Exhibit 10.26
PAPERWEIGHT DEVELOPMENT CORP.
SECURITY HOLDERS AGREEMENT
This SECURITY HOLDERS AGREEMENT (this "Agreement") is entered into as of
November 9, 2001, by and among PAPERWEIGHT DEVELOPMENT CORP., a Wisconsin
corporation (the "Company"), and APPLETON PAPERS INC. EMPLOYEE STOCK OWNERSHIP
TRUST (the "Trust"), which is the funding vehicle of the employee stock
ownership component of the Appleton Papers Retirement Savings and Employee Stock
Ownership Plan.
RECITALS
WHEREAS, the Trust owns 100% of the outstanding common stock of the
Company (the "Common Stock"); and
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Company acquired indirect ownership of 100% of the outstanding common stock
of Appleton Papers Inc., a Delaware corporation ("API"); and
WHEREAS, in connection with these transactions, the parties wish to
provide for the future voting of the shares of the Common Stock to elect and
maintain in office the members of the Board of Directors and to provide for
certain limitations on the future issuance of shares of the Company's capital
stock and the Company's direct or indirect acquisition of the assets or equity
securities of another natural person, corporation, limited liability company,
partnership, trust or other entity or enterprise (a "Person"), without the prior
written consent of the Trust as set forth below;
AGREEMENT
NOW, THEREFORE, the parties hereto mutually agree as follows:
1. VOTING.
1.1 Shares. The Trust agrees to hold all shares of the Common Stock
owned by the Trust as of the date hereof and any and all other
securities of the Company legally or beneficially acquired by the
Trust after the date hereof (collectively, the "Shares") subject
to, and to vote the Shares in accordance with, the provisions of
this Agreement.
1.2 Election of Directors.
(a) Except to the extent otherwise provided in Section 4.4, on all
matters relating to the election of directors of the Company by the
Trust, the Trust agrees to vote all Shares held by the Trust
(pursuant to an action by written consent or otherwise) so as to
elect and maintain in office the following members to the Company's
Board of Directors:
(i) prior to January 1, 2003, three (3) individuals nominated by
the Trust, three (3) individuals nominated by the Chief
Executive Officer of the Company and one (1) individual
nominated by Joint Nomination (as defined below);
(ii) between January 1, 2003, and December 31, 2003, two (2)
individuals nominated by the Trust, three (3) individuals
nominated by the Chief Executive Officer of the Company and
two (2) individuals nominated by Joint Nomination;
(iii) between January 1, 2004, and December 31, 2004, one (1)
individual nominated by the Trust, three (3) individuals
nominated by the Chief Executive Officer of the Company and
three (3) individuals nominated by Joint Nomination; and
(iv) on and after January 1, 2005, four (4) individuals nominated
by the Chief Executive Officer of the Company and three (3)
individuals be nominated by Joint Nomination.
(b) Except to the extent otherwise provided in Section 4.4, (i) any
vote taken to remove any director elected pursuant to any subsection
of Section 1.2(a), or to fill any vacancy created by the resignation
or death of a director elected pursuant to any subsection of Section
1.2(a), shall also be subject to the provisions of the applicable
subsection of Section 1.2(a), and (ii) a director nominated by Joint
Nomination may only be removed by mutual agreement of the Trust and
the Chief Executive Officer of the Company.
(c) For the purposes of this Agreement, individuals nominated by
"Joint Nomination" for election as directors of the Company shall be
individuals proposed by the Trust and accepted (including acceptance
by default pursuant to the penultimate sentence of this Section
1.2(c)) by the Chief Executive Officer of the Company in the manner
set forth in this Section 1.2(c). Either the Trust or the Chief
Executive Officer may initiate a Joint Nomination by so notifying
the other in writing (a "Notice of Joint Nomination"), and upon
delivery or receipt of a Notice of Joint Nomination, as the case may
be, the Trust shall promptly notify the Chief Executive Officer in
writing of the name, age, business address, residence address and
principal occupation or employment of each proposed nominee and, if
applicable, the name(s) of the individual(s) who previously held the
directorship(s) for which such nominee(s) is or are proposed for
Joint Nomination pursuant to this Section 1.2(c) (a "Notice of
Proposed Nominees" that, if the Notice of Joint Nomination is
delivered by the Trust, may be included in the Notice of Joint
Nomination). Following the Chief Executive Officer's receipt of a
Notice of Proposed Nominees, the Trust shall promptly provide the
Chief Executive Officer with such additional information regarding
any or all such proposed nominees as may be reasonably be requested
by the Chief Executive Officer. The Chief Executive Officer may in
his sole discretion accept or reject any or all such proposed
nominees and, within fifteen (15) days
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following his receipt of a Notice of Proposed Nominees, shall notify
the Trust in writing as to whether he accepts or rejects any or all
of such proposed nominees (a "Notice of Acceptance/Rejection"). Each
such nominee accepted by the Chief Executive Officer pursuant to a
Notice of Acceptance/Rejection shall be deemed to be nominated by
Joint Nomination for election as a director of the Company. If the
Chief Executive Officer fails to deliver a Notice of
Acceptance/Rejection within such fifteen-day period, (i) the Trust
shall select from among such proposed nominees such number of
individuals as there are open directorships to be filled by Joint
Nomination pursuant to Section 1.2(a), and (ii) the individual(s) so
selected by the Trust shall be deemed to be nominated by Joint
Nomination for election as a director(s) of the Company. If the
Chief Executive Officer delivers a Notice of Acceptance/Rejection to
the Trust within such fifteen-day period rejecting all such proposed
nominees in respect of any or all such open directorships, the Trust
shall promptly thereafter deliver to the Chief Executive Officer a
new Notice of Proposed Nominees regarding one or more new proposed
nominees for each such remaining open directorship, and the Trust
and the Chief Executive Officer shall follow the procedures set
forth in this Section 1.2(c) mutatis mutandis.
(d) Upon receiving notice of any valid nomination or removal of a
director, the Trust shall execute and deliver a written consent of
sole shareholder (as described in Section 180.0704 of the Wisconsin
Business Corporation Law) electing such nominee or approving such
removal, as the case may be.
2. ISSUANCE OF ADDITIONAL SHARES; ACQUISITIONS BY COMPANY.
2.1 Issuance of Additional Shares. The Company shall not issue any
additional shares of its capital stock to any Person other than the
Trust without the prior written consent of the Trust.
2.2 Acquisitions by Company. The Company shall not, and shall not permit
any of its direct or indirect subsidiaries (including, but not
limited to, API and its direct and indirect subsidiaries) to,
purchase or otherwise acquire, by merger, consolidation or
otherwise, in a single transaction or a series or related
transactions, any equity securities of or other equity interest in,
or any assets of, another Person for cash or other consideration
having an aggregate fair market value in excess of One Hundred
Million Dollars ($100,000,000) without the prior written consent of
the Trust. For the purposes of this Section 2.2, the terms "equity
securities" and "equity interest" also include any debt securities
or other rights convertible into or exchangeable for equity
securities of or other equity interest in another Person.
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3. TERMINATION. This Agreement shall continue in full force and effect from
the date hereof until the date as of which the parties hereto terminate
this Agreement by unanimous written consent of the Company (acting by
majority of the members of the Board of Directors then in office) and the
Trust, as of which date it shall terminate in its entirety.
4. MISCELLANEOUS.
4.1 Ownership. Each party hereto represents and warrants to the other
parties hereto that such party has full power and capacity to execute,
deliver and perform this Agreement, which has been duly executed and
delivered by, and evidences the valid and binding obligation of, such
party enforceable in accordance with its terms.
4.2 Further Action. The Company shall not permit the transfer of any of the
Shares on its books, and shall not issue a new certificate representing
any of the Shares, unless and until the Person to whom such Shares are
to be transferred shall have executed a written agreement pursuant to
which such Person shall agree to be bound by all of the provisions of
this Agreement as if such Person were an original party hereto.
4.3 Specific Performance. The parties hereto hereby declare that it is
impossible to measure in money the damages that will accrue to a party
hereto or to its successors and assigns by reason of a failure to
perform any of their respective obligations under this Agreement and
agree that the terms of this Agreement shall be specifically
enforceable. If any party hereto or its successors or assigns
institutes any action or proceeding to specifically enforce the
provisions hereof, any Person against whom such action or proceeding is
brought hereby waives the claim or defense therein that such party has
an adequate remedy at law, and such Person shall not offer in any such
action or proceeding the claim or defense that such remedy at law
exists.
4.4 Governing Law; Compliance with Law. This Agreement, and the rights of
the parties hereto, shall be governed by and construed in accordance
with the laws of the State of Wisconsin as such laws apply to
agreements among Wisconsin residents made and to be performed entirely
within the State of Wisconsin. Notwithstanding anything to the contrary
contained in this Agreement, nothing in this Agreement shall require
the Trust to take any action that would violate, in the opinion of the
counsel for the Trust, any law or fiduciary obligation to which the
Trust is subject, including but not limited to the Internal Revenue
Code of 1986, as amended, and the Employee Retirement Income Security
Act of 1974, as amended. If the Trust relies on this Section 4.4 to
forego taking action otherwise required under this Agreement, the Trust
shall cooperate with the other parties in good faith to determine an
alternative course of action that would be consistent with the purposes
of this Agreement and permitted by this Section 4.4.
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4.5 Amendment and Waiver. This Agreement may be amended, and provisions of
this Agreement may be waived, only by an instrument in writing signed
by the Company (as approved by a majority of the members of the Board
of Directors then in office) and the Trust. Any amendment or waiver so
executed shall be binding upon each of the parties hereto and any
successor or assignee of any such party. No waiver of any breach of
this Agreement extended by any party hereto to any other party hereto
shall be construed as a waiver of any rights or remedies of any other
party hereto or with respect to any subsequent breach.
4.6 Severability. In the event one or more of the provisions of this
Agreement should for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this
Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein.
4.7 Additional Shares. In the event that, subsequent to the date of this
Agreement, any shares or other securities are issued on or in exchange
for any of the Shares by reason of any stock dividend, stock split,
combination of shares, reclassification or the like, such shares or
other securities shall be deemed to be Shares governed by this
Agreement.
4.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same agreement.
4.9 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors
and assigns.
4.10 Notices. Any notices required in connection with this Agreement shall
be in writing and shall be deemed effectively given: (a) upon personal
delivery to the party to be notified, (b) when sent by confirmed
facsimile, if sent during normal business hours of the recipient, or if
not sent during normal business hours of the recipient, on the next
business day, (c) five (5) days after having been sent by registered or
certified mail, return receipt requested and postage prepaid, or (d)
one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written confirmation of
delivery. Such notices shall be addressed to the party or parties to be
notified at the following address(es) or at such other address as a
party may designate from time to time by ten (10) days prior written
notice to the other parties hereto:
To the Trust at: State Street Bank and Trust Company
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxx 00
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Telecopier: (000) 000-0000
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To the Company at: Paperweight Development Corp.
000 Xxxx Xxxxxxxxx Xxxxxx
P.O. Box 359
Appleton, Wisconsin 54912-0359
Attention: Chief Executive Officer
Telecopier: (000) 000-0000
4.11 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement among the parties hereto with regard to the
subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this SECURITY HOLDERS
AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY: TRUST:
PAPERWEIGHT DEVELOPMENT CORP. APPLETON PAPERS INC. EMPLOYEE STOCK
OWNERSHIP TRUST
By: /s/ Xxxx X. Xxxxx By: STATE STREET BANK AND TRUST COMPANY,
Xxxx X. Xxxxx not in its individual or corporate
Vice President and Secretary capacity but solely in its capacity
as Trustee
By: /s/ Xxxxx X. Xxxxxxxx
[Name] Xxxxx X. Xxxxxxxx
[Title] Vice President
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