<PAGE>
                                                                     Exhibit 4.2









                          REGISTRATION RIGHTS AGREEMENT

                                  BY AND AMONG

                           PACKAGING INVESTORS, L.P.,

                             DCBS INVESTORS, L.L.C.,

                              CB INVESTORS, L.L.C.,

                                       AND

                         PACKAGING DYNAMICS CORPORATION



<PAGE>

                                TABLE OF CONTENTS


<TABLE>
<S>                                                                                                     <C>
1.   SECURITIES SUBJECT TO THIS AGREEMENT................................................................1
     1.1   Definitions...................................................................................1
     1.2   Registrable Securities........................................................................2
     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.......................................................................3
     2.4   Selection of Underwriters.....................................................................4

3.   DEMAND REGISTRATION.................................................................................4
     3.1   Request for Demand Registration...............................................................4
     3.2   Effective Demand Registration and Expenses....................................................4
     3.3   Underwriting Procedures.......................................................................5
     3.4   Selection of Underwriters.....................................................................5

4.   PIGGY-BACK REGISTRATION OF COMMON STOCK.............................................................5

5.   HOLDBACK AGREEMENTS.................................................................................6

6.   REGISTRATION PROCEDURES.............................................................................7

7.   REGISTRATION EXPENSES..............................................................................11

8.   INDEMNIFICATION; CONTRIBUTION......................................................................11
     8.1   Indemnification by Packaging Dynamics........................................................11
     8.2   Indemnification by Each Holder...............................................................12
     8.3   Conduct of Indemnification Proceedings.......................................................12
     8.4   Contribution.................................................................................13

9.   PARTICIPATION IN UNDERWRITTEN REGISTRATIONS........................................................14

10.  COVENANT OF HOLDERS OF REGISTRABLE SECURITIES......................................................14

11.  RULE 144...........................................................................................14

12.  MISCELLANEOUS......................................................................................14
     12.1  Recapitalization, Exchanges, etc., Affecting Packaging Dynamics' Capital Stock...............14
     12.2  No Inconsistent Agreements...................................................................15
     12.3  Remedies.....................................................................................15
     12.4  Amendments and Waivers.......................................................................15
     12.5  Notices......................................................................................15
</TABLE>

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<PAGE>

<TABLE>
<S>                                                                                                     <C>
     12.6  Successors and Assigns.......................................................................16
     12.7  Counterparts.................................................................................17
     12.8  Headings.....................................................................................17
     12.9  Governing Law................................................................................17
     12.10 Severability.................................................................................17
     12.11 Entire Agreement.............................................................................17
</TABLE>








                                       ii
<PAGE>

                          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 hereby 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.

<PAGE>

     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

                                       2
<PAGE>

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

                                       3
<PAGE>

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

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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

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<PAGE>

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

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<PAGE>

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

                                       7
<PAGE>

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

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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;

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<PAGE>

           (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).

                                       10
<PAGE>

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

                                       11
<PAGE>

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

                                       12
<PAGE>

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

                                       13
<PAGE>

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

                                       14
<PAGE>

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
                         3900 West 43rd Street
                         Chicago, Illinois 60632
                         Telephone: (773) 254-6000
                         Telecopy: (773) 254-8204
                         Attention: Chief Executive Officer


                                       15
<PAGE>

                    (ii) if to the Holders:

                         Packaging Investors, L.P.
                         c/o Group III 31, L.L.C.
                         201 Main Street
                         Suite 3100
                         Fort Worth, Texas 76102
                         Telephone: (817) 390-8500
                         Telecopy: (817) 338-2067
                         Attention: Kevin G. Levy

                         and

                         DCBS Investors, L.L.C.
                         c/o Packaging Dynamics Corporation
                         3900 West 43rd Street
                         Chicago, Illinois 60632
                         Telephone: (773) 254-6000
                         Telecopy: (773) 254-8204
                         Attention: Frank V. Tannura
                                    G. Douglas Patterson

                         and

                         CB Investors, L.L.C.
                         c/o Packaging Dynamics Corporation
                         3900 West 43rd Street
                         Chicago, Illinois 60632
                         Telephone: (773) 254-6000
                         Telecopy: (773) 254-8204
                         Attention: Frank V. Tannura
                                    G. Douglas Patterson

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

                                       16
<PAGE>

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.]



                                       17
<PAGE>


           IN WITNESS WHEREOF, the undersigned have executed this Agreement on
the date first above written.

                                    PACKAGING DYNAMICS CORPORATION


                                    By: /s/ Frank V. Tannura
                                        --------------------------------
                                        Name:
                                        Title:

                                    PACKAGING INVESTORS, L.P.


                                    By: /s/ Kevin G. Levy
                                        --------------------------------
                                        Name: Kevin G. Levy
                                        Title: Vice President of Group III 31
                                                L.L.C., General Partner

                                    DCBS INVESTORS, L.L.C.


                                    By: /s/ Frank V. Tannura
                                        --------------------------------
                                        Name:
                                        Title:

                                    CB INVESTORS, L.L.C.


                                    By: /s/ Frank V. Tannura
                                        --------------------------------
                                        Name:
                                        Title:




                                                 [Registration Rights Agreement]