to Section 6(c) above,
counsel to the indemnified parties shall be selected by the Company or the
relevant Selling Stockholder. An indemnifying party may participate at its own
expense in the defense of any such action; provided, however, that counsel to
the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to one local counsel in each jurisdiction) separate from their own
counsel for

35
<PAGE> 42
all indemnified parties in connection with any one action or separate but
similar or related actions arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written consent
of the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified
parties are actual or potential parties thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified
party from all liability arising out of such litigation, investigation,
proceeding or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party.

(e) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(1)(ii) effected without its written consent if (i) such settlement
is entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such indemnifying party shall have received notice
of the terms of

36
<PAGE> 43

such settlement at least 30 days prior to such settlement being entered into
and (iii) such indemnifying party shall not have reimbursed such indemnified
party in accordance with such request prior to the date of such settlement.

(e) Other Agreements with Respect to Indemnification. The provisions of
this Section shall not affect any agreement among the Company and the Selling
Stockholders with respect to indemnification.

SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Stockholders on the one hand and the U.S. Underwriters on the other
hand from the offering of the Securities pursuant to this Agreement or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Selling Stockholders on the one hand and of the U.S. Underwriters on the
other hand in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.

The relative benefits received by the Company and the Selling Stockholders
on the one hand and the U.S. Underwriters on the other hand in connection with
the offering of the U.S. Securities pursuant to this Agreement shall be deemed
to be in the same respective proportions as the total net proceeds from the
offering of the U.S. Securities pursuant to this Agreement (before deducting
expenses) received by the Company and the Selling Stockholders and the total
underwriting discount received by the U.S. Underwriters, in each case as set
forth on the cover of the U.S. Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet bear to the aggregate public offering
price of the U.S. Securities as set forth on such cover.

37
<PAGE> 44

The relative fault of the Company and the Selling Stockholders on the one
hand and the U.S. Underwriters on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the Selling
Stockholders or by the U.S. Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

The Company, the Selling Stockholders and the U.S. Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 7
were determined by pro rata allocation (even if the U.S. Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above
in this Section 7. The aggregate amount of losses, liabilities, claims,
damages and expenses incurred by an indemnified party and referred to above in
this Section 7 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.

Notwithstanding the provisions of this Section 7, no U.S. Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the U.S. Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such U.S. Underwriter has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission.

No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.

For purposes of this Section 7, each person, if any, who controls a U.S.
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each

38
<PAGE> 45

director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company or
any Selling Stockholder within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Company or such Selling Stockholder, as the case may be. The U.S.
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial U.S. Securities set forth
opposite their respective names in Schedule A hereto and not joint.

The provisions of this Section shall not affect any agreement among the
Company and the Selling Stockholders with respect to contribution.

SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries or the Selling Stockholders submitted pursuant hereto, shall
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of any U.S. Underwriter or controlling person, or by or on
behalf of the Company or the Selling Stockholders, and shall survive delivery
of the Securities to the U.S. Underwriters.

SECTION 9. Termination of Agreement.

(a) Termination; General. The U.S. Representatives may terminate this
Agreement, by notice to the Company and the Selling Stockholders, at any time
at or prior to Closing Time (i) if there has been, since the time of execution
of this Agreement or since the respective dates as of which information is
given in the U.S. Prospectus, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse change in the financial markets in the United
States or the international financial markets, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or development
involving a prospective change in national or international political,
financial or economic conditions, in each case the effect of which is such as
to make it, in the judgment of the U.S. Representatives, impracticable to

39
<PAGE> 46

market the Securities or to enforce contracts for the sale of the Securities,
or (iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission or the New York Stock Exchange, or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc.
or any other governmental authority, or (iv) if a banking moratorium has been
declared by Federal, New York or Illinois authorities.

(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that
Sections 1, 6, 7 and 8 shall survive such termination and remain in full force
and effect.

SECTION 10. Default by One or More of the U.S. Underwriters. If one or
more of the U.S. Underwriters shall fail at Closing Time or a Date of Delivery
to purchase the Securities which it or they are obligated to purchase under
this Agreement (the "Defaulted Securities"), the U.S. Representatives shall
have the right, within 24 hours thereafter, to make arrangements for one or
more of the non-defaulting U.S. Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth. If,
however, the U.S. Representatives shall not have completed such arrangements
within such 24-hour period, then:

(a) if the number of Defaulted Securities does not exceed 10% of the
number of U.S. Securities to be purchased on such date, each of the
non-defaulting U.S. Underwriters shall be obligated, severally and not jointly,
to purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting U.S. Underwriters, or

(b) if the number of Defaulted Securities exceeds 10% of the number of
U.S. Securities to be purchased on such date, this Agreement or, with respect
to any Date of Delivery which occurs after the Closing Time, the obligation of
the U.S. Underwriters

40
<PAGE> 47

to purchase and of the Company to sell the U.S. Option Securities to be
purchased and sold on such Date of Delivery shall terminate without liability
on the part of any non-defaulting U.S. Underwriter.

No action taken pursuant to this Section shall relieve any defaulting U.S.
Underwriter from liability in respect of its default.

In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the U.S.
Underwriters to purchase and the Company to sell the relevant U.S. Option
Securities, as the case may be, either the (i) U.S. Representatives or (ii) the
Company and any Selling Stockholder shall have the right to postpone Closing
Time or the relevant Date of Delivery, as the case may be, for a period not
exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectuses or in any other documents or
arrangements. As used herein, the term "U.S. Underwriter" includes any person
substituted for a U.S. Underwriter under this Section 10.

SECTION 11. Default by one or more of the Selling Stockholders or the
Company. (a) If a Selling Stockholder shall fail at Closing Time to sell and
deliver the number of U.S. Securities which such Selling Stockholder is
obligated to sell hereunder, then the U.S. Underwriters may, at option of the
U.S. Representatives, by notice from the U.S. Representatives to the Company
and the non-defaulting Selling Stockholders, either (a) terminate this
Agreement without any liability on the fault of any non-defaulting party except
that the provisions of Sections 1, 4, 6, 7 and 8 shall remain in full force and
effect or (b) elect to purchase the U.S. Securities which the non-defaulting
Selling Stockholders and the Company have agreed to sell hereunder. No action
taken pursuant to this Section 11 shall relieve any Selling Stockholder so
defaulting from liability, if any, in respect of such default.

In the event of a default by any Selling Stockholder as referred to in
this Section 11, each of the U.S. Representatives, the Company and the
non-defaulting Selling Stockholders shall have the right to postpone Closing
Time for a period not

41
<PAGE> 48

exceeding seven days in order to effect any required change in the Registration
Statement or Prospectuses or in any other documents or arrangements.

(b) If the Company shall fail at Closing Time or at the Date of Delivery
to sell the number of U.S. Securities that it is obligated to sell hereunder,
then this Agreement shall terminate without any liability on the part of any
nondefaulting party; provided, however, that the provisions of Sections 1, 4,
6, 7 and 8 shall remain in full force and effect. No action taken pursuant to
this Section shall relieve the Company from liability, if any, in respect of
such default.

SECTION 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the U.S.
Underwriters shall be directed to the U.S. Representatives at North Tower,
World Financial Center, New York, New York 10281-1201, attention of Todd
Kaplan; notices to the Company shall be directed to it at 100 Tri-State Drive,
Suite 200, Lincolnshire, Illinois 60069, attention of G. Douglas Patterson; and
notices to the Selling Stockholders shall be directed to them at [201 MAIN
STREET, SUITE 3100, FORT WORTH, TEXAS 76102, ATTENTION OF CHARLES A. IRWIN AND
JOHN R. MONSKY].

SECTION 13. Parties. This Agreement shall each inure to the benefit of
and be binding upon the U.S. Underwriters, the Company and the Selling
Stockholders and their respective successors. Nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the U.S. Underwriters, the Company and the Selling
Stockholders and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
in respect of this Agreement or any provision herein contained. This Agreement
and all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the U.S. Underwriters, the Company and the Selling
Stockholders and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any

42
<PAGE> 49

U.S. Underwriter shall be deemed to be a successor by reason merely of such
purchase.

SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

SECTION 15. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.

43
<PAGE> 50

If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and each Selling Stockholder a
counterpart hereof, whereupon this instrument, along with all counterparts,
will become a binding agreement among the U.S. Underwriters, the Company and
the Selling Stockholders in accordance with its terms.

Very truly yours,

IVEX PACKAGING CORPORATION

By:_______________________
Name:_____________________
Title:____________________

THE SELLING STOCKHOLDERS

By:_______________________
Name:_____________________
As Attorney-in-Fact, acting
on behalf of each of the
Selling Stockholders named in
Schedule B hereto

44
<PAGE> 51

CONFIRMED AND ACCEPTED,
as of the date first above written:

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
BT ALEX. BROWN INCORPORATED
LEHMAN BROTHERS INC.
SMITH BARNEY INC.

By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED

By
---------------------------------------------
Authorized Signatory

For themselves and as U.S. Representatives of the other U.S. Underwriters named
in Schedule A hereto.

45
<PAGE> 52

SCHEDULE A

<TABLE>
<CAPTION>
Name of Underwriter Number of
- ------------------- Initial
Securities
----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.........................
BT Alex. Brown Incorporated..................
Lehman Brothers Inc.
Smith Barney Inc.............................

Total........................................
===========
</TABLE>

<PAGE> 53

SCHEDULE B

Number of Initial
Securities to be Sold

<TABLE>
<S> <C>
Ivex Packaging Corporation.................
Selling Stockholders
--------------------
</TABLE>

<PAGE> 54

Total......................................
</TABLE>

<PAGE> 55

SCHEDULE C

IVEX PACKAGING CORPORATION
4,256,000 Shares of Common Stock
(Par Value $.01 Per Share)

1. The public offering price per share for the Securities, determined as
provided in said Section 2, shall be $__________.

2. The purchase price per share for the Securities to be paid by the several
Underwriters shall be $__________, being an amount equal to the public
offering price set forth above less $__________ per share; provided that
the purchase price per share for any Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be
reduced by an amount per share equal to any dividends or distributions
declared by the Company and payable on the Initial Securities but not
payable on the Option Securities.

<PAGE> 56

[SCHEDULE D]

[LIST OF PERSONS AND ENTITIES SUBJECT TO LOCK-UP]

George V. Bayly
Frank V. Tannura
Thomas S. Ellsworth
Eugene M. Whitacre
Glenn R. August
Anthony P. Scotto
R. James Comeaux
William J. White
Robert M. Bass
Keystone, Inc.
Equitable Life Assurance
Society of the United States
[LEHMAN ACCOUNTS TO BE DETERMINED]
ACADIA MGP, INC.

<PAGE> 57

EXHIBIT A

FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)

(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.

(ii) The Company has corporate power and corporate authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectuses and to enter into and perform its obligations under the U.S.
Purchase Agreement and the International Purchase Agreement.

(iii) The Company, based solely upon a review of "good standing" certificates,
is duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction set forth on an Exhibit attached
hereto.

(iv) The authorized, issued and outstanding capital stock of the Company is as
set forth in the Prospectuses in the column entitled "Historical" under
the caption "Capitalization" (except for subsequent issuances, if any,
pursuant to the U.S. Purchase Agreement and the International Purchase
Agreement or pursuant to reservations, agreements or employee benefit
plans referred to in the Prospectuses or pursuant to the exercise of
convertible securities or options referred to in the Prospectuses); the
shares of issued and outstanding capital stock of the Company, including
the Securities to be purchased by the U.S. Underwriters and the
International Managers from the Selling Stockholders, have been duly
authorized and validly issued and are fully paid and non-assessable; and
none of the outstanding shares of capital stock of the Company was issued
in violation of the preemptive or other similar rights of any
securityholder of the Company arising by operation of law under the
charter or by-laws of the Company or, to the

<PAGE> 58

knowledge of such counsel, any other agreement to which the Company is a
party.

(v) The Securities to be purchased by the U.S. Underwriters and the
International Managers from the Company have been duly authorized for
issuance and sale to the Underwriters pursuant to the U.S. Purchase
Agreement and the International Purchase Agreement, respectively, and,
when issued and delivered by the Company pursuant to the U.S. Purchase
Agreement and the International Purchase Agreement, respectively, against
payment of the consideration set forth in the U.S. Purchase Agreement and
the International Purchase Agreement, will be validly issued and fully
paid and non-assessable and no holder of the Securities is or will be
subject to personal liability solely by reason of being such a holder.

(vi) The issuance and sale of the Securities by the Company and the sale of
the Securities by the Selling Stockholders is not subject to the
preemptive or other similar rights of any securityholder of the Company
arising by operation of law under the charter or by-laws of the Company
or, to the knowledge of such counsel, any other agreement to which the
Company is a party.

(vii) Each Subsidiary has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and corporate authority to own, lease
and operate its properties and to conduct its business as described in
the Prospectuses and, based solely upon "good standing" certificates, is
duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction listed on an Exhibit attached hereto;
except as otherwise disclosed in the Registration Statement, all of the
issued and outstanding capital stock of each Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and, to
the best of such counsel's knowledge, based solely on a review of the
stock records and minute books of the Company, is owned by the Company,
directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of
the outstanding shares of capital stock of any Subsidiary was issued in

<PAGE> 59

violation of the preemptive or similar rights of any securityholder of
such Subsidiary.

(viii) Each of the U.S. Purchase Agreement and the International Purchase
Agreement has been duly authorized, executed and delivered by the
Company.

(ix) Based solely upon a telephone conversation with the Staff of the
Commission, the Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act;
any required filing of the Prospectus pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b);
and, to the best of such counsel's knowledge, no stop order suspending
the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or
threatened by the Commission.

(x) The Registration Statement, including any Rule 462(b) Registration
Statement, the Rule 430A Information and the Rule 434 Information, as
applicable, the Prospectuses, and each amendment or supplement to the
Registration Statement and Prospectuses, as of their respective
effective or issue dates (other than the financial statements and
supporting schedules included therein or omitted therefrom and the
exhibits to the Registration Statement, as to which such counsel need
express no opinion) appeared on their face to be appropriately
responsive in all material respects with the requirements of the 1933
Act and the 1933 Act Regulations.

(xi) If Rule 434 has been relied upon, the Prospectuses were not "materially
different," as such term is used in Rule 434, from the prospectuses
included in the Registration Statement at the time it became effective.

(xii) The form of certificate used to evidence the Common Stock complies in all
material respects with all applicable statutory requirements, with any
applicable requirements of the charter and by-laws of the Company and the
requirements of the New York Stock Exchange.

<PAGE> 60

(xiii) To the best of such counsel's knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to
which the Company or any subsidiary is a party, or to which the property
of the Company or any subsidiary is subject, before or brought by any
court or governmental agency or body, domestic or foreign, which is
required to be described in the Registration Statement or the
Prospectuses except as described therein.

(xiv) The information in the Prospectuses under "Description of Capital Stock"
and in the Registration Statement under Item 14, to the extent that it
constitutes matters of law, summaries of legal matters, the Company's
charter and bylaws or legal proceedings, or legal conclusions, has been
reviewed by such counsel and is correct in all material respects.

(xv) To the best of such counsel's knowledge, there are no statutes or
regulations that are required to be described in the Prospectuses that
are not described as required.

(xvi) All descriptions in the Registration Statement of contracts and other
documents to which the Company or its subsidiaries are a party are
accurate in all material respects; to the best of such counsel's
knowledge, there are no franchises, contracts, indentures, mortgages,
loan agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to therein or
filed or incorporated by reference as exhibits thereto.

(xvii) To the best of such counsel's knowledge, neither the Company nor any
subsidiary is in violation of its charter or by-laws and no default by
the Company or any subsidiary exists which is likely, individually or in
the aggregate, to have Material Adverse Effect in the due performance or
observance of any obligation, agreement, covenant or condition contained
in any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument that is described or referred to in the
Registration Statement or the Prospectuses or filed or

<PAGE> 61

incorporated by reference as an exhibit to the Registration Statement.

(xviii) No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the 1933 Act
and the 1933 Act Regulations, which have been obtained, or as may be
required under the securities or blue sky laws of the various states,
as to which such counsel need express no opinion) is necessary or
required in connection with the due authorization, execution and
delivery of the U.S. Purchase Agreement and the International Purchase
Agreement or for the offering, issuance, sale or delivery of the
Securities.

(xix) The execution, delivery and performance of the U.S. Purchase Agreement
and the International Purchase Agreement and the consummation of the
transactions contemplated in the U.S. Purchase Agreement, the
International Purchase Agreement and the Registration Statement
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the
Prospectuses under the caption "Use Of Proceeds") and compliance by the
Company with its obligations under the U.S. Purchase Agreement and the
International Purchase Agreement do not and will not, whether with or
without the giving of notice or lapse of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined in
Section 1(a)(x) of the U.S. Purchase Agreement) under or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any subsidiary pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or any other agreement or instrument, known to such
counsel, to which the Company or any subsidiary is a party or by which
it or any of them may be bound, or to which any of the property or
assets of the Company or any subsidiary is subject (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that
would not have a Material Adverse Effect), nor will such action result
in any violation of the provisions of the charter or by-laws of the
Company or any subsidiary, or any applicable law,

<PAGE> 62

statute, rule, regulation, judgment, order, writ or decree, known to
such counsel, of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any
subsidiary or any of their respective properties, assets or operations.

(xx) Except as disclosed in the Registration Statement, to the best of such
counsel's knowledge, there are no agreements between the Company and any
person granting such person the right to require the Company to include
any Securities in the Registration Statement.

(xxi) The Company is not an "investment company" or an entity "controlled" by
an "investment company," as such terms are defined in the 1940 Act.

Nothing has come to such counsel's attention that would lead such counsel
to believe that the Registration Statement or any amendment thereto, including
the Rule 430A Information and Rule 434 Information (if applicable) (except for
financial statements and schedules and other financial data included therein or
omitted therefrom, as to which such counsel need make no statement), at the
time such Registration Statement or any such amendment became effective,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectuses or any amendment or supplement thereto
(except for financial statements and schedules and other financial data
included therein or omitted therefrom, as to which such counsel need make no
statement), at the time the Prospectuses were issued, at the time any such
amended or supplemented prospectus was issued or at the Closing Time, included
or includes an untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.

In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it
is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).

<PAGE> 63

EXHIBIT B

FORM OF OPINION OF COUNSEL FOR THE SELLING STOCKHOLDERS
TO BE DELIVERED PURSUANT TO SECTION 5(c)[1]

(i) No filing with, or consent, approval, authorization, license, order,
registration, qualification or decree of, any court or governmental
authority or agency (other than the issuance of the order of the
Commission declaring the Registration Statement effective and such
authorizations, approvals or consents as may be necessary under state
securities laws, as to which such counsel need express no opinion) is
necessary or required to be obtained by the Selling Stockholders for the
performance by each Selling Stockholder of its obligations under the
U.S. Purchase Agreement and the International Purchase Agreement or in
connection with the offer, sale or delivery of the Securities.

(ii) The U.S. Purchase Agreement, the International Purchase Agreement and the
Power of Attorney and Custody Agreement have been duly authorized,
executed and delivered by each Selling Stockholder.

(iii) The execution, delivery and performance of the U.S. Purchase Agreement,
the International Purchase Agreement and the Power of Attorney and
Custody Agreement and the sale and delivery of the Securities and the
consummation of the transactions contemplated in the U.S. Purchase
Agreement, the International Purchase Agreement and in the Registration
Statement and compliance by the Selling Stockholders with its
obligations under the U.S. Purchase Agreement, the International
Purchase Agreement and the Power of Attorney and Custody Agreement have
been duly authorized by all necessary action on the part of the Selling
Stockholders and do not and will not, whether with or without the giving
of notice or passage of time or both, conflict with or constitute a
breach of, or default

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

[1] This form does not include the customary assumptions, exceptions and
qualifications that will appear in the final opinion.

<PAGE> 64

under or result in the creation or imposition of any tax, lien, charge
or encumbrance upon the Securities or any property or assets of the
Selling Stockholders pursuant to, any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, license, lease or other
instrument or agreement of which such counsel is aware to which any
Selling Stockholder is a party or by which it may be bound, or to which
any of the property or assets of the Selling Stockholders of which such
counsel is aware may be subject nor will such action result in any
violation of the provisions of the charter or by-laws of any Selling
Stockholder, if applicable, or any law, administrative regulation,
judgment or order of any governmental agency or body or any
administrative or court decree having jurisdiction over such Selling
Stockholder or any of its properties of which such counsel is aware.

(iv) By delivery of a certificate or certificates for the Securities, each
Selling Stockholder will transfer to the Underwriters who have purchased
such Securities pursuant to the U.S. Purchase Agreement and the
International Purchase Agreement (without notice of any defect in the
title of such Selling Stockholder and who are otherwise bona fide
purchasers for purposes of the Uniform Commercial Code) valid and
marketable title to such Securities, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind.

2
<PAGE> 65

[FORM OF LOCK-UP FROM DIRECTORS, OFFICERS OR OTHER STOCKHOLDERS PURSUANT TO
SECTION 5k)]

EXHIBIT C

______, 1998

Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
BT Alex. Brown Incorporated
Lehman Brothers Inc.
Smith Barney Inc.
as Representatives of the several
U.S. Underwriters to be named in the
within-mentioned U.S. Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209

Re: Proposed Public Offering by Ivex Packaging Corporation

Dear Sirs:

The undersigned, a stockholder [and an officer and/or director] of Ivex
Packaging Corporation, a Delaware corporation (the "Company"), understands that
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), BT Alex. Brown Incorporated, Lehman Brothers Inc. and Smith
Barney Inc. propose to enter into a U.S. Purchase Agreement (the "U.S. Purchase
Agreement") with the Company and the Selling Stockholders providing for the
public offering of shares (the "Securities") of the Company's common stock, par
value $.01 per share (the "Common Stock"). In recognition of the benefit that
such an offering will confer upon the undersigned as a stockholder [and an
officer and/or director] of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the undersigned agrees with each underwriter to be named in the U.S. Purchase
Agreement that, during a period of 90 days from the date of the U.S. Purchase
Agreement, the undersigned will not, without the prior written consent of
Merrill Lynch,

<PAGE> 66

directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant for the sale of, or otherwise dispose of or
transfer any shares of the Company's Common Stock or any securities convertible
into or exchangeable or exercisable for Common Stock, whether now owned or
hereafter acquired by the undersigned or with respect to which the undersigned
has or hereafter acquires the power of disposition, or file any registration
statement under the Securities Act of 1933, as amended, with respect to any of
the foregoing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Common Stock, whether any such swap or
transaction is to be settled by delivery of Common Stock or other securities,
in cash or otherwise.

Very truly yours,

Signature: __________________

Print Name: _________________

<PAGE> 1
EXHIBIT 1.2
================================================================================

================================================================================

IVEX PACKAGING CORPORATION

(a Delaware corporation)

1,064,000 Shares of Common Stock

INTERNATIONAL PURCHASE AGREEMENT

Dated: May __, 1998

================================================================================

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<S> <C>
INTERNATIONAL PURCHASE AGREEMENT ............................................ 1

SECTION 1. Representations and Warranties.............................. 4

(a) Representations and Warranties by the Company................. 4
(i) Compliance with Registration Requirements............. 4
(ii) Independent Accountants............................... 5
(iii) Financial Statements.................................. 5
(iv) No Material Adverse Change in Business................ 6
(v) Good Standing of the Company.......................... 6
(vi) Good Standing of Subsidiaries......................... 6
(vii) Capitalization........................................ 7
(viii) Authorization of Agreement............................ 7
(ix) Authorization and Description of Securities........... 7
(x) Absence of Defaults and Conflicts..................... 8
(xi) Absence of Labor Dispute.............................. 8
(xii) Compliance with ERISA................................. 9
(xiii) Absence of Proceedings................................ 9
(xiv) Accuracy of Exhibits.................................. 10
(xv) Possession of Intellectual Property................... 10
(xvi) Absence of Further Requirements....................... 10
(xvii) Possession of Licenses and Permits.................... 10
(xviii) Title to Property..................................... 11
(xix) Compliance with Cuba Act.............................. 11
(xx) Investment Company Act................................ 11
(xxi) Environmental Laws.................................... 11
(xxii) Registration Rights................................... 12
(xxiii) Taxes................................................. 12
(xxiv) Maintenance of Adequate Insurance..................... 13
(xxv) Maintenance of Sufficient Internal Controls........... 13

(b) Representations and Warranties by the Selling Stockholders.... 13
(i) Accurate Disclosure................................... 13
(ii) Authorization of Agreements........................... 13
(iii) Good and Marketable Title............................. 14
(iv) Absence of Manipulation .............................. 15
(v) Absence of Further Requirements....................... 15
(vi) Restriction on Sale of Securities..................... 15
</TABLE>

<PAGE> 3

<TABLE>
<S> <C> <C>
(vii) Certificates Suitable for Transfer........................ 15
(viii) No Association with NASD.................................. 16

SECTION 2. Sale and Delivery to International Managers; Closing ........... 16

(a) Initial Securities................................................ 16
(b) International Option Securities................................... 16
(c) Payment........................................................... 17
(d) Denominations; Registration....................................... 18

SECTION 3. Covenants of the Company........................................ 18

(a) Compliance with Securities Regulations and Commission Requests.... 19
(b) Filing of Amendments.............................................. 19
(c) Delivery of Registration Statements............................... 19
(d) Delivery of Prospectuses.......................................... 20
(e) Continued Compliance with Securities Laws......................... 20
(f) Blue Sky Qualifications........................................... 20
(g) Rule 158.......................................................... 21
(h) Use of Proceeds................................................... 21
(i) Listing........................................................... 21
(j) Restriction on Sale of Securities................................. 21
(k) Reporting Requirements............................................ 22
(l) Compliance with Rule 463.......................................... 22

SECTION 4. Payment of Expenses............................................. 22

(a) Expenses.......................................................... 22
(b) Expenses of the Selling Stockholders.............................. 22
(c) Termination of Agreement.......................................... 23
(d) Allocation of Expenses............................................ 23

SECTION 5. Conditions of International Managers' Obligations............... 23

(a) Effectiveness of Registration Statement........................... 23
(b) Opinion of Counsel for Company.................................... 23
(c) Opinion of Counsel for the Selling
</TABLE>

<PAGE> 4

Stockholders 24
(d) Opinion of Counsel for the International Managers................. 24
(e) Officers' Certificate............................................. 24
(f) Certificate of Selling Stockholders............................... 25
(g) Accountant's Comfort Letter....................................... 25
(h) Bring-down Comfort Letter......................................... 25
(i) Approval of Listing............................................... 25
(j) No Objection...................................................... 26
(k) Lock-up Agreements................................................ 26
(l) Purchase of Initial U.S. Securities............................... 26

(m) Closing of New Credit Facility.................................... 26
(n) Conditions to Purchase of International Option Securities......... 26
(i) Officers' Certificate.................................. 26
(ii) Opinion of Counsel for Company......................... 26
(iii) Opinion of Counsel for International Managers.......... 26
(iv) Bring-down Comfort Letter.............................. 27
(o) Additional Documents.............................................. 27
(p) Termination of Agreement.......................................... 27

SECTION 6. Indemnification................................................. 27

(a) Indemnification of International Managers by the Company.......... 27
(b) Indemnification of the International Managers by the
Selling Stockholders............................................. 28
(c) Indemnification of Company, Directors and Officers and
Selling Stockholders............................................. 29
(d) Actions against Parties; Notification............................. 29
(e) Settlement without Consent if Failure to Reimburse................ 30
(f) Other Agreements with Respect to Indemnification.................. 31

SECTION 7. Contribution.................................................... 31

SECTION 8. Representations, Warranties and Agreements to Survive
Delivery....................................................... 32

SECTION 9. Termination of Agreement........................................ 33

(a) Termination; General.............................................. 33
</TABLE>

<PAGE> 5

<TABLE>

<S> <C> <C>
(b) Liabilities.................................................. 33

SECTION 10. Default by One or More of the
International Managers.................................... 33

SECTION 11. Default by one or more of the
Selling Stockholders or the Company....................... 34

SECTION 12. Notices................................................... 35

SECTION 13. Parties................................................... 35

SECTION 14. Governing Law and Time.................................... 36

SECTION 15. Effect of Headings........................................ 36
</TABLE>

<PAGE> 6

SCHEDULES
<S> <C>
Schedule A - List of Underwriters................................. Sch A-1
Schedule B - List of Selling Stockholders......................... Sch B-1
Schedule C - Pricing Information.................................. Sch C-1
Schedule D - List of Persons Subject to Lock-up................... Sch D-1

EXHIBITS

Exhibit A - Form of Opinion of Company's Counsel...................... A-1
Exhibit B - Form of Opinion for the Selling Stockholders.............. B-1
Exhibit C - Form of Lock-up Letter.................................... C-1
</TABLE>

<PAGE> 7
IVEX PACKAGING CORPORATION

(a Delaware corporation)

1,064,000 Shares of Common Stock

(Par Value $.01 Per Share)

INTERNATIONAL PURCHASE AGREEMENT

May __, 1998

MERRILL LYNCH INTERNATIONAL
BT Alex. Brown International
Lehman Brothers International (Europe)
Smith Barney Inc.
as Lead Managers of the several International Managers
c/o Merrill Lynch & Co.
Merrill Lynch International

Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
England

Ladies and Gentlemen:

Ivex Packaging Corporation, a Delaware corporation (the "Company"), and
the persons listed in Schedule B hereto (the "Selling Stockholders"), confirm
their respective agreements with Merrill Lynch & Co., Merrill Lynch
International ("Merrill Lynch") and each of the other International Managers
named in Schedule A hereto (collectively, the "International Managers,"
which term shall also include any Manager substituted as hereinafter provided
in Section 10 hereof), for whom Merrill Lynch, BT Alex. Brown International,
Lehman Brothers International (Europe) and Smith Barney Inc. are acting as
representatives (in such capacity, the "Lead Managers"), with respect to (i)
the sale by the Company and the Selling Stockholders, acting severally and not
jointly, and the purchase by the International Managers, acting severally and
not jointly, of the respective numbers of shares of Common Stock, par value
$.01 per share, of the Company ("Common Stock") set forth in Schedules A and B
hereto and (ii) the grant by the Company to

<PAGE> 8
the International Managers, acting severally and not jointly, of the option
described in Section 2(b) hereof to purchase all or any part of 159,600
additional shares of Common Stock to cover over-allotments, if any. The
aforesaid 1,064,000 shares of Common Stock (the "Initial International
Securities") to be purchased by the International Managers and all or any part
of the 159,600 shares of Common Stock subject to the option described in
Section 2(b) hereof (the "International Option Securities") are hereinafter
called, collectively, the "International Securities."

It is understood that the Company and the Selling Stockholders are
concurrently entering into an agreement dated the date hereof (the "U.S.
Purchase Agreement") providing for the offering by the Company and the Selling
Stockholders of an aggregate of 4,256,000 shares of Common Stock (the "Initial
U.S. Securities") through arrangements with certain underwriters in the United
States and Canada (the "U.S. Underwriters") for whom Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Lehman Brothers Inc. and Smith Barney Inc are
acting as representatives (the "U.S. Representatives") and the grant by the
Company to the U.S. Underwriters, acting severally and not jointly, of an
option to purchase all or any part of the U.S. Underwriters' pro rata portion
of up to 638,400 additional shares of Common Stock solely to cover over
allotments, if any (the "U.S. Option Securities" and, together with the
International Option Securities, the "Option Securities"). The Initial U.S.
Securities and the U.S. Option Securities are hereinafter called the "U.S.
Securities." It is understood that (a) neither the Company nor the Selling
Stockholders are obligated to sell, and the International Managers are not
obligated to purchase, any Initial International Securities unless all of the
Initial U.S. Securities are contemporaneously purchased by the U.S.
Underwriters and (b) neither the Company nor the Selling Stockholders are
obligated to sell, and the U.S. Underwriters are not obligated to purchase, any
Initial U.S. Securities unless all of the Initial International Securities are
contemporaneously purchased by the International Managers.

The International Managers and the U.S. Underwriters are hereinafter
collectively called the "Underwriters," the Initial International Securities
and the Initial U.S. Securities are hereinafter collectively called the
"Initial Securities," and the

<PAGE> 9

International Securities and the U.S. Securities are hereinafter collectively
called the "Securities."

The Company and the Selling Stockholders understand that the International
Managers propose to make a public offering of the International Securities as
soon as the Lead Managers deem advisable after this Agreement has been executed
and delivered.

The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-_____) covering the
registration of the Securities under the Securities Act of 1933, as amended
(the "1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will
either (i) prepare and file a prospectus in accordance with the provisions of
Rule 430A ("Rule 430A") of the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule
424(b)") of the 1933 Act Regulations or (ii) if the Company has elected to rely
upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term
sheet (a "Term Sheet") in accordance with the provisions of Rule 434 and Rule
424(b). Two forms of prospectus are to be used in connection with the offering
and sale of the Securities: one relating to the International Securities (the
"Form of International Prospectus") and one relating to the U.S. Securities
(the "Form of U.S. Prospectus"). The Form of International Prospectus is
identical to the Form of U.S. Prospectus, except for the front cover and back
cover pages and the information under the caption "Underwriting." The
information included in such prospectus or in any such Term Sheet, as the case
may be, that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is
referred to as "Rule 430A Information" or (b) pursuant to paragraph (d) of
Rule 434 is referred to as "Rule 434 Information." The Form of International
Prospectus and Form of

<PAGE> 10

U.S. Prospectus used before such registration statement became effective, and
any prospectus that omitted, as applicable, the Rule 430A Information or the
Rule 434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final
Form of International Prospectus and the final Form of U.S. Prospectus in the
forms first furnished to the Underwriters for use in connection with the
offering of the Securities are herein called the "International Prospectus" and
the "U.S. Prospectus," respectively, and collectively, the "Prospectuses." If
Rule 434 is relied on, the terms "International Prospectus" and "U.S.
Prospectus" shall refer to the preliminary International Prospectus dated
September 4, 1997 and preliminary U.S. Prospectus dated September 4, 1997,
respectively, each together with the applicable Term Sheet, and all references
in this Agreement to the date of the Prospectuses shall mean the date of the
Term Sheet. For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus, the International Prospectus, the U.S.
Prospectus or any Term Sheet or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("EDGAR").

SECTION 1. Representations and Warranties.

(a) Representations and Warranties by the Company. The Company
represents and warrants to each International Manager as of the date hereof, as
of the Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b) hereof, and agrees with each
International Manager, as follows:

(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b)

<PAGE> 11

Registration Statement has become effective under the 1933 Act and no
stop order suspending the effectiveness of the Registration Statement or
any Rule 462(b) Registration Statement has been issued under the 1933 Act
and no proceedings for that purpose have been instituted or are pending
or, to the knowledge of the Company, are contemplated by the Commission,
and any request on the part of the Commission for additional information
has been complied with.

At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any International Option
Securities are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations and
did not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. Neither of the
Prospectuses nor any amendments or supplements thereto, at the time the
Prospectuses or any amendments or supplements thereto were issued and at
the Closing Time (and, if any International Option Securities are
purchased, at the Date of Delivery), included or will include an untrue
statement of a material fact or omitted or will omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. If Rule
434 is used, the Company will comply with the requirements of Rule 434
and the Prospectuses shall not be "materially different," as such term is
used in Rule 434, from the prospectuses included in the Registration
Statement at the time it became effective. The representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or the International Prospectus
made in reliance upon and in conformity with information furnished to the
Company in writing by any International Manager through the Lead Managers
expressly for use in the Registration Statement or the International
Prospectus or any amendments or supplements thereto.

<PAGE> 12

Each preliminary prospectus and the prospectuses filed as part of
the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectuses
delivered to the Underwriters for use in connection with this offering
was substantially identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.

(ii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required by
the 1933 Act and the 1933 Act Regulations.

(iii) Financial Statements. The financial statements included in
the Registration Statement and the Prospectuses, together with the
related schedules and notes, present fairly in all material respects the
financial position of the Company and its consolidated subsidiaries at
the dates indicated and the statement of operations, stockholders' equity
and cash flows of the Company and its consolidated subsidiaries for the
periods specified; said financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP") applied
on a consistent basis throughout the periods involved, except as
otherwise stated therein. The supporting schedules included in the
Registration Statement present fairly in all material respects in
accordance with GAAP the information required to be stated therein. The
selected financial data and the summary financial information included in
the Prospectuses present fairly in all material respects the information
shown therein and have been compiled on a basis consistent with that of
the audited financial statements included in the Registration Statement.
The Pro forma financial statements and the financial information related
to Ultra Pac, Inc. are not required to be included in the Registration
Statement and the Prospectuses in accordance with the Commission's
rules and guidelines with respect to pro forma financial statements.

<PAGE> 13

(iv) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectuses except as otherwise stated therein, (A) there has been
no material adverse change in the condition, financial or otherwise, or
in the earnings, business affairs or business prospects of the Company
and its subsidiaries considered as one enterprise, whether or not arising
in the ordinary course of business (a "Material Adverse Effect"), (B)
there have been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered
as one enterprise, and (C) there has been no dividend or distribution of
any kind declared, paid or made by the Company on any class of its
capital stock.

(v) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectuses and to enter into and perform its
obligations under this Agreement and under the U.S. Purchase Agreement;
and the Company is duly qualified as a foreign corporation to transact
business and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing
of property or the conduct of business, except where the failure so to
qualify or to be in good standing would not result in a Material Adverse
Effect.

(vi) Good Standing of Subsidiaries. Each "significant subsidiary"
of the Company (as such term is defined in Rule 1-02 of Regulation
S-X)(each a "Subsidiary" and, collectively, the "Subsidiaries") has been
duly organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectuses and is duly
qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or

<PAGE> 14

the conduct of business, except where the failure so to qualify or to be
in good standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement, all of the issued and
outstanding capital stock of each such Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and is
owned by the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or
equity; none of the outstanding shares of capital stock of any Subsidiary
was issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary. The only subsidiaries of the Company
are the subsidiaries listed on Exhibit 21.1 to the Registration
Statement.

(vii) Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectuses in the
column entitled "Historical" under the caption "Capitalization" (except
for subsequent issuances, if any, pursuant to this Agreement or the U.S.
Purchase Agreement, pursuant to reservations, agreements or employee
benefit plans referred to in the Prospectuses or pursuant to the exercise
of convertible securities or options referred to in the Prospectuses).
The shares of issued and outstanding capital stock, including the
Securities to be purchased by the U.S. Underwriters and the International
Managers from the Selling Stockholders, have been duly authorized and
validly issued and are fully paid and non-assessable; none of the
outstanding shares of capital stock, including the Securities to be
purchased by the U.S. Underwriters and the International Managers from
the Selling Stockholders, was issued in violation of the preemptive or
other similar rights of any securityholder of the Company.

(viii) Authorization of Agreement. This Agreement and the
International Purchase Agreement have been duly authorized, executed and
delivered by the Company.

(ix) Authorization and Description of Securities. The Securities
to be purchased by the International Managers and the U.S. Underwriters
from the Company have been duly authorized for issuance and sale to the
International Managers pursuant to this Agreement and the U.S.

<PAGE> 15

Underwriters pursuant to the U.S. Purchase Agreement and, when issued and
delivered by the Company pursuant to this Agreement and the U.S. Purchase
Agreement, respectively, against payment of the consideration set forth
herein and therein, will be validly issued and fully paid and
non-assessable; the Common Stock conforms in all material respects to all
statements relating thereto contained in the Prospectuses and such
description conforms in all material respects to the rights set forth in
the instruments defining the same; no holder of the Securities will be
subject to personal liability solely by reason of being such a holder;
and the issuance of the Securities is not subject to the preemptive or
other similar rights of any securityholder of the Company.

(x) Absence of Defaults and Conflicts. Neither the Company nor any
of its subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement
or instrument to which the Company or any of its subsidiaries is a party
or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any subsidiary is subject
(collectively, "Agreements and Instruments") except for such defaults
that would not result in a Material Adverse Effect; and the execution,
delivery and performance of this Agreement and the U.S. Purchase
Agreement and the consummation of the transactions contemplated in this
Agreement, the U.S. Purchase Agreement and in the Registration Statement
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Prospectuses
under the caption "Use of Proceeds") and compliance by the Company with
its obligations under this Agreement and the U.S. Purchase Agreement have
been duly authorized by all necessary corporate action and do not and
will not, whether with or without the giving of notice or passage of time
or both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company or any subsidiary pursuant to, the Agreements and Instruments
(except for such

<PAGE> 16

conflicts, breaches, Repayment Events or defaults or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor
will such action result in any violation of the provisions of the charter
or by-laws of the Company or any subsidiary or any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any subsidiary or any of their
assets, properties or operations except such violations that would not,
individually or in the aggregate, have a Material Adverse Effect. As
used herein, a "Repayment Event" means any event or condition which gives
the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any subsidiary.

(xi) Absence of Labor Dispute. No labor dispute with the employees
of the Company or any subsidiary exists or, to the knowledge of the
Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any
subsidiary's principal suppliers, manufacturers, customers or
contractors, which, in either case, may reasonably be expected to result
in a Material Adverse Effect.

<PAGE> 17

plan" established or maintained by the Company that is intended to be
qualified under Section 401(a) of the Code is so qualified in all
material respects and has received a favorable determination letter as to
its qualification and nothing has occurred, whether by action or failure
to act, which would cause the loss of such qualification. For purposes
of this subsection, "Control Group' is defined to include any entity
which is part of a group which includes the Company and is treated as a
single employer under Section 414 of the Code.

(xiii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or
any subsidiary, which is required to be disclosed in the Registration
Statement (other than as disclosed therein), or which might reasonably be
expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the properties
or assets thereof or the consummation of the transactions contemplated in
this Agreement or the U.S. Purchase Agreement or the performance by the
Company of its obligations hereunder and thereunder; the aggregate of all
pending legal or governmental proceedings to which the Company or any
subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material
Adverse Effect.

(xiv) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectuses or to be filed as exhibits thereto which have not been so
described and filed as required.

<PAGE> 18

trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the
business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect
to any Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the
aggregate, would result in a Material Adverse Effect.

(xvi) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations under this Agreement or the U.S. Purchase Agreement, in
connection with the offering, issuance or sale of the Securities
hereunder or thereunder or the consummation of the transactions
contemplated by this Agreement or the U.S. Purchase Agreement, except
such as have been already made or obtained or will be made or obtained
prior to Closing Time or as may be required under the 1933 Act or the
1933 Act Regulations or state securities laws.

(xvii) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them except
where the failure to possess the same would not, individually or in the
aggregate, have a Material Adverse Effect; the Company and its
subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not,
singly or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except when
the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse

<PAGE> 19

Effect; and neither the Company nor any of its subsidiaries has received
any notice of proceedings relating to the revocation or modification of
any such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.

(xviii) Title to Property. The Company and its subsidiaries have
good and marketable title to all real property owned by the Company and
its subsidiaries and good title to all other properties owned by them, in
each case, free and clear of all mortgages, pledges, liens, security
interests, claims, restrictions or encumbrances of any kind except such
as (a) are described in the Prospectuses or (b) would not reasonably be
expected to have a Material Adverse Effect; and all of the leases and
subleases material to the business of the Company and its subsidiaries,
considered as one enterprise, and under which the Company or any of its
subsidiaries holds properties described in the Prospectuses, are in full
force and effect, and neither the Company nor any subsidiary has received
any notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any subsidiary under any
of the leases or subleases mentioned above, or affecting or questioning
the rights of the Company or such subsidiary to the continued possession
of the leased or subleased premises under any such lease or sublease.

(xix) Compliance with Cuba Act. The Company has complied with, and
is and will be in compliance with, the provisions of that certain Florida
act relating to disclosure of doing business with Cuba, codified as
Section 517.075 of the Florida statutes, and the rules and regulations
thereunder (collectively, the "Cuba Act") or is exempt therefrom.

(xx) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectuses will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended (the "1940 Act").

<PAGE> 20

(xxi) Environmental Laws. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in
a Material Adverse Effect, (A) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent, decree or judgment,
relating to pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water, groundwater,
land surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively,
"Hazardous Materials") or to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, "Environmental Laws"), (B) the Company and its
subsidiaries have all material permits, authorizations and approvals
required under any applicable Environmental Laws and are each in
compliance with their requirements, (C) there are no pending or
threatened administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental Law
against the Company or any of its subsidiaries and (D) there are no
events or circumstances that might reasonably be expected to form the
basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against
or affecting the Company or any of its subsidiaries relating to Hazardous
Materials or any Environmental Laws.

(xxii) Registration Rights. Except as disclosed in the
Registration Statement, there are no persons with registration rights or
other similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company under the
1933 Act.

(xxiii) Taxes. The Company and each of its subsidiaries have filed
all necessary material federal, state, local and foreign income, payroll,
franchise and

<PAGE> 21

other tax returns (after giving effect to extensions) and have paid all
material taxes shown as due thereon or with respect to any of its
properties, and there is no tax deficiency that has been, or to the
knowledge of the Company is likely to be, asserted against the Company,
any of its subsidiaries or any of their properties or assets that would
result in a Material Adverse Effect, except for taxes that are being
contested in good faith by appropriate proceedings and with respect to
which the Company has established adequate reserves in accordance with
GAAP.

(xxiv) Maintenance of Adequate Insurance. The Company and each of
its subsidiaries is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as is
reasonably prudent in the business in which it is engaged or proposed to
engage after giving effect to the transactions described in the
Prospectuses; and the Company does not have any reason to believe that it
will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not
result in a Material Adverse Effect.

(xxv) Maintenance of Sufficient Internal Controls. The Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions
are recorded as necessary to permit preparation of financial statements
in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization;
and (iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.

(b) Representations and Warranties by the Selling Stockholders. Each
Selling Stockholder severally represents and warrants to each International
Manager as of the date hereof and as of the Closing Time, and agrees with each
International Manager, as follows:

<PAGE> 22

(i) Accurate Disclosure. Each Selling Stockholder has reviewed and
is familiar with the Registration Statement and the Prospectuses and
neither the Prospectuses nor any amendments or supplements thereto
includes any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided that this subsection shall only apply to statements in or
omissions from the Registration Statement or Prospectuses made in
reliance upon and in conformity with written information relating to such
Selling Stockholder furnished to the Company or the International
Managers by the Selling Stockholder expressly for use in the Registration
Statement or Prospectuses.

(ii) Power of Attorney and Custody Agreement. Each Selling
Stockholder has duly executed and delivered in the form heretofore
furnished by the International Manager, a power of attorney and custody
agreement (the "Power of Attorney and Custody Agreement") with
________________, as the attorney-in-fact and the custodian (the
"Attorney-in-Fact" and the "Custodian", respectively); the
Attorney-in-Fact is authorized to execute and deliver this Agreement and
the certificates referred to in Section 5(f) or that may be required
pursuant to Section 5(o) on behalf of such Selling Stockholder, to
determine the purchase price to be paid by the International Managers to
such Selling Stockholder as provided in Section 2(a) hereof, to authorize
the delivery of the Securities to be sold by such Selling Stockholder
hereunder, to duly endorse (in blank or otherwise) the certificate or
certificates representing such Securities, to accept payment therefor,
and otherwise to act on behalf of such Selling Stockholder in connection
with this Agreement.

(iii) Authorization of Agreements. Each Selling Stockholder has
the full right, power and authority to enter into this Agreement and the
U.S. Purchase Agreement and to sell, transfer and deliver the Securities
to be sold by such Selling Stockholder under this Agreement and the Power
of Attorney and Custody Agreement, U.S. Purchase Agreement.
The execution and delivery of this Agreement and the U.S. Purchase
Agreement and the sale and delivery of the Securities to be sold by such
Selling Stockholder and the

<PAGE> 23

consummation of the transactions contemplated in this Agreement and the
U.S. Purchase Agreement and compliance by such Selling Stockholder with
its obligations hereunder and thereunder have been duly authorized by
such Selling Stockholder and do not and will not, whether with or without
the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default under, or (A) result in the creation
or imposition of any tax, lien, charge or encumbrance upon the Securities
to be sold by such Selling Stockholder or any property or assets of such
Selling Stockholder pursuant to any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, license, lease or other
agreement or instrument to which such Selling Stockholder is a party or
by which such Selling Stockholder may be bound, or to which any of the
property or assets of such Selling Stockholder is subject, or (B) result
in any violation of the provisions of the charter or by-laws or other
organizational instrument of such Selling Stockholder, if applicable, or
any applicable treaty, law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over such Selling Stockholder or
any of its properties except, in the case of clause (A), for such
conflicts, breaches, defaults, taxes, liens, charges or encumbrances
which could not reasonably be expected, individually or in the aggregate,
to have a material adverse effect on the consummation of the transactions
contemplated by this Agreement.

(iv) Good and Marketable Title. Such Selling Stockholder has and
will at the Closing Time have good and marketable title to the Securities
to be sold by such Selling Stockholder under this Agreement and the U.S.
Purchase Agreement, free and clear of any security interest, mortgage,
pledge, lien, charge, claim, equity or encumbrance of any kind, other
than pursuant to this Agreement and the U.S. Purchase Agreement; and upon
delivery of such Securities and payment of the purchase price therefor as
contemplated herein and therein, assuming each such Underwriter has no
notice of any adverse claim, each of the Underwriters will receive good
and marketable title to the Securities purchased by it from such Selling
Stockholder, free and clear of any security interest, mortgage, pledge,
lien, charge, claim, equity or encumbrance of any kind.

<PAGE> 24

(v) Absence of Manipulation. Such Selling Stockholder has not
taken, and will not take, directly or indirectly, any action which is
designed to or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Securities.

(vi) Absence of Further Requirements. No filing with, or consent,
approval, authorization, order, registration, qualification or decree of,
any court or governmental authority or agency, domestic or foreign, is
necessary or required for the performance by each Selling Stockholder of
its obligations under this Agreement and the U.S. Purchase Agreement or
in connection with the sale and delivery of the Securities under this
Agreement and the U.S. Purchase Agreement or the consummation of the
transactions contemplated hereunder or thereunder, except such as may
have previously been made or obtained or as may be required under the
1933 Act or the 1933 Act Regulations or state securities laws.

(vii) Restriction on Sale of Securities. During a period of 90
days from the date of the International Prospectus, such Selling
Stockholder will not, without the prior written consent of Merrill Lynch,
Pierce, Fenner & Smith, (i) offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of, directly or indirectly, any share of Common Stock
or any securities convertible into or exercisable or exchangeable for
Common Stock or file any registration statement under the 1933 Act with
respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause
(i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not
apply to the Securities to be sold hereunder or under the U.S. Purchase
Agreement.

<PAGE> 25

(viii) Certificates Suitable for Transfer. Certificates for all of
the Securities to be sold by such Selling Stockholder pursuant to this
Agreement and the U.S. Purchase Agreement, in suitable form for transfer
by delivery or accompanied by duly executed instruments of transfer or
assignment in blank with signatures guaranteed, will be placed in custody
with the Custodian who shall place them with First Chicago Trust Company
of New York by the close of business on May __, 1998 with irrevocable
conditional instructions to deliver such Securities to the International
Managers and the U.S. Underwriters pursuant to this Agreement and the
U.S. Purchase Agreement, respectively.

(ix) No Association with NASD. Except as described in the
Prospectuses, neither such Selling Stockholder nor any of its affiliates
directly, or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, or has any other
association with (within the meaning of Article I, Section 1(m) of the
By-laws of the National Association of Securities Dealers, Inc.), any
member firm of the National Association of Securities Dealers, Inc.

(c) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Global Coordinator, the
International Managers or to counsel for the U.S. Underwriters and the
International Managers shall be deemed a representation and warranty by the
Company to each U.S. Underwriter and each International Manager as to the
matters covered thereby; and any certificate signed by or on behalf of the
Selling Stockholders as such and delivered to the Lead Managers or to counsel
for the U.S. Underwriters and the International Managers pursuant to the terms
of this Agreement and the U.S. Purchase Agreement shall be deemed a
representation and warranty by such Selling Stockholder to the U.S.
Underwriters and the International Managers as to the matters covered thereby.

SECTION 2. Sale and Delivery to International Managers; Closing.

(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company and each

<PAGE> 26
Selling Stockholder, severally and not jointly, agree to sell to each
International Manager, severally and not jointly, and each International
Manager, severally and not jointly, agrees to purchase from the Company and
each Selling Stockholder, at the price per share set forth in Schedule C, that
proportion of the number of Initial International Securities set forth in
Schedule B opposite the name of the Company or such Selling Stockholder, as the
case may be, which number of Initial International Securities set forth in
Schedule A opposite the name of such International Manager, plus any additional
number of Initial International Securities which such International Manager may
become obligated to purchase pursuant to the provisions of Section 10 hereof,
bears to the total number of Initial International Securities, subject, in each
case, to such adjustments among the International Managers as the Lead Managers
in their sole discretion shall make to eliminate any sales or purchases of
fractional securities.

(b) International Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
International Managers, severally and not jointly, to purchase up to an
additional 159,600 shares of Common Stock at the price per share set forth in
Schedule C, less an amount per share equal to any dividends or distributions
declared by the Company and payable on the Initial International Securities but
not payable on the International Option Securities. The option hereby granted
will expire 30 days after the date hereof and may be exercised in whole or in
part from time to time only for the purpose of covering over-allotments which
may be made in connection with the offering and distribution of the Initial
International Securities upon notice by the Global Coordinator to the Company
setting forth the number of International Option Securities as to which the
several International Managers are then exercising the option and the time and
date of payment and delivery for such International Option Securities. Any
such time and date of delivery (a "Date of Delivery") shall be determined by
the Global Coordinator, but shall not be later than seven full business days
after the exercise of said option, nor in any event prior to the Closing Time,
as hereinafter defined. If the option is exercised as to all or any portion of
the International Option Securities, each of the International Managers, acting
severally and not jointly, will purchase that proportion of the total number of

<PAGE> 27

International Option Securities then being purchased which the number of
Initial International Securities set forth in Schedule A opposite the name of
such International Manager bears to the total number of Initial International
Securities, subject in each case to such adjustments as the Global Coordinator
in its discretion shall make to eliminate any sales or purchases of fractional
shares.

(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial International Securities shall be made at the
offices of Mayer, Brown & Platt, 190 South LaSalle Street, Chicago, Illinois,
or at such other place as shall be agreed upon by the Global Coordinator, the
Company and the Selling Stockholders, at 9:00 A.M. (Eastern time) on the third
(fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given day)
business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Global Coordinator, the Company
and the Selling Stockholders (such time and date of payment and delivery being
herein called "Closing Time").

In addition, in the event that any or all of the International Option
Securities are purchased by the International Managers, payment of the purchase
price for, and delivery of certificates for, such International Option
Securities shall be made at the above-mentioned offices, or at such other place
as shall be agreed upon by the Global Coordinator and the Company, on each Date
of Delivery as specified in the notice from the Global Coordinator to the
Company.

<PAGE> 28

the purchase price for, the Initial International Securities and the
International Option Securities, if any, which it has agreed to purchase.
Merrill Lynch, individually and not as representative of the International
Managers, may (but shall not be obligated to) make payment of the purchase
price for the Initial International Securities or the International Option
Securities, if any, to be purchased by any International Manager whose funds
have not been received by the Closing Time or the relevant Date of Delivery, as
the case may be, but such payment shall not relieve such International Manager
from its obligations hereunder.

(d) Denominations; Registration. Certificates for the Initial
International Securities and the International Option Securities, if any, shall
be in such denominations and registered in such names as the Lead Managers may
request in writing at least one full business day before the Closing Time or
the relevant Date of Delivery, as the case may be. The certificates for the
Initial International Securities and the International Option Securities, if
any, will be made available for examination and packaging by the Lead Managers
in The City of New York not later than 10:00 A.M. (Eastern time) on the
business day prior to the Closing Time or the relevant Date of Delivery, as the
case may be.

SECTION 3. Covenants of the Company. The Company covenants with each
International Manager as follows:

<PAGE> 29

confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectuses or any amended Prospectuses shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectuses or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus, or of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Company will
promptly effect the filings necessary pursuant to Rule 424(b) and will take
such steps as it deems necessary to ascertain promptly whether the form of
prospectus transmitted for filing under Rule 424(b) was received for filing by
the Commission and, in the event that it was not, it will promptly file such
prospectus. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.

(b) Filing of Amendments. The Company will give the Global Coordinator
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), any Term Sheet or any
amendment, supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the Prospectuses,
will furnish the Global Coordinator with copies of any such documents a
reasonable amount of time prior to such proposed filing or use, as the case may
be, and will not file or use any such document to which the Global Coordinator
or counsel for the International Managers shall not have given its consent
which shall not be unreasonably withheld.

(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the Lead Managers and counsel for the International Managers,
without charge, signed copies of the Registration Statement as originally filed
and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and signed copies of all consents and
certificates of experts, and will also deliver to the Lead Managers, without
charge, a conformed copy of the Registration

<PAGE> 30

Statement as originally filed and of each amendment thereto (without exhibits)
for each of the International Managers. The copies of the Registration
Statement and each amendment thereto furnished to the International Managers
will be substantially identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.

(d) Delivery of Prospectuses. The Company has delivered to each
International Manager, without charge, as many copies of each preliminary
prospectus as such International Manager reasonably requested, and the Company
hereby consents to the use of such copies for purposes permitted by the 1933
Act. The Company will furnish to each International Manager, without charge,
during the period when the International Prospectus is required to be delivered
under the 1933 Act or the Securities Exchange Act of 1934 (the "1934 Act"),
such number of copies of the International Prospectus (as amended or
supplemented) as such International Manager may reasonably request. The
International Prospectus and any amendments or supplements thereto furnished to
the International Managers will be substantially identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.

(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the completion
of the distribution of the Securities as contemplated in this Agreement, the
U.S. Purchase Agreement and in the Prospectuses. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with sales
of the Securities, any event shall occur or condition shall exist as a result
of which it is necessary, in the opinion of counsel for the International
Managers or for the Company, to amend the Registration Statement or amend or
supplement the Prospectuses in order that the Prospectuses will not include any
untrue statements of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectuses in order to
comply with the requirements of the 1933 Act or the 1933 Act Regulations, the
Company will promptly prepare and file with

<PAGE> 31

the Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectuses comply with such requirements, and the Company
will furnish to the International Managers such number of copies of such
amendment or supplement as the International Managers may reasonably request.

(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the International Managers, to qualify the Securities for
offering and sale under the applicable securities laws of such states and other
jurisdictions (domestic or foreign) as the Global Coordinator may designate and
to maintain such qualifications in effect for a period of time as may be
necessary to complete the distribution of the Securities; provided, however,
that the Company shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation or as a dealer in securities
in any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject. In each jurisdiction in which the Securities have been
so qualified, the Company will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification in
effect for a period of time as may be necessary to complete the distribution of
the Securities.

(h) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Prospectuses
under "Use of Proceeds."

(i) Listing. The Company will use its best efforts to effect the listing
of the Common Stock (including the Securities) on the New York Stock Exchange.

(j) Restriction on Sale of Securities. During a period of 90 days from
the date of the Prospectuses, the Company will not,

<PAGE> 32

without the prior written consent of Merrill Lynch, Pierce, Fenner & Smith, (i)
directly or indirectly, offer, pledge, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase or otherwise transfer or dispose of any
share of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under the 1933
Act with respect to any of the foregoing or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Common
Stock, whether any such swap or transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (A) the
Securities to be sold hereunder or under the U.S. Purchase Agreement, (B) any
shares of Common Stock issued by the Company upon the exercise of an option or
warrant or the conversion of a security outstanding on the date hereof and
referred to in the Prospectuses, or (C) any shares of Common Stock issued or
options to purchase Common Stock granted pursuant to existing employee benefit
plans of the Company referred to in the Prospectuses.

SECTION 4. Payment of Expenses.

<PAGE> 33

stamp or other duties payable upon the sale, issuance or delivery of the
Securities to the Underwriters, (iv) the fees and disbursements of the
Company's counsel, accountants and other advisors, (v) the qualification of the
Securities under securities laws in accordance with the provisions of Section
3(f) hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with the
preparation, printing and delivery of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheets and of the Prospectuses and any
amendments or supplements thereto, (vii) the fees and expenses of any transfer
agent or registrar for the Securities, (viii) the filing fees incident to, and
the reasonable fees and disbursements of counsel to the Underwriters in
connection with, the review by the National Association of Securities Dealers,
Inc. (the "NASD") of the terms of the sale of the Securities and (ix) the fees
and expenses incurred in connection with the listing of the Securities on the
New York Stock Exchange.

(c) Termination of Agreement. If this Agreement is terminated by the
Lead Managers in accordance with the provisions of Section 5, Section 9(a)(i)
or Section 11 hereof, the Company and the Selling Stockholders shall reimburse
the International Managers for all of their reasonable out-of-pocket expenses
incurred in connection with the sale of the Securities, including the
reasonable fees and disbursements of counsel for the International Managers.

(d) Allocation of Expenses. The provisions of this Section shall not
affect any agreement that the Company and the Selling

<PAGE> 34

Stockholders may have or make for the sharing of such costs and expenses.

SECTION 5. Conditions of International Managers' Obligations.
The obligations of the several International Managers hereunder are subject to
the accuracy of the representations and warranties of the Company and the
Selling Stockholders contained in Section 1 hereof or in certificates of any
officer of the Company or any subsidiary of the Company or on behalf of any
Selling Stockholder delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations hereunder,
and to the following further conditions:

(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the International Managers. A prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon Rule
434, a Term Sheet shall have been filed with the Commission in accordance with
Rule 424(b).

(b) Opinion of Counsel for Company. At Closing Time, the Lead Managers
shall have received the favorable opinions, dated as of Closing Time, of
Skadden, Arps, Slate, Meagher & Flom (Illinois), special counsel for the
Company, and G. Douglas Patterson, Vice-President and General Counsel of the
Company, in form and substance reasonably satisfactory to counsel for the
International Managers, together with signed or reproduced copies of such
letter for each of the other International Managers to the aggregate effect set
forth in Exhibit A hereto and to such further effect as counsel to the
International Managers may reasonably request. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the federal law of the United States and the General

<PAGE> 35

Corporation Law of the State of Delaware, upon the opinions of Skadden, Arps,
Slate, Meagher & Flom LLP and such other counsel satisfactory to the U.S.
Representatives. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Company and its subsidiaries and
certificates of public officials.

(c) Opinion of Counsel for the Selling Stockholders. At Closing Time,
the Lead Managers shall have received the favorable opinion, dated as of
Closing Time, of Paul, Weiss, Rifkind, Wharton & Garrison, counsel for the
Selling Stockholders, in form and substance satisfactory to counsel for the
International Managers, together with signed or reproduced copies of such
letter for each of the other International Managers to the effect set forth in
Exhibit B hereto and to such further effect as counsel to the International
Managers may reasonably request.

(d) Opinion of Counsel for the International Managers. At Closing Time,
the Lead Managers shall have received the favorable opinion, dated as of
Closing Time, of Mayer, Brown & Platt, counsel for the International Managers,
together with signed or reproduced copies of such letter for each of the other
International Managers with respect to the matters set forth in clauses (i),
(ii), (v), (vi) (solely as to preemptive or other similar rights arising by
operation of law or under the charter or by-laws of the Company), (viii)
through (x), inclusive, (xii), (xiv) (solely as to the information in the
Prospectus under "Description of Capital Stock--Common Stock") and the
penultimate paragraph of Exhibit A hereto. In giving such opinion such counsel
may rely, as to all matters governed by the laws of jurisdictions other than
the law of the State of New York the federal law of the United States and the
General Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to the International Managers. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and its
subsidiaries and certificates of public officials.

<PAGE> 36

or in the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, and the Lead Managers shall have received a
certificate of the President or a Vice President of the Company and of the
chief financial or chief accounting officer of the Company, dated as of Closing
Time, to the effect that (i) there has been no such material adverse change,
(ii) the representations and warranties in Section 1(a) hereof are true and
correct with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to Closing
Time, and (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or are contemplated by the Commission.

(f) Certificate of Selling Stockholders. At Closing Time, the Lead
Managers shall have received a certificate of each Selling Stockholder, dated
as of Closing Time, to the effect that (i) the representations and warranties
of each Selling Stockholder contained in Section 1(b) hereof are true and
correct in all respects with the same force and effect as though expressly made
at and as of Closing Time and (ii) each Selling Stockholder has complied in all
material respects with all agreements and all conditions on its part to be
performed under this Agreement at or prior to Closing Time.

(g) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Lead Managers shall have received from Price Waterhouse L.L.P. a
letter dated such date, in form and substance satisfactory to the Lead
Managers, together with signed or reproduced copies of such letter for each of
the other International Managers containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectuses.

(h) Bring-down Comfort Letter. At Closing Time, the Lead Managers shall
have received from Price Waterhouse LLP a letter, dated as of Closing Time, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (g) of this Section, except that the specified date
referred to

<PAGE> 37

shall be a date not more than three business days prior to Closing Time.

(i) Approval of Listing. At Closing Time, the Securities shall have been
approved for listing on the New York Stock Exchange, subject only to official
notice of issuance.

(j) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(k) Lock-up Agreements. At the date of this Agreement, the Lead Managers
shall have received an agreement substantially in the form of Exhibit C hereto
signed by the persons listed on Schedule D hereto.

(l) Purchase of Initial U.S. Securities. Contemporaneously with the
purchase by the International Managers of the Initial International Securities
under this Agreement, the U.S. Underwriters shall have purchased the Initial
U.S. Managers Securities under the U.S. Purchase Agreement.

(m) Conditions to Purchase of International Option Securities. In the
event that the International Managers exercise their option provided in Section
2(b) hereof to purchase all or any portion of the International Option
Securities, the representations and warranties of the Company contained herein
and the statements in any certificates furnished by the Company and any
subsidiary of the Company hereunder shall be true and correct as of each Date
of Delivery and, at the relevant Date of Delivery, the Lead Managers shall have
received:

(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of the
chief financial or chief accounting officer of the Company confirming
that the certificate delivered at the Closing Time pursuant to Section
5(e) hereof remains true and correct as of such Date of Delivery.

<PAGE> 38

Option Securities to be purchased on such Date of Delivery and otherwise
to the same effect as the opinion required by Section 5(b) hereof.

(iii) Opinion of Counsel for International Managers. The favorable
opinion of Mayer, Brown & Platt, counsel for the International Managers,
dated such Date of Delivery, relating to the International Option
Securities to be purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Section 5(d) hereof.

(iv) Bring-down Comfort Letter. A letter from Price Waterhouse LLP
satisfactory to the Lead Managers and dated such Date of Delivery,
substantially in the same form and substance as the letter furnished to
the Lead Managers pursuant to Section 5(h) hereof, except that the
"specified date" in the letter furnished pursuant to this paragraph shall
be a date not more than five days prior to such Date of Delivery.

(n) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the International Managers shall have been furnished with such
documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company and the Selling
Stockholders in connection with the issuance and sale of the Securities as
herein contemplated shall be reasonably satisfactory in form and substance to
the Lead Managers and counsel for the International Managers.

(o) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of the
International Option Securities on a Date of Delivery which is after the
Closing Time, the obligations of the several International Managers to purchase
the relevant International Option Securities, may be terminated by the Lead
Managers by notice to the Company at any time at or prior to Closing Time or
such Date of Delivery, as the case may be, and such termination shall be
without liability of any party to any other party except as provided in
Section 4 and except

<PAGE> 39

that Sections 1, 6, 7 and 8 shall survive any such termination and remain in
full force and effect.

SECTION 6. Indemnification.

(a) Indemnification of International Managers by the Company. (1) The
Company agrees to indemnify and hold harmless each International Manager and
each person, if any, who controls any International Manager within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act to the extent and
in the manner set forth in clauses (i), (ii) and (iii) below.

(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information
and the Rule 434 Information, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectuses (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;

(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of
the Company and the Selling Stockholders; and

<PAGE> 40

litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement
or omission, to the extent that any such expense is not paid under (i) or
(ii) above;

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of any International Manager through the Lead Managers expressly for
use in the Registration Statement (or any amendment thereto), including the
Rule 430A Information and the Rule 434 Information, if applicable, or any
preliminary prospectus or the International Prospectus (or any amendment or
supplement thereto). The foregoing indemnity with respect to any untrue
statement contained in or any omission from the Registration Statement shall
not inure to the benefit of any International Manager from whom the person
asserting any such loss, liability, claim, damage or expense purchased any of
the Securities that are the subject thereof if the Company shall sustain the
burden of proving that (i) the untrue statement or omission contained in the
Registration Statement was corrected and (ii) such person was not sent or given
a copy of the International Prospectus which corrected the untrue statement or
omission at or prior to the written confirmation of the sale of such Securities
to such persons.

<PAGE> 41

(b) Indemnification of the International Managers by the Selling
Stockholders. Each Selling Stockholder shall indemnify and hold harmless each
International Manager, its officers and employees, and each person, if any, who
controls any International Manager within the meaning of the Securities Act,
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of Stock), to which
that International Manager, officer, employee or controlling person may become
subject, under the Securities Act or otherwise, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto) or any Preliminary Prospectus
or the International Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information relating to such
Selling Stockholder furnished to the Company or the International Managers
through the Lead Managers expressly for use in the Registration Statement (or
any amendment thereto), or any Preliminary Prospectus or the International
Prospectus (or any amendment or supplement thereto). The foregoing indemnity
agreement is in addition to any liability which the Selling Stockholder may
otherwise have to any International Manager or any officer, employee or
controlling person of that International Manager.

(c) Indemnification of Company, Directors and Officers and Selling
Stockholders. Each International Manager severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
and each Selling Stockholder and each person, if any, who controls any Selling
Stockholder within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a)(1) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary International prospectus or the
International Prospectus (or any amendment or supplement thereto) in reliance
upon and in conformity with written information furnished to the

<PAGE> 42
Company by or on behalf of such International Manager through the Lead Managers
expressly for use in the Registration Statement (or any amendment thereto) or
such preliminary prospectus or the International Prospectus (or any amendment
or supplement thereto).

(d Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve
such indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this
indemnity agreement. In the case of parties indemnified pursuant to Section
6(a)(1) above, counsel to the indemnified parties shall be selected by Merrill
Lynch, and, in the case of parties indemnified pursuant to Section 6(c) above,
counsel to the indemnified parties shall be selected by the Company or the
relevant Selling Stockholder. An indemnifying party may participate at its own
expense in the defense of any such action; provided, however, that counsel to
the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to one local counsel in each jurisdiction) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions arising out of the same general
allegations or circumstances.

<PAGE> 43

No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified
parties are actual or potential parties thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified
party from all liability arising out of such litigation, investigation,
proceeding or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified
party.

(f) Other Agreements with Respect to Indemnification. Other Agreements
with Respect to Indemnification. The provisions of this Section shall not
affect any agreement among the Company and the Selling Stockholders with
respect to indemnification.

<PAGE> 44

such proportion as is appropriate to reflect the relative benefits received by
the Company and the Selling Stockholders on the one hand and the International
Managers on the other hand from the offering of the Securities pursuant to this
Agreement or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company and the Selling Stockholders on the one hand and of the
International Managers on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.

The relative benefits received by the Company and the Selling Stockholders
on the one hand and the International Managers on the other hand in connection
with the offering of the International Securities pursuant to this Agreement
shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of the International Securities pursuant to this
Agreement (before deducting expenses) received by the Company and the Selling
Stockholders and the total underwriting discount received by the International
Managers, in each case as set forth on the cover of the International
Prospectus, or, if Rule 434 is used, the corresponding location on the Term
Sheet bear to the aggregate initial public offering price of the International
Securities as set forth on such cover.

The relative fault of the Company and the Selling Stockholders on the one
hand and the International Managers on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the Selling
Stockholders or by the International Managers and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

The Company, the Selling Stockholders and the International Managers agree
that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation (even if the International
Managers were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 7. The

<PAGE> 45

aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged
untrue statement or omission or alleged omission.

Notwithstanding the provisions of this Section 7, no International Manager
shall be required to contribute any amount in excess of the amount by which the
total price at which the International Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such International Manager has otherwise been required to pay by
reason of any such untrue or alleged untrue statement or omission or alleged
omission.

For purposes of this Section 7, each person, if any, who controls an
International Manager within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
International Manager, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company or any Selling Stockholder within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company or such Selling Stockholder, as the case may be.
The International Managers' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the number of Initial International
Securities set forth opposite their respective names in Schedule A hereto and
not joint.

The provisions of this Section shall not affect any agreement among the
Company and the Selling Stockholders with respect to contribution.

<PAGE> 46

SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries or the Selling Stockholders submitted pursuant hereto, shall
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of any International Manager or controlling person, or by
or on behalf of the Company or the Selling Stockholders, and shall survive
delivery of the Securities to the International Managers.

SECTION 9. Termination of Agreement.

(a) Termination; General. The Lead Managers may terminate this
Agreement, by notice to the Company and the Selling Stockholders, at any time
at or prior to Closing Time (i) if there has been, since the time of execution
of this Agreement or since the respective dates as of which information is
given in the International Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which
is such as to make it, in the judgment of the Lead Managers, impracticable to
market the Securities or to enforce contracts for the sale of the Securities,
or (iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission or the New York Stock Exchange, or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc.
or any other governmental authority, or (iv) if a banking moratorium has been
declared by Federal, New York or Illinois authorities.

<PAGE> 47

SECTION 10. Default by One or More of the International Managers. If one
or more of the International Managers shall fail at Closing Time or a Date of
Delivery to purchase the Securities which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"), the Lead Managers shall have
the right, within 24 hours thereafter, to make arrangements for one or more of
the non-defaulting International Managers, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth. If,
however, the International Managers shall not have completed such arrangements
within such 24-hour period, then:

(a) if the number of Defaulted Securities does not exceed 10% of the
number of International Securities to be purchased on such date, each of the
non-defaulting International Managers shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting International Managers, or

(b) if the number of Defaulted Securities exceeds 10% of the number of
International Securities to be purchased on such date, this Agreement or, with
respect to any Date of Delivery which occurs after the Closing Time, the
obligation of the International Managers to purchase, and of the Company to
sell, the International Option Securities to be purchased and sold on such Date
of Delivery shall terminate without liability on the part of any non-defaulting
International Manager.

No action taken pursuant to this Section shall relieve any defaulting
International Manager from liability in respect of its default.

<PAGE> 48

to purchase and the Company to sell the relevant International Option
Securities, as the case may be, either the (i) Lead Managers or (ii) the
Company and any Selling Stockholder shall have the right to postpone Closing
Time or the relevant Date of Delivery, as the case may be, for a period not
exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectuses or in any other documents or
arrangements. As used herein, the term "International Manager" includes any
person substituted for an International Manager under this Section 10.

SECTION 11. Default by one or more of the Selling Stockholders or the
Company. (a) If a Selling Stockholder shall fail at Closing Time to sell and
deliver the number of International Securities which such Selling Stockholder
is obligated to sell hereunder, then the International Managers may, at option
of the Lead Managers, by notice from the Lead Managers to the Company and the
non-defaulting Selling Stockholders, either (a) terminate this Agreement
without any liability on the fault of any non-defaulting party except that the
provisions of Sections 1, 4, 6, 7 and 8 shall remain in full force and effect
or (b) elect to purchase the International Securities which the non-defaulting
Selling Stockholders and the Company have agreed to sell hereunder. No action
taken pursuant to this Section 11 shall relieve any Selling Stockholder so
defaulting from liability, if any, in respect of such default.

In the event of a default by any Selling Stockholder as referred to in
this Section 11, each of the International Managers, the Company and the
non-defaulting Selling Stockholders shall have the right to postpone Closing
Time for a period not exceeding seven days in order to effect any required
change in the Registration Statement or Prospectuses or in any other documents
or arrangements.

(b) If the Company shall fail at Closing Time or at the Date of Delivery
to sell the number of International Securities that it is obligated to sell
hereunder, then this Agreement shall terminate without any liability on the
part of any nondefaulting party; provided, however, that the provisions of
Sections 1, 4, 6, 7 and 8 shall remain in full force and effect. No action
taken pursuant to this Section shall relieve the Company from liability, if
any, in respect of such default.

<PAGE> 49

SECTION 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
International Managers shall be directed to the Lead Managers at North Tower,
World Financial Center, New York, New York 10281-1201, attention of Todd
Kaplan; notices to the Company shall be directed to it at 100 Tri-State Drive,
Suite 200, Lincolnshire, Illinois 60069, attention of G. Douglas Patterson; and
notices to the Selling Stockholders shall be directed to them at [201 MAIN
STREET, SUITE 3100, FORT WORTH, TEXAS 76102, ATTENTION OF CHARLES A. IRWIN AND
JOHN R. MONSKY.]

SECTION 13. Parties. This Agreement shall each inure to the benefit of
and be binding upon the International Managers, the Company and the Selling
Stockholders and their respective successors. Nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the International Managers, the Company and the Selling
Stockholders and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
in respect of this Agreement or any provision herein contained. This Agreement
and all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the International Managers, the Company and the Selling
Stockholders and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any International Manager shall be deemed to be a successor by reason
merely of such purchase.

SECTION 15. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.

<PAGE> 50

If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and each Selling Stockholder a
counterpart hereof, whereupon this instrument, along with all counterparts,
will become a binding agreement among the International Managers, the Company
and the Selling Stockholders in accordance with its terms.

Very truly yours,

IVEX PACKAGING CORPORATION

By:_______________________
Name:_____________________
Title:____________________

THE SELLING STOCKHOLDERS
As Attorney-in-Fact, acting on
behalf of each of the Selling
Stockholders named in Schedule
B hereto.

By:_______________________
Name:_____________________

<PAGE> 51

CONFIRMED AND ACCEPTED,
as of the date first above written:

MERRILL LYNCH INTERNATIONAL
BT ALEX. BROWN INTERNATIONAL
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
SMITH BARNEY INC.
as lead managers of the several international managers
C/O MERRILL LYNCH & CO.
MERRILL LYNCH INTERNATIONAL

By: MERRILL LYNCH INTERNATIONAL

By
-----------------------------------------
Authorized Signatory

For themselves and as Lead Managers of the other International Mangers named in
Schedule A hereto.

<PAGE> 52

SCHEDULE A

Number of
Initial
Name of Underwriter Securities
- ------------------- ----------
<S> <C>
Merrill Lynch International.............
BT Alex. Brown International
Lehman Brothers International (Europe)..
Smith Barney Inc.

Total...................................
</TABLE>

<PAGE> 53

SCHEDULE B

Number of Initial
Securities to be Sold

<TABLE>

<S> <C>
Ivex Packaging Corporation............................................

Selling Stockholders:
- ---------------------

</TABLE>

Selling Stockholders (continued)
- --------------------
<S> <C>

--------
Total ............................................................
</TABLE>

<PAGE> 55

SCHEDULE C

IVEX PACKAGING CORPORATION
1,064,000 Shares of Common Stock
(Par Value $.01 Per Share)

1. The public offering price per share for the Securities, determined as
provided in said Section 2, shall be $_______.

2. The purchase price per share for the Securities to be paid by the several
Underwriters shall be $_____, being an amount equal to the initial public
offering price set forth above less $____ per share; provided that the
purchase price per share for any Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be
reduced by an amount per share equal to any dividends or distributions
declared by the Company and payable on the Initial Securities but not
payable on the Option Securities.

<PAGE> 56
[SCHEDULE D]

[LIST OF PERSONS AND ENTITIES SUBJECT TO LOCK-UP]

<PAGE> 57
Exhibit A

FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)

(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.

(iv) The authorized, issued and outstanding capital stock of the Company is as
set forth in the Prospectuses in the column entitled "Historical" under
the caption "Capitalization" (except for subsequent issuances, if any,
pursuant to the U.S. Purchase Agreement and the International Purchase
Agreement or pursuant to reservations, agreements or employee benefit
plans referred to in the Prospectuses or pursuant to the exercise of
convertible securities or options referred to in the Prospectuses); the
shares of issued and outstanding capital stock of the Company, including
the Securities to be purchased by the U.S. Underwriters and the
International Managers from the Selling Stockholders, have been duly
authorized and validly issued and are fully paid and non-assessable; and
none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar
rights of any securityholder of the Company arising by operation of
law under the charter or by-laws of the Company or, to the

<PAGE> 58

knowledge of such counsel, any other agreement to which the Company
is a party.

(vii) Each Subsidiary has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and corporate authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectuses and, based solely upon "good standing" certificates, is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction listed on an Exhibit attached hereto; except
as otherwise disclosed in the Registration Statement, all of the issued
and outstanding capital stock of each Subsidiary has been duly authorized
and validly issued, is fully paid and non-assessable and, to the best of
such counsel's knowledge, based solely on a review of the stock records
and minute books of the Company, is owned by the Company, directly or
through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; none of the outstanding
shares of capital stock of any Subsidiary was issued in

<PAGE> 59

violation of the preemptive or similar rights of any securityholder
of such Subsidiary.

(viii) Each of the U.S. Purchase Agreement and the International Purchase
Agreement has been duly authorized, executed and delivered by the
Company.

(x) The Registration Statement, including any Rule 462(b) Registration
Statement, the Rule 430A Information and the Rule 434 Information, as
applicable, the Prospectuses, and each amendment or supplement to the
Registration Statement and Prospectuses, as of their respective effective
or issue dates (other than the financial statements and supporting
schedules included therein or omitted therefrom and the exhibits to the
Registration Statement, as to which such counsel need express no
opinion)appeared on their face to be appropriately responsive in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations.

<PAGE> 60

(xiii ) To the best of such counsel's knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation, to
which the Company or any subsidiary is a party, or to which the property
of the Company or any subsidiary is subject, before or brought by any
court or governmental agency or body, domestic or foreign, which is
required to be described in the Registration Statement or the
Prospectuses except as described therein.

(xv) To the best of such counsel's knowledge, there are no statutes or
regulations that are required to be described in the Prospectuses that
are not described as required.

(xvi) All descriptions in the Registration Statement of contracts and other
documents to which the Company or its subsidiaries are a party are
accurate in all material respects; to the best of such counsel's
knowledge, there are no franchises, contracts, indentures, mortgages,
loan agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or to be filed
as exhibits thereto other than those described or referred to therein
or filed or incorporated by reference as exhibits thereto.

(xvii) To the best of such counsel's knowledge, neither the Company nor any
subsidiary is in violation of its charter or by-laws and no default by
the Company or any subsidiary exists which is likely, individually or
in the aggregate, to have a Material Adverse Effect in the due
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument that is
described or referred to in the Registration Statement or the
Prospectuses or filed or

<PAGE> 61

incorporated by reference as an exhibit to the Registration
Statement.

(xviii) No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the 1933 Act
and the 1933 Act Regulations, which have been obtained, or as may be
required under the securities or blue sky laws of the various states, as
to which such counsel need express no opinion) is necessary or required
in connection with the due authorization, execution and delivery of the
U.S.Purchase Agreement and the International Purchase Agreement or for
the offering, issuance, sale or delivery of the Securities.

<PAGE> 62

(xxi) The Company is not an "investment company" or an entity "controlled" by
an "investment company," as such terms are defined in the 1940 Act.

<PAGE> 63
Exhibit B

FORM OF OPINION OF COUNSEL FOR THE SELLING STOCKHOLDERS
TO BE DELIVERED PURSUANT TO SECTION 5(c)[1]

(i) No filing with, or consent, approval, authorization, license, order,
registration, qualification or decree of, any court or governmental
authority or agency (other than the issuance of the order of the
Commission declaring the Registration Statement effective and such
authorizations, approvals or consents as may be necessary under state
securities laws, as to which such counsel need express no opinion) is
necessary or required to be obtained by the Selling Stockholders for the
performance by each Selling Stockholder of its obligations under the U.S.
Purchase Agreement and the International Purchase Agreement or in
connection with the offer, sale or delivery of the Securities.

(ii) The U.S. Purchase Agreement, the International Purchase Agreement and the
Power of Attorney and Custody Agreement have been duly authorized,
executed and delivered by of each Selling Stockholder.

(iii) The execution, delivery and performance of the U.S. Purchase Agreement,
the International Purchase Agreement and and the Power of Attorney and
Custody Agreement and the sale and delivery of the Securities and the
consummation of the transactions contemplated in the U.S. Purchase
Agreement, the International Purchase Agreement and in the Registration
Statement and compliance by the Selling Stockholders with its obligations
under the U.S. Purchase Agreement, the International Purchase Agreement
and the Power of Attorney and Custody Agreement have been duly authorized
by all necessary action on the part of the Selling Stockholders and do not
and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default

_______________________
[1] This form does not include the customary assumptions, exceptions and
qualifications that will appear in the final opinion.

<PAGE> 64

under or result in the creation or imposition of any tax, lien,
charge or encumbrance upon the Securities or any property or assets
of the Selling Stockholders pursuant to, any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, license,
lease or other instrument or agreement of which such counsel is aware
to which any Selling Stockholder is a party or by which it may be
bound, or to which any of the property or assets of the Selling
Stockholders of which such counsel is aware may be subject nor will
such action result in any violation of the provisions of the charter
or by-laws of any Selling Stockholder, if applicable, or any law,
administrative regulation, judgment or order of any governmental
agency or body or any administrative or court decree having
jurisdiction over such Selling Stockholder or any of its properties
of which such counsel is aware.

<PAGE> 65

[FORM OF LOCK-UP FROM DIRECTORS, OFFICERS OR OTHER STOCKHOLDERS PURSUANT TO
SECTION 5k)]

Exhibit C

______, 1998

Ropemaker Place
25 Ropemaker Street
London EC24 9L4
England

Re: Proposed Public Offering by Ivex Packaging Corporation

Dear Sirs:

The undersigned, a stockholder [and an officer and/or director] of Ivex
Packaging Corporation, a Delaware corporation (the "Company"), understands that
Merrill Lynch International ("Merrill Lynch"), BT Alex. Brown International,
Lehman Brothers International (Europe) and Smith Barney Inc. propose to enter
into an International Purchase Agreement (the "International Purchase
Agreement") with the Company and the Selling Stockholders providing for the
public offering of shares (the "Securities") of the Company's common stock, par
value $.01 per share (the "Common Stock"). In recognition of the benefit that
such an offering will confer upon the undersigned as a stockholder [and an
officer and/or director] of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the undersigned agrees with each underwriter to be named in the International
Purchase Agreement that, during a period of 90 days from the date of the
International Purchase Agreement, the undersigned will not, without the prior
written consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated, directly
or indirectly, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase

<PAGE> 66

any option or contract to sell, grant any option, right or warrant for the sale
of, or otherwise dispose of or transfer any shares of the Company's Common
Stock or any securities convertible into or exchangeable or exercisable for
Common Stock, whether now owned or hereafter acquired by the undersigned or
with respect to which the undersigned has or hereafter acquires the power of
disposition, or file any registration statement under the Securities Act of
1933, as amended, with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction is to be settled by delivery
of Common Stock or other securities, in cash or otherwise.

Very truly yours,

Signature: __________________

Print Name: _________________

<PAGE> 1
EXHIBIT 5.1

April 28, 1998

Ivex Packaging Corporation
100 Tri-State Drive, Suite 200
Lincolnshire, IL 60069

Re: Ivex Packaging Corporation --
Registration Statement on
Form S-1 (No. 333- )

Ladies and Gentlemen:

We are acting as special counsel to Ivex Packaging Corporation, a Delaware
corporation (the "Company"), in connection with the initial public
offering of up to 6,118,000 shares (the "Shares") of the Company's Common
Stock, par value $0.01 per share (the "Common Stock"). Of the 6,118,000 Shares
being offered, 500,000 Shares (the "Company Firm Shares") are being offered by
the Company and 4,820,000 Shares (the "Selling Stockholder Firm Shares" and,
together with the Company Firm Shares, the "Firm Shares") are being offered by
certain selling stockholders (the "Selling Stockholders") and 798,000 Shares are
subject to an over-allotment option granted by the Company to the Underwriters
(as defined below).

This opinion is being furnished in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (the
"Act").

In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of (i) the
Registration Statement on Form S-1 (File No. 333- ), as filed with the
Securities and Exchange Commission (the "Commission") under the Act on April
28, 1998.

<PAGE> 2
Ivex Packaging Corporation
April 28, 1998
Page 2

(such Registration Statement, as may be amended, being hereinafter
referred to as the "Registration Statement"); (ii) the form of the U.S.
Purchase Agreement (the "U.S. Purchase Agreement") proposed to be entered into
by and among the Company, the Selling Stockholders and Merrill, Lynch, Pierce,
Fenner & Smith Incorporated, BT Alex. Brown Incorporated, Lehman Brothers Inc.
and Smith Barney Inc., as representatives of the several underwriters named
therein (the "U.S. Underwriters"), filed as an exhibit to the Registration
Statement; (iii) the form of the International Purchase Agreement (the
"International Purchase Agreement" and, together with the U.S. Purchase
Agreement, the "Purchase Agreements") proposed to be entered into by and among
the Company, the Selling Stockholders and Merrill Lynch International, BT Alex
Brown International, Lehman Brothers International (Europe) and Smith Barney
Inc. as lead managers for each of the international managers named therein (the
"International Managers" and, together with the U.S. Underwriters, the
"Underwriters"); (iv) the Amended and Restated Articles of Incorporation (the
"Articles") and the Amended and Restated Bylaws of the Company (the "Bylaws"),
as adopted on the date hereof and as filed as exhibits to the Registration
Statement; (v) a specimen certificate representing the Common Stock; and (vi)
certain resolutions of the Board of Directors of the Company (the
"Resolutions"), relating to the issuance and sale of the Shares and related
matters. We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Company and such
agreements, certificates of public officials, certificates of officers or other
representatives of the Company and others, and such other documents,
certificates and records as we have deemed necessary or appropriate as a
basis for the opinions set forth herein.

In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination

<PAGE> 3

Ivex Packaging Corporation
April 28, 1998
Page 3

of documents executed or to be executed by parties other than the Company, we
have assumed that such parties had or will have the power, corporate or other,
to enter into and perform all obligations thereunder and have also assumed the
due authorization by all requisite action, corporate or other, and execution
and delivery by such parties of such documents and the validity and binding
effect thereof. As to any facts material to the opinions expressed herein
which we have not independently established or verified, we have relied upon
statements and representations of officers and other representatives of the
Company and others.

Members of our firm are admitted to the practice of law in the State of
Illinois, and we do not express any opinion as to the laws of any other
jurisdiction.

Based upon and subject to the foregoing, we are of the opinion that when (i)
the Registration Statement becomes effective; (ii) the price at which the
Shares are to be sold to the Underwriters pursuant to the Purchase Agreements
and other matters relating to the issuance and sale of the Shares have been
approved by the Board of Directors of the Company in accordance with the
Resolutions; (iii) the Purchase Agreements have been duly executed and
delivered; and (iv) certificates representing the Shares in the form of the
specimen certificate examined by us have been manually signed by an
authorized officer of the transfer agent and registrar for the Common Stock and
registered by such transfer agent and registrar, and delivered to and paid for
by the Underwriters as contemplated by the Purchase Agreements, the issuance
and sale of the Shares will have been duly authorized, and the Shares will be
validly issued, fully paid and nonassessable.

<PAGE> 4

Ivex Packaging Corporation
April 28, 1998
Page 4

We hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement. We also consent to the reference to our
firm under the heading "Legal Matters" in the Registration Statement. In
giving this consent, we do not thereby admit that we are included in the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Commission.

Very truly yours,

/s/ Skadden, Arps, Slate, Meagher & Flom
(Illinois)

<PAGE> 1

EXHIBIT 21.1

SUBSIDIARIES OF IVEX

Ivex Packaging Corporation, a Delaware corporation, owns all of the
outstanding capital stock of IPC, Inc., a Delaware corporation, which owns all
of the outstanding capital stock of the following:

1. Packaging Products, Inc., a Delaware corporation

2. Ivex Corporation, an Ontario corporation, which owns all of the
outstanding capital stock of:

(i) M&R Plastics Inc., a Quebec corporation, which owns all of the
outstanding capital stock of:

(a) M&R Plastics Canada, Inc., an Ontario corporation, and
(b) 2528-5347 Quebec Inc., a Quebec corporation

3. Kama of Illinois Corporation, a Delaware corporation

4. Valley Express Lines, Inc., a Delaware corporation

5. Ivex Paper Mill Corporation, a Delaware corporation

6. IPMC Holding Corporation, a Delaware corporation, which owns all of the
outstanding capital stock of:

(i) IPMC, Inc., a Delaware corporation

7. Trio Products, Inc., a Delaware corporation

8. Ivex Holdings, Ltd., a corporation organized under the laws of England
and Wales, which owns all of the outstanding capital stock of:

(i) Kama Europe Limited, a corporation organized under the laws of
England and Wales

9. CFI Industries, Inc., a Delaware corporation, which owns all of the
outstanding capital stock of:

(i) Plastofilm Industries, Inc., a Delaware corporation, which owns all
of the outstanding capital stock of:

(a) Crystal Thermoplastics, Inc., a Rhode Island corporation, which
owns 50% of the capital stock of:

(1) Thermo-Flex corporation, a Puerto-Rican company.
(ii) CFI Recycling, Inc., a Delaware corporation, and
(iii) Plastofilm Limited, a Northern Ireland corporation

10. Ultra Pac, Inc., a Minnesota corporation

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated January 20, 1998, except
as to Note 2, "Comprehensive income," which is as of April 28, 1998, relating to
the consolidated financial statements of Ivex Packaging Corporation and its
subsidiaries, which appears in such Prospectus. We also consent to the
application of such report to the Financial Statement Schedules for the three
years ended December 31, 1997 listed under Item 16(b) of this Registration
Statement when such schedules are read in conjunction with the consolidated
financial statements referred to in our report. The audits referred to in such
report also included these schedules. We also consent to the reference to us
under the heading "Experts" in such Prospectus.

Price Waterhouse LLP
Chicago, Illinois
April 28, 1998