January ____, 1995 effective
as of December ____, 1994
▇▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇▇. ▇▇▇▇▇▇▇▇:
This letter will set forth our agreement, effective as
of December ____, 1994, with respect to the pending acquisition
by Packaging Research Corporation of the assets and business of
Mama ▇▇▇▇▇'▇, Inc. ("MRI") and MRI's indebtedness to you. For
convenience we shall refer to you as "▇▇▇▇▇▇▇▇" and to ourself as
"PRC."
1. PRC has entered into an Acquisition Agreement with MRI
and its shareholders for the acquisition of
substantially all of the assets and liabilities of MRI.
The consummation of that Agreement is conditioned upon
a number of matters including reaching a mutually
acceptable agreement with ▇▇▇▇▇▇▇▇ with respect to the
MRI indebtedness to ▇▇▇▇▇▇▇▇. We understand that as of
June 30, 1994 that indebtedness, including accrued
interest, was approximately $9,200,000. All of such
indebtedness of MRI to ▇▇▇▇▇▇▇▇ as of June 30, 1994 is
hereinafter referred to as the "Indebtedness." All
additional advances by ▇▇▇▇▇▇▇▇ to MRI made after
June 30, 1994 is hereinafter referred to as the "Post
June 30 Advances." The Post June 30 Advances have
totalled $2,000,000. Solely for purposes of this
Agreement, the Indebtedness and the Post June 30
Advances shall not accrue interest after June 30, 1994.
2. As of the effective date of this letter agreement, PRC
shall purchase from ▇▇▇▇▇▇▇▇ all of her rights with
respect to the Post June 30 Advances for $2,000,000.
In connection with the purchase of such Post June 30
Advances by PRC, ▇▇▇▇▇▇▇▇ shall (i) subordinate the
repayment of the Indebtedness to the repayment by MRI
to PRC of the Post June 30 Advances, and (ii) assign to
PRC the security interests she holds in the assets of
MRI to the extent of the Post June 30 Advances.
3. Upon the execution of this letter agreement, PRC shall
purchase from ▇▇▇▇▇▇▇▇ a proportionate part of the
Indebtedness equal to $3,000,000 divided by the amount
of the Indebtedness in consideration for the payment to
▇▇▇▇▇▇▇▇ of $3,000,000. In connection with such
purchase, ▇▇▇▇▇▇▇▇ shall (i) subordinate the repayment
to her of the remaining Indebtedness to the repayment
by MRI to PRC of such purchased portion of the
Indebtedness, and (ii) further assign to PRC the
security interests she holds in the assets of MRI to the
extent of such purchased portion of the Indebtedness.
4. On the closing of the acquisition of the assets and
business of MRI by PRC, the remaining Indebtedness held
by ▇▇▇▇▇▇▇▇ shall be discharged as follows:
(a) A portion of the remaining Indebtedness shall be
discharged through an offset, on a dollar for
dollar basis, against the principal and interest
of the indebtedness then existing at the closing
of ▇▇▇▇▇▇▇▇ to PRC, which is in the present
principal amount of $1,200,000.
(b) PRC shall issue to ▇▇▇▇▇▇▇▇ PRC common stock for
the balance of the remaining Indebtedness valued
for such purpose at $6.50 per share. In the event
of any change in the capitalization of PRC prior
to the closing as a result of stock dividend,
stock split or stock consolidation, the value of
such shares shall be appropriately adjusted.
▇▇▇▇▇▇▇▇ shall be entitled to cause PRC at its
expense to register such stock for resale under
the Securities Act of 1933 on Form S-3. If PRC
registers any of ▇▇▇▇▇▇▇▇'▇ stock during 1995,
▇▇▇▇▇▇▇▇ shall not during 1995 resell such stock
pursuant to such registration in an amount greater
than the volume limitations on resales of
restricted stock set forth under Rule 144 of the
SEC. In the event of any public stock offering by
PRC prior to January 1, 1996, ▇▇▇▇▇▇▇▇ shall agree
to restrictions on the resale of such stock to the
same extent as so agreed by the officers,
directors and other principal shareholders of PRC.
Notwithstanding anything to the contrary contained
in the foregoing, in the event that the business
of MRI does not generate for PRC gross revenues of
at least $15,000,000 during 1995, the payment to
▇▇▇▇▇▇▇▇ for the remaining Indebtedness under this
subparagraph (b) shall be reduced by $2,000,000 or
by 307,692 shares of PRC common stock.
5. ▇▇▇▇▇▇▇▇ represents and warrants that she owns the
Indebtedness and Post June 30 Advances free and clear
of all liens and encumbrances and that the consent of
no other person or entity is necessary for her carrying
out the agreement set forth herein. ▇▇▇▇▇▇▇▇ also
acknowledges that she understands that the acquisition
of the assets and business of MRI by PRC is subject to
a number of conditions and that accordingly there can
be no assurance that such acquisition will be completed
and if not completed, the agreement set forth in this
letter, except for the provisions of paragraphs 2 and 3
hereof, shall become of no effect. On the closing of
such acquisition and in connection with the
consummation of the agreement set forth herein, ▇▇▇▇▇▇▇▇
or her investment representative or agent shall execute
an investment representation letter in customary form to
establish the exemption for the issuance of the PRC
common stock described in paragraph 4(b) above from the
registration requirements of the Securities Act of 1933
pursuant to Section 4(2) thereof.
6. PRC and ▇▇▇▇▇▇▇▇ shall execute all other documents and
take all other actions as are reasonably necessary and
customary to carry out the provisions and intent of
this letter agreement.
7. The terms and conditions of this letter agreement shall
bind and inure to the benefit of PRC and ▇▇▇▇▇▇▇▇ and
their respective successors, assigns, heirs and
personal representatives.
If this letter correctly sets forth our agreement, please
sign and return the attached copy hereof.
Very truly yours,
PACKAGING RESEARCH CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
Agreed to this ______ day
of January, 1995 effective
as of December ___, 1994.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
