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                                                                   EXHIBIT 10.21

                    SEVERANCE AND CHANGE OF CONTROL AGREEMENT

         THIS AGREEMENT is made as of January 23, 2003 by and between Packaging
Dynamics Corporation (the "Company") and Phil Harris (the "Executive").

         The parties hereto, intending to be legally bound hereby, agree as
follows:

         1. Position and Compensation. The Executive currently is serving as
President and Chief Executive Officer of the Company and is receiving the
following compensation (the "Compensation") for his services: (a) the base
salary in effect on the date hereof (which amount may be increased as the
Company may determine and such increased rate of base salary shall thereafter
constitute the Executive's base salary for all purposes of this Agreement), (b)
an annual performance bonus under the Company's Senior Management Incentive
Compensation Plan equal to the percentage (in effect on the date hereof) of the
Executive's base salary, and (c) participation in all of the Company's employee
benefits plans, including without limitation, retirement and pension plans,
incentive compensation plans (including the 2002 Long-term Incentive Stock
Plan), life insurance plans, dental plans, medical plans and automobile
allowance plans which are, from time to time, made available by the Company to
its executive officers, subject to the terms of such plans, with the Executive's
participation to be on terms no less favorable to the Executive than the terms
provided to other similar executives.

         2. Compensation Upon Termination. The Executive shall be entitled to
the following Compensation from the Company upon termination of employment:

            (a) Termination for "Cause" or without "Good Reason". In the event
of a termination of the Executive's employment by the Company for "Cause" or by
the Executive without "Good Reason", the Executive shall be entitled to receive
the Compensation specified in Section 1 through the date of termination plus any
unpaid performance bonus for any prior fiscal year.

            (b) Upon Termination "Without Cause" or for "Good Reason". In the
event that the Executive's employment is terminated by the Company "Without
Cause" or by the Executive for "Good Reason", then the Executive shall be
entitled to receive:

                 (i) Compensation due the Executive through the date of
termination (including, without limitation, any unpaid

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performance bonus for the prior fiscal year);

                 (ii) a lump sum payable on the date of termination equal to (A)
one (1) times the sum of the Executive's base salary and target bonus, each as
in effect immediately prior to the date of termination (or, if higher, in effect
immediately prior to the first occurrence or circumstance constituting Good
Reason), or (B) two (2) times the sum of such amounts if such termination occurs
on or after a Change Of Control and on or before the second anniversary date of
such Change Of Control;

                 (iii) the continuation for the Executive and his dependents of
the medical and dental benefits described in Section 1(c) or the provision of
equivalent benefits until the earlier of (x) the first anniversary of the date
of termination (or the second anniversary of such date if such termination
occurs on or after a Change Of Control and on or before the second anniversary
date of such Change Of Control) or (y) with respect to the medical benefits, the
date upon which the Executive begins to be covered by medical insurance with a
new employer; provided, that the Executive's medical coverage with the Company
shall be discontinued upon subsequent employment only to the extent that any
pre-existing medical conditions are covered under the new employer's medical
plan (for purposes of determining the period of continuation coverage to which
the Executive or any of his dependents is entitled pursuant to Section 4980B of
the Code (or any successor provision thereto) under any group health plan
maintained by the Company or its Affiliates, the Executive shall be considered
to have remained employed until the termination of the above-described
coverage);

                 (iv) if such termination occurs on or after (or within close
proximity of) a Change Of Control, the acceleration of vesting under the
Company's 2002 Long-Term Incentive Stock Plan; and

                 (v) if such termination occurs on or after (or within close
proximity of) a Change Of Control, outplacement services for a period of one (1)
year, or, if earlier, until the first acceptance by the Executive of an offer of
employment, in an amount not to exceed $25,000.

         3. No Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement in connection with or
following termination of employment by seeking other employment or otherwise,
nor shall any amounts provided herein be reduced by any compensation earned by
the Executive as the result of employment by another employer after termination
of the Executive's employment hereunder.

         4. Non-Compete Covenants. (a) In consideration of the premises and the
mutual covenants contained herein, the Executive

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shall not during the Restricted Period (as hereinafter defined), in the United
States, Canada or any other place where the Company and its affiliates conduct
substantial manufacturing operations relating to the Company's businesses,
directly or indirectly (except in the Executive's capacity as an officer of the
Company or any of its affiliates), (i) engage or participate in any of the
Company's principal businesses; (ii) enter the employ of, or render any other
services to, any person engaged in any of the Company's principal businesses; or
(iii) become interested in any such person in any capacity, including, without
limitation, as an individual, partner, shareholder, lender, officer, director,
principal, agent, consultant, advisor or trustee; provided, however, that the
Executive may own, directly or indirectly, solely as an investment, securities
of any person traded on any national securities exchange or listed on the
National Association of Securities Dealers Automated Quotation System if the
Executive is not a controlling person of, or a member of a group which controls,
such person and the Executive does not, directly or indirectly, own five percent
(5.0%) or more of any class of equity securities, or securities convertible into
or exercisable or exchangeable for five percent (5.0%) or more of any class of
equity securities, of such person. As used herein, the "Restricted Period" shall
mean a period commencing on the date hereof and terminating upon the first
anniversary date of such termination of employment. The Company and the
Executive hereby agree that the non-compete obligations contained in this
Section 4(a) shall supercede and control over any other similar obligations
contained in any other agreements or documents which such other obligations
shall have no force or effect.

            (b) The Executive acknowledges that the Company has a legitimate and
continuing proprietary interest in the protection of its confidential
information and that it has invested substantial sums and will continue to
invest substantial sums to develop, maintain and protect such confidential
information. The Executive agrees that during and after the Restricted Period,
the Executive shall keep secret and retain in strictest confidence and shall not
use for the benefit of himself or others all confidential information directly
relating to the Company's businesses learned by the Executive heretofore or
hereafter, unless otherwise in the public domain other than as a result of
disclosure by the Executive or previously known by the Executive or obtained by
the Executive independent of the Company's confidential information.

            (c) The Executive acknowledges that all memoranda, notes, lists,
records, engineering drawings, technical specifications and related documents
and other documents or papers (and all copies thereof) relating to the Company,
including such items stored in computer memories, microfiche or by any other
means relating to the Company and its affiliates, made or compiled by or on
behalf of the Executive during his

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employment or made available to the Executive relating to the Company, its
affiliates or any entity which may hereafter become an affiliate thereof, shall
be the property of the Company and shall be delivered to the Company promptly
upon the termination of the Executive's employment with the Company or at any
other time upon request.

            (d) The Executive agrees that any inventions, discoveries,
improvements, ideas, concepts or original works of authorship relating directly
to the Company's businesses, including without limitation, computer apparatus,
programs and manufacturing techniques, whether or not protectable by patent or
copyright, that have been originated, developed or reduced to practice by the
Executive alone or jointly with others during the Executive's employment with
the Company shall be the property of and belong exclusively to the Company. The
Executive shall promptly and fully disclose to the Company the origination or
development by the Executive of any such material and shall provide the Company
with any information that it may reasonably request about such material.

            (e) During the Restricted Period, the Executive shall not, directly
or indirectly, (i) hire or solicit, or cause others to hire or solicit, for
employment by any person other than the Company, or retain as a consultant,
advisor, agent, representative or in any other capacity whatsoever, or cause
others to do any of the foregoing, any person employed by the Company or its
affiliates or successors within the two (2) years preceding the Executive's
hiring or retention of such person or solicitation of such person, or (ii)
encourage any such employee to leave his employment.

            (f) During the Restricted Period, the Executive shall not, except by
reason of and in his capacity as an officer of the Company, directly or
indirectly request or advise a customer of the Company or its subsidiaries to
curtail or cancel such customer's business relationship with the Company.

            (g) If the Executive breaches, or threatens to commit a breach of,
any of the provisions contained in this Section (the "Restrictive Covenants"),
the Company shall have the following rights and remedies, each of which rights
and remedies shall be independent of the others and severally enforceable, and
each of which is in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity:

                 (i) the right and remedy to have the Restrictive Covenants
specifically enforced by any court of competent jurisdiction, it being agreed
that any breach or threatened breach of the Restrictive Covenants would cause
irreparable injury to the Company and that money damages would not provide an
adequate remedy to the Company; and

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                 (ii) the right and remedy to require the Executive to account
for and pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits derived or received by the Executive as the result
of any action constituting a breach of the Restrictive Covenants.

         5. Miscellaneous.

            (a) Definitions. For purposes of this Agreement, the terms "Cause",
"Without Cause", "Good Reason", "Change Of Control" and "Disability" shall have
the meaning set forth in Exhibit A attached hereto.

            (b) Certain Additional Payments by the Company. The Company hereby
agrees to the terms and conditions of Exhibit B attached hereto.

            (c) Successors; Binding Agreement. In the event of any merger,
consolidation or transfer of assets, the provision of this Agreement shall bind
and inure to the benefit of the surviving or resulting corporation, or the
corporation to which such assets have been transferred, as the case may be. The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by written agreement, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. The Company's failure to obtain such agreement prior to the effectiveness
of any such succession shall entitle the Executive to terminate his employment
hereunder for Good Reason.

            (d) Attorney's Fees. All reasonable legal fees and costs incurred by
the Executive in connection with the resolution of any dispute or controversy
under or in connection with this Agreement shall be reimbursed by the Company
promptly upon the Executive's incurrence thereof plus interest at ten percent
(10.0%) per annum from the date of any such incurrence; provided, however, that
the Company shall not be obligated to make such payment where the dispute or
controversy is finally determined in favor of the Company. Also, until paid, all
past due amounts required to be paid by the Company hereunder shall bear
interest at a rate of ten percent (10.0%) per annum.

            (e) Governing Law. This Agreement shall be governed, construed,
interpreted, and enforced in accordance with the substantive laws of the State
of Illinois.

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         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

                                            PACKAGING DYNAMICS CORPORATION

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

                                                /s/ Phillip D. Harris
                                                ---------------------
                                                    Phil Harris

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                                    Exhibit A
                                       to
                   Severance and Change Of Control Agreement

         The term "Cause" shall mean and include (a) chronic alcoholism or drug
addition, (b) deliberate misappropriation of any material amount of money or
other assets or properties of the Company or any affiliate or successor thereof,
(c) except where the nonperformance is caused by the illness or other similar
incapacity or disability of the Executive, gross and continuing neglect in the
substantial performance of duties reasonably assigned to the Executive that is
not corrected promptly upon receipt by the Executive of written notice delivered
at the direction of the Company specifically identifying the manner in which it
is alleged that the Executive has not substantially performed his duties, (d)
any willful and material breach of any of the terms of this Agreement except
where the breach is caused by the illness or other similar incapacity or
disability of the Executive, (e) conviction of a misdemeanor involving moral
turpitude or conviction of a felony, (f) death of the Executive, or (g) a
permanent disability of the Executive that entitles the Executive to receive
benefits under the Company's disability insurance program ("Disability").

         The term "Without Cause" shall mean termination by the Company for any
reason other than "Cause".

         The term "Good Reason" shall mean the continuation of any of the
following (without the Executive's express prior written consent) after written
notice provided by the Executive and the failure by the Company to remedy such
event or condition within thirty (30) days after receipt of such notice:

            (a) A reduction in the Executive's base salary, as in effect
pursuant to Section 1(a);

            (b) A reduction of or failure by the Company to pay to the Executive
any bonus which is payable pursuant to Section 1(b);

            (c) A failure by the Company to provide, on terms no less favorable
to the Executive than the terms offered to other senior executives of the
Company, any benefit or compensation plan (including any pension, profit
sharing, life insurance, health, accidental death or dismemberment or disability
plan), or any substantially similar benefit or compensation plan, which has been
made available to such other senior executives; provided, however, that nothing
herein shall be construed to mean that the Company shall be constrained from
amending or eliminating any benefit or compensation plan as such is applied to
the Executive and to other senior executives of the Company;

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            (d) The assignment to the Executive of any duties materially
inconsistent with the Executive's current position with the Company or the
material reduction or elimination of any of the Executive's duties which has the
effect of diminishing the Executive's responsibilities or authority;

            (e) A change in the Executive's title;

            (f) Failure by the Company to obtain, in accordance with Section
5(c), the written agreement of any successor in interest to the business of the
Company to assume and perform the obligations of the Company under this
Agreement;

            (g) The relocation of the Executive's principal place of employment
to a location more than fifty miles from the Executive's currently existing
place of employment; or

            (h) Any other material breach of this Agreement by the Company.

         Anything in this Agreement to the contrary notwithstanding, a
termination by the Executive for any reason during the period of three (3)
months which begins six (6) months after a Change Of Control shall be deemed to
be a termination for Good Reason for all purposes of this Agreement.

         The term "Change Of Control" shall mean the acquisition by any person
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of fifty percent (50%) or more of the outstanding interests or
outstanding voting securities of the Company; provided, however, that for
purposes of this subsection (i), the following acquisitions shall not constitute
a Change Of Control: (A) any acquisition directly from the Company, (B) any
acquisition by the Company, (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (d) any acquisition by Packaging Investors,
L.L.P., DCBS Investors, L.L.P., CB Investors, L.L.P. or any of their direct or
indirect partners, members, shareholders or affiliates or any entity controlled
by any one or more of them.

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                                    Exhibit B
                                       to
                    Severance and Change Of Control Agreement

            (a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Exhibit B) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), or if any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, being hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.

            (b) Subject to the provisions of paragraph (c) below, all
determinations required to be made under this Exhibit B, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by a nationally recognized certified public accounting firm designated by the
Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within fifteen (15) business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting a Change of Control, the Executive may appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). The Accounting Firm shall assist the Executive with the
preparation and filing of any income tax return required of the Executive which
relates to the period or periods in which Executive received a Payment or a
Gross-Up Payment. All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Exhibit B, shall be paid by the Company to the Executive within five (5) days of
the receipt of the Accounting Firm's

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determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to paragraph (c) below and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.

            (c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of a Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty
(30)-day period following the date on which the Executive gives such notice to
the Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:

                 (i) Give the Company any information reasonably requested by
the Company relating to such claim,

                 (ii) Take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,

                 (iii) Cooperate with the Company in good faith in order
effectively to contest such claim, and

                 (iv) Permit the Company to participate in any proceedings
relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without

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limitation on the foregoing provisions of this paragraph (c), the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax claimed and
sue for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

                 (d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to paragraph (c) above, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of paragraph (c)
above) promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
paragraph (c) above, a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of any Gross-Up
Payment required to be paid.

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                    SEVERANCE AND CHANGE OF CONTROL AGREEMENT

         THIS AGREEMENT is made as of January 23, 2003 by and between Packaging
Dynamics Corporation (the "Company") and Frank V. Tannura (the "Executive").

         The parties hereto, intending to be legally bound hereby, agree as
follows:

         1. Position and Compensation. The Executive currently is serving as
Chairman of the Company and is receiving the following compensation (the
"Compensation") for his services: (a) the base salary in effect on the date
hereof (which amount may be increased as the Company may determine and such
increased rate of base salary shall thereafter constitute the Executive's base
salary for all purposes of this Agreement), (b) an annual performance bonus
under the Company's Senior Management Incentive Compensation Plan equal to the
percentage (in effect on the date hereof) of the Executive's base salary, and
(c) participation in all of the Company's employee benefits plans, including
without limitation, retirement and pension plans, incentive compensation plans
(including the 2002 Long-term Incentive Stock Plan), life insurance plans,
dental plans, medical plans and automobile allowance plans which are, from time
to time, made available by the Company to its executive officers, subject to the
terms of such plans, with the Executive's participation to be on terms no less
favorable to the Executive than the terms provided to other similar executives.

         2. Compensation Upon Termination. The Executive shall be entitled to
the following Compensation from the Company upon termination of employment:

            (a) Termination for "Cause" or without "Good Reason". In the event
of a termination of the Executive's employment by the Company for "Cause" or by
the Executive without "Good Reason", the Executive shall be entitled to receive
the Compensation specified in Section 1 through the date of termination plus any
unpaid performance bonus for any prior fiscal year.

            (b) Upon Termination "Without Cause" or for "Good Reason". In the
event that the Executive's employment is terminated by the Company "Without
Cause" or by the Executive for "Good Reason", then the Executive shall be
entitled to receive:

                 (i) Compensation due the Executive through the date of
termination (including, without limitation, any unpaid

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performance bonus for the prior fiscal year);

                 (ii) a lump sum payable on the date of termination equal to (A)
one (1) times the sum of the Executive's base salary and target bonus, each as
in effect immediately prior to the date of termination (or, if higher, in effect
immediately prior to the first occurrence or circumstance constituting Good
Reason), or (B) two (2) times the sum of such amounts if such termination occurs
on or after a Change Of Control and on or before the second anniversary date of
such Change Of Control;

                 (iii) the continuation for the Executive and his dependents of
the medical and dental benefits described in Section 1(c) or the provision of
equivalent benefits until the earlier of (x) the first anniversary of the date
of termination (or the second anniversary of such date if such termination
occurs on or after a Change Of Control and on or before the second anniversary
date of such Change Of Control) or (y) with respect to the medical benefits, the
date upon which the Executive begins to be covered by medical insurance with a
new employer; provided, that the Executive's medical coverage with the Company
shall be discontinued upon subsequent employment only to the extent that any
pre-existing medical conditions are covered under the new employer's medical
plan (for purposes of determining the period of continuation coverage to which
the Executive or any of his dependents is entitled pursuant to Section 4980B of
the Code (or any successor provision thereto) under any group health plan
maintained by the Company or its Affiliates, the Executive shall be considered
to have remained employed until the termination of the above-described
coverage);

                 (iv) if such termination occurs on or after (or within close
proximity of) a Change Of Control, the acceleration of vesting under the
Company's 2002 Long-Term Incentive Stock Plan; and

                 (v) if such termination occurs on or after (or within close
proximity of) a Change Of Control, outplacement services for a period of one (1)
year, or, if earlier, until the first acceptance by the Executive of an offer of
employment, in an amount not to exceed $25,000.

         3. No Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement in connection with or
following termination of employment by seeking other employment or otherwise,
nor shall any amounts provided herein be reduced by any compensation earned by
the Executive as the result of employment by another employer after termination
of the Executive's employment hereunder.

         4. Non-Compete Covenants. (a) In consideration of the premises and the
mutual covenants contained herein, the Executive

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shall not during the Restricted Period (as hereinafter defined), in the United
States, Canada or any other place where the Company and its affiliates conduct
substantial manufacturing operations relating to the Company's businesses,
directly or indirectly (except in the Executive's capacity as an officer of the
Company or any of its affiliates), (i) engage or participate in any of the
Company's principal businesses; (ii) enter the employ of, or render any other
services to, any person engaged in any of the Company's principal businesses; or
(iii) become interested in any such person in any capacity, including, without
limitation, as an individual, partner, shareholder, lender, officer, director,
principal, agent, consultant, advisor or trustee; provided, however, that the
Executive may own, directly or indirectly, solely as an investment, securities
of any person traded on any national securities exchange or listed on the
National Association of Securities Dealers Automated Quotation System if the
Executive is not a controlling person of, or a member of a group which controls,
such person and the Executive does not, directly or indirectly, own five percent
(5.0%) or more of any class of equity securities, or securities convertible into
or exercisable or exchangeable for five percent (5.0%) or more of any class of
equity securities, of such person. As used herein, the "Restricted Period" shall
mean a period commencing on the date hereof and terminating upon the first
anniversary date of such termination of employment. The Company and the
Executive hereby agree that the non-compete obligations contained in this
Section 4(a) shall supercede and control over any other similar obligations
contained in any other agreements or documents which such other obligations
shall have no force or effect.

            (b) The Executive acknowledges that the Company has a legitimate and
continuing proprietary interest in the protection of its confidential
information and that it has invested substantial sums and will continue to
invest substantial sums to develop, maintain and protect such confidential
information. The Executive agrees that during and after the Restricted Period,
the Executive shall keep secret and retain in strictest confidence and shall not
use for the benefit of himself or others all confidential information directly
relating to the Company's businesses learned by the Executive heretofore or
hereafter, unless otherwise in the public domain other than as a result of
disclosure by the Executive or previously known by the Executive or obtained by
the Executive independent of the Company's confidential information.

            (c) The Executive acknowledges that all memoranda, notes, lists,
records, engineering drawings, technical specifications and related documents
and other documents or papers (and all copies thereof) relating to the Company,
including such items stored in computer memories, microfiche or by any other
means relating to the Company and its affiliates, made or compiled by or on
behalf of the Executive during his

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<PAGE>

employment or made available to the Executive relating to the Company, its
affiliates or any entity which may hereafter become an affiliate thereof, shall
be the property of the Company and shall be delivered to the Company promptly
upon the termination of the Executive's employment with the Company or at any
other time upon request.

            (d) The Executive agrees that any inventions, discoveries,
improvements, ideas, concepts or original works of authorship relating directly
to the Company's businesses, including without limitation, computer apparatus,
programs and manufacturing techniques, whether or not protectable by patent or
copyright, that have been originated, developed or reduced to practice by the
Executive alone or jointly with others during the Executive's employment with
the Company shall be the property of and belong exclusively to the Company. The
Executive shall promptly and fully disclose to the Company the origination or
development by the Executive of any such material and shall provide the Company
with any information that it may reasonably request about such material.

            (e) During the Restricted Period, the Executive shall not, directly
or indirectly, (i) hire or solicit, or cause others to hire or solicit, for
employment by any person other than the Company, or retain as a consultant,
advisor, agent, representative or in any other capacity whatsoever, or cause
others to do any of the foregoing, any person employed by the Company or its
affiliates or successors within the two (2) years preceding the Executive's
hiring or retention of such person or solicitation of such person, or (ii)
encourage any such employee to leave his employment.

            (f) During the Restricted Period, the Executive shall not, except by
reason of and in his capacity as an officer of the Company, directly or
indirectly request or advise a customer of the Company or its subsidiaries to
curtail or cancel such customer's business relationship with the Company.

            (g) If the Executive breaches, or threatens to commit a breach of,
any of the provisions contained in this Section (the "Restrictive Covenants"),
the Company shall have the following rights and remedies, each of which rights
and remedies shall be independent of the others and severally enforceable, and
each of which is in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity:

                 (i) the right and remedy to have the Restrictive Covenants
specifically enforced by any court of competent jurisdiction, it being agreed
that any breach or threatened breach of the Restrictive Covenants would cause
irreparable injury to the Company and that money damages would not provide an
adequate remedy to the Company; and

                                                                               4
<PAGE>

                 (ii) the right and remedy to require the Executive to account
for and pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits derived or received by the Executive as the result
of any action constituting a breach of the Restrictive Covenants.

         5. Miscellaneous.

            (a) Definitions. For purposes of this Agreement, the terms "Cause",
"Without Cause", "Good Reason", "Change Of Control" and "Disability" shall have
the meaning set forth in Exhibit A attached hereto.

            (b) Certain Additional Payments by the Company. The Company hereby
agrees to the terms and conditions of Exhibit B attached hereto.

            (c) Successors; Binding Agreement. In the event of any merger,
consolidation or transfer of assets, the provision of this Agreement shall bind
and inure to the benefit of the surviving or resulting corporation, or the
corporation to which such assets have been transferred, as the case may be. The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by written agreement, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. The Company's failure to obtain such agreement prior to the effectiveness
of any such succession shall entitle the Executive to terminate his employment
hereunder for Good Reason.

            (d) Attorney's Fees. All reasonable legal fees and costs incurred by
the Executive in connection with the resolution of any dispute or controversy
under or in connection with this Agreement shall be reimbursed by the Company
promptly upon the Executive's incurrence thereof plus interest at ten percent
(10.0%) per annum from the date of any such incurrence; provided, however, that
the Company shall not be obligated to make such payment where the dispute or
controversy is finally determined in favor of the Company. Also, until paid, all
past due amounts required to be paid by the Company hereunder shall bear
interest at a rate of ten percent (10.0%) per annum.

            (e) Governing Law. This Agreement shall be governed, construed,
interpreted, and enforced in accordance with the substantive laws of the State
of Illinois.

                                                                               5
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

                                            PACKAGING DYNAMICS CORPORATION

                                            By: /s/ Phillip D. Harris
                                                ---------------------

                                                /s/ Frank V. Tannura
                                                ---------------------
                                                    Frank V. Tannura

                                                                               6

<PAGE>

                                    Exhibit A
                                       to
                    Severance and Change Of Control Agreement

         The term "Cause" shall mean and include (a) chronic alcoholism or drug
addition, (b) deliberate misappropriation of any material amount of money or
other assets or properties of the Company or any affiliate or successor thereof,
(c) except where the nonperformance is caused by the illness or other similar
incapacity or disability of the Executive, gross and continuing neglect in the
substantial performance of duties reasonably assigned to the Executive that is
not corrected promptly upon receipt by the Executive of written notice delivered
at the direction of the Company specifically identifying the manner in which it
is alleged that the Executive has not substantially performed his duties, (d)
any willful and material breach of any of the terms of this Agreement except
where the breach is caused by the illness or other similar incapacity or
disability of the Executive, (e) conviction of a misdemeanor involving moral
turpitude or conviction of a felony, (f) death of the Executive, or (g) a
permanent disability of the Executive that entitles the Executive to receive
benefits under the Company's disability insurance program ("Disability").

         The term "Without Cause" shall mean termination by the Company for any
reason other than "Cause".

         The term "Good Reason" shall mean the continuation of any of the
following (without the Executive's express prior written consent) after written
notice provided by the Executive and the failure by the Company to remedy such
event or condition within thirty (30) days after receipt of such notice:

            (a) A reduction in the Executive's base salary, as in effect
pursuant to Section 1(a);

            (b) A reduction of or failure by the Company to pay to the Executive
any bonus which is payable pursuant to Section 1(b);

            (c) A failure by the Company to provide, on terms no less favorable
to the Executive than the terms offered to other senior executives of the
Company, any benefit or compensation plan (including any pension, profit
sharing, life insurance, health, accidental death or dismemberment or disability
plan), or any substantially similar benefit or compensation plan, which has been
made available to such other senior executives; provided, however, that nothing
herein shall be construed to mean that the Company shall be constrained from
amending or eliminating any benefit or compensation plan as such is applied to
the Executive and to other senior executives of the Company;

                                                                               i
<PAGE>

            (d) The assignment to the Executive of any duties materially
inconsistent with the Executive's current position with the Company or the
material reduction or elimination of any of the Executive's duties which has the
effect of diminishing the Executive's responsibilities or authority;

            (e) A change in the Executive's title;

            (f) Failure by the Company to obtain, in accordance with Section
5(c), the written agreement of any successor in interest to the business of the
Company to assume and perform the obligations of the Company under this
Agreement;

            (g) The relocation of the Executive's principal place of employment
to a location more than fifty miles from the Executive's currently existing
place of employment; or

            (h) Any other material breach of this Agreement by the Company.

         Anything in this Agreement to the contrary notwithstanding, a
termination by the Executive for any reason during the period of three (3)
months which begins six (6) months after a Change Of Control shall be deemed to
be a termination for Good Reason for all purposes of this Agreement.

         The term "Change Of Control" shall mean the acquisition by any person
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of fifty percent (50%) or more of the outstanding interests or
outstanding voting securities of the Company; provided, however, that for
purposes of this subsection (i), the following acquisitions shall not constitute
a Change Of Control: (A) any acquisition directly from the Company, (B) any
acquisition by the Company, (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (d) any acquisition by Packaging Investors,
L.L.P., DCBS Investors, L.L.P., CB Investors, L.L.P. or any of their direct or
indirect partners, members, shareholders or affiliates or any entity controlled
by any one or more of them.

                                                                              ii
<PAGE>

                                    Exhibit B
                                       to
                    Severance and Change Of Control Agreement

            (a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Exhibit B) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), or if any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, being hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.

            (b) Subject to the provisions of paragraph (c) below, all
determinations required to be made under this Exhibit B, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by a nationally recognized certified public accounting firm designated by the
Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within fifteen (15) business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting a Change of Control, the Executive may appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). The Accounting Firm shall assist the Executive with the
preparation and filing of any income tax return required of the Executive which
relates to the period or periods in which Executive received a Payment or a
Gross-Up Payment. All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Exhibit B, shall be paid by the Company to the Executive within five (5) days of
the receipt of the Accounting Firm's

                                                                               i
<PAGE>

determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to paragraph (c) below and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.

            (c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of a Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty
(30)-day period following the date on which the Executive gives such notice to
the Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:

                 (i) Give the Company any information reasonably requested by
the Company relating to such claim,

                 (ii) Take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,

                 (iii) Cooperate with the Company in good faith in order
effectively to contest such claim, and

                 (iv) Permit the Company to participate in any proceedings
relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without

                                                                              ii
<PAGE>

limitation on the foregoing provisions of this paragraph (c), the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax claimed and
sue for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

            (d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to paragraph (c) above, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of paragraph (c) above) promptly
pay to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to paragraph (c) above,
a determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of any Gross-Up Payment required
to be paid.

                                                                             iii<PAGE>
                                                                   EXHIBIT 10.24

                    SEVERANCE AND CHANGE OF CONTROL AGREEMENT

         THIS AGREEMENT is made as of January 23, 2003 by and between Packaging
Dynamics Corporation (the "Company") and Mr. Hank Newell (the "Executive").

         The parties hereto, intending to be legally bound hereby, agree as
follows:

         1. Position and Compensation. The Executive currently is serving as
Vice President and Chief Financial Officer of the Company and is receiving the
following compensation (the "Compensation") for his services: (a) the base
salary in effect on the date hereof (which amount may be increased as the
Company may determine and such increased rate of base salary shall thereafter
constitute the Executive's base salary for all purposes of this Agreement), (b)
an annual performance bonus under the Company's Senior Management Incentive
Compensation Plan equal to the percentage (in effect on the date hereof) of the
Executive's base salary, and (c) participation in all of the Company's employee
benefits plans, including without limitation, retirement and pension plans,
incentive compensation plans (including the 2002 Long-Term Incentive Stock
Compensation Plan), life insurance plans, dental plans, medical plans and
automobile allowance plans which are, from time to time, made available by the
Company to its executive officers, subject to the terms of such plans, with the
Executive's participation to be on terms no less favorable to the Executive than
the terms provided to other similar executives.

         2. Compensation Upon Termination. The Executive shall be entitled to
the following Compensation from the Company upon termination of employment:

            (a) Termination for "Cause" or without "Good Reason". In the event
of a termination of the Executive's employment by the Company for "Cause" or by
the Executive without "Good Reason", the Executive shall be entitled to receive
the Compensation specified in Section 1 through the date of termination plus any
unpaid performance bonus for any prior fiscal year.

            (b) Upon Termination "Without Cause" or for "Good Reason". In the
event that the Executive's employment is terminated by the Company "Without
Cause" or by the Executive for "Good Reason", then the Executive shall be
entitled to receive:

                 (i) Compensation due the Executive through the

                                                                               1

<PAGE>

date of termination (including, without limitation, any unpaid performance bonus
for the prior fiscal year);

                 (ii) a lump sum payable on the date of termination equal to one
(1) times the sum of the Executive's base salary as in effect immediately prior
to the date of termination (or, if higher, in effect immediately prior to the
first occurrence or circumstance constituting Good Reason);

                 (iii) the continuation for the Executive and his dependents of
the medical and dental benefits described in Section 1(c) or the provision of
equivalent benefits until the earlier of (x) the first anniversary of the date
of termination or (y) with respect to the medical benefits, the date upon which
the Executive begins to be covered by medical insurance with a new employer;
provided, that the Executive's medical coverage with the Company shall be
discontinued upon subsequent employment only to the extent that any pre-existing
medical conditions are covered under the new employer's medical plan (for
purposes of determining the period of continuation coverage to which the
Executive or any of his dependents is entitled pursuant to Section 4980B of the
Code (or any successor provision thereto) under any group health plan maintained
by the Company or its Affiliates, the Executive shall be considered to have
remained employed until the first anniversary of his Termination Date);

                 (iv) if such termination occurs on or after (or within close
proximity of) a Change Of Control, the acceleration of vesting under the
Company's 2002 Long-Term Incentive Compensation Plan; and

                 (v) if such termination occurs on or after (or within close
proximity of) a Change Of Control, outplacement services for a period of one (1)
year, or, if earlier, until the first acceptance by the Executive of an offer of
employment, in an amount not to exceed $25,000.

         3. No Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement in connection with or
following termination of employment by seeking other employment or otherwise,
nor shall any amounts provided herein be reduced by any compensation earned by
the Executive as the result of employment by another employer after termination
of the Executive's employment hereunder.

         4. Non-Compete Covenants. (a) In consideration of the premises and the
mutual covenants contained herein, the Executive shall not during the Restricted
Period (as hereinafter defined), in the United States, Canada or any other place
where the Company and its affiliates conduct substantial manufacturing
operations relating to the Company's businesses, directly or indirectly (except
in the Executive's capacity as an officer of the Company

                                                                               2
<PAGE>

or any of its affiliates), (i) engage or participate in any of the Company's
principal businesses; (ii) enter the employ of, or render any other services to,
any person engaged in any of the Company's principal businesses; or (iii) become
interested in any such person in any capacity, including, without limitation, as
an individual, partner, shareholder, lender, officer, director, principal,
agent, consultant, advisor or trustee; provided, however, that the Executive may
own, directly or indirectly, solely as an investment, securities of any person
traded on any national securities exchange or listed on the National Association
of Securities Dealers Automated Quotation System if the Executive is not a
controlling person of, or a member of a group which controls, such person and
the Executive does not, directly or indirectly, own five percent (5.0%) or more
of any class of equity securities, or securities convertible into or exercisable
or exchangeable for five percent (5.0%) or more of any class of equity
securities, of such person. As used herein, the "Restricted Period" shall mean a
period commencing on the date hereof and terminating upon the first anniversary
date of such termination of employment. The Company and the Executive hereby
agree that the non-compete obligations contained in this Section 4(a) shall
supercede and control over any other similar obligations contained in any other
agreements or documents which such other obligations shall have no force or
effect.

            (b) The Executive acknowledges that the Company has a legitimate and
continuing proprietary interest in the protection of its confidential
information and that it has invested substantial sums and will continue to
invest substantial sums to develop, maintain and protect such confidential
information. The Executive agrees that during and after the Restricted Period,
the Executive shall keep secret and retain in strictest confidence and shall not
use for the benefit of himself or others all confidential information directly
relating to the Company's businesses learned by the Executive heretofore or
hereafter, unless otherwise in the public domain other than as a result of
disclosure by the Executive or previously known by the Executive or obtained by
the Executive independent of the Company's confidential information.

            (c) The Executive acknowledges that all memoranda, notes, lists,
records, engineering drawings, technical specifications and related documents
and other documents or papers (and all copies thereof) relating to the Company,
including such items stored in computer memories, microfiche or by any other
means relating to the Company and its affiliates, made or compiled by or on
behalf of the Executive during his employment or made available to the Executive
relating to the Company, its affiliates or any entity which may hereafter become
an affiliate thereof, shall be the property of the Company and shall be
delivered to the Company promptly upon the termination of the Executive's
employment with the Company or at any other

                                                                               3
<PAGE>

time upon request.

            (d) The Executive agrees that any inventions, discoveries,
improvements, ideas, concepts or original works of authorship relating directly
to the Company's businesses, including without limitation, computer apparatus,
programs and manufacturing techniques, whether or not protectable by patent or
copyright, that have been originated, developed or reduced to practice by the
Executive alone or jointly with others during the Executive's employment with
the Company shall be the property of and belong exclusively to the Company. The
Executive shall promptly and fully disclose to the Company the origination or
development by the Executive of any such material and shall provide the Company
with any information that it may reasonably request about such material.

            (e) During the Restricted Period, the Executive shall not, directly
or indirectly, (i) hire or solicit, or cause others to hire or solicit, for
employment by any person other than the Company, or retain as a consultant,
advisor, agent, representative or in any other capacity whatsoever, or cause
others to do any of the foregoing, any person employed by the Company or its
affiliates or successors within the two (2) years preceding the Executive's
hiring or retention of such person or solicitation of such person, or (ii)
encourage any such employee to leave his employment.

            (f) During the Restricted Period, the Executive shall not, except by
reason of and in his capacity as an officer of the Company, directly or
indirectly request or advise a customer of the Company or its subsidiaries to
curtail or cancel such customer's business relationship with the Company.

            (g) If the Executive breaches, or threatens to commit a breach of,
any of the provisions contained in this Section (the "Restrictive Covenants"),
the Company shall have the following rights and remedies, each of which rights
and remedies shall be independent of the others and severally enforceable, and
each of which is in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity:

                 (i) the right and remedy to have the Restrictive Covenants
specifically enforced by any court of competent jurisdiction, it being agreed
that any breach or threatened breach of the Restrictive Covenants would cause
irreparable injury to the Company and that money damages would not provide an
adequate remedy to the Company; and

                 (ii) the right and remedy to require the Executive to account
for and pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits derived or received by the Executive as the result
of any action

                                                                               4
<PAGE>

constituting a breach of the Restrictive Covenants.

         5. Miscellaneous.

            (a) Definitions. For purposes of this Agreement, the terms "Cause",
"Without Cause", "Good Reason", "Change Of Control" and "Disability" shall have
the meaning set forth in Exhibit A attached hereto.

            (b) Certain Additional Payments by the Company. The Company hereby
agrees to the terms and conditions of Exhibit B attached hereto.

            (c) Successors; Binding Agreement. In the event of any merger,
consolidation or transfer of assets, the provision of this Agreement shall bind
and inure to the benefit of the surviving or resulting corporation, or the
corporation to which such assets have been transferred, as the case may be. The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by written agreement, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. The Company's failure to obtain such agreement prior to the effectiveness
of any such succession shall entitle the Executive to terminate his employment
hereunder for Good Reason.

            (d) Attorney's Fees. All reasonable legal fees and costs incurred by
the Executive in connection with the resolution of any dispute or controversy
under or in connection with this Agreement shall be reimbursed by the Company
promptly upon the Executive's incurrence thereof plus interest at ten percent
(10.0%) per annum from the date of any such incurrence; provided, however, that
the Company shall not be obligated to make such payment where the dispute or
controversy is finally determined in favor of the Company. Also, until paid, all
past due amounts required to be paid by the Company hereunder shall bear
interest at a rate of ten percent (10.0%) per annum.

            (e) Governing Law. This Agreement shall be governed, construed,
interpreted, and enforced in accordance with the substantive laws of the State
of Illinois.

                                                                               5
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

                                            PACKAGING DYNAMICS CORPORATION

                                            By: /s/ Phillip D. Harris
                                                ---------------------

                                                /s/ Hank Newell
                                                ---------------------
                                                    Hank Newell

                                                                               6

<PAGE>

                                    Exhibit A
                                       to
                    Severance and Change Of Control Agreement

         The term "Cause" shall mean and include (a) chronic alcoholism or drug
addition, (b) deliberate misappropriation of any material amount of money or
other assets or properties of the Company or any affiliate or successor thereof,
(c) except where the nonperformance is caused by the illness or other similar
incapacity or disability of the Executive, gross and continuing neglect in the
substantial performance of duties reasonably assigned to the Executive that is
not corrected promptly upon receipt by the Executive of written notice delivered
at the direction of the Company specifically identifying the manner in which it
is alleged that the Executive has not substantially performed his duties, (d)
any willful and material breach of any of the terms of this Agreement except
where the breach is caused by the illness or other similar incapacity or
disability of the Executive, (e) conviction of a misdemeanor involving moral
turpitude or conviction of a felony, (f) death of the Executive, or (g) a
permanent disability of the Executive that entitles the Executive to receive
benefits under the Company's disability insurance program ("Disability").

         The term "Without Cause" shall mean termination by the Company for any
reason other than "Cause".

         The term "Good Reason" shall mean the continuation of any of the
following (without the Executive's express prior written consent) after written
notice provided by the Executive and the failure by the Company to remedy such
event or condition within thirty (30) days after receipt of such notice:

            (a) A reduction in the Executive's base salary, as in effect
pursuant to Section 1(a);

            (b) A reduction of or failure by the Company to pay to the Executive
any bonus which is payable pursuant to Section 1(b);

            (c) A failure by the Company to provide, on terms no less favorable
to the Executive than the terms offered to other senior executives of the
Company, any benefit or compensation plan (including any pension, profit
sharing, life insurance, health, accidental death or dismemberment or disability
plan), or any substantially similar benefit or compensation plan, which has been
made available to such other senior executives; provided, however, that nothing
herein shall be construed to mean that the Company shall be constrained from
amending or eliminating any benefit or compensation plan as such is applied to
the Executive and to other senior executives of the Company;

                                                                               i
<PAGE>

            (d) The assignment to the Executive of any duties materially
inconsistent with the Executive's current position with the Company or the
material reduction or elimination of any of the Executive's duties which has the
effect of diminishing the Executive's responsibilities or authority;

            (e) A change in the Executive's title;

            (f) Failure by the Company to obtain, in accordance with Section
5(c), the written agreement of any successor in interest to the business of the
Company to assume and perform the obligations of the Company under this
Agreement;

            (g) The relocation of the Executive's principal place of employment
to a location more than fifty miles from the Executive's currently existing
place of employment; or

            (h) Any other material breach of this Agreement by the Company.

         The term "Change Of Control" shall mean the acquisition by any person
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of fifty percent (50%) or more of the outstanding interests or
outstanding voting securities of the Company; provided, however, that for
purposes of this subsection (i), the following acquisitions shall not constitute
a Change Of Control: (A) any acquisition directly from the Company, (B) any
acquisition by the Company, (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (D) any acquisition by Packaging Investors,
L.L.P., DCBS Investors, L.L.P., CB Investors, L.L.P. or any of their direct or
indirect partners, members, shareholders or affiliates or any entity controlled
by any one or more of them.

                                                                              ii
<PAGE>

                                    Exhibit B
                                       to
                    Severance and Change Of Control Agreement

            (a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Exhibit B) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), or if any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, being hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.

            (b) Subject to the provisions of paragraph (c) below, all
determinations required to be made under this Exhibit B, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by a nationally recognized certified public accounting firm designated by the
Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within fifteen (15) business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting a Change of Control, the Executive may appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). The Accounting Firm shall assist the Executive with the
preparation and filing of any income tax return required of the Executive which
relates to the period or periods in which Executive received a Payment or a
Gross-Up Payment. All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Exhibit B, shall be paid by the Company to the Executive within five (5) days of
the receipt of the Accounting Firm's

                                                                               i
<PAGE>

determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to paragraph (c) below and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.

            (c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of a Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty
(30)-day period following the date on which the Executive gives such notice to
the Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:

                 (i) Give the Company any information reasonably requested by
the Company relating to such claim,

                 (ii) Take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,

                 (iii) Cooperate with the Company in good faith in order
effectively to contest such claim, and

                 (iv) Permit the Company to participate in any proceedings
relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without

                                                                              ii
<PAGE>

limitation on the foregoing provisions of this paragraph (c), the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax claimed and
sue for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

            (d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to paragraph (c) above, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of paragraph (c) above) promptly
pay to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to paragraph (c) above,
a determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of any Gross-Up Payment required
to be paid.

                                                                             iii
<PAGE>

                    SEVERANCE AND CHANGE OF CONTROL AGREEMENT

         THIS AGREEMENT is made as of January 23, 2003 by and between Packaging
Dynamics Corporation (the "Company") and Mr. Randy Van Antwerp (the
"Executive").

         The parties hereto, intending to be legally bound hereby, agree as
follows:

         1. Position and Compensation. The Executive currently is serving as
Vice President and General Manager of the Company and is receiving the following
compensation (the "Compensation") for his services: (a) the base salary in
effect on the date hereof (which amount may be increased as the Company may
determine and such increased rate of base salary shall thereafter constitute the
Executive's base salary for all purposes of this Agreement), (b) an annual
performance bonus under the Company's Senior Management Incentive Compensation
Plan equal to the percentage (in effect on the date hereof) of the Executive's
base salary, and (c) participation in all of the Company's employee benefits
plans, including without limitation, retirement and pension plans, incentive
compensation plans (including the 2002 Long-Term Incentive Stock Compensation
Plan), life insurance plans, dental plans, medical plans and automobile
allowance plans which are, from time to time, made available by the Company to
its executive officers, subject to the terms of such plans, with the Executive's
participation to be on terms no less favorable to the Executive than the terms
provided to other similar executives.

         2. Compensation Upon Termination. The Executive shall be entitled to
the following Compensation from the Company upon termination of employment:

            (a) Termination for "Cause" or without "Good Reason". In the event
of a termination of the Executive's employment by the Company for "Cause" or by
the Executive without "Good Reason", the Executive shall be entitled to receive
the Compensation specified in Section 1 through the date of termination plus any
unpaid performance bonus for any prior fiscal year.

            (b) Upon Termination "Without Cause" or for "Good Reason". In the
event that the Executive's employment is terminated by the Company "Without
Cause" or by the Executive for "Good Reason", then the Executive shall be
entitled to receive:

                 (i) Compensation due the Executive through the date of
termination (including, without limitation, any unpaid

                                                                               1

<PAGE>

performance bonus for the prior fiscal year);

                 (ii) a lump sum payable on the date of termination equal to one
(1) times the sum of the Executive's base salary as in effect immediately prior
to the date of termination (or, if higher, in effect immediately prior to the
first occurrence or circumstance constituting Good Reason);

                 (iii) the continuation for the Executive and his dependents of
the medical and dental benefits described in Section 1(c) or the provision of
equivalent benefits until the earlier of (x) the first anniversary of the date
of termination or (y) with respect to the medical benefits, the date upon which
the Executive begins to be covered by medical insurance with a new employer;
provided, that the Executive's medical coverage with the Company shall be
discontinued upon subsequent employment only to the extent that any pre-existing
medical conditions are covered under the new employer's medical plan (for
purposes of determining the period of continuation coverage to which the
Executive or any of his dependents is entitled pursuant to Section 4980B of the
Code (or any successor provision thereto) under any group health plan maintained
by the Company or its Affiliates, the Executive shall be considered to have
remained employed until the first anniversary of his Termination Date);

                 (iv) if such termination occurs on or after (or within close
proximity of) a Change Of Control, the acceleration of vesting under the
Company's 2002 Long-Term Incentive Compensation Plan; and

                 (v) if such termination occurs on or after (or within close
proximity of) a Change Of Control, outplacement services for a period of one (1)
year, or, if earlier, until the first acceptance by the Executive of an offer of
employment, in an amount not to exceed $25,000.

         3. No Mitigation. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement in connection with or
following termination of employment by seeking other employment or otherwise,
nor shall any amounts provided herein be reduced by any compensation earned by
the Executive as the result of employment by another employer after termination
of the Executive's employment hereunder.

         4. Non-Compete Covenants. (a) In consideration of the premises and the
mutual covenants contained herein, the Executive shall not during the Restricted
Period (as hereinafter defined), in the United States, Canada or any other place
where the Company and its affiliates conduct substantial manufacturing
operations relating to the Company's businesses, directly or indirectly (except
in the Executive's capacity as an officer of the Company or any of its
affiliates), (i) engage or participate in any of

                                                                               2
<PAGE>

the Company's principal businesses; (ii) enter the employ of, or render any
other services to, any person engaged in any of the Company's principal
businesses; or (iii) become interested in any such person in any capacity,
including, without limitation, as an individual, partner, shareholder, lender,
officer, director, principal, agent, consultant, advisor or trustee; provided,
however, that the Executive may own, directly or indirectly, solely as an
investment, securities of any person traded on any national securities exchange
or listed on the National Association of Securities Dealers Automated Quotation
System if the Executive is not a controlling person of, or a member of a group
which controls, such person and the Executive does not, directly or indirectly,
own five percent (5.0%) or more of any class of equity securities, or securities
convertible into or exercisable or exchangeable for five percent (5.0%) or more
of any class of equity securities, of such person. As used herein, the
"Restricted Period" shall mean a period commencing on the date hereof and
terminating upon the first anniversary date of such termination of employment.
The Company and the Executive hereby agree that the non-compete obligations
contained in this Section 4(a) shall supercede and control over any other
similar obligations contained in any other agreements or documents which such
other obligations shall have no force or effect.

            (b) The Executive acknowledges that the Company has a legitimate and
continuing proprietary interest in the protection of its confidential
information and that it has invested substantial sums and will continue to
invest substantial sums to develop, maintain and protect such confidential
information. The Executive agrees that during and after the Restricted Period,
the Executive shall keep secret and retain in strictest confidence and shall not
use for the benefit of himself or others all confidential information directly
relating to the Company's businesses learned by the Executive heretofore or
hereafter, unless otherwise in the public domain other than as a result of
disclosure by the Executive or previously known by the Executive or obtained by
the Executive independent of the Company's confidential information.

            (c) The Executive acknowledges that all memoranda, notes, lists,
records, engineering drawings, technical specifications and related documents
and other documents or papers (and all copies thereof) relating to the Company,
including such items stored in computer memories, microfiche or by any other
means relating to the Company and its affiliates, made or compiled by or on
behalf of the Executive during his employment or made available to the Executive
relating to the Company, its affiliates or any entity which may hereafter become
an affiliate thereof, shall be the property of the Company and shall be
delivered to the Company promptly upon the termination of the Executive's
employment with the Company or at any other time upon request.

                                                                               3
<PAGE>

            (d) The Executive agrees that any inventions, discoveries,
improvements, ideas, concepts or original works of authorship relating directly
to the Company's businesses, including without limitation, computer apparatus,
programs and manufacturing techniques, whether or not protectable by patent or
copyright, that have been originated, developed or reduced to practice by the
Executive alone or jointly with others during the Executive's employment with
the Company shall be the property of and belong exclusively to the Company. The
Executive shall promptly and fully disclose to the Company the origination or
development by the Executive of any such material and shall provide the Company
with any information that it may reasonably request about such material.

            (e) During the Restricted Period, the Executive shall not, directly
or indirectly, (i) hire or solicit, or cause others to hire or solicit, for
employment by any person other than the Company, or retain as a consultant,
advisor, agent, representative or in any other capacity whatsoever, or cause
others to do any of the foregoing, any person employed by the Company or its
affiliates or successors within the two (2) years preceding the Executive's
hiring or retention of such person or solicitation of such person, or (ii)
encourage any such employee to leave his employment.

            (f) During the Restricted Period, the Executive shall not, except by
reason of and in his capacity as an officer of the Company, directly or
indirectly request or advise a customer of the Company or its subsidiaries to
curtail or cancel such customer's business relationship with the Company.

            (g) If the Executive breaches, or threatens to commit a breach of,
any of the provisions contained in this Section (the "Restrictive Covenants"),
the Company shall have the following rights and remedies, each of which rights
and remedies shall be independent of the others and severally enforceable, and
each of which is in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity:

                 (i) the right and remedy to have the Restrictive Covenants
specifically enforced by any court of competent jurisdiction, it being agreed
that any breach or threatened breach of the Restrictive Covenants would cause
irreparable injury to the Company and that money damages would not provide an
adequate remedy to the Company; and

                 (ii) the right and remedy to require the Executive to account
for and pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits derived or received by the Executive as the result
of any action constituting a breach of the Restrictive Covenants.

                                                                               4
<PAGE>

         5. Miscellaneous.

            (a) Definitions. For purposes of this Agreement, the terms "Cause",
"Without Cause", "Good Reason", "Change Of Control" and "Disability" shall have
the meaning set forth in Exhibit A attached hereto.

            (b) Certain Additional Payments by the Company. The Company hereby
agrees to the terms and conditions of Exhibit B attached hereto.

            (c) Successors; Binding Agreement. In the event of any merger,
consolidation or transfer of assets, the provision of this Agreement shall bind
and inure to the benefit of the surviving or resulting corporation, or the
corporation to which such assets have been transferred, as the case may be. The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by written agreement, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place. The Company's failure to obtain such agreement prior to the effectiveness
of any such succession shall entitle the Executive to terminate his employment
hereunder for Good Reason.

            (d) Attorney's Fees. All reasonable legal fees and costs incurred by
the Executive in connection with the resolution of any dispute or controversy
under or in connection with this Agreement shall be reimbursed by the Company
promptly upon the Executive's incurrence thereof plus interest at ten percent
(10.0%) per annum from the date of any such incurrence; provided, however, that
the Company shall not be obligated to make such payment where the dispute or
controversy is finally determined in favor of the Company. Also, until paid, all
past due amounts required to be paid by the Company hereunder shall bear
interest at a rate of ten percent (10.0%) per annum.

            (e) Governing Law. This Agreement shall be governed, construed,
interpreted, and enforced in accordance with the substantive laws of the State
of Illinois.

                                                                               5
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

                                            PACKAGING DYNAMICS CORPORATION

                                            By: /s/ Phillip D. Harris
                                                ---------------------

                                                /s/ Randy Van Antwerp
                                                ---------------------
                                                    Randy Van Antwerp

                                                                               6
<PAGE>

                                    Exhibit A
                                       to
                    Severance and Change Of Control Agreement

         The term "Cause" shall mean and include (a) chronic alcoholism or drug
addition, (b) deliberate misappropriation of any material amount of money or
other assets or properties of the Company or any affiliate or successor thereof,
(c) except where the nonperformance is caused by the illness or other similar
incapacity or disability of the Executive, gross and continuing neglect in the
substantial performance of duties reasonably assigned to the Executive that is
not corrected promptly upon receipt by the Executive of written notice delivered
at the direction of the Company specifically identifying the manner in which it
is alleged that the Executive has not substantially performed his duties, (d)
any willful and material breach of any of the terms of this Agreement except
where the breach is caused by the illness or other similar incapacity or
disability of the Executive, (e) conviction of a misdemeanor involving moral
turpitude or conviction of a felony, (f) death of the Executive, or (g) a
permanent disability of the Executive that entitles the Executive to receive
benefits under the Company's disability insurance program ("Disability").

         The term "Without Cause" shall mean termination by the Company for any
reason other than "Cause".

         The term "Good Reason" shall mean the continuation of any of the
following (without the Executive's express prior written consent) after written
notice provided by the Executive and the failure by the Company to remedy such
event or condition within thirty (30) days after receipt of such notice:

            (a) A reduction in the Executive's base salary, as in effect
pursuant to Section 1(a);

            (b) A reduction of or failure by the Company to pay to the Executive
any bonus which is payable pursuant to Section 1(b);

            (c) A failure by the Company to provide, on terms no less favorable
to the Executive than the terms offered to other senior executives of the
Company, any benefit or compensation plan (including any pension, profit
sharing, life insurance, health, accidental death or dismemberment or disability
plan), or any substantially similar benefit or compensation plan, which has been
made available to such other senior executives; provided, however, that nothing
herein shall be construed to mean that the Company shall be constrained from
amending or eliminating any benefit or compensation plan as such is applied to
the Executive and to other senior executives of the Company;

                                                                               i
<PAGE>

            (d) The assignment to the Executive of any duties materially
inconsistent with the Executive's current position with the Company or the
material reduction or elimination of any of the Executive's duties which has the
effect of diminishing the Executive's responsibilities or authority;

            (e) A change in the Executive's title;

            (f) Failure by the Company to obtain, in accordance with Section
5(c), the written agreement of any successor in interest to the business of the
Company to assume and perform the obligations of the Company under this
Agreement;

            (g) The relocation of the Executive's principal place of employment
to a location more than fifty miles from the Executive's currently existing
place of employment; or

            (h) Any other material breach of this Agreement by the Company.

         The term "Change Of Control" shall mean the acquisition by any person
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of fifty percent (50%) or more of the outstanding interests or
outstanding voting securities of the Company; provided, however, that for
purposes of this subsection (i), the following acquisitions shall not constitute
a Change Of Control: (A) any acquisition directly from the Company, (B) any
acquisition by the Company, (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (D) any acquisition by Packaging Investors,
L.L.P., DCBS Investors, L.L.P., CB Investors, L.L.P. or any of their direct or
indirect partners, members, shareholders or affiliates or any entity controlled
by any one or more of them.

                                                                              ii

<PAGE>

                                    Exhibit B
                                       to
                    Severance and Change Of Control Agreement

            (a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Exhibit B) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), or if any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such interest and
penalties, being hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.

            (b) Subject to the provisions of paragraph (c) below, all
determinations required to be made under this Exhibit B, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by a nationally recognized certified public accounting firm designated by the
Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within fifteen (15) business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting a Change of Control, the Executive may appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). The Accounting Firm shall assist the Executive with the
preparation and filing of any income tax return required of the Executive which
relates to the period or periods in which Executive received a Payment or a
Gross-Up Payment. All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Exhibit B, shall be paid by the Company to the Executive within five (5) days of
the receipt of the Accounting Firm's

                                                                               i
<PAGE>

determination. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to paragraph (c) below and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.

            (c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of a Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten (10) business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty
(30)-day period following the date on which the Executive gives such notice to
the Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:

                 (i) Give the Company any information reasonably requested by
the Company relating to such claim,

                 (ii) Take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,

                 (iii) Cooperate with the Company in good faith in order
effectively to contest such claim, and

                 (iv) Permit the Company to participate in any proceedings
relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without

                                                                              ii

<PAGE>

limitation on the foregoing provisions of this paragraph (c), the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax claimed and
sue for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

                 (d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to paragraph (c) above, the Executive becomes
entitled to receive any refund with respect to such claim, the Executive shall
(subject to the Company's complying with the requirements of paragraph (c)
above) promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
paragraph (c) above, a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of any Gross-Up
Payment required to be paid.

                                                                             iii

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