**Exhibit 10.3**

 

THE SHARES RECEIVEDPURSUANT TO THIS STOCK OPTION SHALL BE SUBJECT TO THE RIGHTS, RESTRICTIONS, ANDOBLIGATIONS APPLICABLE TO SUCH SECURITIES, ALL AS PROVIDED IN THE SHAREHOLDERSAGREEMENT DATED AS OF JUNE 12, 2006 BETWEEN THE COMPANY AND ITS SHAREHOLDERS,AS AMENDED AND IN EFFECT FROM TIME TO TIME (THE “SHAREHOLDERS AGREEMENT”).

 

Performance StockOption

 

Granted Under

 

Cellu ParentCorporation

2006 Stock Optionand Restricted Stock Plan

 

# **1.**                                      Grant of Option.

# ** **

This certificateevidences an performance stock option (this “Stock Option”) granted by CelluParent Corporation,**a Delawarecorporation (the “Company”), on April 13, 2009, to Russell C. Taylor,an employee of the Company or its subsidiaries (the “Participant”) pursuant tothe Company’s 2006 Stock Option and Restricted Stock Plan (as from time to timein effect, the “Plan”).  Under this StockOption, the Participant or the Participant’s permitted transferee may purchase,in whole or in part, on the terms herein provided, up to 574 shares of commonstock of the Company (the “Shares”), (the exact number of shares to bedetermined according to the cash return conditions set forth below) at $883.27per Share, which is not less than the fair market value of the Shares on thedate of grant.  The latest date on whichthis Stock Option, or any part thereof, may be exercised is April 13, 2019(the “Final Exercise Date”).  The StockOption evidenced by this certificate is intended to be an incentive stockoption as defined in section 422 of the Internal Revenue Code of 1986, asamended from time to time (the “Code”).

 

This Stock Option isexercisable in the following circumstances prior to the Final Exercise Date:

 

(a)          270shares may be earned and vest if the majority owner, Weston Presidio, realizesa return of 2.5 times its total cash investment in the Company (as determinedby the amount of its investment as of April 13, 2009) at the time of asale or any other transfer for value, which also shall include the earning andvesting of a pro rata percentage in the event of sale or any transfer for valueof less than all its ownership for a 2.5 times multiple; and

 

(b)         an additional 81 shares (for a total of 351 shares)may be earned and vest if the majority owner, Weston Presidio, realizes areturn of 2.75 times its total cash 

 

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investment in the Company(as determined by the amount of its investment as of April 13, 2009) atthe time of a sale or any other transfer for value, which also shall include theearning and vesting of a pro rata percentage in the event of sale or anytransfer for value of less than all its ownership for a 2.75 times multiple;and

 

(c)          an additional 61 shares (for a total of412 shares) may be earned and vest if the majority owner, Weston Presidio,realizes a return of 3.00 times its total cash investment in the Company (asdetermined by the amount of its investment as of April 13, 2009) at thetime of a sale or any other transfer for value, which also shall include theearning and vesting of a pro rata percentage in the event of sale or anytransfer for value of less than all its ownership for a 3.00 times multiple;and

 

(d)         an additional 81 shares (for a total of493 shares) may be earned and vest if the majority owner, Weston Presidio,realizes a return of 3.25 times its total cash investment in the Company (asdetermined by the amount of its investment as of April 13, 2009) at thetime of a sale or any other transfer for value, which also shall include theearning and vesting of a pro rata percentage in the event of sale or anytransfer for value of less than all its ownership for a 3.25 times multiple;and

 

(e)          an additional 81 shares (for a total of574 shares) may be earned and vest if the majority owner, Weston Presidio, realizesa return of 3.5 times its total cash investment in the Company (as determinedby the amount of its investment as of April 13, 2009) at the time of asale or any other transfer for value, which also shall include the earning andvesting of a pro rata percentage in the event of sale or any transfer for valueof less than all its ownership for a 3.5 times multiple.

 

Notwithstanding theforegoing, upon termination of the Participant’s Employment, any portion ofthis Stock Option that is not then exercisable shall immediately expire and theremainder of this Stock Option shall remain exercisable for a period equal tothe lesser of (1) thirty days (30) or (2) the period ending on thelatest date this Stock Option could have been exercised without regard to clause(1), and shall then expire and terminate; *provided*, thatif the Administrator in its sole discretion determines that such cessation ofthe Participant’s Employment has resulted for reasons which constitute causefor termination of employment, this entire Stock Option shall expire andterminate immediately upon termination of Employment and no portion thereofshall thereafter remain exercisable; *further provided*,that any portion of this Stock Option that is outstanding immediately prior tothe Participant’s death, to the extent then exercisable, will remainexercisable for a period equal to the lesser of (1) one year following theParticipant’s death or (2) the period ending on the latest date this StockOption could have been exercised without regard to clause (1), and shall thenexpire and terminate; *and further provided*,that in no event shall any portion of this Stock Option be exercisable afterthe Final Exercise Date.

 

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### For purposes ofthis Stock Option, cause for termination shall be defined as (i) theParticipant’s repeated and willful refusal or failure (other than duringperiods of illness, disability or vacation) to perform the Participant’s dutieshereunder or under any lawful directive of the Board; (ii) the Participant’swillful misconduct or gross neglect in the performance of the Participant’sduties hereunder which in either case is materially injurious to the Company orany of its Subsidiaries, monetarily or otherwise; (iii) the conviction ofthe Participant of any felony or any other crime involving dishonesty or moralturpitude or the Participant’s pleading guilty to any felony, other than motorvehicle offenses, orany other crime involving dishonesty or moral turpitude; (iv) the commission of fraud, embezzlement,theft or other dishonesty by the Participant with respect to the Company or anyof its Affiliates; (v) any other conduct that involves a breach of fiduciaryobligation on the part of the Participant or otherwise could reasonably beexpected to have a material adverse effect upon the business, interests orreputation of the Company or any of its Affiliates; or (vi) a previousemployer of Participant shall commence against Participant and/or Company anaction, suit, proceeding or demand arising from an alleged violation of anon-competition or other similar agreement between Participant and suchprevious employer.

###  

Noact, or failure to act, on the Participant’s part, will be considered “willful”unless done or omitted to be done by Participant not in good faith and withouta reasonable belief that the Participant’s action or omission was infurtherance of the Company’s business.

 

# **2.**                                      Exercise of Stock Option.

# ** **

Eachelection to exercise this Stock Option shall be in writing, signed by theParticipant or the Participant’s permitted transferee (the “Option Holder”),and received by the Company at its principal office, accompanied by thiscertificate and payment in full as provided in the Plan.  Subject to the further terms and conditionsprovided in the Plan, the purchase price may be paid as follows:  (i) by delivery of cash or checkacceptable to the Administrator; (ii) upon and following an initial publicoffering of the Company, through a broker-assisted exercise program acceptableto the Administrator; (iii) if so permitted by the Administrator, throughthe delivery of Shares that have been outstanding for at least six months(unless the Administrator approves a shorter period) and that have a fairmarket value equal to the exercise price); (iv) if so permitted by theAdministrator, by delivery to the Company of a promissory note of the personexercising this Stock Option, payable on such terms as are specified by theAdministrator; or (v) through any combination of the foregoing.  In the event that this Stock Option isexercised by an Option Holder other than the Participant, the Company will beunder no obligation to deliver Shares hereunder unless and until it issatisfied as to the authority of the Option Holder to exercise this StockOption.

 

# **3.**                                      Restrictions on Transfer of Shares.

# ** **

Thegranting of this Stock Option and the issuance of Shares received under thisStock Option shall be subject to the Plan and the Shareholders Agreement,and the issuance of this Award shall be conditional upon the execution anddelivery by the undersigned of the Shareholders Agreement.  Any Shares received under this Award shall besubject to the rights, restrictions and 

 

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obligationsapplicable to options and shares of Stock of the Company as provided from timeto time in such Shareholders Agreement.

 

If at the time this StockOption is exercised the Company or any of its stockholders is a party to anyother agreement restricting the transfer of any outstanding shares of theCompany’s common stock, the Administrator may provide that this Stock Optionmay be exercised only if the Shares so acquired are made subject to thetransfer restrictions set forth in that agreement (or if more than one suchagreement is then in effect, the agreement or agreements specified by theAdministrator).

 

# **4.**                                      Withholding; Agreement to ProvideSecurity.

# ** **

If at the time this StockOption is exercised the Company determines that under applicable law andregulations it could be liable for the withholding of any federal or state taxupon exercise or with respect to a disposition of any Shares acquired uponexercise of this Stock Option, this Stock Option may not be exercised unlessthe person exercising this Stock Option remits to the Company any amountsdetermined by the Company to be required to be withheld (or makes otherarrangements satisfactory to the Company for the payment of such taxes).

 

# **5.**                                      Nontransferability of Stock Option.

# ** **

This Stock Option is nottransferable by the Participant otherwise than by will or the laws of descentand distribution and is exercisable during the Participant’s lifetime only bythe Participant (or in the event of the Participant’s incapacity, the person orpersons legally appointed to act on the Participant’s behalf).

 

# **6.**                                      Provisions of the Plan.

# ** **

This Stock Option issubject to the provisions of the Plan, which are incorporated herein byreference.  A copy of the Plan as ineffect on the date of the grant of this Stock Option has been furnished to theParticipant.  By exercising all or anypart of this Stock Option, the Participant agrees to be bound by the terms ofthe Plan and this certificate.  Allinitially capitalized terms used herein will have the meaning specified in thePlan, unless another meaning is specified herein.

 

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IN WITNESS WHEREOF, theCompany has caused this instrument to be executed by its duly authorizedofficer.

 
|                                   | CELLU PARENT  CORPORATION |
|----------------------------------------|---------------------------|
|                                   |                      |
|                                   |                      |
|                                   | By:                       |     /s/  Sean Honey |
|                                   | Name: Sean Honey          |
|                                   | Title: President          |
|                                   |                      |
| Dated:  April 13,  2009 |                      |
|                                   |                      |
|                                   |                      |
|                                   | Acknowledged:             |
|                                   |                      |
|                                   |                      |
|                                   | /s/ Russell C. Taylor     |
|                                   | Russell C. Taylor         |
|                                   |                      |
|                                   |                      |
| Dated:  April 17,  2009 |                      |

 

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