EXHIBIT 10.4
[PACKAGING DYNAMICS CORPORATION LETTERHEAD]
September 14, 2004
Packaging Investors, L.P.
c/o Group III 00, X.X.X.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxx
c/o Packaging Dynamics Corporation
0000 Xxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
X. Xxxxxxx Xxxxxxxxx
Glencoe Capital LLC
000 X. Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Gentlemen:
This letter agreement (this "Agreement") sets forth the
agreement of the undersigned with respect to that certain First Amended and
Restated Registration Rights Agreement (the "Packaging Investors Registration
Rights Agreement") by and among Packaging Investors, L.P. ("Packaging
Investors"), DCBS Investors, L.L.C. ("DCBS"), CB Investors, L.L.C. ("CB"),
Xxxxxx X. Xxxx ("Xx. Xxxx") and Packaging Dynamics Corporation (the "Company").
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Packaging Investors Registration Rights Agreement.
The Company has entered into that certain Acquisition
Agreement, dated as of August 6, 2004, by and among the Company, 3141276 Canada
Inc. ("Parent"), GMG International Inc., Papercon, Inc. and Xxxx X. Xxxxx ("Mr.
Xxxxx"), pursuant to which the Company will purchase from Mr. Xxxxx all of the
issued and outstanding capital stock of Parent on the terms and subject to the
conditions set forth in the Acquisition Agreement (the "Transaction"). In
connection with the Transaction, it is proposed that the Company enter into a
registration rights agreement with Mr. Xxxxx (the "Ajram Registration Rights
Agreement"). Subject to and conditioned upon the consummation of the
Transaction, the undersigned hereby agree to the following amendments to the
Packaging Investors Registration Rights Agreement:
1. Notwithstanding the provisions of clause (2) of Section 4 of the
Packaging Investors Registration Rights Agreement, in the event that
(i) Packaging Investors makes a written request for registration of
Registrable Securities held by it pursuant to Section 2 or Section 3
of the Packaging Investors Registration Rights Agreement, (ii) Mr.
Xxxxx exercises his piggy-back registration rights to participate in
such requested registration in accordance with Section 3 of the Ajram
Registration Rights Agreement and (iii) pursuant to Section 4 of the
Packaging Investors Registration Rights Agreement, the Company
Underwriter advises the Company that in its opinion 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 first to Packaging Investors, Mr.
Xxxxx and any other holders of registrable securities pursuant to the
Packaging Investors Registration Rights Agreement pro rata on the
basis of (i) the number of registrable securities requested to be
registered by Packaging Investors, (ii) an amount equal to the lesser
of (x) 50% of the then outstanding registrable securities owned by Mr.
Xxxxx and (y) the number of registrable securities requested to be
registered by Mr. Xxxxx, (iii) with respect to each of the other
holders requesting registration of Registrable Securities pursuant to
the Packaging Investors Registration Rights Agreement (other than
Xxxxx X. Xxxxxxx ("Xx. Xxxxxxx")), the number of Registrable
Securities requested to be registered by such holder (other than Xx.
Xxxxxxx) and (iv) with respect to Xx. Xxxxxxx requesting registration
of Registrable Securities pursuant to the Packaging Investors
Registration Rights Agreement, an amount equal to the lesser of (x)
50% of the then outstanding Registrable Securities owned by Xx.
Xxxxxxx and (y) the number of Registrable Securities requested to be
registered by Xx. Xxxxxxx, second to Mr. Xxxxx and the holders of
Registrable Securities pursuant to the Packaging Investors
Registration Rights Agreement (including Xx. Xxxxxxx) pro rata on the
basis of the number of Registrable Securities or registrable
securities, as the case may be, requested to be registered thereby to
the extent such Registrable Securities or registrable securities, as
the case may be, were not covered by the immediately preceding clause,
third to the Company and fourth to any other holders of registrable
securities.
2. Notwithstanding the provisions of clause (2) of Section 4 of the
Packaging Investors Registration Rights Agreement, in the event that
(i) the Company proposes to file a registration statement with respect
to an offering by the Company for its own account, (ii) Mr. Xxxxx
exercises his piggy-back registration rights to participate in such
registration in accordance with Section 3 of the Ajram Registration
Rights Agreement and (iii) pursuant to Section 4 of the Packaging
Investors Registration Rights Agreement, the Company Underwriter
advises the Company that in its opinion 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 first to the Company, second to Packaging
Investors, the Holder and any other holders of Registrable Securities
pursuant to the Packaging Investors Registration Rights Agreement pro
rata on the basis of the number of Registrable Securities or
registrable securities, as the case may be, requested to be registered
thereby and third to any other holders of registrable securities.
Except as expressly set forth herein, this Agreement shall
not by implication or otherwise, alter, modify, amend or in any way affect any
of the terms, conditions, obligations or agreements contained in the Packaging
Investors Registration Rights Agreement and the Packaging Investors
Registration Rights Agreement shall remain in full force and effect in
accordance with its terms.
This Agreement shall be construed in accordance with and
governed for all purposes by the laws of the State of Delaware applicable to
contracts executed and to be wholly performed within such State.
[Signature page follows.]
Please indicate your agreement to the foregoing by signing in
the space provided below and returning an executed copy of this Agreement to
the undersigned.
Very truly yours,
PACKAGING DYNAMICS CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
-------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chairman
Agreed to and accepted as of the date first written above in accordance with
Section 12.4(i) of the Packaging Investors Registration Rights Agreement:
PACKAGING INVESTORS, L.P.
By: /s/ Xxxxx X. Xxxx
----------------------------
Name: Xxxxx X. Xxxx
Title: Vice President of General Partner
Agreed to and accepted as of the date first written above in accordance with
Sections 12.4(i) and (ii) of the Packaging Investors Registration Rights
Agreement:
By: /s/ Xxxxx X. Xxxxxxx
--------------------------
XXXXX X. XXXXXXX, individually
By: /s/ Xxxxxx Xxxxxx
-------------------------
XXXXXXX X. XXXXXX, individually
By: /s/ X. Xxxxxxx Xxxxxxxxx
--------------------------
X. XXXXXXX XXXXXXXXX, individually
