Document:

Exhibit 10.18

 

FORM OF OPTION AGREEMENT

 

KapStone Paper and Packaging Corporation, a Delaware corporation (the “Company”), hereby grants to {insert name} (“you” or the “Grantee”), [a non-employee director](1)[an executive officer] of the Company, an option (the “Option”) to purchase the number of shares of the Company’s common stock, $.0001 par value per share (each, a “Share”), at an option exercise price during the option term, and on the other terms and conditions set forth below.

 

The Option is subject to the terms and conditions set forth in Exhibit A to this Option Agreement, and in the KapStone Paper and Packaging {2016} Incentive Plan, as amended from time to time (the “Plan”), all of which are an integral part of and are hereby incorporated into this Option Agreement. You may obtain a copy of the Plan and amendments to the Plan upon request. Capitalized terms used but not defined in this Option Agreement have the meaning specified in the Plan.

 

	
Date of Grant
    	
 
    
	
 
    	
 
    
	
Number of Shares
    	
 
    
	
 
    	
 
    
	
Option Price
    	
 
    
	
 
    	
 
    
	
Expiration of Option
    	
 
    

 

 The Option will vest and become exercisable in installments as follows:

 

	
Date
   Exercisable
    	
 
    	
Percentage
    	
 
    	
Number of Shares Becoming
   Exercisable
    	
 
    
	
 
    	
 
    	
 
    	
%
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
%
    	
 
    	
 
    

 

	
 
    	
KAPSTONE PAPER AND   PACKAGING CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Its:
    	
Chief Executive   Officer
    

 

(1) Bracketed language that is italicized in this Exhibit relates only to non-employee directors of the Company. Bracketed language that is not italicized in this Exhibit relates only to executive officers of the Company.

 

 

EXHIBIT A

 

to

 

OPTION AGREEMENT

 

1.                                      Form of Award. This is an award of a nonqualified stock option which is not intended to meet the requirements of Section 422 of the Code. The Option will become vested and exercisable pursuant to the vesting schedule set forth in the Option Agreement.

 

2.                                      Effect of Termination [of Employment]. Immediately upon your termination of status as [a non-employee director][an employee] of the Company for any reason other than [retirement from the Board][your Retirement], death or Disability, the Option will terminate to the extent it has not become vested and exercisable pursuant to the vesting schedule set forth in the Option Agreement. Upon your termination of [membership on the Board][employment] by reason of [retirement][Retirement], death or Disability, this Option will immediately vest. With respect to the portion (if any) of the Option that has become vested on, at or prior to your termination of [membership on the Board][employment]:

 

(a)                                 The Option will terminate immediately upon your termination of [membership on the Board][employment] for Cause;

 

(b)                                 The Option will terminate upon the earlier of (i) the expiration of the term of this Option or (ii) two years following your termination of [membership on the Board][employment] by reason of [retirement][Retirement], death or Disability; or

 

(c)    The Option will terminate upon the earlier of (i) the expiration of the term of this Option or (ii) [three months] following your termination of [membership on the Board][employment] for any reason other than [retirement][your Retirement], death or Disability.

 

The terms “Cause[,” “Retirement]” and “Disability” are defined in the Plan. [For purposes of this Option Agreement, the term “retirement” shall mean your voluntary retirement from the Board, as determined by the Committee.]

 

3.                                      Manner of Exercise. You may exercise this Option while the Option is exercisable, during the period before the expiration of the Option term, in the manner set forth on Fidelity’s netbenefit.com site. The Committee reserves the right to change the manner in which you may exercise this Option. If any person other than you exercises this Option, the Committee may require evidence of the authority of such person to exercise the Option. Payment may be made by any one or a combination of the following means:

 

(a)                                 Cash, negotiable personal check or electronic funds transfer;

 

(b)                                 The tender of Shares having a Fair Market Value on the effective date of such exercise equal to the aggregate Option Price for the number of Shares being purchased;

 

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(c)                                  Requesting the Company to withhold from those Shares that would otherwise be received upon exercise of this Option a number of Shares having a Fair Market Value on the effective date of such exercise that is equal to the aggregate Option Price for the number of Shares being purchased; or

 

(d)                                 Through the sale of the Shares acquired on exercise of this Option through a broker-dealer to whom you have submitted an irrevocable notice of exercise and irrevocable instructions to deliver promptly to the Company the amount of sale or loan proceeds sufficient to pay for such Shares, together with the amount of federal, state, local or foreign withholding taxes payable by reason of such exercise.

 

Such exercise shall become effective at the time both such notice and payment have been received by the Company, which must be a date after the Option has become exercisable and before the Option has terminated either through expiration of the Option term or pursuant to Section 2 upon or following your termination [of membership on the Board]. You shall not have any rights as a stockholder of the Company with respect to the Shares deliverable upon exercise of this Option until you become the holder of record of such Shares.

 

Notwithstanding anything herein to the contrary, if the Option is outstanding on the last business day of the Option term (the “Automatic Exercise Date”), the Option shall be automatically exercised on the Automatic Exercise Date if the Fair Market Value of a Share on the Automatic Exercise Date exceeds the Option Price per Share of the Option. Payment of the Option Price per Share shall be made pursuant to this Section 3 and the Company shall withhold whole Shares which would otherwise be delivered to you, having an aggregate Fair Market Value in the amount necessary to satisfy the federal, state, local or foreign income, FICA or other taxes relating to such exercise. The Committee may elect to discontinue the automatic exercise of the Option pursuant to this Section 3 at any time upon notice to the Grantee.

 

4.                                      [Taxes. The Company is not required to issue Shares upon the exercise of this Option unless you first pay to the Company the minimum amount that the Company is required to withhold for federal, state, local or foreign income, FICA or other taxes relating to such exercise.  You may irrevocably elect at the time of exercise of this Option to make payment of federal, state, local or foreign income, FICA or other taxes that you are required to pay relating to such exercise. You may satisfy this obligation by any one or a combination of the following means:

 

(a)                                 Delivering cash, negotiable personal check or electronic funds transfer in an amount that is equal to the amount to be withheld;

 

(b)                                 Delivering part or all of the payment in Shares having a Fair Market Value on the date effective date of such exercise that is equal to the amount to be withheld; or

 

(c)                                  Requesting the Company to withhold from those Shares that would otherwise be received upon exercise of this Option a number of Shares having a Fair Market Value on the effective date of such exercise that is equal to the amount to be withheld.

 

Shares to be delivered or withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate.]

 

A - 2

 

[4][5]                  Limited Transferability of Option. Except as provided below in this Section [4][5], this Option is exercisable during your lifetime only by you or your guardian or legal representative, and this Option is not transferable except by will or the laws of descent and distribution. Except as provided below in this Section [4][5], this Option may not be assigned, negotiated, or pledged in any way (whether by operation of law or otherwise) and this Option shall not be subject to execution, attachment or similar process.

 

You are authorized to transfer all or any portion of this Option by gift (or similar transfer for no consideration) to a Family Member. Following the transfer of all or any portion of this Option to a Family Member, the Family Member shall have all of your rights and obligations and you shall not retain any rights with respect to the transferred Option, except that (A) the payment of any tax attributable to the exercise of the transferred Option shall remain your obligation, and (B) the determination of the exercisability of the Option shall be based solely on the activities and state of affairs of you.

 

As used herein, “Family Member” means the Grantee’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Grantee’s household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these persons (or the Grantee) control the management of assets, and any other entity in which these persons (or the Grantee) own more than 50% of the voting interests.

 

[5][6].               Forfeiture and Clawback. In the event that you engage in fraud or misconduct involving the Company, then at the option of the Committee, all unvested and vested Options awarded to you will terminate and be forfeited, and you will be required to immediately pay to the Company all amounts that you have received in connection with the exercise of Options. Such forfeiture and clawback shall be in addition to any other right the Company may have with respect to any such fraud or misconduct. At the direction of the Board, the Company may undertake any legal action to collect and recover the amount of any such required payment.

 

[6][7].               Amendments. The Committee may by written instrument amend this Option Agreement prospectively or retroactively in any manner; but no such amendment may adversely affect your rights without your consent unless such amendment is required or permitted to comply with securities, tax or other laws. By accepting this Option you thereby give your consent to any amendment of this Option Agreement reasonably determined by the Committee to be required or permitted by the preceding sentence. The Committee may substitute a new Option for this Option in accordance with the Plan. The Committee retains with respect to this Option all of the rights, powers and authorities described in the Plan, whether or not set forth in this Option Agreement, unless expressly provided to the contrary in this Option Agreement.

 

[7][8].               Notices. Any notice to be given under the terms of this Option Agreement to the Company shall be addressed to the Company in care of its Secretary. Any notice to be given to you shall be addressed to you at the e-mail address or street address listed in the Company’s records. By a notice given pursuant to this Section, either party may designate a different address for notices. Any notice shall have been deemed given when actually delivered.

 

A - 3

 

[8][9].               Severability. If any part of this Option Agreement is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not serve to invalidate any part of this Option Agreement not declared to be unlawful or invalid. Any part so declared unlawful or invalid shall, if possible, be construed in a manner which gives effect to the terms of such part to the fullest extent possible while remaining lawful and valid.

 

[9][10].        Applicable Law. This Option Agreement shall be governed by the laws of the State of Delaware other than its laws respecting choice of law.

 

[10][11]. Headings. Headings are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

 

A - 4Exhibit 10.19

 

AMENDMENT NO. 3 TO 
 RECEIVABLES SALE AGREEMENT

 

THIS AMENDMENT NO. 3 TO RECEIVABLES SALE AGREEMENT (this “Amendment”) is dated as of February 21, 2017 but effective as of February 1, 2017 (the “Amendment Effective Date”), by and among:

 

(a)                                 KAPSTONE KRAFT PAPER CORPORATION, a Delaware corporation, KAPSTONE CONTAINER CORPORATION, a Georgia corporation, LONGVIEW FIBRE PAPER AND PACKAGING, INC., a Washington corporation, KAPSTONE CHARLESTON KRAFT LLC, a Delaware limited liability company, and VICTORY PACKAGING, L.P., a Texas limited partnership (each, an “Originator” and, collectively, the “Originators”),

 

(b)                                 KAPSTONE PAPER AND PACKAGING CORPORATION, a Delaware corporation, as servicer (the “Servicer”), and

 

(c)                                  KAPSTONE RECEIVABLES, LLC, a Delaware limited liability company (the “Buyer”).

 

Capitalized terms used, but not defined, herein shall have the meanings given to such terms in the Sale Agreement defined below.

 

W I T N E S S E T H:

 

WHEREAS, the Originators, the Servicer and the Buyer have entered into that certain Receivables Sale Agreement dated as of September 26, 2014 (as amended, modified or restated from time to time, the “Sale Agreement”); and

 

WHEREAS, the parties hereto desire to amend the Sale Agreement as hereinafter provided;

 

NOW, THEREFORE, in consideration of the premises and the other mutual covenants contained herein, the parties hereto agree as follows:

 

SECTION 1.         Amendment.  As of the Amendment Effective Date:

 

1.1.         The definition in Exhibit I to the Sale Agreement of the following defined term is hereby amended and restated in its entirety to read as follows:

 

“Excluded Receivable” means (a) any API Receivable, (b) any Receivable denominated in any currency other than U.S. Dollars, and (c) any Receivables as to which the Obligor is the Specified Obligor (as defined in the Fee Letter) that arise at least five (5) Business Days after the date on which written notice is delivered by any Originator or the Buyer to the Administrative Agent and the Purchasers that such Receivables will be included in a supply chain financing program and certifying that all such Receivables created in the calendar month then most recently ended represent less than 5% of total Eligible Receivables; provided, however, that any Receivables as to which the Obligor is the Specified Obligor that arise at least five (5) Business Days after the date on which written

 

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notice is delivered by any Originator or the Buyer to the Administrative Agent and the Purchasers that such Receivables are no longer included in a supply chain financing program and certifying that all such Receivables created in the calendar month then most recently ended represent less than 5% of total Eligible Receivables will not be “Excluded Receivables.”

 

1.2.         Exhibit I to the Sale Agreement is hereby amended to insert the following new defined term and definition in the appropriate alphabetical order:

 

“API Receivable” means, collectively, (a) any right to payment arising from the sale of goods or provision of services by Associated Packaging, Inc. or Fast Pak, LLC acquired by KapStone Container Corporation on February 1, 2017, and (b) any right to payment arising from the sale of goods or provision of services by those KapStone Container Corporation locations formerly operated by Associated Packaging, Inc. and/or Fast Pak, LLC arising on or after February 1, 2017 that is not remitted to a Lock-Box or Collection Account.

 

SECTION 2.         Representations and Warranties of the Originators. Each of the Originators represents and warrants to the Buyer that all representations and warranties of such Originator set forth in Section 2.1 of the Sale Agreement are true and correct with respect to such Originator on and as of the Amendment Effective Date; provided that, to the extent that such representations and warranties specifically refer to an earlier date, they shall be true and correct with respect to such Originator as of such earlier date.  All representations and warranties made hereunder shall be deemed to have been made by the Originators under the Sale Agreement on the Amendment Effective Date.

 

SECTION 3.         Effect of Amendment.  Except as specifically amended hereby, the Sale Agreement and all exhibits and schedules attached thereto shall remain in full force and effect.  This Amendment shall not constitute a novation of the Sale Agreement, but shall constitute an amendment to the Sale Agreement and the exhibits attached thereto to the extent set forth herein.

 

SECTION 4.         Binding Effect.  This Amendment shall be binding upon and inure to the benefit of the parties hereto and their successors and permitted assigns.

 

SECTION 5.         Effectiveness. This Amendment shall become effective on the Amendment Effective Date subject to the prior or contemporaneous satisfaction of each of the following conditions precedent:

 

5.1.         The Administrative Agent shall have received counterparts of this Amendment, duly executed by each of the parties hereto and consented to by each of the Purchasers in the space provided below; and

 

5.2.         Each of the representations and warranties contained in Article II of the Sale Agreement shall be true and correct in all material respects, it being understood that the foregoing materiality qualifier shall not apply to any representation that itself contains a materiality threshold.

 

SECTION 6.         Governing Law.  This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York without regard to conflict of laws principles (other than section 5-1401 of the New York General Obligations law).

 

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SECTION 7.         Execution in Counterparts; Severability.  This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original, and all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page by facsimile shall be effective as delivery of a manually executed counterpart of this Amendment.  In case any provision in or obligation under this Amendment shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

<Balance of page intentionally left blank>

 

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IN WITNESS WHEREOF, the parties have hereunder set their hands as of the date first above written.

 

	
 
    	
KAPSTONE KRAFT PAPER   CORPORATION,
    
	
 
    	
as an Originator
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Andrea K. Tarbox
    
	
 
    	
Name:
    	
 Andrea K. Tarbox
    
	
 
    	
Title:
    	
Chief Financial Officer
    

 

4

 

	
 
    	
KAPSTONE CONTAINER CORPORATION,
    
	
 
    	
as an Originator
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Andrea K. Tarbox
    
	
 
    	
Name:
    	
Andrea K. Tarbox
    
	
 
    	
Title:
    	
Chief Financial Officer
    

 

5

 

	
 
    	
LONGVIEW   FIBRE PAPER AND PACKAGING, INC., as an Originator
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Andrea K. Tarbox
    
	
 
    	
Name:
    	
 Andrea K. Tarbox
    
	
 
    	
Title:
    	
Chief Financial Officer
    

 

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KAPSTONE CHARLESTON KRAFT LLC, as   an Originator
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Andrea K. Tarbox
    
	
 
    	
Name:
    	
Andrea K. Tarbox
    
	
 
    	
Title:
    	
Chief Financial Officer
    

 

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VICTORY PACKAGING, L.P., as an Originator
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Andrea K. Tarbox
    
	
 
    	
 
    	
Name: 
    	
Andrea K. Tarbox
    
	
 
    	
 
    	
Title:
    	
Chief Financial Officer
    
					

 

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KAPSTONE PAPER AND PACKAGING   CORPORATION, as   Servicer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Andrea K. Tarbox
    
	
 
    	
Name: 
    	
Andrea K. Tarbox
    
	
 
    	
Title:
    	
Chief Financial Officer
    
				

 

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KAPSTONE RECEIVABLES, LLC,   as the Buyer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Andrea K. Tarbox
    
	
 
    	
Name: 
    	
Andrea K. Tarbox
    
	
 
    	
Title:
    	
Treasurer
    
				

 

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Each of the undersigned hereby consents to the foregoing Amendment No. 3:

 

	
WELLS FARGO BANK, N.A.,   AS ADMINISTRATIVE AGENT AND A PURCHASER
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Michael J. Landry
    	
 
    
	
Name: 
    	
Michael J. Landry
    	
 
    
	
Title:
    	
Director
    	
 
    
				

 

11

	
 
    	
 
    
	
PNC BANK, NATIONAL ASSOCIATION,   AS A PURCHASER
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Michael Brown
    	
 
    
	
Name:
    	
 Michael Brown
    	
 
    
	
Title:
    	
Senior Vice President
    	
 
    
				

 

12

 

	
SUMITOMO MITSUI BANKING   CORPORATION, NEW YORK BRANCH, AS A PURCHASER
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ James D. Weinstein
    	
 
    
	
Name:
    	
James D Weinstein
    	
 
    
	
Title:
    	
Managing Director
    	
 
    
				

 

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COÖPERATIEVE RABOBANK, U.A.,   NEW YORK BRANCH, AS A PURCHASER
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Christopher Lew
    	
 
    
	
Name:
    	
Christopher Lew
    	
 
    
	
Title:
    	
Executive Director
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Thomas McNamara
    	
 
    
	
Name:
    	
Thomas McNamara
    	
 
    
	
Title:
    	
Vice President
    	
 
    
				

 

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