Exhibit 4
REGISTRATION RIGHTS AGREEMENT
by and among
PACKAGING INVESTORS, L.P.,
DCBS INVESTORS, L.L.C.,
CB INVESTORS, L.L.C.,
and
PACKAGING DYNAMICS CORPORATION
TABLE OF CONTENTS
1. SECURITIES SUBJECT TO THIS AGREEMENT................................1
1.1 Definitions...................................................1
1.2 Registrable Securities........................................1
1.3 Holders of Registrable Securities.............................2
2. SHELF REGISTRATION..................................................2
2.1 Request for Shelf Registration................................2
2.2 Effective Shelf Registration and Expenses.....................3
2.3 Underwriting Procedures.......................................4
2.4 Selection of Underwriters.....................................4
3. DEMAND REGISTRATION.................................................4
3.1 Request for Demand Registration...............................4
3.2 Effective Demand Registration and Expenses....................5
3.3 Underwriting Procedures.......................................5
3.4 Selection of Underwriters.....................................5
4. PIGGY-BACK REGISTRATION OF COMMON STOCK.............................6
5. HOLDBACK AGREEMENTS.................................................6
6. REGISTRATION PROCEDURES.............................................7
7. REGISTRATION EXPENSES..............................................11
8. INDEMNIFICATION; CONTRIBUTION......................................11
8.1 Indemnification by Packaging Dynamics........................12
8.2 Indemnification by Each Holder...............................12
8.3 Conduct of Indemnification Proceedings.......................13
8.4 Contribution.................................................13
9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS........................14
10. COVENANT OF HOLDERS OF REGISTRABLE SECURITIES......................14
11. RULE 144...........................................................14
12. MISCELLANEOUS......................................................15
12.1 Recapitalization, Exchanges, etc., Affecting Packaging
Dynamics' Capital Stock....................................15
12.2 No Inconsistent Agreements...................................15
12.3 Remedies.....................................................15
12.4 Amendments and Waivers.......................................15
12.5 Notices......................................................16
12.6 Successors and Assigns.......................................17
12.7 Counterparts.................................................17
12.8 Headings.....................................................17
12.9 Governing Law................................................17
12.10 Severability.................................................18
12.11 Entire Agreement.............................................18
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated July 1, 2002 (this
"Agreement"), among Packaging Dynamics Corporation, a Delaware corporation
("Packaging Dynamics"), Packaging Investors, L.P., a Delaware limited
partnership ("Packaging Investors"), DCBS Investors, L.L.C., a Delaware
limited liability company ("DCBS Investors"), and CB Investors, L.L.C., a
Delaware limited liability company ("CB Investors"). Packaging Investors,
DCBS Investors and CB Investors are sometimes hereinafter referred to as
the "Holders" and each of them, individually, as a Holder.
Packaging Dynamics and the Holders are entering into this
Agreement with respect to the Registrable Securities (as hereinafter
defined) in accordance with paragraph 2 of that certain letter agreement,
dated March 18, 2002 (the "Letter Agreement"), among the Holders and Ivex
Packaging Corporation, a Delaware corporation ("Ivex") of which Packaging
Dynamics was an indirect wholly-owned subsidiary at the time of the
execution thereof.
The parties herby agree as follows:
1. SECURITIES SUBJECT TO THIS AGREEMENT
1.1 Definitions
1.1.1 "Common Stock" means Packaging Dynamics' common stock,
par value $.01 per share, as constituted on the date hereof, any stock into
which such common stock shall have been changed or any stock resulting from
any reclassification of such common stock, and all other stock of any class
or classes (however designated) of the Company, the holders of which have
the right, without limitation as to amount, either to all or to a share of
the balance of current dividends and liquidating dividends after the
payment of dividends and distributions of any shares entitled to
preference, and any shares of capital stock issued or issuable with respect
to any of the foregoing as a result of any stock split, stock dividend,
reorganization, merger, recapitalization, exchange or similar event or
otherwise.
1.1.2 "Registrable Securities" means, subject to Section
1.2, any shares of Common Stock issued to a Holder in the transaction
described in paragraph 2 of that certain letter agreement, dated March 18,
2002, among Ivex Packaging Corporation, a Delaware corporation, DCBS
Investors, CB Investors and Packaging Investors or acquired by a Holder
thereafter and any securities issued or issuable with respect to any Common
Stock referred to above by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise.
1.1.3 "Stockholders Agreement" means that certain
Stockholders Agreement, dated as of July 1, 2002, among Packaging Dynamics,
Packaging Investors, DCBS Investors and CB Investors.
1.2 Registrable Securities. Only Registrable Securities shall be
eligible for registration pursuant to the terms hereof. For purposes of
this Agreement, Registrable Securities will cease to be Registrable
Securities when (i) a registration statement covering such Registrable
Securities has been declared effective under the Securities Act of 1933, as
amended (the "Act"), by the Securities and Exchange Commission (the "SEC"),
and such Registrable Securities have been disposed of pursuant to such
effective registration statement or (ii) the entire amount of Registrable
Securities proposed to be sold in a single sale is, or, in the opinion of
counsel to Packaging Dynamics, may be distributed to the public pursuant to
Rule 144 (or any successor provision then in force) under the Act or
otherwise without registration under the Act.
1.3 Holders of Registrable Securities. A person is deemed to be a
holder of Registrable Securities whenever such person owns of record or
beneficially Registrable Securities. If Packaging Dynamics receives
conflicting instructions, notices or elections from two or more persons
with respect to the same Registrable Securities, Packaging Dynamics shall
act upon the basis of the instructions, notice or election received from
the registered owner of such Registrable Securities.
2. SHELF REGISTRATION
2.1 Request for Shelf Registration. Packaging Dynamics shall file
as soon as reasonably practicable upon the written request of the holder or
holders of Registrable Securities constituting one percent (1.0%) or more
of the aggregate outstanding shares of Common Stock as of the date hereof,
one or more "shelf" registration statements on Form S-3 (or any successor
thereto) under the Act with respect to the Registrable Securities pursuant
to Rule 415 under the Act and/or any similar rule that may be adopted by
the SEC (the "Shelf Registration"). Notwithstanding the immediately
preceding sentence or any other provision of this Agreement, Packaging
Dynamics shall have no obligation to register Registrable Securities under
this Section 2.1 on more than three occasions with respect to any holder of
Registrable Securities and shall have no obligation to register, or to
commence any registration of, Registrable Securities under this Section 2.1
(a) until after the sixtieth (60th) day following the date of the
distribution of Common Stock pursuant to the Distribution Agreement, dated
March 18, 2002, between Ivex and Packaging Dynamics (the "Distribution"),
(b) if any such registration does not have an aggregate offering price of
more than $1 million or (c) at any time when Packaging Dynamics is not
eligible to use Form S-3 (or any successor thereto) under the Act to
register the Registrable Securities covered by such written request.
Each Holder may offer its Registrable Securities under any Shelf
Registration pursuant to this Section 2.1. At least fifteen (15) business
days prior to the first anticipated filing date of each Shelf Registration,
Packaging Dynamics shall notify each holder of Registrable Securities of
the information Packaging Dynamics reasonably requires from each such
holder if they elect to have any of their Registrable Securities included
in the Shelf Registration (the "Requested Information"). Packaging Dynamics
shall include the Registrable Securities of any Holder that provides such
information in such Shelf Registration. If within five (5) business days
prior to the first anticipated filing date, Packaging Dynamics has not
received the Requested Information in writing from any of such holders (the
"Non-Responsive Holders"), Packaging Dynamics may file the Shelf
Registration without including the Registrable Securities of the
Non-Responsive Holders. At any time subsequent to the date of the first
filing of the Shelf Registration and up to the date that is ten (10) days
prior to the first anticipated effective date of such Shelf Registration, a
Non-Responsive Holder may notify Packaging Dynamics in writing that it
elects to have all or part of its Registrable Securities included in the
Shelf Registration and Packaging Dynamics shall so include such Registrable
Securities in such Shelf Registration; provided, however, that such
Non-Responsive Holders shall have furnished to Packaging Dynamics in
writing all Requested Information on or prior to the tenth (10th) day prior
to the first anticipated effective date of such Shelf Registration.
2.2 Effective Shelf Registration and Expenses. Packaging Dynamics
shall use its best efforts to have the Shelf Registration declared
effective as soon as reasonably practicable after such filing and shall use
reasonable efforts to keep the Shelf Registration continuously effective
for a period of twelve (12) months from the date such Shelf Registration is
declared effective. Packaging Dynamics shall have the right, upon written
notice to each Holder, to postpone for up to sixty (60) days any
registration requested pursuant to this Section 2 if, in the good faith
opinion of the board of directors of Packaging Dynamics, such registration
would materially interfere with any material acquisition or financing
transaction then being pursued by Packaging Dynamics. Packaging Dynamics
may not exercise its right to so delay registration under this Section 2
and Section 3 more than once in any twelve-month period.
Packaging Dynamics shall supplement or amend, if necessary, each
Shelf Registration, as required by the registration form utilized by
Packaging Dynamics, by the instructions applicable to such registration
form, by the Act or the rules and regulations promulgated thereunder or as
reasonably required by the holder or holders of (or any underwriter for) a
majority of the aggregate outstanding shares of Registrable Securities to
be registered pursuant to such Shelf Registration, and shall furnish to the
holders of the Registrable Securities to which the Shelf Registration
relates copies of any such supplement or amendment prior to its being used
and/or filed with the SEC. Packaging Dynamics shall pay all Registration
Expenses (as defined in Section 7 hereof) in connection with each Shelf
Registration, whether or not it becomes effective. No Shelf Registration
shall include any securities other than Registrable Securities unless the
holder or holders of a majority of the aggregate outstanding shares of
Registrable Securities to be registered pursuant to such Shelf Registration
consent to such inclusion in writing; provided, however, that, subject to
compliance by Packaging Dynamics with Section 4 hereof, this Agreement
shall not prohibit the filing of shelf registrations other than a Shelf
Registration.
2.3 Underwriting Procedures. If the holder or holders of a
majority of the aggregate outstanding shares of Registrable Securities to
be registered pursuant to a Shelf Registration so elect, the offering of
such Registrable Securities pursuant to a Shelf Registration shall be in
the form of an underwritten offering and the managing underwriter or
underwriters selected for such offering shall be the Approved Underwriter
(as defined below). In such event, if the Approved Underwriter advises
Packaging Dynamics in writing that in its opinion the aggregate amount of
Registrable Securities requested to be included in such offering is
sufficiently large as to have a material adverse effect on the success of
such offering, Packaging Dynamics shall include in such registration only
the aggregate amount of Registrable Securities that, in the opinion of the
Approved Underwriter, may be sold without any such material adverse effect,
which amount of Common Stock shall be allocated first to the Holders who
have requested to be included in such offering pro rata on the basis of the
number of Registrable Securities requested to be registered thereby and
second to the Company and any other holders of Common Stock.
2.4 Selection of Underwriters. If any Shelf Registration is in the
form of an underwritten offering, the holder or holders of a majority of
the aggregate outstanding shares of Registrable Securities to be registered
pursuant to such Shelf Registration shall select and obtain the investment
banker or investment bankers and manager or managers that will administer
the offering (the "Approved Underwriter"); provided, that the Approved
Underwriter shall be reasonably acceptable to Packaging Dynamics. The
holders of Registrable Securities to be included in such offering shall
pay, pro rata on the basis of the number of Registrable Securities
requested to be registered thereby, all discounts and commissions of the
Approved Underwriter.
3. DEMAND REGISTRATION
3.1 Request for Demand Registration. At any time after the 60th
day following the date of the Distribution and when a Shelf Registration
with respect to Registrable Securities is not in effect under the Act or a
Shelf Registration is not available for use by the holders of the
Registrable Securities hereunder, the holder or holders of Registrable
Securities constituting one percent (1.0%) or more of the aggregate
outstanding shares of Common Stock as of the date hereof may make a written
request for registration of Registrable Securities having an aggregate
offering price of more than $1 million under the Act and under the
securities or blue sky laws of any jurisdiction designated by such holder
or holders (each, a "Demand Registration"). Each request for a Demand
Registration shall specify the amount of the Registrable Securities
proposed to be sold and the intended method of disposition thereof. Upon a
request for a Demand Registration, Packaging Dynamics shall promptly take
such steps as are necessary or appropriate to prepare for the registration
of the Registrable Securities to be registered; provided that Packaging
Dynamics shall have the right, upon written notice to each Holder, to
postpone for up to 60 days any registration requested pursuant to this
Section 3 if, in the good faith opinion of the board of directors of
Packaging Dynamics, such registration would materially interfere with any
material acquisition or financial transaction then being pursued by
Packaging Dynamics. Packaging Dynamics may not exercise its right to delay
registration under Section 2 or Section 3 more than once in any twelve
month period. Subject to Section 3.2 hereof, Packaging Dynamics shall have
no obligation to register Registrable Securities under this Section 3.1 on
more than three occasions with respect to any holder of Registrable
Securities.
3.2 Effective Demand Registration and Expenses. Packaging Dynamics
shall, subject to Section 3.3 hereof, use its best efforts to effect Demand
Registrations pursuant to written requests made in accordance with Section
3.1 of this Agreement. If a Demand Registration is not declared effective
on or before the expiration of one hundred and twenty (120) days after a
request is delivered under Section 3.1, then Packaging Dynamics shall be
required to effect one (1) additional Demand Registration for the
Registrable Securities included in such Demand Registration pursuant to the
terms of this Agreement. A registration shall not count as a Demand
Registration until it has become effective and remains continuously
effective for not less than one hundred and twenty (120) days. Packaging
Dynamics shall use its best efforts to cause any such Demand Registration
to become effective not later than ninety (90) days after it receives a
request under Section 3.1 hereof. In any registration initiated as a Demand
Registration, Packaging Dynamics shall pay all Registration Expenses in
connection therewith, whether or not such Demand Registration becomes
effective.
3.3 Underwriting Procedures. If the holder or holders of a
majority of the aggregate outstanding shares of Registrable Securities to
be registered pursuant to a Demand Registration so elect, the offering of
such issue of Registrable Securities pursuant to such Demand Registration
shall be in the form of an underwritten offering and the managing
underwriter or underwriters selected for such offering shall be the
Approved Underwriter. In such event, if the Approved Underwriter advises
Packaging Dynamics in writing that in its opinion the aggregate amount of
Registrable Securities requested to be included in such offering is
sufficiently large as to have a material adverse effect on the success of
such offering, Packaging Dynamics shall include in such registration only
the aggregate amount of Registrable Securities that, in the opinion of the
Approved Underwriter, may be sold without any such material adverse effect,
which amount of Common Stock shall be allocated first to the Holders who
have requested to be included in such offering pro rata on the basis of the
number of Registrable Securities requested to be registered thereby and
second as to the Company and any other holders of Common Stock.
3.4 Selection of Underwriters. If any Demand Registration of
Registrable Securities is in the form of an underwritten offering, the
Approved Underwriter shall be selected and obtained and their discounts and
commissions, if any, paid in accordance with the procedure set forth in
Section 2.4 hereof.
4. PIGGY-BACK REGISTRATION OF COMMON STOCK.
If Packaging Dynamics proposes to file a registration statement
under the Act with respect to an offering by Packaging Dynamics for its own
account and/or for the accounts of any or all of DCBS Investors, CB
Investors or Packaging Investors of Common Stock or other securities of
Packaging Dynamics (other than a registration statement on Form S-4 or S-8
or any successor or similar forms thereto), then Packaging Dynamics shall
give each Holder at least 20 days' prior written notice of such proposed
registration and distribution and offer to each Holder the opportunity to
register such amount of Registrable Securities as each holder of
Registrable Securities hereunder may request in writing. Subject to Section
9 hereof, Packaging Dynamics shall include, or use its best efforts (within
thirty (30) days after the notice provided for in the preceding sentence)
to cause the managing underwriter or underwriters of a proposed
underwritten offering (the "Company Underwriter") to permit the holders of
Registrable Securities to participate in the registration for such offering
and to include, such Registrable Securities in such offering. If Packaging
Dynamics is offering securities of the same class as any Registrable
Securities, any such Registrable Securities of the holders registered
pursuant to this Agreement shall be included in the offering on the same
terms and conditions as such securities being offered by Packaging
Dynamics. Notwithstanding the foregoing, if the Company Underwriter advises
Packaging Dynamics in writing that in its opinion the total amount of
Registrable Securities, other Common Stock and other securities which the
holders of Registrable Securities, Packaging Dynamics and any other persons
or entities intend to include in such offering (the "Total Securities") is
sufficiently large as to have a material adverse effect on the distribution
of the Total Securities, then the Total Securities shall be reduced to the
amount recommended by the Company Underwriter, which amount shall be
allocated (1) in the case of a Demand Registration by DCBS Investors, CB
Investors or any of their Transferees (as such term is defined herein),
first to the Holder(s) upon the request of which such Demand Registration
was initiated in an amount equal to the greater of (x) 50% of the then
outstanding Registrable Securities owned by such Holder(s) making such
demand and (y) such Holder's or Holders', as the case may be, pro rata
share of the aggregate number of Registrable Securities requested to be
registered by all of the Holders and any other holders of Registrable
Securities, second to the other Holders, pro rata on the basis of the
number of Registrable Securities requested to be registered by such other
Holders, and third to any other holders of Registrable Securities and (2)
in any other case, first to the Company, second to the Holders, pro rata on
the basis of the number of Registrable Securities requested to be
registered thereby, and third to any other holders of Registrable
Securities. Packaging Dynamics shall bear all Registration Expenses in
connection with any registration pursuant to this Section 4 (except for the
discounts or commissions of the Company Underwriter applicable to the
holders' Registrable Securities, which shall be paid in accordance with the
procedures set forth in Section 2.4 hereof).
5. HOLDBACK AGREEMENTS.
To the extent not inconsistent with applicable law, the holders of
Registrable Securities agree not to effect any public sale or distribution
of any Registrable Securities being registered or of securities convertible
into or exchangeable or exercisable for such Registrable Securities,
including a sale pursuant to Rule 144 under the Act, during the period
commencing on the tenth (10th) day prior to the anticipated effective date
of, and continuing through and including the one hundred eightieth (180th)
day after the actual effective date of, the applicable registration
statement under Section 2 or Section 4 of this Agreement (except as part of
such registration), in each case, if and to the extent requested by
Packaging Dynamics in the case of a nonunderwritten public offering or if
and to the extent requested by Packaging Dynamics or the Company
Underwriter in the case of an underwritten public offering, provided that,
in the event such request is made to holders of Registrable Securities,
Packaging Dynamics shall use reasonable efforts to obtain the agreement of
its directors and executive officers not to effect any public sale or
distribution of any securities of (or securities convertible into or
exchangeable or exercisable for securities of) the same class as the
Registrable Securities during such period as holders of Registrable
Securities are prohibited from effecting any sale or public distribution
pursuant to this Section 5.
6. REGISTRATION PROCEDURES.
In connection with any registration effected pursuant to the terms
of this Agreement, Packaging Dynamics shall as expeditiously as possible:
(a) prepare and file with the SEC, not later than forty-five (45)
days after receipt of a request to file a registration statement with
respect to Registrable Securities, a registration statement of any form for
which Packaging Dynamics then qualifies and which counsel for Packaging
Dynamics deems appropriate for the sale of such Registrable Securities in
accordance with the intended method of distribution thereof. Packaging
Dynamics shall use its best efforts to cause such registration statement to
become effective; provided, however, that before filing a registration
statement or prospectus or any amendments or supplements thereto, Packaging
Dynamics shall (i) provide counsel selected by the holder or holders of a
majority of the aggregate outstanding shares of Registrable Securities to
be registered pursuant to such registration ("Holders' Counsel") and any
other Inspector (as defined below) with an opportunity to participate in
the preparation of such registration statement and each prospectus included
therein (and each amendment or supplement thereto) to be filed with the
SEC, which documents shall be subject to the review of Holders' Counsel,
and (ii) notify Holders' Counsel and the holders of Registrable Securities
of any stop order issued or threatened by the SEC and take all reasonable
action required to prevent the entry of such stop order or to remove it if
entered;
(b) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
until the earliest to occur of (i) the expiration of twelve (12) months and
(ii) the date all Registrable Securities included therein have been sold
and comply with the provisions of the Act with respect to the disposition
of all securities covered by such registration statement during such period
in accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(c) furnish to each Holder and to the Holders' Counsel, prior to
filing a registration statement, copies of such registration statement as
proposed to be filed, and thereafter such number of copies of such
registration statement, each amendment and supplement thereto (in each case
including all exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus) and such
other documents as the Holders' Counsel may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by the
holders of Registrable Securities;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such
jurisdictions as the Holders' Counsel reasonably request and do any and all
other acts and things which may be reasonably necessary or advisable to
enable the holders of Registrable Securities to consummate the disposition
in such jurisdictions of the Registrable Securities held by such holders of
Registrable Securities; provided, however, that Packaging Dynamics shall
not be required to (i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this paragraph
(d), (ii) subject itself to taxation in any such jurisdiction or (iii)
consent to general service of process in any such jurisdiction;
(e) use its best efforts to cause the Registrable Securities
covered by such registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary by
virtue of the business and operations of Packaging Dynamics to enable the
holders of Registrable Securities to consummate the disposition of such
Registrable Securities;
(f) notify the holders of Registrable Securities, at any time when
a prospectus relating to the registration statement is required to be
delivered under the Act, upon discovery of, or upon the happening of any
event as a result of which, the prospectus included in such registration
statement contains an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made. In such instance, Packaging Dynamics promptly shall prepare
and file a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances
under which they were made;
(g) enter into and perform customary agreements (including an
underwriting agreement in customary form) and take such other actions as
are reasonably required in order to expedite or facilitate the disposition
of such Registrable Securities, including using its reasonable efforts to
cause officers of Packaging Dynamics to participate in "road shows" and
other information meetings organized by the Approved Underwriter or the
Company Underwriter;
(h) make available for inspection by any managing underwriter
participating in any disposition pursuant to such registration statement,
Holders' Counsel and any accountant or other agent retained by the holder
or holders of a majority of the aggregate outstanding shares of Registrable
Securities to be registered hereunder or any managing underwriter
(collectively, the "Inspectors"), all pertinent financial and other
records, pertinent corporate documents and properties of Packaging Dynamics
and its subsidiaries (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise their due diligence responsibility,
and cause Packaging Dynamics' and its subsidiaries' officers, directors and
employees, and the independent public accountants of Packaging Dynamics, to
supply all information reasonably requested by any such Inspector in
connection with such registration statement. Records and other information
that Packaging Dynamics determines in good faith to be confidential, and of
which determination the Inspectors are so notified, shall not be disclosed
by the Inspectors unless (i) the disclosure of such Records or other
information is necessary to avoid or correct a misstatement or omission in
the registration statement, (ii) the release of such Records or other
information is ordered pursuant to a subpoena or other order from a court
of competent jurisdiction or (iii) the information in such Records or such
other information has been made generally available to the public by
someone other than such Inspector. Packaging Dynamics shall not be required
to disclose any such confidential information or Records until and unless
the Inspectors shall have entered into customary confidentiality agreements
with Packaging Dynamics with respect thereto. Each holder of Registrable
Securities agrees that it shall, upon learning that disclosure of such
Records or other information is sought in a court of competent
jurisdiction, give notice to Packaging Dynamics and allow Packaging
Dynamics, at Packaging Dynamics' expense, to undertake appropriate action
to prevent disclosure of the Records or other information deemed
confidential;
(i) in the event such sale is pursuant to an underwritten
offering, use its best efforts to obtain a "cold comfort" letter, dated as
of a date reasonably proximate to the date of the underwriting agreement
and the date of the closing under the underwriting agreement, from
Packaging Dynamics' independent public accountants in customary form and
covering such matters of the type customarily covered by "cold comfort"
letters as Holders' Counsel or the managing underwriter reasonably request;
(j) use its best efforts to obtain, at the request of Holders'
Counsel on the date such securities are delivered to the underwriters for
sale pursuant to such registration or, if such securities are not being
sold through underwriters, on the date the registration statement with
respect to such securities becomes effective, an opinion of counsel
representing Packaging Dynamics for the purposes of such registration,
addressed to the underwriters, if any, and to the holders of Registrable
Securities, covering such legal matters with respect to the registration in
respect of which such opinion is being given as the Holders' Counsel and
the underwriters, if any, may reasonably request and are customarily
included in such opinions;
(k) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC and make available to its security
holders, as soon as reasonably practicable, but no later than fifteen (15)
months after the effective date of the registration statement, an unaudited
earnings statement covering a period of twelve (12) months beginning within
three (3) months after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of Section 11(a) of
the Act and Rule 158 thereunder;
(l) keep each holder of Registrable Securities advised in writing
as to the initiation and progress of any registration under Section 2, 3 or
4 hereunder;
(m) provide officers' certificates and other customary closing
documents;
(n) notify each seller of such Registrable Securities and each
underwriter participating in the disposition of such Registrable Securities
of any stop order or other suspension of effectiveness of the registration
statement;
(o) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the registration statement at the
earliest possible moment;
(p) cooperate with the sellers of such Registrable Securities and
the managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of book-entry securities or, if applicable, of
certificates (not bearing any restrictive legends) representing securities,
to be sold under the registration statement and enable such securities to
be in such denominations or amounts, as the case may be, and registered in
such names as the managing underwriter or underwriters, if any, or such
sellers may request;
(q) cooperate with each seller of Registrable Securities and each
underwriter participating in the disposition of such Registrable Securities
and their respective counsel in connection with any filings required to be
made with the National Association of Securities Dealers, Inc. (the
"NASD");
(r) use all reasonable efforts to take all other steps necessary
to effect the registration of the Registrable Securities contemplated
hereby; and
(s) use all reasonable efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar
securities issued by Packaging Dynamics are then listed.
Packaging Dynamics may require each holder of Registrable
Securities to furnish to Packaging Dynamics such information regarding the
distribution of such securities as Packaging Dynamics may from time to time
reasonably request in writing.
Each holder of Registrable Securities agrees that, upon receipt of
any notice from Packaging Dynamics of the happening of any event of the
kind described in Section 6(f) hereof, such holder of Registrable
Securities shall forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 6(f) hereof and, if so directed
by Packaging Dynamics, such holder shall deliver to Packaging Dynamics (at
Packaging Dynamics' expense) all copies, other than permanent file copies
then in such holder's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. In
the event Packaging Dynamics shall give any such notice, Packaging Dynamics
shall extend the period during which such registration statement shall be
maintained effective pursuant to this Agreement (including, without
limitation, the period referred to in Section 6(b)) by the number of days
of the period from and including the date of the giving of such notice
pursuant to Section 6(f) hereof to and including the date when the holder
of Registrable Securities shall have received the copies of the
supplemented or amended prospectus contemplated by and meeting the
requirements of Section 6(f).
7. REGISTRATION EXPENSES.
Packaging Dynamics shall pay all expenses (other than underwriting
discounts and commissions of the Approved Underwriters or of the Company
Underwriter applicable to the holders of Registrable Securities) arising
from or incident to its performance of, or compliance with, this Agreement,
including, without limitation, (i) required SEC, stock exchange and NASD
registration and filing fees (including, if applicable, the fees and
expenses of any "qualified independent underwriter" as such term is defined
in Rule 2720 set forth in the NASD Manual, and of its counsel), (ii) all
fees and expenses incurred in complying with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with
blue sky qualifications of the Registrable Securities), (iii) all printing
(including expenses of printing prospectuses if such printing is reasonably
requested by the holder or holders of a majority of the Registrable
Securities to be registered pursuant to such registration statement),
messenger and delivery expenses, (iv) the fees and disbursements of counsel
to Packaging Dynamics and of its independent public accountants and any
other accounting and legal fees and expenses incurred by Packaging Dynamics
(including, without limitation, any expenses arising from any special
audits or "cold comfort" letters required by or incident to any
registration or qualification), (v) internal expenses (including, without
limitation, all salaries and expenses of officers and employees performing
legal or accounting duties), (vi) the reasonable fees and expenses of any
special experts retained by Packaging Dynamics in connection with any
registration pursuant to the terms of this Agreement, regardless of whether
such registration statement is declared effective, and (vii) any liability
insurance or other premiums for insurance obtained by Packaging Dynamics in
connection with any registration, in each case, regardless of whether such
registration is declared effective. In connection with each registration
hereunder, Packaging Dynamics shall reimburse the holders of Registrable
Securities being registered in such registration for the reasonable fees
and disbursements of not more than one counsel for the holders of
Registrable Securities selected by the holder or holders of a majority of
the aggregate outstanding Registrable Securities included, or to be
included, in such registration statement. All of the expenses described in
this Section 7 are herein called "Registration Expenses."
8. INDEMNIFICATION; CONTRIBUTION
8.1 Indemnification by Packaging Dynamics. Packaging Dynamics
agrees to indemnify, to the full extent permitted by law, each holder of
Registrable Securities, its officers, directors, partners, members,
employees and agents and each person who controls (within the meaning of
the Act and the Securities Exchange Act of 1934, as amended (the "Exchange
Act") such holder, and any investment adviser thereof or agent therefor
from and against any and all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation and legal expenses)
arising out of or based upon any untrue, or alleged untrue, statement of a
material fact contained in any registration statement, prospectus or
preliminary prospectus or notification or offering circular (as amended or
supplemented if Packaging Dynamics shall have furnished any amendments or
supplements thereto) or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances under which they were made. The indemnification
agreement contained in this Section 8.1 shall not apply to statements or
omissions made in reliance upon and in conformity with information
furnished in writing to Packaging Dynamics by such holder of Registrable
Securities expressly for use therein. The indemnification agreement
contained in this Section 8.1 with respect to any preliminary prospectus
shall not inure to the benefit of any person from whom the person asserting
any such losses, claims, damages, liabilities or expenses purchased the
Registrable Securities that are the subject thereof (or to the benefit of
any person controlling such person) if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected in the
prospectus, as then amended or supplemented, and such person failed to
deliver a copy of the amended or supplemented prospectus to the person
asserting such loss, claim, damage, liability or expense after Packaging
Dynamics had furnished such person with copies of the same; provided,
however, that Packaging Dynamics shall have provided such amended or
supplemental prospectus within a reasonable period prior to such sale.
Packaging Dynamics shall also indemnify any underwriters of the Registrable
Securities, their officers, directors and employees and each person who
controls such underwriters (within the meaning of the Act and the Exchange
Act) to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities.
8.2 Indemnification by Each Holder. In connection with any
registration statement in which a holder of Registrable Securities is
participating pursuant to Section 2, 3 or 4 hereof, such holder shall
furnish to Packaging Dynamics in writing such information and affidavits
with respect to such holder as Packaging Dynamics may reasonably request
for use in connection with any such registration statement, preliminary
prospectus or prospectus (or amendment or supplement thereof) and each
holder of Registrable Securities agrees to indemnify, to the same extent
and subject to the same exceptions and limitations as set forth in the
foregoing indemnity from the Company to the Holders, Packaging Dynamics,
any underwriter retained by Packaging Dynamics and their respective
directors, officers, employees and each person who controls Packaging
Dynamics or such underwriter (within the meaning of the Act and the
Exchange Act), but only with respect to any such information furnished in
writing by such holder of Registrable Securities for use therein. In no
event shall any Holder have any liability hereunder for an amount in excess
of such Holder's net proceeds pursuant to the offering giving rise to such
liability.
8.3 Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder (the "Indemnified Party") agrees to give prompt
written notice to the indemnifying party (the "Indemnifying Party") after
the receipt by the Indemnified Party of any written notice of the
commencement of any action, suit, proceeding or investigation or threat
thereof made in writing for which the Indemnified Party intends to claim
indemnification or contribution pursuant to this Agreement; provided,
however, that the failure so to notify the Indemnifying Party shall relieve
the Indemnifying Party of any liability that it may have to the Indemnified
Party hereunder only to the extent that it is materially prejudiced by such
delay or failure. In case notice of commencement of any such action shall
be given to the Indemnifying Party as above provided, the Indemnifying
Party shall be entitled to participate in and, to the extent it may wish,
jointly with any other Indemnifying Party similarly notified, to assume the
defense of such action at its own expense, with counsel chosen by it and
reasonably satisfactory to such Indemnified Party. The Indemnified Party
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such
counsel shall be paid by the Indemnified Party unless (i) the Indemnifying
Party agrees to pay the same, (ii) the Indemnifying Party fails to assume
the defense of such action with counsel reasonably satisfactory to the
Indemnified Party, (iii) the named parties to any such action (including
any impleaded parties) have been advised by their counsel that either (x)
representation of such Indemnified Party and the Indemnifying Party by the
same counsel would be inappropriate under applicable standards of
professional conduct or (y) there may be one or more legal defenses
available to it which are different from or additional to those available
to the Indemnifying Party. In the instances listed in the previous
sentence, the Indemnifying Party shall not have the right to assume the
defense of such action on behalf of the Indemnified Party, but will not be
obligated to pay the fees and expenses of more than one counsel (in
addition to any local counsel) for all Indemnified Parties with respect to
such claim. The Indemnified Party shall not be required to consent to entry
of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability with respect to such
claim or litigation. The Indemnifying Party shall not be liable for any
settlement entered into without its consent, which consent shall not be
unreasonably withheld, conditioned or delayed.
8.4 Contribution. If the indemnification provided for in this
Section 8 from the Indemnifying Party is unavailable to an Indemnified
Party hereunder in respect of any losses, claims, damages, liabilities or
expenses referred to herein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party and Indemnified Party
in connection with the actions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above
shall be deemed to include, subject to the limitations set forth in Section
8.1, 8.2 and 8.3, any legal or other fees or expenses reasonably incurred
by such party in connection with any investigation or proceeding. In no
event shall any Holder have any liability hereunder for an amount in excess
of such Holder's net proceeds pursuant to the offering giving rise to such
liability.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 8.4 were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person.
9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
A holder of Registrable Securities may not participate in any
underwritten registration hereunder unless such holder (a) agrees to sell
such holder's Registrable Securities on the basis provided in any
underwriting arrangements entered into in accordance with this Agreement
and (b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements, custody agreements and other
documents reasonably required under the terms of such underwriting
arrangements and (c) agrees to pay their pro rata portion of all
underwriting discounts and commissions of Approved Underwriters or the
Company Underwriter.
10. COVENANT OF HOLDERS OF REGISTRABLE SECURITIES.
Subject to the provisions of this Agreement relating to
Registration Expenses, each holder of Registrable Securities by its
acceptance of the Registrable Securities agrees to reasonably cooperate
with Packaging Dynamics in connection with the preparation and filing of
any registration statement hereunder.
11. RULE 144.
Packaging Dynamics covenants that it shall file any reports
required to be filed by it under the Act, the Exchange Act and the rules
and regulations adopted by the SEC thereunder and that it shall take such
further action as a holder of Registrable Securities may reasonably request
(including providing any information necessary to comply with Rule 144 or
Rule 144A under the Act), all to the extent required from time to time to
enable such holder to sell Registrable Securities without registration
under the Act within the limitation of the exemptions provided by (a) Rule
144 or Rule 144A under the Act, as such rules may be amended from time to
time, or (b) any similar rules or regulations hereafter adopted by the SEC.
Packaging Dynamics shall, upon the request of a holder of Registrable
Securities, deliver to such holder of Registrable Securities a written
statement as to filings made by Packaging Dynamics with the SEC.
12. MISCELLANEOUS
12.1 Recapitalization, Exchanges, etc., Affecting Packaging
Dynamics' Capital Stock. The provisions of this Agreement shall apply, to
the full extent set forth herein with respect to any and all common stock
of Packaging Dynamics or any successor or assign of Packaging Dynamics
(whether by merger, consolidation, sale of assets or otherwise) which may
be issued in respect of, in exchange for or in substitution of, the
Registrable Securities and shall be appropriately adjusted for any stock
dividends, splits, reverse splits, combinations, recapitalizations and the
like occurring after the date hereof. The Company shall cause any successor
or assign (whether by merger consolidation, sale of assets or otherwise) to
enter into a new registration rights agreement with the Holders on terms
substantially the same as this Agreement as a condition of any such
transaction.
12.2 No Inconsistent Agreements. Packaging Dynamics shall not
enter into any agreement with respect to its securities that is
inconsistent with the rights granted to the holders of Registrable
Securities in this Agreement.
12.3 Remedies. The holders of Registrable Securities, in addition
to being entitled to exercise all rights granted by law (including recovery
of damages), shall be entitled to specific performance of their rights
under this Agreement. Packaging Dynamics agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by
it of the provisions of this Agreement and hereby agrees to waive the
defense that a remedy at law would be adequate in any action for specific
performance.
12.4 Amendments and Waivers. Except as otherwise provided herein,
the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given unless Packaging Dynamics has consented in writing
thereto and has obtained (i) the written consent of the holder or holders
of at least a majority of the aggregate outstanding shares of Registrable
Securities affected by such amendment, modification, supplement, waiver or
departure and (ii) if such amendment, modification, supplement, waiver or
departure from the provisions hereof would adversely affect the rights of
DCBS Investors or its members, the written consent of the holder or holders
of at least a majority of all such Registrable Securities owned by DCBS
Investors or any of its members.
12.5 Notices. All notices or other communications provided for
herein shall be in writing and shall be given personally, telegraphed,
telexed, sent by facsimile transmission or sent by prepaid air courier or
certified, registered or express mail, postage prepaid. Any such notice
shall be deemed to have been given (a) when received, if delivered in
person, telegraphed, telexed, sent by facsimile transmission and confirmed
in writing, (b) two (2) business days thereafter if sent by reputable
overnight, prepaid air courier or (c) three (3) business days following the
mailing thereof, if mailed by certified first class mail, postage prepaid,
return receipt requested, in any such case as follows (or to such other
address or addresses as a party may have advised the other in the manner
provided in this Section 12.5):
(i) if to Packaging Dynamics:
Packaging Dynamics Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
(ii) if to the Holders:
Packaging Investors, L.P.
c/o Group III 31, L.L.C.
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▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
and
DCBS Investors, L.L.C.
c/o Packaging Dynamics Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
G. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
and
CB Investors, L.L.C.
c/o Packaging Dynamics Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
G. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
and if to any other holder of Registrable Securities, at the address that
such holder shall have furnished to Packaging Dynamics in writing, or,
until any such other holder so furnishes to Packaging Dynamics an address,
then to and at the address of the last holder of such Registrable
Securities that has furnished an address to Packaging Dynamics.
12.6 Successors and Assigns. Except as otherwise expressly
provided herein, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors
and administrators of the parties hereto, including without limitation any
person or entity to whom or which any Registrable Securities are
transferred or distributed other than in violation of Section 4 of the
Stockholders Agreement (a "Transferee"), it being understood and agreed
that no such transfer shall be made, and Packaging Investors shall not be
required to acknowledge or recognize any such transfer, unless such
Transferee has executed and delivered an agreement whereby such Transferee
agrees to become a party hereto and to be bound by all the provisions
hereof which were applicable to such Transferee's transferor.
12.7 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
12.8 Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.
12.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable
to contracts made and to be performed wholly within such State.
12.10 Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein
shall not be in any way impaired thereby, it being intended that all of the
rights and privileges of the parties shall be enforceable to the fullest
extent permitted by law. Furthermore, in lieu of each such illegal, invalid
or unenforceable provision there shall be added automatically as a part of
this Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and
enforceable.
12.11 Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein. This Agreement supersedes all prior
agreements, discussions and understandings between the parties with respect
to such subject matter.
[Signature page follows.]
IN WITNESS WHEREOF, the undersigned have executed this Agreement
on the date first above written.
PACKAGING DYNAMICS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name:
Title:
PACKAGING INVESTORS, L.P.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President for Group III 31,
L.L.C., General Partner
DCBS INVESTORS, L.L.C.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name:
Title:
CB INVESTORS, L.L.C.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name:
Title: